Inside China Tech: IPO fever returns but Xiaomi hits US blacklist

Beijing-based Kuaishou, which runs the world’s second-largest video-sharing app, plans to raise up to US$6 billion from its Hong Kong IPO

Xiaomi said it would take appropriate action to defend its interests after being blacklisted by the Trump administration

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Kuaishou Technology competes with ByteDance’s Douyin in China’s vast short video-sharing app market, which had 818 million total users at the end of June last year. Photo: Reuters

Published: 10:00am, 16 Jan 2021Updated: 10:00am, 16 Jan 2021

This week we take a look at the planned initial public offering of Kuaishou Technology and whether the short video app operator can make more money from its millions of users, the latest antitrust investigation in China and smartphone maker Xiaomi joining rival Huawei Technologies Co on a US blacklist.

Kuaishou needs to translate users into profit

Chinese short video app operator Kuaishou is set for an IPO in Hong Kong next month, but as Tracy Qu and Iris Deng report – analysts are wondering whether it will be able to turn its 300 million daily active users into profits.

The app, which competes with ByteDance’s Douyin for eyeballs and whose name means “speedy hand”, allows users to upload and share short videos. About one-in-three of China’s netizens use it at least once a day.

Beijing-based Kuaishou, however, chalked up a net loss of 68 billion yuan (US$10.53 billion) in the first six months of 2020 – roughly 373 million yuan of losses a day, according to its preliminary financial filings. And this means investors will have to weigh up the cost of acquiring new users against how quickly the business can build a path to long-term profitability.

China had 818 million short video app users as of end-June 2020, according to a report released by the China Netcasting Services Association in October. Douyin and Kuaishou are the two dominant players, although WeChat’s short video function Channels is catching up quickly, reaping the advantages of WeChat’s huge user base.

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