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The Hong Kong Internet Service Providers Association warns that restricting online access would be ruinous for the region

After Hong Kong’s leader suggested she may invoke emergency powers that could potentially include limiting Internet access, one of city’s biggest industry groups warned that “any such restrictions, however slight originally, would start the end of the open Internet of Hong Kong.”

While talking to reporters on Tuesday, Hong Kong Chief Executive Carrie Lam suggested the government may use the Emergency Regulations Ordinance in response to ongoing anti-government demonstrations. The law, which has not been used in more than half a century, would give the government a sweeping array of powers, including the ability to restrict or censor publications and communications. In contrast to China’s “Great Firewall” and routine government censorship of internet services, Hong Kong’s internet is currently open and mostly unrestricted, with the exception of laws to prevent online crime, copyright infringements and the spread of obscene material like child pornography.

In an “urgent statement” addressed to Hong Kong’s Executive Council, the Hong Kong Internet Service Providers Association (HKISPA) said that because of technology like VPNs, the cloud and cryptographies, the only way to “effectively and meaningfully block any services” would entail putting all of Hong Kong’s internet behind a large-scale surveillance firewall. The association added that this would have huge economic and social consequences and deter international organizations from doing business in Hong Kong.

Furthermore, restricting the internet in Hong Kong would also have implications in the rest of the region, including in mainland China, the HKISPA added. There are currently 18 international cable systems that land, or will land, in Hong Kong, making it a major telecommunications hub. Blocking one application means users will move onto another application, creating a cascading effect that will continue until all of Hong Kong is behind a firewall, the association warned.

In its statement, the HKISPA wrote that “the lifeline of Hong Kong’s Internet industry relies in large part on the open network,” adding “Hong Kong is the largest core node of Asia’s optical fiber network and hosts the biggest Internet exchange in the region, and it is now home to 100+ data centers operated by local and international companies, and it transits 80%+ of traffic for mainland China.”

“All these successes rely on the openness of Hong Kong’s network,” the HKISPA continued. “Such restrictions imposed by executive orders would completely ruin the uniqueness and value of Hong Kong as a telecommunications hub, a pillar of success as an international financial centre.”

The HKISPA urged the government to consult the industry and “society at large” before placing any restrictions in place. “The HKISPA strongly opposes selective blocking of Internet Services without consensus of the community,” it said.

Hong Kong-based fintech startup Qupital raises $15M Series A to expand in mainland China

Qupital, a fintech startup that bills itself as Hong Kong’s largest trade financing platform for SMEs, has closed a $15 million Series A led by CreditEase FinTech Investment Fund (CEFIF), with participation from returning investors Alibaba Hong Kong Entrepreneurs Fund and MindWorks Ventures, both participants in its seed round. To date, Qupital has raised $17 million, including a seed round two years ago, and will use its latest funding to expand its supply chain financing products, launch in mainland Chinese cities and hire more people for its tech development and risk management teams.

CreditEase, which provides loans and other financial services for SMEs in China, will act as a strategic investor, aiding with Qupital’s geographic expansion. Existing investor Alibaba has already helped Qupital reach small businesses on its platform. Qupital will open branches in Chinese cities including Shanghai, Hangzhou, Guangzhou and Shenzhen, along with setting up a new technology center in the Guangdong-Hong Kong-Macau Greater Bay Area for talent and tech development. In total, it will hire about 100 people for its Hong Kong office this year.

Founded in 2016, Qupital offers lending for SMEs that frequently have cash flow issues because they are in a cycle of waiting for invoices to be paid. Qupital’s loans cover most of the value of an invoice, then matches that with investors and funders who cover the cash with the expectation of a return. The company makes money by charging SMEs a service fee that is a fixed percentage of the total invoice value and then a discount fee, and taking a percentage of net gains made by investors.

Qupital has now processed 8,000 trades, totaling HKD $2 billion in value. It won’t disclose how many SMEs it has worked with, but co-founder and chairman Andy Chan says that number is in the hundreds.

Chan tells TechCrunch that in China, Qupital will not compete directly against traditional financial institutions, because it focuses on financing the Hong Kong business entities of Chinese companies in U.S. and Hong Kong currency, instead of onshore renminbi. It will also target SMEs underserved by traditional lenders, by using alternative data sources to determine their creditworthiness.

In a prepared statement, CEFIF managing director Dennis Cong said “The growing volume of SME and cross-border trading drives a huge demand for alternative financing for SME’s who are underserved in the market and opportunities for investors to earn a decent risk-adjusted return. We look forward to working with Qupital to broaden its source of capital base and create unparalleled investment opportunities for CreditEase.”

Xiaomi officially files for Hong Kong IPO to raise a reported $10 billion

Xiaomi’s much-speculated IPO process has kicked off officially after the Chinese smartphone giant filed to go public on the Hong Kong Stock Exchange.

The first draft of its filing does not include proposed financial details of its listing, but the South China Morning Post reports that the eight-year-old company is shooting to raise $10 billion at a valuation of $100 billion. Beyond the year’s largest IPO — and the world’s largest raise since Alibaba in New York in 2014 — the listing could make Xiaomi China’s third largest technology company based on market cap.

Xiaomi operates differently to most companies in that it sells smartphones and smart devices at waiver thin margins, relying on services and efficient use of components to pull in profit. Beyond phones, it operates its own retail business and internet services such as payments and streaming. That strategy — which CEO Lei Jun calls a “triathlon” — is focused on services for growth since Xiaomi has capped its maximum net profit for hardware at five percent.

Xiaomi said in its filing that it has over 190 million people using its MIUI version of Android — that’s a good insight into how many of its devices are in the market — while it has sold over 100 million connected devices, which include smartwatches, fitness bands, smart scales and more. The company claims its users are active on their phones for 4.5 hours per day, and that there are 1.4 million customers who own five or more connected devices.

The company is ranked fourth based on global smartphone shipments, according to analyst firm IDC, and it is one of the few OEMs to buck slowing sales in China.

The company’s financials are impressive.

The company booked sales of 114.6 billion RMB ($18 billion) in 2017, up from 68.4 billion RMB in 2016 and 66.8 billion in 2015.

Xiaomi posted a 43.9 billion RMB ($6.9 billion) loss in 2017 on account of issuing preferred shares to investors (54 billion RMB) but the growth story is healthy. Operating profit jumped to 12.2 billion RMB ($1.92 billion), up more than three-fold on the previous year.

Smartphones continue to represent the bulk of sales at 70 percent, with smart devices pulling in 20 percent more and services responsible for the remainder.

China is, as you’d expect, the primary revenue market but Xiaomi is increasingly less dependent on its homeland. For 2017 sales, China represented 72 percent, but it had been 94 percent and 87 percent, respectively, in 2015 and 2016. India is Xiaomi’s most successful overseas venture, having built the business to the number one smartphone firm based on market share, and Xiaomi is pledging to double down on other global areas.

Interestingly there’s no mention of expanding phone sales to the U.S., but Xiaomi has pledged to put 30 percent of its IPO towards growing its presence in Southeast Asia, Europe, Russia “other regions.” Currently, it said it sells products in 74 countries, that does include the U.S. where Xiaomi sells accessories and non-phone items.

Another 30 percent is earmarked for R&D and product development, while a further 30 percent will be invested in Xiaomi’s internet of things and smart product ecosystem. The remaining 10 percent is down for working capital.

Xiaomi isn’t disclosing the exact percentage stakes that its major investors hold, but CEO Lei Jun is believed to be one of the most significant shareholders. The IPO could make him China’s richest man, according to reports which suggest he controls a stake of over 75 percent.

Uber forced to raise prices by up to 80% in Hong Kong

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If you’re going to be hailing an Uber in Hong Kong — expect to pay a lot more, starting today.

The ride hailing giant has hiked its minimum fare in the territory by as much as 80 percent, a decision that came after an “evaluation of the marketplace.”

Uber announced that the price hike starting Monday would affect UberX, UberBlack and UberAssist services.

The company will also be introducing an additional booking fee of $0.64 (HK$5).

For UberX for example, the minimum fare from Kowloon to the New Territories would be raised from $3.20 (HK$25) to $5.11 (HK$40) — with the booking fee charge, that’s $5.75 (HK$45). Read more…

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David Beckham managed to piss just about everyone off with his new Facebook post

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Looks like there’s just no winning this time for David Beckham.

The English football star probably lost a bunch of Chinese fans after a post in which he referred to Hong Kong as China.

Beckham posted a video of Hong Kong on Instagram and Facebook, saying he had a “great 48 hours in China” — something netizens quickly picked up on.

It’s a touchy subject for many in Hong Kong, which was handed back to China in 1997 after over a century of British rule. Plenty of Hong Kongers still see the island as largely independent from the mainland. Read more…

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500 Startups reboots its efforts in China, but there’s no dedicated fund

edith-yeung 500 Startups is rebooting its efforts in Greater China after it hired a new head of business for the region, which covers mainland China, Hong Kong and Taiwan. Edith Yeung, a former executive with browser firm Dolphin Mobile, is taking up the reins. The VC firm had been without a recognized setup in China for some time after former lead Rui Ma relocated to the 500’s U.S. operations… Read More

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