From Xiamen to Shanghai's massive cemetery dirty bike, all twisted frame and filled with steel axle and wheels unwanted emblem for hundreds of Chinese start-ups, which once thrived on easy money, hard graft and light regulation.
If the idea is to take effect in 2015, the company promises to rent bicycles to attract investors to grow the middle class in China, attracting billions of dollars from investors, even if they are often charged little cyclists, or in some cases did not use anything.
Some, such as Mobike and Ofo, grew rapidly abroad.
Nevertheless, both of them after the cut overseas presence. Founder OFO, Dai Wei, has warned that it is on the verge of bankruptcy. Wukong and Bluegogo already taken place.
Now they have come to symbolize much of what went wrong, both in Chinese technology companies, especially those based on the idea of economic exchange. The companies that have problems, Var & # 39; iruyutstsa from the place of delivery of food and shopping sites to transportation applications.
"Model-oriented transactions, more or less satisfied," – says Jason Dean, a partner at Bain & Co consulting company in Beijing.
"The bubble burst in the general economy … on steroids she was pumped in money. All gone."
Chinese tech sector has developed a wide range of businesses within four to five years. Only during 2018 according to the Hurun Research Group, "100 unicorns" became "unicorn" in the amount of more than $ 1 billion.
But the rapid expansion has been slow in the last quarter of last year. Capital goes looking for a bargain, or in other regional markets, workers rebelled, and mourns the Beijing authorities, which possess some of these companies.
Many of the technology companies were fatal flaw to pay more customers than their clients.
"I think that the whole of China is trying to find a new business model," – said the head of one sector and the investor.
While the United States fear the growth of technology in China – the fear that has been the driving force of a trade war, and efforts to cover telecom equipment company Huawei's – a reality for many companies is less favorable.
Instead, the trade war served padkreslenastsyu many companies. "As trade conflicts in the gaps [between China and US tech capabilities] become more obvious, "- says Shirley C, which is a consulting practice of PwC in China and Hong Kong.
"And technology companies completely understand."
Over the past few years it seems to be an endless stream of capital into the sector. This allowed the company as Ant Financial, last year collected $ 10 billion as a result of fund-raising, which gave it a grade of more than $ 150 billion and created a number of so-called "the PPT companies," the prospectus which was founded a little more than a PowerPoint presentation . , Say investors.
But investors have begun to punish. The total amount of transactions in China in the second quarter was $ 2.2 billion in 2019 IT sector, compared with 26.4 billion. Dollars in the same period a year ago, according to data provider Preqin.
After evaporation of the public funds referred to the minimum, it should be a multidisciplinary approach between the US venture capital firms back the high ratings and dubious business model of some technological groups – in this case a blow struck just swollen coffers in firms "blue chips". Such as Sequoia and Hillhouse, who collected $ 8b (S11.3b) last year.
Consequences really started to be felt in the first quarter. After a series of fundraising, which are evaluated by startups, lower assessment of the previous round, and year after year – a whopping indicators, – stressed investors.
According to one former banker and start-up of the executive director: "The funds are moved from the founders to the investors."
A significant increase in the due diligence on prospective investments.
Another executive director, who & # 39; appeared in the bankers, reminiscent of the fundraising last year: "People called, saying:" We have finished a $ 100 million ".
Nisa Leung, management partner of Chinese venture capitalists Qiming, which has a large portfolio of new technologies and biotechnology companies, said that due diligence is often used only after the present time.
"The police has changed", – she added. "People are cruel to the point of view, and spend much longer on due diligence."
This new rigor turns into an extended range of funding and "cost adjustment mechanisms" designed to protect investors from the fall in the value – for example, by the promise of additional shares to balance any prices fall. This means a change in the sea.
The first former banker and CEO said: "The fact that the sponsor, who nine months ago was trying to make a deal, insists on the mechanisms of value adjustments … shows that there is no appetite for some of these companies are among the world's players."
In this new discipline are losing: VIPKID, which employs teachers who speak English, teach children in China, the Internet and tries to raise funds, and Megvy, one of China's largest companies in the field of artificial intelligence.
Megvy who stole the early marches in recognition of a person was left earlier supporters, when in May he was looking for more money. Instead, he stepped back from the government agencies to provide the bulk of its funding in the amount of $ 750 million.
Tender feelings, which enhances the growth of trade war, apply to public markets – even if the Chinese start-ups seeking to gain access to the funds before investors shun technology market.
Among the Chinese technology companies that have listed in the past year, Uxin, the car market of used cars fell by 73% of the value of a floating production, while the share of consumer Mogu-clothes up 81 percent from the IPO level.
The second impetus came from China tech employees, some of which are at the beginning of this year came on the platform of Internet developers GitHub, to express their disappointment with the culture of "996" – six days at 9 am to 9 pm.
Alibaba, JD.com and ByteDance were among those who called and ganebavavsya in the company, which has attracted the attention of state-run newspaper of the Communist Youth, which states that "the discontent reached the turn."
For a long time it can be expected from start-ups in Silicon Valley in Shenzhen, but in China is deteriorating changing conditions of interaction, because startups are trying to reduce costs and maintain the loss.
Bonuses fell in companies such as Didi Chuxing, and benefits – everything from fruit to chashak gym membership – quietly stopped.
"Technology is developing here," – said Syamon Chan, co-founder and managing partner of Palm Drive Capital and previous investor in Alibaba.
"So, people are asking, with & # 39 is it sustainable or not. If you can maintain 996 for the next five to ten years? 20 years? It is very important to go forward."
Many founders, including Jack Ma of Alibaba, see differently.
"If you join Alibaba, you must be willing to work 12 hours a day, why else would you come in Alibaba We do not need those who are comfortable working eight o'clock?", – he said in the transcript, published in April on WeChat group accounts. .
Hooks workers and investors indicate a greater problem: a growing number of start-ups that look like a break. Of total bike and delivery of food products to the online classes in English, the companies believe that the business model, focused on the consumer, do not add up due to intense competition.
Marketplace "Pinduoduo" typizavala model burning cash, depending on the sale of large quantities of goods.
Shanghai company, which is run by former Google CEO Colin Juan, spent $ 1.50 for every $ 1 profit for the last quarter of 2018.
Pinduoduo shocked cozy effective duopoly that enjoys the support of Alibaba and Tencent JD.com, but has since been joined by rivals such as Syaohunshu Songshupinpin and offering its own twist to the e-commerce.
In addition, there was an explosion in Internet companies that teach English, some of which keep prices lower without using native English speakers as teachers or to conduct group sessions rather than individual tutorials.
"With the increase in competition, especially in China, all prices for the purchase of up to a level which is now very few people will be business customers", – says Toby Mather, co-founder and CEO Lingumi, Internet business education. in China and the UK.
"We are entering the B2C acquisition of the winter, if you have no real network effect, like Instagram and Facebook".
Meitu, listed in Hong Kong in 2016, goes into gadgets for skin care. This enables companies with a dilemma, said the banker of Technology, who helped to appoint some of their public.
"Should they focus on growth and to continue spending, or they have to say," I can prove that I am a positive flow, but only 5-10 percent? "
The banker added: "The best thing – growth and profits and it is Alibaba and Tensent So why this decrease is less than the cap..? [companies]? "
Alibaba and Tencent occupy one initiative to reduce the cost of customer acquisition: focus – corporate sales, including small and medium-sized enterprises.
Restructuring Tencent in the end of last year – its first in six years, and is recognized as a "new starting point" for the next 20 years the group – established a unit, based on the client's business and industry.
But it is more difficult transition for small companies.
Customer service-corporate enterprises often requires large expenditures on research and development, say consultants, as opposed to more easily offer to sell to customers using the same type of application. It also requires different skills sets in scope, products and services, HR models and organization structures.
"All are experiencing some form of transformation," – says Ms. Xi. "More and more companies are entering the home. This place is hotter than I've ever seen, and will be for the next 20-30 years."
One investor noted SenseTime, China's largest startup in II, which amounted to $ 4.5 billion after the latest round of funding to demonstrate the struggle to reach the next level. SenseTime expanded its activities by selling facial recognition services, including for the purpose of surveillance in cities, mainly by selling government agency.
"They – the engineers, but do not have a lot of experience to figure out what customers want, because they grew up with one client," – says the investor.
Perhaps the greatest manifestation of the struggle for development – an opportunity many companies to introduce new products.
At the fair, China's high-tech in Shenzhen at the beginning of this year, little has changed in comparison with previous years. Robotic arms puts Oreo cookies in a box, surveillance cameras slide on the stands, and widespread dancing robots – a background for self.
UBTech, which is worth US $ 5 billion and supported by Tencent, sells its robots at schools, shopping centers, airports, hotels.
But at the fair company employee, who is preparing for an initial public offering, he said: "A lot has ordered the government to [bodies] and GP [state-owned enterprises]. They are more willing to purchase local produce or support the development of high-tech. "
Some technology startups that seemingly looked up with new ideas, if they are listed in the list of disappeared over time.
Meitu, which in Hong Kong included in the list, to license its brand Xiaomi smartphone former rival and cut staff in November 2016. It is included in the list of manufacturers of smartphones with decoration applications for filters; Now he makes a push into electronic gadgets skincare.
Similarly, the last sentence of the Good Doctor, online health platform, which opened on Ping An insurer last year at $ 1.1 billion, was the rise in dairy WeightWatchers style.
For bullish observers, these problems – no more than moderate pain, as the sector develops. While winter equipment will continue to be a victim, it is expected that Chinese entrepreneurs will start the task. . "The talent here is motivation and the demand is certainly there." – says Ms. Xw PwC.
But skeptics point to the damage caused by the tendency of the fact that the industry has been the predominant one trend. "Three years ago, it was the economy of sharing Now it 5G and industrial Internet of things, so many companies are involved in the game." – said the head of China's long-time technology. "But no one knows what the business model for the future IIoT … all confused."