Facebook Reportedly Prepares To Enter Greater China

(Bloomberg) — Facebook Inc. is so keen to return to China that it built a tool that would geographically censor information in the country, according to the New York Times.

While that may help the Chinese government get comfortable with Facebook, the company’s re-entry may not happen for years, if at all, given licensing restrictions and other regulations that favor locally owned companies. China, which blocked the world’s largest social network in 2009, has few incentives to allow the social network in.

Chief Executive Officer Mark Zuckerberg visits China frequently, and yet the company is no closer to putting employees in a downtown Beijing office it leased in 2014, according to a person familiar with the matter. The company hasn’t been able to get a license to put workers there, even though they would be selling ads shown outside the country, not running a domestic social network, the person said. The ad sales work is currently done in Hong Kong. The person asked not to be identified discussing private matters.

“We have long said that we are interested in China, and are spending time understanding and learning more about the country,” a Facebook spokeswoman said in an e-mailed statement. “However, we have not made any decision on our approach to China. Our focus right now is on helping Chinese businesses and developers expand to new markets outside China by using our ad platform.” The company declined to comment on the New York Times report or its real estate interests.

Stripe Helps 440 Global Tech Startups Offshore to Delaware

(Bloomberg) — When global companies think about incorporating offshore, they typically look to places such as Bermuda, Ireland, or the Netherlands. Kenyan entrepreneur Trevor Kimenye decided to go with Delaware.

Kimenye co-founded his digital marketing startup Ongair Inc. in Nairobi two years ago. He said companies around the world use Ongair’s tools to help them communicate with customers through WhatsApp and other messaging apps. Ongair has the look and feel of Silicon Valley software, but whenever it tried to collect payment from companies using its services, there would be an inevitable moment of confusion. “Everyone thought we were from the Valley, and now we’re, like, ‘OK, send this money to a Kenyan bank account,’” Kimenye said. “They were, like: ‘Are you Nigerian princes?’”

Ongair employees hacked together a system of wire-transfer services and web payments tools from PayPal Holdings Inc. to facilitate transactions from around the globe. But Kimenye said he was spending way too much time studying the complexities of foreign-exchange currency markets: “I was becoming a forex guru.” He considered switching to Stripe Inc., but the San Francisco startup, which makes payments tools that are popular with coders in the Valley, doesn’t service Kenya.

So Stripe helped him incorporate in the U.S. through a new program called Atlas. “When we automatically took money for the first time from a credit card, everyone in the office was like, ‘Wow,’” Kimenye said. “We felt it had leveled the playing field for us with other companies in the Valley or in Europe. It was no longer holding us back.”

Stripe has been slowly rolling out Atlas over the last three months, pitching it as a startup in a box. For a $500 fee, an aspiring entrepreneur can get the paperwork needed to incorporate in Delaware, a business account with Silicon Valley Bank, connections to American law and consulting firms, and a Stripe account to accept payments online. So far, Stripe has welcomed 440 startups from 91 countries into Atlas. Stripe said it has received applications from entrepreneurs in just about every country in the world but declined to disclose the number of applicants.

Atlas provides a way for Stripe to make customers come to its home country, instead of having to go to them. Stripe works only with businesses based in 25 countries, mostly developed economies, because establishing operations in a new place can involve coordination with local banks, custom technical work, and language localization. Atlas helps Stripe reach developing markets without having to go through the costly process of opening in each one. While Atlas startups aren’t required to use Stripe to process payments, most likely will. Stripe, a venture-backed startup valued at $5 billion, will take a cut of each transaction—which could grow to become a big revenue stream if the companies take off.

Patrick Collison, chief executive officer and co-founder of Stripe, said Atlas can help his company gain the loyalty of a growing set of global entrepreneurs. Their governments should like Atlas, too, he said. The program serves as an alternative to sucking entrepreneurial talent away from emerging markets. “When you discover it’s extremely difficult to start a business or gain access to Stripe in your home country, for many people the easiest response to that is to leave and move to where it is,” Collison said. Stripe said most Atlas participants plan to stay in their home countries.

Stripe surveyed Atlas companies and found that 42 percent were incorporating as a business for the first time, while 20 percent had previously tried unsuccessfully to incorporate in the U.S. They said Atlas simplifies a complicated procedure that otherwise would involve flying to the U.S. to meet with banks and lawyers.

As the wait list for Atlas grows, Stripe declined to say when it plans to open the floodgates. The company said it’s still refining the application process. Stripe underestimated how many questions startups would have when signing up. Several applicants found a phone number listed in some of Stripe’s automated e-mails, which belonged to a leader on the Atlas project, and sent him a barrage of messages through WhatsApp: Do we need a U.S. business address? How many shares should we issue through our new company? What do the different roles on a board of directors do?

To address common issues, Stripe added suggestions inside the sign-up form and to an ever-growing list of frequently asked questions. The goal is to help a startup fill out the form and submit electronically signed documents over the course of a few days. Eventually, any company should be able to join Atlas as long as it doesn’t violate Stripe’s rules prohibiting activities such as drug paraphernalia, gambling, pornography, and pyramid schemes. “There are enough gatekeepers and sources of requisite permission in the world,” Collison said. “We don’t want to introduce more.”

Atlas startups are also hoping their presence in the U.S. will help them attract venture capital. Most said they plan to seek funding in the next year, according to Stripe’s study. Paulo Tenorio, who started Brazilian marketing company Trakto, is hoping Atlas will make his startup more desirable to American venture capitalists after getting turned away in the past. “I’m going to say, ‘I have the legal presence you need here. I can be here in a day. I can spend months here,’” Tenorio said. “I’m going to try it out.”

Why Hong Kong Will Be China’s New Tech Hub

By: Paul Denlinger

More than 10 years ago, before the Internet bubble popped in 2000, Silicon Valley venture capitalists and technology professionals all looked to China as the goal of any leading Internet company. So big was the attraction of China that all of the leading companies to go public went out of their way to associate themselves with the China market. In 1999, the first China-play company to go public on NASDAQ, Chinadotcom (now CDC) went so far as to obtain the ticker symbol CHINA.

Companies based in Hong Kong went out of their way to associate themselves with Beijing and Shanghai, the two leading cities in China. Microsoft, Yahoo and later Google all sought to recruit engineering graduates from Tsinghua University in Beijing, China’s leading university for aspiring scientists (and political leaders), offering the best candidates competitive signing packages. Shanghai became home to China’s leading online gaming firms, lead by Shanda Online Entertainment, which went public in 2004 on NASDAQ and which now has a market cap of US$3 billion.

Compared to Beijing, Hong Kong did not have a high degree of technology talent. It did not have a Tsinghua University. It did not have the growth of the Shanghai region with its population of 100 million. The leading venture capital funds completely bypassed Hong Kong. Even its own best online technology and marketing talent left for Beijing and Shanghai, secure in the knowledge that they would be able to make more in VC-funded companies in mainland China instead of Hong Kong. Attempting to stem the talent flow, and to make Hong Kong more tech-friendly, the Hong Kong government spent millions to develop Cyberport, an ultra-modern tech campus with state of the art infrastructure and its own start-up incubator program. But for many years, the buildings were half empty.

Now though, the tide has turned. Cyberport is almost completely full, and there is a certain confidence in the air of being called a Hong Kong technology professional. What happened?

Broadly speaking, circumstances changed in the technology, business and political fields:

The hot area in software development is now mobile apps for the iPhone and Android platforms, both of which have very high penetration in Hong Kong. Hong Kongers are, for the most part, early adopters of new mobile technology. And mobile apps don’t need large, expensive development teams; most are developed by small teams of 2-3 persons using free development kits from Apple and Google.

The Web 3.0 emphasis on mobile means that even though wages and costs are higher than in mainland China, they are affordable. Break-even points are much lower than 10 years ago, and many smaller firms don’t even need venture capital financing; they can cover their costs based solely on mobile app sales. A small company can sell its apps to the world through the Apple and Google application stores, and collect payment without restriction. One local success story is Stepcase, maker of the popular Darkroom and Actioncam photo applications for the iPhone.

Hong Kong’s high population density makes universal wireless and broadband a reality, making U.S. broadband seem embarrassingly slow in comparison. 1000 MPS service is now advertised to homes.
Setting up a business in Hong Kong is much simpler and more straightforward than in mainland China. A new company can be registered and bank accounts opened in two days, compared to 30-60 days in China. Except for the Chinese yuan, which is non-convertible, payment can be received in any currency.
Another growth area for Hong Kong developers are Facebook gaming and Facebook apps. Facebook is very popular in Hong Kong. It is blocked in mainland China.

Unlike in mainland China, websites are not censored by the Chinese government’s Golden Shield, referred to by critics as the Great Firewall of China, or #gfw. Twitter and Facebook are freely accessible in Hong Kong, without the need for proxy servers as they are in mainland China.

In mainland China, the only three mobile operators are China Mobile, China Unicom and China Telecom. They all report directly to China’s State Council, China’s cabinet, and win their approval for major business decisions. This applies even to the introduction of new mobile services, making them political, not business decisions. In contrast, Hong Kong mobile operators are unregulated about when they can introduce new services for consumers. While mainland Chinese operators are held back waiting for political decisions, Hong Kong operators just charge ahead in the competition for consumers.
Because there is no Internet censorship, the services which are popular in the west are also popular in Hong Kong, such as Yahoo!, Facebook, Twitter and Google. Out of deference to Beijing, this is not widely publicized, though it is well-known among Hong Kong locals and industry insiders.

Over the past year, the Beijing government has implemented a tough policy of holding web publishers accountable for all content, including advertising and comments. Out of fear of losing their licenses, editors have clamped down hard on content. This has had a dampening effect on Internet development in mainland China.
For western companies in China, doing business is very hard. Most recently, Google shut down its Chinese search engine and redirected all China search traffic to… Hong Kong. Earlier casualties included Yahoo! and eBay. Again, deference to Beijing keeps Hong Kong investment officials from talking too loudly about this issue.
Since Hong Kong is the fourth largest capital market in the world, some of China’s leading Internet giants, including Tencent and Alibaba have chosen to list in Hong Kong instead of in New York.

Does this mean that Hong Kong is completely safe now as a technology center for Asia and for China? No. If for instance, China chose to completely lift content restrictions and chose to treat foreign companies completely the same as Chinese companies, and completely deregulate its mobile industry, Hong Kong would lose its advantage.

But that is not likely to happen soon. So for those smart enough to look harder, they can find very interesting options in Hong Kong, China.

Original post

How to Buy in Taobao, the Biggest Online Mall in China

What is Taobao? Answer: It’s an online shopping website with a huge number of sellers selling any kind of products with really low prices, all competing with each other, hence the reason it’s so popular.

Is Taobao safe? Taobao uses a escrow service. So when you pay, the money goes to Taobao and not the seller. The seller will only receive his payment after you acknowledge arrival of the package. After you check your purchased item and are satisfied with it then you login to Taobao and click “Goods received”. After this, Taobao will release the payment to the seller. But please, don’t try to outsmart the seller and lie about package “didn’t arrive”. He will have proof provided by the courier company and it’s delivery tracking system.

“I am not Chinese,  how do I register” Well, read on for a few hints and tips on how to navigate your way around and become a Taobao pro like the Chinese …

1) Download Google Chrome
First things first – don’t run before you can walk. As you’re aware, Taobao is a Chinese shopping site so it’s in Chinese. This is completely useless to those of us who can’t read Chinese. The advantage of downloading and installing the Google Chrome browser is that it automatically translates pages into the language of your browser.  This is a very easy process – after downloading Chrome, go to the ‘Settings’ tab. Scroll down to the bottom and click ‘Advanced Settings’ and then ‘Languages.’ Here, you can select the language of your browser along with any languages you wish to be translated when viewing web pages.

2) Register for online banking with your Chinese bank
In order to set up an account and pay for your items, you must have a handy little USB key (as given by the Agricultural Bank of China) or security device, provided to you courtesy of your bank. The type of security devices given vary from bank to bank. Bank of China customers for example, are given a device that is not a USB-style plug-in but a stick that automatically generates a unique code when you log in to your online account. Regardless, this is a security feature installed on Taobao – no security key, no purchase. This is a great idea because it means that even if somebody finds out your PIN number and tries to buy something online, they can’t unless they also have access to your key, which has its own separate password (double indemnity if you will). Your bank may or may not charge you a small fee (10 – 20 RMB) for it.

Ideally, go with a Chinese friend to help you in the process of obtaining above-mentioned key. For the purposes of this article, I will explain the process for ABC (Agricultural Bank of China) as this is who I bank with. Please note: the processes for obtaining the device and registering online may vary from bank to bank.

When you go to the bank and request online banking, the staff will give you a USB key. The security staff will then take you to a machine and ask you to choose an eight digit password for the key which you must enter three times. They then set up the key for use and give you a receipt. Now, this is what they may not tell you: On the receipt are two codes: an authorisation code and a verification code. Both have a 14 day validity period and need to be used within this timeframe in order to download the security certificate that enables the key for use on your computer.

3) Download security certificate onto your computer (if with ABC)
This is a two-part process, the first of which is automatically done when you plug the key into your computer. The computer should recognize the new device and open an installation wizard. Follow the steps for downloading the security suite, which is the platform that manages the certificate. The second part requires you to log on to your bank’s website and manually download the certificate itself, now validating your key and making it ready for use. Customers from other banks may not have to deal with this step but they will have to download and install a security feature from their banks.

4) Set up an account
As foreigners, we have fewer options open to us for registering our details and setting up an account. The Chinese use a system called Alipay or Zhifubao in Chinese pinyin which links their bank account directly to their Taobao account. Using this system, they can then deposit money into their Taobao accounts at the drop of a hat whenever they run low, much like using PayPal and making sure it has available funds. However, we can’t do this since we don’t have a Chinese ID card, which means there is only one available method left for us to use: linking your bank card directly to your account and pay using that – instant payment via a debit card. This is where the USB key is needed since you are accessing your funds directly to purchase something, so security is tighter.

To set up the account, log on to www.taobao.com. On the top left hand corner click ‘Register Free.’ This opens a registration page. Complete the information to set up your account and away you go!

5) Paying for goods
Please note: paying for goods can only be done through Internet Explorer. This is currently the only supported browser for making payment, so although you can browse in English on Google Chrome, you must pay for your items in Internet Explorer.

Let’s take the process for a t-shirt …

Once you’ve selected the item that you want, click on the payment button to complete the purchase.  This will load the next screen which will confirm the price, number of items and the address it is to be sent to plus any delivery costs to be incurred. Click next if this information is correct.

After this is the payment screen. Here, a list of banks will appear for you to choose from. You should only choose the one at the bottom of the page listed beneath Internet Banking, like this:

After clicking next, you will be asked to input your USB password, then your debit card password, then your USB password again before clicking OK. (For Bank of China users, you must submit your username and password, obtain a security code via text message and input the code from your security device).

Purchase complete!

6) Returning an item
In the event that you should need to return an item you should talk to the seller first to advise them of this and to obtain a return address and telephone number. They will not refund your money until they have received the returned item, usually 7-10 days. If you want to swap the item then this is fine, they will send you another once they have received the returned item. However, be aware that you are liable for the delivery costs of returning the item unless you have pre-purchased shipping insurance on the payment page. The costs are usually 12 RMB for small / light items and around 20 RMB for larger / heavier items. It is your responsibility (or ask a Chinese friend if you are unable to communicate that well) to contact a local courier company. They will then collect your package and send it back to the seller.