East West Hurricane

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

Chinese Students Feel Anxiety from New U.S. Rules 🎓

* The U.S. Immigration and Customs Enforcement agency announced that foreign students taking fully online classes in the fall semester will face consequences including having to leave the country. Many universities announced their intention to go completely virtual in the upcoming semester to ensure appropriate protections against Covid. Also, many international students might currently be in their home countries because of the coronavirus and thought they could dial-in through online classes. Some US universities like Cornell have allowed their foreign students to “study away,” meaning the student can attend a local university in their home country while still being officially registered as a student at Cornell. But under the new ICE regulation, this might not be allowed and disqualify foreign students from holding US visas.

* China is the single largest source of international students for U.S. universities, with around 370,000 currently studying in the US. Right now, Chinese social media is blowing up with students freaking out about how their plans are going to be disrupted. This new regulation might cause a decrease in Chinese students both in the short and medium term, similar to what I wrote about Korean students a few days ago. I was an international student on an F1 Student Visa in the U.S. for seven years and know the process intimately, excruciatingly well. Regardless of the inefficiencies or incompetencies with the current process, I doubt any foreign student or US university wants this new ICE rule to happen.

British Museum Hosts Livestream During Lockdown 🖼

* The British Museum partnered with Chinese companies Fliggy and Taobao to host a two-hour livestream on June 30. Around 370,000 Chinese fans tuned in to watch an curated virtual tour around the museum. Viewers were able to see real-time Chinese translations and interact with other viewers through comments. They were able to purchase British Museum merchandise through pop-up links directly within the app.

* The museum has been pretty forward thinking when it comes to social media and focusing on Asian audiences. They were cultivating followers on Weibo and WeChat all throughout the 2010s and were the first international museum to launch on Tmall, Alibaba’s online retail platform. The museum made $51 Million in their first year selling products like jewellery, stationery, and art to Chinese audiences.

* The coronavirus has forced cultural institutions to explore new marketing strategies, communications tools and business models. The Fliggy app already partnered with tourism boards across Finland, France, Germany, Serbia, and the UK to host a five-day travel-themed livestream earlier in May. There is still strong demand for pairing Chinese viewers with Western cultural destinations, even in this moment of restricted travel.

The Gaokao Hopes and Dreams 👩‍🎓

* When I took the SATs back in high school in the US, it seemed like a pretty big deal at the time. But for Chinese high schoolers, the pressure to perform on the Gaokao is magnified. The Gaokao (formally known as the National College Entrance Examination) is the single most important college entrance exam in China, which currently 10 million students are taking across three days between July 7-9.

* The coronavirus has disrupted the traditional school schedules, test preparation structures, and general mental health of China’s student population. The Gaokao was delayed by one month this year and Chinese authorities have created additional health and safety measures around the actual testing locations. No matter what is going on in the rest of the world, as you read this there are ten million Chinese high school students furiously taking the Gaokao, powered by their hopes and dreams.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

TikTok Begins Move Out of Hong Kong 🇭🇰

* Many tech companies have responded to the Chinese government’s imposition of a new, controversial national security law in Hong Kong that officially came into effect last week. Facebook, Google, Twitter, and Zoom have all stated that they will refuse processing user data requests for the Hong Kong police, pending a deeper review on the new law. But the most notable news has come from TikTok, who publicly announced that Hong Kong users will no longer be able to access the app within a few days.

* This is a complicated situation that needs unpacking. TikTok is owned by a Chinese company called Bytedance, with its global headquarters in Beijing. Bytedance owns another mobile app Douyin, that is ‘essentially’ a Chinese version of TikTok. Or depending how you look at it, TikTok is the international version of Douyin since it is a younger app and was the result of Bytedance acquiring the app Musical.ly in 2017. People in Hong Kong use both TikTok and Douyin and Hong Kong users should still be able to access Douyin from now on.

* It’s unclear to me how exactly this all works, but Bytedance finds itself in a very nuanced position owning both Douyin and TikTok. The parent company has made efforts to separate the two entities and hiring an American CEO for TikTok, Kevin Mayer, has been a big move to indicate their seriousness. With the overall movement towards regulation of social media by governments around the world, it’s in the best interests of Bytedance to ensure Douyin and TikTok are separate.

Netflix to Launch First Chinese Production 🎬

* Netflix is working with China’s Pearl Studio to release an animated Chinese musical film later this year called “Over the Moon.” It will tell the story of a young girl who dreams of traveling to the moon to meet the Chinese goddess of the moon. Pearl Studio co-produced Kung Fu Panda 3 and was created as a Chinese-American joint venture in 2012 with Dreamworks. This is Netflix’s very first big Chinese production, even though Netflix is not available in China.

* Netflix has been making significant efforts to internationalise their content in order to better appeal to their international audiences, particularly around Asia. Another example is their major push into India last year that included aggressive discounts and local Indian content like Sacred Games. In following the eyeballs of their audience, Netflix is realising that their biggest growth opportunity comes from Asia.

Indian Startup Zomato is Cut Off From Chinese Investors 🏦

* Zomato is a $3 Billion Indian food delivery startup that raised $150 Million in funding earlier this year from Ant Financial, the Chinese digital payments company. However, thanks to increasing tensions between China and India, the Indian government has imposed new laws on foreign investment. One of these laws was announced in April, requiring official approval for investments from countries that share a land border with India. And so around $100 Million out of the $150 Million is currently going through government approval before actually hitting Zomato’s bank account.

* Historically, Chinese institutional investors have been one of the biggest sources of startup capital for India’s young tech companies, including funds affiliated with Tencent and Alibaba. Ant Financial (owned by Alibaba) has invested around $560 Million in Zomato, which gives it a 25% ownership stake in the company. And Zomato’s biggest rival Swiggy has received major investment from Tencent and Meituan-Dianping. This dynamic has played out for a while and 60% of India’s tech unicorns (startups with a valuation about $1 Billion) have received Chinese funding. If the political tension between the two countries lead to laws that make it more difficult for Chinese investors, that leaves a huge funding gap for Indian companies.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

Luckin Coffee’s Chairman is Out ☕️

* Luckin Coffee was previously one of the hottest companies in China. The coffee brand was considered a serious competitor to Starbucks and completed an initial public offering on the NASDAQ in 2019. The rosy picture came crashing down when a $300 Million accounting fraud was revealed in April of this year.

* Charles Lu, the current chairman of Luckin, survived a vote of no confidence last week. Despite this victory for Lu, it was announced today that he was ousted from the board in another emergency board meeting that happened on Sunday that also removed three other board members. And there is still significant speculation that he will soon be facing serious criminal charges, including seizure of his family’s assets. Luckin is the most high profile case of fraud in public Chinese business over the last year, and has hurt the levels of trust investors have in Chinese companies.

Chinese Film Studios Look to More Online Releases 🎬

* Earlier this year, many Chinese production companies began releasing their films directly on digital platforms because physical movie theaters had shut down due to the coronavirus. I wrote an article about Bytedance being one of the main players involved by hosting the Chinese film ‘Lost in Russia’ a few months ago, and since then many other major films have been released through Bytedance.

* This has angered many Chinese movie theater chains, whose entire financial model is put in jeopardy by direct-to-digital releases on top of the coronavirus. But since the very first experiments at the beginning of the year, the film studios are seeing even more financial benefits to this approach. Tencent, iQiyi, Xigua, and other video-streaming platforms have released dozens of Chinese films and a recent report by Endata has shown huge increases in users and time spent.

* This trend has been replicated in the West, most notably with Disney releasing major films direct to Disney+ and Universal Pictures releasing films like “Trolls World Tour” direct to digital download. Pretty much the same scenario played out in both China and the US. It just happened earlier in China by a few months because of the coronavirus.

Korean Students Leaving the US ✈

* This article in the Korean Herald talks about the dilemma faced by many Korean students who have to make decisions about studying abroad in the time of coronavirus. Given the current financial, health, and visa challenges in higher education, especially in countries like the US, some Korean students are opting to come back home to Korea to pursue their studies. This has also affected local businesses in Korea that provide related services like US college admission prep companies and study abroad agencies.

* Behind China and India, South Korea is the country that sends the largest number of foreign students to universities in the United States, making 6.5% of all foreign enrolment in the US. A few days ago, I wrote about the effect new US work visa restrictions will have on the Indian labour market. With fewer Indians and Koreans able to either study or work in the US, it’s likely that these countries (like many other countries around Asia) will have a more full, but competitive labour market in the short term. Flows of human capital are changing.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

TikTok’s Losses from the India Ban ⛈

* The biggest story of this week has been the Indian ban of 59 Chinese Mobile Apps. But how much does that actually cause in losses for the newly banned companies? For TikTok specifically, we might have an idea. Sources close to Bytedance (TikTok’s parent company) have described that the Indian government’s decision to ban TikTok could lead to a revenue loss of $6 Billion for the company.

* TikTok currently employs 2,000 staff in India, has 200 Million Indian users, and was temporarily banned in India back in April 2019. At the time, TikTok was accused of exposing children to pornography, cyberbullying, and predators. A report by Sensor Tower around that time estimated the ban made TikTok lose 15 million users and court documents revealed Bytedance lost up to $500,000 a day during the week-long 2019 ban. Given the importance of India and the controversy around their presence, last year TikTok announced a $1 Billion investment plan for India and plans to create a local Indian data center.

* There’s another potential, more positive scenario for Bytedance. Just like the 2019 ban, there’s a chance this latest ban could be temporary. Kevin Mayer, the newly hired CEO of TikTok/COO of Bytedance and former Disney executive, posted this public letter of support to TikTok’s employees in India. He surely has one of the most rewarding, high-profile, and incredible challenging roles of any tech executive in the world. What a wild first month in the job.

Pinduoduo’s Founder/CEO Steps Down 🌄

* Pinduoduo is one of the great Chinese e-commerce success stories over the last five years. The company provides a social commerce model for online shopping - allowing users to unlock great discounts by making group purchases, incorporating lots of gamification, and focusing on lower-tier cities as their target audience. Colin Huang, the 40-year-old billionaire founder/CEO of Pinduoduo announced this week that he is stepping down from his current role.

* I think Pinduoduo is one of the most interesting companies in China tech. In their IPO documents, Pinduoduo literally described their aspirations to be a combination of Costco and Disneyland. The company has 480 Million users and despite being only five years old, it’s the third biggest e-commerce company in China after Alibaba and JD .

* Whenever a major tech CEO changes, there’s usually a story behind it. And after Pinduoduo’s success at last month’s 618 festival, Colin Huang actually became the second richest man in China, overtaking Jack Ma from Alibaba. While Colin will still be involved in the company, he has stepped away from day-to-day operations and named his CTO Chen Lei to be the new CEO of Pinduoduo.

Gojek Unifies Brand Across South East Asia 🛵

* Indonesia’s most valuable startup, Gojek, has just changed the name of their Thai and Vietnamese local brands to unify under a single international Gojek brand. Previously, Gojek’s Thai and Vietnamese brands were called GoViet and Get. Many people attribute this change as a way for Gojek to better compete with their biggest rival, Grab. Grab currently has the same brand name across all eight of the South East Asian countries where they operate.

* What GoJek faces is a classic challenge of localisation vs. standardisation for international business. Major CPG brands like Procter & Gamble, Unilever, and Nestle have the exact same products operate under different names in different countries to better appeal to the local market. This applies across many other industries but Gojek has now decided to follow the standardisation of Grab and Uber. Gojek’s leadership has described the new unified brand as a way to scale the company across new markets and products. And with the investment Gojek received last month from Facebook and Paypal, the company now has even more firepower to take on their international rivals at Grab.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

The Big Moment for Indian Tech 📱

* India’s expulsion of 59 Chinese apps earlier this week is a watershed moment in Indian tech, depending on how long the ban lasts and what happens next. This op-ed by Vivek Wadhwa in the Hindustan Times describes some of the potential tech opportunities this gives to India, framing this positively. At the same time, other opinion pieces like this one from Apar Gupta in The Hindu criticise the ban. The closest thing to this ban is how China banned Western tech companies like Facebook and Instagram. You could argue that China’s own consumer tech companies (WeChat, Weibo, QQ, etc.) were able to thrive because they didn’t have as much competition from Western tech alternatives. Could India now execute on a similar strategy, creating natively Indian versions of these banned Chinese mobile apps?

* Another angle to this is looking at what else is currently affecting India’s labour market—US Visas. Donald Trump recently announced that several US work visas will have their approval processes suspended until the end of the year, including the H-1B visas most commonly used by the US tech industry. Putting aside the cultural, social, and psychological consequences of this decision on the US’s ability to attract foreign talent, it has a significant impact on India specifically. India accounts for 70% of the 85,000 total H-1B visas issued annually, so thousands of Indian employees and American tech companies have had their 2020 plans disrupted.

* Now suddenly India’s tech landscape has less competition, because of banned Chinese apps. At the same time, India’s highly skilled tech workers who would have moved to the US for job opportunities suddenly cannot, because of restrictions in US work visa policy. What could this mean for India?

AngelList launches EquityList for India 💸

* AngelList is one of Silicon Valley’s best known companies, a marketplace/job listings site that connects startup founders with angel investors. They have just announced the launch of a new product specifically for the Indian market called EquityList. EquityList is a tool that allows founders to manage their equity stakes, issue equity to employees, and perform a host of other equity-related functions. This takes out many of the operational and fiscal burdens that comes with distribution and tracking of equity in a startup.

* This is just the latest in a series of new investments made by AngelList specifically targeting India. They also launched an Indian micro-VC fund called iSeed in May. AngelList India itself was launched in 2018. Things are heating up in the Indian tech market—there are surely many more announcements to come.

Exporting Korean Culture 🇰🇷

* This week, the Korean Academic Society for Public Relations hosted an event in Seoul discussing how to promote Korean Culture in a post-Covid world. The event was sponsored by the Korean Culture and Information Service, and supported by several government officials. The attendees discussed how to frame the positive messaging of Korea given the country’s relative success in stopping Covid and how to choose the right medium to deliver these messages.

* Promoting your country’s ‘brand’ has always been a thing, whether done by national tourism boards or other government agencies. Putting aside Covid, Korea’s ‘brand’ has been rising rapidly over the last five years and seeing these types of events makes me realise that the Korean government takes this seriously. I’m currently in New Zealand, and there have been similar discussions raised by certain government officials on how to capitalise on New Zealand’s ‘brand’ in a post-Covid world. Although my opinion is that New Zealand takes this less seriously than Korea, I’m bullish on the commercial and social opportunities afforded to the Asia-Pacific countries who have dealt with Covid effectively.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

Covid’s Effect on Chinese Smartphones 📱

* Three of the world’s top five smartphone companies are Chinese, making up one-third of global sales. This KrAsia article summarises how these major brands are dealing with the coronavirus. As an overall global industry, smartphones are struggling and Q1 saw an 11% year-on-year decline in shipments, which is the largest decline ever recorded.

* The biggest Chinese smartphone companies are Huawei, Xiaomi, and Vivo. Over the last couple of years, their growth has mainly come from emerging markets in places like India, South East Asia, and Africa. Their current challenges don’t just come from the coronavirus, but are compounded by government regulation. Huawei has been the subject of bans by the US government, and this week the Indian government banned 59 Chinese mobile apps.

* Huawei is the second biggest smartphone maker by number of shipments, and 50% of their sales come from the Chinese domestic market. They recently opened a huge new flagship store in Shanghai right next to the Apple store. Xiaomi is a weaker player in China, with most of their growth coming from India, Europe, and South America. This leaves them in a more vulnerable position given both public health and policy challenges in each of those regions. Vivo has even more reliance on the Indian market for growth—earlier this year before Covid, they announced an aggressive marketing plan to launch hundreds of new stores around India, which is likely no longer possible to pull off. It’s not an easy time to be a Chinese smartphone maker.

Taobao - From E-Commerce to Online Education 🎓

* Taobao, one of China’s largest e-commerce platforms, is owned by Alibaba and has over 800 million users. Last week, they announced a new initiative called a “One Million New Students Plan” to “help more than 1,000 education organisations to gain at least 100,000 new students each in the next three years.” So that’s a goal to get 100 million new students in total within three years. This includes new product features, marketing, content, and partnerships.

* In 2013, Taobao had launched their first version of an online education spinoff called Tongxue, which means ‘classmates’ in English. It’s always been available on Taobao, but this latest announcement is more topical and takes advantage of recent trends. Since the beginning of this year, edtech and online classes have grown rapidly in China. Given the size of China’s population, the stakes are even higher for education. With 230 million Chinese students currently in K-12 education, it’s more than any other country in the world.

* The Financial Times reported on this education boom earlier in the year, which is happening not only in China, but throughout Asia. Online education apps like Ding Talk became widely used teaching tools for almost all students thanks to the coronavirus. Ding Talk specifically got so big that Chinese students from around the country kept giving the app a one-star rating, with the hopes that the app would get kicked off the App Store and they wouldn’t have to do their homework. And now it’s Taobao’s turn to try to win over students and get a slice of the growing education pie.

KKR Raises New Asia Fund, Their Biggest Ever 💴

* KKR (Kohlberg, Kravis, Roberts) is in the process of closing a $12.5 Billion buyout fund this month, focused specifically on investments in Asia. This is said to be the biggest ever Asia-focused fund raised by a U.S. company. KKR is one of the oldest and most respected companies in private equity. And given the financial toll the coronavirus has taken on the world economy, this provides KKR with more potential companies as investment targets.

* Just this year, KKR has already spent $3.3 Billion acquiring companies in Asia-Pacific, including $1.1 Billion in the Indian-based Reliance Industries and $650 Million in Vietnam’s largest real estate developer. Clearly KKR sees major opportunity in Asia, but it’s not the case for all investors. The PR fallout from Luckin Coffee’s scandal has still cast doubt on investing in Asia and a recent study by Bain indicates that Asia-Pacific private equity activity has declined over the last year. There’s room for many different opinions on the future of Asia.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

Indian Government Bans 59 Chinese Mobile Apps 🚫

* The Indian government announced yesterday that it has banned 59 Chinese Mobile Apps, citing concerns that the apps engaged in activity “prejudicial to sovereignty and integrity of India, defence of India, security of state and public order.” There are also allegations that these apps, such as TikTok, are sharing Indian user data with the Chinese government, which has been publicly denied by the companies.

* This comes against the backdrop of military skirmishes between India and China earlier this month in a disputed Himalayan border, which resulted in the deaths of 20 Indian troops. Prior to this ban, there were many calls to boycott Chinese goods and stop Chinese imports, which will have a huge effect on the $90 Billion in bilateral trade between the two countries each year.

* Among the affected apps — two of the most notable are TikTok and WeChat. India is TikTok’s largest market outside of China and it’s estimated that there are over 120 Million Indian TikTok users. Is this the death of TikTok India? While there are many people in India who support the ban, the combined users of these total apps is around 300 Million. And these people could be using apps for pure entertainment (Clash of Kings, Helo, TikTok) or business reasons (ShareIT, WeChat, UC Browser). Depending on how long this ban lasts, there’s now a major opportunity for local Indian companies to take advantage of the ban and provide domestic alternatives.

Korean Fund Set Up to Promote Local Media 🇰🇷

* The Korean government has announced the creation of a new 1 trillion won (USD $825 Million) fund to invest in local media companies. There are also plans to decrease regulation in order to allow local media tech startups to compete with players like Netflix and Youtube. This also comes on top of several government investments in private sector infrastructure, such as an announcement earlier this year of $15 Billion in new infrastructure funds.

* A trend I believe we will start seeing more is the decentralisation of popular culture, away from the dominance of Hollywood throughout the second half of the twentieth century. Korea already punches above its weight when it comes to global cultural influence, but could we start seeing a renaissance in Korean pop culture? Korea arguably had the most advanced professional gaming industry earlier than any other country. K-pop has taken over the world over the last few years. In February of this year, Korean film Parasite became the very first foreign language film to win the Best Picture Oscar. And K-Dramas have been dominating Asia for years. What’s next for Korea?

Chinese K.O.L.s vs. Western Influencers 📊

* Daxue Consulting wrote an article comparing Chinese influencers (KOLs - Key Opinion Leaders) with Western Influencers. It was a fascinating look at the similarities and differences between the Eastern and Western worlds of social media and influence. The biggest tool Chinese influencers use differently to monetise is livestreaming, which is the number one focus for KOLs like Austin Li and Viya. For Li and Viya, their livestreams can average up to $250,000 USD in revenue per minute over the course of a several hour long livestream.

* In one case study, they focus on comparing Jeffree Star (one of the biggest American beauty influencers) and Austin Li (one of the biggest Chinese beauty influencers). Jeffree Star’s annual income is estimated to be $100 Million and Austin Li’s is estimated to be $140 Million. Jeffree Star is notable for having own brand of cosmetics and products, a model more common in America, while Li does not have his own ‘vertical business line’ and instead uses his influence to market products from other brands. We should watch closely to see how the East-West influencer strategies evolve.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

Livestreaming E-Commerce in a Post-Covid World 🤳

* There has been a lot of hype around e-commerce livestreaming in China. Since around 2017, people have been using live video apps to directly sell products. The most successful livestreaming influencers or Key Opinion Leaders (KOLs) are perceived as genuine and have built a trusted relationship with their fanbase. The closest thing resembling this in the West is TV infomercials or QVC; but in China, social media platforms like Taobao, Douyin, and Kuaishou allow users to buy products directly in-app during a livestream.

* But Covid has triggered a dramatic mass adoption of livestreaming. The Chinese livestreaming industry is now expected to reach $129 Billion by the end of the year (double the amount from 2019); demand for livestreaming hosts has gone up 50% over the last six months; and 62% of the total Chinese internet population is expected to participate in livestreams in 2020. CEOs of several major companies in China have started using livestreaming as a tool to sell products and services. Government agencies have provided subsidies to livestreamers to encourage the local economy, including direct endorsements from President Xi Jingping.

* And with this growth, the products sold on livestreams now encompass peaches from rural farmers to real estate from major urban developers to $5.6 Million rocket launch services from famous influencers. I’ve been a huge fan of livestreaming for a while, and you may have seen me writing about this in previous updates or my other newsletter Venn Diagrams. We’re going to see more and more Asian influence in our business, tech, media, and culture (TikTok is a good example of this), and I think e-commerce livestreaming could be the next big marketing channel for your brand.

A Chinese Liquor Brand Bigger than Coca-Cola 🍶

* Moutai is China’s most popular alcoholic beverage, a liquor brand named after the town of Moutai, in Guizhou province. Kweichow Moutai, the company that produces the drink, is now larger than Disney, Coca-Cola, and Verizon. With a market cap of $260 Billion, it’s also bigger than the biggest alcohol brands like Diageo, Heineken, SAB Miller, and AB InBev. While many stocks have taken a hit because of the coronavirus, Moutai is an interesting exception that sheds insight on China’s consumer market.

* The type of liquor of Moutai is called baijiu, which is a harsh, strong liquor that I have personally had the pleasure of tasting—it’s closely tied to Chinese culture. 95% of Moutai’s sales are from the domestic Chinese market and as China’s economy looks like it’s recovering from the coronavirus at some degree more quickly than the rest of the world, many people have been investing in Moutai as a bellwether for economic recovery. At the same time, major Western alcohol brands are dealing with the lockdown of bars, restaurants, and venues.

* China is the world’s biggest consumer population and one of the fastest growing. In terms of practical application, that means a huge ‘domestic’ brand in China can have orders of magnitude more sales than a well known international brand. If you are an Italian shampoo company, an American clothing company, a Brazilian drinks company; from a numbers perspective—your biggest potential customer base is China.

Snapchat Announces Singapore Office 👻

* Snap Inc., the official name of the parent company that created Snapchat, has announced that they will be opening up a Singapore office later this year. The person leading the office is Anubhav Nayyar, the former head of Asia-Pacific for messaging app Viber. This signals the increased importance of the Asian market, and perhaps a strategic move considering challenges from the coronavirus.

* This really marks a shift in Snap’s Asia strategy. Just a few years ago, a lot of press was criticising Snap for not focusing on Asia early enough. At the same time, Snap has previously faced fierce competition from local Asian apps, including Korean clone Snow. And there has always been a classic chicken or egg problem of whether a Western tech company should invest in Asia to increase its user base, or wait until the user base reaches a certain size before deciding to invest. There must be something new that triggered the Snap leadership to think that now is the right time. We can also look to the fact that Asia is becoming an even more attractive growth market for everyone. For example, Disney+ is already moving quickly to open up a Singapore office this year.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com

Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

Follow us on Twitter and Instagram! ⚡️

Apple Removes Thousands of Apps with New Chinese App Store Policy 🍎

* Starting July, Apple will begin removing thousands of mobile apps from the Chinese App Store. This is a new policy to require all paid games to have approval from Chinese regulators before getting listed. Prior to this decision, game developers were able to still submit their apps to the App store while their government approvals were still processing. This was used by everyone from indie developers to major companies like Rockstar Games, the creators of the Grand Theft Auto series, to be able to make money technically without government approval.

* It’s expected that one third of all games on the Chinese App Store will be removed next month because of this policy. Anything that makes it harder for game developers to make money will have effects on the software community. And developing games for the huge Chinese market has always had additional challenges because of the government’s strict approval process, especially as the overall gaming industry continues to grow massively. In China, the mobile gaming industry last year reached a size close to $30 Billion.

China’s Sports Are Reopening 🏀

* Last weekend, after five months of hiatus, the Chinese Basketball Association (CBA) played their first set of games. While many things are back to normal, not every team’s roster has stayed the same. Some international players are actually stranded outside of China since the border is still currently closed to foreigners, and for the Beijing Ducks, their foreign head coach is stuck outside of China.

* The next question many fans are asking is — what about other sports? The Chinese Super League, the country’s biggest football league, plans to restart some time next month in July. If you look to the rest of the world, it’s been quite a mixed bag — some European football leagues like the Premier League and Bundesliga have already resumed, without fans in stadiums. On the other end of the spectrum, the Belarus national football league has actually kept playing all of their matches over the last few months during the coronavirus crisis.

* In motorsport, the Shanghai Grand Prix was supposed to happen in April but was cancelled. There is some talk that Formula One will be potentially rescheduling races in Asia for the second half of this year, and Shanghai is actually lobbying to host two races if the reopening happens. A Formula One Grand Prix generally brings a lot of press and economic benefits to the host city—one good example of this is the Grand Prix that has taken place in Baku, Azerbaijan since 2017. One PWC study calculated the city has received half a billion dollars in economic benefit because of the Grand Prix. So it’s a very attractive event for many cities, including Shanghai.

Steam’s Chinese Expansion Comes With Strings Attached 🎮

* Steam is a digital distribution platform, one of the world’s biggest for selling video games. The platform has 95 Million active users and sells billions of dollars worth of games every year. Currently, 30 million users access the platform from China, where you can only use Steam by going through a VPN. The company has operated in this grey zone for a long time, until an official Steam partnership with local Chinese company Perfect World was announced in 2018.

* Earlier this year, an early beta version of the new ‘Steam China’ has appeared to include censorship features, restricted times to play games, and fewer titles. Once again, issues of government regulation are a hugely important factor for anything related to gaming in China. The Chinese PC Gaming market was worth $15 Billion last year and there are a reported 321 Million PC gamers in China. By creating a new Steam China, Steam might be hoping to legitimise their huge business in China, but they might also end up annoying gamers and developers.

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Welcome to East West Hurricane! 🌪

We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.

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Latest NASDAQ Delisting Notice for Luckin Coffee ☕️

* Luckin Coffee was previously heralded as one of China’s biggest business successes over the last year, a serious competitor to Starbucks and one of the fastest growing companies in the country. This was all before a $310 Million financial reporting fraud was revealed in April, leading to a series of investigations and still ongoing controversy.

* This week, Luckin disclosed that it has received a second notice from the NASDAQ asking the company to delist from the exchange. Their first delisting notice came on May 19 for “public interest concerns” and “fabricated” records. This second one is because Luckin has failed to file their annual report for the fiscal period ending December 31, 2019. The current share price of Luckin is hovering around $2.70, a significantly lower price than their high of $50 a share in mid-January.

* Luckin had their IPO on the NASDAQ in May 2019, with a lot of fanfare characterising the company as the next Starbucks of China. Luckin was such a high profile company with a large percentage of their investors coming from the West, specifically the US. So the impact of Luckin’s fraud and impending decline can be traced all the way to the recent US legislation introduced to delist Chinese companies and a broader sense of mistrust between the investment communities of the two countries.

Challenge for India’s Wedding Industry 💒

* In India, weddings are a big business—a $50 Billion industry. With a population of 1.3 billion people (and half under the age of 30), the industry was expecting double digit growth going into this year. Unfortunately, the Coronavirus has created new challenges to prevent this growth from happening.

* This Vogue Business article outlines some of the ways businesses are adapting, including virtual appointments, increased e-commerce, and augmented reality. Many people have also had to postpone or completely rethink their approach to getting married. Personally, I’ve had several friends get married over Zoom the last few months, which cuts into what people would have spent for a traditional wedding. A large part of a wedding’s cost is spent on luxury goods, which could mean anything from the actual bridal wear to jewellery.

* What’s happening in India’s wedding industry is something many countries are experiencing, but India’s size means it’s more susceptible to this corona-induced downturn. The US is the world’s largest wedding market valued at $70 Billion, with India coming in second at $50 Billion and growing more quickly. 29% of global jewellery spending also currently comes from India. The challenges of this wedding industry will have ripple effects across the broader Indian economy.

Gucci and Other Fashion Brands Need Work On Their Chinese Socials 👜

* The idea of a brand rushing into social media or “digital” is a playbook I’m very familiar with. When I worked at Facebook, social media was too often seen as a blunt marketing instrument rather than a nuanced tool. It’s not easy. This article from Jing Daily outlines Gucci’s struggle to find success on short video app Douyin, the Chinese version of TikTok owned by parent company Bytedance.

* Gucci launched on Douyin on April 29 earlier this year, in an attempt to better connect with younger Chinese audiences like Millennials and Gen-Z. Since then, the account has received lots of negative feedback from fans, primarily criticising the aesthetic and quality of Gucci’s videos. For Gucci and many similar brands, China is often their most important market, as the country accounts for two-thirds of growth in the global luxury market. So being successful on Chinese social media is not a luxury, but a necessity.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit eastwesthurricane.substack.com