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China’s digital health care start-ups get a boost from the coronavirus, Beijing and investors

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BEIJING — The coronavirus pandemic is proving to be the accelerator that China’s health care technology start-ups needed.

In a country of 1.4 billion, many people who used to travel and wait for hours to see doctors are turning more to online products, companies say. The government is rolling out needed policy support for internet-based health care. And investors are pouring in money. 

Before the coronavirus outbreak, much of the health-tech investment in China was focused on scientific research for medical treatments, said Kitty Lee, Singapore-based partner and head of the Asia Pacific health and life sciences practice at Oliver Wyman.

Going forward, she expects the portion of investment focused on consumer health care and infrastructure will grow more rapidly than biotech.

In the second quarter, global health-care funding to private companies reached a quarterly record of $18.1 billion, according to CB Insights. Health-care funding in Asia nearly doubled from the prior quarter to $5 billion, and deals to China-based start-ups recovered to pre-coronavirus levels, the analysis found.

“The entire Chinese health industry has really only begun to be cultivated after the passing of the (coronavirus) epidemic,” JD Health CEO Xin Lijun said in an interview last week, according to a CNBC translation of his Mandarin-language remarks.

The company is a subsidiary of Chinese e-commerce giant JD.com and is set to receive an investment of more than $830 million this quarter from Hillhouse Capital.

During the worst of the outbreak in China, JD Health offered free online consultations, drawing roughly 150,000 patients or more a day, who then realized they didn’t necessarily have to go to a physical hospital, Xin said. He now claims that in less than three years, his health tech company has the highest income among its peers in China.

Covid-19 first emerged late last year in the Chinese city of Wuhan. The disease began to spread within the country in January and February, before hitting the rest of the world in a global pandemic that has infected more than 27.6 million people and killed more than 900,000 people. In an effort to curb the outbreak, authorities have restricted social gatherings, forcing people to turn more to online platforms.

In the first six months of the year, visits to health care institutions in China dropped 21.6% from a year ago, according to data released Aug. 21 by the National Health Commission. Visits were still down 9.7% year-on-year in June to 630 million, the commission said.

On the other hand, Tencent-backed WeDoctor said that during the coronavirus outbreak, customer orders for online consultations increased 3.6 times from a year ago. More than 50,000 doctors joined the platform for a total of about 250,000 physicians, according to WeDoctor.

More high-level support

The Chinese government has also stepped up efforts to back the health tech industry’s development. Notably in July, 13 major national departments and ministries jointly announced support for developing online medical services, as part of a broader plan to promote consumption and employment. On Wednesday, a meeting of the country’s top executive body, the State Council, again noted the need to expand internet-based health clinics.

“Really after the serious stage of the pandemic …, the central government and the local government they delivered a lot of different policies to help the internet hospitals,” Tang Bochen, vice president at Qi’e XingRen, also known as Tencent Trusted Doctor, said in a phone interview on Sunday. “What I saw was almost every city, their public hospitals are now building up an internet hospital system to help their patients (move) from offline to online.” 

The company operates an online consultation platform as well as offline clinics. Tang said about 450,000 physicians with 20 million patients are already part of XingRen’s network, and that more than 30 of the 135 clinics have already received licenses to work with the government’s social insurance program. He said the company aims to build user traffic through general patient care, and rely more on specialist clinics such as dental and eye care to generate profit.

Major corporations have also been pushing into the emerging industry.

Ping An Good Doctor, a Hong Kong-listed subsidiary of the insurance giant Ping An, reported 26.7% year-on-year growth in average daily online consultations to 831,000 in the first half of the year, with revenue from online medical services doubling to 694.9 million yuan ($101.56 million). Registered users grew by more than 56 million in 12 months to 346.2 million.

Hong Kong-listed Alibaba Health says that through the Alipay app it has more than 15,000 contracted medical institutions, including nearly 400 Class III hospitals in 17 provinces, that are connected to medical insurance payment services. The company said in the first quarter, the net total of frequent active users of Alipay’s health-care channel exceeded 390 million.

“Telehealth or internet hospital or however you want to call it in China, it’s here to stay,” said He Wang, senior health care analyst at CB Insights. He expects at least roughly a quarter of health care services spending can be digitalized.

“A key indicator in telehealth’s momentum in China is integration with basic medical health insurance program,” Wang said. “You’re seeing insurance companies and hospitals and governments all form telehealth platforms themselves. I think it’s increasingly a crowded space. The platform players, like JD Health, Ping An, WeDoctor are probably the ones that are going to continue to play.”

But whether JD’s Xin or other industry players CNBC interviewed for this article, they generally agreed that online health in China is still in the very early stages of development.

“I think this health care market is very large. It is very far from a time of splitting the cake. (Right now) it is all about making the cake larger,” said New York-listed 111 co-founder and Executive Chairman Gang Yu, according to a CNBC translation of his Mandarin-language remarks. 

The company works with local pharmacies to sell medicine, and also has an online consultation program. Since the coronavirus outbreak, the proportion of its users age 40 or older has increased to more than half, the company said. In August, the company said it received a capital injection of 419.82 million yuan ($61.36 million), ahead of plans for another listing on China’s Star board. Net revenue surged 93.5% in the second quarter from a year ago to 1.62 billion yuan ($236.77 million), and net losses narrowed. 

“Profitability long-term is still a question long-term for every single one of these telehealth companies,” CB’s Wang said. “How you turn government support into cash flow is still on the table. It’s not solved yet internationally.”

The extent to which health tech can transform such a traditional industry also remains to be seen. While online consultations can give doctors a flexible source of income, they cannot replace a physical check-up.

“The medical industry remains relatively closed, with highly uneven resource allocation, and a virus-induced internet-based transformation cannot occur overnight,” Yipin Ng, founding partner of Shanghai-based Yunqi Partners and a former partner at GGV Capital, said in a Chinese-language statement, according to a CNBC translation. “Data islands and short-term shortage of quality medical resources remain a long-term problem for China’s medical industry, and will continue to bring entrepreneurial opportunities for specific sub-sectors and improving efficiency.”

The roughly six-year-old firm has invested in Intco Medical Technology, whose shares are up 650% so far this year. Yunqi’s more recent investments include V Daifu, which develops software for medical clinics, and Doctopia, which focuses on health tech for mothers with young children. 

— CNBC’s Iris Wang contributed to this report.

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NBC Sports Network will cease operations in 2021

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Ivan Provorov #9 of the Philadelphia Flyers plays the puck against Brad Marchand #63 of the Boston Bruins during the first period in a Round Robin game during the 2020 NHL Stanley Cup Playoff at Scotiabank Arena on August 02, 2020 in Toronto, Ontario.

Mark Blinch | National Hockey League | Getty Images

The NBC Sports Network is shutting down.

The network will stop operations by the end of 2021, a person familiar with the plan confirmed to CNBC. NBC will transfer its sports media rights, including the National Hockey League, to USA Network. The person spoke to CNBC on condition of anonymity as the individual isn’t allowed to comment publicly on the matter. Both networks are owned by CNBC parent company NBCUniversal.

The plan to halt operations will allow NBC to attract more reach for its sports content. USA Network is available in 86 million homes, while NBCSN has an estimated 80 million household reach.

NBCUniversal initially hoped NBC Sports Network would be its response to Disney‘s ESPN — a cable sports network that could justify high affiliate fees from pay-TV distributors because of its popular sports content. Twenty-first Century Fox developed Fox Sports 1 and CBS introduced CBS Sports Network for similar reasons.

But none of the cable sports networks have ever seriously threatened ESPN, and the media industry’s move toward streaming video has made linear sports networks anachronistic. NBCUniversal is considering shutting down several networks, CNBC reported in October, to consolidate its best assets in fewer networks. Shuttering underperforming cable networks could allow legacy media companies to keep the shrinking cable bundle afloat while maintaining subscription revenue by boosting fees for its existing networks.

The network started in the 1990s as the Outdoor Life Network, then was rebranded to Versus in 2006. Comcast owned the network when it took over NBCUniversal in 2011, and rebranded it as the NBC Sports Network at that time.

NHL playoff games, a selection of NASCAR races, and Premier League content will transfer to USA Network after NBCSN closes.

The Stamford, Connecticut-based network took over NHL rights with a 10-year, $2 billion package in 2011. The agreement runs through the current 2020-21 season.

NBCSN also has a $4.4 billion rights package with NASCAR that expires in 2024 and coming up on its renewal option with European’s soccer Premier League rights (worth roughly $1 billion). The network moved some of those games to NBC’s streaming service, Peacock, last year.

Back to the future

Longtime sports media rights advisor Lee Berke said the move is “back to the future” for USA Network airing sports content. The channel was originally a national distribution arm for Madison Square Garden Sports Network, airing sports content including the National Basketball Association until 1984.

“The fact that sports is returning to USA isn’t a new concept,” Berke told CNBC in an interview on Friday. “Certainly the distribution is helpful but this move is reflective of a couple of things — the pay TV bundle is shrinking. Subscriber base is shrinking. So, it justifies fewer networks to be on the air and the other part of it is the growth of streaming.”

Berke, the CEO of LHB Sports, a sports consultancy firm, said streaming trends is forcing network to reinvent themselves “as consumer viewing behavior changes. The was a migration of sports from broadcast to cable over the past 20, 30 years when pay TV became bigger and bigger. And now you’re seeing sports migrating to streaming.

“I think its a sensible move given the trends that are taking place,” said Berke of NBCSN’s closure. “You’re trying to stay ahead of the wave. You don’t want to be behind it and miss out. But this makes sense based off where pay TV is heading and base on where streaming is heading.”

Disclosure: Comcast owns NBCUniversal, which is the parent company of CNBC.


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‘Touching fish’ craze see China’s youth find ways to laze amid ‘996’ work culture | China

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On the Chinese microblogging platform Weibo, enthusiastic slackers share their tips: fill up a thermos with whisky, do planks or stretches in the work pantry at regular intervals, drink litres of water to prompt lots of trips to the toilet on work time and, once there, spend time on social media or playing games on your phone.

“Not working hard is everyone’s basic right,” said one netizen. “With or without legal protection, everyone has the right to not work hard.”

Young Chinese people are pushing back against an engrained culture of overwork, and embracing a philosophy of laziness known as “touching fish”. The term is a play on a Chinese proverb: “muddy waters make it easy to catch fish”, and the idea is to take advantage of the Covid crisis drawing management’s focus away from supervising their employees.

The author of a viral post at the centre of the conversation, Weibo user Massage Bear, described “touching fish” as a life attitude.

“[It] is a life philosophy of perfunctory living, letting go of oneself and others at the same time… and that’s the key to living in the moment and being relaxed,” she said.

Some make a game of it, Quartz reported, aiming to be the employee who uses the most toilet paper, or getting up from their desk whenever any other colleague does.

The deliberate slowdown at work marks a cultural shift among younger generations who are pushing back against unhealthy work hours for little gain, and not seeing the opportunities for upward mobility experienced by their parents.

“The fundamental reason for me to do that is that I no longer believe that I can get a promotion in my current company by hard work and ability,” said one Weibo user.

“There’s a joke in the tech industry, if you work hard before 35 as engineer in a food delivery company, then after 35 you are the delivery guy,” said Suji Yan, a 25-year-old chief executive of a tech startup mask.io.

“I’ve heard of people being fired after 35 because they spent less time in the company, because they have families to look after and they have less energy than the younger people.”

The “touching fish” movement has a sense of humour, but behind it is a deadly serious issue. Recent deaths have again highlighted the dangers in China’s “996” work culture – a reference to working 9am to 9pm, six days a week at a minimum, particularly in the tech industry and among food delivery drivers. The 996 attitude is widespread, despite labour laws saying work should be limited to eight hours a day, for an average of 44 hours a week.

Media reports include anecdotes of employees being offered bonuses or fold-out beds for under the desk if they work overtime, fines for missing phone calls, and even signal blockers in bathrooms to stop employees using their phones while on their toilet.

“It’s not that I don’t do my job well,” said one Weibo user.

“Touching fish to resist 996 is nothing more than a kind of nonviolent non-cooperation in a harsh working environment and a difficult process of safeguarding rights.”

In December a 23-year-old employee of e-commerce giant Pinduoduo died after working past midnight, the company confirmed earlier this month. While her death hasn’t been formally attributed to overwork, the company attracted furious backlash over the expectations put upon employees, and it was exacerbated further when earlier this month an engineer – surnamed Tan – took his own life.

Shortly afterwards Pinduoduo also fired an employee, named as Wang Taixu. Wang said he was fired after posting a photo online of an ambulance parked outside the company’s Shanghai officer building with the caption “another brave Pinduoduo warrior has fallen”. Pinduoduo reportedly disputed his characterisation of the medical incident and said Wang was fired for “extreme comments made with obvious malice”, violating company rules, and unrelated to the ambulance video. But another video which he posted after he was fired, criticising the intense work culture at the company, was viewed nearly half a million times according to Sixth Tone. Pinduoduo denied the accusations in the video.

Yan said companies got around labour laws in globally familiar ways: hiring people as contractors rather than employees, and incentivising people like delivery drivers to work long hours more often, with bonuses and games, rather than forcing them to do it.

He said as a chief executive he understood the pressures companies were under to increase output, but disagreed with the systematic culture of overwork, and saw the touching fish movement as a form of safe resistance.

“People do that because they have no way of talking to the management.”

Current leading business people are still fans of 996. Alibaba founder, Jack Ma, has said the practice is key to being successful in competitive industries. Xibei Canyin chief executive, Jia Guolong, said people should in fact be working “715” (15 hours a day, seven days a week). In 2019 a Huawei executive boasted that employees asked to work past 10pm. But it has drawn opposition from state media, including Xinhua news and the Communist party mouthpiece, the People’s Daily.

Yan said the tech industry was having a reckoning with how it was enabling the 996 culture, for example by building the technology which exploits delivery drivers. Github, a software development hosting site, has a project called 996.ICU (work 996 and you’ll end up in the intensive care unit), which documents companies enforcing excessive overtime. Yan suggested the project, co-created by his wife Katt Gu and other IT developers and to which he contributes, was in part a way for engineers to make amends.

“There are more and more engineers who are like the Github starters and want to contribute something to society, not to create algorithms to kill more delivery guys,” he said.

“There’s progress. I think my generation, when they become employers and CEOs they’ll have more humane ways of management, they’ll try to fix the system.”


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Microsoft president Brad Smith defends MSPAC to employees

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Microsoft president Brad Smith takes part in a roundtable discussion with US President Donald Trump and industry executives on reopening the country, in the State Dining Room of the White House in Washington, DC on May 29, 2020.

Mandel Ngan | AFP | Getty Images

A top Microsoft executive defended the company’s approach to supporting political campaigns in a meeting with employees on Thursday, according to a transcript of the meeting that CNBC reviewed.

Microsoft President and legal chief Brad Smith said Microsoft is evaluating options for the Microsoft Political Action Committee (MSPAC), which employees criticized because it helped finance the campaigns of Congress members who supported Donald Trump’s unfounded claims of fraud in the 2020 presidential election.

Microsoft employees in the U.S. can give some of their income to the MSPAC, but have no direct say in which candidates it donates to. On Jan. 11 the company said it was putting donations on hold after the Jan. 6 insurrection attempt, when rioters flooded into the U.S. Capitol during the Electoral College vote count that formalized Joe Biden’s win. The MSPAC had donated to several Republican members of Congress who tried to delay the formal Electoral College vote count, despite the complete lack of evidence of widespread voting fraud.

Several other companies, including Amazon, Facebook and Google, also temporarily stopped political contributions after the events.

On Jan. 13 one Microsoft employee, Carmen Crincoli, called for the company to stop supporting members of Congress who voted against the Electoral College results, and to stop giving money directly to elected officials and candidates. He said if the company couldn’t do those things, it should close down MSPAC and ask that employees get involved with politics individually.

Smith, who articulates Microsoft’s position on political topics, addressed the complaints.

“The questions that are being considered are exactly I think what you would expect. Should the PAC suspend donations to the members who voted against the Electoral College? If so, for how long?” Smith said to employees on Thursday.

But he also gave an frank explanation of why the MSPAC was important to Microsoft’s interests:

“I can tell you it plays an important role. Not because the checks are big, but because the way the political process works. Politicians in the United States have events, they have weekend retreats, you have to write a check and then you’re invited and participate. So if you work in the government affairs team in the United States, you spend your weekends going to these events; you spend your evenings going to these dinners, and the reason you go is because the PAC writes a check.

“But out of that ongoing effort a relationship evolves and emerges and solidifies, and I can tell you as somebody who sometimes is picking up the phone, I’m sometimes calling members and asking for their help on green cards, or on visa issues, or help to get an employee or family member who is outside the United States during Covid back into the country because of an immigration restriction.

“Or the issues around national security, or privacy, or procurement reform. Or the tax issues that our finance team manages. And I can tell you, there are times when I call people who I don’t personally know, and somebody will say ‘you know, your folks have always shown up for me at my events. And we have a good relationship. Let me see what I can do to help you.'”

Microsoft declined to comment on Smith’s remarks.

In 2020 hundreds of Facebook employees participated in a protest over the company’s decision to maintain a posts from former President Donald Trump, and in 2018 Google employees protested a contract the company had to supply cloud services to the Pentagon, prompting the company to not renew the contract.

WATCH: Microsoft and Green Bay Packers team up to invest in Black and Latinx entrepreneurs

Nominations are open for the 2021 CNBC Disruptor 50, a list of private start-ups using breakthrough technology to become the next generation of great public companies. Submit by Friday, Feb. 12, at 3 pm EST.


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