Weekly Business Roundup #5

News from Shein, Alibaba, Miniso, Douyin, Baidu, Tencent, Chinese Banks, iQIYI, Kuaishou

Monday May 13:

• Shein Prepares for London IPO as US Listing Effort Stalls
  
  Fast fashion retailer Shein is shifting its IPO ambitions to London, as its US listing remains uncertain, according to a Reuters report citing two sources. The China-connected company, which relocated its headquarters to Singapore in 2022, still prefers a public debut in New York.
  
  The decision to consider London as a listing venue is seen as a second-best option for Shein. The potential US IPO is viewed as a significant indicator of the geopolitical relationship between the US and China.

• Alibaba Reduces US Stock Holdings by Over 60% in Q1
  

  Alibaba Group reduced its US stock holdings by over 60% in Q1 2024, selling stakes in Bilibili and 23andMe while adding Zhihu. As of March 31, Alibaba owned USD 154.2 million in US-listed equities, down from USD 420.7 million in December. The company sold 10 million Bilibili shares worth USD 121.7 million and also divested from Hello Group and 23andMe. Focusing on e-commerce and cloud computing, Alibaba also plans to sell its 38% stake in Shiji Retail Information Technology. In Q1, Alibaba purchased 10.5 million Zhihu shares worth USD 7.2 million and retained holdings in Weibo and Xpeng, valued at USD 81.8 million and USD 51.1 million, respectively.

• Miniso Q1 Profits Surge 28%
  

  Miniso’s adjusted net profit rose 28% to CNY 617 million (USD 85.3 million) in Q1 from a year earlier, with revenue increasing 26% to CNY 3.7 billion (USD 514 million), the Chinese budget retailer announced. As of March 31, Miniso operated 6,630 stores, with 4,034 in mainland China.

Tuesday May 14:

• Douyin to Restrict Influencers from Posting on Politics, Economics, Law, and Healthcare

  
  Douyin, China’s largest short video platform, will bar influencers from posting on politics, economics, law, and healthcare, allowing third-party advertisers to upload commercials instead. Effective Wednesday, this rule reverses a prior policy allowing PR updates and may reduce influencer earnings. ByteDance, Douyin’s owner, clarified that other monetization methods and content creation on serious topics remain unaffected.

• China’s Delivery Industry Reports Strong Revenue Growth
  

  China’s delivery industry generated CNY 421 billion (USD 58.3 billion) in revenue in the first four months of the year, a 17% increase from a year earlier, according to the State Post Bureau. In April alone, revenue rose 16% to CNY 109 billion compared to the same period last year.

Wednesday May 15:

Baidu Expects Robotaxi Business to Break Even by Q4

• Chinese search engine giant Baidu announced it expects its robotaxi business to break even in the fourth quarter of this year, aiming for profitability by 2025. Baidu plans to deploy 1,000 robotaxis in Wuhan by year-end, expanding its fully autonomous fleet operating over 3,000 square kilometers (1,158 square miles).

• Tencent to Launch First Public Large Language Model App
  

  Tencent Holdings will release Yuanbao, its first large language model app, to the public on May 30. Based on Tencent’s Hunyuan AI model, Yuanbao will be available as an app for individual users. Previously, Hunyuan was accessible only to enterprises and developers via Tencent Cloud. Yuanbao’s capabilities include generating 16-second videos and 3D models in 30 seconds. Tencent also introduced Yunaqi, a platform for creating and distributing AI agents, and launched three new toolchain models to enhance knowledge, image, and video creation for enterprises. Tencent aims to integrate Hunyuan across various industries, including healthcare.

• Chinese Banks Report Rising Q1 Investment Income
  

  Over 80% of listed Chinese banks reported increased Q1 investment income, primarily from bond returns amid narrowing net interest margins. Of 42 banks, 36 saw growth, with five exceeding 300% surges. Xiamen Bank led with CNY 280 million (USD 38.7 million), up from CNY 43.4 million (USD 6 million) a year earlier. Urban commercial banks noted investment returns made up over half of non-interest income, driven by bond allocations totaling CNY 15.4 trillion (USD 2.13 trillion). Future returns will depend on market conditions and macroeconomic factors, with potential liquidity risks from market fluctuations.

Thursday May 16:

• ByteDance Surprises AI Rivals with Ultra-Low Cost Doubao Model
  

  TikTok owner ByteDance has shocked the AI industry with its ultra-low-cost Doubao model. Doubao can process 2 million Chinese characters (1.25 million tokens) for just RMB 1 ($0.14). In contrast, OpenAI’s newly unveiled GPT-4o model costs $5 per million input tokens.

• Chinese Real Estate Stocks Surge After Policy Easing
  

  Chinese real estate stocks rebounded after the central bank eased housing policies on down payments and mortgage rates to boost home sales. Major property developers like China Vanke, Poly Developments and Holdings Group, and Gemdale surged by the 10 percent daily limit. The People’s Bank of China lowered the minimum down payment for first homes to 15% and second homes to 25%, and cut interest rates on housing provident fund loans by 25 basis points. Local governments can now set interest rates independently.

Friday May 17:

• Chinese Long-Form Videos: Q1 2024 Overview
  

  iQIYI reported a 5% revenue decline to 7.9 billion yuan in Q1 2024 due to decreased membership income. IQiyi will stop disclosing subscriber numbers from this quarter to focus on increasing the average monthly revenue per membership. Tencent’s long video segment had a good quarter, with new TV dramas and animated series increasing paid subscribers by 8% to 116 million. TME’s collaboration with Tencent Video led to a 20% rise in music paid subscribers, totaling 114 million. Despite a general reluctance to pay for software, Tencent saw increased willingness to pay for their SaaS offerings. Alibaba Digital Media and Entertainment Group reported a 1% revenue decrease to 4.945 billion yuan and a reduced EBITA loss of 884 million yuan, improving from a 1.129 billion yuan loss in 2023.

• Kuaishou Prepares for 618 Shopping Festival with E-commerce Growth
  

  As the 618 Shopping Festival approaches, Kuaishou hosted its E-commerce Gravity Conference on May 15th, highlighting significant growth. In 2023, Kuaishou’s e-commerce GMV surpassed one trillion yuan for the first time, reaching 1.18 trillion yuan. Q1 2024 saw continued growth, driven by general merchandise shelves, short videos, and search functions. Consumers are increasingly relying on search for purchases, with Southern China and older consumers becoming key contributors to GMV.