Finance is a really odd section for me to have. I don’t come from a finance background, I have no interest in fin-tech. Yet it makes its appearance here on this blog.
When thinking about this category, I decided to reflect on why its here. It’s usually where curated content sits, rather than my own ideas.
The reality of life in the west is that everything has become financialised. As I write this as people think about web 3.0, they are thinking about payment systems first and working about utility later. This implies that the open web we know won’t be part of the metaverse in terms of ideas or ethos.
Instead of economic growth consumer spending depends on different ways of creating credit. Its no accident that delayed payments finance company Klarna is the biggest thing in European e-commerce at the time of writing this page.
Back when I started writing we were heading into the financial crisis of 2008, the knock on effects of that could still be felt a dozen years later and was a contributing factor to Brexit and Trump victories. The ‘occupy’ movement was catalysed by the financial crisis and then turned into something else. For instance it became a pro-democracy movement in Hong Kong.
We had the implosion of financial brands like Lehman Brothers and the Royal Bank of Scotland. This created a lack of trust in business, the media and the government. We are still seeing that play out today, from cryptocurrency to conspiracy theories and a lack of trust by the public in experts.
The US-China tech cold war has turned hot – but would a Biden presidency change things for Huawei and others? | South China Morning Post – “No president will want to be accused of being soft on China,” said James Andrew Lewis, senior vice-president and director of the technology policy programme at the Washington-based Centre for Strategic and International Studies (CSIS). “Trump’s policies are disorganised, but consistently move to cut economic ties with China. Biden’s policies will be better coordinated, less abrupt, but move in the same direction.” – the tech cold war isn’t new. You could trace it back to the beginning with coercive IP transfer and massive industrial espionage. It kicked off in earnest with the Golden Shield Project 金盾 工程 censorship system. Where we are now was not a case of if, but when
TikTok becomes a case study for Chinese companies planning global expansion | South China Morning Post – Zhang’s relationship with the ruling Communist Party is complicated. He must walk a fine line between keeping Beijing happy but not be seen as too close to raise concerns outside China. Zhang, who told Atlantic magazine in July that he was not a party member, was approached by Beijing a year ago with an offer to help when TikTok faced political troubles in India. However, Zhang sent mid-level staff to meet government officials, signalling he did not want Beijing to get involved – whether entrepreneurs like it or not, they’re likely to find the government inserted into the business like a helicopter parent. You’re likely to see coercive business development as part of Chinese diplomats wolf warrior patter; a la Huawei 5G network equipment and the Faroe Islands
Money-launderers use Chinese online shopping sites to funnel cash offshore | Financial Times – Money launderers have used some of China’s leading online shopping sites to transfer billions of dollars to offshore gambling sites, police raids have revealed. People wishing to evade China’s strict capital controls, for example to gamble on offshore websites, have been placing fake orders on the shopping sites, including on Pinduoduo, China’s second-largest platform by users. A corresponding sum is then credited to their gaming account.
Why Epic isn’t an innocent victim in the Fortnite battle with Apple, and why it deserves a loss today – BGR – interesting argument that goes against the popular media narrative. I wonder why Epic haven’t gone after console makers as well? Not all gamers might get the fact that Epic has created this crisis fully knowing it would breach the contract, fully knowing what Apple’s responses could be, and full knowing that Apple will call its bluff. That’s why it had all those lawsuits on hand and the viral commercial. Whether it expected Apple to go for the nuclear option, that’s debatable, but the same email chain above proves that Apple’s response was swift. From the moment Epic released the update, Apple let the company know that it’s risking losing access to its developer tools, which can hinder app development for games based on the Unreal engine that Epic licenses to other game makers. The same response also details another dishonest behavior from Epic that shouldn’t be ignored. Epic took advantage of Apple’s developer tools to quietly push an update to the App Store that turned on an IAP payment functionality that Apple would never approve. Epic has been cheating, and that’s a company that’s supposedly working for other developers. That’s a company that other developers should trust when dealing with a hypothetical Epic App Store inside the App Store that would be governed by Epic’s own rules
Vietnamese tech firm sues TikTok, alleging copyright infringement – Reuters – VNG are a highly creative outfit. They do great games, their messenger platform has done well despite Vietnam allowing access to WhatsApp and Facebook. They had some challenges over IP over five years ago and have since built up their own stable of recording artists
Chinese-Made Smartphones Are Secretly Stealing Money From People Around The World – how cheap Chinese smartphones take advantage of the world’s poorest people. Current security concerns about Chinese apps and hardware have largely focused on potential back doors in Huawei’s 5G equipment. More recently, people have focused on how user data collected by TikTok could be abused by the company and the Chinese government. But an overlooked and ongoing threat is the consistent presence of malware on cheap smartphones from Chinese manufacturers and how it exacts a digital tax on people with low incomes
‘The new definition of luxury’: Highsnobiety unpacks how the landscape of high-end fashion has tilted toward accessibility – Digiday – Carvalho said that through the recent research Highsnobiety performed, his team has learned that younger shoppers don’t care about exclusivity in luxury like previous generations did. Instead, they want accessibility. And for the most part, the designer brands that have successfully attracted a younger audience no longer have closed shop doors that only allow in certain clientele. “Accessibility doesn’t mean that every consumer will have the means to purchase a product, but the doors are open for them,” he said. “The hope is that down the line” this 16- or 17-year-old will become a paying customer of the brand.” More luxury segment content and analysis here
First, private equity holds us to ransom. Now it wants us to bail out its losses | Private equity | The Guardian – Its excessive debts, once the route to fortunes and, it would say, “business discipline”, are crushing it. On top, the commercial property market no longer looks a one-way bet. It wants its vast mortgage debt guaranteed by the government, even though the interest charges drive the underlying companies into operating losses – but this has been apparent way before COVID. Private equity in these sectors has been like an unpleasant game of pass the parcel
The businesses provide a consistent experience – like McDonalds that’s their thing. This means very hierarchical structures.
Finally restaurants tend to make money on controlling the margins tightly, doing the right thing here would be going against pretty much every trait that makes them successful all of the time
Pandemic triggers wave of billion-dollar US bankruptcies – really interesting data points and charts on large US bankruptcies in this FT article. The bigger question are these billion dollar US bankruptcies like ripping a band-aid off as their demise was inevitable, or are good businesses going to the wall in extreme times? (paywall)
The Effects of Hong Kong’s National-Security Law Are Already Clear | 新聞 – Yahoo雅虎香港 – Just a few weeks after China’s imposition of a new “national-security law” on Hong Kong, we can already see the law’s effects: It has emboldened the Chinese Communist Party (CCP) to suppress dissent, punish activism, and create fear within the city’s democracy movement. In 1997, the United Kingdom returned Hong Kong, which it had governed for 99 years under a lease extorted from the Qing Dynasty, back to the People’s Republic of China. At the time, the PRC promised to preserve the political autonomy and freedoms the city had enjoyed under the British until 2047. The national-security law and the crackdown it initiated marked the breaking of that promise.
Gen Zer men think feminism has ‘gone too far’ | Canvas8 – ok dodgy headline. The interesting thing about this is that it questions the blanket progressiveness wrapped around gen-z. Which is also an indicator of how useless generations can be as shorthand. It would be interesting to see how they compared to previous cohorts of 18 – 29 year olds. Not terribly surprising though. More consumer behaviour related posts here.
Here’s Why Jackie Chan Is Really Unpopular in Hong Kong | Vice – accurate, but neglects to mention a number of relevant points. That the fate of Chan’s son (arrested on drug use) rests with the Chinese government. So there was at least one point of leverage that the party has over Chan. Adding to the complex relation of Chan’s relationship to the Chinese Communist Party is is own family history. Chan’s father was a Koumintang intelligence officer hounded by the communists. After successive assassination attempts on his life; Chan’s father eventually ran away to Hong Kong and eventually Australia where he worked as a cook. Chan’s mother had smuggled opium in her past. Meanwhile his brothers who were left in China lived a life of hardship full of communist punishments because of who their father was.
DigiTimes: HiSilicon engineers abandon ship – Huawei is apparently looking to build a 45nm silicon chip fabrication plant without US tech, which DigiTimes claims is ‘mission impossible’. Kind of related form the FT: Huawei employees worry about lay-offs after tougher US sanctions. Not surprised that the global marketing team seems to be taking the cuts. It was often quoted to me that ‘the best advertising for Huawei was its employees’ and attributed to Mr Ren. This was when the company was reluctant to do co-marketing deals and advertising for handsets
Morgan Stanley blocks remote network access for China interns | Financial Times – Another large US bank said its systems in China were exposed to frequent cyber attacks that were of “infinitely greater” magnitude than many other countries. – not terribly surprised that remote network access is a threat vector in China. More China-related posts here. It will be interesting to see if remote network access brings out more
Do Chinese millennials want diversity in fashion ads? | Advertising | Campaign Asia – Fashion’s culture wars are dividing Chinese millennials. In June, a series of fashion and beauty moves, including a Calvin Klein pride campaign featuring the black trans model Jari Jones and the decision by some top beauty groups to take their skin-whitening products off the market in China, polarized opinions across the country’s social media landscape. While the mainstream overwhelmingly saw these radical changes as a byproduct of the West’s excessive political correctness, the fashion-forward crowd recognized these debates as the start of a much-needed change in their country.
On the Twitter Hack – Schneier on Security – Whether the hackers had access to Twitter direct messages is not known. These DMs are not end-to-end encrypted, meaning that they are unencrypted inside Twitter’s network and could have been available to the hackers. Those messages — between world leaders, industry CEOs, reporters and their sources, heath organizations — are much more valuable than bitcoin. (If I were a national-intelligence agency, I might even use a bitcoin scam to mask my real intelligence-gathering purpose.) Back in 2018, Twitter said it was exploring encrypting those messages, but it hasn’t yet.
Enter the parents | Film | The Guardian – no one suspected that he would turn out to have two brothers still alive and living impoverished, anonymous lives in mainland China. Nor did they have any inkling that Jackie’s mother had once been a legendary gambler in the Shanghai underworld or that his father had been a Nationalist spy and gangland boss. These are among the more startling revelations that Cheung uncovers. “The fact that his mother was an opium smuggler, a gambler and a big sister in the underworld was a big shock to Jackie and also to us,” she admits. “Everybody in Hong Kong knew that his mother was like a common housewife, very kind, very gentle.”
China has big ideas for the internet. Too bad no one else likes them – CNET – New IP would shift control of the internet, both its development and its operation, to countries and the centralized telecommunications powers that governments often run. It would make it easier to crack down on dissidents. Technology in New IP to protect against abuse also would impair privacy and free speech. And New IP would make it harder to try new network ideas and to add new network infrastructure without securing government permission
Why business in Hong Kong should be worried | The Economist – Hong Kong is trapped like the grips of vice. Its economy is dominated by finance and rent-seeking businesses – Simon Cartledge for Gavekal Dragonomics, a consultancy, because these firms are over-represented in government, “Hong Kong’s single biggest disincentive to risk-taking and entrepreneurship—its high costs, especially for property—cannot be tackled.” That is why the back-to-business message is unlikely to resonate with ordinary Hong Kongers. This is probably why Hong Kong start-ups like DJI moved to Shenzhen to found their businesses. (Frank Wang did a lot of the key work on DJI drones whilst studying at HKUST. And even benefited from a small HKUST grant. But he moved across to Shenzhen to found the business itself in 2006.) Fintech has been a bit of a busted flush. It was the latest in a long line of business ideas like wine trading, the arts and medical tourism as failed niches for Hong Kong. Singapore seems to have been much more successful in business creation and seems to be seeing more venture capital interest. Current sectors in Hong Kong likely to be affected include the legal practices specialising in commercial arbitration. Without trustworthy commercial arbitration in Hong Kong doing business in China looks much less attractive. Singapore is trying to bridge the gap, but I suspect that there might be long term corrosion of Chinese business dealings. Digital companies and foreign banks face big worries. Between the Hong Kong Autonomy Act and the Hong Kong National Security Law – Helping America to enforce sanctions would violate the security law. Not doing so would incur American penalties
Mark Ritson: In a virtual marketplace, only the strongest brands will survive – Companies see better profit margins and an almost unlimited customer base but miss the drastic reduction in barriers to entry. – so brand hyper-competition will ensue and the winner takes all model will extend beyond tech. Expect venture capital money to pour all kinds of weird industry niches as they try to pick category winners
Chinese liquor group Kweichow Moutai tumbles after graft news report | Financial Times – Moutai sales are linked to gifting and lavish consumption and some have linked the share price increase with a corresponding uplift in sales and by implication graft. The damaging bit in the article is that Moutai’s former chairman Yuan Renguo quoted saying in private that sales linked to corruption are “a normal part of business” and that China’s corruption clampdown would not reach far enough to affect the company’s business
Banning junk food from TV an ‘irrelevant symbolic gesture’ that won’t reduce obesity | The Drum – the argument whilst true won’t be believed by regulators. Their rationale would be why would junk food companies advertise if it didn’t work? The distinction of this is junk food brand fighting out with similar brands in its category won’t wash. Secondly, advertising bans worked in the past on tobacco products over time
Outrage Over China’s Treatment of Hong Kong Galvanizes the West – WSJ – Complaints about China have piled up in Western capitals in recent years, but it took Beijing’s new curbs on Hong Kong’s autonomy to galvanize them around something approaching a common cause. – In many respects its like boiling a frog in reverse, it is likely that China didn’t expect the frog to jump out of the pot, given that the heat had been on so long
Opinion | A Coronavirus Care Package From China – The New York Times – After the Communist takeover in 1949, traditional Chinese medicine was institutionalized. Folk remedies helped fulfill both a tangible need — credentialed doctors were scarce — and an ideological end: That system of knowledge is quintessentially and uniquely Chinese. Today, the Chinese government sees a political opportunity in the continuing emotional appeal of traditional medicine. If Chinese people can embrace an Eastern alternative to Western medicine, they might also be more likely to accept the Communist Party’s governance model and reject liberal democracy
Speaking in Tongues – Chinese Storytellers – such a great essay on the current challenge facing Chinese (and in particular Hong Kongers) writing for foreign audiences: a Chinese storyteller telling stories for an English-speaking audience in a divided world. As a writer who has called Hong Kong, Beijing and New Haven home, I find myself often in the position of what Zadie Smith once called “speaking in tongues”: equivocating between the lens of the insider and the outsider, examining the places I call home with both the “objective,” parachuted gaze of the foreign correspondent, and the emotionally implicated and invested eye of the local storyteller. Increasingly, that has felt impossible
Google considers alternatives to Hong Kong for undersea cable | Financial Times – Hong Kong has – become less critical for not only US cloud providers but also their Chinese rivals, according to Tao Wu, a senior research analyst for Gartner, a tech research firm. “Singapore has become much more important than Hong Kong from a location and population perspective,” Ms Wu said. “Other top cloud providers such as Alibaba Cloud are much more focused on south-east Asia to go global than expanding in Hong Kong.” – this will have a big impact for those property developers who’ve invested in data centres (internet hotels). Hong Kong’s financial position for international trading desks will also be diminished if international telecoms infrastructure starts to divert away from Hong Kong. From a pure connectivity point of view Korea, Singapore and even the Philippines start to look really good
