The Switch might finally go on sale in China


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It seems the Switch may soon arrive in China, as Nintendo has teamed up with Tencent to bring its ultra-popular console to an enormous market. Guangdong province’s game regulator has provisionally given the green light for a trial version of New Super Mario Bros. U Deluxe for the Switch. Nintendo told Reuters it has applied for approval to sell the console itself, but the process is multi-layered, so it may take some time before the Switch actually goes on sale in China.

China has relaxed some restrictions on gaming in recent years, paving the way for Microsoft to start selling the Xbox One there and Sony to offer the PS4 in the market. However, for nine months last year, authorities halted game approvals, causing the Tencent share price to plummet and underlining that the market still holds a great deal of uncertainty.

Nintendo, meanwhile, is said to be working on two new versions of its console. A lower-end one might arrive in the fall, which a souped-up premium model could go on sale later.

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Amazon will close its Chinese platform for third-party sellers in July


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Amazon is pulling the plug on its e-commerce marketplace business in China. The decision follows a long struggle by American e-commerce companies in the country, who have fallen behind China’s faster shopping rivals.

According to a statement from Amazon, it will no longer operate its third-party online marketplace or provide seller services on Amazon.cn from July 18th. As such, domestic companies will no longer be able to sell products to Chinese consumers on the platform. However, the company did say it remains “committed to China” through its global stores, Kindle business and web services.

Further, The Wall Street Journal reports that Amazon is in merger talks with Chinese competitor, NetEase Inc’s Kaola. A potential deal could see a stock-for-stock transaction, although neither company would comment on the status of those talks.

Amazon arrived in China in 2004 with the purchase of Joyo.com, where it was initially the largest vendor of books, music and video. But over time the platform came to be used predominantly for imported international goods, and despite its booming presence elsewhere, Amazon is now a very small player in China’s e-commerce market. In quarter four 2018, the company accounted for just six percent of gross merchandise volume in the cross-border e-commerce market, while NetEase Kaola and Alibaba commanded 25 percent and 32 percent respectively.

While it would be feasible for Amazon to continue its operations there, getting ahead would mean spending big to unseat its competitors, or dropping prices even further — evidently its executives have made the decision to quite while its ahead.

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Amazon China to close local marketplace and place more focus on cross-border

Amazon has finally given up the fight with Chinese online shopping giants to capture the domestic market. On Thursday, the Seattle-based ecommerce company announced it will shut down its marketplace on Amazon.cn, which connects mainland Chinese buyers and sellers, while other units of its local venture will stay intact.

“We are working closely with our sellers to ensure a smooth transition and to continue to deliver the best customer experience possible,” an Amazon spokesperson told TechCrunch, adding that this segment of the business will end on July 18.

The partial retreat, first reported by Reuters and Bloomberg, is indicative of the relentless ecommerce race in China where Alibaba and JD.com dominate, with newcomer Pinduoduo closing on the incumbents’ heels.

But this is hardly the end of Amazon’s China story. The American giant has over the years attracted waves of cross-border sellers, many of whom have hailed from China’s traditional export industry looking to sell cheaply manufactured goods to consumers around the world for lucrative margins. To date, Chinese export suppliers are able to sell to 12 countries that include India, Japan, Australia, Canada, the United States, and five Western European countries.

Other global ecommerce players also have their eyes set on the massive raft of goods flowing out of China, though each comes with a different geographic focus. Alibaba-backed Lazada, for example, is the bridge between Chinese merchants and Southeast Asian shoppers, while Jumia, which just listed in the U.S., exports from China to Africa.

“The biggest appeal [of exporting through Amazon] is the low costs because we are close to a lot of supply chain resources,” a Shenzhen-based vendor selling water-resistant placemats on Amazon told TechCrunch.

In the meantime, China has developed a big craving for imported goods as middle-class consumers now demand higher quality products. Amazon is in the import business, too, although it lags far behind more entrenched players such as Alibaba, of which Tmall Global takes the lead with 29 percent market share in the cross-border ecommerce space according to data from iResearch, dwarfing Amazon’s 6 percent.

That could change if Amazon finds a prominent local partner. Rumors have swirled for months that Amazon was reportedly in talks to merge its import unit with Kaola, the cross-border shopping business run by Chinese internet giant Netease with a 22.6 percent market share.

Not to be forgotten, Amazon also offers cloud computing services to Chinese enterprises although, in this space, it’s again in a direct face-off with Alibaba Cloud, the dominant player in China. Lastly, China remains the largest market for Kindle, so pivotal that the e-reader launched a localized model just for China.

“Over the past few years, we have been evolving our China online retail business to increasingly emphasize cross-border sales, and in return we’ve seen very strong response from Chinese customers,” said the Amazon spokesperson. “Amazon’s commitment to China remains strong—we have built a solid foundation here in a number of successful businesses and we will continue to invest and grow in China across Amazon Global Store, Global Selling, AWS, Kindle devices and content.”

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Starbucks challenger Luckin’s fundraising spree continues with $150M investment

Coffee startup Luckin is continuing its fundraising spree as it sets its sight on becoming an alternative to Starbucks in China.

The a-year-and-a-half old company announced on Thursday that it closed a Series B-plus raise totaling $150 million. The fresh proceeds valued Luckin at $2.9 billion post-money, up from $2.2 billion just four months ago.

While many question Luckin’s cash-fueled expansion, Blackrock, which owns a 6.58 percent stake in Starbucks, shows its confidence in the Chinese startup by pumping $125 million through its private equity fund into Luckin’s new round.

With that, the New York-based investment firm has its bet on two contrasting models for China’s coffee consumption. While Starbucks zeroes in on the brick-and-mortar experience, Luckin is a network of last-mile coffee delivery centers plus places for people to pick up orders and sit down targeting busy white-collar workers.

In a move that would amp up its battle with Luckin, Starbucks teamed up with Alibaba’s food delivery unit Ele.me last August to put hot and cold drinks in people’s hands.

Luckin did not disclose how it will spend the fresh capital infusion, but the pace at which it’s raising suggests the startup is in dire need of cash. The new round arrived less than a year after it secured a $200 million Series A in July and another $200 million from a Series B in December.

Indeed, Luckin founder Qian Zhiya, a former executive at auto rental firm Car Inc, confessed the company burned through $150 million within just six months from launching. A big chunk of money had gone to shelling out deep discounts for consumers, while the coffee challenger’s offline expansion was as cash-intensive.

As of late, Luckin has opened 2,000 outlets consisting of small prep kitchens, pickup stations and cafes in 22 Chinese cities, up from 1,700 locations reached in December. That gives Luckin less than eight months to fulfill its ambition of becoming the “biggest coffee chain in China by the number of outlets run and cups sold.” The goal is to top 4,500 outlets by the end of 2019.

Starbucks, which made its foray into China 20 years ago, has also been aggressively putting up storefronts. It currently runs 3,600 stores across 150 cities in China, up from 3,300 last May.

When it comes to actual people using the service, Starbucks still enjoys a huge lead. The Luckin app that allows one to order and pay has 650 thousand unique downloads in March, data from research firm iResearch shows. Starbucks’s app is more than four times its size with 2.81 million unique downloads from the same period.

Other investors who joined in on Luckin’s latest round included existing backers such as Singapore’s sovereign wealth fund GIC, Chinese government-controlled China International Capital Corporation, Dazheng Capital and Joy Capital, whose founding partner Liu Erhai sits on Luckin’s board.

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Foxconn boss Terry Gou is running for president of Taiwan


ASSOCIATED PRESS

Terry Gou, the billionaire founder of electronics giant Foxconn, is stepping down from his role as chairman to run for president of Taiwan. He will stand in the primaries of the Kuomintang opposition party, promoting a more China-friendly policy during what is currently a period of heightened tension with Beijing.

According to Gou, he was inspired to pursue presidency by the sea goddess Mazu, who came to him in a dream encouraging him to promote peace across the Taiwan Strait. Speaking to a crowd at a temple in Taipei, he said that, “Mazu doesn’t want Taiwanese society to be so difficult. Mazu told me to come out and do something.” He added that if he was not elected to represent Kuomintang in the 2020 elections, “It means I haven’t worked hard enough,” and he will then give his full support to his party’s chosen candidate.

Foxconn is the world’s largest contract manufacturer, known predominantly for assembling Apple’s iPhones. Gou’s move away from the company comes at a sensitive time, as Foxconn tries to reduce its reliance on Apple and the iPhone maker strives to diversify its supplier base. However, it’s not the first top-level change China’s tech landscape has seen in recent times. Co-founder of Alibaba Jack Ma plans to step down within a year to allow for younger management, while Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co, retired last year.

If selected as Kuomintang’s candidate, Gou could prove to be a significant threat to Taiwan’s current president, Tsai Ing-wen, who is battling low approval ratings. Ms Tai, who became Taiwain’s first female president in 2016, has a traditionally pro-independence stance on Taiwan’s relationship with greater China. Many in China, however, disagree with Tsai’s refusal to endorse Taiwan as part of Chinese territory.

Gou says he wants to improve relations with mainland China — something which is quite feasible given his plentiful resources and experience. Foxconn already operates numerous factories in China employing hundreds of thousands of workers, plus Gou has an alliance with US President Donald Trump, thanks to Foxconn’s plans to build a $10 billion facility in Wisconsin. This is certainly a relationship that could give Gou a lot of clout if necessary.

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