TechNodes

China’s largest internet IP dispute goes to court (again)

China’s largest internet IP dispute goes to court (again)

After three years of lawsuits, China’s two biggest search engines—Baidu and Sogou—are seeing each other in court again. The negotiations over patent infringement accusations have failed and the two parties have started presenting their cases at the Beijing Intellectual Property Court on Thursday (in Chinese).

Sogou vs. Baidu is China’s largest patent lawsuit and has gathered considerable attention from Chinese media and netizens. Since October 2015, Sogou has filed two suits against its competitor for infringing a total of 17 patents claiming RMB 270 million in damages.

Sogou is China’s second most popular search engine after Baidu. The company also developed a browser, web apps and an input method editor (IME) for Chinese characters. The IME software is the source of the protracted war between Sogou and Baidu.

Sogou’s IME. (Image credit: TechNode)

Back in 2014, Baidu sued Sogou for unfair competition, claiming Sogou’s integration of search functionality in its IME was stealing Baidu’s search engine traffic. The court ruled in Baidu’s favor and ordered an RMB 500,000 compensation to be paid out by the defendant.

After Sogou filed the two lawsuits which are now being heard in court, Baidu filed another ten lawsuits against Sogou in November 2016 seeking RMB 100 million in compensation, keeping the Baidu-Sogou soap opera going.

Sogou is less known in the West than Baidu but its IPO plans may change that. Sogou also gained fame in 2007 when it won a lawsuit against none other than Google which took elements from Sogou’s IME. Besides Google and Baidu, the company has also butted heads with Tencent over IME software.

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China’s Bitcoin exchanges begin closing shop sending BTC prices down

China’s Bitcoin exchanges begin closing shop sending BTC prices down

One of the China’s largest Bitcoin exchange platform—BTC China—announced in a Tweet on Thursday that it will shut down Bitcoin trading within China by the 30th of September. The move comes after Chinese regulators banned fundraising through Initial Coin Offerings (ICO) on September 4th citing concerns over financial fraud and speculation.

BTCC is not the first Bitcoin exchange platform that has decided to close shop. Just two days ago China’s Bitkan announced that it will suspend over-the-counter (OTC) Bitcoin (BTC) and Bitcoin cash (BCH) trading from Thursday.

Other Bitcoin trading platforms have not made any announcements yet. However, according to Yicai, on September 13th, the China Internet Finance Association issued a risk warning, saying that all of the so-called ” virtual currency” trading platform in China lacks a legal basis. Yicai also quoted the Shanghai Municipal Office saying that it has already ordered shutting down a number of Bitcoin trading platforms. Bitcoin trading platforms in Beijing are yet to see these announcements.

Not everyone seems to be in favor of shutting down Bitcoin trade in China. Reuters reports that on Friday, a senior official at the National Internet Finance Association of China and a former president of the Bank of China Li Lihui called on Chinese regulators to create a regulative framework to support the development of digital currencies, adding that global regulators should work together on digital currencies.

Meanwhile, to help startups and investors in a time of crisis a number of ICO advisory services are springing up, such as ICOBox, Bitcoinist reports. These services also help companies hold an ICO when they don’t have the capital to fund it.

Bitcoin price on September 15, 2017. Image credit: Coindesk

Recent news from China has impacted the price of Bitcoin sending it on a downward spiral. Other crypto currencies are also in the red.

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NEO—China’s Ethereum—is building a smart economy on blockchain

NEO—China’s Ethereum—is building a smart economy on blockchain

NEO, formerly known as AntShares, has been dubbed the Ethereum of China. Along with Qtum, it has one of China’s most successful crypto currencies. It is also China’s first open source blockchain.

Much like Ethereum, NEO uses a general purpose blockchain and runs smart contracts on it. Smart contracts aim to obliterate the traditional paper-based contract law. According to a definition by Nick Szabo, legal scholar and computer scientist known for his pioneering research into digital contracts and currencies, a smart contract is a computer function that can automatically execute the terms of a contract. To put it in simple terms, smart contracts help exchange money, property, shares, or anything of value in a transparent way without relying on a middleman, be it a lawyer, a broker or any other third party.

“Blockchain technology provides us with a decentralized, tamper-resistant, highly reliable system in which smart contracts are very useful,” NEO’s founder Da Hongfei told TechNode.

Platforms such as NEO help developers create blockchain solutions using smart contracts and create applications that are specific to a certain business. This means that it can be applied to all kinds of industries, including finance, insurance, law, healthcare, creative, and potentially more.

One of the projects using NEO’s platform is Red Pulse, a blockchain-based research platform covering China’s financial markets. The company aims to enable content creators to sell their research to readers in exchange for NEO tokens called RPX (Red Pulse Token).

“The platform will match research consumers with the research that is most relevant to them. Researchers can be reader-directed,” said Da. “Through the use of digital currencies, analysts and contributors can be compensated directly. This is vastly different from the current landscape of financial market research.”

Red Pulse had its fundraising planned on NEO’s platform on September 10th—it was supposed to be NEO’s first initial coin offering (ICO). And then came China’s ICO ban.

Red Pulse simply decided to postpone the sale of its tokens until the regulations are made clearer. But for NEO, the decision has sent the cryptocurrency on a downward spiral.

Screenshot from CryptoCurrency Market Capitalizations, September 14th, 2017

During August—which saw record price growth both for bitcoin and “altcoins” (alternatives to bitcoin)—NEO experienced a meteoric rise reaching market capitalization over $2 billion. The decision to ban ICOs and related fundraising activities issued on September 4th made NEO’s value drop and its investors panic.

Since then, NEO’s value has been steadily recovering but without the kind of high peaks witnessed during the August crypto frenzy. The reaction from its founder has so far been quite reserved.

“Compliance is inevitable after the blockchain industry matures to a certain stage,” said Da, adding that NEO has offered a full refund for its ICO participants and that government oversight will contribute to sustainable development of financial technologies.

Recent online reactions from big bitcoin players known as “whales” as well as ordinary buyers sound positive. This stems from the realization that trading crypto currencies can be extremely volatile and dependent on news and rumors. But it also seems that unlike many Chinese crypto currency offerings, which border on speculation or outright fraud, NEO has been developing actual products based on the blockchain. The company is betting on what they call the “Smart Economy” which involves creating standards for digital assets, smart contracts, and blockchain-based digital identity systems.

“NEO is the use of blockchain technology and digital identity to digitize assets, the use of smart contracts for digital assets to be self-managed, to achieve ‘Smart Economy’ with a distributed network,” said Da.

NEO has one more advantage—it has enabled developers to use multiple programming languages, such as C#, Java and Go. According to Da, development on NEO has a more smooth learning curve and shorter learning circle, allowing for a fast introduction of projects.

As several crypto pundits have pointed out, if NEO manages to bounce back, the ICO ban will prove a positive event—after all, many of their competitors in China may end up obliterated.

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Why China banned ICOs: The grass mud horse coin and other ridiculous offerings

Why China banned ICOs: The grass mud horse coin and other ridiculous offerings

Since China issued a ban on all ICOs, the price of bitcoin tumbled and the startups who were looking to fundraise using an ICO have been thrown into a havoc. $394 million was contributed towards ICOs in the period from January to June 2017, as reported by the National Committee of Experts on Internet Financial Security Technology. With no regulation in place, fraud and speculation have become rampant.

Just how much frenzy was there? We found three examples of ridiculous ICOs (or crowdfunding projects that masqueraded as ICOs) offered on the market. They make a strong case in support of the decision to ban the fundraising activity altogether.

Started in mid-2017, MLGBI was a crowdfunding project looking to raise 5000 ETH, a popular cryptocurrency. The team behind MLGBI claimed that the acronym stands for Massive Linked Grid Basic Infrastructure, which referred to the blockchain platform they are trying to build.

A slide found in the investment deck for MLGBI (Image credit: MLGBI)

However, the crowdfunding campaign first gained attention for its Chinese name 马勒戈币(malegebi, a homonym of an expletive that literally translates to “fornicating with your mother’s genitals”. Its original investment deck also needed to be seen to believe, showing slides on “Alpaca (草泥马 caonima which in Chinese is another homonym for an expletive) Standard Artificial Intelligence” and “The First Morden [sic] Performance Artwork Based on Block Chain Technology”.

Charles Xue's Weibo post that said he invested in MLGBI (Image credit: Sina)

Charles Xue’s Weibo post that said he invested in MLGBI (Image credit: Sina)

Performance art indeed. It was hard to believe that anyone could take this seriously until angel investor Charles Xue (who founded successful technology companies and is known for being vocal on Weibo) expressed an interest in investing in the ICO.

As of September 13, a notice on MLGBI’s website (in Chinese) apologized for the early performance art-like behavior and said that it was complying with the government’s orders to refund the roughly 5000 ETH it had raised.

Marketed in Chinese as万福币 (wanfubi) or auspicious coin, the GX coin project claimed to be a cryptocurrency and trading platform developed based on Ethereum. GX coin was tied to Global Future City Holding, Inc., a company that doesn’t offer many clues as to what it does on its website, or elsewhere.

A reward scheme for GX coin (Image credit: Hao Xitong)

A reward scheme for GX coin (Image credit: Hao Xitong)

What lured investors in was the claim of returns as high as 800% within the first year (in Chinese). From when GX coin was launched in February 2016 to May 2016, the price of a GX coin rose from RMB 20 per coin to RMB 25 per coin, a growth of 25%. With no clear business model, the price of the coin seemed to be driven up purely by recruiting more investors. In other words, a Ponzi scheme.

The man behind GX coin Samuel Liu with George W. Bush, Barack Obama and Hillary Clinton. (Image credit: Samuel Liu)

The man behind GX coin, Samuel Liu, with George W. Bush, Barack Obama, and Hillary Clinton. (Image credit: Samuel Liu)

GX coin was launched by Samuel Liu, a Chinese-American businessman, who boasted about his relationship with U.S. politicians such as George, W. Bush, Barack Obama and Hillary Clinton (whether the photos have been edited is up for debate). After it became apparent that GX coin was a ponzi scheme, he was arrested along with 60 other employees in the company for defrauding around RMB 2 billion worth of funds.

This ICO was raising money to build a consumption and entertainment ecosystem based on the blockchain. However, Travelling Free Token’s investment deck has already been panned by Chinese media as fraud. Now with the ban in place, travelling free token isn’t going anywhere.

A promotional image for free travelling token (Image credit: free travelling token)

A promotional image for Travelling Free Token (Image credit: Travelling Free Token)

The Travelling Free Token investment deck (in Chinese) claimed that it already was in agreement to launch partnerships with several large companies such as Cathay Pacific, Carrefour, Amazon, and Starbucks. When reached for comment by the Beijing News, Starbucks denied that it had any sort of partnership with Travelling Free Token As did Carrefour.

The Travelling Free Token website hasn’t been updated and still outlines an ambitious plan to expand into the Middle East, Europe and North America after the conclusion of its ICO in China in September 2017.

Too good to be true

The above examples are only three out of the many ICOs, legitimate or otherwise, that were flooding the market. But perhaps none illustrate the fever state of the market as well as a saying that has been going around in ICO WeChat groups (in Chinese):

“There are too many idiots, not enough ICOs.”

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China’s Internet of Things sector exceeds RMB 900 billion

China’s Internet of Things sector exceeds RMB 900 billion

China’s Internet of Things (IoT) industry has seen its output value exceed RMB 930 billion ($142 billion) in 2016, up from RMB 170 billion in 2009, according to the vice minister for Industry and Information Technology.

IoT is the concept of linking more everyday items and appliances, wearable devices and vehicles as well as industrial equipment to each other and the internet via sensors and data exchange.

China’s IoT sector is growing fast, with a compound annual growth rate of over 25%, said the vice minister, Luo Wen, at the World Internet of Things Exposition in Wuxi, near Shanghai.

Luo said that the huge domestic market, the country’s complete industrial chain and the world’s biggest mobile telecommunications network could see China taking the lead in certain sub-sectors of IoT technology; especially given the government support being planned. 

Luo said that not only will a number of technological centers and laboratories be established to develop the technology in general, it will also be pushed into more fields including agriculture, healthcare, environmental protection and logistics.

China will work hard to engage in establishing international standards for how devices communicate, said Wang Zhigang, vice minister of science and technology.

Such participation could pay off. The application of IoT is growing rapidly as it is embedded in more and more devices. A research report by the Boston Consulting Group released earlier in the year estimated that B2B spending on IoT technologies, apps and solutions will reach $267 billion by 2020. IHS reported that in 2015 there were about 15.4 billion connected devices and this number will grow to 30.7 billion by 2020, and 75.4 billion by 2025. Intel is expecting even greater things and has forecast that by 2020, clearly a real watershed year for IoT, there will be 200 billion connected devices—almost three devices per person by then.

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Chinese cryptocurrency exchanges increase supervision in wake of tightening regulations

Chinese cryptocurrency exchanges increase supervision in wake of tightening regulations

China’s recent ban on initial coin offering (ICO), a cross-between crowdfunding and initial public offering, has forced local cryptocurrency exchanges into stricter self-scrutiny about their supervision mechanisms.

After months of breakneck development, the ICO sector received a severe blow this Monday when Chinese authorities announced a ban on all related fundraising activities, citing possible financial scam and massive fraud. In addition, all completed ICOs must liquidate and refund investors, according to the rule.

Of the total 60 platforms that have held token offering-related activities inside China, over half have launched the liquidation process or suspended the ICO services upon the news, local media reported. However, the ICO ban seems to be just a beginning for another wave of stricter regulations from Beijing, which reportedly intends to further regulate the crypto economy.

Quickly translating the signal, leading Chinese cryptocurrency exchanges are raising their own risk supervision standards in line with the tightening governmental curbs.

Huobi, a leading digital currency trading platform in China, strengthened risk warning system for users’ BTC withdrawal request. On September 2nd, the exchange raised its trading fee in a bit to curb speculative short-term trading. Another crypto exchange Yunbi released a public letter outlining its reinforced self-disciplinary practices.

Open Letter from Yunbi in Chinese

Early warning signs about governmental crackdown started weeks before. Shanghai regulator halted a block chain business event at the end of August, sparking speculations of a wider curb on the industry back then.

Although the regulation does not directly name any cryptocurrency, the valuation of bitcoin, the most common digital currency used in an ICO, fell in response to the news. Data from SOSOBTC shows that values for 520 out of 580 digital currencies trading on the market are plunging.

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China’s ICO platforms suspend operation after social order warning

China’s ICO platforms suspend operation after social order warning

China’s ICO sector has come under strict supervision after months of breakneck growth. After an announcement by the National Internet Finance Association of China and subsequent reports of investigations by the China Securities Regulatory Commission, the country’s largest platforms including Bitcoin China’s ICOCOIN and ICOINFO are announcing the suspension of operations.

The platforms provide ways for users to administer initial coin offerings (ICOs) using cryptocurrencies as a way of crowdfunding for an organization or investment in a project. Such platforms have proved highly popular in China in part because they provide another class of investment opportunity in a country where options are slim.

Bitcoin China announces on its website the suspension of its ICOCOIN platform for ICOs (Image credit: Bitcoin China)

The National Internet Finance Association of China published its “Brief on the Prevention of All Forms of Investment-related Risk in the Name of ICO” (link in Chinese; our translation, 关于防范各类以ICO名义吸收投资相关风险的提示) on August 30.

“The number of projects that have been launched in the name of ICO (Initial Coin Offerings) has grown rapidly in the country, disrupting the socioeconomic order and creating a greater risk danger,” said the statement. It listed the issues of “misleading propaganda” to attract financing activities without permission. This means the institutions are suspected of fraud, illegal fundraising and issuing illegal securities. The statement criticizes the lack of transparency in the organizations’ dealings and intents.

The brief warns people of the dangers of getting involved in such fundraising schemes and calls for greater self-discipline from members of the National Internet Finance Association of China.

Bitcoin China announcement urging all users of ICOCOIN to withdraw any remaining funds in the platform as of 6pm on Sunday September 3

Bitcoin China announcement urging all users of ICOCOIN to withdraw any remaining funds in the platform as of 6 pm on Sunday, September 3 (Image credit: Bitcoin China)

On the same day, ICOINFO, China’s second-largest ICO platform announced it would be temporarily suspending any new ICO services while awaiting updates from the authorities on any regulatory changes. On September 2, Bitcoin China (BTCChina, 比特币中国) announced it would be stopping all charging and exchange activities on its ICOCOIN platform and asked users to withdraw any funds by 6 pm September 3.

Chart of value of the bitcoin cryptocurrency with a slight fall on August 30 (Image credit: Bitcoin China)

Chart of value of the bitcoin cryptocurrency with a slight fall on August 30 (Image credit: Bitcoin China)

The global bitcoin value saw a slight drop on the day of the announcement but has since recovered.

According to the 21st Century Business Herald (21世纪经济报道), a source in the blockchain sector has said the China Securities Regulatory Commission has already started a study into the practices of the sector (in Chinese) which he said could be understood to be a thorough investigation into the processes of ICO platforms.

On August 24th, the Legislative Affairs Office of the State Council issued the draft of “Regulations for Handling Illegal Fundraising.” The draft seeks public consultation on the setting up of a framework for all kinds of organizations from mutual funds to companies working with farmers that seek to raise money from investors. On August 28, the Beijing Online Loan Industry Association (北京市网贷行业协会)  issued a warning about the various risks of ICO platforms; the warning also highlighted the increasing importance financial regulators were attaching to the sector (in Chinese).

Control over money in China remains a problem for the government. The demand for investment opportunities has left Chinese authorities struggling to deal with local and national pyramid selling and Ponzi schemes, which reportedly have even resulted in the deaths of those caught up. Beijing even saw protests in July against the authorities for investigating Shanxinhui and arresting its leader Zhang Tianming as they were concerned they would not get back their investments.

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Report says India is about to overtake China’s fintech

Report says India is about to overtake China’s fintech

At more than twice the global average, China is currently the world leader in fintech service adoption, but current second-place India is expected to surpass its neighbor according to a report by EY (formerly Ernst & Young), a global accounting and consulting firm. This is not something for Chinese fintech firms to be concerned about—because they’re already heavily invested in their counterparts across the Himalayas.

The 20 markets surveyed for fintech adoption worldwide (Image credit: EY)

The EY FinTech Adoption Index 2017 covers five categories of fintech: money transfer and payments, borrowing, savings and investment, financial planning, and insurance. The categories are rather broad in the 2017 report. For example, insurance now covers comparison sites for picking premiums. Providers can be start-ups through to maturing firms.

The changing demand for fintech services worldwide (Image credit: EY)

The changing demand for fintech services worldwide (Image credit: EY)

China excels in most categories and has a total adoption rate of 69%, far ahead of India at 52%. Adoption is based on the Rogers’ innovation adoption curve which spans five categories from “brave pioneers” to “early adopters” through to “laggards”. The survey—based on 22,000 interviews across 20 markets—found that 33% of those surveyed have moved from “early adopters” into the “early majority.” The whole world has made progress, but only China and India have moved into the fourth category, “late majority.”

Adoption rate by adopter category—only China and India have reached 'late majority' (Image credit: EY)

Adoption rate by adopter category—only China and India have reached ‘late majority’ (Image credit: EY)

The report also looks to the future and has found that while fintech adoption will continue to develop in China, penetration will continue further in India. The projection sees China climb to a 77% adoption rate and 80% in India. The global fintech adoption rate is forecast to reach 52%. Asking people about their expected future usage, the report states, is somewhat unpredictable, but it is a measure of the positive sentiment towards the technology.

Past, present and future—how the fintech is expected to progress worldwide (Image credit: EY)

The past, present, and future—how the fintech is expected to progress worldwide (Image credit: EY)

Chinese firms with a fintech element have been making serious inroads into the Indian fintech sector. Alibaba has the largest share in One97, the parent company of Paytm, India’s largest mobile payments and e-commerce platform. The two are currently running additional projects such as pushing into banking and in talks to buy a 20% stake in Bigbasket, India’s leading online grocery store. All eyes are on Tencent, thought to be investing in India’s number two e-wallet MobiKwik and which recently took part in a $1.4bn investment round in Flipkart, India’s largest e-commerce platform.

Category rankings for fintech (Image credit: EY)

Category rankings for fintech (Image credit: EY)

China currently tops four out of the five categories, only dropping down the rankings for insurance services. Money transfer and payments are an obvious forte for Chinese fintech (83% adoption), as are savings and investments (58%) and borrowing (46%), but also leads the countries surveyed for financial planning services (22%), which are online budgeting and planning tools.

Eric Jing, CEO of Ant Financial was quoted by the report as saying:

We believe in the power of tech and, by using it well, we can bring the world equal opportunities—for those underserved or unserved by traditional financial services. By working closely with our financial and strategic partners around the world, we aim to bring equal access in financial services to more than two billion people in 10 years.

Changing perceptions of fintech (Image credit: EY)

Changing perceptions of fintech (Image credit: EY)

The findings bring to light regional and global variations. The emerging economies of Brazil, China, India, Mexico, and South Africa are digitally active and have an average adoption rate of 46%, considerably higher than the global average of 33%. “This is because fintech firms excel at tapping into the tech-literate, but financially underserved population, of which there are particularly high ratios in emerging countries,” states the report. China also stands out for having strict restrictions on investment which means that the tech allows users to make better use of the options available.

Speed of adoption—as perceptions and knowledge of fintech has changed worldwide, adoption rates have leapt (Image credit: EY)

Speed of adoption—as perceptions and knowledge of fintech has changed worldwide, adoption rates have leapt (Image credit: EY)

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Taiwan Turnaround: An Asian Tiger catching up in the internet sector

Taiwan Turnaround: An Asian Tiger catching up in the internet sector

Taiwan’s internet tech scene is playing catch-up after being left in the dust compared to others in Asia. In part 1 TechNode visits the island to see how the Asian Tiger plans to stimulate its startup ecosystem.  Next, in the series, we talk to more accelerators, VC funds, and entrepreneurs about how they are changing mindsets and helping Taiwan startups to go global.

Taiwan has had a head start in its economic transformation and building a strong hardware sector over the mainland, gaining the moniker “Asian Tiger” in the process. So it is surprising that it hasn’t caught onto the internet sector boom as some of its neighbors in Asia have. It’s got all the right ingredients: a strong technical foundation, a highly educated workforce and a penchant for creativity as seen in some of the top entrepreneurs the island has helped nurture, Dr. Kai Fu Lee and Steven Chen of Youtube. So what’s missing and how can the Asian Tiger catch up?

Crouching tiger, hidden dragon

An advertisement for Asus laptop (Image credit: Asus)

Along with the three other “Asian Tigers”—Hong Kong, Singapore, and South Korea—Taiwan saw accelerated economic growth from the late 60s until the early 2000s. Its investment in manufacturing helped to create a world-leading semiconductor and hardware industry. TMSC, which is the world’s largest dedicated semiconductor foundry, Foxconn, AcerAsus, and HTC are some successful enterprises to have been born out of the boom.

With this strong technical foundation, a highly educated workforce and successful entrepreneurs such as Dr. Kai Fu Lee and Youtube’s Steven Chen, it is surprising to see that Taiwan’s startup ecosystem still lags behind its neighbors in the region.

“I’m not saying unicorns are the most important thing, but looking at some of the other countries, [despite] Singapore being tiny in terms of population and geography, they managed to produce three unicorns [Garena, Lazada, and GrabTaxi],” Taiwan Startup Stadium VP of Operations and Startup Development Jeffrey Ling told TechNode. Taiwan Startup Stadium or TSS is a government-funded initiative that coaches Taiwanese startups on going global.

Tutor ABC spokesperson Yao Ming (Image credit: Tutor ABC)

Tutor ABC spokesperson Yao Ming (Image credit: Tutor ABC)

“Taiwan has one [unicorn]. It’s called Tutor ABC which was 13 years in the making,” Jeffrey told TechNode. Launched in 2004, Tutor ABC is an online English learning service from TutorGroup.

Early success stories

Tutor ABC was part of the wave of early internet successes in Taiwan to come after the dot com bubble crash, though mostly in the e-commerce vertical.

Serial entrepreneur Steven Ho founded e-commerce platforms Bid.com.tw, which was sold to eBay in 2002 and Monday Tech, which was acquired by Yahoo in 2008. Ho, a serial entrepreneur and investor, also founded 91app, a service that helps vendors to set up online e-commerce stores, and NineYi Capital to invest in other e-commerce startups.

Steven Ho (Image credit: TSS)

Steven Ho (Image credit: TSS)

The Kuo brothers are another pair of entrepreneurs who have made it big in e-commerce. Their first company was bought by Groupon in 2010 and became the now defunct Groupon Taiwan. The brothers have since gone on to found nine more e-commerce platforms. Four of which are doing particularly well, including Fresh Market (formerly Haoyu Net).

However, insufficient seed funding and venture capital in Taiwan mean that startups rarely moved beyond series A and this hindered many from scaling up and maturing.

Show me the money

In the 2016 Taiwan Startup Ecosystem survey compiled by BusinessNext, fund raising was cited as the most significant challenge faced by nearly half of all entrepreneurs surveyed while only 13.8% had received venture capital funding.

An infographic on AppWorks accelerator's 14th batch (Image credit: AppWorks)

An infographic poster found at AppWorks about accelerator’s 14th batch (Image credit: TechNode)

“After the dot com bubble crash in 2000, [it was] low key in Taiwan from the VC investment perspective. There were very few VCs focused on investing in internet-related startups,” AppWorks Ventures Associate Jessica Liu told TechNode. AppWorks VC funds and its accelerator program was one of the earliest established in Taiwan and has now grown into the largest accelerator network in Asia with more than 320 startups and 720 founders amongst its current members and alumni.

Looking to help Taiwanese startups to gain funding and grow, Jamie Lin, a National Taiwan University and NYU Stern-educated entrepreneur returned to Taiwan to start AppWorks in 2009.

According to Taiwan Venture Capital Association (in Chinese), 2002 to 2005 saw a peak in investments in startups and new businesses. Following the global financial crisis in 2008, investments only started to grow again from 2011. In 2015, investments received by new businesses and startups were around $421 million as reported by the National Development Council. A small amount, but still a big jump from 2014’s $130 million.

Adding to the growing pool of investment is government funding, the Taiwan Silicon Valley Tech Fund looks to fundraise and invest $300 million into local startups between 2015 and 2017, of which $180 million is expected to have been raised from the private sector. The more recently announced Asia Silicon Valley Development Plan aims to promote innovation specifically in the IoT sector and stimulate the local startup ecosystem.

What’s next

Apart from the relatively small amount of venture capital available to entrepreneurs in Taiwan, other factors that have slowed the growth of the internet industry are the small-market mentality of entrepreneurs, the difficulty of attracting talent, and strict government regulations.

“The biggest problem we see among entrepreneurs here in Taiwan is the lack of this global mindset,” Jeffrey Ling from TSS told TechNode. “A lot of startups, they don’t draw the bigger picture so investors won’t be able to know if you can go bigger or not.” He went on to explain that TSS helps startups to understand investor’s perspective and what they are looking for.

“‘If you don’t even dare to want it bad enough, I’m not sure if I want to put my money in you,’ ” Jeffrey explained.

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China Internet Report 2017 – TechNode

China Internet Report 2017 – TechNode

Editor’s note: This is reposted with permission from Edith Yeung, a General Partner at 500 Mobile Collective Microfund primarily focusing on investing in mobile, VR, AR, IoT, and consumer internet startups. It originally appeared on her website.

Last month, my brother and I were hanging out in Tuanjiehu district in Beijing where our grandfather used to live. After finished paying up for our lunch bill using WeChat Pay (the owner convinced us not to use credit card as it would cost him high fees), I called a Didi (Uber of China) and headed to our friend’s house to watch various live streaming shows on YY and 6.cn (founded by my brother). After a few hours of socializing, we decided to head home by grabbing a couple of ofo bikes we found on the street.

As I was biking my yellow bike across town, I realized how much Chinese lives have changed by all the ‘Made-in-China’ innovations: from messaging, mobile payment, bike sharing to live streaming. I am truly inspired by the new generation of Chinese innovations, entrepreneurs, and energy. And this is why I decided to write this China internet report.

This report hopefully serves as a guide for you (investors, founders, and executives) of China internet landscape and trends. Drawing from my own experience, hundreds of hours of research and interviews with entrepreneurs and investors friends, I am honored to present this report of China innovations.

China no longer needs to “borrow ideas” from America but can create new innovations of her own.

Hope you enjoy reading it as much I enjoyed writing it.

Special thanks to everyone who helped and contributed to report: Wai Lin Liao, Bonnie Cheung, Chris McCann, Jane Wu, Xu Tao, Peng Ong, Jianfeng Lu, Tony Zhao Bin, Alan Chan, Greg Kidd, Dave McClure, Xiaolong Yang, and the 500 Team.

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