6/24 TBC Insider Digest
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Insider Digest 6/24/21: EdTech Regulations, Zhangmen IPO, Meicai Farmer-to-Business, Data Security Law
Housekeeping: We have an upcoming recorded chat with Richard Xu of Grand View Capital, which focuses on Chinese businesses exporting abroad. Let me know if you have any specific questions! Unfortunately it’s not live as Richard’s English is not as good as he’d like and so prefers no audience. If you missed our chats with Andy Tian (whose business Asia Innovations has about 400mm users outside of China across various live social apps), or Ray Hu on SaaS in China you can find the recordings here or wait for them to come out on our livecast.
We won’t have a weekly chat this Friday due to my house being renovated and lack of internet around that time, but next Friday we will be talking about Edtech regulations! See you at 6AM PST / 9AM EST / 9PM Asia Time!
6/2021 China Edtech Regulations Update
I’ve already written about the rumors from back in March. Now, there’s murmurs of stricter rules. However, all is not lost, the government is cracking down on K9 academic tutoring, so some things are spared, ie extracurriculars. The more important question is why, and will it work? It’s important to know why because if the base cause is not addressed, these rules, even if they come to be, may be reversed or loosened. Almost everyone I spoke to thinks it is about 1) first and foremost, the demographic crisis (which I’ve written about here) and 2) equal opportunity, for the sake of social stability. Additionally, almost everyone I spoke to in the industry thinks it is not going to work, just like it didn’t in South Korea. But that doesn’t mean the government won’t enforce it anyway, and it could potentially be very strict. Sorry, I don’t have any real answers.
But then we have a slew of edtech IPOs anyway! Well, barely tech. Zhangmen just went public, and Huohua Siwei (Spark Education) has filed. I wrote briefly about the company but mainly to highlight some sector trends, which is that AI tutoring is really growing very quickly (~24% of the market in just a few short years) and that sales & marketing are awful in this business … but you knew that already.
Meicai is actually already rumored to be going IPO, so we might see the real numbers very soon. Until then, it’s a $7Bn unicorn backed by Hillhouse that is building out food distribution from farmers to restaurants in China. It’s got some obstacles, including a very challenging supply chain that it had to build from scratch, complete with not just cold chain but the ability to transport live animals. But it seems determined to run with this asset-heavy model, not unlike another one of the businesses Hillhouse loves, JD. Do take a read and let me know what you think.
6/10/21 China Data Security Law
This is a belated finishing up of a thread I opened last week on the Data Security Law. Alas, it’s not nearly as sensational as some outlets reported. It just outlines some punishments (mostly fines) for when companies refuse to comply with domestic law enforcement, or comply with foreign ones without permission. Unlikely to be problematic for anyone who’s doing a purely domestic business.
Other Posts
Update on Xiaohongshu’s product from a brand’s perspective based on a webinar I attended from Walk the Chat. It’s got longer shelf life content but doesn’t have a very good internal advertising or transactional system.
Update on the US vs China unicorn count. Turns out Chinese sources would have the count be closer to 30 of unicorns birthed in China thus far this year vs the 3 on CBInsights
Welcome to our new members:
Remi from Belgium - individual investor
Reuben from Singapore - entrepreneur (dating)
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