China’s largest Uber-for-trucks companies merge
Yunmanman (a GGV portfolio company) and Huochebang, two top players in China’s trillion-dollar logistics market that offer Uber-like services to trucks, have reached an agreement to merge this week. Wang Gang, a backer of Yunmanman’s and an angel investor in Didi Chuxing (a GGV portfolio company), will become the CEO of the new entity. Yunmanman has raised around $500 million to date, and Huochebang has raised $327 million.
In China, there have been multiple sectors in which the top two players engaged in fierce, sometimes even toxic, battles before merging to save money. This was the case with Didi-Kuaidi in the ride-sharing industry.
We at GGV Capital have been a part of many of these merger discussions. Led by managing partner Jixun Foo, GGV has played a critical role in several key strategic mergers and acquisitions in China, such as those of Youku-Tudou (first ever multi-billion dollar tech merger in China), Baidu-Qunar, Ctrip-Qunar, and Mogujie-Meilishuo.
Beijing pushing for 5G adoption
The Ministry of Industry and Information Technology (MIIT), China’s telecom regulator, said it expects to replace current 4G technology with fifth-generation (5G) networks in global markets starting in 2019. The technology will facilitate data transfer rates of up to 100 megabits per second in major metropolitan areas. This is a signal that Beijing intends to be at the forefront of the next generation of mobile communications. China’s three major wireless carriers, China Mobile, China Unicom, and China Telecom, all plan to roll out the initial commercial version of 5G mobile networks next year.
Toutiao will spend $300M to help influencers make money
Toutiao, China’s top AI-driven content platform, held a conference last week celebrating its content creators and announced that it will spend $300 million to help them increase followers and generate revenue. Toutiao also hopes to help create 1,000 influencers with over a million followers in the coming year.
“Toutiao has always aimed to be ‘the platform that understands you the most,’ using algorithms to recommend content to potential followers,” said Toutiao’s founder and CEO Zhang Yiming. “We also collect data on how content creators and their followers interact. Over time, this matching has become increasingly accurate, allowing influencers to increase their follower base.”
Toutiao now owns six short-video apps, three in China (Xigua, Tik Tok/Douyin, and Hypstar/Huoshan) and three outside of China (Flipagram, Musical.ly, and ToppBuzz Video). Over 10 billion short videos are consumed every day across these platforms.
According to Toutiao, the average user of Xigua Video (formerly Toutiao Video) spends a whopping 70 minutes on the app, compared to 60 minutes for the average YouTube user.
Read our primer on Toutiao with Hans Tung’s (managing partner at GGV Capital) conversation with founder Zhang Yiming here.
Cheetah Mobile releases strong Q3 results
Cheetah Mobile (NYSE: CMCM, market cap $1.73B), a Chinese mobile Internet company that owns various popular apps (including Clean Master, Live.me, News Republic, Piano Tiles, etc.), released strong third-quarter earnings last week. Cheetah Mobile is an example of a Chinese company that has successfully gone global, with75.4% of its 589 million monthly active users located outside of China.
Revenues from the mobile entertainment business, which includes Live.me, News Republic, and mobile games, increased by 123.9% year over year to $54.5 million. Net income increased by 122.5% year over year to $24.2 million.
Cao Xudong, founder and CEO at Momenta (a startup developing software for autonomous vehicles; a GGV portfolio company), at GGV’s Evolving Lifestyle conference in October:
I think the development of autonomous vehicles will definitely be localized. In order to detect road conditions, you need very local data. For example, Tesla’s cars get into a disproportionately large number of accidents in China because its algorithms are designed for road conditions in the US, not in China. Roads in China are much more congested, and drivers there are accustomed to a very different way of driving. This will present significant challenges for autonomous driving in China.