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Hellobike, survivor of China’s bike-sharing craze, goes electric

Just two years ago, investors were heavily pouring money into China’s dockless bike-sharing startups. Now that boom has busted with derelict bikes littering the streets of cities.

Meanwhile, a new race has started for two-wheelers with motors — and one of the main players is a survivor from the bike-sharing craze. Blessed with fundings from the world’s most valuable fintech company Ant Financial through its Series D to F funding rounds, Hellobike provides a range of mobility services such as shared e-bikes and rented electric scooters to its 230 million registered users.

Electric push

Hellobike first launched in 2016 by deploying shared bikes in smaller cities and towns — where Ofo and Mobike were largely absent early on — rather than large urban centers like Beijing and Shanghai. This allowed Hellobike to largely avoid the cash splurging competition against Ofo and Mobike.

Ofo is now battling a major financial crisis as it struggles to repay user deposits. Its archrival Mobike has slowed down expansion since it was sold to Hong Kong-listed local services giant Meituan. And Hellobike, which boasts about its operational efficiency, has begun an electric push.

“When the two major powers were at war, neither of them went after electric bikes. They were fighting over bicycles,” Hellobike’s chief financial officer Fischer Chen (pictured above) recently told TechCrunch at Rise conference in Hong Kong, referring to the feud between Mobike and Ofo. “As such, there was no price war for e-bikes from the outset. The competition is rational.”

Electric two-wheeled vehicles are in high demand in the country where nearly 1.4 billion people live. According to data collected by Hellobike, nearly 300 million rides are completed on analog bikes every day in China. What many don’t realize is that pedal-assist electric bikes and pedal-free scooters together more than double that number, generating 700 million rides per day.

As with bicycles, there are benefits to rent rather than buy an electric bike in China. For one, users don’t need to worry about getting their assets stolen. Second — and, this is specific to electric vehicles — finding a safe, convenient charging spot can be a challenge in China.

That’s why Hellobike put up charging stations as it went about offering shared ebikes in 2017. At these kiosks, riders swap their battery out for a new one without having to plug in and wait. They then have the option to pay with Alipay, Ant’s mobile wallet with a one-billion user base.

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Hellobike’s bike (left and middle) and e-bike (right) models / Photo: Hellobike via Weibo

Of all the monthly two-wheeler electric bikes activity in China, Hellobike has captured 80% of the market share, Chen claims. For bike-sharing, it accounts for 60-70%. It’s hard to verify the share by looking at data compiled by third-party app trackers, for they don’t usually break out the user number for individual features. The Hellobike app is a one-stop-shop for bicycles, e-bikes, e-scooters as well as carpooling, a service complementary to its main two-wheeler business intended to “capture price-sensitive small-town consumers” according to Chen.

Similarly, Mobike has been folded into Meituan’s all-in-one service app. What further complicates the inquiry is some of Hellobike’s rides are accessed directly on Alipay rather than its own app.

When it comes to competition in electric two-wheelers, Chen maintained that other challengers are “relatively small” and that acquiring online users has become “very difficult.” For Hellobike, getting existing customers to try out new features takes as much effort as “adding a new tab to its app,” Chen suggested.

But other internet giants have also set their sight on plugged-in micromobility. Both Mobike and ride-sharing leader Didi Chuxing have their own e-bike sharing programs. It won’t be an easy game, as all contenders need to cope with China’s increasingly strict rules for electric bicycles.

Scooter rental is next

What’s for certain is that Hellobike has big ambitions for electric micromobility. While shared bikes and e-bikes are meant for one-off uses, Hellobike plans to rent out e-scooters for longer swathes of time as many people might want the powered-up vehicles for their daily commute.

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Hellobike’s electric scooter. Caption: “App-enabled lock. Smart anti-theft. Real-time location tracking for checking the vehicle’s status.” / Photo: Hellobike homepage  

Hellobike founded a new joint venture last month to fulfill that demand. Joining forces with Ant — which is controlled by Alibaba founder Jack Ma — and China’s top battery manufacturer CATL, Hellobike is launching a rental marketplace for its 25 km/h e-scooters targeted at millions of migrant workers in Chinese cities.

“People might be able to afford an e-scooter that costs several thousand yuan [$1 = 6.88yuan], but they might be leaving the city after a year, so why would they buy it? So we come in as a third-party partner with a new rental model through which people pay about 200 yuan a month to use the scooter,” explained Chen. “By doing so, we convert people from buying vehicles to paying for services, renting the vehicles.”

The three shareholders will also work to install more battery-swapping stations nationwide that not only recharge Hellobike’s shared e-bikes but also its e-scooters, that will be made by manufacturing partners.

“We function as a platform and won’t compete with traditional scooter manufacturers,” suggested Chen. “They still get to use their own designs and SKUs [stock keeping units], but we will put smart hardware into their models… so users know where their vehicles are… and they can unlock the scooters with a QR code just like they do with a shared bike or e-bike.”

Hellboke has raised at least $1.8 billion to date, according to public data compiled by Crunchbase. Bloomberg reported in April that it was seeking to raise at least $500 million in a new funding round. The company declined to comment on its fundraising progress.

When it comes to financial metrics, Chen, a veteran investment banker, declined to disclose whether Hellobike overall is profitable but said the company “performs much better than its competitors” financially. The most profitable segment, according to the executive, is the electric bike business.

As for bicycles, Chen noted that China’s main bike-sharing companies are “no longer burning money” since they’ve raised prices in recent times. Hellobike’s bike unit has achieved cash-flow positive during the warmer, peak seasons, Chen added.

U.S. slams Alibaba and its challenger Pinduoduo for selling fakes

China’s biggest ecommerce company Alibaba was again on the U.S. Trade Representative’s blacklist over suspected counterfeits sold on its popular Taobao marketplace that connects small merchants to consumers.

Nestling with Alibaba on the U.S.’s annual “notorious” list that reviews trading partners’ intellectual property practice is its fast-rising competitor Pinduoduo . Just this week, Pinduoduo founder Colin Huang, a former Google engineer, wrote in his first shareholder letter since listing the company that his startup is now China’s second-biggest ecommerce player by the number of “e-way bills”, or electronic records tracking the movement of goods. That officially unseats JD.com as the runner-up to Alibaba.

This is the third year in a row that Taobao has been called out by the U.S. government over IP theft, despite measures the company claims it has taken to root out fakes, including the arrest of 1,752 suspects and closure of 1,282 manufacturing and distribution centers.

“Although Alibaba has taken some steps to curb the offer and sale of infringing products, right holders, particularly SMEs, continue to report high volumes of infringing products and problems with using takedown procedures,” noted the USTR in its report.

In a statement provided to TechCrunch, Alibaba said it does “not agree with” the USTR’s decision. “Our results and practices have been acknowledged as best-in-class by leading industry associations, brands and SMEs in the United States and around the world. In fact, zero industry associations called for our inclusion in the report this year.”

Pinduoduo is a new addition to the annual blacklist. The Shanghai-based startup has over the course of three years rose to fame among China’s emerging online shoppers in smaller cities and rural regions, thanks to the flurry of super-cheap goods on its platform. While affluent consumers may disdain Pinduodou products’ low quality, price-sensitive users are hooked to bargains even when items are subpar.

“Many of these price-conscious shoppers are reportedly aware of the proliferation of counterfeit products on pinduoduo.com but are nevertheless attracted to the low-priced goods on the platform,” the USTR pointed out, adding that Pinduoduo’s measures to up the ante in anti-piracy technologies failed to fully address the issue.

Pinduoduo, too, rebutted the USTR’s decision. “We do not fully understand why we are listed on the USTR report, and we disagree with the report,” a Pinduoduo spokesperson told TechCrunch. “We will focus our energy to upgrade the e-shopping experience for our users. We have introduced strict penalties for counterfeit merchants, collaborated closely with law enforcement and employed technologies to proactively take down suspicious products.”

The attacks on two of China’s most promising ecommerce businesses came as China and the U.S. are embroiled in on-going trade negotiations, which have seen the Trump administration repeatedly accused China of IP theft. Tmall, which is Alibaba’s online retailer that brings branded goods to shoppers, was immune from the blacklist, and so was Tmall’s direct rival JD.com.

Taobao has spent over a decade trying to revive its old image of an online bazaar teeming with fakes and “shanzhai” items, which are not outright pirated goods but whose names or designs intimate those of legitimate brands. Pinduoduo is now asked to do the same after a few years of growth frenzy. On the one hand, listing publicly in the U.S. subjects the Chinese startup to more scrutiny. On the other, small-town users may soon demand higher quality as their purchasing power improves. And when the countryside market becomes saturated, Pinduoduo will need to more aggressively upgrade its product selection to court the more sophisticated consumers from Chinese megacities.

Starbucks partners with Alibaba on coffee delivery to boost China business

Starbucks is palling up with Alibaba as it seeks to rediscover growth for its business in China.

China has been a bright spot for some time for the U.S. coffee giant, but lately it has struggled to maintain growth — its China business dragged on its Q3 financials — and it is up against some ambitious new rivals, including billion-dollar startup Luckin Coffee.

One-year-old Luckin recently raised $200 million from investors and it has already built quite a presence. It claims over 500 outlets across China and it taps into the country’s mobile trends, with mobile payments and orders and delivery, too. Then there are some deep discounts aimed at getting new users, as is common with food, cars and other on-demand services.

In response, Starbucks is injecting some of that ‘New Retail’ strategy into its own China presence — and it is doing so with none other than Alibaba, the company that coined the phrase, which signifies a marriage between online and offline commerce.

The partnership between Alibaba and Starbucks is wide-ranging and it will cover delivery, a virtual store and collaboration on Alibaba’s “new retail” Hema stores.

The delivery piece is perhaps most obvious, and it’ll see Starbucks work with Ele.me, the $9.5 billion food delivery platform owned by Alibaba, to allow customers to order and receive coffee without visiting a store. The service will start in September in Beijing and Shanghai, with plans to expand to 30 cities and over 2,000 stores by the end of this year.

Starbucks is also building its app into Alibaba’s array of e-commerce sites, including its Tmall brand e-mall and Taobao marketplace. That’s a move that Starbucks President and CEO Kevin Johnson told CNBC would operate “similar to the mobile app embedded right into that experience” and open Starbucks up to Alibaba’s 500 million-plus users.

Finally, Starbucks is bringing its own “Starbucks Delivery Kitchens” to Alibaba’s Hema stores, which feature robots and mobile-based orders, that will combine Starbucks stores to boost its delivery capacity and speed.

Starbucks, as mentioned, needed a boost in China but the deal is also a major coup for Alibaba, which is battling JD.com on the new retail front as well as ambitious on-demand service Meituan. The latter is reported to have recently filed for an IPO in Hong Kong that could raise it $4 billion.

WeWork China raises $500M to triple the number of cities it covers

WeWork’s China business is getting a fresh injection of capital after it raised $500 million.

The company entered China two years ago and today it covers Beijing, Shanghai and Chengdu with nearly 40 locations. It claims 20,000 members, and it is also active in Hong Kong, which technically falls under ‘Greater China.’

The new capital comes from Trustbridge Partners, Singapore’s Temasek, SoftBank, SoftBank’s Vision Fund and Hony Capital. WeWork said it’ll be used for expansion into six new cities: those are Shenzhen, Suzhou, Hangzhou, Chengdu, Nanjing, and Wuhan. This new raise is a Series B, WeWork China previously scored a $500 million Series A last year, which was also when the Chinese entity was founded.

The company has been pretty busy over that 12-month period, most notably it scooped up its largest rival, Naked Hub, in an acquisition deal that is worth a reported $400 million and massively grew its reach.

Naked Hub builds on WeWork’s presence in Greater China by adding 24 office locations and a further 10,000 members. That’s why WeWork China’s figures are so impressive for just two years of operations. Now, this new capital will put WeWork’s own DNA into that network through this planned expansion spree.

“This investment will help WeWork fuel our mission to support creators, small businesses, and large companies across China,” WeWork CEO and co-founder Adam Neumann said in a statement. “WeWork has built an incredible team in China that supports our members every day, serving as a bridge for local companies who want to reach the world as well as for global companies that want to enter the Chinese market.”

Outside of China, WeWork is also making inroads in India — where it launched in 2017 — Korea, Japan (where it operates a joint venture with SoftBank) and Southeast Asia, where it made an acquisition to kick-start its presence. Indeed, WeWork has a float of around $500 million for its operations in Southeast Asia and Korea, although the total pot for India is unknown at this point.

WeWork China’s big raise comes days after Hong Kong’s Campfire pulled in $18 million and Awfis in India raised $20 million.

WeWork confirms deal to buy Naked Hub, one of its main competitors in China

WeWork is buying up one of its largest competitors in China after it announced a deal to acquire Naked Hub.

The deal was widely reported by Chinese media yesterday, but WeWork has now confirmed it through a blog post from its CEO Adam Neumann. Terms of the transaction are not disclosed but Bloomberg reported that it is worth around $400 million.

Naked Hub is an offshoot of China-based luxury resort company Naked Group that was started in 2015 by Grant Horsfield and Delphine Yip-Horsfield. The company is primarily anchored in China, with most of its locations in Beijing and Shanghai, but it has expanded into Australia, Hong Kong and Vietnam. All told, it claims to have 10,000 members across its 24 office locations.

Even though a deal to merge with Singapore-based JustCo was called off, Naked Hub had emerged as one of WeWork’s fiercest competitors in China with the ambition to continue that battle in Southeast Asia and other markets, as I wrote last year.

WeWork isn’t commenting at this point about how it plans to integrate the two brands, but its CEO Neumann paid tribute to the Naked Hub business.

“We have found an equal who shares our thinking about the importance of space, community, design, culture, and technology. Together, I believe we will have a profound impact in helping businesses across China grow, scale, and succeed,” he wrote.

“China-born naked Hub and WeWork may come from vastly different backgrounds, but there is more that binds us than separates us. The values we share toward creating a vibrant community for our members by using design, technology, and hospitality are core to how both companies are successful,” said Horsfield, Naked Group’s founder and chairman.

Naked Hub may be a growing threat to WeWork China, but it is far from the only major competitor. Unicorn Ucommune — which changed its name from URwork following a lawsuit from WeWork — is perhaps the largest profile Chinese challenger.

WeWork launched in China in 2016 via Shanghai. Today it said it has 13 locations in Greater China with plans to increase that to more than 40 by the end of this year. That’s a move that it said will quadruple its membership numbers in China from 10,000 to 40,000.

The deal is WeWork’s second acquisition of a competitor in Asia, its first being a deal to buy SpaceMob, a then 1.5-year-old company in Singapore, last year.

The company has been lining its pockets to fuel a big push into Asia.

Last year, the firm span out a WeWork China entity backed by $500 million from investors, while capital also went to WeWork Japan — a unit that investor SoftBank owns half of — and WeWork Pacific, its business focused on Southeast Asia and other parts of the region which also got a $500 million to spend. All of that capital was part of a $4.4 billion investment round in WeWork from SoftBank.

Here's the woman who offered U.S. citizenship to the highest bidder at the Shanghai marriage market

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That’s certainly one way to get noticed.

At the Shanghai marriage market, parents of single folks gather to show off their children’s credentials, in hopes of netting them a spouse.

But over the weekend, a woman, dressed in a wedding gown and holding her American passport, caught the eye of many for the prize she was dangling — U.S. citizenship.

Image: Weibo

Alas, she wasn’t for real.

The woman, has been identified as Erin Peisert, an American performance artist currently based in Shanghai.

In viral photos circulating on Weibo and Instagram, she’s shown holding up a sign saying “USA Citizenship through marriage to the highest bidder,” as she is surrounded by curious onlookers. Read more…

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