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March 27, 2019

“ZTE may be able to succeed where Huawei wouldn’t be able to because it has stayed out of the media spotlight.”

Paul Haswell, a tech lawyer, on ZTE’s plans to open 5G-focused labs in China and Europe

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Starbucks or Luckin? Consumers speak up

What: Luckin Coffee is under increased scrutiny as it reportedly prepares for a US IPO.

Background: Luckin Coffee has opened more than 2,000 shops since January 2018 but posted a net loss of RMB 857 million (around $128 million) over the first three quarters of 2018. And the company’s astonishing expansion doesn’t stop there. Luckin plans to surpass Starbucks by opening about 2,500 new Chinese outlets this year.

Marketing wonders: Luckin’s operations rely on a strategy called “fission marketing,” a concept conceived by Luckin Coffee’s CMO Yang Fei. This approach focuses on storing and maintaining internet traffic in order to build a large pool of users. Luckin purchases are made entirely within the company’s app, where the coffee chain also pushes rewards for customers who buy in bulk or refer new customers.

But: Some analysts question whether the brand’s cash-burning marketing strategy can sustain Luckin’s position in the Chinese market, or if the coffee chain will burn out before reaching maturity.

- Shi Jiayi

Shots

Concentrated daily news

Chinese video-streaming platform iQiyi plans to raise about $1.05 billion by offering convertible bonds in one of the largest-ever such sales by a US-listed Chinese company, as it seeks to fortify itself financially in the crowded online video market.

Shenzhen-based telecommunications equipment maker ZTE is expected to build three cybersecurity evaluation centers in China, Belgium, and Italy this year, similar to the one that Huawei operates under the supervision of the UK government.

NetEase and PUBG Corp recently settled a copyright infringement dispute over NetEase’s mobile games “Knives Out” and “Rules of Survival.”

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Drips

Small drops to get smart on China's tech world

To the stars: Chinese space startup OneSpace will attempt its first orbital launch this week. (Space Flight Now)
Skipping classes: Some Chinese universities are using AI to check attendance rates. Best not skip class! (SCMP)
Behind bars: China’s former top internet regulator has been sentenced to 14 years in jail for corruption. (Bloomberg)
No more subsidies: China will cut electric vehicle (EV) subsidies as it aims to spur innovation and counter manufacturers' reliance on government assistance to drive sales. (Bloomberg)