VC Investment in China Reached a Five-quarter Low in Q316 — KPMG Report

q316kpmgreportVenture capital investment in China reached a five-quarter low in Q3, according to the latest report on VC trends jointly issued by KPMG and CBInsights. The total amount invested decreased from US$5.7 billion to US$3.9 billion QoQ, although the total number of deals increased from 79 to 84.

It’s becoming more of a buyer’s market in China … Investment committees are asking deal teams to put personal funds into projects to ensure they have a real stake in a company’s success”, said Lyndon Fung, Partner, KPMG China.

Chinese VC investors are focusing on markets outside of China, taking advantage of government incentives. In particular, Chinese companies have recently acquired or invested in technology companies in Israel, Canada and the UK. Israel-based companies have been especially keen to work with tech VC funds in China in order to promote their technologies to the Chinese market for their mutual benefit”, said Irene Chu, Partner and Head of the High Growth Technology and Innovation Group, KPMG China, “in Asia, the next wave of innovation will be about building globally competitive companies.”

“Over the next few quarters, Asia-based VC investment is likely to remain focused on technology enablement – using technology to help improve service or product quality or to make them more accessible for individuals.”

“The healthcare sector is poised to be a big winner in this regard, both in terms of providing accessible primary healthcare and in terms of making processes like booking appointments and writing prescriptions easier for both doctors and patients, according to the report.”

“Investment in entertainment and media technologies is also expected to rise heading into 2017.”

2016 Letters to Shareholders from Alibaba CEO and Chairman

Jack Ma Letter

Daniel Zhang Letter

Some Updated Numbers,

  • Annual active buyers, who made at least one purchase in the previous year, have reached 430 million, up from 423 million as of March 2016.
  • Mobile revenues accounted for more than 75% of the total revenue in the most recent quarter.
  • More than 75% of users are 35 years old or younger.
  • Qianniu, the mobile app for merchants on Alibaba marketplaces, has more than 6 million daily business users.
  • Cainiao, the logistics network, processes more than 40 million packages a day on average.
  • Alibaba Cloud hosts 35% of total websites in China.

China Tech Newsletter – Sept. 28th-30th, 2016

Screenshots of Alipay Daowei
Screenshots of Alipay Daowei

The latest version of the Alipay app has added a new feature to enable users to find local services providers such as photographers, plumbers, and personal fitness coaches, near you.

Called Daowei it even let you borrow money or other things from people nearby.

Mavic Pro is DJI’s first fold-up drone. — A Review by Engadget

Xiaomi’s Mi 5s hides a fingerprint reader under its glass — Engadget

China Tech Newsletter – Sept. 27th, 2016


WeChat launches Maidan, a new payment solution for small businesses who were not previously able to integrate the former’s mobile payment capability through the official API.

Now any business only needs to register online to get a QR code for customers to scan and make payments.

Drone maker DJI releases Snail, a drone racing optimized propulsion system.

Toutiao, a leading news and content reader app, has added a shopping channel by partnering with online retailer Users will be able to make purchases without leaving the Toutiao app.

Toutiao claims to have had more than 130 million monthly active users.

Guazi, the used car marketplace backed by, has received a new investment from two new investors, Matrix Partners China and Blue Run Ventures, that brought the total amount of its Series A funding to US$250 million. (via Sina Tech)

Zuoyebang, the K-12 education app backed by search giant Baidu, has completed a US$60 million Series B round of financing led by GGV Capital and Xianghe Capital (not official translation), with participation from existing investors Sequoia Capital and Legend Capital. (via Jiemodui)

China Tech Newsletter – Sept. 26th, 2016

Meituan-Dianping, the leading local services marketplace, has acquired Qian Dai Bao, a third-party payment service provider. Established in 2008, Qian Dai Bao was one of the first to obtain an official third-party payment license.

Meituan app currently accepts WeChat Payment, the mobile payment service of Tencent, Alipay, the online payment service of Alibaba’s finance arm, and credit and debit cards.

Xiaomi’s equity crowdfunding platform Micfunding launches today.

The company launched mobile payment service Mi Pay last month.

Weibo launches a multi-channel network (MCN) for video content creators.

Transportation network company Didi Chuxing announces investment in ofo, a bicycle-sharing platform.

Founded in 2014, ofo claims to have had over 1.5 million users from 20 cities and more than 500,000 daily rides.

Alipay, the online payment service of Alibaba’s finance arm, launches “Future Airport” program that will enable Chinese users to make payments at international airports. Ten international airports have joined the program.

Xiaomi Mi Pay & Mi Cleaning Robot

Xiaomi launches mobile payment service Mi Pay.

The latest addition to Xiaomi’s non-smartphone hardware product family, or MIJIA (aka. Mi Ecosystem), is an iRobot Roomba-like cleaning robot.

Since 2013, Xiaomi had invested in some 55 smart hardware startups as of March this year.

A total of 37 products from these MIJIA companies had been released as of August.

MIJIA app, the central app for controlling all Xiaomi smart home devices, had registered a total of 40 million devices and more than 5 million daily active users, according to Xiaomi.

WeChat Reached 806M MAU in Q216

Source: Tencent
Source: Tencent

WeChat (Weixin in Chinese) saw 34% year-over-year growth in monthly active users to reach 806 million in the second quarter.

Weixin Enterprise Accounts, the version for enterprise launched in April, has registered 20 million customers.

eLoyalty Cards, a new loyalty program for merchants launched in June, has signed up more than two dozen businesses, including multinational consumer goods company Unilever, personal care product chain Watsons, Swedish furniture chain IKEA, hotel chain Days Group (or 7 Days Inn) and Air China.

ARPU range for WeChat and Mobile QQ games was RMB155 – 165.


Tencent, WeChat’s parent company, reports 52% top-line growth in Q2. Operating margin decreased from 43% to 40% year-over-year.

Value-added subscriptions, including monthly paid packages for gaming, music and video, increased 25% year-over-year. The subscription growth and increased virtual item sales contributed to the social networking revenue growth which is 57%.

The recent merger with China Music Corporation, which owns two major music streaming services (Kugou and Kuwo), has made Tencent’s QQ Music the biggest digital music provider in China. Chinese online music services provide free streaming and make revenues through paid subscriptions, paid downloads, and advertising.

Performance-based advertising, which is powered by Tencent’s self-service ad system, grew 80% year-over-year in revenue, mainly driven by Weixin(WeChat) Moments, Tencent News app, and Weixin(WeChat) Official Accounts. WeChat Moments integrated the self-service ad system in the first quarter this year.

Overall growth in online advertising revenue is 60%. Online advertising margin decreased year-over-year due to content cost increase.

Mobile advertising accounts for 80% of the total advertising revenue, the same as last quarter.

In May NOW, a live video streaming service, was launched. The company had developed several similar services previously but few got much traction.