Sino-US decoupling hits Chinese venture capital

FT subscribers can click here to receive Tech Scroll Asia by email.

First of all, thanks for your interest in our forthcoming US events. In case you missed it, together with the Asia Society’s Center on US-China Relations, we will be holding two events in the US, in New York on October 16 and San Francisco on October 17: The Great Decoupling and the Sino-US Race for Technological Supremacy.

We have secured a few more free seats for Tech Scroll Asia readers for the New York one, so please reply to if you wish to attend. The agenda is here. The San Francisco event, in partnership with UC Berkeley, still has a few spots left so please register here. We both hope to see you there!

Hi everyone — here is your bumper “US-China decoupling” issue. Chinese venture capital firms — once so enamoured of the US start-up scene — are pulling in their horns. The US has also considered restrictions on Chinese listings in New York. But amid all this, PayPal has secured entry into the huge Chinese digital payments market. Switching to India, New Delhi has unveiled its surveillance ambitions and IT specialists are finding plenty of jobs in the US. Oh, and Hyundai is moving into “urban air mobility” (flying cars). 

The Big Story — exclusive

US-China decoupling is hitting venture capital hard. Chinese VC firms used to make big investments into US start-ups but that is changing fast, according to an exclusive in the Financial Times. Spooked by US national security reviews, Chinese VC investments into the US this year have fallen to $4bn, down from almost $7bn in the same period last year.

Key implications

Cfius, the US review panel on foreign investment, is the main obstacle. The panel is heightening scrutiny over Chinese investments and acquisitions, particularly in “critical technology” areas such as military equipment, semiconductors and a broad category of “dual use” tech that could have both civilian and military applications. Such action — and the fear of it — has clobbered the confidence of Chinese investors eyeing the US. Much of their interest is instead now focused on India and south-east Asia


The pullback in venture capital matches a broader drying-up of Chinese foreign direct investment into the US. Chinese FDI, a category that does not include venture capital, fell to $5.4bn in 2018 from $29b in 2017, according to data from Rhodium Group.

Mercedes’ top 10

A round-up of the week’s best tech stories from the FT’s Asia tech reporter Mercedes Ruehl.

  1. A report that the Trump administration was considering a ban on Chinese listings on US stock markets spooked companies. The Nikkei Asian Review points out five things to know about this (so far unverified) escalation.
  2. Huawei managed to get into Oxford. The Chinese company found a way to gain access to some of the UK’s most promising early stage technology: a stake in the company that commercialises research at the university.
  3. So much for a Trump administration crackdown on H-1B visas curtailing foreign talent in the US. Google, Facebook, Apple and Amazon have increased the number of Indian IT specialists they employ to levels higher than in the Obama years.
  4. Undeterred by the WeWork IPO fiasco, SoftBank has acquired a big stake in Japanese rental apartment operator MDI, together with Indian hotel start-up Oyo.
  5. ByteDance, China’s biggest unlisted private company and the owner of TikTok, is apparently profitable.
  6. Uber co-founder Travis Kalanick is quietly working on a cloud kitchen company and his plans include Asia. He has invested in India’s largest shared-kitchen company, according to a South China Morning Post report
  7. The family office of Brexiter James Dyson has relocated to Singapore and is hiring. That’s on top of the 2,000 jobs the British appliance maker, which has moved its office to the Asian city, plans to add in south-east Asia.
  8. Chinese car start-up claims to have found a workaround to US tariffs on Chinese goods by using artificial intelligence and 3D printing.
  9. Cue The Jetsons clichés. Hyundai has become the latest company to attempt building a flying car. Or as the South Korean company prefers to call it: “a division dedicated to urban air mobility”.
  10. I leave you with sobering thoughts from the FT’s John Thornhill, who bemoans the blind-faith thinking that technology alone will solve the world’s climate change problem.

When sages speak

  • OK, so this is not directly tech. But concerns over alleged Chinese espionage in the US is one of the main forces behind US-China tech decoupling so this report by CSIS, the Washington-based think-tank, is in fact relevant. It lists 137 publicly reported instances of Chinese espionage directed at the US since 2000.
  • Military technology is not really our bag — but given the enormous parade in Beijing this week, we are moving with the zeitgeist. This very fine report by C4ADS goes into depth on the vexed issue of China’s military-civil-fusion programme, which does much to fuel the “dual use” suspicions that underlie our Big Story this week.

Heard by Henny

What will be the takeaways from the implosion of WeWork? Well, one might be that being the largest — and among the highest paying — office space tenant in town might not be such a good idea. Reality is exerting a downdraught on office rental demand in several cities already.

But there is one segment of the real estate market that looks more durable: logistics. “Logistics is our highest conviction global investment theme today,” said Ken Caplan, global co-head of Blackstone real estate. This week Blackstone announced the purchase of another $5.9bn worth of US warehouses from Colony Capital.

And logistics these days are high tech. The warehouses in China of ESR Cayman, an Asia-focused ecommerce and logistics start-up, are a prime example. At one logistics centre in Shanghai, robots moved cartons to trucks and delivery vans in a carefully choreographed dance. The company is hoping all this will parlay into a Hong Kong listing this year to raise between $1bn and $1.5bn, perhaps one of the biggest splashes of the year. 

Read the story from Henny Sender, the FT’s chief correspondent of international finance, here.

In the spotlight

Opening Day Of The Mobile World Congress...Dan Schulman, president and chief executive officer of PayPal Holdings Inc., gestures as he speaks during a keynote session at the Mobile World Congress in Barcelona, Spain, on Monday, Feb. 22, 2016. Mobile World Congress, an annual phone-industry event organized by GSMA Ltd., runs from Feb 22 to Feb 25. Photographer: Pau Barrena/Bloomberg

© Bloomberg

PayPal became the first foreign company to enter China’s huge but fiercely competitive digital payments market, signing this week to acquire a local player called Guofubao or, in English, GoPay. The move allows PayPal to steal a march on Visa and Mastercard, which are among those foreign companies that have been kept waiting by Chinese authorities for licences in spite of changes in 2017 that removed formal obstacles to market access.

Dan Schulman, PayPal’s chief executive, pictured above, thinks China’s market is big enough to support several participants. Indeed, it is enormous: there are forecast to be 956m active mobile payment users by 2023, with total payments valued at $96.7tn. The downside, though, is that Alibaba’s Alipay and Tencent’s WeChat Pay already have the market pretty much sewn up.

Smart data

A graphic with no description

Move over Beijing and London. New Delhi is planning to become one of the world’s top surveillance cities. The city government will install 300,000 smart cameras to upgrade its crime-fighting potential. 

There’s still some catching up to do. According to a survey by consumer site Comparitech, the city has only about 10 CCTV cameras per 1,000 people, compared with 40 in Beijing and 68 in London. But privacy campaigners in India are worried — especially as the country is yet to introduce any personal data privacy laws. 

“There’s a high chance that the government will be tempted to use the facial recognition data for highly dubious purposes,” says one think-tanker. The FT’s Benjamin Parkin in Mumbai has more

Regulation round-up

There’s been a drip, drip, drip of articles on Asian countries considering broader scrutiny of Big Tech. In south-east Asia, lawmakers face challenges protecting consumers and holding tech companies accountable as the disparate region of 650m leaps online. Just take Singapore’s fake news laws, which come into force today.

But a more unified approach to regulating Big Tech may be developing. Initiatives include a push from Indonesia to join forces with Thailand, Vietnam and the Philippines — together 80 per cent of the region’s population — in demanding action from Google, Facebook and others on content regulation and tax policy. Lobby groups are (unsurprisingly) unhappy. More here.

We always want to hear your thoughts and feedback, so please drop us an email at

Thanks to the Courtesy of :

Leave a Reply