Jun
15
2020
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VESoft raises $8M to meet China’s growing need for graph databases

Sherman Ye founded VESoft in 2018 when he saw a growing demand for graph databases in China. Its predecessors, like Neo4j and TigerGraph, had already been growing aggressively in the West for a few years, while China was just getting to know the technology that leverages graph structures to store data sets and depict their relationships, such as those used for social media analysis, e-commerce recommendations and financial risk management.

VESoft is ready for further growth after closing an $8 million funding round led by Redpoint China Ventures, an investment firm launched by Silicon Valley-based Redpoint Ventures in 2005. Existing investor Matrix Partners China also participated in the Series pre-A round. The new capital will allow the startup to develop products and expand to markets in North America, Europe and other parts of Asia.

The 30-people team is comprised of former employees from Alibaba, Facebook, Huawei and IBM. It’s based in Hangzhou, a scenic city known for its rich history and housing Alibaba and its financial affiliate Ant Financial, where Ye previously worked as a senior engineer after his four-year stint with Facebook in California. From 2017 to 2018, the entrepreneur noticed that Ant Financial’s customers were increasingly interested in adopting graph databases as an alternative to relational databases, a model that had been popular since the 80s and normally organizes data into tables.

“While relational databases are capable of achieving many functions carried out by graph databases… they deteriorate in performance as the quantity of data grows,” Ye told TechCrunch during an interview. “We didn’t use to have so much data.”

Information explosion is one reason why Chinese companies are turning to graph databases, which can handle millions of transactions to discover patterns within scattered data. The technology’s rise is also a response to new forms of online businesses that depend more on relationships.

“Take recommendations for example. The old model recommends content based purely on user profiles, but the problem of relying on personal browsing history is it fails to recommend new things. That was fine for a long time as the Chinese [internet] market was big enough to accommodate many players. But as the industry becomes saturated and crowded… companies need to ponder how to retain existing users, lengthen their time spent, and win users from rivals.”

The key lies in serving people content and products they find appealing. Graph databases come in handy, suggested Ye, when services try to predict users’ interest or behavior as the model uncovers what their friends or people within their social circles like. “That’s a lot more effective than feeding them what’s trending.”

Neo4j compares relational and graph databases (Link)

The company has made its software open source, which the founder believed can help cultivate a community of graph database users and educate the market in China. It will also allow VESoft to reach more engineers in the English-speaking world who are well-acquainted with the open-source culture.

“There is no such thing as being ‘international’ or ‘domestic’ for a technology-driven company. There are no boundaries between countries in the open-source world,” reckoned Ye.

When it comes to generating income, the startup plans to launch a paid version for enterprises, which will come with customized plug-ins and host services.

The Nebula Graph, the brand of VESoft’s database product, is now serving 20 enterprise clients from areas across social media, e-commerce and finance, including big names like food delivery giant Meituan, popular social commerce app Xiaohongshu and e-commerce leader JD.com. A number of overseas companies are also trialing Nebula.

The time is ripe for enterprise-facing startups with a technological moat in China as the market for consumers has been divided by incumbents like Tencent and Alibaba. This makes fundraising relatively easy for VESoft. The founder is confident that Chinese companies are rapidly catching up with their Western counterparts in the space, for the gargantuan amount of data and the myriad of ways data is used in the country “will propel the technology forward.”

May
13
2020
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Startups are transforming global trade in the COVID-19 era

Global trade watchers breathed a sigh of relief on January 15, 2020.

After two years of threats, tariffs and tweets, there was finally a truce in the trade war between the U.S. and China. The agreement signed by President Trump and Chinese Vice Premier Liu He in the Oval Office didn’t resolve all trade tensions and maintained most of the $360 billion in tariffs the administration had put on Chinese goods. But for the first time in months, it looked like manufacturers, importers and shippers could start to put two difficult years behind them.

Then came COVID-19, at first a local disruption in Wuhan, China. Then it spread throughout Hubei province, causing havoc in a concentric circle that eventually engulfed the rest of China, where industrial production fell by more than 13.5% in the first two months of the year. When the virus spread everywhere, chaos ensued: Factories shuttered. Borders closed. Supply chains crumbled.

“It has had a cascading effect through the entire world’s economy,” says Anja Manuel, co-founder and managing partner of Rice, Hadley, Gates & Manuel LLC, an international strategic consulting firm based in Silicon Valley.

The crisis has caused a drastic contraction in global trade; the World Trade Organization estimates trade volumes will fall 13-20% in 2020. And spinning activity back up could be tricky: Even as China starts to get back online, the slowdown there could reduce worldwide exports by $50 billion this year. When factories do reopen, there’s no guarantee whether they will have parts available or empty warehouses, says Manuel, who also serves on the advisory board of Flexport, a shipping logistics startup. “Our supply chains are so tightly-knit and so just-in-time that throw a few wrenches in it like we’ve just done, and it’s going to be really hard to stand it back up again. The idea that we go back to normal the moment we lift restrictions is unlikely, fanciful, even.”

Getting to that new normal, though, is a job that a number of logistics startups are embracing. Already on the rise, companies like Flexport, Haven and Factiv see a global trade crisis as a setback, but also an opportunity to demonstrate the value of their digital platforms in a very much analog industry.

Apr
21
2020
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Will China’s coronavirus-related trends shape the future for American VCs?

For the past month, VC investment pace seems to have slacked off in the U.S., but deal activities in China are picking up following a slowdown prompted by the COVID-19 outbreak.

According to PitchBook, “Chinese firms recorded 66 venture capital deals for the week ended March 28, the most of any week in 2020 and just below figures from the same time last year,” (although 2019 was a slow year). There is a natural lag between when deals are made and when they are announced, but still, there are some interesting trends that I couldn’t help noticing.

While many U.S.-based VCs haven’t had a chance to focus on new deals, recent investment trends coming out of China may indicate which shifts might persist after the crisis and what it could mean for the U.S. investor community.

Image Credits: PitchBook

Mar
18
2020
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Chinese cloud infrastructure market generated $3.3B in Q42019

Research firm Canalys reports that the Chinese cloud infrastructure market grew 66.9% to $3.3 billion in the last quarter of 2019, right before the COVID-19 virus hit the country. China is the second largest cloud infrastructure market in the world, with 10.8% share.

The quarter puts the Chinese market on a $13.2 billion run rate. Canalys pegged the U.S. market at $14 billion for the same time period, with a 47% worldwide market share.

Alibaba led the way in China, with more than 46% market share. Like its American e-commerce giant counterpart, Amazon, Alibaba has a cloud arm, and it dominates in its country much the same way AWS does in the U.S.

Tencent was in second, with 18%, roughly the equivalent of Microsoft Azure’s share in the U.S., and Baidu AI Cloud came in third, with 8.8%, roughly the equivalent of Google’s U.S. market share.

Slide: Canalys

Matthew Ball, an analyst at Canalys, says the fourth quarter numbers predate the medical crisis due to the COVID-19 outbreak in China. “In terms of growth drivers for Q4, we have seen the ongoing demand for on-demand compute and storage accelerate throughout 2019, as private and public organizations embark on digital transformation projects and start building platforms and applications to develop new services.”

Ball says gaming was a big cloud customer, as was healthcare, finance, transport and industry. He also pointed to growth in facial recognition technology as part of the smart city sector.

As for next year, Ball says the firm still sees big growth in the market despite the virus impact in Q12020. “In addition to the continuation of digital projects once business returns to normality, we anticipate many businesses new to using cloud services during the crisis will continue use and become paying customers,” he said. The cloud companies have been offering a number of free options to businesses during the crisis.

“The overall outcome of current events around the world will be that companies will assess their business continuity measures and make sure they can continue to operate if events are ever repeated,” he said.

Mar
08
2020
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China Roundup: Enterprise tech gets a lasting boost from coronavirus outbreak

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, a post from Sequoia Capital sounding the alarm of the coronavirus’s impact on businesses is reaching far corners of tech communities around the world, including China.

Many echo Sequoia’s observation that the companies that are the “most adaptable” are the likeliest to survive. Others cling to the hope of “[turning] a challenging situation into an opportunity to set yourself up for enduring success.”

Two weeks ago I wrote about how the private sector and the government in China are working together to contain the epidemic, bringing a temporary boost to the technology industry. This week I asked a number of investors and founders which of these changes will stand to last, and why.

B2B on the rise

The business-to-business (B2B) space was rarely a hot topic in China until online consumer businesses became relatively saturated in recent times. And now, the COVID-19 epidemic has unexpectedly breathed life into the once-boring field, which stretches from virtual meetings, online education, digital healthcare, cybersecurity, telecommunications, logistics to smart cities, analysis from investment firm Yunqi Partners shows.

For one, there is an obvious opportunity for remote collaboration tools as people work from home. Downloads of indigenous work apps like Dingtalk, WeChat Work, TikTok’s sister Lark as well as America’s Zoom jumped exponentially amid the health crisis. While some argue that the boom is overblown and will dissipate as soon as businesses are back to normal, others suggest that the shift in behavior will endure.

Like other work collaboration services, Zoom soared in China amid the coronavirus outbreak, jumping from No. 180 in late January to No. 28 as of late February in overall app installs. Data: App Annie 

“People are reluctant to change once they form a new habit,” suggests Joe Chan, partner at Hong Kong-based Mindworks Ventures. The virus outbreak, he believes, has educated the Chinese masses to work remotely.

“Meeting in person and through Zoom both have their own merits, depending on the social norm. Some people are used to thinking that relationships need to be established through face-to-face encounters, but those who don’t hold that view will have fewer meetings. [The epidemic] presents a chance for a paradigm shift.”

But changes are slow

Growth in enterprise businesses might be less visible than what China witnessed over the SARS epidemic that fueled internet consumer verticals such as ecommerce. That’s because software-as-a-services (SaaS), cloud computing, health tech, logistics and other enterprise-facing services are intangible for most consumers.

“Compared to changes in consumer behavior, the adoption of new technologies by enterprises happen at a slower pace, so the impact of coronavirus on new-generation innovations [B2B] won’t come as rapidly and thoroughly as what happened during SARS,” contended Jake Xie, vice president of investment at China Growth Capital.

Xie further suggested that the opportunities presented by the outbreak are reserved for companies that have been steadily investing in the field, in part because enterprise services have a longer life cycle and require more capital-intensive infrastructure. “Opportunists don’t stand a chance,” he concluded.

As for changing consumer behavior, such as the uptick in grocery delivery usage by seniors trapped indoors, the impact might be short-lived. “The only benefit that the epidemic brings to these apps is getting more people to try their services. But how many of them will stay? The argument that people will keep using these apps over concerns of getting sick in offline markets is unsubstantiated. The strength of a business lies in its ability to solve user problems in the long term, for example, providing affordability and convenience,” suggested Derek Shen, chairman of Danke Apartment, the Chinese co-living startup slated to list on NYSE.

Summoned by Beijing

The adjacent sector of enterprise services — at-scale technologies tailored to energizing government functions — has also seen traction over the course of the epidemic. Private firms in China have teamed up with regional authorities to better track people’s movements, ramp up facial recognition capacities aimed at a mask-wearing public, develop contact-free consumer experience, among other measures.

Tech firms touting services to the government are no stranger to criticisms concerning the lack of transparency in how user data is used. But the appeal to private firms is huge, not only because state contracts tend to provide a steady stream of long-term revenue, but also that certain public-facing projects can be billed as a fulfillment of corporate social responsibilities. Following the virus outbreak, Chinese tech companies of all sizes hastened to offer contributions, with efforts ranging from making monetary donations to building tools that keep the public informed.

On the flip side, the government also needs private help in emergency management. As prominent Chinese historian Luo Xin poignantly pointed out in podcast SurplusValue’s recent episode [1:00:00], some of the most efficient and effective responses to the public health crisis came not from the government but the private sector, whether it is online retailer JD.com or logistics firm SF Express delivering relief supplies to the epicenter of the outbreak.

That said, Luo argued there are signs that some local authorities’ tendency to centralize control is getting in the way of private efforts. For example, some government offices have stumbled in their attempts to develop crisis management systems from scratch, overlooking a pool of readily available and proven infrastructure powered by the country’s tech giants.

Sep
24
2019
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Alibaba unveils Hanguang 800, an AI inference chip it says significantly increases the speed of machine learning tasks

Alibaba Group introduced its first AI inference chip today, a neural processing unit called Hanguang 800 that it says makes performing machine learning tasks dramatically faster and more energy efficient. The chip, announced today during Alibaba Cloud’s annual Apsara Computing Conference in Hangzhou, is already being used to power features on Alibaba’s e-commerce sites, including product search and personalized recommendations. It will be made available to Alibaba Cloud customers later.

As an example of what the chip can do, Alibaba said it usually takes Taobao an hour to categorize the one billion product images that are uploaded to the e-commerce platform each day by merchants and prepare them for search and personalized recommendations. Using Hanguang 800, Taobao was able to complete the task in only five minutes.

Alibaba is already using Hanguang 800 in many of its business operations that need machine processing. In addition to product search and recommendations, this includes automatic translation on its e-commerce sites, advertising and intelligence customer services.

Though Alibaba hasn’t revealed when the chip will be available to its cloud customers, the chip may help Chinese companies reduce their dependence on U.S. technology as the trade war makes business partnerships between Chinese and American tech companies more difficult. It also can help Alibaba Cloud grow in markets outside of China. Within China, it is the market leader, but in the Asia-Pacific region, Alibaba Cloud still ranks behind Amazon, Microsoft and Google, according to the Synergy Research Group.

Hanguang 800 was created by T-Head, the unit that leads the development of chips for cloud and edge computing within Alibaba DAMO Academy, the global research and development initiative in which Alibaba is investing more than $15 billion. T-Head developed the chip’s hardware and algorithms designed for business apps, including Alibaba’s retail and logistics apps.

In a statement, Alibaba Group CTO and president of Alibaba Cloud Intelligence Jeff Zhang (pictured above) said, “The launch of Hanguang 800 is an important step in our pursuit of next-generation technologies, boosting computing capabilities that will drive both our current and emerging businesses while improving energy-efficiency.”

He added, “In the near future, we plan to empower our clients by providing access through our cloud business to the advanced computing that is made possible by the chip, anytime and anywhere.”

T-Head’s other launches included the XuanTie 910 earlier this year, an IoT processor based on RISC-V, the open-source hardware instruction set that began as a project at UC Berkeley. XuanTie 910 was created for heavy-duty IoT applications, including edge servers, networking, gateway and autonomous vehicles.

Alibaba DAMO Academy collaborates with universities around the world, including UC Berkeley and Tel Aviv University. Researchers in the program focus on machine learning, network security, visual computing and natural language processing, with the goal of serving two billion customers and creating 100 million jobs by 2035.

Jul
24
2019
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Alibaba to help Salesforce localize and sell in China

Salesforce, the 20-year-old leader in customer relationship management (CRM) tools, is making a foray into Asia by working with one of the country’s largest tech firms, Alibaba.

Alibaba will be the exclusive provider of Salesforce to enterprise customers in mainland China, Hong Kong, Macau and Taiwan, and Salesforce will become the exclusive enterprise CRM software suite sold by Alibaba, the companies announced on Thursday.

The Chinese internet has for years been dominated by consumer-facing services such as Tencent’s WeChat messenger and Alibaba’s Taobao marketplace, but enterprise software is starting to garner strong interest from businesses and investors. Workflow automation startup Laiye, for example, recently closed a $35 million funding round led by Cathay Innovation, a growth-stage fund that believes “enterprise software is about to grow rapidly” in China.

The partners have something to gain from each other. Alibaba does not have a Salesforce equivalent serving the raft of small-and-medium businesses selling through its e-commerce marketplaces or using its cloud computing services, so the alliance with the American cloud behemoth will fill that gap.

On the other hand, Salesforce will gain sales avenues in China through Alibaba, whose cloud infrastructure and data platform will help the American firm “offer localized solutions and better serve its multinational customers,” said Ken Shen, vice president of Alibaba Cloud Intelligence, in a statement.

“More and more of our multinational customers are asking us to support them wherever they do business around the world. That’s why today Salesforce announced a strategic partnership with Alibaba,” said Salesforce in a statement.

Overall, only about 10% of Salesforce revenues in the three months ended April 30 originated from Asia, compared to 20% from Europe and 70% from the Americas.

Besides gaining client acquisition channels, the tie-up also enables Salesforce to store its China-based data at Alibaba Cloud. China requires all overseas companies to work with a domestic firm in processing and storing data sourced from Chinese users.

“The partnership ensures that customers of Salesforce that have operations in the Greater China area will have exclusive access to a locally-hosted version of Salesforce from Alibaba Cloud, who understands local business, culture and regulations,” an Alibaba spokesperson told TechCrunch.

Cloud has been an important growth vertical at Alibaba and nabbing a heavyweight ally will only strengthen its foothold as China’s biggest cloud service provider. Salesforce made some headway in Asia last December when it set up a $100 million fund to invest in Japanese enterprise startups and the latest partnership with Alibaba will see the San Francisco-based firm actually go after customers in Asia.

Jun
27
2019
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Cathay Innovation leads Laiye’s $35M round to bet on Chinese enterprise IT

For many years, the boom and bust of China’s tech landscape have centered around consumer-facing products. As this space gets filled by Baidu, Alibaba, Tencent, and more recently Didi Chuxing, Meituan Dianping, and ByteDance, entrepreneurs and investors are shifting attention to business applications.

One startup making waves in China’s enterprise software market is four-year-old Laiye, which just raised a $35 million Series B round led by cross-border venture capital firm Cathay Innovation. Existing backers Wu Capital, a family fund, and Lightspeed China Partners, whose founding partner James Mi has been investing in every round of Laiye since Pre-A, also participated in this Series B.

The deal came on the heels of Laiye’s merger with Chinese company Awesome Technology, a team that’s spent the last 18 years developing Robotic Process Automation, a term for technology that lets organizations offload repetitive tasks like customer service onto machines. With this marriage, Laiye officially launched its RPA product UiBot to compete in the nascent and fast-growing market for streamlining workflow.

“There was a wave of B2C [business-to-consumer] in China, and now we believe enterprise software is about to grow rapidly,” Denis Barrier, co-founder and chief executive officer of Cathay Innovation, told TechCrunch over a phone interview.

Since launching in January, UiBot has collected some 300,000 downloads and 6,000 registered enterprise users. Its clients include major names such as Nike, Walmart, Wyeth, China Mobile, Ctrip and more.

Guanchun Wang, chairman and CEO of Laiye, believes there are synergies between AI-enabled chatbots and RPA solutions, as the combination allows business clients “to build bots with both brains and hands so as to significantly improve operational efficiency and reduce labor costs,” he said.

When it comes to market size, Barrier believes RPA in China will be a new area of growth. For one, Chinese enterprises, with a shorter history than those found in developed economies, are less hampered by legacy systems, which makes it “faster and easier to set up new corporate software,” the investor observed. There’s also a lot more data being produced in China given the population of organizations, which could give Chinese RPA a competitive advantage.

“You need data to train the machine. The more data you have, the better your algorithms become provided you also have the right data scientists as in China,” Barrier added.

However, the investor warned that the exact timing of RPA adoption by people and customers is always not certain, even though the product is ready.

Laiye said it will use the proceeds to recruit talents for research and development as well as sales of its RPA products. The startup will also work on growing its AI capabilities beyond natural language processing, deep learning, and reinforcement learning, in addition to accelerating commercialization of its robotic solutions across industries.

Jun
05
2019
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LinkedIn to shutter Chitu, its Chinese-language app, in July, redirects users to LinkedIn in Chinese

LinkedIn has long eyed China as an important country to offset slowing growth in more mature markets. But now it’s calling time on a localized effort after failing to see it pick up steam. The company has announced that it will be shutting down Chitu — a Chinese-only app it had built targeting younger people and those who had less of a need to network with people outside of the country — at the end of July.

The closure is notable for a couple of reasons.

First, it marks a retreat of sorts for LinkedIn in the country from building standalone apps to target younger users, and specifically those targeting young professionals, at the same time that LinkedIn also faces stiff competition from other services like Maimai and Zhaopin.

Second, Chitu was a rare (and possibly the only) example of an app from LinkedIn built specifically to target one non-English market — and a very big one at that — by building a social graph independent of LinkedIn’s. Chitu’s shutdown is therefore a sign of how LinkedIn ultimately didn’t succeed in that effort.

The company posted an announcement of the change in Chinese on Chitu’s website, and a spokesperson for LinkedIn confirmed the changes further in a statement provided to TechCrunch, where it described Chitu — which has been around since 2015 — as “one of many experiments.”

It also noted that it will be upgrading the LinkedIn core app as a “one-stop shop,” incorporating some of Chitu’s features, presumably in an effort to attract Chitu’s users rather than lose them altogether.

“Chitu will officially go offline at the end of July 2019,” the company noted in the statement. “In the future, we will focus on the continuous optimization and upgrade of the LinkedIn app, serving as a one-stop shop to accompany Chinese professionals along each step of their career development and connect to more opportunities.” We’ll post the full statement LinkedIn sent us at the bottom of this article.

LinkedIn first officially set up shop in China back in 2014 as “??”. Its branding firm pointed out at the time that the characters’ pronunciation, “ling ying,” sounding a bit like “LinkedIn” and loosely meant “to lead elites.” It was initially established as a joint venture with Sequoia and CBC as it was still an independent company and not owned by Microsoft at the time.

LinkedIn already had users in the country at that point — some 4 million individuals and 80,000 companies were already using the English-language version of the site at the time — but the idea was to set up a local operation to seize the opportunity of creating services more tailored to the world’s biggest mobile market, which would include local language support, and to meet the regulatory demands of needing to establish local operations to do that. It included efforts to build integrations with other sites like WeChat, as well as bigger partnerships with the likes of Didi.

A year later, Derek Shen, the LinkedIn executive who led the launch of LinkedIn China, spearheaded the launch of Chitu.

The idea was to build a new app that could tap into the smartphone craze that had swept the country, in particular among younger users who had foregone using computers in favor of their hand-held devices that they used to regularly check in on apps like WeChat.

“In the past year, we have done a lot of localization efforts and achieved great results, such as deep integration with WeChat, Weibo, QQ mailbox, and Alibaba,” he wrote in an essay at the time (originally in Chinese).

“However, in general, we are still maintaining a global platform that is not evolving fast enough, and localization is not determined. We believe that only a product that is independent of the global platform can fully meet the unique needs of social networking in China, so that we can really run like a startup.”

LinkedIn would at the same time continue to build out the Chinese version of LinkedIn itself, targeting older and more premium users who might be interacting with people in other languages, like English.

From what we understand, Chitu had a good start, with millions of users signing up in the early years, beating LinkedIn itself on user retention rates and engagement.

But a source says that internally it faced some issues for trying to develop an ecosystem independent of the LinkedIn platform, which only became more challenging after Microsoft acquired the company, the source said. (He didn’t say why, but for starters it would have been more lucrative to monetise a single user base, and develop new features for a single platform, rather than do either across multiple apps.)

“After Microsoft acquired LinkedIn, independence became unthinkable,” the source said. “People with entrepreneurial DNA have all left, so it’s natural to shut down Chitu at this point.” It didn’t help that Shen himself left the company in 2017.

It’s unclear how many users Chitu ultimately picked up, but LinkedIn says that it has 47 million LinkedIn members in China, out of a total of 610 million globally. Notably, observers point out that its two big rivals Maimai and Zhaopin are both growing faster.

More generally, and likely to better compete against local players, LinkedIn tells us that it rebooted its growth strategy in the country last month. That new strategy appears to be based fundamentally on any new services or partnerships now stemming from one centralised platform.

“2.0 [as the new strategic effort is called] is built on LinkedIn’s vast global network of professionals with real identities and profiles as the foundation and providing a one-stop-shop services to our members and constructing an ecosystem in China,” a spokesperson said in response to a question we had about whether the company will continue to build out more partnerships with third parties. “We do not exclude any partners who participate in building this ‘one-stop-shop’ and eventually construct a powerful ecosystem.” 

Here is the full statement on the shut-down of Chitu:

China is core to LinkedIn’s mission and vision globally – creating economic opportunity to every member of the global workforce. Since entering China in 2014, LinkedIn has explored its development path within the Chinese market, adjusting short-term strategies according to changes in the market environment. This includes Chitu, which launched in 2015, to help LinkedIn expand the social network market through the mobile app.

Chitu is one of many experiments we conducted to continue to learn and provide more value to members. Other efforts include WeChat integration, Sesame Credit partnership etc. Based on user feedback and data analysis, we find that Chinese professionals are proactively seeking for career development opportunities. We incorporate many learnings and insights from Chitu into our new offerings on LinkedIn app that we believe will cover different needs and stages in professional and career development.

Chitu will officially go offline at the end of July 2019, following the completion of its historical mission. In the future, we will focus on the continuous optimization and upgrade of the LinkedIn app, serving as a one-stop shop to accompany Chinese professionals along each step of their career development and connect to more opportunities.

May
20
2019
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IDC: Asia-Pacific spending on AI systems will reach $5.5 billion this year, up 80% from 2018

Spending on artificial intelligence systems in the Asia-Pacific region is expected to reach $5.5 billion this year, an almost 80% increase over 2018, driven by businesses in China and the retail industry, according to IDC. In a new report, the research firm also said it expects AI spending to climb at a compound annual growth rate of 50% from 2018 to 2022, reaching a total of $15.06 billion in 2022.

This means AI spending growth in the Asia-Pacific region is expected to outpace the rest of the world over the next three years. In March, IDC forecast that worldwide spending on AI systems is expected to grow at a CAGR of 38% between 2018 to 2022.

Most of the growth will happen in China, which IDC says will account for nearly two-thirds of AI spending in the region, excluding Japan, in all forecast years. Spending on AI systems will be driven by retail, professional services and government industries.

Retail demand for AI-based tools will also lead growth in the rest of the region, as companies begin to rely on it more for merchandising, product recommendations, automated customer service and supply and logistics. While the banking industry’s AI spending trails behind retail, it will also begin adopting the tech for fraud analysis, program advisors, recommendations and customer service. IDC forecasts that this year, companies will invest almost $700 million in automated service agents. The next largest area for investment is sales process recommendations and automation, with $450 million expected, and intelligent process automation at more than $350 million.

The fastest-growing industries for AI spending are expected to be healthcare (growing at 60.2% CAGR) and process manufacturing (60.1% CAGR). In terms of infrastructure, IDC says spending on hardware, including servers and storage, will reach almost $7 billion in 2019, while spending on software is expected to grow at a five-year CAGR of 80%.

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