Reflections and Predictions on China and SoftBank in 2020 with Shai Oster
Fresh out of the studio, in episode 338, Shai Oster, the Asia Bureau chief for The Information is back on his annual review with us again to discuss the state of China technology giants and SoftBank in the time of COVID-19 pandemic and predict what is to come in 2021. Starting the conversation, Shai reviewed the predictions he made in 2019 and explored the impact of COVID-19 pandemic on how they played out in 2020. From there, Shai reflected on the year that dominated the headlines in 2020: the diffusion of the China-US tensions to other regions: India and Australia against China tech giants, Tik Tok's problems in the US, Ant's botched IPO and SoftBank's attempt to go private. Last but not least, Shai offered his predictions for 2021 and what is to come for the Chinese technology giants and SoftBank for the year ahead.
Here are the interesting show notes and links to the discussion:
* Shai Oster (@beijingscribe, LinkedIn, TheInformation Profile), Asia Bureau Chief in The Information
* So since your last appearance on the show, what have you been up to?
* 2019 Predictions:
* China & US: Trump’s impeachment
* China economy: growth
* Tiktok will retreat from US, scale back & renew focus china, maybe India, Southeast Asia and Africa: accurate
* The shift of Chinese money to other markets
* 2020 Events that shook China and SoftBank: The China-US tensions have exacerbated and percolated to other regions now (and that includes Australia and India) to Chinese companies: 1/ India banning 47 apps including Wechat, Tik Tok and many apps from China and 2/ Australia and US banned Wechat.
* Let’s go to India first, given that the major unicorns are invested by Chinese tech giants, for example, PayTM by Alibaba, and the rise of local giants such as Reliance Jio backed by a strong US consortium: Facebook, Google, Silver Lake Partners, KKR, how do you see the challenges moving ahead for Xiaomi, which is dominant in India as well?
* How do you think the Biden administration will handle the current tensions with China?
* In the year ahead, do you think China will come down hard on US companies that are heavily invested here, like Apple or Starbucks Coffee?
* Currently, the Chinese government has directed the local companies to be self-reliant, and specifically in the semiconductor industry, does that mean that we will see the decoupling of the supply chain accelerate much quicker?
* Given that Tencent owns a few major gaming companies, for example, Epic, and with the recent lawsuit between Apple and Epic, do you see a possibility that the US government will pressure Tencent to divest their holdings in the US?
* Tik Tok’s problems in the US and elsewhere: First, Kevin Mayer, the former CEO of DisneyPlus was poached and then became the CEO of Tik Tok US and Group COO, and subsequently resigned in July 2020, given the Trump’s administration insistence that the company has to be sold. Finally, after talks with rumors that Microsoft might acquire the entity completely, the eventual decision is that Oracle becomes the beneficiary of being an investor (along with Walmart) for Tik Tok US to ensure that data resides in the US.
* What are your thoughts on Tik Tok’s current situation in the US?
* Can ByteDance grow further given that there is so much pushback from other markets?
* Where do you see ByteDance’s growth markets are? Will be they turn inwards towards domestically or expand to other markets where the push back is lesser, for example, Southeast Asia?
* The Botched IPO of Ant Financial and what’s going to be next?
* The Chinese government has ended Ant Financial’s IPO with direct interference from President Xi as reported by various outlets. What are the causes in your opinion as to why the IPO ended up not happening?
* What are the implications for Alibaba Group as a whole with Ant Financial not able to IPO?
* What must Ant Financial do in order to convince the authorities to allow them to IPO?
* The billion-dollar question: Will Ant Financial eventually IPO?
* A lot of people did not realize that the Ant Financial IPO has left a lot of money on the table in the Hong Kong Stock Exchange, do you think that the companies which are going to IPO in HKSE will benefit from this event?
* Does this offer a lesson to how Chinese tech companies should conduct themselves? Which companies do you think might run into trouble with the state?
* COVID-19 Pandemic:
* Which tech companies in China are the major beneficiaries of the COVID-19 pandemic?
* China has managed the COVID-19 pandemic much better than the US. What are the implications to the Chinese economy from now with the various successful vaccines, for example, Pfizer vaccine being approved?
* SoftBank in 2020 and its current strategy to go private
* After the Wework debacle, SoftBank has gone on a few different directions: 1/ Selling their Alibaba stake, 2/ Sell ARM to NVDIA and Boston Dynamics to Hyundai, 3/ Ran a stock market gambit with futures in tech, 4/ DoorDash’s IPO giving them 10B gain that will write off Wework’s investment, and 5/ quietly buying back shares to go private?
* How do you assess SoftBank’s performance in 2020 and do you think that with DoorDash’s success, will SoftBank Vision Fund 2 happen?
* Has SoftBank’s enormous influence on the tech industry waned after WeWork’s debacle? Where do you think that they will spend the remainder of the $100B Vision Fund on?
* Do you think that SoftBank will go private according to Tim Culpan’s analysis on Masa’s strategy? Do you think that SoftBank will manoeuvre and make a comeback after being private?
* 2020 is now closing to the end, what are your predictions for 2021 so that we can have a future conversation a year from now?
* Any recommendations?
* Shai's recommendations: Rui Ma and Ying Ying Lu, Techbuzz China podcast and subscribe to The Information with the key breaking news it broke in 2020.
* How does our audience find you?
Editor's note: Our team in Analyse Asia thanked our audience for your support and wished everyone a Happy New Year 2021. The episode is recorded in the last week of 2020.
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The show is hosted and produced by Carol Yin (@CarolYujiaYin) and originally created by Bernard Leong (@bernardleong, Linkedin). Sound credits for the intro music: Taro Iwashiro, "The Beginning" from Red Cliff Soundtrack. analyseasia · Reflections and Predictions on China and SoftBank in 2020 with Shai Oster