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RISE Hong Kong: Regulation holds China back from becoming global tech leader

5-Year Virtual Multichannel Revenue Forecast Underscores Segment's Opportunities

Financial Consumer Watchdog's Powerful Investigative Tool Faces Overhaul - Episode 26

Wake Up Savers, Watch Out Banks - CDs Back In Vogue - Episode 25

SNL Banker


RISE Hong Kong: Regulation holds China back from becoming global tech leader

If China is on track for global tech dominance, its only remaining obstacle may be regulation, as the country struggles to keep up with the fast pace of technological innovation.

Speaking July 10 at RISE Hong Kong 2018, an annual conference for APAC's tech and startup space, a panel of experts on China’s technology sector said regulation and the behavior of China’s government are costing the country its competitive edge.

SNL ImageXunlei's Lei Chen at RISE Hong Kong 2018
Source: S&P Global Market Intelligence

"It’s not that the [Chinese] government does not care, it’s just that regulation, particularly in privacy protection, has not kept pace with innovation,” said Bessie Lee, founder of Withinlink, a China-based startup incubator and early stage venture fund focused on marketing and communication technology.

She added that the country needs to protect its users better, pointing to the European Union’s recently enforced General Data Protection Regulation, or GDPR, as an example.

China’s new cybersecurity law, which took effect in June 2017, has frequently been compared to Europe’s GDPR.

Under the Chinese piece of legislation, operators of "critical information infrastructure" — including those in the public communications and information, energy, finance, transportation and public governance sectors — must store personal data and important business information inside China, provide unspecified technical support to security agencies and pass national security reviews.

Some industry experts called the law too strict.

Xunlei Ltd.'s CEO Lei Chen said that the government has been harsh on blockchain technology in particular, due to a raft of local players that are "too focused on fast money."

When it comes to blockchain technology maturation, he believes China has a lot of catching up to do.

Late last year, China ordered all bitcoin exchanges in Beijing and Shanghai to wind down their operations after the Chinese central bank decided to ban initial coin offerings.

"When the regulatory environment becomes healthier, it will be easier to separate the good and the bad [players] and investments into tech will follow,” Lei said.

However, China's rapid rise in a number of emerging technologies is likely to make the country a global tech leader in the near future, the panelists argued.

For example, China is taking the lead in artificial intelligence and making headway in areas such as mobile hardware, Lei told delegates.

In fact, a July 9 RISE Hong Kong survey of 100 global investors, with funds of up to US$50 billion, found that 67% think China will become the world's leading power in tech within the next five years.

One explanation for the rapidly evolving tech scene, according to Harry Hui, founding partner of private equity and venture capital fund ClearVue Partners, is that China’s landscape has changed so drastically, with domestic technology players locked in a "fierce competition," that this resulted in technology evolving at a faster pace than global counterparts.

Additional RISE Hong Kong coverage:

Better education needed to survive in digital economy

Tencent is looking abroad to grow its gaming business



5-Year Virtual Multichannel Revenue Forecast Underscores Segment's Opportunities

Highlights

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Jul. 18 2018 — Driven by subscriber gains from AT&T Inc.'s DIRECTV NOW and DISH Network Corp.'s Sling TV and assisted by a batch of new arrivals in 2017 that includes Hulu LLC's Hulu with Live TV and Alphabet Inc.'s YouTube TV, Kagan estimates virtual multichannel services will reach nearly $2.82 billion in overall revenue in 2018, rising to more than $7.77 billion by 2022.

The large gains we project reflect the relative fledgling status of a market that is positioned to take advantage of widespread internet access by presenting new, alternative choices to traditional multichannel operators.

While the growth of virtual services is expected to dampen the projected decline in customers with some form of live linear channel package, we project the shift to have significant revenue implications for the market due to markedly lower average revenue per user rates associated with the new services.

Future developments could impair the segment over the five-year outlook. For instance, legacy distributors could revisit skinny bundles at competitive price points and leverage their existing customer relationships to undercut virtual providers.

Of note, traditional multichannel operators also providing wireline broadband have additional leverage with broadband bundles. For this category of ISPs, broadband could also be leveraged through the creation of prioritization lanes given the FCC's net neutrality reversal.

Recent M&A activity also clouds the future, led by the pursuit of key 21st Century Fox Inc. assets by Walt Disney Co. and Comcast Corp.

Disney has been quite transparent about the rationale behind the move. The media juggernaut plans to launch direct-to-consumer services leveraging its vast content libraries, including some of the world's most valuable franchises such as Marvel and Star Wars.

Although Comcast is playing its strategy cards closer to the vest, its pursuit of Sky PLC and 21st Century Fox, combined with the company's foray into wireless telecommunications, intimate wide-scale video-streaming plans.

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Listen: Financial Consumer Watchdog's Powerful Investigative Tool Faces Overhaul - Episode 26

Jul. 17 2018 — Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, has changed the way the agency operates and reduced enforcement actions against banks. Now, Mulvaney is turning his attention to a powerful tool used by the agency called the civil investigative demand. S&P Global Market Intelligence colleague Brian Cheung discusses how the CFPB uses the tool and what changes could mean for banks and consumers.

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).


Listen: Wake Up Savers, Watch Out Banks - CDs Back In Vogue - Episode 25

Jul. 17 2018 — CD specials are back. More banks are offering the promotional rates on CDs, or certificates of deposits, to attract new customers. While that is good news for savers, it means funding costs likely will rise even more for banks. The episode shines a light on recent CD rates offered by banks and features commentary on smart deposit strategies from Bruce Hinkle of StoneCastle Cash Management and KeyCorp CFO Donald Kimble.

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).


Watch: SNL Banker

Jul. 10 2018 — Transform internal data into vital insight with SNL Banker from S&P Global Market Intelligence. Our solution integrates seamlessly with internal systems to give U.S. community banks and credit unions greater visibility into finances and operations