Online platforms are becoming integral and crucial for business-to-business e-commerce companies across various segments amid stiff competition, a new survey said.
The study, published on Monday by SAP Hybris, an e-commerce solution provider that is part of German software giant SAP SE, and Forrester Research Inc, showed that the number of B2B firms in China, that make more than one-quarter of their purchases online, will double in the next three years.
"B2B e-commerce is expected to enter a phase of a rapid development. B2B companies that wait too long to implement e-commerce strategies are taking a big risk as they will lag in catering to client requirements and suffer in terms of sales, services and retention of customers," said Zhang Bo, China manager of SAP Hybris.
The study polled 200 business decision-makers of B2B firms in China. About 34 percent of the respondents said 25 percent or even more of their purchases will be conducted through online channels in the next three years, compared with just 17 percent now.
The majority of the surveyed B2B e-commerce firms, ranging from automotive, high-tech, manufacturing to oil and gas, said they expect online sales to increase in the following years.
It is an opportune time for ambitious B2B firms to set up e-commerce platforms to shape the future of their individual industry, he said.
On Friday, Hangzhou Ali Venture Capital, an investment firm backed by Alibaba, said it will build an online steel trade platform with Minmetals Development Co Ltd to tap into the B2B steel industry.
The firm, in which Alibaba's Jack Ma has an 80 percent stake, said it will invest 316.8 million yuan ($49.52 million) in the B2B e-commerce platform.
Charlie Dai, principal analyst with Forrester Research Inc, said though Alibaba already has a B2B online trading platform called 1688.com, which sells consumer products such as cloth, machinery and steel, it will still need to dig deep into each sector to become an established player.
"That's why even e-commerce giant like Alibaba needs to team up with Minmetals to leverage their expertise in steel production and sales," he said.
More top talent was sought in China this year by multinationals with a noted shift to high-caliber local prospects, though a slightly weaker sales outlook weighed.
Global executive search and consulting firm Chicago-based Heidrick & Struggles International Inc, said that half of the 119 multinational executives with responsibility over China operations said headcount would likely show an increase by the end of 2015 over the previous year.
The survey of managers released in October, however, noted that the overall level of hiring expectations dropped to 50 percent from 58 percent in 2014, and the difference was accounted for by sales growth prospects.
"For those companies that are growing, they may be adding headcount," said Seth Peterson, a partner in the Hong Kong office of Heidrick & Struggles and a member of the Industrial Practice. "Certain sectors have more favorable conditions and outlook than others."
Sixty percent of the respondents worked at companies with more than 1,000 employees, the firm said, while Peterson noted they faced rising labor costs as domestic firms sought the same talent pools, particularly in manufacturing.
But the number of companies that said sales would increase in 2015 dropped to 75 percent from 80 percent in 2014, with just over half saying profits would likely rise this year, the survey said.
The search for local talent was a major focus for all firms, Peterson said, with a variety of programs in place such as sending Chinese staff overseas to groom them for eventual assignment back in China.
"It has been the intention of most multinationals to develop their local talent pipelines and fill openings wherever possible with local leaders," said Peterson. Still, the survey saw 15 percent of respondents say a skills gap would lead them to hire more foreign employees.
Uber China, Uber Technologies Inc's independent China branch, has changed its name to China Uber, as a new start for its ambitious expansion plan, according to the Shanghai-based news portal jiemian.com.
Liu Zhen, head of strategy for China Uber, said the firm is being "increasingly more mature and independent." And with more Chinese investors joining, it is also more "localized," she added.
Liu said China Uber will expand to 100 cities, a big step from its coverage of 23 cities currently. "We will focus on cities with a population of more than 3 million in the expansion plan," she said, and that more second-and third-tier cities will be reached in 2016.
The southern metropolis of Guangzhou currently completes the most number of trips daily among all cities in the world where Uber is available, according to firm's press releases.
China's ride-hailing market has already seen intense competition among domestic players over taxi-hailing and ride-on-demand services.
On October 8, Uber announced a plan for $1 billion of investment in China, and that it would set up an independent China branch. That branch would be the only one outside the U.S., located in the Shanghai FTZ, to play down its overseas company status.
The company Didi Kuaidi took 83.2 percent of the market share while Uber, a remote No 2, controlled 16 percent at the end of the third quarter, the research firm Analysys International said in a report.
People check out their mobile phones in front of China Telecom's billboard in Beijing.
Telecom's Shanghai center is starting to produce online businesses while its rivals roll out new plans to boost shrinking revenue
Liang Duguo always knew he could return to his old job when he first launched Shanghai Yi Xing Information Technology Co Ltd in 2013.
The 47-year-old was a senior product manager at China Telecom Corp Ltd, the country's third-largest carrier by the number of subscribers with 194 million customers.
But the chance to branch out on his own and turn an entrepreneurial dream into reality proved too alluring. He was also cushioned by the promise that he could go back to his old position at the State-owned telecom giant if his venture failed.
"They said I could return and take up a position at the same level," Liang, who had spent 20 years at China Telecom, said. "That special policy gave me the courage to think about operating my own business."
So far, his decision to set up Shanghai Yi Xing has proved successful. The company offers real-time traffic information to firms specializing in mapping and navigational services, as well as government agencies, by using mobile signals generated by China Telecom customers, without compromising personal data.
"We raised about 10 million yuan ($1.56 million) from investors earlier this year and now we are serving several enterprises," Liang said, without disclosing further detailed information. "We are quite optimistic about our business."
But he could not have achieved this without the help of China Telecom.
During the past three years, Liang has been just one of up to 5,000 employees at the behemoth that have taken advantage of this "safety net" to roll out their own businesses or join startup teams.
By cultivating a pool of online-savvy people, the company hopes to create new revenue streams.
The first steps were taken in 2012 when China Telecom unveiled a 10,000-square-meter "innovation center" in Shanghai, the first of its kind among SOEs.
This has allowed employees to work on new projects until they grow into independent companies. If they fail, they can return to their old jobs.
In addition to the normal startup services such as office space, financial incentives and mentoring classes, the group's staff can also access telecommunication network resources, tap into the technology support system and marketing network operations.
A fund of up to 200 million yuan has been put aside to invest in these startups.
"We are sparing no efforts to learn from Internet companies about how to inspire innovation," Li Anmin, general manager of the innovation business department at China Telecom, said.
With a 450,000 workforce, China Telecom also has the luxury of numbers on its side. But there are other down-to-earth business reasons behind the decision.
As the country's "big three" carriers struggle with declining revenue from text messaging and voice calls, they are coming up with new ways to push growth.
One solution has been to awaken the entrepreneurial spirit in employees, illustrated by China Telecom's policy.
"Rising competition from Internet firms that offer instant messaging services has eaten into the revenue of text messaging and voice calls," Xiang Ligang, an independent telecom analyst and founder of the industry website cctime.com, said.
"These were two major revenue sources, so the telecom companies are now looking at other ways to make money by encouraging innovation."
Overhauling the existing business model had to happen, according to Xi Guohua, former chairman at China Mobile Ltd, the largest telecom carrier in China with 823 million subscribers.
He said in August that revenue from text messaging and voice calls had been declining at an annual rate of between 15 and 20 percent in the past several years.
Although the figures were slightly better in the first nine months of 2015, China Mobile still reported that "voice call duration" shrank by 1.2 percent and text messaging declined by 6.4 percent.
It was a similar story at China Telecom and China Unicom (Hong Kong) Ltd.
Naturally, the big three players have been moving into other areas to stem the tide, including what is known as Internet-enabled services, which involve online music streaming and gaming.
Last month, China Unicom announced it would invest 3.3 billion yuan into a 110,000-square-meter innovation center in Guangzhou, Guangdong province. The aim is to help nurture Internet-enabled companies. "We will offer storage services, big data analysis, marketing and channel resources as well as financial investment," Li Han, who is in charge of the Internet business at China Unicom's Guangdong branch, said.
China Mobile is also moving in the same direction. In May, it established a 2.55 billion yuan fund with State Development and Investment Corp and a fund management firm. The new company will invest in rapidly growing or mature mobile Internet businesses. China Mobile has pumped 1.5 billion yuan into the venture.
"Telecom operators are investing in startups because they need to innovate," Xiang at cctime.com said. "They hope to do that by funding enterprises in this mobile era."
China Mobile is also refining its existing operation. Earlier this month, it set up an Internet division, literally translated as China Mobile Internet Co.
The plan appears to involve integrating the company's nine Internet business centers across China, which are involved in gaming, music streaming and online reading material.
Analysts are not convinced if this is the right road to take.
"The new branch is a baby born late," Fu Liang, a longtime independent telecom expert, said, adding that China Mobile announced as early as 2012 that it would set up a special Internet unit.
"In fact, China Mobile missed a golden opportunity back then to promote a mobile Internet business. But it still has a chance to rectify that," he added.
"In the past, its Internet centers were run separately. Now the new branch will coordinate this operation."
Yet it is uncertain whether telecom carriers will be able to compete with leading Internet companies when it comes to specialized content.
"A better way is for Internet companies to work with carriers by setting up premium services for customers," Gene Cao, a senior analyst at consultancy Forrester Research Inc, said.
"They would pay, say a 15 yuan membership fee, to enjoy free data traffic, while listening to songs which are unavailable to normal users."
"The combination will enhance the appeal of premium services to customers. In this way, Internet companies can boost their revenues by offering more value-added services, and telecom carriers can also increase data traffic," Cao added.
Fu is in total agreement. The strength of the big three carriers is their sprawling infrastructure network and massive customer base.
"They are equipped with resources, which will give them a larger say in partnerships with Internet companies," he said.
In September last year, China Mobile reported that it had 823 million customers. In comparison, Tencent Holdings Ltd's WeChat, the most popular instant messaging platform in China, had just 650 million users.
But turning those strengths into lucrative revenue streams will not be easy. "The lack of Internet talent at SOEs' corporate governance structure is a bottleneck to growth," Fu said.
Still, progress is being made. China Telecom, for example, has shaken up its management structure for its Shanghai "innovation center".
As of November, the carrier had invested 50 million yuan in startups and 162 related projects. Four of them?the one set up by Liang Duguo, Shanghai Changshi Network Technology Co Ltd, woyoushi.com and Shanghai Zewei Information Technology Co Ltd?have received funding from venture capital firms.
"The innovation business is the fastest-growing department at China Telecom, with an annual growth rate of 50 percent," Li Anmin, who is in charge of the division, said. "We also plan to establish 10 more incubators across China and open the innovation ecosystem to all startups."
China CITIC Bank Corp Ltd confirmed Tuesday that it will collaborate with China's biggest online search engine, Baidu Inc, to build a direct banking business.
China CITIC Bank said it will hold a press conference in Beijing on Wednesday to officially cement the strategic partnership. Beijing-based Baidu said it will participate Wednesday's event with China CITIC Bank but refused to reveal details about the two's cooperation.
Through a working relationship with China CITIC Bank, Baidu is expected to finally enter China's nascent private banking sector. Baidu's rivals- Alibaba Group Holding Ltd and Tencent Holdings Ltd-have already successfully gained private banking licenses by forming similar alliances with different partners.
Baidu hasn't gained a private banking license, but analysts say that in China, to get involved in the direct banking business, which is a bank without any branch network that offers its services remotely via online banking and telephone banking, it's not required to have a private banking license.
China's top 500 private companies have made significant contributions in fostering innovation, creating jobs and tax contributions, a new report said on Monday.
The report, published by the China Federation of Private Enterprises, an industry association, and the China Academy of Management Science, a government think tank, ranked Legend Holdings Corp, the largest shareholder in personal-computer maker Lenovo Group Ltd, as the leading private enterprise in China with operating revenues of 289.5 billion yuan ($45 billion). It was followed by telecom giants Huawei Technologies Co Ltd and retail giant Suning Commerce Group Co Ltd with revenues of 288.2 billion yuan and 282.9 billion yuan, respectively.
Private firms have made an increasingly larger contribution to the economy and made more efforts in innovation, investment and international competitiveness, in addition to job creation and tax contributions, the report said.
Sectors like big data, cloud computing, biology and new materials have tremendous growth potential due to the new trade initiatives like the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
Overall, manufacturing enterprises are still better off than others in terms of growth potential. Sectors like electrical machinery, construction and nonferrous metal metallurgy have done reasonably well, the report said.
Breaking down the numbers, there were 33 nonferrous metal metallurgy companies and 38 iron and steel enterprises in the list. Shandong Weiqiao Pioneering Group Co Ltd, a super-large enterprise that focuses on textiles, garments and dying services as well as thermoelectricity and aluminum, was ranked fourth.
Private enterprises also made further inroads into overseas markets and increased their investments, due to the new opportunities from the Belt and Road Initiative. This year, about 500 companies achieved revenues of $316.7 billion through overseas operations, up 48 percent from a year earlier.
Companies in eastern China accounted for 61 percent of the country's private enterprises, with Zhejiang and Jiangsu provinces taking the most spots. But, companies in central and western regions are catching up, and added 23 companies to the list from last year.
Sun Lijian, vice-dean of the school of economics at Fudan University in Shanghai, said: "Most of the enterprises made it to the list with their own independent innovation. They braced for competition in the marketplace instead of growing on the support of encouraging policies.
"Some leading private companies such as Huawei, and foreign companies such as Samsung Electronics Co Ltd, established leading positions in their sectors by specializing and diversifying their products."
The government should help break the monopolies, open up the market and encourage competition to let private enterprises speed up innovation, Sun said.
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