VPN booms as countries around the world mull TikTok bans

As countries around the world ban or threaten to restrict TikTok, interest in virtual private networks has spiked.

The use of VPNs can let users access an online service from an encrypted tunnel and thus bypass app blocks. “We are seeing an increasing number of governments around the world attempting to control the information their citizens can access,” observes Harold Li, vice president of ExpressVPN, which claims to have over 3,000 servers across 94 countries. “For this reason, VPNs are used to access blocked sites and services by many worldwide.”

Indeed, ExpressVPN’s website saw a 10% week-over-week increase in traffic following the U.S. government’s announcement of a potential TikTok ban. The VPN service recorded similar trends in Japan and Australia, where it saw a 19% and 41% WoW increase in traffic respectively after the governments said they might block TikTok.

When India officially shut down TikTok, ExpressVPN saw a 22% WoW jump in web traffic. In Hong Kong, where TikTok voluntarily pulled out following the enactment of the national security law, the VPN service logged a 10% WoW traffic growth.

Not a ‘magic bullet’

VPNs have long been a popular solution for people to elude restrictions on the internet, be it censored content or app bans. We wrote about Hong Kong residents flocking to VPN services in anticipation of heightened censorship, but the use of a VPN is not a ‘magic bullet,’ as a Hong Kong media scholar warned.

Governments can make it difficult for average users to access VPNs by removing them from local app stores. Users will have to register in another regional app store, which often involves roadblocks like owning a local credit card. Countries can also illegalize the use of VPNs, imposing fines on users and even imprisoning VPN vendors as China did.

Depending on how an app block plays out in practice, there may be other challenges unsolvable by VPNs. “We don’t know how potential bans may be enforced yet, and it may require users to jump through other hoops on top of using a VPN, such as removing their local SIM card,” suggested Li.

Users can look for alternatives to banned apps, but switching services can entail high costs, especially when a product has strong network effects. TikTok, for instance, enjoys a ‘content network effect’ that makes it difficult for rivals to match its user experience, as my former colleague Josh Constine pointed out.

Similarly, those who worry about a potential WeChat ban in the U.S. may simply lack a viable alternative to the Chinese messenger with over 1 billion users. For members of the Chinese diaspora in the U.S., WeChat is the only way for them to reach their families and friends in China, where it’s the dominant chat app while major Western social networks are unavailable.

Smaller apps are flying under the radar of the authority. Unlike rivals Telegram and Whatsapp, encrypted messenger Signal is still accessible in China — for now, and the app climbed 51 spots in the China rank of iOS social apps just between August 7-9, currently sitting in the 36th place. Others in China use iMessenger, which also remains unblocked, to stay in touch with their U.S. contacts, but the option is exclusive to iPhone users.

Individuals and businesses worldwide increasingly need to adapt to service shutdowns or risk losing access to the free and open internet. As Telegram founder Pavel Durov lamented: “[T]he U.S. move against TikTok is setting a dangerous precedent that may eventually kill the internet as a truly global network (or what is left of it).”

More Chinese phone makers could lose US apps under Trump’s Clean Network

Over a third of the world’s smartphone sales come from Chinese vendors Huawei, Xiaomi and Oppo. These manufacturers have thrived not only because they offer value-for-money handsets thanks to China’s supply chains, but they also enjoy a relatively open mobile ecosystem, in which consumers in most countries can freely access the likes of Google, Instagram and WhatsApp.

That openness is under attack as the great U.S.-China tech divide inches closer to reality, which can cause harm on both sides.

The Trump Administration’s five-pronged Clean Network initiative aims to strip away Chinese phone makers’ ability to pre-install and download U.S. apps. Under U.S. sanctions, Huawei already lost access to key Google services, which has dealt a blow to its overseas phone sales. Oppo, Vivo, Xiaomi, and other Chinese phone makers could suffer the same setback as Huawei, should the Clean Network applies to them.

For years, China has maintained a closed-up internet with the Great Firewall restricting a bevy of Western services, often without explicitly presenting the reasons for censorship. Now the U.S. has a plan that could potentially keep Chinese apps off the American internet.

The Clean Network program was first announced in April as part of the Trump Administration’s efforts in “guarding our citizens’ privacy and our companies’ most sensitive information from aggressive intrusions by malign actors, such as the Chinese Communist Party.”

Beijing said Thursday it’s firmly opposed to U.S. restrictions on Chinese tech firms and blasted that the U.S. uses such actions to preserve its technology hegemony.

Many on Chinese social media compare Trump’s Clean Network proposal to routine cyberspace crackdowns in China, which regulators say are to purge pornography, violence, gambling, and other ‘illegal’ activities. Others that espouse a free internet lament its looming demise.

It’s unclear when the rules would be implemented and how they would be enforced. The program also aims to remove ‘untrusted’ Chinese apps from US app stores. A TikTok ban is looking less likely as Microsoft nears a buyout, but other Chinese apps also have a big presence in the U.S. Many, like WeChat and Weibo, target the diaspora community, while players like Likee and Zynn, owned by Chinese firms, are making waves among local users.

Chinese firms are already hedging. Some like TikTok have set up overseas data centers. Others register their entities abroad and maintain U.S. offices, while still resorting to China for cheaper engineering talents. It’s simply impractical to investigate — and hard to determine — every app’s Chinese origin.

Under the program, carriers like China Mobile are not allowed to connect with U.S. telecoms networks, which could prevent these services from offering U.S. roaming to Chinese travelers.

The initiative also tells U.S. companies not to store information on Chinese cloud services like Alibaba, Tencent, and Baidu. Chinese cloud providers don’t find many clients in the U.S., perhaps except when they are hosting data for their own services, such as Tencent games serving American users.

Lastly, the framework wants to ensure U.S. undersea cables connecting to the world “are not subverted for intelligence gathering by the PRC at hyper-scale.”

Such sweeping restrictions, if carried out, will almost certainly trigger retaliation from China. But what bargaining chips are left for Beijing? Apple and Tesla are the few American tech behemoths with significant business interest in China.

Hollywood’s Triller sets its own rhythm even as it gains from TikTok troubles

Triller, the short video app backed by a Hollywood mogul and music celebrities, is rapidly ballooning in both user size and valuation. It’s now seeking a new funding round of $250 million that will push its valuation to over $1 billion, according to a source with knowledge of the matter.

That’s a leap from its $130 million valuation reported last October. Triller’s founder and CEO Mike Lu declined to comment, although another executive confirmed the funding with Dot.la.

The app has emerged as what many see as a TikTok replacement, but it has been around since 2015, two years before TikTok’s debut, and has its own “identity and ecosystem,” the founder insisted.

According to Lu, Triller was already recording “significant growth” even before the Trump administration began mulling a ban or a forced sale of TikTok, although he also admitted the app is getting a boost from the TikTok backlash. 35 million new users joined Triller just within the last few days. The app has so far collected 250 million downloads worldwide.

The Los Angeles-based startup still has a long way to catch up with TikTok, which crossed 2 billion downloads in April. The rivals both tout their capability to let users match videos with music, a defining feature for their success. In fact, Triller recently filed a lawsuit accusing its Chinese rival for infringing its patent for “creating music videos synchronized with an audio track.”

Triller attributed part of its achievement to majority investor Proxima Media, the Hollywood studio founded by Ryan Kavanaugh. Lu said his company has spent zero in marketing to reach its size, something that “has never happened in technology history.” But Ryan, the film producer and financier behind hits like The Fast and the Furious and The Social Network, has no doubt brought unmatched media exposure, celebrity connections, and naturally, their fans who convert to Triller users.

Triller has also secured deals with major record labels, clearing the way for users to make music-centered videos. Its roster of angel investors include Snoop Dogg, The Weekend, Marshmellow, Lil Wayne, among other big names.

“Ryan is second to none in Hollywood, entertainment and media,” said Lu. “I give [Proxima Media] a ton of credit for helping us get to this stage, this massive growth. I don’t think we could have done it without them.”

Celebrity-quality content is one thing that sets Triller apart from TikTok, said Anis Uzzaman, general partner of Pegasus Tech Ventures, which invested in Triller in a strategic round.

“TikTok tries to grow its own celebrities. Triller already has all the big celebrities,” the investor said, refering to videos shared by Alicia Keys, Cardi B, Marshmellow, and Eminem via Triller, which is now a popular place for releasing songs. TikTok has also become a testing ground for artists to test new works.

Meanwhile, the app strives to keep its ordinary users engaged, one thing TikTok has done very well. For example, it boasts of AI-powered editing features that enable users to make professionally looking music videos. It’s also lanched a Billboard chart that ranks the biggest Triller songs, leveling the playing field between emerging creators and celebrities.

“It gives the young people a feeling that they are close to celebrities,” observed Uzzaman.

The investor also believes there’s room for multiple players in the short video space, akin to how Uber and Lyft co-exist. Indeed, China has seen TikTok’s Chinese version Douyin going head to head with Kuaishou in recent years.

For Lu, Triller’s identity is anchored in music, especially hip hop music in the early days, with a demographic of 18-25.

Triller’s App Store images.

TikTok, in comparison, can be everything from light-hearted dance videos to goofy skits. One gets a hint of their differences from the visuals they picked for their App Store pages.

TikTok’s App Store images.

The TikTok alts

The fate of TikTok could still change dramatically in the coming weeks, although so far, there’s a decent chance that Microsoft may scoop up the Chinese-owned app. Some startups are betting that their US identity will help them win over users from TikTok, but a survey done by California-based Creative Digital Agency suggests that may not be the case.

65% of the hundreds of TikTok users it asked said they won’t feel more comfortable with their data policies even if TikTok were an American company, and 84.6% believe the proposed ban is motivated by political concerns.

“The vast majority believe that all American social media platforms are doing exactly the same thing in mining personal data, which is the big privacy concern,” the agency’s managing director Kevin Almeida suggested.

That said, TikTok’s growth has slowed down recently, as some creators hedge the risk of losing followers in the case of a ban. The app’s installs in the US last week were down 7% compared to the four-week average, shows data from analytics firm Sensor Tower. Its total downloads in the US are close to 190 million.

Triller is hardly the only US startup thriving against the backdrop of TikTok’s uncertain future. At least three other micro-video apps have seen new downloads in the hundreds of thousands in the US over the past week, according to Sensor Tower, and two are rooted in China.

They are Byte, Dom Hofmann’s new app after Vine was shuttered by Twitter; Zynn, which is run by Kuaishou, TikTok’s Chinese homegrown rival; and Likee, operated by Bigo, a Singapore-based company acquired by China’s YY. These apps totaled downloads of 2.9 million, 6.4 million, and 16.3 million in the US, respectively.

Growth of TikTok’s old rival Dubsmash isn’t as remarkable but the app has the most US installs among the competitors, reaching 41.6 million recently.

In comparison, Triller has accumulated 23.8 million downloads in the US. The app has seen a surge in downloads in India following the country’s TikTok ban, but it has also ranked among the top photo and video apps across multiple European and African countries where TikTok remains accessible.

The company operates a global team of 350 employees, most of whom are in the US and work on content operation and engineering.

China’s electric SUV maker Li Auto raises $1.1 billion in U.S. IPO

Trade tensions between China and the U.S. have not stopped Chinese companies from eyeing to list on American stock exchanges. Li Auto, a five-year-old Chinese electric vehicle startup, raised $1.1 billion through its debut on Nasdaq on Thursday.

The Beijing-based company is targeting a growing Chinese middle class who aspire to drive cleaner, smarter, and larger vehicles. Its first model, sold at a subsidized price of 328,000 yuan or $46,800, is a six-seat electric SUV that began shipping end of last year.

Li Auto priced its IPO north of its targeted range at $11.5 per share, giving it a fully diluted market value of $10 billion. It also raised an additional $380 million in a concurrent private placement of shares to existing investors.

The IPO arrived amid a surge of investor interest in EV makers. Tesla’s shares have skyrocketed in the last few quarters. Li Auto’s domestic rival Nio, which raised a similar amount in a $1 billion float in New York back in 2018, also saw its stock price rally in recent months.

Li Auto is one step ahead of its Chinese peer Xpeng in planning its first-time sale. The six-year-old competitor said last year it may consider an IPO. Last month, a source told South China Morning Post that Xpeng was getting ready for the listing.

Founders of China’s emergent EV startups are often shrewd internet veterans who are well-connected in the venture capital and marketing world, attracting investment dollars in the billions. Li Auto, for instance, counts China’s food delivery mogul Wang Xing, boss of Meituan Dianping, as its second-largest shareholder after its CEO Li Xiang. TikTok parent ByteDance shelled out $30 million in its Series C round.

Investors are in part emboldened by Beijing’s national push to electrify China’s auto industry. The question, then, is whether these startups have the right talent and resources to pull things off in an industry that traditionally demands a much longer development cycle.

Wallace Guo, a managing partner at Li Auto’s Series B investor Taihecap, admitted that “the nature of auto consumption, unlike internet products evolving through trial and error, manufacturing a car, is a strategic move with sophisticated system, very long value chain, requiring huge investment and resources and any error can be fatal.”

Mingming Huang, chief executive of Future Capital, said that “it was a no brainer in 2015 to be the first investor” in Li Auto. The venture capitalist said Li, who ran a popular car-buying online portal before getting into manufacturing, “has the rare combination of being a relentless talent as well as a top-notch product manager that excels in creating value for all stakeholders.”

Customers testing Li Auto’s SUV in China. Photo: Li Auto

Both investors believed Li Auto has picked the right path of zeroing in on extended-range electric vehicles. EREVs come with an auxiliary power unit, often a small combustion engine, that ensures cars can still operate even when a charging station is not immediately available, a shortage yet to be solved in China.

As my colleague Alex pointed out, Li Auto is on a trajectory similar to that of its peer Nio, going public after a short history of delivering to customers. The startup only began shipping its first model last December and delivered just over 10,000 units as of June, its prospectus showed.

The startup is still deep in the red, losing 2.44 billion yuan ($350 million) in 2019, up from a net loss of 1.53 billion yuan in 2018. It did finish the first quarter of 2020 with a gross profit of $9.6 million after it began monetization.

Its annual revenue — which comprised mostly of car sales and a small portion from services like charging stalls — stood at 284 million yuan ($40.4 million) in 2019, a tiny fraction of Nio’s $1.12 billion. But Nio also amassed a greater net loss of $1.62 billion in the same year. In contrast, Tesla has been profitable for four straight quarters.

Li Auto’s investors are clearly bullish that the Chinese startup can one day match Tesla’s commercial success.

“Xiang has a deep understanding of the preferences and pain points of car owners and drivers in China. Li Auto is the first in China, to successfully commercialize extended-range electric vehicles, solving the challenges of inadequate charging infrastructure and battery technologies constraints,” Huang asserted.

“The company is able to get positive gross margin when selling the first batch of vehicles and thus with its growth in sales volume, its gross margin was well above competitors and can live long enough to become a ten billion-dollar company with this healthy business model,” said Guo.

China now accounts for nearly one-quarter of Tesla revenue

Tesla has been counting on China to maintain its sales momentum, and it seems to be on track with the plan.

In the three months ended June 30, the automaker’s revenue in China climbed 102.9% year-over-year to $1.4 billion, according to its latest SEC filing. That means China now makes up 23.3% of Tesla’s total revenues of $6 billion in the quarter, compared to just about 11% in the same period a year before.

To increase affordability for Chinese consumers, Tesla inked a 50-year lease from the Shanghai government to build a Gigafactory there, which keeps production costs down and allows it to reap local tax benefits and avoid tariffs. Under the terms of the agreement, the electric vehicle giant needs to pay 2.23 billion yuan ($320 million) in tax to China every year starting at the end of 2023. It must also sink 14.08 billion yuan in capital expenditure into the facility.

Tesla began shipping China-made Model 3 at the end of last year and is on course to add its Model Y, a mid-size electric SUV, to its production in the world’s biggest auto market, the filing shows. Earlier this month, it also started taking reservations in China for its futuristic Cybertruck, which won’t go into production until late 2022.

While shipment in China jumped in the second quarter, Tesla delivered 4.8% fewer vehicles overall in the period due to challenges prompted by COVID-19, including suspended production. The period marked the fourth straight quarter of profitability for the automaker.

After India and US, Japan looks to ban TikTok and other Chinese apps

A group of Japanese lawmakers is seeking to restrict the use of TikTok and other apps developed by Chinese firms, following the footstep of India, which has already blocked dozens of Chinese apps, and the U.S., which is floating the idea of a ban.

The decision was first reported by the Japanese national broadcaster NHK. The lawyers shared the same concern as officials in the U.S. and India that their domestic user data could end up in the hand of Beijing, and planned to submit the proposal to the Japanese government as early as September.

Japan was one of TikTok’s first overseas success cases despite being considered a tough nut for foreign internet firms to crack. The nascent localization team went all out to attract celebrity users and made its breakthrough with Kinoshita Yukina, a TV personality, after holding “six or seven rounds of discussions” with her studio. Kinoshita’s participation ushered in other stars, who brought with them flocks of fans to the platform.

In the Japanese iOS store, TikTok has consistently ranked at the top among entertainment apps and is the fifth-most downloaded app across all categories in the country as of this writing, according to research firm App Annie.

In response to scrutiny coming from Japan, a TikTok spokesperson reiterated the app’s distance from Chinese control in a statement to TechCrunch:

“There’s a lot of misinformation about TikTok out there. TikTok has an American CEO, a Chief Information Security Officer with decades of industry, U.S. military and law enforcement experience, and a U.S. team that works diligently to develop a best-in-class security infrastructure. Four of our parent company’s five board seats are controlled by some of the world’s best-respected global investors. TikTok U.S/ user data is stored in the U.S. and Singapore, with strict controls on employee access.”

Other Chinese tech giants have their eyes locked on Japan for years. Baidu, for instance, operates Simeji, one of the most popular input methods among Japanese. Line is the main chat app in the country, but WeChat is essential to Japanese businesses with Chinese ties — which there are many given China is Japan’s main trade partner. While the Indian ban is certainly a debacle for Chinese developers coveting the fastest-growing internet market, the country’s ARPU, or average revenue per user, also remains low compared to numbers in the West. Japan, on the other hand, is a much more lucrative market.

All dogs in Shenzhen, China will get microchipped by 2020

The world’s hardware haven is taking a digital leap for pets. In May, China’s southern city Shenzhen announced that all dogs must be implanted with a chip, joining the rank of the U.K., Japan, Australia and a growing number of countries to make microchips mandatory for dogs.

This week, city regulators began to set up injection stations across their partnering pet clinics, according to social media posts from the Shenzhen Urban Management Bureau.

The chip, which is said to last for at least 15 years and comes in the size of a grain of rice, is implanted under the skin of a dog’s neck. Each chip, when scanned by authorized personnel, reveals a unique 15-digit number matching the dog’s name and breed, as well as its owner’s identity and contact information — which will help reduce strays. The microchip, a radio-frequency identification (RFID) chip, doesn’t track the dog’s location; nor does the authority store its owner’s personal information, according to a local media report.

While Shenzhen’s poster child of technology Huawei is striving to phase out foreign semiconductor parts amid U.S. trade sanctions, the city is procuring imported pet chips, including American and Sweden brands, said the same report.

The Shenzhen government is footing the bill for all the implants as it aims to seize more regulatory oversight over the city’s growing pet population. Those who don’t get their dogs microchipped by November will face a fine or have to turn their pets over to regulators. The city of over 20 million residents owned around 200,000 dogs and cats in 2019, according to official data. The total number of dogs and cats nationwide grew 8.4% year-over-year to nearly 1 billion in 2019, an industry white paper showed.

Tencent wants to take full control of long-time search ally Sogou

It’s been seven years since Tencent picked up a 36.5% stake in Sogou to fend off rival Baidu in the online search market. The social and gaming giant is now offering to buy out and take private its long-time ally.

NYSE-listed Sogou said this week it has received a preliminary non-binding proposal from Tencent to acquire its remaining shares for $9 each American depositary share (ADS) it doesn’t already own. That means Sohu, a leading web portal in the Chinese desktop era and the controlling shareholder in Sogou, will no longer hold an interest in the search firm.

Sohu’s board of directors has not yet had an opportunity to review the proposal or determine whether or not to take the offer, the company stated. Sogou’s shares leaped 48% on the news to $8.51 on Monday, yet still far below its all-time high at $13.85 at the time of its initial public offering.

Founded in 2005, Sogou went public in late 2017 billing itself as a challenger to China’s biggest search service Baidu, though it has long been a distant second. The company also operates the top Chinese input software, which is used by 482 million people every day to type and convert voice to text, according to its Q1 earnings report.

Ever since the strategic partnership with Tencent kicked off, Sogou, which means “Search Dog” in Chinese, has been the default search engine for WeChat and benefited immensely from the giant’s traffic, though WeChat has also developed its own search feature.

The potential buyout will add Sogou to a list of Chinese companies to delist from the U.S. as tensions between the countries heighten in recent times. It will also allay concerns amongst investors who worry WeChat Search would make Sogou redundant. So far WeChat’s proprietary search function appears to be gleaning data mainly within the app’s enclave, from users’ news feed, user-generated articles, e-commerce stores, through to lite apps integrated into WeChat.

That’s a whole lot of content and services targeted at WeChat’s 1.2 billion active users. Many people need not look beyond the chat app to consumer news, order food, play games, or purchase groceries. But there remains information outside the enormous ecosystem, and that’s Sogou’s turf — to bring what’s available on the open web (of course, subject to government censorship like all Chinese services) to WeChat users.

The arrangement reflects an endemic practice on the Chinese internet — giants blocking each other or making it hard for rivals to access their content. The goal is to lock in traffic and user insights. For instance, articles published on WeChat can’t be searched on Baidu. Consumers can’t open Alibaba shopping links without leaving WeChat.

Sogou is hardly WeChat’s sole search ally. To capture a full range of information needs, the messenger has also struck deals to co-opt fellow microblogging platform Weibo, Quora-like Zhihu, and social commerce service Xiaohongshu into its search pool.

Imint: the Swedish firm that gives Chinese smartphones an edge in video production

If your phone takes amazing photos, chances are its camera has been augmented by artificial intelligence embedded in the operating system. Now videos are getting the same treatment.

In recent years, smartphone makers have been gradually transforming their cameras into devices that capture data for AI processing beyond what the lens and sensor pick up in a single shot. That effectively turns a smartphone into a professional camera on auto mode and lowers the bar of capturing compelling images and videos.

In an era of TikTok and vlogging, there’s a huge demand to easily produce professional-looking videos on the go. Like still images, videos shot on smartphones rely not just on the lens and sensor but also on enhancement algorithms. To some extent, those lines of codes are more critical than the hardware, argued Andreas Lifvendahl, founder and chief executive of Swedish company Imint, whose software now enhances video production in roughly 250 million devices — most of which come from Chinese manufacturers.

“[Smartphone makers] source different kinds of camera solutions — motion sensors, gyroscopes, and so on. But the real differentiator, I would say, is more on the software side,” Lifvendahl told TechCrunch over a phone call.

Smart video recording

Imint started life in 2007 as a spin-off academic research team from Uppsala University in Sweden. It spent the first few years building software for aerial surveillance, just as many cutting-edge innovations that find their first clients in the defense market. In 2013, Lifvendahl saw the coming of widespread smartphone adaptation and a huge opportunity to bring the same technology used in defense drones into the handsets in people’s pockets.

“Smartphone companies were investing a lot in camera technology and that was a clever move,” he recalled. “It was very hard to find features with a direct relationship to consumers in daily use, and the camera was one of those because people wanted to document their life.”

“But they were missing the point by focusing on megapixels and still images. Consumers wanted to express themselves in a nice fashion of using videos,” the founder added.

Source: Imint’s video enhancement software, Vidhance

The next February, the Swedish founder attended Mobile World Congress in Barcelona to gauge vendor interest. Many exhibitors were, unsurprisingly, Chinese phone makers scouring the conference for partners. They were immediately intrigued by Imint’s solution, and Lifvendahl returned home to set about tweaking his software for smartphones.

“I’ve never met this sort of open attitude to have a look so quickly, a clear signal that something is happening here with smartphones and cameras, and especially videos,” Lifvendahl said.

Vidhance, Imint’s video enhancement software suite mainly for Android, was soon released. In search of growth capital, the founder took the startup public on the Stockholm Stock Exchange at the end of 2015. The next year, Imint landed its first major account with Huawei, the Chinese telecoms equipment giant that was playing aggressive catch-up on smartphones at the time.

“It was a turning point for us because once we could work with Huawei, all the other guys thought, ‘Okay, these guys know what they are doing,'” the founder recalled. “And from there, we just grew and grew.”

Working with Chinese clients

The hyper-competitive nature of Chinese phone makers means they are easily sold on new technology that can help them stand out. The flipside is the intensity that comes with competition. The Chinese tech industry is both well-respected — and notorious — for its fast pace. Slow movers can be crushed in a matter of a few months.

“In some aspects, it’s very U.S.-like. It’s very straight to the point and very opportunistic,” Lifvendahl reflected on his experience with Chinese clients. “You can get an offer even in the first or second meeting, like, ‘Okay, this is interesting, if you can show that this works in our next product launch, which is due in three months. Would you set up a contract now?'”

“That’s a good side,” he continued. “The drawback for a Swedish company is the demand they have on suppliers. They want us to go on-site and offer support, and that’s hard for a small Swedish company. So we need to be really efficient, making good tools and have good support systems.”

The fast pace also permeates into the phone makers’ development cycle, which is not always good for innovation, suggested Lifvendahl. They are reacting to market trends, not thinking ahead of the curve — what Apple excels in — or conducting adequate market research.

Despite all the scrambling inside, Lifvendahl said he was surprised that Chinese manufacturers could “get such high-quality phones out.”

“They can launch one flagship, maybe take a weekend break, and then next Monday they are rushing for the next project, which is going to be released in three months. So there’s really no time to plan or prepare. You just dive into a project, so there would be a lot of loose ends that need to be tied up in four or five weeks. You are trying to tie hundreds of different pieces together with fifty different suppliers.”

High-end niche

Imint is one of those companies that thrive by finding a tough-to-crack niche. Competition certainly exists, often coming from large Japanese and Chinese companies. But there’s always a market for a smaller player who focuses on one thing and does it very well. The founder compares his company to a “little niche boutique in the corner, the hi-fi store with expensive speakers.” His competitors, on the other hand, are the Walmarts with thick catalogs of imaging software.

The focused strategy is what allows Imint’s software to enhance precision, reduce motion, track moving objects, auto-correct horizon, reduce noise, and enhance other aspects of a video in real-time — all through deep learning.

About three-quarters of Imint’s revenues come from licensing its proprietary software that does these tricks. Some clients pay royalties on the number of devices shipped that use Vidhance, while others opt for a flat annual fee. The rest of the income comes from licensing its development tools or SDK, and maintenance fees.

Imint now supplies its software to 20 clients around the world, including the Chinese big-four of Huawei, Xiaomi, Oppo and Vivo as well as chip giants like Qualcomm and Mediatek. ByteDance also has a deal to bake Imint’s software into Smartisan, which sold its core technology to the TikTok parent last year. Imint is beginning to look beyond handsets into other devices that can benefit from high-quality footage, from action cameras, consumer drones, through to body cameras for law enforcement.

So far, the Swedish company has been immune from the U.S.-China trade tensions, but Lifvendahl worried as the two superpowers move towards technological self-reliance, outsiders like itself will have a harder time entering the two respective markets.

“We are in a small, neutral country but also are a small company, so we’re not a strategic threat to anyone. We come in and help solve a puzzle,” assured the founder.