Posts Tagged ‘WeChat’

One World, Two Internets: The Internet, Divided Between the U.S. and China, Has Become a Battleground

February 12, 2019
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The global internet is splitting in two.

One side, championed in China, is a digital landscape where mobile payments have replaced cash. Smartphones are the devices that matter, and users can shop, chat, bank and surf the web with one app. The downsides: The government reigns absolute, and it is watching—you may have to communicate with friends in code. And don’t expect to access Google or Facebook.

On the other side, in much of the world, the internet is open to all. Users can say what they want, mostly, and web developers can roll out pretty much anything. People accustomed to China’s version complain this other internet can seem clunky. You must toggle among apps to chat, shop, bank and surf the web. Some websites still don’t seem to be designed with smartphones in mind.

The two zones are beginning to clash with the advent of the superfast new generation of mobile technology called 5G. China aims to be the biggest provider of gear underlying the networks, and along with that it is pushing client countries to adopt its approach to the web—essentially urging some to use versions of the “Great Firewall” that Beijing uses to control its internet and contain the West’s influence.

Battles are popping up around the world as Chinese tech giants try to use their market power at home to expand abroad, something they’ve largely failed to do so far.

New 5G networks may advance technologies such as driverless vehicles. Here, a video game aboard an autonomous 5G-connected bus at a South Korea media event.
New 5G networks may advance technologies such as driverless vehicles. Here, a video game aboard an autonomous 5G-connected bus at a South Korea media event. PHOTO: SEONGJOON CHO/BLOOMBERG NEWS
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Some Silicon Valley executives worry the divergence risks giving Chinese companies an advantage in new technologies such as artificial intelligence, partly because they face fewer restrictions over privacy and data protection.

“The Chinese approach could well lead to some large-scale improvements like better health outcomes—benefits derived from the mass capture and analysis of data,” said Nick Clegg, the former British deputy prime minister whom Facebook Inc. hired to run its global policy and communications, in a Brussels speech last week. “But it could equally be put to more sinister surveillance ends.”

“The real choice,” he said, “is between an appropriately regulated tech sector, balancing the priorities of privacy, free speech, innovation and scale—and an alternative in which ingenuity runs roughshod over some basic guarantees of privacy and individual rights.” He and Facebook declined to comment further.

The divide is clear to people like Tom Pellman who straddle it. Mr. Pellman, a director in Washington, D.C., for an international risk advisory firm, spent a decade in Beijing from the mid-2000s. His company doesn’t use Slack, the messaging app, because China has blocked it. He circumvented the Great Firewall by cycling through virtual private networks, or VPNs, which can disguise activity from monitors until getting discovered and then blocked, he said. “It’s Whac-A-Mole.”

Beijing’s censorship is like its polluted air, he said: “You’re in it and it seems OK, then you leave and you realize how bad it was.”

Yet he loved WeChat, the app that can do multiple tasks, and missed it when he left China. “When I came back to the U.S. it was like coming back to the Stone Age,” he said. “Not being able to use WeChat , everything felt just old fashioned.”

Paying the metro fare using Tencent's WeChat in Shenzhen, China.
Paying the metro fare using Tencent’s WeChat in Shenzhen, China. PHOTO: ZHAO YANXIONG/VCG/GETTY IMAGES
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These parallel universes have coexisted. In one, people buy goods on Amazon; in the other, it’s Alibaba. In the West, Alphabet Inc.’s Google is so popular it’s a verb, but you can’t Google in China—there’s Baidu for that. In London, Apple Pay can get you on the Tube; in Beijing, it’s Alipay. To do all this in one app in China, there’s WeChat, which lets a billion people also send texts, hail cabs and do many other tasks.

Beijing has blocked GoogleFacebook and other services, promoting domestic champions such as Alibaba Group Holding Ltd. and WeChat owner Tencent Holdings Ltd. Outside China, though, these giants haven’t had much success.

The 5G collision

The collision of these universes as 5G arrives is exacerbating conflict between the U.S. and China and could broaden the rift and drive more of the world into China’s cyberspace model.

Networks using 5G technology are expected to download movies on phones in seconds, help enable self-driving cars, and connect components ranging from pacemakers to factory machines to the internet. Military futurists say 5G may alter battlefields, connecting tanks and drones with artificial intelligence.

China is aiming to expand its zone with 5G. It is aggressively promoting 5G networks, establishing a body in 2013 composed of regulators, companies and scientists to design and control every aspect of the process. It built a state facility where anyone selling 5G equipment in China must test it.

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A vehicle using 5G technology, displayed at a show in South Korea last year.
A vehicle using 5G technology, displayed at a show in South Korea last year. PHOTO: SEONGJOON CHO/BLOOMBERG NEWS
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China’s 5G goal is to “win primacy,” said China’s leading proponent of the effort, Wu Hequan of the Chinese Academy of Engineering, last month, according to a transcript conference organizers posted. The government’s information office and the Cyberspace Administration, an internet regulator, didn’t respond to requests for comment.

That Chinese challenge has suddenly come to the fore because one giant has leapt the divide between the parallel universes. Huawei Technologies Co. is now the world’s biggest supplier of the equipment that goes into mobile-computing networks.

The 5G equipment itself won’t tilt the playing field—the gear is the plumbing of the internet, based on global standards that are agnostic as to what web developers and users run on it.

But many in Washington, from Congress to members of the national-security and intelligence communities, warn that Huawei’s Chinese ownership means Beijing could use the gear to spy on the world and more broadly be a camel’s nose under the tent to expand its influence.

Huawei has publicly rejected the accusations. Founder Ren Zhengfei in a media appearance last month said “I personally would never harm the interest of my customers…And my company would not answer to such requests.”

‘I personally would never harm the interest of my customers,’ says Huawei founder Ren Zhengfei, here at company headquarters last month.
‘I personally would never harm the interest of my customers,’ says Huawei founder Ren Zhengfei, here at company headquarters last month. PHOTO: QILAI SHEN/BLOOMBERG NEWS
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Chinese officials and cybersecurity experts point to former National Security Agency contractor Edward Snowden’s allegations the agency installed surveillance backdoors in U.S.-made routers designated for export. The NSA didn’t respond to requests for comment. In the past, it has said in response that it takes care to ensure that innocent users of such technologies aren’t affected by U.S. intelligence gathering.

The U.S. has also accused Huawei of stealing trade secrets and violating sanctions, raising the possibility the Trump administration could cut its access to critical U.S.-made components. Huawei denies wrongdoing.

If that happens, said Paul Triolo, a former federal government analyst who heads up global technology research at risk consulting firm Eurasia Group, China could build a version of 5G that isn’t compatible with the U.S. network. “If the global supply chain for 5G really falls apart,” he said, “we would be in totally new territory.”

Huawei Deputy Chairman Ken Hu said it has amassed 13,000 suppliers and that: “If any link in this global industry chain is obstructed in an unusual way, that would have major impact on the development of the industry chain and even the economic development of countries involved.” Huawei declined to comment further for this article.

Deploying 5G widely at home before the West does could benefit Chinese tech companies, said David Chao, general partner at DCM Ventures, a Silicon Valley venture-capital firm that invests in China. Chinese companies could have a leg up by using their huge domestic market to develop new apps and hardware that flourish with the faster speeds. “It could sprout a whole generation of mobile services that take advantage of that,” he said, “and they may be exported to the western world.”

At the heart of the divide are differing views on how to manage the internet. The U.S. pushes the open model on which the internet was built. Beijing and like-minded countries such as Russia say states should be able to censor, spy on or otherwise control internet traffic within their borders.

A Huawei executive in Beijing at a launch of new 5G Huawei products.
A Huawei executive in Beijing at a launch of new 5G Huawei products. PHOTO: FRED DUFOUR/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Beijing has sold its internet model alongside Chinese-made telecom equipment in countries as distant as Vietnam and Tanzania as part of an effort to build what it calls a “Digital Silk Road.” Last year, Tanzanian officials followed up public praise for Chinese internet censorship by approving rules that threaten online content providers with fines and jail if they don’t take down “prohibited content” at government request.

Tanzanian information minister Harrison Mwakyembe said the government backs China’s vision of strict internet policing to protect national security and to prevent “moral degeneration.”

Government officials in India have been considering ways to shelter domestic tech firms from American companies such as Amazon.com Inc. and Facebook, much as China has protected its own startups. India’s telecom secretary, Aruna Sundararajan, said the idea is to promote Indian companies “to become global champions.”

Wang Huning, the Communist Party’s top official in charge of ideology and propaganda, at China’s annual conference for promoting ‘cyber sovereignty’ in 2017.
Wang Huning, the Communist Party’s top official in charge of ideology and propaganda, at China’s annual conference for promoting ‘cyber sovereignty’ in 2017. PHOTO: ALY SONG/REUTERS
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To promote its notion of “cyber sovereignty,”China has lobbied at the United Nations for discussion of internet regulation to be limited to states, with industry and civil society relegated to the sidelines. In 2017 at a conference in China attended by Apple CEO Tim Cook and Google chief Sundar Pichai, the Communist Party’s top official in charge of ideology and propaganda, Wang Huning, praised Chinese President Xi Jinping for advancing China’s vision of the internet, saying it had “gained broad approval and positive responses from international society.”

Firewall rising

At first, with the internet’s spread, foreign companies were welcome in China and technology evolved faster than the government’s censorship capabilities. Google rolled out a censored Chinese-language version of its search engine. Amazon entered the market, and Chinese users flooded onto Facebook, YouTube and Twitter.

Chinese leaders took more control after the 2008 Beijing Olympics, reflecting fear of political dissent and concern Chinese businesses were struggling to compete online. Facebook, Twitter and YouTube were blocked in 2009. The next year, Google said it was no longer willing to censor search results, and it was blocked. The websites of several foreign news organizations, including The Wall Street Journal’s, are also blocked.

That left China’s search market to Baidu Inc. Alibaba vanquished eBay Inc., and its Alipay payment system gave it a lock on online payments, with foreign firms from PayPal Holdings Inc. to Visa Inc. blocked from providing payment services.

Outside China, Alibaba was an afterthought in many markets. Baidu shut down search engines in Japan and Egypt after investing in local-language products. An Alibaba spokeswoman said the company remains “fully committed to realizing our mission of making it easy to do business anywhere in this digital era.” A Baidu spokeswoman said the company still provides advertising and other services in Japan.

China's Huawei Indicted: Breaking Down the Charges

China’s Huawei Indicted: Breaking Down the Charges
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The U.S. unveiled sweeping charges against Chinese tech firm Huawei in late January. WSJ’s Shelby Holliday breaks down the indictments.

Despite an aggressive marketing push featuring celebrities such as soccer star Lionel Messi, Tencent has struggled to expand WeChat overseas. Since January 2012, WeChat has been downloaded about 350 million times from Apple’s App store world-wide, according to research firm Sensor Tower Inc. About 83% of those downloads come from users in China and 17% from outside, according to Sensor Tower. Tencent didn’t respond to requests for comment.

Some Chinese tech champions have struggled overseas because they came late to markets where competitors such as Google and Facebook have a foothold.

Another factor is suspicion the companies may have links to the Communist Party. Ant Financial Services Group, owned by Alibaba founder Jack Ma, made a 2017 bid to enter North American financial services by acquiring Texas-based MoneyGram International Inc.The Committee on Foreign Investment in the U.S. rejected the deal last year. It also blockedBroadcom Inc.’s planned purchase of Qualcomm Inc., citing concerns it would weaken Qualcomm, a major competitor to Huawei in 5G patents.

In September, Mr. Ma recanted a pledge to create a million U.S. jobs, citing trade hostilities. He didn’t respond to a request for comment sent through Alibaba, which pointed to an interview Mr. Ma did in which he said “trade should be a propeller of peace.”

Washington’s effort to push back on the equipment side started years ago. It blacklisted Huawei and China’s rival ZTE Corp. in 2012, when the House intelligence committee concluded they weren’t free of Beijing’s influence. ZTE and Huawei have repeatedly said they aren’t a threat. The U.S. pushback escalated last month with a U.S. indictment against Huawei’s chief financial officer for allegedly playing a role in breaking Iran sanctions. Separately, prosecutors accused Huawei of stealing trade secrets. Huawei has denied wrongdoing in both cases and said it was unaware of any wrongdoing by the CFO, who has denied the allegations.

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Czech Prime Minister Andrej Babis last month.
Czech Prime Minister Andrej Babis last month.PHOTO: MICHAL KAMARYT/CTK/ZUMA PRESS
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Europe’s eastern flank is a particular battleground. In December, the Czech Republic’s top cybersecurity agency warned that sensitive data probably shouldn’t be carried over Huawei gear. But the country’s president, Milos Zeman, has criticized those findings. Last month, he took two senior Huawei executives on a tour of Prague’s castle and in a televised interview called Huawei spying allegations hysteria. His prime minister, Andrej Babis, has taken a differing view, saying Czech agencies and European Union leaders should take such allegations seriously. A spokesman for Mr. Babis confirmed his views. Mr. Zeman’s office declined to comment.

For now, motivated consumers in China can span the two internet worlds using workarounds such as smartphones with foreign SIM cards that connect to the outside internet, said Li Zhen, a Hong Kong market-research analyst who travels to China for business.

She senses the rift in the paranoia her Chinese contacts exhibit while talking on WeChat about potentially sensitive topics. “My friends in the government and media will talk in code, and it can take a long time to figure out what they’re saying,” she said. “Sometimes the topic is probably not so sensitive, but you never know.”

Write to Josh Chin at josh.chin@wsj.com

Appeared in the February 9, 2019, print edition as ‘One World, Two Internets.’

https://www.wsj.com/articles/the-internet-divided-between-the-u-s-and-china-has-become-a-battleground-11549688420

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China Government In Internet Crackdown on Undesirable Influences — Enforcing Communist Ideology

February 10, 2019
  • Communist Party’s official outlets scouring country for new media specialists to reach 800 million web users and squeeze out ‘undesirable influences’
  • Growing disaffection among younger generations prompts party outlets to cut back on Communist jargon in effort to ‘reach people’s hearts’
PUBLISHED : Sunday, 10 February, 2019, 2:04pm
UPDATED : Sunday, 10 February, 2019, 6:08pm

China’s leadership has started a propaganda blitz amid concerns about rising dissent among younger internet users.

South China Morning Post
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Image result for Xi Jinping, waving, pictures

Observers said Beijing was seriously concerned that online media was having an “undesirable influence” on young Chinese people and was trying to ensure they got more exposure to the officially approved narrative.

At the core of this drive is a team of millennial new media specialists who eschew the jargon-heavy style of traditional propaganda in favour of stories designed to resonate with younger, web-savvy citizens.

President Xi Jinping told a January 22 meeting of senior officials that they should regard the political risk from public dissent as their top priority and prepare for the “worst-case scenario”.

The Chinese leadership is acutely sensitive to the danger of public dissent as the economy starts to slow, and recent months have seen protests by army veterans, teachers and young Marxist students supporting workers’ rights.

Four days after his speech, Xi led members of the political bureau of the Communist Party Central Committee on a visit to the new media operation of People’s Daily, the party’s mouthpiece.

He spoke at length on the importance of “boosting integrated media development and amplifying the mainstream voice” in public communication.

“Mobile platforms are the priority,” Xi said, adding that he wanted his propaganda chiefs to put in serious efforts to “develop websites, Weibo, WeChat, electronic newspaper bulletins, mobile newspapers, IPTV and other forms of new media”.

Some senior officials have already heeded his call with Yu Weiguo, the party chief for Fujian province, visiting the local bureau of People’s Daily three days after Xi’s comments to drive home the message.

Mobile platforms are the priority
XI JINPING

The Chinese internet has always been heavily censored but the new focus on Xi’s demand to ensure “the voice of the party can reach all kinds of user terminals directly”, has prompted propaganda chiefs to hunt down new media specialists from all over the nation.

They have been recruited to provide platforms for the party’s official mouthpieces and promote what is described as “positive energy” among the nation’s 800 million web users.

Deng Yuwen, an independent scholar at the China Strategic Analysis Centre, said: “Xi listed political risk as the top priority [at the study session]. The fact that he immediately followed up with the trip to People’s Daily to talk about new media, shows that he believes controlling the new media’s influence on Chinese youth is key to mitigating the risk.”

On January 18, Public Security Minister Zhao Kezhi warned of the risks of a “colour revolution” – a reference to the range of protests that swept a number of former Soviet countries a decade ago – and asked all law enforcement forces to “resolutely defend political security”.

After 40 years of rapid growth, China’s younger generation now feel they have fewer opportunities to move upwards, while facing a lot more pressure in work and life.

The growing disaffection that resulted has alarmed the party leadership and prompted a debate about what some academics characterise as “intergenerational inequality” as younger Chinese people lose out on the benefits enjoyed by the generation who grew up at the peak of the country’s economic boom.

One consequence is that a demotivational slacker culture known as “Sung” has become popular online among people born in the 1980s or 1990s.

A study by the China UC Big Data Centre said the phenomenon was driven by a sense of alienation caused by factors such as skyrocketing home prices, a lack of social mobility and the difficulty of finding a partner in modern China.

These social divisions are exacerbated by social media, where many affluent millennials enjoy showing off their wealth online.

One popular meme last year was the “flaunt your wealth” challenge, where people posted photographs showing themselves sprawled on the ground surrounded by valuables as if they had tripped and dropped them.

Unsurprisingly, the party’s renewed focus on social media includes vigorous efforts to counteract this trend.

One part of the crackdown has targeted popular social media accounts that are accused of sensationalising social problems or failing to police their content properly.

Last month, a popular WeChat account called Mimeng, which was known for its use of clickbait headlines, was denounced by official media outlets for publishing a story about a bright young man who died in poverty despite his hard work and determination to improve his lot in life.

The story was widely spread online before many elements of it were debunked, prompting a denunciation by People’s Daily that attacked those spreading “poisonous” stories online.

The publisher was forced to apologise and close her Weibo account. She also promised to suspend her WeChat operations for two months for “profound self-reflection”.

Another leading voice in the backlash against “irresponsible” social media users “cashing in on people’s anxiety” is the official WeChat account of the Central Political and Legal Affairs Commission.

This lies at the heart of the party’s efforts to control the social media narrative and operated for three years under the nickname of Chang An Jian – or Sword of Long-lasting Security – complete with anime-style avatar, before disclosing its true identity in November.

The South China Morning Post understands that this new media operation is run by a small central team of fewer than 10 people, all of whom were born in the 1980s or 1990s.

The selection process for this core team, and the provincial operations working under them, is stringent and includes screening candidates for political loyalty.

They also need a background in law enforcement – whether in the police, courts, justice department or prosecutors’ offices – must be familiar with new media platforms such as WeChat or Weibo and, of course, be willing to work the very long hours more common in internet start-ups than government jobs.

Those who make the grade will be sent to Beijing for six months of intensive training before returning home to lead provincial and municipal new media teams.

A source said the process helped the new media centre to “keep the team fresh with the best people from all over China”.

After their training finished they could “bring back the experience gained in Beijing, so we can build stronger provincial teams”.

Unlike the traditional top-down structure of propaganda departments, the new media team had more editorial freedom “not necessarily following orders from the top”. When deciding what stories to promote, “the first consideration is can we reach people’s hearts?” the person said.

When they cannot reach a consensus on what message to promote, the team takes a vote and even the boss can be overruled.

Deng said that while traditional official media was targeted at party cadres, new media operations had to reach a wider audience, so they “have to adapt to a more reader-friendly format and use less party jargon in their reporting”. He also said they had achieved a “certain success” in this up to now.

Official new media platforms have an inbuilt advantage when it comes to growing their audiences as all provincial and municipal law enforcement agencies make it compulsory for their employees to follow or “like” these new media accounts.

The Post has seen an official document from the Political and Legal Affairs Commission in Siping, a city in Jilin province, in which Politburo member Guo Shengkun tells all Chinese police officers to subscribe to the new media accounts operated by the Central Political and Legal Affairs Commission, which he heads.

[New media operations] have to adapt to a more reader-friendly format and use less party jargon
DENG YUWEN, INDEPENDENT SCHOLAR AT CHINA STRATEGIC ANALYSIS CENTRE

China does not publish official figures for how many police officers it has, but Fan Peng, a researcher at the Chinese Academy of Social Sciences, estimated the number at about 1.6 million in 2014.

According to Leibei.com, which tracks WeChat public accounts, Chang An Jian has about 670,000 active subscribers and its Weibo account has more than 6 million followers.

Another official media account operated by People’s Daily, Xia Ke Dao – or Swordsman of the Island – has more than 1 million active followers.

Some analysts believe the growth of these official accounts will squeeze out other new media players as official media has a monopoly on hard news reporting.

Alfred Wu, an associate professor at Singapore’s Lee Kuan Yew School of Public Policy, said: “The space for non-official new media players will shrink further under the current atmosphere.

“All the policy, current affairs-related reporting is monopolised by the official channels, others can only write soft content such as relationships, the zodiac etc.”

But Henry Chan, a visiting senior research fellow at the Cambodian Institute of Cooperation and Peace, said that in other areas China’s official media had been lagging behind for years.

The crux of the problem was “not the format or the platforms”, but their content, he said.

“Overstressing ideology makes them lack the most important quality of modern media, responding quickly [to breaking news].”

https://www.scmp.com/news/china/politics/article/2185300/how-official-chinese-propaganda-adapting-social-media-age

What’s Worse Than Facebook? What China does with social media…

January 7, 2019

China has made social media an instrument of oppression.

Social media faces a dilemma: Mark Zuckerberg or Xi Jinping?

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Image result for Mark Zuckerberg Xi Jinping, pictures

Social media faces a dilemma: Mark Zuckerberg or Xi Jinping? Despite the many drawbacks, I’d go with Mr. Zuckerberg.

The moral panic surrounding social media and Facebook in particular now stretches from horizon to horizon. “Social media are doomsday machines,” writes Jason Pontin in Wired. “They distract, divide, and madden; we can no longer hear each other, speak coherently, or even think. As a result, our social, civic, and political ligands are dissolving.” This sort of agitation may make almost any measure seem preferable to letting Instagram impose cretinism and anarchy on society.

In reality, social media poses a nest of problems, but it is not the source of them. Racism, sexism and stupidity were possible before it. So were otherwise-unaccountable victories of whatever political party one happens to oppose, And government regulation of social media is liable to be—is already proving to be—an even bigger problem. That’s clear in China, which has turned regulation of the internet to the purposes of a simultaneously traditional and innovative 21st-century totalitarianism.

Image result for Chinese Muslims ,re-education, pictures
Chinese Muslims in re-education

The European Union last year enacted sweeping internet privacy protections. But Europe and its member states are also pretty far down the road of regulating content, including material that the authorities regard as “hate speech” or “fake news.” The European Commission, like the government of China, may eventually conclude that, given the disastrous dissolving of civic ligands, communication must be taken out of private hands entirely. And given the moral panic about social media, many have suggested similar “reforms” in the U.S.

WeChat , the Chinese state social-media operation, has managed to eliminate almost everything the Communist Party regards as hate speech, fake news or threats, however vague, to the social order. These include any expression of pride or religious identity by members of the Muslim Uighur community, or support for that community, as Beijing annihilates its culture. A million or more Chinese Muslims are in re-education camps. The unfolding nightmare is as invisible on Chinese social media as on Chinese television.

Image result for Chinese Muslims ,re-education, pictures

There will be no Arab Spring-style resistance, organizing itself on each participant’s cellphone. Whatever liberating possibilities social media might have held, state control has turned them into instruments of oppression.

Image result for WeChat, pictures

In the West, it is disturbing how much commercially useful information the tech giants harvest from their users and customers, how little control we have over our own information and how we can potentially be manipulated by its use. But what the government of China does with people’s information makes the activities of Google and Amazon look trivial. State control of the internet permits the party to rank every person among its 1.38 billion for the extent of their capitulation, and to reward or penalize them—and their families—accordingly.

This “social credit” system, slated to be fully in place next year, would make every life prospect—education, residence, employment, health care, mere physical freedom—subject to the results of the thorough surveillance that internet regulation makes possible. This policy is supported by everyone in the People’s Republic, on pain of a hit to their social-credit rating.

What’s likelier in the U.S. than federal annexation of Facebook is the sort of close continual regulation and regulatory capture that would make social-media companies increasingly entwined with the federal government, open to surveillance by it, and sensitive to how political content generated by private citizens can present a threat to their profitability as well as “public order.” In a panicked attempt to solve a problem, lawmakers risk creating an entirely new problem that cannot be solved at all.

Mr. Sartwell teaches philosophy at Dickinson College in Carlisle, Pa.

https://www.wsj.com/articles/whats-worse-than-facebook-11546804406

Apple Loses Ground to China’s Homegrown Rivals

January 3, 2019

“The others are a little closer to the pulse of what matters to Chinese consumers” — Despite developing more features to woo Chinese consumers, Apple’s market share has stagnated

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BEIJING– Apple Inc. AAPL -8.69% brought the high-end smartphone to China. Now it is sputtering as homegrown rivals win over consumers by offering similar designs and features at far lower prices.

While Tim Cook, Apple’s chief executive, blamed China’s economic slowdown for weakening sales that hurt its global revenue in the past quarter, the company’s problems run deeper than that. The Cupertino, Calif., tech giant may have underestimated how competitive domestic smartphone makers have become, analysts say.

Once a top-seller in China, Apple has slipped to the fifth-biggest phone seller in that country, trailing four domestic producers that have all been growing in popularity. Despite developing more features targeted at Chinese consumers, Apple’s market share has stagnated.

Chinese rivals including Huawei Technologies Co. and Oppo and Vivo, which are owned by BBK Electronics Corp., have rolled out popular features such as camera functions designed for users to take better selfies.

Image result for Oppo, China, products, photos

“The others are a little closer to the pulse of what matters to Chinese consumers,” said Mark Natkin, managing director at Marbridge Consulting in Beijing.

Moreover, Apple’s iOS operating system is proving less “sticky” for Chinese consumers than in other markets because smartphone users spend a large chunk of their phone time inside WeChat , a chat, payments and social-media app from Tencent Holdings Ltd.

Chinese consumers who won’t pay for the status of brandishing the top-priced iPhone model are considered more fickle when it comes to brands, said Mo Jia, a Shanghai-based analyst at market-research firm Canalys. As the economic slowdown pushes consumers to tighten their purse strings, such consumers are generally more inclined to consider cheaper, non-Apple smartphones, Mr. Jia said.

Apple on Wednesday slashed its quarterly revenue forecast for the first time in more than 15 years. In a letter to investors, Mr. Cook said the revenue shortfall stemmed from lower-than-anticipated iPhone sales in Greater China.

The worse-than-expected performance in China adds to pressure on Isabel Ge Mahe, who was appointed in 2017 to oversee the crucial market that accounts for almost 20% of Apple’s global sales. Apple posted sales growth in the Greater China region for five consecutive quarters until the quarter that ended Sept. 29.

Overall smartphone shipment volume in China has been falling for seven consecutive quarters, data from Canalys show. For Apple, its volume for the nine months to the end of September declined 11.8% from the previous year, even as its market share grew 0.2 percentage point to 7.8%.

Apple’s current struggle in China is illustrated by the iPhone XR, one of the three handsets that Apple released last year.

Apple had placed big orders for the iPhone XR to be sold in China before it went on sale last October, anticipating strong demand, a person familiar with the matter said. Now it is grappling with excess inventory, the person said.

The XR—the lowest priced among the three latest models—starts at a still-hefty 6,499 yuan ($945). By comparison, one competing Huawei model, Mate 20, which was also launched last year with the latest chipsets, starts at 3,999 yuan.

Sales of Apple’s more extravagant handset, the iPhone XS Max, with a starting price of 9,599 yuan ($1,400), have been more resilient, according to Mr. Jia of Canalys.

Global smartphone sales have fallen over the past year, reflecting sticker shock over new phone prices and a lack of show-stopping features to persuade consumers to upgrade. Global shipments fell 7% for the three months ended Sept. 30 versus the prior year, the fourth straight quarter of declines, according to Canalys, a market research firm. Meanwhile, China, the world’s largest smartphone market, tumbled even more at 15%, Canalys said.

Apple has taken steps to court Chinese customers—its latest models introduced a dual-SIM support feature popular with the country’s phone users, though most Chinese rivals had already offered that. In the past, Apple has also enabled iPhone owners to use their phone number as Apple ID as many people don’t frequently use email, and offered the iPhone in rose gold color.

In an effort to boost sales, Apple in recent weeks started to offer discounts in China for trade-ins with used phones, according to its website.

Mr. Cook also cited China’s rising trade tensions with the U.S. as a factor affecting China’s economy. The company hasn’t faced significant anti-Apple sentiment; indirectly, some three million people work in China at suppliers as well as outlets that sell Apple goods, Apple has said.

Still, pockets of resistance have emerged.

Following the arrest in Canada last month of the Huawei’s chief financial officer Meng Wanzhou at the behest of U.S. prosecutors investigating sanctions violations, some Chinese companies have openly encouraged their employees to purchase Huawei phones.

Apple has also received some cancellations from Chinese companies for iPhone orders, which are sometimes given out as year-end bonuses, though they haven’t had a major impact on Apple’s business, a person familiar with the matter said.

Write to Yoko Kubota at yoko.kubota@wsj.com

https://www.wsj.com/articles/apple-loses-ground-to-chinas-homegrown-rivals-11546524491

How China Walled Off the Internet

November 20, 2018

Today, China has the world’s only internet companies that can match America’s in ambition and reach.

It is years ahead of the United States in replacing paper money with smartphone payments, turning tech giants into vital gatekeepers of the consumer economy.

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And it is host to a supernova of creative expression — in short videos, podcasts, blogs and streaming TV — that ought to dispel any notions of Chinese culture as drearily conformist.

All this, on a patch of cyberspace that is walled off from Facebook and Google, policed by tens of thousands of censors and subject to strict controls on how data is collected, stored and shared.

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China’s leaders like the internet they have created. And now, they want to direct the nation’s talent and tech acumen toward an even loftier end: building an innovation-driven economy, one that produces world-leading companies.

Not long ago, Chinese tech firms were best known for copying Silicon Valley.

By  RAYMOND ZHONG
The New York Times

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But the flow of inspiration now runs both ways. American social media executives look to Tencent and ByteDance for the latest tricks for keeping users glued to their phones.

Tencent’s WeChat app, an all-in-one hub for socializing, playing games, paying bills, booking train tickets and more, paved the way for the increasingly feature-stuffed chat apps made by Facebook and Apple. Facebook recently took a page from TikTok, a Chinese service that is a sensation among Western tweens, by releasing its own highly similar app for creating goofy short videos.

If people in the West didn’t see this coming, it was because they mistook China’s authoritarianism for hostility toward technology.

But in some ways Chinese tech firms are less fettered than American ones. Witness the backlash against Big Data in the United States, the calls to break up giants like Facebook and the anxiety about digital addiction. None of those are big problems for Chinese companies.

In China, there is pretty much only one rule, and it is simple: Don’t undermine the state.

So titans like Weibo and Baidu heed censorship orders. Unwanted beliefs and ideologies are kept out.

Beyond that, everything is fair game. Start-ups can achieve mammoth scale with astonishing speed; they can also crash brutally. Thanks to weak intellectual property protections, they can rip one another off with abandon — not great for rewarding innovation, but O.K. for consumers, who get lots of choices.

And the money just keeps flowing in.

In another advantage, old-school industries like media, finance and health care have been dominated by lumbering state-run giants. That has allowed internet champions like Alibaba and Tencent to sew themselves into these businesses with ease.

With their mobile payment platforms, the two giants have built sprawling ecosystems in which vast amounts of commercial activity now take place. Little remains of daily life that has not been transformed. Shopping. Getting a loan. Renting a bike. Even going to the doctor.

This level of clout hasn’t gone unnoticed by China’s leaders. Never in the Communist era have private entities wielded such influence over people’s lives.

To keep tech in its place, the government is demanding stakes in companies and influence over management. Regulators have reprimanded online platforms for hosting content they deem distasteful — too raunchy, too flirty, too creepy or just too weird.

That’s why the best way for tech companies to thrive in China is to make themselves useful to the state. Nearly everyone in China uses WeChat, making the social network a great way for the authorities to police what people say and do. SenseTime, whose facial recognition technology powers those fun filters in video apps, also sells software to law enforcement.

The risk for these companies is that the government demands more, sucking away resources that could be better spent chasing innovations or breaking into new markets.

In China, says Lance Noble of the research firm Gavekal Dragonomics, the government’s support “can be a blessing and a curse.”

See the rest:

NYT:https://www.nytimes.com/interactive/2018/11/18/world/asia/china-internet.html?action=click&module=Top%20Stories&pgtype=Homepage

China ups cash rewards for citizens who report porn

November 16, 2018

China is raising the cash rewards paid to citizens for reporting pornographic and “illegal” publications to authorities, government regulators said Friday.

Starting December 1, people can rake in up to 600,000 yuan ($86,000) for reporting illegal content, online or otherwise, double the 300,000 yuan under previous guidelines.

What counts as “illegal” content in China is broadly defined, but includes work that “endangers national unity”, “leaks state secrets”, and “disturbs social order” — umbrella terms that are also sometimes used when authorities punish or silence Chinese dissidents and rights campaigners.

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The new rules, published by a bureau under the top media regulator, come as Beijing ramps up controls on content.

Earlier this week the Cyberspace Administration of China (CAC) said it had “cleaned up” 9,800 accounts on Chinese social media platforms which it accused of spreading “politically harmful” information and rumours.

The internet regulator also chastised popular social media platforms WeChat and Weibo for negligence and “irresponsibility”.

And on Thursday CAC published new rules requiring online platforms to save a plethora of user data, including chat logs, network addresses, and device type, by the end of the month.

The information would be included in “security assessment reports” — which police and CAC can request from platforms as needed.

The new requirements are part of CAC’s efforts to tighten control over sites that influence public opinion, such as chat groups, blogs, and Twitter-like Weibo, which was forced to roll out real-name registration in 2012.

Oversight of social media has ramped up in recent years as part of the government’s push to “promote the healthy, orderly development of the Internet, protect state security and public interest”.

AFP

China’s Tencent beats estimates with 30% profit rise

November 14, 2018

Chinese internet giant Tencent said on Wednesday it posted a nearly 30 percent rise in profit in the most recent quarter as new games already in the pipeline mitigated any impact from a government crackdown on the game sector.

Shenzhen-based Tencent said net profit came in at 23.33 billion yuan ($3.39 billion) in the three months ending September 30, beating a Bloomberg analyst estimate of 18.39 billion yuan.

Tencent’s earnings have drawn close scrutiny after the company posted a two percent year-on-year fall in profit for the preceding quarter, which Bloomberg data indicated was the first such decline in at least a decade.

Known for its ubiquitous WeChat social media and messaging programme, Tencent relies heavily on revenues generated by video games played by its users, and the company outlook has been clouded by a government freeze on approvals for new game titles since earlier this year.

The government also has initiated a campaign to tighten regulation of the fast-growing industry amid concerns over gaming addiction.

The recent negative news has lopped a stunning amount off of Tencent’s total market value — more than $250 billion — this year as its Hong Kong-listed shares plummeted.

Tencent said smart-phone game revenue grew seven percent in the third quarter to 19.50 billion yuan.

But PC client game revenues were down 15 percent to 12.4 billion yuan “due to user migration to mobile games and the high base in the same quarter last year.”

Revenues got a boost from the release of 10 new titles during the quarter, Tencent said, adding that it had 15 more games in the pipeline and ready for release.

Analysts said the China gaming industry — the world’s largest, and dominated by Tencent — could feel a squeeze soon due to the cut-off in new title approvals, but added that licensing was expected to resume soon and that the industry continues to enjoy high user demand.

AFP

Australia trade minister to visit China in sign of thaw

November 3, 2018

Australia’s trade minister will travel to China on Sunday, in a sign that political tensions between the two countries may be easing.

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Simon Birmingham, the first senior Australian government official to visit China in a year, will attend the China International Import Expo, or CIEE, seen as an attempt by Beijing to allay foreign concern about its trade practices.

Relations between Australia and the world’s no.2 economy have been at low ebb over accusations of China’s influence in Australia’s media, universities and politics and its use of loans to build leverage over poorer South Pacific island nations.

In August, Australia banned Huawei Technologies Co Ltd from supplying equipment for a 5G mobile network citing national security risks, a move the Chinese telecoms gear maker criticised as being “politically motivated”.

China, however, remains Australia’s top goods and services trading partner, accounting for 24 percent, or A$183.4 billion ($132.01 billion), of total trade in 2017, according to data from the Department of Foreign Affairs and Trade.

Birmingham said in a statement on Saturday that Australia’s “high-level” delegation, which includes representation from state and territory governments, “reflects our ongoing commitment to our relationship with China”.

The minister’s press office would not immediately comment on whether Birmingham would meet with any senior Chinese officials on his trip to Shanghai.

Later in the week, Birmingham will visit Hong Kong where he is expected to meet with Secretary for Commerce and Economic Development Edward Yau, “to move forward negotiations on the Australia-Hong Kong Free Trade Agreement”.

Chinese President Xi Jinping is expected to open the CIEE with a speech on Monday. No officials from the United States, China’s top trading partner, will attend, although leaders from 18 countries and thousands of foreign companies will be present.

Online Gaming Target of Chinese Government: Tencent reorganization planned to comply

September 30, 2018

Chinese internet giant Tencent Holdings announced on Sunday its first restructuring in six years, as it faces increased challenges from tighter government regulations.

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BEIJING: Chinese internet giant Tencent Holdings announced on Sunday its first restructuring in six years, as it faces increased challenges from tighter government regulations.

The Shenzhen-based and Hong Kong-listed company will integrate the original seven business groups into six, including a new one on cloud and smart industries, the company said in a statement.

Tencent will “further explore the integration of social, content and technology that is more suitable for future trends, and promote the upgrade from consumer internet to industrial internet”, it added.

Tencent will also set up a technology committee.

Tencent, hit by China’s intensified crackdown on online gaming, has reported its first quarterly profit fall in nearly 13 years.

The main business of Tencent, which was founded in 1998, is video games but the company also runs China’s dominant social network, WeChat, with more than 1 billion users.

(Reporting by Kevin Yao; Editing by Richard Borsuk)

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