Welcome to China Business News, NEO’s weekly roundup of top business developments as reported by news outlets in China and the region.
This week’s highlights:
- Tencent released its second-quarter earnings, which showed that revenue dropped by 3% to 134.03 billion yuan, falling for the first time year-on-year and showing a sequential decline for two quarters. Net profit fell 56% year-on-year, to 18.619 billion yuan. The company entered a downturn in performance and continued to reduce costs and increase efficiency. Tencent’s plummeting net profit is dragged down by investment losses. The company’s investment income was partially offset by impairment provisions for a number of domestic investment companies. The earnings report also disclosed that the fair value of the company’s direct and indirect equity holdings in listed companies shrank by 164.63 billion yuan in the six months. Meanwhile, Tencent’s traditionally superior advertising channels are experiencing unprecedented difficulties. The macroeconomic impact on advertisers’ willingness to invest, coupled with the impact of the pandemic in April and May, led to Tencent’s online advertising revenue declining by 18.37% year-on-year. The only segments of the company that showed continued growth were its financial technology and corporate services business, which achieved revenue of 42.208 billion yuan, but showed a growth rate of only 0.75%. (Caixin)
- Tencent Phantom Core officially announced the full stop of its digital collection distribution, less than a month after it proposed a layoff of the team and an adjustment of its business direction. Tencent Phantom Core earlier issued an announcement saying that based on the company’s core strategy, Phantom Core will stop issuing digital collectibles from 16 August, while all users who have purchased digital collectibles through the Phantom Core platform (including the Tencent News Digital Collection Gallery) can choose to continue to hold them or seek a refund. Earlier this year, China’s National Internet Finance Association, the China Banking Association and the Securities Association of China jointly issued the “Initiative on Preventing Financial Risks Related to NFT”, which prohibits the issuance and trading of financial products through NFT. At present, the other major digital collection platform in China, Ant Group’s Whale Scout, remains operational, and those in charge said they have not received any news of the platform possibly shutting down. (Caixin)
- Gravity Extended Reality (XR), an XR smart chip developer, announced the completion of a Pre-Series A funding round in the hundreds of millions of dollars from 12 venture and industrial capital firms, including Gaorong Capital, Sequoia Capital and 37 Interactive Entertainment. The company, which was founded in September 2021, provides chip platforms applied to virtual reality, augmented reality and mixed reality as well as hardware solutions that go with it. It has completed two financing rounds to date. Gravity XR said it will complete mass production of its first generation of chips by 2024. Gravity’s team is experienced in the chip R&D and consumer electronics industry, and have held technical and product development positions at Apple, Huawei and Amazon. Venture capital data show that XR chip investment and financing has been gaining in popularity since 2020, with Chinese internet giants such as Tencent, ByteDance, Meituan, Sequoia China, GGV Capital and IDG mostly focused on angel/A funding rounds. (China Venture)