Your insider’s guide to the exuberant world of Asian tech

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The Big Story — Exclusive

Huawei, the Chinese telecoms equipment giant, is expecting to sustain a “huge impact” from Washington’s decision to blacklist it, according to this scoop from the FT. The warning from Huawei executives comes after revelations that the backbone of the company’s cyber security system, and other key technologies, are sourced from US companies.

Key Implications: Washington’s ban on US companies selling goods and services to Huawei is set to come into force in mid-August. As things stand, that could severely disrupt Huawei’s cyber security system, which is composed of 19 companies, two-thirds of which are US groups.

In addition, Qualcomm supplied one-quarter of the semiconductors in the 200m smartphones shipped by Huawei last year. Upheavals in other areas are also expected.

Upshot: Huawei says it has a full range of alternatives to US goods and services ready. But the scale of the undertaking is enormous and it remains to be seen if Huawei can manage it. For other telecoms companies and non-US suppliers, Huawei’s peril could present an opportunity.

Mercedes’ top 10

A round-up of the week’s best tech stories from the FT’s Asia tech reporter Mercedes Ruehl

  1. The other big news this week in tech was Hong Kong getting the chance to bring Alibaba closer to home. The Chinese ecommerce giant is planning a secondary listing in the Asian city five years after it raised a record $25bn in New York.
  2. It followed a decision by China’s Semiconductor Manufacturing International Corporation to delist in New York. There is divided opinion over whether this was about China’s lagging chipmakers or a trade war-linked move.
  3. Singapore is the new Switzerland, at least when it comes to attempting to stay neutral over Huawei.
  4. An interesting scoop from Nikkei Asian Review on Malaysian sovereign wealth fund Khazanah Nasional Berhad’s rising appetite for tech investments. It is considering investing in SoftBank’s $100bn Vision Fund.
  5. Another scoop in the FT says China’s ByteDance, owner of the popular TikTok streaming app, is looking into developing its own smartphone. As you might imagine, telecoms analysts are sceptical.
  6. Fascinating piece from NAR on Philippine conglomerate Ayala’s digital transformation of its empire spanning property to utilities to healthcare. Guess which country the company is turning to enable that shift? It starts with C and ends with A.
  7. China’s crackdown on peer-to-peer lending platforms this year appears to be hitting its fintech sector. India surpassed China as Asia’s top destination for venture capital-backed fintech funding in the first three months of the year.
  8. A good analysis on why US tech giants — already facing pushback in India in favour of homegrown start-ups — can expect more inhibiting regulation after Narendra Modi’s re-election.
  9. The phasing out of electric vehicle subsidies in China is hitting EV maker Nio where it hurts. The start-up has postponed its electric sedan indefinitely, news that came as it reported a rough first quarter.
  10. I leave you with the FT columnist John Thornhill’s thoughts on facial recognition technology, especially relevant for this newsletter given the technology is ubiquitous in China. “We should fight against the indiscriminate deployment of automatic facial recognition systems,” he writes.
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When sages speak

  • Here’s Philipp Gerbert, who leads Boston Consulting Group’s initiative on digital strategy and artificial intelligence, on why we should learn to love the AI bubble.

  • Mike Moritz, a partner at venture capital firm Sequoia, wrote an opinion article in the FT on tech investors’ latest obsession: “dark kitchens”. For restaurant owners who ignore the shift, this latest development in the gig economy spells big trouble, he says.

In the spotlight

Bukalapak, one of Indonesia’s largest ecommerce platforms backed by GIC and Ant Financial, is set to give investors access to Indonesian equities, according to a scoop from FT Singapore correspondent Stefania Palma.

From “super apps” to building large customer-focused ecosystems, you can expect to see more of south-east Asia’s start-ups muscle in on services traditionally offered by companies such as banks. The move by Bukalapak, which was founded in 2010 by Achmad Zaky, Fajrin Rasyid and Nugroho Herucahyono, would be the first time a digital marketplace offers this kind of product in Indonesia. The company believes it will meet demand for shorter term and riskier investments.

Mr Fajrin says the tech group, which focuses on Indonesian small and medium-sized merchants, could launch the new service before the end of the year. It does not need a licence given its plans to partner with a local broker, but it still must meet requirements such as client signature standards in what remains a “grey” regulatory area.

Smart data

Wecame. Wesaw. Weboosted deposits. The 2018 annual results for WeBank, China’s first digital bank, are out and there was one figure in particular that we found startling: the jump in customer deposits.

The Tencent-backed bank launched in China in 2015 and is already profitable, servicing 100m customers — mostly individuals and small-to-medium-size enterprises. It has no physical branches and its users can only open accounts used for daily consumption and online transactions and have a limited transfer amount. That makes its deposit base of Rmb154.5bn ($22.4bn), an increase of nearly 2,800 per cent on 2017, impressive, even coming off a low base. According to WeBank, the growth was organic and derived from an online push last year.

One way the bank has been able to reach potential customers is via Tencent’s chat platform WeChat. Henry Ma, WeBank’s vice-president and chief information officer, says the bank sends out invitations to users based on the selection criteria the bank has built into its tech-savvy model.

Job market

  • Asian insurance company FWD has appointed Ryan Jong Hoon Kim to the new role of chief digital officer. Based in Hong Kong, he will lead the company’s digital transformation both externally for customers and internally for its employees.
  • HSBC, Europe’s biggest lender, is boosting the headcount of its wealth management team in Asia. The focus is in Singapore, where the banks says it will launch new digital initiatives this year.

Regulation round-up

  • Singapore has begun a public consultation on proposed changes to its Personal Data Protection Act. “The proposed porting provisions allow customers to take their personal data with them when switching service providers, however the burden for porting organisations needs careful thought,” said Anne Petterd, a principal at Baker McKenzie Wong & Leow. “There are also proposed changes to allow a business to use personal data for business innovation purposes without needing consent.”
  • Japan will apply its foreign ownership restrictions to high-tech industries from August 1. The law requires foreign investors to report to the government and undergo inspection in case they buy a certain per cent of stocks in listed and unlisted Japanese companies. The new rule will be applied to 20 sectors in the information and communications industries.

We are taking part in the 25th International Conference on the Future of Asia in Tokyo later this week, organised by Nikkei. James will be moderating a panel on Asian tech start-ups, including Tokopedia founder William Tanuwijaya, Makeblock chief executive Jasen Wang and Preferred Networks president and chief executive Toru Nishikawa. (You can watch live here starting at 1:20pm JST on May 31. A recording will be available afterwards.)

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