8 Predictions About The Commercial Tech Sector In 2016

摘要: In 2016, many things are bound to happen in China: the slowdown of the GDP growth; the rise of middle class; the Internet industry’s further penetration into the traditional economy; the overseas expansion of Chinese smart phone brands; the growing popularity of e-commerce and sports industry; and opportunities brought by the internationalization of the Chinese currency.

(Chinese Version)

By 2016, traditional Internet giants such BAT (Baidu, Alibaba, Tencent) has reached their peak time. As giants start to slow down and haven’t found new business bursting points, enterprises at the middle of the pyramid are gathering momentum and new BAT are brewing.

In 2016 there will certainly be many obstacles. For instance, the overly active flood of capital will create more industry bubbles and lead to the situation where only a few giants are leading a certain industry. What’s more, the heated O2O industry will transfer its capital to offline and make its online business more mobile as well. Without a doubt, all theses changes will bring more challenges to enterprises in strategic decision making in 2016, making the market scene even more complicated.

And after a technological plateau period, a new round of key technological breakthroughs will emerge in 2016. Things we have been taking for granted will transform entirely this year, pumping new blood to the industry layout.

Like previous year, we TMTpost have listed out 8 possible trends and changes worth attention in the new year after discussing with the editors at Business Value.

The commercial real estate industry will be dominated by a few real state giants

Written by Xiao Qi, journalist at TMTpost

The real estate industry at nature is a business model that possesses long-term investing value. However, real estate projects not only require a great amount of money in order to proceed, they also need real estate developers to have competence in choosing the location, attracting brands, design, operation, and management.

In China, there are over 80 thousand real estate companies, 50% of which have more or less entered the commercial real estate sector. Meanwhile, more than 95% of the companies don’t really have operation experience in running the line of commercial real estate. Since these companies don’t possess much knowledge and strength in developing commercial real estate, they therefore lack the ability to manage such projects in the long run.

That is also the reason for the downfall of many shopping malls in the country.

People that don’t really have faith in the future commercial real estate industry believe that many real estate enterprises had completed the early accumulation process of capital and had form the business models of property management and enterprise expansion backed by cash flow.

On the one hand, these companies continue to develop new projects while start to manage output and operate on asset-light on the other hand, using different means to penetrate many commercial real estate projects.

“What is asset-light? To put it in perspective, Wanda Plaza for example doesn't need money from Wanda Group. What Wanda provides is its management system and brand.” Wang Jianlin, board chairman of Wanda Group explained, stating that Wanda is only in charge of choosing the location, planning, designing, constructing, attracting businesses, and operate, and that Wanda Group doesn't pour money into building the plazas. All the revenues will be split by the ratio 35:65 between Wanda and investors. Through cooperating with foundations, insurance and investment companies, Wanda is able to acquire the fund it needs. And of course, Wanda is also utilizing crowdfunding channels to find investment. Wanda plans to use asset-light model to expand its Wanda Plazas base to 400 to 500 in the country by 2020.

As a matter of fact, Wanda has another approach to expand: Technological expansion. Feifan, launched in 2015, positions itself as a real business body and a Internet scene service operator. Supposedly, the project will connect all the independent businesses with the shopping malls through one app, integrating them into one standardized platform. Subsequently, Feifan can use credit and membership systems to construct a user mechanism, which can further boost the profiting capability of brick-and-motor businesses.

Rumor has it that Feifan was able to reach an agreement with about 400 shopping malls in China in 2015 through this technological expansion technique.

Feifan offers a very different marketing and integration solution to real businesses. In contrast to that, Dayuecheng’s asset-light operation integrates channels, consumers and asset in order to maximize the value.

On November 17th 2015, Dayuecheng Real Estate took over Jinhui Plaza in Tianjin with its asset-light operation model, which was renamed as Tianjin Hepingdayuecheng. In the eyes of Wu Zheng, general manager of Dayuecheng Real Estate and Tianjin Dayuecheng, asset-light operation is a way to dig deeper into consumers’ value.

Business Value also learned that Dayuecheng participated in the operation and management of Heping Dayuecheng through providing management, commercial operation and sharing revenue.

The newcomer Macalline also brought forth the strategy of expanding and profiting through providing management service in 2015.

Currently one third of Macalline’s 11 new projects ( in Fuzhou, Tianjin, Lanzhou, Chongqing, Shanghai, Suzhou, Chengdu, Hangzhou, Tangshan, Huaian, Lin Xi, Zhumadian). Among them, the project in Zhumadian will be completed in 2016.

In this case, the commercial real estate industry will be further dominated by a few giants in 2016.

However, whether it’s providing brand name or technologies, the brand itself has to be strong enough first. Besides that, the brands should possess a great pool of brand resources and a compatible talent pool. These two factors will decide how far can those giants go.

Entry-level smart hardware startups will face high fatality rate

Written by Ma Jing, journalist at TMTpost

Without a doubt, this year entry-level products will face devastating challenges.

In just one year, the smart hardware sector has experienced both being a start industry and the capital winter. This newly-emerged industry is currently a world of startups, and in the near future many startup projects will face the danger of going out of business.

Statistics show that the smart hardware industry had completed 106 financings in 2015, among which 44 were angel investments, 5 were pre-A round, 43 were A round, 13 were B round and 1 was C round. That being said, angel investment and A round investment accounted for 86% of the total. The only company in the country that has completed its C round financing was DJI-Innovations, receiving USD 7.5 and attaining a valuation of USD 8 billion.

To find series A round financing, you only have to have a team and a concept to convince investors. But when it comes to series B round, what you have in mind doesn’t matter that much anymore. Instead, you need to have a mature business model, sales, and revenue etc. to insure investment value. Given the current situation where the industry is facing high project abortion rate, the capital market will naturally tend to get the perception that the smart hardware sector is too difficult for startups to survive, and therefore they would prefer startup teams that show comprehensive competence. That said, many teams will be out of business soon.

Entry-level products will take the hit first in this new wave of project abortion. Due to the fact that entry-level product projects have more audience and extension potential, a great deal of startup teams chose this sector as this starting point for their entrepreneurial journey. In this entry-level market, products like wrist bands, smart watches, smart cameras, and smart sockets etc. account for over 90% of the market share. The worst part is that Internet giants like Xiaomi and 360 etc. are also targeting the entry-level market, which means it would become more difficult for startups to survive and thrive for they have no matching power to compete with mature giants.

Today’s Xiaomi is just like yesterday’s Tencent. Xiaomi has become the nemesis of hardware startups. At present, oftentimes entrepreneurs have to consider carefully whether Xiaomi would also do similar projects like theirs in order to avoid competition. Apart from that, they also need to come up with solutions if Xiaomi would eventually enter similar sectors. Xiaomi’s strategy is first enter a red ocean market and use its powerful supply chain and resources in channel to make cheap products. And when the shipment rate reaches one-million-level, Xiaomi starts to make money.

Thanks to Xiaomi’s ecosystem, Xiaomi’s wristband was able to set itself apart from the crowd in the market and found financing. Aside from that, Xiaomi wristband is also gaining more market share. IDC recently released its 2015 3Q Global Wearable Gadget Market Report, which shows the top five wearable brands: Fitbit (22.2%), Apple (18.6%), Xiaomi (17.4%), Garmin (4.1%), and BBK (3.1%).

In 2016, entrepreneurs of the hardware sector will have to giving working on the entry-level market and turn to target specific sectors such as VR, sports and the music sector etc. so as to avoid direct competition with Internet giants. And since these products’ main audience is the geek group, which has better consuming power, their pricing is going to be relatively high as well.

Opportunities in specific sectors have always been there. “Vertical services and hardware that really meet users’ demands are the future of the smart hardware sector,” Wang Xiaochuan, CEO of Sogou said.

In 2015 the smart hardware market was chaotic, with startups and enterprises launching diverse new product everyday. However, despite the product diversity, most smart hardware makers failed to actually meet users’ demand. Instead, entrepreneurs cared more about what kind of data the products could get them and whether they could build a platform etc. As a matter of fact, if startups could pay more attention to vertical specific sectors and successfully build a rather strong industry barrier, then they would have better chance of survival. At present, specific sectors such as VR, drone, health care etc. are growing at a rocket speed while sectors like medicine and auto spare parts etc. are still blue oceans where startups have more opportunities.

ACG becomes mainstream 

Wirtten by Wang Xuan, journalist at TMTpost

2015 had been a year of ACG (Animation, Comic and Game.), with 50 million core ACG users and 149 million sub-ACG users spreading the influence of ACG to mainstream markets from the sub-culture world.

Traditionally speaking, ACG stands for Animation, Comic and Game. There’s also another term named ACGMN (stands for Animation, Comic, Game, Music and Novel), pretty much refers to the same user group. As for sub-ACG users, they are generally people who like ACG sub cultures on the Internet, such as bulletin video sites and cosplay etc. Nowdays these users are more willing to participate in the making and spreading of ACG content than ever.

ACG currently is still in somewhere between mainstream culture and sub culture, and therefore its future development bursting point would be at the long tail phase. In fact, emerging sectors are exactly what capitals are looking for and where new projects will appear rapidly. This year, more and more interesting projects are entering the market. But still, most of them would eventually lose momentum and the industry would be dominated one or two giants ultimately.

In early 2015, Tencent Animation&Comics, founded in 2012, became an independent company and poured in 300 million RMB to establish Juxing Foundation in order to encourage original AC content. At present, Tencent has over 50% of the total original AC content in China. According to the vice president of Tencent, Gu Wu, Tencent is planning to make AC IP mainstream.

Not long ago, there have been rumors that Tencent would invest in Bilibili, which has been confirmed by sources from Tencent. It’s said that Bilibili and Tencent will start to cooperate on content, channels, and communities to find new opportunities. With the investment, Bilibili will be able to purchase more content, accumulate more users and build a better community.

Meanwhile, YoukuTudou, who invested in AcFun, a platform similar to Bilibili, had been acquired by Alibaba. In AcFun’s opinion, original content is a way out, a development path. Currently, AcFun has already been working on its own original AC content. Xu Yuanxiang, vice president of Alibaba Pictures, pointed out in his speech that the company would hire fan fiction writers to create the stories, and reinvent the existing comics, animations, and novels. AcFun’s supporter Alpha Culture had also acquired YAOQMH.COM and invested in DouyuTV and IBUKA etc., gaining an upper hand in content operation.

On the other hand, Baidu holds Tieba, an enormous ACG user base, and a content platform Iqiyi, which is an advantage in channels. However, in terms of the content itsef, Baidu hasn’t really made any move. But later Iqiyi also founded a AC company and announced its strategy of putting more efforts in developing AC IP.

Beside BAT, small and medium-sized companies are also setting their foot in the vertical ACG industry.

Bilibili and AcFun are trying to make their video sites cultural communities. And such ACG brands are rather appealing to investment organizations: Bilibili’s market valuation has reached 1.5 billion RMB; ACG social apps such as JUJU, GUOTANG Mobile, BCY.com etc. have completed their A round financing; music apps with bulletin feature such as BEIWO.ac and Echo have finished their A/B round financing; U17.com has been acquired by Alpha Culture while IBUKA has finished its B round financing and is currently working on producing content.

Echo, an app featuring 3D audio, bulletin comment, and sound sticker functions, had accumulated 10 million users by September, 2015. In comparison, Bilibili is 6 years old and has 50 million registered users, showing the fact that the ACG industry has made a great jump in recent years. And in 2016, this particular will continue to gain momentum and develop. Compared to Japan where almost everyone is ACG fan and the U.S., which is dominated by Marvel, the ACG market in the country is still in the rising phase. It’s apparent that this year there will be more projects entering the market.

However, besides a few companies that really have the potential to become something, most startups are struggling. Most ACG apps are not directly addressing the copyright issues, as well as most music social apps and video sites. If startups don’t have enough funds to purchase copyrights or create original content, they could only grow in the gray area or focus on making innovations on the social networking, ACG fan merchandise or hardware sector. UGC communities are also facing the problem of lacking quality content. And because of that it’s really difficult for them to keep users.

The after-screen market will exceed the box office and become the biggest income source of the film industry

Written by Mei Qi, journalist at TMTpost

While reviewers are still fighting over about the growth rate of the box office, the film industry is brewing a new business wave. In 2016, box office will no longer be the only indicator to measure the success of a movie. The fan merchandise market, which is the after-screen market, has the potential to exceed box office and become the biggest source of income for the film industry. This emerging sector is expected to reach a scale of 50 billion to 600 billion RMB.

In December 2015 at the MCON conference in Sanya, president of the Wanda’s movie theater department Zeng Maojun shared the following statistics: In 2015 the global film industry grew by 13%, with a total box office of USD 41 billion; the box office in the Chinese market reached over 40 billion RMB and might hit 43 billion. Apparently, these statistics confirm the forecasts we made in 2014 on the box office in the country in 2015. However, we can no longer focus only on the box office in 2016 since the Chinese film market is brewing a new business wave.

In 2015, China already had 3100 screens. It’s expected this year that the number would hit 4000. Meanwhile, the number of viewers in China in 2015 was 1.2 billion (1.5 movies per person), pretty close to that of the U.S. The film market in China is just a gigantic gold mine waiting for explorers to exploit. In the future, it’s not accurate to assess the market only according to the box office. This year, the post-90s generation (accounts for 62% of the total audience; 6.1 movies per person) will become the mainstream consuming power, giving more incentives to the after-screen market.

In the mature American film market, the box office only accounts for one third of the total revenue, while the rest is contributed by fan merchandise. If the scale of the Chinese film market is USD 10 billion, then from 2016 to 2017, the after-screen market in China might have a growing space of 50 billion to 60 billion, a scale that will exceed the box office revenue.

According to statistics from foreign media, the movie series Star War has a total box office of USD 4.5 billion while the income brought by its fan merchandise is USD 20 billion. The newest one Star Trek 7 has once again swept through the globe and made tons of mad money.

Mtime’s CEO Hou Kaiwen believes that the lack of a mature industry chain results in the lack of profit models, which is especially obvious when comparing with overseas markets. It’s apparent that the film market in China has grown mature gradually as the box office continues to grow. Besides the incredible box office, there are also amazing stories like Wanda earning 800 million RMB by only selling popcorn. But starting from 2015, the film industry is evolving to different directions.

In 2015 BAT set up their footholds in the film industry and worked on a few IPs to test the waters, through which process they were able to found systematic business models. When the Internet industry cooperates with the film industry, IP can have more income sources other than merely the box office. Games, merchandise, and even theme restaurants developed based on IP can also be great income sources.

The Chinese film market has experienced four consecutive years of high box office growth. However, box office has its limits and it’s only one income source. E-commerce has great influence on traditional movie theaters. In China, most cinemas’ ticket price is low thanks to subsidies from platforms such as Maoyan Movie. And if these platforms stop subsidizing the cinemas, they would be definitely in trouble.

As a matter of fact, film companies, cinemas, Internet film companies had been making their strategies and moves in 2015: Alibaba Pictures launched its one-stop shopping hardware into cinemas. Meanwhile, Mtime.com had been trying to build a one-stop e-commerce service sales platform named Mtime PRO. Wanda on the other hand focused on its membership system. Dadi Cinema took it one step further by bringing forth the Movie+Everything concept. In 2016, the box office will no longer be the sole indicator that measures the success of a film. The after-screen market has great potential to exceed the box office in terms of scale.

VR technology thrives

Written by Ma Jing, journalist at TMTpost

VR technology is probably most prominent emerging technology in recent years as it gradually advances to the point where mass adoption is possible. But what might accelerate this process?

The movie Avatar opened the age of 3D movies years ago and its box office record of USD 2.7 billion hasn't been broken by any film yet. It’s reported that Avatar 2 will go on screens during the Christmas holiday in the U.S. Naturally people start to wonder if Avatar 3 will make use of VR technology and open a new era since its director James Cameron is a total tech maniac who won’t hesitate to apply all the new technologies to his new movies.

HIS estimates that the VR gaming market will reach the scale of USD 496 million in 2016. Gartner believes that VR technology has reached the point where the market will undertake massive transformation, which means consumer-level products will be massively produced. Internet giants in the country and overseas have all been making their own moves, showing that 2016 will be a year of VR technology.

In recent 2 years, 77% of investment or acquisition in the VR industry is related to the entertainment sector. The gaming sector, as the most closely related sector of the VR industry, couldn’t make much of a stir due to the lack of audience. In 2016, the film market might be the stimulus that will erupt the VR industry instead of the gaming sector.

VR technology can drastically enhance the movie-watching experience. It allows viewers to immerse in the movie completely, making it just like gaming experience. Therefore, users will no longer be just watching a movie passively but rather are given the change to interact with the movie. In the aspect of experience, 3D technology only provides a better depth of field and that’s it. There’s no additional information for viewers to explore. On the other hand, VR technology not only boosts the viewing experience, but also provides more space for movie makers to add more information to make it even more entertaining.

Once consumer-level VR products become mature enough, consumers will be able to enjoy a movie-watching experience similar to that in a cinema at home using their own VR devices. However, there’s still a long way to go for the VR industry to reach that state for the fact that there are three major obstacles that are holding it back: VR products at present still can’t fix the dizziness issues that many users experience after using the products for a long time, which is illustrated by statistics from Baofeng Mojing’s platform; the relatively high price of VR products kills many consumers’ passion; the level of difficulty and the filming technique to make a VR movie makes it harder for the film industry to accumulate content for directors are used to the current movie making system and it’s impossible for them to come up with a new system suited for VR movies in a short time.

Many film directors also stated that VR movies are hard to make not only for all those expensive equipment and filming difficulty, but rather they just simply don’t know how to start. At present there are only less then 10 VR movies around the world and they are all less than 10 minutes short, 3 minutes long on average.

So how will the film industry make use if VR technology?

In the era of VR films, films will still be shot and shown mainly in the traditional way, meaning most of the time the audience will need to watch the film in the traditional way. However, certain scenes will be shown with VR technology. For instance, epice scenes like space wars etc. will be made with VR technology that allows the audience to look around the surrounding. This process might last for one minute and the audience can then focus on the screen once again.

The film industry cares a lot about the return of investment, and for that it’s natural for them to avoid risky and money-burning film projects that should be shot completely with VR technology. To put it in perspective, a 3-minute-long can cost over ten million RMB to make. But if only a few scenes are shot with VR technology, then the cost will be less. It’s a way to test the waters and see how the audience would react the VR films while lowering the cost.

Getting listed will be a new trend for P2P companies

Written by Sun Cheng, journalist at TMTpost

In 2015 the development of P2P will be more diverse while a new wave of listing will occur.

The first listed Chinese Internet finance company appeared near the end of 2015: CreditEase’s P2P platform yirendai.com went public on NYSE. Yirendai.com had tried to go public three times before and failed to list on NASDAQ for two times. It seems that NYSE is more comfortable with P2P model than NASDAQ. Before that Lending Club was also listed on NYSE, a platform similar to yirendai.com.

Yirendai.com’s listing had been perceived as a positive influence by the industry for its success contains a lot of useful information for other companies to utilize when trying to go public overseas. Overseas stock markets have stricter systems about transparency on information and business model. Therefore, if P2P companies could get listed there, it would drastically boost their credibility, brand image, and capital input.

If P2P companies get venture capital from dollar fund, they would usually choose to go public in the U.S. And if they get the money from RMB fund and their main user base is in China, then the local stock markets might give them a better valuation.

By putting Internet finance platform’s asset in the newly-listed company TiPray Technology on the New Three Board, PPmoney had achieved the goal of entering the New Three Board. Jindanlicai and Anxin on the other hand exchanged and bought shares from the New Three Board, and making Internet finance a main business of those listed companies.

These listed companies that they are using all make public statement that the deal is not major assets reorganization and their main businesses aren’t changed. Additionally, they also denied that this is an act of back-door listing so as to avoid the strict regulation.

The HKEX will also be a hot place for P2P companies. Jinronggongchang and Eloancn for example made use of the listing of their holding companies and achieved listing in some way on HKEX. Caijia was acquired by Pacific Plywood Holdings and achieved back-door listing as well on HKEX.

In 2016, more P2P platforms might become listed: LU.com, Hongling Capital, Rong360, DianRong, 91Jinrong, CRF China etc.

“LU.com is valued at USD 18 billion and plans to get listed on HKSX in the latter half of 2016,”Kui Sheng, the chairman of board of LU.com, stated. “The company is now working on its series B round financing and will soon issue 5% of shares. We expect to raise a fund between USD 900 million to one billion, which might be finished soon.”

LU.com was established in 2011 and now has over 10 million registered users. Its business model is similar to American peers such as Lending Club and Prosper. In 2014, the total transaction volume of LU.com jumped by 700% and reached USD 43.3 billion. In August 2015, LU.com poured in USD 2 billion and acquired Pingan Puhui, a consumer credit service company that targets consumers from Pingan, extending its loaning business to offline.

Rumor has it that China Rapid Finance is planning to launch its IPO in America in the first half of 2016 and plans to raise USD 200 million. China Rapid Finance was founded in 2001. It has years of experience in risk management on Chinese consumer credit service and launched its Internet finance service in 2010, which was led and backed by the Internet finance forerunner Zopa’s board chairman, American Express’s former Phillip Riese, the board chairman of the first American Internet finance platform Prosper, and Capital One.

In July 2015, China Rapid Finance announced to have completed its series C round financing at USD 35 million, led by Broadline Capital and followed by UBS and other organizations.

Another well-known case is Hongling Capital. Rumor has it that the company might have back-door listing through Sanyuanda. Hongling Capital came online in March 2009 and it’s one of the earliest P2P platforms in China. Hongling Capital has been sticking to its big project model with every singe one of its projects involves millions of dollars.

“Hongling Capital’s startup overdue might erupt intensively in 2017,” Hongling Capital’s founder Zhou Shiping revealed. It seems that Hongling Capital is hoping to use the stock market to grow bigger, enhance the platform’s ability to deal with overdue and bad debts.

“When and where to go public depends on the capital market and the country’s policies. I hope the reform of China’ capital market will continue to help push the industry forward,” Rong360’s CEO Ye Daqing said.

At present, the register mechanism hasn’t come out yet and Rong360 will need to find alternatives. Stock markets in America and Hong Kong might be their potential choices as well.

91Jinrong’s cofounder Wu Wenxiong believed that the stock market in Hong Kong would not be a popular choice among Internet finance companies that have received venture capital for the fact that companies generally get lower valuations in Hong Kong and therefore the cost doesn’t match the estimated return. In this case, 91Jinrong might be listed on A-share markets instead or just go public on the New Three Board first and find another place later.

The coming listing wave of P2P is just like the previous listing waves of Internet companies.

First wave: Web portals like Sina, NetEase, and Sohu created the idea of Internet entry.

Second wave: This wave was mainly contributed by gaming, OTA, and life service Internet companies.

Third wave: Social networking, e-commerce, and tool application companies.

Fourth wave: Giants emerged and became dominant; acquisitions and mergers were frequent; Internet companies worth over USD one billion appeared in the Chinese market.

Now, the Internet finance sector is in the fifth wave.

Before these two waves come, we have to figure out two essential questions:

1. Does the capital market think highly of this sector?

CreditEase was smart to send its best power Yirendai to the stock market. “Yirendai’s most clients are recommended by CrediEase, more than 60% of its total clients,” Yirendai’s prospectus mentions. That said, CreditEase gives away part of it best online resource and assest to CreditEase.

Apparently, CreditEase just simply wants the status of being a listed company. CreditEase’s attitude angers quite a few its peers: “CreditEase’s low valuation will create more troubles for other companies that are planning to go public in America.”

The capital market is really smart. After CreditEase issued its USD 10 share, its share price plunged by 10% to USD 8.35. In the end the closing price was USD 9.1, still a 9% drop. In this case, after closing CreditEase’s valuation would be USD 532 million, which shows the fact that the capital market still has doubts about the Internet finance industry.

The American capital market tends to prefer Internet commercial application companies over finance companies. Additionally, the capital market resents risk assets. For instance, P2P companies such as Lending Club that mainly profit through charging their clients service fee are more desirable than companies like OnDeck that make revenue by using the interest rate differential. In this perspective, pure P2P platforms in the country have better chances of getting listed.

2. Risks posed by policy.

Ever since the founding CreditEase has always been in the center of attention. Its debt assignment model is followed by a lot of offline P2P companies while the company is often criticized for potential cash pooling and its transparency level.

Getting listed is just like a coming-of-age ceremony for P2P companies since they are given the power of the capital market and have the potential to be the game changer. Anyhow, the very core of Internet finance is risk control, which requires the support of the public credit reference system, big dada, relevant regulations and policies.

Tesla’s share price will drop by more than 20%

Written by Hu Yong, journalist at TMTpost

Currently, it seems that the oil price is not going to stop falling any soon while Saudi Arabia decides to hold on to the current policy and maintain the oil output. In this case, the oil price will remain relatively low for a long period in the future. Without a doubt, this will create great pressure for Tesla and other new energy automobile makers.

Statistics from the United States Department of Energy show that the MPGe (Miles per gallon gasoline equivalent) of vehicles using gasoline and diesel oil is between 25 to 50. In accordance with the current oil price, it cost ordinary vehicles 4 to 8 dollars every 100 miles while Tesla cost less than 5.

However, statistics also show that from 2012 to 2015 the price of luxurious cars like BMW, Infiniti, and Mercedes etc. is around USD 50,000 to 60,000 while the cheapest Tesla model is priced at USD 69,900, which means that Tesla no longer possesses any advantage in terms of saving cost. Just think about it: if every car runs for 15,000 miles per year while the oil and electricity price stay the same, then Tesla users can only have the return they expect from their investment in new energy car.

However, high-end consumers who are willing to buy luxurious cars happen to be the user group that doesn't care about the price that much. Tesla 3, which will be launched in 2018, is priced at USD 30,000, a basic model which Musk hopes to conquer the mass market with. But even Tesla itself believes that the company would not be able have enough supply to meet the demand until 2020 when the production capacity is high enough. That being said, what Tesla has to offer within 5 years is a expensive model that doesn’t necessarily save much money. The worst part is that relevant infrastructures like the charging piles etc. are still relatively rare. What Musk should pray for now is that Saudi Arabia will resume to its previous oil output and increase the oil price. Otherwise Tesla will only be trapped in this awkward position that might be even harder to bear in the near future.

In August 2015, Tesla lowered its estimated annual sales from 55,000 to 50,000 to 55,000. However, three months later the number was once again lowered to 50,000 to 52,000.

Model X, a model launched in 2015, didn't actually help boost Tesla’s sales performance. Even though in previous years’ Q4 there had been a comparative growth on moving base of more than 20%, Model X still couldn't achieve its goal in 2015. For Musk, the most serious issues is that after all the fame games, Tesla is indeed in trouble in the Chinese market. Its overly high price, the lack of charge pile, and the unknown new energy policy are pushing Chinese consumers farther from Tesla.

It’s fair to say that in a situation where China’s economic growth is gradually slowing down, Tesla will face more challenges and hardships in this particular region. And this time, Tesla is struggling from the pressure brought by the time.

News apps will be replaced by comprehensive information aggregation apps

Wirtten by Zhang Yuan, journalist at TMTpost

Nowadays, we barely actually read news. So where did we know about the launch of two child policy and see mid-age women dancing at “Silent Hill” in the country? I believe most Chinese people don’t pay much attention to news and they still know about important policies and hot social issues. For many people, WeChat is the platform on which they read important news stories since our friends on WeChat have filtered the news we might like out. In this case, why would us bother to open news apps to read some articles selected out by some freshly graduated editors?

In this case, the rise of information apps like TouTiao and Yidianzixun came naturally. A “customized feeds-streaming platform” is how TouTiao positions itself. Its feature function is not provide users with first-hand news but rather stuff about golf, fishing, parenthood etc.

TouTiao’s user-centric concept makes it one of the most frequently-used information apps in China. Statistics from Trustdata show that on average every user uses TouTiao more than 40 minutes per day, 60% higher than other news apps.

In 2015, news apps started to feel the intensifying pressure and began to transform so as to keep up with the trend. IFENG.COM for example invested over 100 million RMB in Yidianzixun, an information aggregation app, to find a way out. Tencent on the other hand possesses the most popular news app, Tencent News. To secure its status, Tencent is supporting TianTianKuaiBao (its slogan: read things that you are interested in).

In the field of news feeds, the most interesting thing to see in 2016 is probably whether TianTianKuaibao can copy Tencent News’ success and help Tencent fight TouTiao. Trustdata’s report also shows that the number of TouTiao’s daily active users has reached 65% of that of Tencent News while the daily use time is twice as much as the latter.

2015 had been an essential year for TouTiao to complete its content closed loop. The previous two years the copyright incident brought by the media industry forced TouTiao to become something more than just a news app. And to achieve that, TouTiao had poured in tons of money to attract we-medias to create content on its platform. Without a doubt, TouTiao is extremely ambitious. TouTiao’s goal is become the largest mobile content producer and distributing platform, which will create more space for TouTiao to grow than just holding on to the news industry.

As for Tencent, the dominant Internet giant apparently will not just let TouTiao gain momentum and exceed its news product. Tencent still has an ultimate weapon at its disposal: WeChat’s official account feature. However, WeChat’s official accounts spread their content through social connection on WeChat, and therefore they lack diverse distributing channels. To put it in perspective, to have an influential piece on WeChat, one has to make its piece read by at least 100,000 users. TianTianKuaiBao learns from TouTiao’s article recommendation algorithm and gives pieces from WeChat official accounts to another chance to spread. Besides that, TouTiao’s mechanism enables pieces from WeChat to be sent to users that might be interested in them.

Aside from that, through targeted recommendation, relevant article recommendation, hot topics management, TianTianKuaiBao has the chance to revive the WeChat users that are tired of browsing through tens of official accounts on WeChat, meaning it provides another stimulus for WeChat official accounts to thrive.

Two months after the launch, TianTianKuaiBao had already become the top three on the news app chart on App Store and has stayed there even till now. Support from Tencent’s WeChat and QQ no doubt helped TianTianKuaiBao a great deal.

When TianTianKuaiBao and TouTiao are refining its “produce-distribute-feedback-cash-in” closed loop, news apps are becoming less and less appealing to new media. The worst part is that new media even has better status and treatment with traditional news organizations.

Nowadays, there’s only one way to define news: Are people talking about it on social network platform? When people are talking about something on the Internet a lot, then this thing will become news. And to address this phenomenon, relevant apps are developed.

Theses three customizable news apps launched in 2015 show us more possibilities about the customization of news feeds. Compared to influential channels like WeChat and TouTiao that attract content producers and keep them within their own platform, emerging news feeds platforms are actually distributing channels for content apps. When users are tired of opening different official accounts on WeChat to read news, that means WeChat’s mechanism is losing its edge. And that’s when TianTianKuaiBao becomes a content distributing channel. The same thing can apply to all those content apps that users downloaded. Apps like TianTianKuaiBao can collect content from those platforms and allows users to read the things they are interested in on only one platform.

Ruguoapp for instance can dig into content apps and collect the content you have subscribed, and display them to you. And only when news meets the criteria you have set up will they be sent to your phone. In this sense it acts just like a tracking app. You can actively list out the things you are interested and the app will automatically search for them on the Internet and other content platforms, and in the end integrate them and display them.

Dudu Daily on the contrary uses actual professional people to filter and select news for the users, allowing users to read what information forerunners are interested in. If we say the news that friends filter out for us on WeChat is ordinary news, then the news on Dudu Daily is actual news selected and edited by professionals. Simply put, Dudu Daily is like a professional media.

WanDouJiaYiLan on the other hand is an information aggregation that can break the barriers between content apps. Content producers that are on platforms other than WeChat and TouTiao are therefore able to reach more reader without compromising their independence.

Traditional news apps are no longer the center of innovation. It’s just a matter of time that information aggregation apps will exceed them.

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[The article is published and edited with authorization from the author @BusinessValue, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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