Apple cuts App Store fees in China by 5% – from 30% to 25%. Apple also said it commits to offer fee level that is “not higher than overall rates in other markets”.
This benefits the big Internet companies in China.
In return, these Chinese Internet companies are making efforts to promote and sign more people up for OpenClaw-like services, which can drive Apple sales via Mac Mini etc.
“Exchange of courtesies”.
1/ Tencent’s own foundation model Hunyuan is not impressive. However, OpenClaw-like applications doesn’t rely on any single model. Tencent can be more neutral than other Chinese internet giants which shall prioritize their models. So weakness in Hunyuan now becomes a strength.
2/ Chatbot-like applications like Yuanbao is cannibalizing WeChat, whether it’s eating more users’ time or it’s hurting WeChat’s user experience during CNY red pocket campaign. If Yuanbao becomes the best in competition, WeChat shall indirectly be weakened; if Yuanbao loses to Doubao etc., Tencent also loses. However, OpenClaw-like applications leverages and enriches WeChat ecosystem. Winning the OpenClaw-like competition is a more coherent strategy for Tencent.
3/ Tencent is one of the most trusted among tech giants in China. It’s security capability is one of the best in China, which is needed here.
How much losses has Nio made over the past few years?
Over 80 billion rmb, from 2020 to 2025.
In the worst years, Nio lost over 20 billion rmb per year.
Meanwhile, investors are finally seeing the light at the end of the tunnel – Nio made 0.5bn rmb in operating profit in 4q25, thanks to rising sales of large premium SUVs, which carries higher gross profit margin.
You need to take it with a grain of salt though.
1/ Fourth quarter is usually a good quarter
Indeed, Nio only guided non-gaap breakeven for full-year 2026.
Well, at least it’s not accumulating more losses.
2/ Peers like Li Auto, which was profitable before, made losses again in 3q25
It’s the nature of auto industry to be cyclical, due to product cycles etc.
3/ Leaders like Tesla is already making money other than selling cars
If selling EVs is such a good business, Tesla should do more, rather than “diversifying” into FSD, energy storage etc.
A round-up of recent deals
1/ Anta Sports x Puma (Sportswear)
2/ JD.com x CECONOMY (Retail)
3/ CFMOTO x Kalex (Automotive/Racing)
Luckin Coffee, the largest coffee chain in China, posted 1.2% company-owned same-store sales growth for 4q25, which is weak.
During earnings call, Luckin says China’s coffee market is still in a rapid growing phase – is that so?
I think there is still room, but current “coffee intensity” is already like in a mature stage.
Starbucks reward members (35mn) consume 3-5 cups per month.
Luckin members consumes close to 342mn cups per month in 2025 (4.1bn cups annually) and close to 100mn monthly transacting consumers, which translate to over 3 cups per customer per month approximately.
Why there is still room (but may be hard to penetrate)?
1) Luckin’s 450mn customer base means there could be 1.5x to 2x room in China, excluding children and elderly.
2) If Starbucks can get 16k stores in US, Luckin may get up to 4x of that which is over 60k stores in China, or 2x from current 30k stores.
3) Starbucks Reward member is an underestimation of active consumers of Starbucks, which could be like 70-90mn. 4x of that gives you 210-360mn potential which is 2-3x from current 100mn for Luckin.
Why hard to penetrate?
1) lower-hanging fruit / easy regions already have footprint.
2) China has more “layers” of consumers; thus hard to have one-size-fit-all offering. There are more competitions in China. Can’t handle price sensitive and premium customers together.
AI has created chaos in many areas, including the gaming industry.
Google Genie was a case in point a few weeks ago.
TakeTwo (-10%), Roblox (-10%), and Unity (-20%) all down after Google debuts AI Game Creation Tool
byu/Rukuba inValueInvesting
However, I don’t think code alone is what makes a game successful.
Many successful games are like basketball or soccer.
It’s a cultural and social thing.
Shooting is fun but that’s not basketball is all about.
I bet AI can create and update new games easily but it’s the same for sports.
There can be new “sports” coming up – they can be fun to play as well. However, the number of players, the audience, the whole league/industry around a classic sport are the moat.
In the pre-AI era, I don’t think the studio that has top-tier coders is guaranteed to have blockbuster games.
$RBLX $TTWO $TCEHY
US big tech continue to post higher capex outlook for 2026 and those figures are surprisingly large.
However, you now start to negative reactions.
1/ Their own stocks respond negatively
2/ Nvidia stock, which presumably is a beneficiary for higher capex, hasn’t responded very positively
#Why capex is less welcomed?
1/ It could just be higher inflation across the chain. higher price for infrastructure, power equipment and construction workers etc. Therefore, it’s a less-efficient use of money
2/ Investors don’t see immediate growth. The 2026 growth outlooks, which should be supercharged by already massive capex in 2025, is not impressive enough. Investors fear that marginal incremental growth coming from additional capex looks small, at least in the current year.
Some simple calculation:
Xiaomi smartphone GPM was 12.6% in 2024, with 192bn revenue.
Xiaomi sold 1.64 billion smartphones that year.
The GP per handset is about 147 RMB in 2024
Across different smartphone models, memory cost is different, ranging from 50-500 per handset.
But in a nutshell, it’s about 12-18% of BOM.
It’s could be about 150 memory cost per handset for Xiaomi, which is similar to GP per handset.
Then if memory cost is rising 50-100%, the entire GP per handset could be at risk.
To offset, Xiaomi may increase prices for customers.
And as a large customer for memory chips, it may not receive full mark-up immediately.
In the end, maybe 1/3 of the memory cost impact of 120 need to be absorbed by Xiaomi.
Then GP per handset could be more like 100-110 RMB.
And as the price increases, volume could be impacted, plus the RMB appreciation recently (two-thirds of Xiaomi smartphone volume is overseas).
Total impact to Xiaomi smartphone GP could be like 65-75bn, or 25-30% negative impact from 2024 level.
a) Delivery
Since 2025, Alibaba used massive subsidies to compete with Meituan.
b) Micro-loan facilitation
In 2025, the industry faced regulatory crackdown on high fees or high APR, while Alibaba’s Ant Group operates at lower APR segment.
c) OTA
Trip.com (previously CTrip), the leader in China OTA, is targeted by regulators recently for antitrust issues.
d) PDD
In e-commerce, the industry faced some scrutiny and PDD is being probed.
Please see previous post on Old economy is new and new economy is old.
Here is another reason why this happened.
In the era of AI, robots and space, the TAM is beyond human beings.
The electricity is not only consumed by human, but will also by AI agents and robots.
Robots and AI agents will be the “new population” in physical and virtual forms.
Robots and AI agents will have their own identity, wallet, etc.; robots will need additional space to house.
If we will become multi-planet, we will be building a lot more, which will require a lot of manufacturing capacity, materials, power etc.
Thus, old can become new.
Meanwhile, the human being population may not increase that much.
Those human consumption categories will not increase with the “new population”.
Consumer internet probably won’t have dramatically increased TAM, as the ultimate demand comes from human beings.
Thus, new can become old.
Some will keep being “old”.
E.g. Robots and AI agents will not consume alcohol/baijiu.
