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We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.
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New Chinese Rule Has Potential to Affect TikTok Sale ✋
On Friday, China’s Ministry of Commerce and Ministry of Technology changed a rule that would ban the export of technologies related to “artificial intelligence” and “personalized information push service based on data analysis.” Any Chinese company selling that technology to a foreign buyer now has to go through new layers of scrutiny. And both of those quoted technologies are key components of TikTok, the Chinese company currently being forced to sell its US operations. On Sunday, Bytedance, TikTok’s parent company, issued a statement saying they would “strictly comply” with any new Chinese regulation.
At this point, TikTok’s acquisition is imminent and its unclear how this new rule will affect the deal. It was expected that the official TikTok announcement of an acquisition would happen sometime this week but the Wall Street Journal is reporting that talks slowed down this past weekend after the new Chinese rule change. I still think the deal will go through, but this shows how important of a political football TikTok has become for both the US and Chinese government.
New Access to Financial Services for Filipinos 🇵🇭
In the midst of Covid, 27 Million people in the Philippines are unemployed. It’s estimated that only 2 out of 10 Filipinos have a bank account and even fewer have credit cards. At the same time, 7 out of 10 Filipinos are mobile internet users and more people have digital wallets rather than credit cards. Against this backdrop, several fintech startups are beginning to see big opportunities in the Philippines.
The Philippines is a huge country with a population of 106 Million. Companies like Hong-Kong based fintech Cashalo entered the market in 2018 and have offered products like ‘buy now pay later’ credit schemes and personal loans. Since there is not a strong credit scoring system in the country, extending credit to Filipinos can be risky for startups. Regardless, companies like Cashalo, BillEase, and Home Credit have seen millions of app downloads and are still bullish.
The Potential Weakness of Western Celebrity Beauty in China 💄
Nearly half of all global beauty industry growth is expected to come from China over the next five years, an increase in sales representing $38 Billion. This article from Jing Daily highlights the changing consumer preferences of young Chinese consumers. Several Western celebrities like Victoria Beckham, Kim Kardashian, Miranda Kerr, and Rihanna have launched their own beauty brands but success is not always guaranteed from a Western brand name. Local Chinese beauty brands, known as c-beauty, are increasingly more relevant products for local Chinese buyers and are also more affordable than Western celebrity beauty brands.
While the article doesn’t necessarily mean Western celebrities are struggling to launch beauty brands in China, I think it says a lot about Chinese consumers. Modern Chinese consumers are more proud of their national identity and correspondingly have stronger support for local brands. Twenty years ago, it would have been sufficient to launch a foreign brand in China and people would buy your product because it’s foreign. Today, there are much higher standards for Chinese market entry and there is more support for local brands.
Update #62 - Beijing Laws, Philippines Lending, and Celebrity Beauty