WeChat Pay and Alipay partner QFPay raises $20 million to develop new digital payment solutions

Digital payments startup QFPay announced today that it has raised $20 million in new funding led by returning investors Sequoia Capital China and Matrix Partners. MDI Ventures, the investment arm of state-owned Indonesian telecom Telkom Indonesia, Rakuten Capital and VentureSouq also participated as new strategic investors.

According to Crunchbase, this brings QFPay’s total raised so far to $36.5 million. The funding will be used to develop new digital payment products.

QFPay is the largest global partner of WeChat Pay and Alipay, enabling them to process payments to merchants around the world. Founded in 2012, QFPay first launched in China and is known for its QR code-based technology. Its products include end-to-end online and offline mobile payment solutions and add-on services like food ordering and customer loyalty programs. The company claims that it has served over 1.2 million merchants and processed over 1 billion transactions.

QFPay is currently present in 13 markets: Cambodia, China, Hong Kong, Indonesia, Japan, Korea, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and United Arab Emirates.

In a statement, co-founder and CEO Tim Lee said “We have built our track record, know-how and expertise in this industry since we launched in China, which is dubbed as the birthplace of digital payment. We are excited to leverage what we have learned in the past seven years to help lead the cashless movement in the rest of Asia as demand for digital payment, particularly QR-code payment method, heats up.”

China’s largest Q&A platform, Zhihu, raises $434 million from investors including Kuaishou, Baidu and Tencent

Zhihu, the largest question and answer platform in China, has raised a $434 million Series F. This is not only the company’s biggest round since it launched in 2011, but also one of the largest secured over the past two years by a Chinese Internet culture and entertainment company, said China Renaissance, which served as the funding’s financial advisor.

The Series F was led by Beijing Kuaishou, the video and live-streaming app, with participation from Baidu . Existing investors Tencent and CapitalToday also returned for the round, which Zhihu will use for technology and product development. Baidu told Bloomberg that it will add 100 million Zhihu posts to its main app.

While Zhihu has downplayed reports that it is planning an IPO, it embarked on plans to hire a CFO and restructure last year.

Zhihu users tend to be educated with relatively high incomes and the platform has developed a reputation for hosting experts and organizations that are knowledgeable in tech, marketing and professional services like education. Like Quora and other Q&A platforms, Zhihu lets users post and answer text-based questions. But it also has other features, including discussion forums, a publishing platform and live videos for brands and companies to answer questions in real-time. Instead of making its streaming video feature, called Zhihu Live, open to all users, it is available to only to experts and organizations, differentiating it from other streaming apps like Douyin, the domestic version of TikTok (ByteDance is an investor in Zhihu but did not participate in this round).

In a post about the round on his Zhihu page, founder and CEO Victor Zhou wrote the company plans to keep up with rapid changes in China’s media and Internet landscape. “Over the past 8 years, users have gone from expecting simple entertainment to using the Internet to deal with real-life and work problems. The focus of competition has also shifted from traffic to traffic + quality.”

 

Nio electric vehicles sales took a hit as it scrambled to handle battery recall

Nio delivered just 837 electric vehicles in July, a nearly 38% drop from the previous month that was largely caused by a voluntary recall of its high-performance ES8 SUV.

The Chines automotive startup issued a voluntary recall in June of nearly 5,000 ES8 SUVs after a series of battery fires in China and a subsequent investigation revealed a vulnerability in the design of the battery pack that could cause a short circuit. The recall affected a quarter of the ES8 vehicles sold since they went on sale in June 2018.

Nio was able to complete its recall for the 4,803 ES8s by prioritizing battery manufacturing capacity for this effort, which significantly affected our production and delivery results, NIO founder, chairman and CEO William Li said Monday in a statement.

“On the positive side, we completed the ES8 battery recall in approximately half the time compared to our original timeline,” Li said, adding that the customer confidence is returning. “Looking ahead, with battery capacity allocation back to normal, we will accelerate deliveries and make up for the delivery loss impacted by the recall.”

Nio expects August to be a “much stronger month” with a target to deliver between 2,000 and 2,500 vehicles, according to Li. That’s a considerable jump from what Nio has been able to achieve in the past several months, even without the added battery recall problem.

Nio delivered 1,340 vehicles in June, 1,089 in May and 1,124 in April. As of July 31, 2019, aggregate deliveries of the Company’s ES8 and ES6 reached 19,727 vehicles, of which 8,379 vehicles were delivered in 2019.

Deliveries of the ES8 initially surpassed expectations, but they have since slowed in 2019. Now, Nio will have to double deliveries in August to meet its target.

Other factors, and ones that might prove more chronic, also affected delivery numbers in July. Li noted that anticipated reductions in EV subsidies and macroeconomic conditions in China such as a decline in passenger vehicle sales and the U.S.-China trade conflict as other causes.

The souring economic picture in China has already prompted Nio to cut its workforce by 4.5%, shift its vehicle production plans and reduce R&D spending. Nio reported in May a loss of $390.9 million in the first quarter from a slowdown in sales that was primarily driven by the EV subsidy reduction in China and macroeconomic trends in the country that have been exacerbated by the U.S.-China trade war, Li said at the time.

Huawei’s new OS isn’t an Android replacement… yet

If making an Android alternative was easy, we’d have a lot more of them. Huawei’s HarmonyOS won’t be replacing the mobile operating system for the company any time soon, and Huawei has made it pretty clear that it would much rather go back to working with Google than go at it alone.

Of course, that might not be an option.

The truth is that Huawei and Google were actually getting pretty chummy. They’d worked together plenty, and according to recent rumors, were getting ready to release a smart speaker in a partnership akin to what Google’s been doing with Lenovo in recent years. That was, of course, before Huawei was added to a U.S. “entity list” that ground those plans to a halt.

ByteDance launches a new search portal that returns a mix of results from the Web and its own platforms

ByteDance has taken another step into search with the launch of a new search portal today. Called Toutiao Search, the portal is part of the website for Toutiao, the news aggregator owned by ByteDance, and currently optimized only for mobile.

Though it is part of Toutiao’s website, the portal is separate from the Toutiao’s own search function, which lets users look for news articles and topics within the app. Toutiao Search brings up results from the Web, but like other search engines in China, the results are censored. For example, a search for “Hong Kong,” where large pro-democracy demonstrations are currently taking place, show only results from state-approved media outlets or ByteDance’s own services, like Xigua Video, Douyin (its domestic version of TikTok) or Toutiao.

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Searches for less contentious topics like “restaurant” also return a similar mix of web results and media from ByteDance apps. This means the company’s entrance into the search business not only sets it up as a new competitor to Baidu, which currently holds 76% of the search engine market, Sogou, Bing and 360, but will also help ByteDance drive traffic to all of its platforms. Google’s efforts to re-enter the Chinese market stalled when employees protested against the development of a censored search engine last year.

TechCrunch’s Rita Liao reported earlier this month that ByteDance, currently the most highly-valued tech startup in the world, has already hired people from other search companies, including Google, Baidu, Bing and 360. A recruiting post published earlier this month on ByteDance’s WeChat account was the company’s first public announcement that it is building a “universal search engine.”

TechCrunch has contacted ByteDance for more information about the new search portal.

Autonomous air mobility company EHang to deploy air shuttle service in Guangzhou

China’s EHang, a company focused on developing and deploying autonomous passenger and freight low-altitude vehicles, will build out its first operational network of air taxis and transports in Guangzhou. The company announced that the Chinese city would play host to its pilot location for a citywide deployment.

The pilot will focus on not only showing that a low-altitude, rotor-powered aircraft makes sense for use in cities, but that a whole network of them can operate autonomously in concert, controlled and monitored by a central traffic management hub that Ehang will develop together with the local Guangzhou government.

Ehang, which was chosen at the beginning of this year by China’s Civil Aviation Administration as the sole pilot company to be able to build out autonomous flying passenger vehicle services, has already demonstrated flights of its Ehang 184 vehicles carrying passengers in Vienna earlier this year, and ran a number of flights in Guangzhou in 2018 as well.

In addition to developing the air traffic control system to ensure that these operate safely as a fleet working in the air above city at the same time, Ehang will be working with Guangzhou to build out the infrastructure needed to operate the network. The plan for the pilot is to use the initial stages to continue to test out the vehicles, as well as the vertiports it’ll need to support their operation, and then it’ll work with commercial partners for good transportation first.

The benefits of such a network will be especially valuable for cities like Guangzhou, where rapid growth has led to plenty of traffic and high density at the ground level. It could also potentially have advantages over a network of autonomous cars or wheeled vehicles, since those still have to contend with ground traffic, pedestrians, cyclists and other vehicles in order to operate, while the low-altitude air above a city is more or less unoccupied.

Auto supplier Continental shifts gears — and its capital — to an electric future

Continental AG, a global auto-parts supplier, will no longer invest in parts used in internal combustion engines, the latest sign that the automotive industry is being forced to respond to increasingly strict emissions laws.

Instead, the company said it will put more focus and capital on the electric powertrain, which it believes is the “future of mobility.”

“Our customers are increasingly and consistently turning to the electrification of combustion engines through hybrid drives as well as to pure battery-powered vehicles,” said Andreas Wolf, head of Continental’s Powertrain division, which in the future will operate under the name Vitesco Technologies with Wolf as CEO.

This shift toward electrification is being driven by tighter regulations around the world. Cities are clamping down on the use of diesel- and gas-powered cars, trucks and SUVs in urban centers and states like California are tightening rules to meet air quality and emissions targets to combat climate change. China has placed restrictions on gas-powered vehicles and provides incentives to electric ones. France wants to end the sale of fossil fuel-powered cars by 2040.

And automakers are following. Volvo, VW and others have announced plans over the past two years to increase sales of electric vehicles and move toward more electrification throughout their portfolios of existing vehicles. Electrification can mean hybrid, plug-in or all-electric vehicles.

There has been plenty of speculation and attempts to predict exactly when — not so much if — a tectonic shift to electric powertrains would occur. Suppliers have grappled with the “when” part. Putting too much capital too soon toward developing automotive parts can saddle a supplier with inventory and mounting costs.

What’s happening at Continental is starting to play out within the rest of the industry. If companies like Continental want to survive and keep up with the demands of automakers, they have to act. But not wildly. Development costs for powertrains are, after all, no small matter.

Continental is making specific choices on what exactly it pursues. The company, for instance, will not consider producing solid-state battery cells in the future. Apparently the company was open to making an investment in battery cell production. But now the company believes the market no longer offers any attractive economic prospects for battery cell production for Continental, Wolf said.

What Continental is going to do is reduce investment in its hydraulic components business, which includes parts like injectors and pumps for gasoline and diesel engines.

“Investments in research and development and in production capacity for innovations are becoming less profitable,” says Wolf, explaining the reasoning behind this decision.

Continental will fulfill existing orders. New orders will “play an increasingly marginal role.”

This shift within Continental will likely extend over a number of years, as combustion engines essentially serve as the basic drivers for hybrid solutions, Wolf said. The company will also review its business in components for exhaust-gas after treatment and fuel delivery.

All of this translates into big changes within the company, including the technologies it decides to invest in, jobs and even locations of some of its operations. Continental said it will also consider partnerships.

Africa’s top mobile phone seller Transsion to list in Chinese IPO

Chinese mobile-phone and device maker Transsion will list in an IPO on Shanghai’s STAR Market,  Transsion confirmed to TechCrunch. 

The company—which has a robust Africa sales network—could raise up to 3 billion yuan (or $426 million).

“The company’s listing-related work is running smoothly. The registration application and issuance process is still underway, with the specific timetable yet to be confirmed by the CSRC and Shanghai Stock Exchange,” a spokesperson for Transsion’s Office of the Secretary to the Chairman told TechCrunch via email.

Transsion’s IPO prospectus was downloadable (in Chinese) and its STAR Market listing application available on the Shanghai Stock Exchange’s website.

STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that also went live in July with some 25 companies going public. 

Headquartered in Shenzhen—where African e-commerce unicorn Jumia also has a logistics supply-chain facility—Transsion is a top-seller of smartphones in Africa under its Tecno brand.

The company has a manufacturing facility in Ethiopia and recently expanded its presence in India.

Transsion plans to spend the bulk of its STAR Market raise (1.6 billion yuan or $227 million) on building more phone assembly hubs and around 430 million yuan ($62 million) on research and development,  including a mobile phone R&D center in Shanghai—a company spokesperson said. 

Transsion recently announced a larger commitment to capturing market share in India, including building an industrial park in the country for manufacture of phones to Africa.

The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April. 

Listing on the STAR Market will put Transsion on the freshly minted exchange seen as an extension of Beijing’s ambition to become a hub for high-potential tech startups to raise public capital. Chinese regulators lowered profitability requirements, for the exchange, which means pre-profit ventures can list.

Transsion’s IPO process comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan from a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.

Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market—through its brands Tecno, Infinix, and Itel—and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.

Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.

On a recent research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3600 Ethiopian Birr, or roughly $125.

In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.

Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.

Smartphone adoption on the continent is low, at 34 percent, but expected to grow to 67 percent by 2025, according to GSMA.

This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination—such as Nigeria, Kenya, and South Africa—thousands of ventures are building business models around mobile-based products and digital applications.

If Transsion’s IPO enables higher smartphone conversion on the continent that could enable more startups and startup opportunities—from fintech to VOD apps.

Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular if the Shenzhen company moves strongly toward venture investing.

Comparatively, China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities—further boosted in recent years as Beijing pushes its Belt and Road plan.

Transsion’s IPO move is the second recent event—after Chinese owned Opera’s big venture spending in Nigeria—to reflect greater Chinese influence and investment in the continent’s digital scene.

So in coming years, China could be less known for building roads, bridges, and buildings in Africa and more for selling smartphones and providing VC for African startups.

Through a new partnership and $72 million in funding, LanzaTech expands its carbon capture tech

For nearly fifteen years LanzaTech has been developing a carbon capture technology that can turn waste streams into ethanol that can be used for chemicals and fuel.

Now, with $72 million in fresh funding at a nearly $1 billion valuation and a newly inked partnership with biotechnology giant, Novo Holdings, the company is looking to expand its suite of products beyond ethanol manufacturing, thanks, in part, to the intellectual property held by Novozymes (a Novo Holdings subsidiary).

“We are learning how to modify our organisms so they can make things other than ethanol directly,” said LanzaTech chief executive officer, Jennifer Holmgren.

From its headquarters in Skokie, Ill., where LanzaTech relocated in 2014 from New Zealand, the biotechnology company has been plotting ways to reduce carbon emissions and create a more circular manufacturing system. That’s one where waste gases and solid waste sources that were previously considered to be un-recyclable are converted into chemicals by LanzaTech’s genetically modified microbes.

The company already has a commercial manufacturing facility in China, attached to a steel plant operated by the Shougang Group, which produces 16 million gallons of ethanol per-year. LanzaTech’s technology pipes the waste gas into a fermenter, which is filled with genetically modified yeast that uses the carbon dioxide to produce ethanol. Another plant, using a similar technology is under construction in Europe.

Through a partnership with Indian Oil, LanzaTech is working on a third waste gas to ethanol using a different waste gas taken from a Hydrogen plant.

The company has also inked early deals with airlines like Virgin in the UK and ANA in Japan to make an ethanol-based jet fuel for commercial flight. And a third application of the technology is being explored in Japan which takes previously un-recyclable waste streams from consumer products and converts that into ethanol and polyethylene that can be used to make bio-plastics or bio-based nylon fabrics.

Through the partnership with Novo Holdings, LanzaTech will be able to use the company’s technology to expand its work into other chemicals, according to chief executive Jennifer Holmgren. “We are making product to sell into that [chemicals market] right now. We are taking ethanol and making products out of it. Taking ethylene and we will make polyethylene and we will make PET to substitute for fiber.”

Holmgren said that LanzaTech’s operations were currently reducing carbon dioxide emissions by the equivalent of taking 70,000 cars off the road.

“LanzaTech is addressing our collective need for sustainable fuels and materials, enabling industrial players to be part of building a truly circular economy,” said Anders Bendsen Spohr, Senior Director at Novo Holdings, in a statement. “Novo Holdings’ investment underlines our commitment to supporting the bio-industrials sector and, in particular, companies that are developing cutting-edge technology platforms. We are excited to work with the LanzaTech team and look forward to supporting the company in its next phase of growth.”

Holmgren said that the push into new chemicals by LanzaTech is symbolic of a resurgence of industrial biotechnology as one of the critical pathways to reducing carbon emissions and setting industry on a more sustainable production pathway.

“Industrial biotechnology ca unlock the utility of a lot of waste carbon emissions. ” said Holmgren. “[Municipal solid waste] is an urban oil field. And we are working to find new sources of sustainable carbon.”

LanzaTech isn’t alone in its quest to create sustainable pathways for chemical manufacturing. Solugen, an upstart biotechnology company out of Houston, is looking to commercialize the bio-production of hydrogen peroxide. It’s another chemical that’s at the heart of modern industrial processes — and is incredibly hazardous to make using traditional methods.

As the world warms, and carbon emissions continue to rise, it’s important that both companies find pathways to commercial success, according to Holmgren.

“It’s going to get much much worse if we don’t do anything,” she said.

U.S. Treasury just designated China as a currency manipulator, so expect more economic shocks

The U.S. Treasury has just taken the extraordinary step of designating China as a currency manipulator, something no administration has done since the days of Bill Clinton.

With the action, the trade war between the U.S. and China has entered a new phase that will likely see both countries stepping up both their rhetoric and actions in the trade dispute that has now dragged on for over a year.

As a result of the ongoing hostilities between the U.S. government and China, the flood of investment dollars that once came from Chinese technology companies and investors into U.S. technology companies has slowed. Acquisitions and investments made by Chinese companies have been unwound over concerns from the Committee of Foreign Investments in the U.S. and tariffs slapped on Chinese imports have hit U.S. stock prices (including in the technology sector).

The news of Treasury’s move comes less than 24 hours after the Chinese government announced a complete halt on U.S. agricultural imports. More significantly, the Bank of China has let the country’s currency slide in value against the U.S. dollar to above the seven-to-one figure that was considered a line-in-the-sand for trade.

Given the escalation, economists’ fears that global markets could slip into a recession within the next nine months are more likely to be realized, according to reports from Morgan Stanley, quoted by CNBC.

“We take its literal message of planned tariffs quite seriously. There’s a pattern of responding to insufficient negotiation progress with escalation,” Morgan Stanley said in an analyst report.

The move to label China as a currency manipulator means that the U.S. will plead its case before the International Monetary Fund to take steps to curb what Treasury Secretary Steven Mnuchin called “the unfair competitive advantage created by China’s latest actions.”

If anything, China’s actions have actually been to prop up the country’s currency in the face of internal pressures to break the seven-to-one floor that had previously been set on the Renminbi’s value versus the dollar. China’s economy is slowing — in part due to tariffs imposed by the U.S., but also because economies in Europe and Asia are slowing down, which is hitting exports in the country. Indeed, much of the current growth in China’s economy has been fueled by debt-financed big infrastructure projects.

That could change as Chinese goods become cheaper thanks to the falling value of the nation’s currency. However, as Axios notes, what China is doing doesn’t actually fall under the definition of currency manipulation as it’s legally defined.

Because to be a currency manipulator a country needs to spend 2% of its gross domestic product over a 12-month period on currency manipulation. If anything, China was boosting the yuan in the face of calls to reduce its value until the President called for sanctions last week.

Even if the country’s currency devaluation does juice exports, it could have unforeseen consequences on China’s infrastructure spending and could backfire as a tool in the ongoing trade dispute.

A weaker currency means that Chinese consumers and businesses have to pay more for goods and services that are dollar-denominated. It also means that while the country is awash with cash, it could lose its competitive edge in a fight to lure top talent to the country. Losses in spending power could push the developers and programmers the country needs to transition from a manufacturing-focused economy to look elsewhere.

Stock markets are already taking note of the new U.S. action on trade. Futures show the Dow trading down about 350 points and the Nasdaq and S&P 500 indices both trading sharply lower.