Issue 7 | October 16, 2017

A Big Deal
The Wall Street Journal reported that the Chinese government is pushing some of China’s tech giants—including Tencent, Weibo and Youku Tudou (owned by Alibaba) —to offer the state a stake in them and a direct role in corporate decisions.

According to the story, Internet regulators have discussed taking 1% stakes in these three companies, which operate some of China’s most popular social networking sites. Tencent, Weibo and Baidu were recently fined for hosting pornography, fake news and other banned content.

Another Big Deal
The home-rental platform Tujia raised $300 million in Series E at a valuation of $1.5 billion.

Tujia is commonly known as “China’s Airbnb.” However, unlike Airbnb, Tujia doesn’t allow individual property owners to post listings of their homes on Owners have to go through property agents and managers first.

The funding round was led by online travel giant Ctrip and All-Stars Investment. Tujia says it has around 650,000 listings across 345 destinations in China and more than 1,000 overseas. Last June, it acquired local rival

(Tujia, Airbnb, and Ctrip are GGV portfolio companies)

A Number
43.7% – Tencent’s stake in Sogou, which filed for an IPO with the SEC last Friday to raise up to $600 million.

The Beijing-based Sogou was founded in 2005, and plans to list on the NYSE under the symbol SOGO. Sogou offers products in three main categories: search engine, input method, and others.

According to China Internet Watch, Sogou Search was the second largest search engine in China with a 7.9% market share on mobile  in Q1, 2017. Baidu is the clear leader in this market.

China's mobile search market

Sogou is best known for the Sogou Input Method, which dominates the market for Chinese language input methods with a 71% market share as of last November.

According to the filing, Sogou reported $373.2 million in revenue in the first half of 2017. It generates revenues primarily from search and search-related advertising services, which represented 90.4% of its revenues last year. Its largest shareholders are Tencent (43.7%) and Sohu (37.8%).

Sogou SEC IPO filing

Note: Charles Zhang is the founder and CEO of Sohu; Xiaochuan Wang is the founder and CEO of Sogou.

A Picture

JD unmanned warehouse

Last week, unveiled a staffless warehouse in Shanghai, featuring nearly complete automation of processes including the packaging, storage, and sorting of goods. The solar-powered warehouse employs three types of robots equipped with skills such as 2D and 3D image recognition, and will be able to process over 200,000 orders per day once it is fully operational.

A Quote
We should thank Microsoft for making significant contributions to China’s tech industry. Almost 70% of CTOs at Chinese tech companies worked at Microsoft before.
–  David Wei, former CEO of, during a speech this August
  • Jian WANG —Chairman of the technology committee of Alibaba (NYSE: BABA, market cap $451 billion), former assistant managing director of Microsoft Research Center Asia
  • Qi LU — Group President and COO of Baidu (NASDAQ: BIDU, market cap $91 billion), former global executive vice president of Microsoft
  • Ya-Qin ZHANG — President (in charge of new technology and global operations) at Baidu, former chairman of Microsoft Asia-Pacific R&D Group
  • Jeff XIONG — former CTO of Tencent (HKSE: 0700, market cap $429 billion), founding director of MSN China Development Center in Shanghai
  • LIN Bin — President of Xiaomi (valuation $46 billion), former engineering director of Microsoft Research Asia
  • Bill HUANG — CTO of Vipshop (NYSE: VIPS, market cap $5.6 billion), former CTO of Sina (NASDAQ: SINA, market cap $8.3 billion), former manager at Microsoft
  • ZHANG Yiming — Founder and CEO of Toutiao (valuation $20 billion), former Microsoft employee
  • ZHANG Hongjiang — Former CEO of Kingsoft (HKSE: 3888, market cap $2.3 billion), former CTO of Microsoft China R&D Group
  • …..
A Buzzword
达摩院 Dá Mó Yuàn (Damo Institute)

Alibaba announced last week that it will invest more than $15 billion to open a global network of R&D centers called “Academy for Discovery, Adventure, Momentum and Outlook” (DAMO).

The academy will initially focus on foundational and disruptive technologies, including data intelligence, the internet of things, financial technology, quantum computing and human-machine interaction.

Jack Ma said he has three principles for DAMO: It must be even more long-lived than Alibaba itself; it must serve at least 2 billion people around the world; it must solve the pressing issues that mankind may encounter in the future.

“Most research institutes in the world are financially dependent on governments or corporates. Ours must be able to make money on its own,” he added.

On Tuesday, the day before this announcement, Alibaba’s market capitalization briefly rose to $470 billion and surpassed that of Amazon.

– Zara Zhang & Hans Tung at GGV Capital