Hi folks, we are back with our weekly edition of China’s Digital Digest, wherein we bring you weekly updates on China’s digital space. The report takes a quick glance at China’s complex and rapidly evolving social media landscape by providing updates on the latest happenings across the social media industry. Here are the major highlights of the report.
1. Alibaba Entertainment Group Head Regrets Belittling Video-Gaming Unit, Cantonese
The head of Alibaba Group Holding’s entertainment business has apologised to employees for his controversial remarks dismissing a video-gaming unit’s performance and disparaging the Cantonese dialect, which went viral on Chinese social media.
Fan Luyuan, chairman and chief executive of Alibaba’s Digital Media and Entertainment Group, admitted he was “out of line” with the remarks, adding that he only wanted to “liven up the atmosphere” during a meeting with the employees of subsidiary Lingxi Games. At the meeting, Fan – a member of the Alibaba Partnership who also serves as chairman and chief executive of Hong Kong-listed Alibaba Pictures – criticised Guangzhou-based Lingxi Games for going “astray under the leadership of the previous management team”.
2. China’s Instagram-Like Xiaohongshu Closer to IPO As Profits Surge, Sources Say
Social media platform Xiaohongshu, known as China’s Instagram, has the wind at its back in its pursuit of an initial public offering in Hong Kong, as its commercialisation efforts pay off, according to sources briefed on the matter.
The Shanghai-based company, which is influential among young Chinese women with its user-generated lifestyle content, has selected underwriters, including China International Capital Corporation, for the planned listing, according to several people familiar with the matter. The company expects profits to double this year over 2023, exceeding US$1 billion, Bloomberg recently reported, presenting favourable conditions for floating shares on the Hong Kong bourse.
3. Xiaohongshu Establishes Application Algorithm Department
Xiaohongshu has recently integrated the algorithm departments of commercialization, community, and e-commerce.The newly established Application Algorithm Department is concurrently headed by Xia Hou, the head of the Xiaohongshu Community Technology Department and reports to Xiaohongshu Vice President of Technology Fengdi.
After Xia Hou joined Xiaohongshu, he was mainly responsible for the community algorithm and later served as the technical director of the Xiaohongshu community. During his tenure, Xia Hou made great achievements in community algorithms, search integration, ecological governance and other directions, which has also become a prerequisite for this appointment.
4. Shein’s UK IPO Slowed By Challenge From Uygur NGO Alleging Xinjiang Cotton Use
Britain’s financial regulator is taking an unusually long time to approve Shein’s initial public offering (IPO) as it scrutinizes the fast-fashion giant’s supply chain practices and evaluates legal risks. This delay follows a challenge to the listing by an advocacy group representing China’s Uygur population, according to two sources familiar with the matter.
The Independent Anti-Slavery Commissioner, a watchdog under the UK’s interior ministry, has also raised concerns about the IPO due to allegations of exploitative labor practices within Shein’s supply chain. These concerns add further pressure on Shein, a Singapore-based company that dominates the global market with its affordable clothing, such as $5 tops and $10 dresses, primarily sourced from China and sold in 150 countries.
In addition to seeking approval from Britain’s Financial Conduct Authority (FCA), Shein is awaiting clearance from China’s securities regulator. According to two separate sources, the Chinese regulator is likely to issue its decision after the FCA reaches a conclusion. Shein had confidentially filed for a London listing with the FCA in early June, but the process remains under close scrutiny.
5. Beijing Puts Ecommerce Sector’s ‘Refund-Only’ Policy And PDD Under Scrutiny
China’s “refund-only” policy in the e-commerce sector—allowing consumers to receive refunds for purchased goods without returning the items—is now facing scrutiny amid growing concerns over widespread abuse of the practice. Analysts have pointed out its detrimental impact on the local market, particularly on online merchants.
In response, China’s market regulator has directed PDD Holdings, the operator of budget-shopping platforms Pinduoduo in China and Temu internationally, to address issues associated with this policy. The State Administration for Market Regulation (SAMR) and the Ministry of Commerce recently summoned PDD executives to a meeting in Beijing to discuss the matter, according to reports. Notably, no penalties were imposed on the company during this intervention.
The involvement of SAMR and the Commerce Ministry underscores the increasing concern over how the unchecked “refund without return” policy has been exploited, negatively affecting the earnings of online sellers and disrupting market fairness.
6. Jack Ma Speaks at Ant Group’s 20th Anniversary Event
Jack Ma attended the 20th anniversary event of Ant Group on 8th December, where he voiced confidence in its affiliate Ant Group's future, seeing significant opportunities in artificial intelligence for the fintech giant.
He stated in his speech that in the next 20 years, the tremendous changes brought by the AI era will exceed everyone’s imagination, because AI will be a greater era and will change everything, but this does not mean that AI will determine everything. Ma, China's best-known tech entrepreneur, publicly criticized Chinese regulators in a speech in October 2020, derailing a massive listing by Ant Group. That was followed by regulatory crackdowns on the Chinese tech sector, with Ma largely withdrawing from public life.
7. China’s Generative AI Market Sees Fewer New Entrants With 64 New Approvals
China has approved 64 generative artificial intelligence (GenAI) services for release in Beijing’s latest regulatory approvals, making it the smallest of the three batches to be given the go-ahead this year, in a fresh sign that the domestic AI market is becoming saturated.
The November approvals have gone to a diverse group of products and applications, spanning a variety of industries, according to a document published by the Cyberspace Administration of China, the national internet watchdog. Licences have been granted to GenAI models for legal services, medical research, educational tech and online gaming, among other use cases.
Wrapping Up
The vast and diverse nature of the Chinese Social Media space makes it incredibly challenging to keep a tab on the rapid developments taking place. However, China’s Digital Digest brings you all the latest updates from there to keep you abreast of all the evolving trends.
To delve deeper into the findings of our latest report, click here.
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