Pompeo says U.S. may take action against TikTok and other Chinese tech companies “shortly”

Days after President Donald Trump announced he could use an executive order to ban TikTok from the United States, Secretary of State Michael Pompeo said the administration is “closing in on a solution and I think you’ll see the president’s announcement shortly.”

In an interview on Fox News’ “Sunday Morning Futures” host Maria Bartiromo, Pompeo also said that the Trump administration may take action against other Chinese tech companies doing business in the U.S., claiming that some are “feeding data directly to the Chinese Communist Party.”

Beijing-based ByteDance, TikTok’s owner, is currently in talks with Microsoft to sell its TikTok business in the U.S. and several other countries to the U.S. tech giant. The negotiations have taken on extra urgency over the last two weeks as U.S. scrutiny of TikTok increased.

Microsoft said on Sunday that it is in discussions to buy TikTok’s operations in the U.S., Canada, Australia and New Zealand by September 15, and that its chief executive officer, Satya Nadella had talked to Trump about the president’s security concerns.

The company’s announcement came after reports that a potential Microsoft-TikTok deal would put Microsoft in charge of protecting U.S.-based users’ data. Reuters reported last week that ByteDance will completely relinquish control to Microsoft, even though it had previously wanted to hold onto a minority stake in the U.S. TikTok business.

Notably, Microsoft didn’t mention India in its statement, even though TikTok was banned there in June, along with 58 other apps developed by Chinese companies that the Indian government deemed potential threats to national security.

Treasury Secretary Steven Mnuchin said last Wednesday that TikTok is under review by the Committee on Foreign Investment in the U.S. (CFIUS). This follows an earlier investigation by the CFIUS into whether ByteDance’s acquisition of Musical.ly in 2018, which it merged with TikTok, constitutes a national security threat. A decision on the TikTok-Musical.ly review still hasn’t been released.

When asked by Bartiromo if a sale would be enough to placate the U.S. government, Pompeo said the Trump administration would “make sure that everything we have done drives us as close to zero risk for the American people.”

But several Republican lawmakers have said that a sale would not be enough. Marc Rubio, chairman of the Senate Intelligence Committee, told the Financial Times last week that TikTok still needs to answer questions about where its data is store and how it is protected.

“Until TikTok’s owners—regardless of who that might be—can answer these basic questions and get its story straight, I remain concerned about the company’s activities and reported ties to China,” Rubio said.

Beyond TikTok

The day before Pompeo’s Fox News interview, White House trade adviser Peter Navarro told Fox News that the Trump administration is also reviewing “any kind of software that sends the information for Americans back to servers in China.”

Pompeo also suggested that the U.S. government may take action against more Chinese technology companies. “These Chinese software companies doing business in the United States, whether it’s TikTok or WeChat—there are countless more, as Peter Navarro said, are feeding data directly to the Chinese Communist Party, their national security apparatus, could be their facial recognition pattern, information about their residence, their phone numbers, their friends,” he alleged.

Pompeo added that Trump will “take action in the coming days with respect to a broad array of national security risks that are presented by software connected to the Chinese Communist Party,” but did not elaborate on what that will entail or what companies might be affected.

The U.S. government said last month that it may restrict WeChat in China, even though the version of WeChat available in the U.S. has far less features than the one in China, where it is used for payments, bookings e-commerce and other functions in addition to messaging. While WeChat is ubiquitous in China, its user base in the U.S. is much smaller, and it is primarily used by members of the Chinese diaspora and foreign businesses that have operations or a connection in China.

As threats to the company mount, TikTok pushes back

As TikTok’s existential rollercoaster ride continues to rattle on, the company is trying to sway regulators and the public with a flood of dollars and arguments wrapped in free enterprise and free speech to ensure that its parent company Bytedance can retain control of its operations.

The push to validate its business comes as reports swirl around a potential Presidential ban and bid from Microsoft to take over the company’s business in the U.S.

As it confronts domestic competitors and political attacks, TikTok and its parent company Bytedance have picked up some defenders from the American civil rights movement.

Late last night, the American Civil Liberties Union tweeted its objections to the proposed ban by President Trump.

“With any Internet platform, we should be concerned about the risk that sensitive private data will be funneled to abusive governments, including our own,” the ACLU wrote in a subsequent statement. “But shutting one platform down, even if it were legally possible to do so, harms freedom of speech online and does nothing to resolve the broader problem of unjustified government surveillance.”

Meanwhile, the sentiment in China seems resigned to the U.S. forcing Bytedance to divest of its US interests. In a survey by Sina Technology on the social media platform, Weibo asking what people think of Bytedance potentially selling TikTok to Microsoft, 36.7k of the total 75.3k respondents saw it as “a reluctant and helpless solution that’s understandable,” while 35.1k said they are “disappointed and hope [the company] can hold up for a bit more”.  https://m.weibo.cn/1642634100/4533238409991735
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Even as ownership of the service remains an open question, the company moved quickly to reassure its users that TikTok would continue to operate in the U.S.

The company is also redoubling its efforts to appeal to creators even as it faces defections over its potential mishandling of user data.

On Tuesday, a clutch of the company’s largest celebrities, with a collective audience of some 47 million viewers, abandoned the platform for its much smaller competitor, Triller.

Founded in 2015, two years before TikTok began its explosive rise to prominence, Triller is backed by some of the biggest names in American music and entertainment including Snoop Dogg, The Weeknd,  Marshmello, Lil Wayne, Juice WRLD, Young Thug, Kendrick LamarBaron Davis, Tyga, TI, Jake Paul and Troy Carter. 

Now, TikTok stars Josh Richards, Griffin Johnson, Noah Beck and Anthony Reeves are joining their ranks as investors and advisors. Richards, Johnson, Beck and Reeves are also being compensated by Triller, but the reason they cited for leaving the service are the security concerns from governments.

Triller is compensating Richards, Johnson, Beck, and Reeves, though the details of the deals are undisclosed. Despite that, the creators say they’re leaving TikTok because they’ve grown wary of the Chinese-owned company’s security practices.

“After seeing the U.S. and other countries’ governments’ concerns over TikTok—and given my responsibility to protect and lead my followers and other influencers—I followed my instincts as an entrepreneur and made it my mission to find a solution,” Richards, who’s assuming the title of chief strategy officer, told the LA Times. 

TikTok has responded by announcing a dramatic increase in the company’s creator fund. Initially set at $200 million, in a blog post earlier this week, TikTok chief executive Kevin Mayer announced that the fund would reach $1 billion over the next three years.

TikTok’s charm offensive may stave off the assaults, but the company will need to address concerns around user data. It’s the most pressing threat to the company and the one it’s least equipped to deal with.

China’s electric SUV maker Li Auto raises $1.1 billion in U.S. IPO

Trade tensions between China and the U.S. have not stopped Chinese companies from eyeing to list on American stock exchanges. Li Auto, a five-year-old Chinese electric vehicle startup, raised $1.1 billion through its debut on Nasdaq on Thursday.

The Beijing-based company is targeting a growing Chinese middle class who aspire to drive cleaner, smarter, and larger vehicles. Its first model, sold at a subsidized price of 328,000 yuan or $46,800, is a six-seat electric SUV that began shipping end of last year.

Li Auto priced its IPO north of its targeted range at $11.5 per share, giving it a fully diluted market value of $10 billion. It also raised an additional $380 million in a concurrent private placement of shares to existing investors.

The IPO arrived amid a surge of investor interest in EV makers. Tesla’s shares have skyrocketed in the last few quarters. Li Auto’s domestic rival Nio, which raised a similar amount in a $1 billion float in New York back in 2018, also saw its stock price rally in recent months.

Li Auto is one step ahead of its Chinese peer Xpeng in planning its first-time sale. The six-year-old competitor said last year it may consider an IPO. Last month, a source told South China Morning Post that Xpeng was getting ready for the listing.

Founders of China’s emergent EV startups are often shrewd internet veterans who are well-connected in the venture capital and marketing world, attracting investment dollars in the billions. Li Auto, for instance, counts China’s food delivery mogul Wang Xing, boss of Meituan Dianping, as its second-largest shareholder after its CEO Li Xiang. TikTok parent ByteDance shelled out $30 million in its Series C round.

Investors are in part emboldened by Beijing’s national push to electrify China’s auto industry. The question, then, is whether these startups have the right talent and resources to pull things off in an industry that traditionally demands a much longer development cycle.

Wallace Guo, a managing partner at Li Auto’s Series B investor Taihecap, admitted that “the nature of auto consumption, unlike internet products evolving through trial and error, manufacturing a car, is a strategic move with sophisticated system, very long value chain, requiring huge investment and resources and any error can be fatal.”

Mingming Huang, chief executive of Future Capital, said that “it was a no brainer in 2015 to be the first investor” in Li Auto. The venture capitalist said Li, who ran a popular car-buying online portal before getting into manufacturing, “has the rare combination of being a relentless talent as well as a top-notch product manager that excels in creating value for all stakeholders.”

Customers testing Li Auto’s SUV in China. Photo: Li Auto

Both investors believed Li Auto has picked the right path of zeroing in on extended-range electric vehicles. EREVs come with an auxiliary power unit, often a small combustion engine, that ensures cars can still operate even when a charging station is not immediately available, a shortage yet to be solved in China.

As my colleague Alex pointed out, Li Auto is on a trajectory similar to that of its peer Nio, going public after a short history of delivering to customers. The startup only began shipping its first model last December and delivered just over 10,000 units as of June, its prospectus showed.

The startup is still deep in the red, losing 2.44 billion yuan ($350 million) in 2019, up from a net loss of 1.53 billion yuan in 2018. It did finish the first quarter of 2020 with a gross profit of $9.6 million after it began monetization.

Its annual revenue — which comprised mostly of car sales and a small portion from services like charging stalls — stood at 284 million yuan ($40.4 million) in 2019, a tiny fraction of Nio’s $1.12 billion. But Nio also amassed a greater net loss of $1.62 billion in the same year. In contrast, Tesla has been profitable for four straight quarters.

Li Auto’s investors are clearly bullish that the Chinese startup can one day match Tesla’s commercial success.

“Xiang has a deep understanding of the preferences and pain points of car owners and drivers in China. Li Auto is the first in China, to successfully commercialize extended-range electric vehicles, solving the challenges of inadequate charging infrastructure and battery technologies constraints,” Huang asserted.

“The company is able to get positive gross margin when selling the first batch of vehicles and thus with its growth in sales volume, its gross margin was well above competitors and can live long enough to become a ten billion-dollar company with this healthy business model,” said Guo.

China’s electric SUV maker Li Auto raises $1.1 billion in U.S. IPO

Trade tensions between China and the U.S. have not stopped Chinese companies from eyeing to list on American stock exchanges. Li Auto, a five-year-old Chinese electric vehicle startup, raised $1.1 billion through its debut on Nasdaq on Thursday.

The Beijing-based company is targeting a growing Chinese middle class who aspire to drive cleaner, smarter, and larger vehicles. Its first model, sold at a subsidized price of 328,000 yuan or $46,800, is a six-seat electric SUV that began shipping end of last year.

Li Auto priced its IPO north of its targeted range at $11.5 per share, giving it a fully diluted market value of $10 billion. It also raised an additional $380 million in a concurrent private placement of shares to existing investors.

The IPO arrived amid a surge of investor interest in EV makers. Tesla’s shares have skyrocketed in the last few quarters. Li Auto’s domestic rival Nio, which raised a similar amount in a $1 billion float in New York back in 2018, also saw its stock price rally in recent months.

Li Auto is one step ahead of its Chinese peer Xpeng in planning its first-time sale. The six-year-old competitor said last year it may consider an IPO. Last month, a source told South China Morning Post that Xpeng was getting ready for the listing.

Founders of China’s emergent EV startups are often shrewd internet veterans who are well-connected in the venture capital and marketing world, attracting investment dollars in the billions. Li Auto, for instance, counts China’s food delivery mogul Wang Xing, boss of Meituan Dianping, as its second-largest shareholder after its CEO Li Xiang. TikTok parent ByteDance shelled out $30 million in its Series C round.

Investors are in part emboldened by Beijing’s national push to electrify China’s auto industry. The question, then, is whether these startups have the right talent and resources to pull things off in an industry that traditionally demands a much longer development cycle.

Wallace Guo, a managing partner at Li Auto’s Series B investor Taihecap, admitted that “the nature of auto consumption, unlike internet products evolving through trial and error, manufacturing a car, is a strategic move with sophisticated system, very long value chain, requiring huge investment and resources and any error can be fatal.”

Mingming Huang, chief executive of Future Capital, said that “it was a no brainer in 2015 to be the first investor” in Li Auto. The venture capitalist said Li, who ran a popular car-buying online portal before getting into manufacturing, “has the rare combination of being a relentless talent as well as a top-notch product manager that excels in creating value for all stakeholders.”

Customers testing Li Auto’s SUV in China. Photo: Li Auto

Both investors believed Li Auto has picked the right path of zeroing in on extended-range electric vehicles. EREVs come with an auxiliary power unit, often a small combustion engine, that ensures cars can still operate even when a charging station is not immediately available, a shortage yet to be solved in China.

As my colleague Alex pointed out, Li Auto is on a trajectory similar to that of its peer Nio, going public after a short history of delivering to customers. The startup only began shipping its first model last December and delivered just over 10,000 units as of June, its prospectus showed.

The startup is still deep in the red, losing 2.44 billion yuan ($350 million) in 2019, up from a net loss of 1.53 billion yuan in 2018. It did finish the first quarter of 2020 with a gross profit of $9.6 million after it began monetization.

Its annual revenue — which comprised mostly of car sales and a small portion from services like charging stalls — stood at 284 million yuan ($40.4 million) in 2019, a tiny fraction of Nio’s $1.12 billion. But Nio also amassed a greater net loss of $1.62 billion in the same year. In contrast, Tesla has been profitable for four straight quarters.

Li Auto’s investors are clearly bullish that the Chinese startup can one day match Tesla’s commercial success.

“Xiang has a deep understanding of the preferences and pain points of car owners and drivers in China. Li Auto is the first in China, to successfully commercialize extended-range electric vehicles, solving the challenges of inadequate charging infrastructure and battery technologies constraints,” Huang asserted.

“The company is able to get positive gross margin when selling the first batch of vehicles and thus with its growth in sales volume, its gross margin was well above competitors and can live long enough to become a ten billion-dollar company with this healthy business model,” said Guo.

China now accounts for nearly one-quarter of Tesla revenue

Tesla has been counting on China to maintain its sales momentum, and it seems to be on track with the plan.

In the three months ended June 30, the automaker’s revenue in China climbed 102.9% year-over-year to $1.4 billion, according to its latest SEC filing. That means China now makes up 23.3% of Tesla’s total revenues of $6 billion in the quarter, compared to just about 11% in the same period a year before.

To increase affordability for Chinese consumers, Tesla inked a 50-year lease from the Shanghai government to build a Gigafactory there, which keeps production costs down and allows it to reap local tax benefits and avoid tariffs. Under the terms of the agreement, the electric vehicle giant needs to pay 2.23 billion yuan ($320 million) in tax to China every year starting at the end of 2023. It must also sink 14.08 billion yuan in capital expenditure into the facility.

Tesla began shipping China-made Model 3 at the end of last year and is on course to add its Model Y, a mid-size electric SUV, to its production in the world’s biggest auto market, the filing shows. Earlier this month, it also started taking reservations in China for its futuristic Cybertruck, which won’t go into production until late 2022.

While shipment in China jumped in the second quarter, Tesla delivered 4.8% fewer vehicles overall in the period due to challenges prompted by COVID-19, including suspended production. The period marked the fourth straight quarter of profitability for the automaker.

All dogs in Shenzhen, China will get microchipped by 2020

The world’s hardware haven is taking a digital leap for pets. In May, China’s southern city Shenzhen announced that all dogs must be implanted with a chip, joining the rank of the U.K., Japan, Australia and a growing number of countries to make microchips mandatory for dogs.

This week, city regulators began to set up injection stations across their partnering pet clinics, according to social media posts from the Shenzhen Urban Management Bureau.

The chip, which is said to last for at least 15 years and comes in the size of a grain of rice, is implanted under the skin of a dog’s neck. Each chip, when scanned by authorized personnel, reveals a unique 15-digit number matching the dog’s name and breed, as well as its owner’s identity and contact information — which will help reduce strays. The microchip, a radio-frequency identification (RFID) chip, doesn’t track the dog’s location; nor does the authority store its owner’s personal information, according to a local media report.

While Shenzhen’s poster child of technology Huawei is striving to phase out foreign semiconductor parts amid U.S. trade sanctions, the city is procuring imported pet chips, including American and Sweden brands, said the same report.

The Shenzhen government is footing the bill for all the implants as it aims to seize more regulatory oversight over the city’s growing pet population. Those who don’t get their dogs microchipped by November will face a fine or have to turn their pets over to regulators. The city of over 20 million residents owned around 200,000 dogs and cats in 2019, according to official data. The total number of dogs and cats nationwide grew 8.4% year-over-year to nearly 1 billion in 2019, an industry white paper showed.

Tencent wants to take full control of long-time search ally Sogou

It’s been seven years since Tencent picked up a 36.5% stake in Sogou to fend off rival Baidu in the online search market. The social and gaming giant is now offering to buy out and take private its long-time ally.

NYSE-listed Sogou said this week it has received a preliminary non-binding proposal from Tencent to acquire its remaining shares for $9 each American depositary share (ADS) it doesn’t already own. That means Sohu, a leading web portal in the Chinese desktop era and the controlling shareholder in Sogou, will no longer hold an interest in the search firm.

Sohu’s board of directors has not yet had an opportunity to review the proposal or determine whether or not to take the offer, the company stated. Sogou’s shares leaped 48% on the news to $8.51 on Monday, yet still far below its all-time high at $13.85 at the time of its initial public offering.

Founded in 2005, Sogou went public in late 2017 billing itself as a challenger to China’s biggest search service Baidu, though it has long been a distant second. The company also operates the top Chinese input software, which is used by 482 million people every day to type and convert voice to text, according to its Q1 earnings report.

Ever since the strategic partnership with Tencent kicked off, Sogou, which means “Search Dog” in Chinese, has been the default search engine for WeChat and benefited immensely from the giant’s traffic, though WeChat has also developed its own search feature.

The potential buyout will add Sogou to a list of Chinese companies to delist from the U.S. as tensions between the countries heighten in recent times. It will also allay concerns amongst investors who worry WeChat Search would make Sogou redundant. So far WeChat’s proprietary search function appears to be gleaning data mainly within the app’s enclave, from users’ news feed, user-generated articles, e-commerce stores, through to lite apps integrated into WeChat.

That’s a whole lot of content and services targeted at WeChat’s 1.2 billion active users. Many people need not look beyond the chat app to consumer news, order food, play games, or purchase groceries. But there remains information outside the enormous ecosystem, and that’s Sogou’s turf — to bring what’s available on the open web (of course, subject to government censorship like all Chinese services) to WeChat users.

The arrangement reflects an endemic practice on the Chinese internet — giants blocking each other or making it hard for rivals to access their content. The goal is to lock in traffic and user insights. For instance, articles published on WeChat can’t be searched on Baidu. Consumers can’t open Alibaba shopping links without leaving WeChat.

Sogou is hardly WeChat’s sole search ally. To capture a full range of information needs, the messenger has also struck deals to co-opt fellow microblogging platform Weibo, Quora-like Zhihu, and social commerce service Xiaohongshu into its search pool.

Tencent wants to take full control of long-time search ally Sogou

It’s been seven years since Tencent picked up a 36.5% stake in Sogou to fend off rival Baidu in the online search market. The social and gaming giant is now offering to buy out and take private its long-time ally.

NYSE-listed Sogou said this week it has received a preliminary non-binding proposal from Tencent to acquire its remaining shares for $9 each American depositary share (ADS) it doesn’t already own. That means Sohu, a leading web portal in the Chinese desktop era and the controlling shareholder in Sogou, will no longer hold an interest in the search firm.

Sohu’s board of directors has not yet had an opportunity to review the proposal or determine whether or not to take the offer, the company stated. Sogou’s shares leaped 48% on the news to $8.51 on Monday, yet still far below its all-time high at $13.85 at the time of its initial public offering.

Founded in 2005, Sogou went public in late 2017 billing itself as a challenger to China’s biggest search service Baidu, though it has long been a distant second. The company also operates the top Chinese input software, which is used by 482 million people every day to type and convert voice to text, according to its Q1 earnings report.

Ever since the strategic partnership with Tencent kicked off, Sogou, which means “Search Dog” in Chinese, has been the default search engine for WeChat and benefited immensely from the giant’s traffic, though WeChat has also developed its own search feature.

The potential buyout will add Sogou to a list of Chinese companies to delist from the U.S. as tensions between the countries heighten in recent times. It will also allay concerns amongst investors who worry WeChat Search would make Sogou redundant. So far WeChat’s proprietary search function appears to be gleaning data mainly within the app’s enclave, from users’ news feed, user-generated articles, e-commerce stores, through to lite apps integrated into WeChat.

That’s a whole lot of content and services targeted at WeChat’s 1.2 billion active users. Many people need not look beyond the chat app to consumer news, order food, play games, or purchase groceries. But there remains information outside the enormous ecosystem, and that’s Sogou’s turf — to bring what’s available on the open web (of course, subject to government censorship like all Chinese services) to WeChat users.

The arrangement reflects an endemic practice on the Chinese internet — giants blocking each other or making it hard for rivals to access their content. The goal is to lock in traffic and user insights. For instance, articles published on WeChat can’t be searched on Baidu. Consumers can’t open Alibaba shopping links without leaving WeChat.

Sogou is hardly WeChat’s sole search ally. To capture a full range of information needs, the messenger has also struck deals to co-opt fellow microblogging platform Weibo, Quora-like Zhihu, and social commerce service Xiaohongshu into its search pool.

India bans 47 apps cloning restricted Chinese services

India, which banned 59 apps developed by Chinese firms late last month on the grounds that they pose a threat to nation’s security, today banned an additional 47 apps.

The nation’s Ministry of Electronics and IT’s new ban is aimed at those apps that were facilitating access to previously banned services such as TikTok and Cam Scanner. The new apps to be banned includes Cam Scanner Advance.

The move today comes as the Indian government contemplates restricting access to several more Chinese apps and services. Indian daily The Economic Times reported on Monday that New Delhi was planning ot ban an additional 275 apps including ByteDance’s Resso music streaming service and popular game PUBG.

More to follow…

Imint: the Swedish firm that gives Chinese smartphones an edge in video production

If your phone takes amazing photos, chances are its camera has been augmented by artificial intelligence embedded in the operating system. Now videos are getting the same treatment.

In recent years, smartphone makers have been gradually transforming their cameras into devices that capture data for AI processing beyond what the lens and sensor pick up in a single shot. That effectively turns a smartphone into a professional camera on auto mode and lowers the bar of capturing compelling images and videos.

In an era of TikTok and vlogging, there’s a huge demand to easily produce professional-looking videos on the go. Like still images, videos shot on smartphones rely not just on the lens and sensor but also on enhancement algorithms. To some extent, those lines of codes are more critical than the hardware, argued Andreas Lifvendahl, founder and chief executive of Swedish company Imint, whose software now enhances video production in roughly 250 million devices — most of which come from Chinese manufacturers.

“[Smartphone makers] source different kinds of camera solutions — motion sensors, gyroscopes, and so on. But the real differentiator, I would say, is more on the software side,” Lifvendahl told TechCrunch over a phone call.

Smart video recording

Imint started life in 2007 as a spin-off academic research team from Uppsala University in Sweden. It spent the first few years building software for aerial surveillance, just as many cutting-edge innovations that find their first clients in the defense market. In 2013, Lifvendahl saw the coming of widespread smartphone adaptation and a huge opportunity to bring the same technology used in defense drones into the handsets in people’s pockets.

“Smartphone companies were investing a lot in camera technology and that was a clever move,” he recalled. “It was very hard to find features with a direct relationship to consumers in daily use, and the camera was one of those because people wanted to document their life.”

“But they were missing the point by focusing on megapixels and still images. Consumers wanted to express themselves in a nice fashion of using videos,” the founder added.

Source: Imint’s video enhancement software, Vidhance

The next February, the Swedish founder attended Mobile World Congress in Barcelona to gauge vendor interest. Many exhibitors were, unsurprisingly, Chinese phone makers scouring the conference for partners. They were immediately intrigued by Imint’s solution, and Lifvendahl returned home to set about tweaking his software for smartphones.

“I’ve never met this sort of open attitude to have a look so quickly, a clear signal that something is happening here with smartphones and cameras, and especially videos,” Lifvendahl said.

Vidhance, Imint’s video enhancement software suite mainly for Android, was soon released. In search of growth capital, the founder took the startup public on the Stockholm Stock Exchange at the end of 2015. The next year, Imint landed its first major account with Huawei, the Chinese telecoms equipment giant that was playing aggressive catch-up on smartphones at the time.

“It was a turning point for us because once we could work with Huawei, all the other guys thought, ‘Okay, these guys know what they are doing,'” the founder recalled. “And from there, we just grew and grew.”

Working with Chinese clients

The hyper-competitive nature of Chinese phone makers means they are easily sold on new technology that can help them stand out. The flipside is the intensity that comes with competition. The Chinese tech industry is both well-respected — and notorious — for its fast pace. Slow movers can be crushed in a matter of a few months.

“In some aspects, it’s very U.S.-like. It’s very straight to the point and very opportunistic,” Lifvendahl reflected on his experience with Chinese clients. “You can get an offer even in the first or second meeting, like, ‘Okay, this is interesting, if you can show that this works in our next product launch, which is due in three months. Would you set up a contract now?'”

“That’s a good side,” he continued. “The drawback for a Swedish company is the demand they have on suppliers. They want us to go on-site and offer support, and that’s hard for a small Swedish company. So we need to be really efficient, making good tools and have good support systems.”

The fast pace also permeates into the phone makers’ development cycle, which is not always good for innovation, suggested Lifvendahl. They are reacting to market trends, not thinking ahead of the curve — what Apple excels in — or conducting adequate market research.

Despite all the scrambling inside, Lifvendahl said he was surprised that Chinese manufacturers could “get such high-quality phones out.”

“They can launch one flagship, maybe take a weekend break, and then next Monday they are rushing for the next project, which is going to be released in three months. So there’s really no time to plan or prepare. You just dive into a project, so there would be a lot of loose ends that need to be tied up in four or five weeks. You are trying to tie hundreds of different pieces together with fifty different suppliers.”

High-end niche

Imint is one of those companies that thrive by finding a tough-to-crack niche. Competition certainly exists, often coming from large Japanese and Chinese companies. But there’s always a market for a smaller player who focuses on one thing and does it very well. The founder compares his company to a “little niche boutique in the corner, the hi-fi store with expensive speakers.” His competitors, on the other hand, are the Walmarts with thick catalogs of imaging software.

The focused strategy is what allows Imint’s software to enhance precision, reduce motion, track moving objects, auto-correct horizon, reduce noise, and enhance other aspects of a video in real-time — all through deep learning.

About three-quarters of Imint’s revenues come from licensing its proprietary software that does these tricks. Some clients pay royalties on the number of devices shipped that use Vidhance, while others opt for a flat annual fee. The rest of the income comes from licensing its development tools or SDK, and maintenance fees.

Imint now supplies its software to 20 clients around the world, including the Chinese big-four of Huawei, Xiaomi, Oppo and Vivo as well as chip giants like Qualcomm and Mediatek. ByteDance also has a deal to bake Imint’s software into Smartisan, which sold its core technology to the TikTok parent last year. Imint is beginning to look beyond handsets into other devices that can benefit from high-quality footage, from action cameras, consumer drones, through to body cameras for law enforcement.

So far, the Swedish company has been immune from the U.S.-China trade tensions, but Lifvendahl worried as the two superpowers move towards technological self-reliance, outsiders like itself will have a harder time entering the two respective markets.

“We are in a small, neutral country but also are a small company, so we’re not a strategic threat to anyone. We come in and help solve a puzzle,” assured the founder.