Google, ZTE and Xiaomi highlight our top five China tech stories of the year
From Google’s Dragonfly to ZTE’s crisis and Xiaomi’s IPO, it’s been a strange year in China’s tech industry
As we come to the end of 2018, it’s time to look back on the year that was. With so many big stories to pick from, our writers broke down the year in China tech by looking at five of the biggest stories.
Google’s censored search engine for China
In China, even the Googles are fake. Ever since the search engine pulled out of China in 2010, knock-offs have been appearing online in the country, fueling anticipation for its comeback. But it was still a big shock when The Intercept broke news this August that a censored version of Google search is, in fact, coming back for real through a project named Dragonfly.
Dragonfly was carried out in complete secrecy and in partnership with a mysterious China-based company. And Googlers didn’t like it. Around 1,400 employees signed a petition criticizing the lack of transparency around the project while more than 200 Google employees issued an open letter to the company demanding it halts the project.
There wasn’t just pressure from inside the company. A US congressional panel questioned the company’s CEO, Sundar Pinchai, during which he vaguely said that Google’s not going into China… for now. On December 18, Google decided to shut down the data analysis system it was using to develop the search engine over internal complaints -- effectively halting project Dragonfly. - Masha Borak
Where are the games?
China is the world’s largest gaming market. It has the world’s biggest gaming company. And yet, somehow the government stopped approving new games for nine months… and it was all, allegedly, down to bureaucratic infighting. That inter-office spat put the entire gaming industry on ice, as it suffered the slowest growth in at least a decade.
The impact wasn’t limited to just stopping new games from releasing. It also meant some older titles couldn’t make money from players. If you’ve ever seen the microtransactions in PUBG Mobile, know that they don’t exist in the Chinese version -- simply because Tencent isn’t allowed to charge players (yet).
It comes as the government has increasingly voiced concerns over games in various ways, whether worrying about childhood myopia or about addiction. Tencent even added a feature to block young children from playing their hit game Honor of Kings (Arena of Valor in the West) for too long, leading to the bizarre situation where a game company is actively trying to stop people from playing its own games. - Josh Ye
Xiaomi’s up and down year
Eight years after it was founded in a small Beijing office, Xiaomi went public in Hong Kong in July... priced at half of what it originally sought.
But that wasn’t the only setback that Xiaomi faced this year. Once the world’s most valuable startup and China’s top smartphone seller, the company has since fallen behind rivals Huawei, Vivo and Oppo. Figures from last quarter showed it took the fifth spot in China, despite setting an ambitious goal in February to take back the top spot by 2020.
It’s a different story outside of China, as Xiaomi expands into overseas markets like Western Europe and India. Last quarter, it shipped 21% more handsets globally year-on-year, reaching the annual target of 100 million units two months ahead of time. - Karen Chiu
ZTE and Huawei’s troubles with the US
Like any good soap opera, the ZTE and Huawei drama has actually going on for years. The issue escalated in 2018 with the beginning of the US-China trade war. In January, AT&T canceled its deal with Huawei to sell its smartphones in the US. The company was also accused of posing a national security threat due to its relationship with the Chinese government.
ZTE fared even worse after being given a seven-year export ban for violating US sanctions on Iran. The company almost collapsed before the US gave it the green light to resume business in June.
The following months continued with mounting suspicion against Huawei, which spread from the US to Australia, UK, and other countries. And then, the highlight of the show: Huawei’s CFO Meng Wanzhou was arrested in Canada at the request of the US government for violating the US trade embargo on Iran. Tune in for the next episode in 2019. - Masha Borak
End of the bike-sharing craze… and Ofo?
Just two years ago, Chinese cities were crammed with millions of colorful rental bikes made by the country’s over 60 “bike-sharing” startups.
In 2018, there’s only three left, and nobody knows if one of them will make it.
Ofo, once one of the two leading bike-sharing companies, had a really tough 2018. Its biggest competitor Mobike was acquired by China’s consumer giant Meitu in April. It stopped charging users for deposits after that, as did Hellobike -- leaving Ofo as the only bike-sharing company charging users deposits.
Users aren’t happy about that, and since then, Ofo has been grappling with its financials despite its CEO’s determination to “fight till the end”. Sued by suppliers and owing users’ deposits, it has even tried to make money by putting video ads in its app and selling honey on WeChat. Users flocked to its Beijing headquarters to claim their deposits back, with reports saying that there is a queue of more than 10 million people ahead of them.
There was no clearer way to see the collapse of the bike sharing industry than the millions of abandoned bicycles. Whether turned into scrap or piled into bike graveyards, it was a scene that became common in China this year. Similar scenes have also been seen outside the country as companies sought to expand overseas… only to find they’d over-reached. - Xinmei Shen