#HTE

South Korean giant Samsung, Apple’s contract manufacturing partners Foxconn, Wistron and Pegatron, and Indian smartphone vendors Micromax and Lava among others have applied for India’s $6.6 billion incentive program aimed at boosting the local smartphone manufacturing, New Delhi said on Saturday.

The scheme, called Production-Linked Incentive Scheme, will offer a range of incentives to companies including a 6% financial incentive on additional sales of goods produced locally over five years, with 2019-2020 set as the base year, India’s IT Minister Ravi Shankar Prasad said in a press conference.

22 companies have applied for the incentive program — that also includes manufacturing of electronics components — and have agreed to export 60% of their locally produced units outside of India, said Prasad. He said the companies estimate they will produce smartphones and components worth $153 billion during the five-year duration.

The Production-Linked Incentive Scheme is aimed at turning India into a global hub of high-quality manufacturing of smartphones and support Prime Minister Narendra Modi’s push to make the country self-reliant, said Prasad.

As part of their applications, the companies have also agreed to offer direct and indirect employment to roughly 1.2 million Indians, the Indian minister said.

The interest of Samsung and Apple, two companies that account for more than 50% of the global smartphone sales revenue, in India is a testament of the opportunities they see in the world’s second largest internet market, said Prasad. “Apple and Samsung, India welcomes you with attractive policies. Now expand your presence in the country,” he said.

Missing from the list of companies that the Indian minister revealed today are Chinese smartphone makers Oppo, Vivo, OnePlus, and Realme that have not applied for the incentive program.

The Indian government did not prevent companies from any country from participating to the program, Prasad insisted in a call with reporters Saturday noon. Chinese smartphone vendors command roughly 80% of the Indian handset market, according to research firm Canalys.

“We are optimistic and looking forward to building a strong ecosystem across the value chain and integrating with the global value chains, thereby strengthening electronics manufacturing ecosystem in the country,” he said. The deadline for applying to participate in India’s program, which began in April, ended on Friday this week.

The participation of Wistron, Foxconn, and Pegatron is also indicative of Apple’s future plans to produce locally in India. Apple’s contract manufacturing partner, Taiwan-based Wistron, first began assembling older iPhone models in 2017. Last month, Foxconn kickstarted assembly of a small batch of iPhone 11 units. This was the first time any Apple supplier assembled a current-generation iPhone model in the country.

#HTE

Japanese conglomerate Rakuten has pulled the plug on its U.S. online retail store, originally known as Buy.com, and will wind down its operations over the next two months, the company confirmed to TechCrunch. The shutdown means that the US headquarters will lay off its staff as well, meaning 87 people will lose their jobs, according a source familiar with the developments.

“We have decided to sunset the U.S. Rakuten Marketplace,” a company representative said in an email to TechCrunch. They clarified, however, that the “cash back rewards” referral business the company operates at Rakuten.com (formely Ebates, which it bought for $1B in 2014) “is definitely not shutting down and is stronger than ever.”

Rakuten bought Buy.com for $250M back in 2010 in an attempt to expand its retail business out of its stronghold of Japan. Unfortunately the evolving market, aggressive growth (and targeting of rivals) at Amazon, and likely the choice to rebrand the once well-known site under the Rakuten name, all led to declining business. The original CEO and COO left in 2012.

Customers of the Rakuten US store will be able to place orders for the next two months, after which the site will shutter completely. Users of the rewards and commission business shouldn’t see any major changes, and other businesses (like the Kobo e-reading division) aren’t affected either.

It’s a blow to Rakuten, but hardly one that can have taken them by surprise. The company has diversified and invested in a large number of businesses and verticals around the world (even launching a cryptocoin), so the failure of a marketplace like this, while unfortunate (especially for those laid off), won’t be affecting their bottom line much at this point.

#HTE

Chinese electric vehicle and parts manufacturer Kandi Technologies Group is officially bringing two EVs to the United States through its subsidiary Kandi America — news that has prompted run up in its share price in the past day. 

Kandi shares opened at $3.88 a share on Wednesday, jumping to $16.51 today. Shares have now settled below $9.

Kandi Technologies has been talking about bringing EVs to the United States for a couple of years. Now, two models are arriving as early as the end of 2020, beginning in a limited area in Texas. Both are priced under $30,000 before federal incentives.

Image Credits: Kandi America

The two models heading to the U.S. are Kandi’s compact K27 vehicle that comes with a 17.69 kWh battery and a range of up to 100 miles, according to the automaker (although it’s unclear if these are EPA estimates or another standard). The K27 starts at $20,499, and is eligible for the $7,500 federal income tax credit. That would put the K27 at just under $13,000, although, again, it’s unclear if this includes the destination fee.

The larger K23 is also coming to the U.S. market. This small electric SUV has a 41.4 kWh battery and a driving range of more than 180 miles. The K23 starts at just less than $30,000, again, before applying federal incentives.

Both of those vehicles, even without the federal incentives, are less expensive than other EVs sold in the U.S., including the Tesla Model 3, Nissan Leaf, Hyundai Ioniq and Kia Kona EV — to name a few.

The target is middle class U.S. consumers. It’s a group that has had few affordable EV choices, Kandi Technologies Chairman Xiaoming Hu said in a statement. Kandi America CEO Johnny Ta echoed those sentiments.

“Electric vehicles have been valued for years for their efficiency, sustainability and innovation. However, owning the ‘it’ car often eluded consumers who desired a great EV alongside all the other comforts of modern living. Kandi is changing that by revolutionizing the EV-buying experience for many,” Tai said. “Kandi’s mission is to make electric cars accessible to all.”

The two models clearly hit the affordability standard. The question is whether they will tick the other important boxes for customers here, a list that includes reliability and performance.

The vehicles will be sold by Garland, Texas-based Kandi America, the trade name of Kandi’s wholly owned subsidiary SC Autosports, LLC. Sales will initially focus on the Dallas-Fort Worth area, the company said.

#HTE

Trade tensions between China and the U.S. have not stopped Chinese companies from eyeing to list on American stock exchanges. Li Auto, a five-year-old Chinese electric vehicle startup, raised $1.1 billion through its debut on Nasdaq on Thursday.

The Beijing-based company is targeting a growing Chinese middle class who aspire to drive cleaner, smarter, and larger vehicles. Its first model, sold at a subsidized price of 328,000 yuan or $46,800, is a six-seat electric SUV that began shipping end of last year.

Li Auto priced its IPO north of its targeted range at $11.5 per share, giving it a fully diluted market value of $10 billion. It also raised an additional $380 million in a concurrent private placement of shares to existing investors.

The IPO arrived amid a surge of investor interest in EV makers. Tesla’s shares have skyrocketed in the last few quarters. Li Auto’s domestic rival Nio, which raised a similar amount in a $1 billion float in New York back in 2018, also saw its stock price rally in recent months.

Li Auto is one step ahead of its Chinese peer Xpeng in planning its first-time sale. The six-year-old competitor said last year it may consider an IPO. Last month, a source told South China Morning Post that Xpeng was getting ready for the listing.

Founders of China’s emergent EV startups are often shrewd internet veterans who are well-connected in the venture capital and marketing world, attracting investment dollars in the billions. Li Auto, for instance, counts China’s food delivery mogul Wang Xing, boss of Meituan Dianping, as its second-largest shareholder after its CEO Li Xiang. TikTok parent ByteDance shelled out $30 million in its Series C round.

Investors are in part emboldened by Beijing’s national push to electrify China’s auto industry. The question, then, is whether these startups have the right talent and resources to pull things off in an industry that traditionally demands a much longer development cycle.

Wallace Guo, a managing partner at Li Auto’s Series B investor Taihecap, admitted that “the nature of auto consumption, unlike internet products evolving through trial and error, manufacturing a car, is a strategic move with sophisticated system, very long value chain, requiring huge investment and resources and any error can be fatal.”

Mingming Huang, chief executive of Future Capital, said that “it was a no brainer in 2015 to be the first investor” in Li Auto. The venture capitalist said Li, who ran a popular car-buying online portal before getting into manufacturing, “has the rare combination of being a relentless talent as well as a top-notch product manager that excels in creating value for all stakeholders.”

Customers testing Li Auto’s SUV in China. Photo: Li Auto

Both investors believed Li Auto has picked the right path of zeroing in on extended-range electric vehicles. EREVs come with an auxiliary power unit, often a small combustion engine, that ensures cars can still operate even when a charging station is not immediately available, a shortage yet to be solved in China.

As my colleague Alex pointed out, Li Auto is on a trajectory similar to that of its peer Nio, going public after a short history of delivering to customers. The startup only began shipping its first model last December and delivered just over 10,000 units as of June, its prospectus showed.

The startup is still deep in the red, losing 2.44 billion yuan ($350 million) in 2019, up from a net loss of 1.53 billion yuan in 2018. It did finish the first quarter of 2020 with a gross profit of $9.6 million after it began monetization.

Its annual revenue — which comprised mostly of car sales and a small portion from services like charging stalls — stood at 284 million yuan ($40.4 million) in 2019, a tiny fraction of Nio’s $1.12 billion. But Nio also amassed a greater net loss of $1.62 billion in the same year. In contrast, Tesla has been profitable for four straight quarters.

Li Auto’s investors are clearly bullish that the Chinese startup can one day match Tesla’s commercial success.

“Xiang has a deep understanding of the preferences and pain points of car owners and drivers in China. Li Auto is the first in China, to successfully commercialize extended-range electric vehicles, solving the challenges of inadequate charging infrastructure and battery technologies constraints,” Huang asserted.

“The company is able to get positive gross margin when selling the first batch of vehicles and thus with its growth in sales volume, its gross margin was well above competitors and can live long enough to become a ten billion-dollar company with this healthy business model,” said Guo.

#HTE

Tesla has been counting on China to maintain its sales momentum, and it seems to be on track with the plan.

In the three months ended June 30, the automaker’s revenue in China climbed 102.9% year-over-year to $1.4 billion, according to its latest SEC filing. That means China now makes up 23.3% of Tesla’s total revenues of $6 billion in the quarter, compared to just about 11% in the same period a year before.

To increase affordability for Chinese consumers, Tesla inked a 50-year lease from the Shanghai government to build a Gigafactory there, which keeps production costs down and allows it to reap local tax benefits and avoid tariffs. Under the terms of the agreement, the electric vehicle giant needs to pay 2.23 billion yuan ($320 million) in tax to China every year starting at the end of 2023. It must also sink 14.08 billion yuan in capital expenditure into the facility.

Tesla began shipping China-made Model 3 at the end of last year and is on course to add its Model Y, a mid-size electric SUV, to its production in the world’s biggest auto market, the filing shows. Earlier this month, it also started taking reservations in China for its futuristic Cybertruck, which won’t go into production until late 2022.

While shipment in China jumped in the second quarter, Tesla delivered 4.8% fewer vehicles overall in the period due to challenges prompted by COVID-19, including suspended production. The period marked the fourth straight quarter of profitability for the automaker.

#HTE

A group of Japanese lawmakers is seeking to restrict the use of TikTok and other apps developed by Chinese firms, following the footstep of India, which has already blocked dozens of Chinese apps, and the U.S., which is floating the idea of a ban.

The decision was first reported by the Japanese national broadcaster NHK. The lawyers shared the same concern as officials in the U.S. and India that their domestic user data could end up in the hand of Beijing, and planned to submit the proposal to the Japanese government as early as September.

Japan was one of TikTok’s first overseas success cases despite being considered a tough nut for foreign internet firms to crack. The nascent localization team went all out to attract celebrity users and made its breakthrough with Kinoshita Yukina, a TV personality, after holding “six or seven rounds of discussions” with her studio. Kinoshita’s participation ushered in other stars, who brought with them flocks of fans to the platform.

In the Japanese iOS store, TikTok has consistently ranked at the top among entertainment apps and is the fifth-most downloaded app across all categories in the country as of this writing, according to research firm App Annie.

In response to scrutiny coming from Japan, a TikTok spokesperson reiterated the app’s distance from Chinese control in a statement to TechCrunch:

“There’s a lot of misinformation about TikTok out there. TikTok has an American CEO, a Chief Information Security Officer with decades of industry, U.S. military and law enforcement experience, and a U.S. team that works diligently to develop a best-in-class security infrastructure. Four of our parent company’s five board seats are controlled by some of the world’s best-respected global investors. TikTok U.S/ user data is stored in the U.S. and Singapore, with strict controls on employee access.”

Other Chinese tech giants have their eyes locked on Japan for years. Baidu, for instance, operates Simeji, one of the most popular input methods among Japanese. Line is the main chat app in the country, but WeChat is essential to Japanese businesses with Chinese ties. While the Indian ban is certainly a debacle for Chinese developers coveting the fastest-growing internet market, the country’s ARPU, or average revenue per user, also remains low compared to numbers in the West. Japan, on the other hand, is a much more lucrative market.

#HTE

Toppr, one of the largest online learning startups in India, has secured $46 million in a new financing round as it looks to scale its platform including a new product.

Dubai-headquartered investment firm Foundation Holdings led the Mumbai-based seven-year-old startup’s Series D round. Kaizen Private Equity, an existing investor, also participated in the new round, which brings Toppr’s to-date raise to over $92 million.

Toppr operates four products and services that are aimed at K-12 students. Learning app, Toppr’s marquee service, offers students live classes and sessions to clear doubts, pre-recorded lessons and tests. Toppr’s catalog covers 17 subjects and prepares students for five dozen competitive exams, explained Toppr founder and chief executive Zishaan Hayath in an interview with TechCrunch.

A portion of Toppr’s library is available to students at no charge on Learning app, but full access requires a membership. The subscription starts at 1,000 Indian rupee ($13.35) and goes as high as 3,000 Indian rupee ($40).

The startup launched Codr, a product aimed at helping all school-age children learn computer programming, last month. A Codr session costs about $9.35. Toppr also maintains a free problem solving app that enables a student to take a picture of a question, use machine learning to sift through the large bank of problems Toppr has amassed over the years, and get its solution instantly, explained Hayath.

Toppr’s Learning app has amassed over 13 million users, more than 150,000 of whom are paying subscribers, he said. In recent months, the startup has also worked on a new product called School OS, which enables a school to digitize their learning experience. Through School OS, a teacher can assign and collect homework digitally, and students can attend live classes.

Zishaan Hayath, the founder and chief executive of Toppr, a Mumbai-headquartered edtech startup (Photo: Toppr)

“They can also attend classes from previous years, or of grades ahead of them. Our schooling system is built in a way that keeps you locked in the current year’s curriculum. On digital, one of the benefits is that you don’t have to follow such rules. So for instance, if a student in tenth grade needs to brush up some concept from grade nine, they can do so at any moment,” said Hayath.

More than 40 schools have deployed School OS for their 60,000 students, he said. The startup plans to have 300,000 students enrolled to School OS in the next few months.

“Toppr has emerged as the highest traffic destination for K-12 learning and hosts over 1 million sessions every day. Toppr’s community of 50,000+ educators from across the country has contributed to over 35 lakh learning pieces, including questions, solutions, concepts, games and videos for the students. Our investment in Toppr also reflects our commitment to empowering great teachers via the new School OS. The new School OS already has 55,000+ learners on it,” said Aakash Sachdev, Managing Director of Foundation Holdings, in a statement.

Sachdev has joined Toppr’s board as part of the new financing round.

Hayath said the startup will continue to focus on scaling its various products and services, and also invest a little on marketing — an aspect he said Toppr has never spent any penny on.

Another relatively new area for Toppr is exploring merger and acquisition deals. Hayath said the startup has so far resisted the idea of acquiring a team or firm to grow inorganically, but is open to scouting deals for a right fit.

Toppr’s fundraising announcement today comes as edtech startups in India witness a significant surge in their userbases at a time when firms in other industries are finding it difficult to steer through the coronavirus pandemic.

Byju’s, India’s most valuable edtech startup, raised about $23 million from Mary Meeker’s Bond last month. Unacademy, another learning platform in India, acquired a smaller firm PrepLadder for about $50 million earlier this month. And two weeks ago, Vedantu said it had secured $100 million in a fresh financing round.

#HTE

Indonesia-based online travel portal, Traveloka, has picked up $250M in fresh funding to beef up its coronavirus-battered balance sheet.

The travel aggregator dubs the capital injection a “strong vote of confidence” in its strategy to adjust to what it couches as a ‘new normal’ for travel by retooling its focus on domestic and short hop excursions and activities. The funding round is led by an unnamed global financial institution. Traveloka also says “some” existing investors also participated (EV Growth being one it has named).

Prior to this latest raise, Traveloka had pulled in around $950M across five funding rounds since being founded back in 2012, according to Crunchbase. Back in 2017 it passed unicorn valuation after bagging $350 million from Expedia in exchange for a minority stake in the business. But, shortly afterwards, it lost one of its co-founders — who departed citing a clash of goals as the business switched to more of a commercial mindset, as he saw it.

Fast forward a few years and the pandemic is playing havoc with the travel industry as a whole. Since the pandemic landed to decimate ‘business as usual’ in the sector, Traveloka has responded by launching a number of initiatives in a bid to reassure and woo back customers — including flights that bundle COVID-19 tests; flexible open-date vouchers for hotels (aka, ‘Buy Now Stay Later’); online experiences; flash sale livestreams; and a big push around cleanliness with standardized hygiene protocols for vacation accommodation that can be booked via its platform.

Traveloka says the latest capital injection will be used not only to beef up its balance sheet but to boost efforts and deepen offerings in “select priority areas” — including building out what it describes as “a more robust and integrated Travel & Lifestyle portfolio” in key markets.

It also intends to expand financial services solutions it offers to ecosystem partners.

Commenting in a statement, Ferry Unardi, Traveloka co-founder and CEO, said: “Without a doubt, Traveloka has been profoundly affected by the COVID-19 pandemic. We have experienced the lowest business rate that we have ever seen since our inception. However, we always believed that the company will prevail by rapidly adjusting our strategy, working with our industry and ecosystem partners, as well as continuing to innovate for our users, our ultimate focus.”

Per Ferry, Traveloka’s business in Vietnam is “approaching” steady pre-COVID-19 levels, while he says its Thailand business is “on its way” to surpassing 50%.

“Indonesia and Malaysia are still in the early stage, but they continue to demonstrate promising momentum with strong week-to-week improvement, especially in accommodation with the emergence of shorter distance staycation behavior,” he added. “We acknowledge that the sector may go through further turbulence as it navigates new waves, but we feel we are prepared to take on the challenge and emerge on the right side of it.”

“The travel industry is facing unprecedented times, including Traveloka,” added Willson Cuaca, managing partner of EV Growth, in another supporting statement. “The leadership team has taken difficult yet commendable measures including restructuring and optimization to minimize financial health risks. We are confident that the company will emerge even stronger after this crisis.”

#HTE

The world’s hardware haven is taking a digital leap for pets. In May, China’s southern city Shenzhen announced that all dogs must be implanted with a chip, joining the rank of the U.K., Japan, Australia and a growing number of countries to make microchips mandatory for dogs.

This week, city regulators began to set up injection stations across their partnering pet clinics, according to social media posts from the Shenzhen Urban Management Bureau.

The chip, which is said to last for at least 15 years and comes in the size of a grain of rice, is implanted under the skin of a dog’s neck. Each chip, when scanned by authorized personnel, reveals a unique 15-digit number matching the dog’s name and breed, as well as its owner’s identity and contact information — which will help reduce strays. The microchip, a radio-frequency identification (RFID) chip, doesn’t track the dog’s location; nor does the authority store its owner’s personal information, according to a local media report.

While Shenzhen’s poster child of technology Huawei is striving to phase out foreign semiconductor parts amid U.S. trade sanctions, the city is procuring imported pet chips, including American and Sweden brands, said the same report.

The Shenzhen government is footing the bill for all the implants as it aims to seize more regulatory oversight over the city’s growing pet population. Those who don’t get their dogs microchipped by November will face a fine or have to turn their pets over to regulators. The city of over 20 million residents owned around 200,000 dogs and cats in 2019, according to official data. The total number of dogs and cats nationwide grew 8.4% year-over-year to nearly 1 billion in 2019, an industry white paper showed.

#HTE

Flipkart on Tuesday launched a hyperlocal service in suburbs of Bangalore, four years after the e-commerce group abruptly concluded its previous foray into this category.

The e-commerce group, owned by Walmart, said Flipkart Quick leverages the company’s supply chain infrastructure and a new location mapping technology framework to deliver more than 2,000 products across grocery, perishables, smartphones, electronics accessories, and stationary items within 90 minutes to customers.

When a customer places an order, the items are sourced from local neighborhood stores, warehouses and retail chains. Flipkart Quick — initially operational in Whitefield, Panathur, HSR Layout, BTM Layout, Banashankari, RK Puram and Indiranagar among other suburbs of Bangalore — allows customers to book a convenient two-hour slot between 6am to midnight for delivery.

The company, which is working with a range of partnered firms, is levying a delivery charge starting 29 Indian rupees (39 cents) on servicing these orders, it said.

The launch of Quick stands to provide Flipkart an opportunity to reach a new set of users, especially those who otherwise see no reason to buy online, offer more timely deliveries and also become a headache for some existing startups such as Dunzo that already operate in a similar space. It also marks Flipkart’s foray into servicing fresh fruits, vegetables, meats, and milk orders.

“This is a great model for India as households of all sizes are already used to their neighbourhood Kirana stores. In fact, Indian families are so comfortable with what we call the ‘hyperlocal context’, that there is a tendency to develop deep, familial ties with vendors, shopkeepers and service providers – now with the convenience of e-commerce,” said Sandeep Karwa, a VP at Flipkart, in a statement.

“While we start with our dark store (no-walkin) model, wherein we enable sellers to store inventory close to the consumer; this model has the potential of encouraging local entrepreneurship and enabling new business strategies and partnerships. Today, with Flipkart Quick – our Hyperlocal capability, we have the potential to bring together the whole network of neighbourhood Kirana stores onto our platform with just a click,” he added.

This isn’t the first time Flipkart has explored the hyperlocal delivery category. In late 2015, Flipkart launched Nearby to deliver perishables, grocery, wellbeing, and household items within 60 minutes. But the company abruptly discontinued Nearby reportedly because of poor demand and thin margin.

Flipkart did not reference Nearby today, but talked about the efforts it has made to build Quick and the opportunities it sees in the market. A Flipkart spokeswoman told TechCrunch that the company plans to expand Quick hyperlocal delivery service outside of Bangalore in a few months.

Flipkart said for Quick, it is also moving away from the traditional model of using zip code system to identify delivery location and instead using a latitude and longitude approach. This model enables the company to “not only narrow down the location” but also be “more precise” and deliver more efficiently.