Category: "News of China"
Wuhan Iron & Steel 'will cut jobs'
December 15th, 2015Wuhan Iron & Steel Co (Wugang) will lay off 6,196 people by the end of February 2016, news portal jiemian.com reported on Monday.
The workforce stood at 27,760 people based on the company's 2014 financial report, so the job cut will cover more than 20 percent of its staff.
Wugang's parent company, Wuhan Iron and Steel (Group) Corp (WISCO), will likely eliminate roughly 11,000 jobs, with a 20 percent pay cut to be imposed on all employees in 2016, the same report said, citing several anonymous sources at WISCO.
But Sun Jing, director of WISCO's communication department, was quoted as saying in the report that there have been no layoffs or pay cuts. He also explained that according to company policy, an employee may face a pay cut of up to 20 percent only when he or she fails to complete the workload.
Smartphone makers set sights on iris scanning tech
December 14th, 2015While the year 2015 has witnessed fingerprint recognition scanner becoming a must-have feature in top of the line handsets, iris scanning technology is expected to be the center of attraction in high-end smartphones in the next few years.
Iris recognition, an automated method of biometric identification, enables you to unlock the phone as well as secure mobile payment by scanning your eyes instead of the tip of your fingers.
The new recognition method, which analysts said is widely regarded as becoming the next security standard, has found its way to mobile devices.
South Korean tech giant Samsung is rumored to be working on its next generation of Galaxy S7 smartphones, which will come with the iris scanning technology in 2016.
Another South Korean smartphone manufacturer, LG, which hadn't originally even intended to integrate fingerprint scanner on its LG G4, is reportedly very likely to become a front-runner in smartphone technological breakthroughs. According to tech news portal techradar.com's report in November, LG's next generation LG G5, which is expected to be released early 2016, could sport an iris scanner.
Smaller smartphone makers, Guangdong-based Vivo and Japan's Fujitsu, have already tried out this technology on their flagship smartphones, Vivo X5 Pro and Fujitsu ARROWS NX F-04G, respectively.
Fujitsu promoted its gizmo that can unlock a screen with a 0.6-second glance, and Vivo X5 Pro claimed it can secure almost all mobile applications. The two devices created quite a sensation among tech enthusiasts when they were launched in May, but their sales were reportedly not particularly high, as iris recognition doesn't seem to be a feature ordinary consumers are looking for in the next generation of smartphones.
"I will not change or buy a smartphone only for the sake of enjoying the new technology, which is like a supplementary feature for passwords, not a necessary one," Shang Xin, a 31-year-old Beijing resident, told the Global Times on Tuesday.
He added that it is slightly inconvenient to constantly have to lift the phone to your eyes, and the infrared light will also make the technology annoying and invasive if done regularly.
"I think fingerprint scanning technology is enough for my daily use with respect to security and speed," he said.
Fingerprint recognition, another biometric identification method, was widely integrated into high-end smartphones this year.
"Technologically speaking, iris scanning will be more secure than other identification methods," Zhu Dalin, an industry analyst with Beijing-based market consultancy Analysys International, told the Global Times on Tuesday.
"But this does not mean that fingerprint scanning technology will head out of the door in favor of iris scanning, especially when current iris scanning technology is not significantly faster," said Zhu. "One of the reasons why fingerprint scanning caught on was thanks to Apple's solution - Touch ID - which slightly edged out typing in passwords in terms of speed."
Experts are concerned that the new technology may still carry some disadvantages for users who have eye-related disorders as well as those who are trying to unlock their phones without enough light present.
But consumers are likely to see the adoption of iris scanning technology in next year's smart devices as a strong selling point as the global smartphone market continues to mature.
U.S. market consultancy International Data Corp (IDC) forecast on December 3 that 2015 will be the first full year of single-digit growth of 9.8 percent year-on-year in worldwide smartphone shipments, settling at a total of 1.43 billion units. IDC also predicted that the once red-hot smartphone market in China would grow by only 1.2 percent this year, down from 19.7 percent in 2014.
E-commerce creates more jobs for the disabled
December 11th, 2015
Su Qianqian, who runs an online store for hand-drawn postcards, discusses her business with Luo Runfa, an e-commerce instructor, after a training class in Hangzhou, Zhejiang province, in September.
A newly released e-commerce report showed that the Internet has created more job opportunities for China's disabled population.
As of June, 316,000 disabled people had opened online stores on Taobao, China's biggest online shopping platform, with sales of 10.5 billion yuan ($1.63 billion) in 2014.
The report, prepared by the Ali Research Institute, was released on Thursday at the China Disabled Persons' Federation in Beijing. It analyzed aspects of the store owners and customers on Taobao, one of Alibaba's main online marketplaces.
It showed that disabled online store owners in eastern coastal cities had the best sales, with Zhejiang province on top, followed by Guangdong and Shanghai.
Male online store owners accounted for about 64 percent, while female owners accounted for 36 percent.
Nearly 25 percent of online stores owned by disabled owners sell clothing.
The report also said that nearly 80 percent of owners had no chance for a college education, and their highest degree for most was a high school diploma. About a quarter only finished elementary school.
The report also showed that 80 percent of the owners earned less than 30,000 yuan a year from the online stores, or about 2,500 yuan per month.
The research institute also studied disabled customers, finding that 2.69 million disabled clients shopped on Taobao as of June, spending 13 billion yuan in 2014.
Disabled clients spent more on electric cars, family health, online games and instruments and spent less on travel than other customers, the report found.
The Internet is a gateway for many disabled people to engage in society, said Zhang Haidi, chairwoman of the federation. The cooperation with Alibaba is a seed that encourages disabled people to work, she said.
"We are dedicated to cooperation with the China Disabled Person's Federation and other organizations to establish an online 'barrier-free' ecology that allows disabled people to enjoy equal rights with others on the Internet," said Alibaba's President Jin Jianhang.
Alibaba will invest 300 million yuan over the next five years to provide 50,000 online jobs for disabled people and to train 100,000 online, Jin said.
China has more than 80 million disabled.
Zheng Ran, a former Paralympic Games basketball player, retired from the court and became a star online store owner in 2012 selling equipment for the disabled in 2012.
"Sports changed me, and the Internet business changed my life," she said.
Top 10 products
What disabled online store owners sell on Taobao
· Clothing
· Shoes, suitcases and bags
· Furniture
· Online games
· Digital products
· Cosmetics
· Office supplies
· Food
· Sports equipment
· Jewelry and accessories
Source: Ali Research Institute
London property company Savills plans office in Wuhan
December 10th, 2015London-listed property services provider Savills Plc's China operation will open a new office in Wuhan in central China's Hubei province in 2016, expanding its business in the country as the company holds optimistic outlook for market demands, said Jeremy Helsby, Group CEO.
During his visit to Shanghai Tuesday evening, Helsby said he believes that China's demand for property services will grow fast, making China one of the most active property markets in the next five years, and Savills continues to expand its business and investment in China.
Savills is still bullish about China economic growth despite GDP growth not as rapid as that of past years, he said.
"China is still a very important growth region. I am not worried about China's growth, and I am still excited about it," said Helsby.
Savills opened its 15th office in China's mainland in Xi'an, west China's Shaanxi province. The Xi'an office will serve increasing demands amid China's Belt and Road Initiative rejuvenating westbound trading routes and further opening markets to investors.
Savills will also continue to assist its Chinese clients to develop business in overseas market as they expand their footprint globally in commercial and residential property sectors, including development of hotels to meet mounting demands of Chinese outbound tourists, said Helsby.
Didi Kuaidi plans car sales to diversify its business
December 9th, 2015Didi Kuaidi is planning to sell cars through its platform, as the ride-hailing major seeks to diversify its business mix to more segments and sectors.
The Beijing-based company said on Monday it will sell 200 new vehicles by Mercedes-Benz and Tianjin FAW Toyota Motor Co Ltd, on its platform on Saturday.
Consumers can pay 40,000 yuan ($6,200) less to buy two models of automobiles on Didi Kuaidi, whose market prices are about 300,000 yuan. Users can book appointments and pay a deposit on the car-hailing platform before picking up the cars at designated 4S stores.
The sales event targets consumers in six cities: Beijing, Shanghai, Hangzhou, Guangzhou, Shenzhen and Chengdu where Didi Kuaidi is offering test-drive services.
Zhu Lei, vice-president of Didi Kuaidi, said the campaign marks the company's latest attempt to offer more targeted marketing services for automakers
"By offering test-drive services, we can accumulate data on what types of cars consumers like. Selling automobiles online offers a chance to turn such understanding of consumer preferences into precision marketing, which in turn will boost the proportion of consumers who actually buy cars," he said.
In October, Didi Kuaidi launched test-drive services, a product it said "has a huge business potential". Through its platform users can get hands-on driving experience of about 100 models.
Zhu said the company plans to expand the service to more than 30 cities within a year but more studies are necessary to make car sales a regular business.
Wang Xiaofeng, an analyst with market research firm Forrester Research Inc, said the move is part of Didi Kuaidi's broad efforts to monetize its huge user traffic.
"I don't think Didi Kuaidi wants to become an e-commerce site to sell cars, which demands large investments. Instead, it is in a better position to become a marketing platform. This is a low-cost strategy and the most efficient way to tap into its sizable user base," she said.
Currently, Didi Kuaidi has 250 million registered users. With services available in 259 Chinese cities, the company dominates the country's private-car hailing market with 83.2 percent in the third quarter of this year, according to Beijing-based Internet consultancy Analysys International.
Its arch rival Uber Technologies Inc is a distant second in China with a market share of 16.2 percent. The US-based technology company has also been offering its users on-demand test drives.
Jia Xinguang, a senior analyst with the China Automobile Dealers Association, said it is a well-calculated decision for ride-hailing platforms to offer test-drive services before selling cars, but automobiles can never be sold simply through online channels.
"Customers need to visit the dealerships in person to feel and check a car. Offline dealers are also needed to ensure deliveries and after-sales services. The online-to-offline car deals ultimately are still directed to offline dealers," Jia said.
China likely to roll out de-stocking measures for property sector
December 8th, 2015It is expected that during an upcoming key economic meeting Chinese officials will introduce measures to cut housing inventories.
De-stocking the property market will likely be discussed at the upcoming Central Economic Working Conference, which sets economic targets for the coming year, a source told China Business News.
The measures are not expected to boost the real estate market nor set quantitative de-stocking targets for specific regions.
"The most important thing is to reactivate the property sector to help with its liquidity," the source said.
The housing market experienced a downturn in 2014 due to weak demand and a supply glut. This continued into 2015, with both sales and prices falling, and investment slowing.
According to data from the National Bureau of Statistics, the unsold home inventory hit a record 686.3 million square meters by the end of October, up 17.8 percent from the previous year.
Officials have already showed resolve to address the country's housing woes. Destocking the property market will be one of the government's main tasks, President Xi Jinping told a meeting of the Central Leading Group for Financial and Economic Affairs in November.
Premier Li Keqiang also told a cabinet meeting that the government should overhaul China's household registration system to encourage more rural residents to settle in cities and boost house sales.
Besides existing stimulus measures such as cutting interest rates and easing deposit requirements, measures such as transforming commercial housing into affordable housing are also expected next year, the source said.
Didi ties up to expand globally
December 7th, 2015Didi Kuaidi said yesterday that it has teamed up with three overseas counterparts as it continues to expand globally.
The Chinese ride-hailing company said it has sealed strategic partnerships with Lyft, GrabTaxi and Ola. Its tie-up with Lyft is an expansion of the global ride-sharing agreement the two firms formed in September.
The four parties will collaborate and leverage each other's technology, local market knowledge and business resources. This will offer international travelers access to local on-demand rides by using the same application they use at home without shifting to a new software in a foreign language, according to a joint statement yesterday.
Each company will handle mapping, routing and payments via a secure app interface so that customers will experience a seamless ride in China, the United States, Southeast Asia and India.
"As Didi consolidates market leadership in China, we are now focused on leveraging our collective technology and expertise to further develop product innovation and enhance the user experience," said Cheng Wei, CEO of Didi Kuaidi.
Didi Kuaidi is a merger of China's two largest ride-hailing applications.
Tencent named one of most innovative companies
December 4th, 2015Tech giant Tencent was named by the Boston Consulting Group on Wednesday as one of the most innovative companies in the world, rising to 12th from 47th in the rankings.
BCG's 10 most innovative companies are: Apple, Google, Tesla Motors, Microsoft, Samsung, Toyota, BMW, Gilead Sciences, Amazon and Daimler.
The rankings were compiled from survey responses by 1,500 senior executives at companies from a wide range of industries. The companies were judged mainly for their speed, research and development processes; use of technological platforms; and exploration of adjacent markets.
The report's authors said that speed has long been seen as a key attribute of strong innovators. Survey results supported speed's growing importance.
The authors said that "overly long development times were the most-cited obstacle to generating returns on innovation and product development" and that "fast innovators are much more likely to also be strong innovators".
"I think user platform and speed are two things that Tencent has been quite spectacular on," said Puneet Manchanda, professor of marketing at the University of Michigan Ross School of Business. "They've been moving very fast into many other areas, like media, streaming, advertising, and now apps for taxicab hailing and so on."
In the past year, Tencent, headquartered in Shenzhen, China, has announced it will roll out a mobile payments service for overseas users; distribute music via its QQ Music platform; partner with a U.S. film studio to make a video-game action film; and work with U.S. publishers to sell American titles on its Tencent Literature platform. Those products extend far beyond the company's core products like its instant messaging platform QQ and social mobile app WeChat.
"It's a fast-acting company for sure, but it also has platforms where it can launch new services that plug and play into those platforms. That's what has made it so fast — anything they want to do in media, advertising, e-commerce, you have close to 800 million on your various platforms and you have a lot of social media data. The platforms can be leveraged very quickly," Manchanda said.
The report's authors said that greater agility has the "potential to boost a company's top and bottom lines, and flexible and mobile consumers demand it."
Speed allows companies to gain larger market share, reduce development costs and increase forecasting accuracy, they said.
The list of 50 innovative companies includes two other Chinese brands: Huawei and Lenovo, both makers of electronic products.
"Lenovo probably makes it on the lean manufacturing criteria. It has been pretty good at streamlining manufacturing, and the brand has been nurtured reasonably well," Manchanda said.
"Huawei is actually quite innovative — they don't get talked about much because they don't supply consumer-facing products as much but they are very innovative and their electronic equipment is world class," he said.
Nokia shareholders approve acquisition of Alcatel-Lucent
December 3rd, 2015Shareholders of Finnish telecommunication company Nokia approved the acquisition of French-American rival Alcatel-Lucent at an extraordinary general meeting in Helsinki on Tuesday.
Nokia said that the transaction is expected to be completed in the first quarter of 2016.
With the acquisition, the Helsinki-based company hopes to expand from telecom networks to Internet networks and "cloud" services to better compete with its global rivals.
"Nokia's shareholders have today shown the full extent of their support for our proposed combination with Alcatel-Lucent. By ratifying the transaction in such great numbers, they have endorsed our strongly-held belief that the combined company will be better positioned to compete as a world leader in network technologies over the long-term," said Risto Siilasmaa, Chairman of the Nokia Board of Directors.
In April, Nokia confirmed that it was negotiating a takeover of Alcatel-Lucent. The two companies have entered into a memorandum of understanding, under which Nokia will make an offer for all the shares issued by Alcatel-Lucent through a public exchange offer in France and in the United States. The total price of acquisition is 15.6 billion euros (about 16.5 billion U.S. dollars).
Under the terms of the agreement, the name of the combined company will be "Nokia", its headquarters will remain in Finland. Nokia will hold 66.5 percent stake in the new company, Alcatel-Lucent will hold the remaining 33.5 percent stake.
Currently, Nokia ranked the third largest network equipment manufacturer after Ericsson of Sweden and China's Huawei. Following the sale of its mobile phone business to Microsoft, Nokia focus on telecommunications infrastructure and mapping services.
Manufacturing slumps to 3-year low
December 2nd, 2015China's manufacturing activity fell to its lowest level for more than three years in November after recording its fourth straight month in decline.
The official Purchasing Managers' Index fell 0.2 points from October to 49.6, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
The demarcation line between growth and expansion is set at 50 points.
The November reading was the lowest since August 2012.
Bureau analyst Zhao Qinghe said the data suggested worsening conditions due to sluggish demand at home and abroad.
"Some traditional industries, such as nonferrous metals, are in deeper contraction as they seek to rid themselves of overcapacity," he said.
"But performance remained stable on the whole, as emerging sectors remained in expansionary territory," he said.
The PMI's component indexes showed widespread weakness in manufacturing, with new orders — a proxy for domestic and foreign demand — down 0.5 points at 49.8 and exports contracting to 46.4 for the 14th straight month. Input prices fell 3.3 points to 41.1.
Economists at ANZ said this points to persistent deflation in upstream prices, which would add pressure to factory gate prices and industrial profits.
October's Producer Price Index — a measure of inflation at the factory gate — fell 5.9 percent year on year, extending its downward trend to a 44th month.
China's gross domestic product in the third quarter rose 6.9 percent year on year, its slowest pace in six years. In an effort to bolster growth, the People's Bank of China has cut benchmark interest rates and banks' reserve requirement ratio five times this year.
The moves, however, have yet to have any major impact.
According to earlier figures, the profits of China's industrial firms in October fell 4.6 percent year on year, following a 0.1 percent dip in September.
"With soft growth momentum and deflationary pressures growing, we expect the government to further ease its monetary policy and continue to implement an expansionary fiscal policy," said ANZ economist Liu Ligang.
Despite the poor overall performance in November, private and export-oriented companies fared better than state-owned industrial enterprises.
The Caixin China PMI, a similar measure to the official PMI but weighted toward private and export-oriented manufacturing companies, rose to 48.6 last month, from 48.3 in October and 47.2 in September.
"Activity in the sector has been in contraction in each of the past nine months, but the November figure was the best since June," said He Fan, chief economist at Caixin Insight.
The improvement was partly due to more stable output, which had been in decline over the past six months, he said.
Meanwhile, the official non-manufacturing PMI improved to 53.6 points in November, its highest level since July.
The gains were partly due to the Singles Day online sales event, the bureau said.
Julian Evans-Pritchard, an economist at Capital Economics, said in a research note: "The services sector appears strong, and there are hints that accelerating credit growth and fiscal spending may have continued to support investment growth last month."
B2B e-commerce to enter a phase of rapid development
December 1st, 2015Online 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.
Top talent sought by foreign firms despite weaker sales outlook
November 30th, 2015More 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 changes name, eyes 100 cities for expansion
November 27th, 2015
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.
Major carriers turn to Internet innovation
November 25th, 2015
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."
Baidu partners with China CITIC Bank in direct banking business
November 18th, 2015China 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.
Private firms lead in innovation and job creation, says report
November 17th, 2015
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.
Chinese entrepreneurs less satisfied about business situations
November 16th, 2015Chinese entrepreneurs are feeling the pressure from economic slowdown and are less content with their current business situations than previous years, a latest survey showed.
Business owners that are "very satisfied" or "relatively satisfied" about current situations accounted for 28.3 percent of the total surveyed owners, down 6.5 percentage points from a year earlier, according to a survey of more than 2,500 companies by the China Entrepreneurs Survey System.
A third of surveyed business owners said they were not satisfied about the business situations at present.
The average score of their level of satisfaction was 2.9, with 5 being the highest, the survey showed. The figure was lower than those for the previous two years.
More entrepreneurs have a negative view on the current macroeconomic conditions, showing dropping confidence as the economy slows.
China's economy expanded by 6.9 percent year on year in the third quarter of 2015, the lowest quarterly growth in six years.
Lenovo launches new tablet-laptop hybrids to revive PC market
November 10th, 2015The world's largest PC maker Lenovo launched two convertible laptops and a tablet under its Yoga line on Monday to resuscitate demand for personal computer amid growing penetration of mobile devices.
Launched in 2012, Lenovo's Yoga line of laptops were designed to work both as PC and tablet as the growing popularity of smartphones and tablets have contributed to a slowdown in PC sales.
Monday's release includes two laptops with keyboard that can be either folded or detached and a Yoga tablet.
Lenovo's CEO Yang Yuanqing said on Monday that the PC market, valued at 200 billion U.S. dollars, still has potential for growth as some of its essential features cannot be replaced by tablets and smartphones.
"I'm still optimistic about the PC market," said Yang, "there is still a lot of investment going into improving the PC's user experience and to stay relevant, manufacturers need to be committed to innovation."
Yang said though Lenovo is already the world's largest PC maker, it still wants to grow its market share.
Lenovo retains its spot as the world's third largest tablet maker with a global market share of 6.3 percent in the third quarter this year, data from IDC shows.
Alibaba could be planning Hong Kong media raid
November 9th, 2015
Alibaba's founder Jack Ma. Alibaba may be set to make a major foray into the media and entertainment industries.
Alibaba may be set to make a major foray into the media and entertainment industries.
After announcing on Friday it was taking over China's top online video provider in a cash deal, rumors surfaced over the weekend that the mainland-based company is "in discussions" to invest in Hong Kong-based SMCP Group Ltd, which publishes the English-language newspaper South China Morning Post.
On Sunday, a spokesman for Alibaba told China Daily the company does not comment on market rumors. The communications department at SCMP Group did not respond to an inquiry.
The rumor surfaced after SMCP announced on Friday that Wang Xiangwei, the newspaper's editor-in-chief, was stepping down and Tammy Tam, Wang's No 2 since 2012, would take over from Jan 1.
Meanwhile, Shanghai-based mobile news app The Paper reported that Alibaba is in talks to take a stake in Sina Corp, which runs online news portal sina.com.cn and Weibo, the Chinese equivalent of Twitter.
Industry observers said that since June, Alibaba has poured billions of dollars into media organizations, including online video giant Youku Tudou Inc.
Tian Hou, an analyst at TH Capital in Beijing, said Alibaba's media expansion is "very likely". Huang Guofeng, an analyst at the Internet consultancy Analysys International in Beijing, said Alibaba may have a "big vision to enter people's living rooms".
Chinese textile firms look to thrive in new hot spot
November 6th, 2015Vietnam is becoming a "hot spot" for Chinese textile manufacturers when they look to build factories overseas. [Special coverage]
One of the main reasons is that apparel produced in the Southeast Asian country for the United States market will be tariff-free after last month's Trans-Pacific Partnership agreement.
Huafang Co, a textile business in Shandong province, plans to set up a high-end fabric factory in Vietnam with a 700 million yuan ($110 million) investment. This will be the company's first overseas factory.
Another 150 million yuan will be pumped into a research and development center in Vietnam to look into new technologies covering the whole industry chain, including cotton, spinning, weaving and dyeing.
Huafang, which is listed on the Shanghai Stock Exchange, is planning to issue about 120 million shares for corporate investors, with an issuing price of about 7.4 yuan per share. This will help the company raise 900 million yuan to finance its Vietnamese project.
"Before the zero-tariff policy reached by the TPP, many labor-intensive Chinese industries had already shifted to Southeast Asian countries," said Zhang Jianping, a senior researcher at the Institute for International Economic Research under the National Development and Reform Commission. "The labor costs there are four to five times cheaper than in China.
"Here, the country is undergoing an economic transformation. In China's developed coastal regions, high-tech industries are springing up to replace labor-intensive industries," he added. "The trend has been gathering pace, and the new policy will speed up the process."
Vietnam has become a major importer of fabrics and a leading exporter of clothing. But weak domestic production has left local companies struggling to cope with international demand.
That was another key factor in Huafang's decision to set up a manufacturing center in Vietnam. Now the company plans to set up two production lines, although it will take up to three years to build the plant.
Pei Chunqu, former deputy minister of trade and industry in Vietnam, said that in the past decade, the textile industry in the country has been growing slowly.
Luen Thai International Group, which is Hong Kong's largest clothing company, Sanshui Jialida TextileCo, based in Guangdong province, and Vietnam's Vinatex Co are planning to establish a textile industrial park.
China to deliver 50 bln express parcels by 2020: Official
November 5th, 2015China aims to deliver 50 billion express parcels annually, generating 800 billion yuan (126.3 billion U.S. dollars) in business revenue, by 2020, a postal official said Wednesday.
The target is equal to the annual sum of deliveries across the globe today, said Ma Junsheng, head of State Post Bureau in an online interview.
Total express deliveries would near 20 billion pieces with business revenue reaching 400 billion yuan in 2015, Ma said, adding that the sector has registered an annual growth rate of over 50 percent in the past five years, according to Ma.
The country plans to build an efficient and safe express delivery system with nationwide coverage, advanced technology and services and international connections by 2020, according to a policy document released last week by the State Council, China's cabinet.
Despite a slowing economy, express delivery services have grown steadily. The amount of express delivery packages has increased 8.2 times over the past six years. In the first half of 2015, express deliveries jumped by more than 43 percent year on year.
On average, each Chinese person received more than 10 parcels last year, even with only half of the country covered by the delivery network.
JD.com files complaint against Alibaba for 'disrupting market order'
November 4th, 2015
Working staff distribute packs in an express company in Hangzhou, East China's Zhejiang province, Nov 12, 2012. The annual Single's Day which falls on Nov 11 has become a shopping festival under a continuous sales promotion of e-commerce groups.
JD.com Inc,China's second-largest e-commerce site, filed a complaint to industry authority claiming that its rival Alibaba Group Holding Ltd was "disrupting the market order".
In a complaint filed on Tuesday to the State Administration of Industry and Commerce, the Beijing-based company said Alibaba told retailers to pick a side during the upcoming Singles' Day, China's largest online shopping festival, which falls on next Wednesday.
"Alibaba conveyed a message to retailers that if they participated in its Tmall's promotion campaign on the Singles Day, they will not allowed to attend similar events held by rival sites," JD said in a statement.
Alibaba threatened to direct less traffic to retailers who were unwilling to follow its demands, JD claimed, adding "such behavior poses barriers to market competition and severely undermines consumers' interests."
In response, Alibaba said late Tuesday that let consumers decide which platforms they are willing to choose. "Market-related problems should resort to the market for solution. We will continue offering consumers quality products at lower prices," Alibaba said.
The State Administration of Industry and Commerce was not immediately available for comment.
The dispute comes as the country's e-commerce sites intensify efforts to vie for retail partners for the upcoming Singles' Day, when millions of consumers flood to websites for bargain shopping.
Taiwan's manufacturing index drops again
November 3rd, 2015Taiwan's manufacturing industry reported sluggish figures in October, echoing the damp situation of the island's general economy.
The purchasing managers index (PMI), a key indicator for manufacturing, dropped month on month, for a fourth consecutive month, by 0.1 points from September to 46 in October, according to a monthly report from the Chung-Hua Institution for Economic Research, a local think tank.
It also remained below the 50 mark for a fourth straight month, the report said.
A PMI reading above 50 shows expansion in manufacturing activity, while a figure below 50 signals contraction.
All five indicators for the PMI -- new orders, production, inventories, employment and supplier deliveries -- showed a contraction.
Among six industrial sectors, only the sector of chemical, biochemical and medical rose above 50 to 54.1 points in October from 48.4 the previous month. The rest contracted.
Taiwan's GDP in the third quarter shrank by 1.01 percent year on year, the first reduction since the fourth quarter of 2009, when the island was affected by the global financial crisis.
Its authorities announced a package of short-term stimulus policies last week, including subsidies for the purchase of energy-efficient home appliances, for travel and for residents who replace their outdated cell phones with smartphones.
Wu Chung-shu, president of the Chung-Hua Institution, suggested that the island should work out long-term policies to cope with the challenges causing economic slowdown, such as the aging labor force and declining fiscal revenue.
Retaining talent a key concern
October 30th, 2015
An applicant talks to hiring staff at a job fair
Employers in China are the most worried about retaining talent among major global economies while the employees are the most concerned about salaries and health, a Metlife report has said.
The U.S.-based life insurance company said that 47 percent of employers in China are worried that talent shortages will affect their business in the next 12 months, and 71 percent said that retaining existing talent is difficult, the highest among 11 countries and regions where the survey is conducted.
The study found that while raising salaries remain the most effective way in retaining talent in China, 58 percent employees said they will stay with their company if an improved benefits package is offered.
Medical-related benefits are the most sought after benefits, followed by life insurance and retirement plans even if employees have to pay the full costs, it said.
"Globally, we are seeing employers increasingly challenged to find innovative ways to attract, retain and engage talent, and China is no exception," said Maria Morris, executive vice president, Global Employee Benefits, MetLife. "We found Chinese employees are more concerned about healthcare than many mature markets such as the U.S., and we expect fast growth of group insurance market in China throughout the healthcare, life insurance, and pension sectors."
Compared with the U.K. and Russia, Chinese employees are less obsessed with cash incentives, Morris added.
It is the first time Metlife include the Chinese market into its global Employee Benefit Trends Study as the insurer noticed huge potential of employment benefit market driven by domestic and multinational companies demands to retain talent.
The China survey covers nearly 393 employers and 367 full-time employees.
Manufacturing still backbone of the economy
October 29th, 2015Nothing demonstrates the striking power shift between China and the United Kingdom more than the planned investment by China into a high-speed railway and nuclear power station in the UK, deals clinched during President Xi Jinping's recent state visit.
While the UK's industrial advantages have declined, China's have grown. Branded the "world's factory", China is the only country that boasts all the industrial categories as classified by the United Nations. Aside from advantages in traditional labor-intensive manufacturing and consumer goods, China has also gained an upper hand in equipment manufacturing, in which its output now accounts for one-third of the world's total, 2.5 times that of Germany, which ranks second. All this has laid a solid foundation for China's ascension to become the world's second-largest economy.
However, there are also pressures threatening China's role as "world's workshop". Such pressures are not just from pure economic factors such as soaring labor costs, but also from the fact that the market value of domestic electronics giants with numerous patents and annual profits of billions of yuan is lower than that of some loss-suffering enterprises whose market value is only based on speculative concepts.
Such concerns are aggravated by the fact that a number of domestic manufactures have shifted their business to real estate and capital operations and there is declining enthusiasm among university students to study science and technology majors.
However, manufacturing is the country's economic backbone and more importance should be paid to consolidating it as the foundation of the domestic manufacturing sector.
It should be noted that a big country's sustainable economic development can only be built on industrialization, because the modern service sector, which provides the majority of people with decent incomes and employment opportunities, is also built on the foundation of modern manufacturing. This is true not only for developing countries but also developed countries and economies.
If China's aim in the past was how to economically catch up with and surpass developed countries, then its current aim should be how to prevent itself from being overtaken.
Is China's manufacturing sector able and determined to pursue further development and prevent itself from being overtaken by its counterparts in the rest of the world? The answer is yes. A series of emerging trends, from intensified efforts to try new business models and open new markets by some domestic manufacturers to the exploration of the "Internet plus" model, show the foresight and adaptability of domestic producers.
In 2014 alone, a total of 53,140 scientific and technological fruits were registered in China and applications were filed for more than 1.3 million patents. Meanwhile, China's R&D input was 2.09 percent of its gross domestic product that year. The proportion was even higher among such manufacturing giants as TCL.
What China now lacks is not excellent and hardworking technicians and scientists, nor entrepreneurs with a strong market vision and the courage to withstand pressure, nor enthusiastic investors and capital. What it lacks is equitable evaluation of its manufacturers and positive incentives.
It is hoped that the 13th Five-Year Plan (2016-20) can give the domestic manufacturing sector a deserved status and the capital market reasonably evaluates enterprises.
The author, Mei Xinyu, is a researcher at the Ministry of Commerce's International Trade and Economic Cooperation Institute.
Tech, Internet, logistics firms bask in limelight
October 28th, 2015Benchmark ends higher after volatile swings on bourses
Stock prices posted marginal gains on Tuesday as a rally in the technology, Internet and logistics sectors kept the buying interest active.
The benchmark Shanghai Composite Index opened 0.6 percent lower in the morning at 3,409.14 points amid selling pressure after Monday's gains, but made an about-turn in the afternoon and closed 0.14 percent higher at 3,434.34 points.
The Shenzhen Component Index opened 0.6 percent lower at 11,588.94 points, started to gain before noon and closed at 11,758.41 points, a 0.6 percent gain.
The diverse outlooks among investors for the long-term performance of various sectors clouded market sentiment, analysts said.
On the positive side, the benefits of the central bank's rate cuts and removal of caps on interest rates have been gradually profiting the stock market and the real economy alike, according to a research note by Shanghai-based Haitong Securities Co.
However, sluggish growth has narrowed profit margins for many sectors and lower-than-expected data have become a matter of concern, especially after economic growth slipped to its lowest level since 2009 in the third quarter.
"Recent events have tended to illustrate the scale of the task confronting the authorities in managing the policy trade-offs involved in structural rebalancing," said Jenny Shi, managing director and country manager for China at global credit ratings agency Moody's Investors Service.
China needs to engineer economic restructuring, policy reform, market liberalization, and slower credit uptake with the aim of shifting economic growth drivers away from State-led investment, without sacrificing short-term macroeconomic stability, which is a re-balancing challenge, according to Moody's.
More than 500 companies listed in Shanghai and Shenzhen had released their third-quarter results or result forecasts by Tuesday, among which more than half reported gains, according to data from China Galaxy Securities.
Firms in the retail and textile sectors reported positive cash flows, showing signs of recovery in the third quarter after a tough period, said a report in the Securities Times.
Most of the other Asian bourses dropped slightly on Tuesday. Japan's Nikkei 225 lost 0.9 percent, closing at 18,777.04 points while South Korea's KOSPI dropped 0.17 percent, closing at 2,044.65 points.
Alibaba's Q2 results likely to dim outlook for mainland consumers
October 27th, 2015Chinese e-commerce giant Alibaba Group Holding's second-quarter revenue growth is likely to have slumped to half the year-earlier rate, undermining hopes consumer spending will temper a slowdown in the world's second-biggest economy.
China is hoping that private consumption will pick up the slack as exports fall and it tries to rebalance the economy - now heading for its slowest full-year growth in 25 years - away from a reliance on trade and government spending.
But Alibaba's second-quarter results due on Tuesday are expected to cloud the increasingly grim outlook for consumer spending, which accounted for 60 percent of China's economic growth in the first half of 2015.
"Much focus will be paid to the deceleration in volume growth Alibaba guided to mid-quarter. Investors will be looking to see if Alibaba can improve take rates to make up for this slowdown," Wedbush Securities analyst Gil Luria said.
Lackluster data from the firm behind China's biggest and most successful e-commerce platforms could provide fresh fodder for bears predicting China is heading for a much harder economic landing than the official figures would suggest.
Having warned in September of slower-than-expected sales, Alibaba's revenue in the three months through September is expected to be 21.3 billion yuan ($3.35 billion), according to Thomson Reuters data analyzing forecasts from 28 analysts.
That would represent an increase of 26.7 percent from the same quarter last year, when year-on-year growth was a sizzling 53.7 percent.
In the April - June quarter, revenue and gross merchandise volume - the total value of goods transacted across Alibaba's platforms - both eased to their slowest rates in more than three years.
To be sure, government data shows retail sales have continued to grow above 10 percent so far this year, even as GDP growth has slowed to 6.9 percent in the third quarter.
But a China consumer confidence index produced by ANZ Bank and polling company Roy Morgan fell to a record low in August, and research firm Gartner said smartphone sales recorded their first fall in the Chinese mainland in the second quarter.
China's rate cut to promote growth
October 26th, 2015
Workers are busy at a manufacture base of Dongbei Special Steel Group Co., Ltd. in Dalian, northeast China's Liaoning Province, Oct. 13, 2015.
China's central bank on Friday cut interest rates and lowered the reserve requirement ratio (RRR) to promote growth and interest rate liberalization.
The People's Bank of China (PBOC) cut its benchmark one-year lending and deposit rates by 25 basis points each to 4.35 percent and 1.5 percent, from October 24. The bank also cut the RRR for all financial institutions by 50 basis points.
This is the fifth RRR reduction and the sixth round of interest cuts in the last year.
LIQUIDITY INJECTION
Any rate cut's direct impact on growth tends to be limited, but it reduces the interest rate burden for corporates and local governments and reduces financial risk, said a J.P. Morgan report sent to Xinhua.
"The monetary easing is supplemented by additional fiscal policy adjustment to mitigate the funding constraint faced by local governments. Local government debt swap program was expanded to 3.2 trillion yuan in 2015, and policy banks issued 300 billion yuan special financial bond to support infrastructure investment," according to J.P. Morgan
"As the real economy faces tough challenges, the cuts in interest rates and RRR are building a sound monetary environment for stable growth," said Zeng Gang, researcher at the Chinese Academy of Social Sciences.
The move is meaningful for enterprises as they will reduce financing costs and improve operating conditions, Zeng said.
Wang Tao, a UBS economist, expects the PBOC to cut rates one more time this year, and again in early 2016 to bring the one-year deposit rate to 1 percent and the lending rate to 3.85 percent.
"This would push the real deposit rate into negative territory, as often happened in the past, which could encourage consumption, support asset prices and anchor inflation expectations," said Wang.
INTEREST RATE LIBERALIZATION
As a step towards full interest rate liberalization, the central bank also announced on Friday removal of the 50 percent upper-bound for deposit rates, in principle leaving banks free to set their own deposit rates.
The removal of the deposit rate ceiling completes interest rate liberalization, though it will take longer for rates to be fully determined by market, said Wang.
To that end, Wang suggests breaking implicit credit guarantees, reforms of SOEs and financial sectors, and a more price-based monetary policy.
HELPING INTERNATIONALIZATION OF RMB?
The rate move came after deputy PBOC governor Yi Gang's remarks at the IMF annual talks in Lima last week that China hopes the RMB will be included in the special drawing rights (SDR) basket later this year.
The PBOC issued its first offshore RMB note in London on Wednesday,worth 5 billion yuan at a rate of 3.1 percent, due in 2016. It has also extended an agreement on a reciprocal currency swap scheme with the Bank of England.
The PBOC opened the onshore inter-bank FX market to foreign central banks, sovereign wealth funds and multilateral financial institutions on Sept. 30. Paul Mackel, head of EM FX strategy at HSBC, described the PBOC activity as addressing "some" of the IMF's initial considerations for the next SDR review.
"There have also been several other announcements that are not directly targeted at the upcoming SDR review, but are nevertheless supportive of the RMB playing a more important global role over the medium term, be it in asset management, the invoicing of goods and services trade, FX trading, or as a funding currency," Mackel said in a report.
Earlier this month, the first phase of the China international payment system was launched in Shanghai. Also on Oct. 8, the central bank announced that China's official statistics will conform to special data dissemination standards (SDDS), an IMF statistical system to improve transparency.
On October 6, SWIFT said that the RMB overtook the Japanese yen in August to become the world's fourth most important payment currency.
The SDR is currently made up of the dollar, euro, Japanese yen and the British pound. The yuan failed to be included in 2010 when the IMF said the currency did not meet the "freely usable" criteria.
Rush for jobs fuels Disney dreams
October 23rd, 2015
A prospective candidate facing the interview board in Shanghai on Wednesday. The Shanghai Disney Resort, expected to open early next year, is set to create more new job opportunities in the city.
Though it took 25-year-old Ling Zhiqiang a full day to travel from Yunnan province to catch the first round of job fairs held by the Shanghai Disney Resort on Tuesday, he does not regret it as he believes it is a life-changing opportunity.
Ling quit his job as a transportation worker in a hotel in a small town in Yunnan and opened an online shop to sell clothes a year ago. But, when he spotted the Shanghai Disney recruitment advertisement, he considered it an opportunity to fulfil his dream of working for a global company.
"Shanghai Disney is a promising work place that will help me gain knowledge and experience from a long-term perspective," said Ling.
Ling was excited to learn during the interview that the company allows everyone to try working in different positions at the resort and choose what they are good at later.
The job fair attracted hundreds of applicants such as Ling from all over the country for 30 positions.
The four-day event is the first recruitment fair organized by the Shanghai Disney Resort to kick off the preparations for its opening early next year.
"We look forward to hiring and training great local talent who will deliver warm hospitality and renowned guest service to help our guests make memories that last a lifetime," said Philippe Gas, general manager of Shanghai Disney.
To get ready for an expected high number of tourists after the opening, the resort will recruit a large number of staff for each sector of the resort, such as ride operations, guest services, custodial and cleaning, retail operations, food and beverage operations, engineering and maintenance, security, and hotel operations.
After the one-hour interview, Ling was lucky to receive a confirmed offer as he applied for a position that does not require him to speak English.
"My goal is to become the head of transportation at the resort within three years," said Ling.
For certain job positions such as entertainment host, guest service and park greeter, English is an essential skill for applicants.
Zhang Liangguang, an applicant who applied to be an entertainment host, said: "I thought I applied for the position that required the least related working experience, but I still failed to pass the interview as my spoken English was not up to the mark."
Although Shanghai Disney Resort claimed that the first two days of the job fair were open only for pre-registered candidates and the other two for the general public, the online registration platform has been jammed and the four-day job fair has been fully reserved by online applicants. Those not registered online are have been asked not to come by since the interview vacancies for the first round are filled.
A series of job fairs will take place in the city in the following months, aiming to attract talent with experience in the tourism and service industry.
Shanghai Disney currently employs more than 1,500 local staff members working on the development and operation of the resort. It will have six themed areas, including Mickey Avenue and Tomorrowland.
China's economic downturn 'vastly overstated': report
October 22nd, 2015China's recent economic downturn is less a sign of catastrophe than of the long-awaited shift to a market economy model that is service-based and consumption-driven, a new report from international think tank European Council on Foreign Relations (ECFR) said.
"Doom-mongering predictions about the decline of the Chinese economy are vastly overstated," Francois Godement, head of ECFR's Asia and China program, said in his report "China's economic downturn: The facts behind the myth".
"After years in which China's economic hyper-growth was taken for granted, there has been a dramatic reversal of international sentiment. The Chinese economy is now widely believed to be faltering. This is an exaggeration," Godement said.
Godement asserted that recent economic issues in China should be seen as part of China's transition to a service-driven economy, rather than a deep-rooted economic downturn.
The report highlights variances between different economic sectors within China, where the service sector continues to expand strongly -- particularly in e-commerce, with web retail sales growing 36 percent in the first three quarters of 2015.
Meanwhile, declines in sectors such as steel and housing are desirable due to overproduction, and their environmental impact, the report said.
Godement said these patterns reflected China's economic structural changes.
Godement also asserted that ideas of China's impact on the global economy were exaggerated, claiming that these ideas were essentially "psychological."
He cited limited non-Chinese exposure to the Chinese stock market and its positive current account and trade balances as factors limiting any real contagion to the global economy.
Nevertheless, he highlighted some possible effects of China's economic changes on parts of the world economy, which do impact Europe.
Worst hit by the transition will be big exporters to China, including commodity providers like Brazil and Venezuela.
For consumer markets such as Europe, which are neither producers of primary material nor large exporters to China, the benefits from a Chinese slowdown are twofold: the downward trend in primary material prices benefits all importers; and the reduced price of Chinese exports is a boon to living standards, the report said.
However, for various European countries, the impacts of China's economic transition would be mixed.
For Eastern Europe, it would be mostly positive, due to lower primary prices and cheaper consumer products from China.
The effects for Germany may turn out to be negative as the country relies on China as an export market.
As for southern European economies, including France, the price deflation may well increase their relative debt burden.
"There will be losses but they will, in the main, be limited in scope, although exporters to China or those with high public or private debt levels may feel the effects very sharply indeed," Godement said.
Instead of a crisis, the expert said China's economic transition would be an "opportunity" for European counties.
The expert said some more liberal economies -- chiefly, Britain and Sweden -- and Eastern European economies were right to seek China as a main funder of infrastructure projects, albeit with Chinese suppliers.
"The terms for long-term financing have never been so good; China's supply prices, thanks to deflation and excess capacities, are becoming almost unbeatable; and the quality gap with Western supply has decreased in all but the very top technologies," the report said.
The report also said the turn in China's economy towards services and the changing trends in consumption would facilitate investment or free-trade negotiations between China and the European Union.
"A deal whereby Europe would participate more in China's new economy while opening itself to the older Chinese sectors seems like a win-win proposition," the expert advised.
Baidu halts recruitment drive following IT industry downsize
October 21st, 2015(Ecns) -- Baidu, one of China's three leading Internet giants, is tuning its recruiting strategy to focus on top talents.
The company confirmed the adjustment to China News Service, including a halt on team expansion.
Baidu's recruiting head Liu Hui revealed in an email that they've closed the window for job applications, excluding already announced positions.
Meanwhile, campus recruitment will continue as scheduled. Its CEO Li Yanhong will appear at a career talk at Fudan University in Shanghai next week.
Except for Baidu, Alibaba Group, led by Jack Ma, has also announced it would cut down on new employees in 2016 from a planned 3000 to 400, triggering speculation of an industrial slump, according to tech.qq.com.
In response, Baidu explains that the move is "in line with its consistent pursuit for efficiency," and that it will take the lead with a "smaller but excellent" team.
Founded in 2000, Baidu has been gaining momentum over the past 15 years with more than 50,000 current employees.
Sep property investment growth slows to six-year low, figures from NBS indicate
October 20th, 2015Growth in China's real estate investment over the first nine months of the year cooled to its slowest rate since the global financial crisis, although sales improved, underlining a mixed recovery in one of the most critical sectors of the economy.
Property investment, a main driver of the economy, grew 2.6 percent in the first nine months of 2015 from a year earlier, marking the slowest rate since the January-February period of 2009, data from the National Bureau of Statistics (NBS) showed on Monday.
"The fact that real estate investment is weak will hinder fourth-quarter economic recovery," said Oliver Barron, a researcher at NSBO in Beijing.
While home sales and prices have improved in bigger Chinese cities over recent months after a barrage of government support measures, conditions remain weak in smaller cities and a huge overhang of unsold homes is discouraging new investment and construction.
New construction fell 12.6 percent during the January-September period from a year earlier though it slowed from a 16.8 percent annual drop in the first eight months, the NBS data showed.
Reflecting the sharp drop in housing starts, sales of earth excavating machines in China fell 35 percent in September from a year earlier, the China Construction Machinery Association said.
The property malaise has weighed on the Chinese economy, which is expected to post its slowest growth in 25 years this year.
Still, the recent rebound in home sales could suggest the housing market is at least bottoming out.
The floor area of property sold grew 7.5 percent during the January-September period, up from a 7.2 percent increase in January to August, according to the NBS data.
Regulators cut down payment requirements again late September for first-time home buyers as they look to reduce the property market's drag on the broader economy.
China's average new home prices rose 0.3 percent in August from July, the fourth straight month of gains, though they were still down 2.3 percent from a year earlier, according to official data out in September.
Chinese public companies expect rising 3Q profits
October 19th, 2015More than half of China's listed companies have published preliminary financial results for the first nine months of the year, with the majority of them expecting better profits.
So far, 1,702 of China's 2,800 companies listed in Shanghai and Shenzhen have announced preliminary financial estimates for the Jan-Sept. period. More than 58 percent said their profits increased in the last nine months.
Among the top ten gainers, seven were in the manufacturing sector, according to market information provider Eastmoney.
Companies in the steel, electric equipment, agriculture, entertainment and chemical sectors recorded the best performance, with profits rising 332 percent, 256 percent, 96 percent, 79 percent and 50 percent, respectively.
Weapons, construction material, real estate, and mechanical equipment companies suffered the heaviest blows in the third quarter, with profits falling 183 percent, 25 percent, 24 percent and 22 percent, respectively.
According to Wang Delun, an analyst with China's third largest brokerage, Guotai Jun'an Securities, many heavyweight companies have yet to release their financial results.
UCAR cooperates with Edaijia in domestic car-hailing sector
October 16th, 2015Firms will pool drivers to cope with intensifying competition
China's leading car-hailing firm UCAR Technology Inc announced Thursday an agreement involving strategic cooperation with online car-hailing app Edaijia, in a joint effort to provide customers with high-quality services.
The companies will jointly promote the brand in the domestic market and seek cooperation in terms of capital, according to the press release sent by UCAR to the Global Times on Thursday.
UCAR and Edaijia will pool driver resources, the release said, and a premium driver training project will be launched.
"The cooperation will help the two companies to complement one another with the aim of creating the best mobile traveling service platform," Lu Zhengyao, president of UCAR, said Thursday at a briefing in Beijing.
Yang Jiajun, CEO of Edaijia, noted Thursday at the same briefing that Edaijia focuses on the safety of its riders and will continue to offer them good services to expand its market share.
Edaijia, which specializes in offering online designated driver services, has been focusing on the sector for four years. These services are usually aimed at people who avoid driving their own cars after a night out drinking.
Media reports said the agreement was reached because UCAR didn't have enough drivers to meet demand, while Edaijia had an ample pool of drivers. Experts said that the agreement would meet each company's needs and allow them to battle rivals jointly.
The services provided by Edaijia will be available in 298 cities nationwide with more than 200,000 registered drivers, according to Yang.
UCAR faces fierce competition from numerous rivals such as US-based car-hiring firm Uber Technologies Inc and Didi Kuaidi, backed by domestic Internet giants Alibaba Group Holding and Tencent Holdings.
In the second quarter, UCAR was the third-largest Internet car-hailing firm in the Chinese mainland with 466,520 active users of its car-hailing platform, after Didi Kuaidi with 3.59 million and Uber with 649,640, Analysys International said in a report in August.
Cooperation among car-hailing companies will become more common as competition intensifies, Zhang Shuang, deputy manager of the Internet research center of Beijing-based research firm CCID Consulting, told the Global Times on Thursday.
"Such cooperation will soon change the competitive situation in the industry," Zhang forecast.
Edaijia has encountered intensified competition from Didi Kuaidi, which launched designated driver services on July 28.
Edaijia aims to lower its operating costs and win more market share in this sector through sharing the platform with UCAR, Zhang said.
Unlike Uber and Didi Kuaidi's customer-to-customer model (C2C), which connects private car owners with riders, UCAR uses a business-to-customer (B2C) model under which it serves riders with its own drivers and cars, which are primarily from its main shareholder Car Inc.
"UCAR created a new way for the government to manage the car-hailing sector as the company has stricter rules to manage its drivers and is able to make good use of resources," Hu Dan, senior consulting manager at consultancy iResearch Consulting Group, told the Global Times on Thursday.
The cooperation agreement will play a vital role in making the sector more normal, Hu said.
Zhang said that given the market situation in China, UCAR's B2C model will lead to a more sound business environment than Didi Kuaidi's C2C model.
UCAR, which got listed on the Hong Kong stock market in fall 2014, secured $550 million in a second round of financing in September, after which UCAR was valued at $3.6 billion, a statement released in September by CAR Inc showed. And in the first round, which closed in early July, the company raised about $250 million, according to media reports.
Service industry helps with economic growth
October 15th, 2015
A customer shops at a supermarket in Huaibei, Anhui province, on Oct 13, 2015.
Producer Price Index decline 'may facilitate restructuring process'
Inflation edged down for consumers in September and producer prices continued to contract, suggesting that the rate of economic growth may lose steam in the third quarter as demand remains weak.
But an hopeful scenario could be seen in the service sector, where prices are rising rapidly. A boom in services can prevent a hard landing by the world's largest emerging economy, economists say.
The Consumer Price Index, a main gauge of inflation, moderated to 1.6 percent year-on-year in September, down from 2 percent in August, the National Bureau of Statistics reported on Tuesday.
In the first three quarters, consumer prices were 1.4 percent higher than a year earlier, lower than the government target of 3 percent and below the 2.2 percent reading for the same period last year.
"The low inflation level can reflect economic weakness," said Chang Jian, an economist at Barclay's Capital in China.
Meanwhile, factory gate prices, as measured by the Producer Price Index, declined by 5.9 percent in September from a year earlier, extending its streak of negative readings to 43 months, compared with a 5.9 percent drop in August and a 5.4 percent fall in July, the statistics bureau said.
In the first nine months, PPI declined by 5 percent year-on-year.
According to Li Jing, an economist at HSBC Bank, "Prolonged weak inflation will not only weigh on firms' profits and add to their debt burdens but also lead to poor market expectations regarding incomes and prices."
The bank predicted more decisive policy easing in the coming months to counter the potential deflation risks.
However, some economists have seen positive signals in the expansion of the service sector.
Data from the NBS showed that service prices rose 2.1 percent in September from a year earlier the strength of domestic tourism, box office receipts and restaurant spending, among other things.
A research note from Goldman Sachs said booming service prices, together with the easing of industrial product prices, suggests that policymakers are successfully transferring the economic growth pattern away from investment and toward consumption.
It is also a wise choice to stop the country from entering the so-called middle income trap, the research said.
Lian Ping, chief economist at the Bank of Communications, said the PPI may continue to decline for the rest of this year, which may help reduce the backward production capacity while facilitating the restructuring process.
China's producer prices fall for 43rd month
October 14th, 2015China's producer prices continue to fall in September, signalling prolonged weakness in aggregate demand, data from the National Bureau of Statistics showed on Wednesday.
The producer price index, a measure of costs for goods at the factory gate, fell 5.9 percent year on year, unchanged from the rate seen a month earlier.
The reading also marked the 43th straight month of decline.
Minsheng Securities reckons the index will stay in negative territory in the foreseeable future as China still has a long way ahead to digest its over-capacity in upstream industries.
In addition, the country's ongoing economic restructuring means a trending slowness in demand for traditional industrial goods, which will restrain prices.
Month on month, producer prices in September edged down 0.4 percent.
Output prices of production materials fell 7.7 percent in September, contributing 5.8 percentage points of the PPI drop during the month, while those of consumer goods edged down 0.3 percent during the period.
The data came along with the release of the consumer price inflation index, which edged up to 1.6 percent in September, slightly below the market forecast of 1.8 percent and 2-percent rise in August.
The downcast PPI and slowing CPI highlighted deflation pressure for China, Minsheng said, projecting a high possibility of further cuts in interest rates and the bank reserve requirement ratio in the fourth quarter.
China is battling a property downturn, industrial overcapacity, sluggish demand and weak exports, which dragged growth down to 7 percent for the first half of the year. Growth data for the third quarter is due next week.
IMAX targeting wealthy Chinese
October 13th, 2015IMAX is looking to target high net-worth individuals in China and real estate developers in the country with its new $400,000 home theater system, according to a company executive.
Robert Lister, chief business development officer for IMAX Corp, told China Daily that the company is looking to target three segments of the market: wealthy individuals, high-end real estate developers, and home designers that individuals consult when they furnish their homes.
"Before we even launched the product, a lot of the market research we did were on things like Bentleys and Ferraris - things that are the very, very high-end of luxury goods and there seems to be a great appetite for that in China as more capital flows to the middle class and the upper class," he said. The product has only been available since June, and Lister said the company is optimistic about sales. "We do have a lot of confidence," he said.
IMAX China, a subsidiary of IMAX that focuses on China, listed on the Hong Kong Stock exchange last week. It teamed up with TCL Multimedia Technology Holdings Ltd to manufacture the 20-feet-by-10-feet screens that will play IMAX movies at the same time they are available for release in theaters. Homeowners will pay a fee for movies, a figure that IMAX is negotiating with various studios, according to Lister.
The company unveiled the luxury home-entertainment system at Le Royal Méridien Shanghai for customers in the summer. The system features sound isolation, acoustics, wall treatments and audio-visual content from IMAX.
"Our strategic partnership with TCL, one of the world's leading entertainment technology manufacturers, strengthens both companies' positioning in China, with its rising demand for premium entertainment, and creates an ideal launch-pad for global expansion in the home entertainment sector," said Lister at the time of the product launch.
Eric Wold, an analyst with B. Riley & Co who follows IMAX, said that the home-theater system's price point means that IMAX doesn't need a huge number of sales to make the venture economically viable.
"It's not as much of a gamble as it would be. They've spent 20-30 years developing the technology, so to partner with TCL and launch a smaller system, it's expensive but you don't need a lot of sales to make it work," he said. "The people that can afford this are not the people who go down to your local multiplex on a Saturday night and sit next to the riff raff and pay $12. They're happy to sit in their homes. There's a market for it."
The Chinese box office is the second-largest in the world, earning $4.8 billion in 2014, a 34 percent increase over the previous year. China is ranked right behind the US, which took home $10.4 billion last year, a 5 percent decrease from the year prior. Many analysts predict that China's box office will overtake the US' by the end of the decade.
IMAX has 251 screens in China, and is planning to build 217 more. IMAX announced on Oct 8 that it reached a deal with Chinese company Omnijoi Cinemas to open an additional 15 IMAX theater systems in China. Its box office revenue was $183 million last year
IMAX China made its Hong Kong Stock Exchange debut on Wednesday, becoming the first Hollywood company to list shares in Hong Kong and raising $248 million to do so. It priced its shares at 31 Hong Kong dollars ($4), and closed at 34.25 Hong Kong dollars on opening day, about a 10 percent increase. Shares were 36.5 Hong Kong dollars at market close on Oct 9.
"Going public has been part of our long-term China strategy, and we believe the introduction of local Chinese investors into the business will further solidify our position in the Chinese market," CEO Gelfond said on opening day.
Wold said that the company is clearly aiming for the Chinese market, where a third of its business now exists, adding that there will be a continuation of growth trends within the movie industry and increasing demands from customers who will pay to watch films.
"IMAX China's stock's up 18 percent in the two days since it became public, so clearly the valuation has gone higher already," he said. "They haven't seen a degradation in demand, they haven't seen a degradation in box office numbers per screen. It's held up. That bolsters optimism."
Opportunity knocks for EU and China over next five years
October 12th, 2015This month, President Xi Jinping has two priorities on his schedule, one at home and one overseas.
First at home, he will join China's other top decision-makers in a plenary session of the Central Committee of the Communist Party of China, which is expected to roll out a draft of the development program for 2016 to 2020. This, it is believed, will mainly aim to give a final push so China's per capita income doubles from its 2010 level by 2020.
And abroad, after his September state visit to the United States, Xi is due pay a visit to the United Kingdom, during which he is likely to further explain to the world how China intends to play its due role as global stakeholder.
Xi will also likely outline the opportunities China's new five-year plan offers the UK, Europe and the rest of the world.
With China deepening its efforts to restructure its economy, the Europe Union and China are becoming increasingly interlinked in trade, investment and people flows, due to their natural complementary as a result of their differing development stages.
In fact, this may produce a second wave of growth after the first wave brought about by China's accession to the World Trade Organization in 2001.
In that year, the bilateral trade volume was $76.6 billion. It had soared to $615 billion by the end of 2014.
The coming five years offer a golden opportunity for China and the European Union to solidify the foundations of their bilateral partnership, if both sides demonstrate enough vision and determination to push forward the existing momentum.
That is to say, China's accession to the WTO was the incentive for China and the EU to deepen their trade and economic relationship. Now, Beijing and Brussels have realized the urgency of injecting new momentum into their relations after taking advantage of the WTO dividend for years.
The two sides have decided to speed up their bilateral investment talks and will try to finalize the text for negotiations by the end this year. They have signed a memorandum of understanding that makes China the first foreign country to join the European Union's 315 billion euro Investment Scheme, and Brussels has shown its intention to get a piece of the pie that China's Belt and Road Initiative is creating. An EU-China fund may also be in the works.
More importantly, many European Union countries have become founding members of the Beijing-led Asian Infrastructure Investment Bank, despite Washington's disapproval.
To sum up, on top of their already active economic and trade activities, a bilateral investment pact, a joint government-led fund and a new international financial institute are set to be three crucial important institutional arrangements between China and the EU in the coming five years.
The bilateral investment pact and a joint fund to facilitate investment into each other's mega programs still take time to realize. But most likely, the three important arrangements can all be put into operation by 2020.
And Brussels and Beijing can do more.
Both sides should show more ambition and vision and announce their agenda for starting free trade talks soon. China and the EU account for a population of nearly 1.9 billion people and about one-third of the global economy, which are telling statistics showing the potential if the market barriers between them were to be removed.
Europe is still mired in economic difficulties as a result of the global financial crisis, and the euro's fate still hangs in the balance to some degree. China too has been experiencing an economic slowdown.
Therefore, the leaders of both sides should lay solid institutional foundations for achieving common prosperity, they should not risk letting the opportunities of the coming five years slip through their hands. That will be benefit both sides, not only by 2020, but beyond.
Dianping, Meituan form O2O JV as sector becomes more competitive
October 10th, 2015Dianping Holdings and meituan.com, China's two largest online-to-offline (O2O) services providers, on Thursday announced that they have formed a new company that will become "a leading platform in the Chinese O2O sector."
In response to the move, China's top search engine Baidu Inc, the operator of another O2O services provider Baidu Nuomi, said late on Thursday that it will not be challenged by the new firm.
In a joint statement, China's leading group-buying website Meituan and top business review site Dianping said the new company will adopt a co-CEO governance structure, with Meituan CEO Wang Xing and Dianping CEO Zhang Tao becoming the new company's co-CEOs.
The former rivals said that they would retain their respective personnel management structures, brands and independent business operations.
Other details including the name of the new company and financing were not announced.
But the combined company could be worth as much as $20 billion, and it could raise $2 billion to $3 billion in the first round of fundraising, according to media reports.
Media also said the move could pose a serious threat to Baidu Nuomi, run by Baidu, which announced in July that it would invest as much as $3.2 billion in Nuomi over the next three years.
Baidu shrugged off media claims, saying that it was the new company that would be threatened by Baidu Nuomi.
"We believe that this merger is an extreme measure that shows just how seriously Meituan and Dianping view the threat from Baidu Nuomi," Baidu said in a statement e-mailed to the Global Times on Thursday.
Baidu said that the difficulties Meituan and Dianping have had in raising money and the rapid erosion of their respective market positions in the face of Baidu Nuomi's growth drove them to the merger.
Baidu also pointed to its performance in the O2O market as evidence that it will be strong in the face of any competition. It said Baidu Nuomi has been gaining about 2 percentage points a month in market share by gross merchandise volume, while Meituan's market share has been declining.
Liu Xuwei, an analyst with market research firm Analysys International, agreed overall with Baidu's assessment.
"I think the major point behind this cooperation is to raise capital," Liu told the Global Times Thursday, noting the overall capital market is in bad shape.
Liu also noted that Meituan and Dianping are facing strong competition in an increasingly competitive O2O field with major players such as Baidu Nuomi.
But Baidu Nuomi will also face pressure from the Meituan-Dianping venture, he said.
Liu believes Meituan and Dianping's new venture will help them to gain profits, given the two companies' huge market share and the "enormous" market for O2O businesses in China.
Uber, Didi Kuaidi seek lawful status in China
October 9th, 2015Car-hailing service provider Didi Kuaidi and the U.S.-headquartered rival Uber Technologies are to apply for legal status in China as the market, crucial to both, is expected to fill its regulatory gap soon.
Didi Kuaidi, a firm valued at $16 billion and backed by Chinese Internet giants Alibaba Group Holding and Tencent Holdings, said it had received a license to offer privately-registered car bookings in Shanghai, and was seeking permission from other cities.
Uber China also said on Thursday that it was "actively preparing" documents to apply for the car-booking license to meet new regulations governing the sector expected to be announced soon.
Shanghai's initiative to close regulatory grey zones came as China is moving to release its first regulation on ride-hailing services via mobile apps, and could prompt other cities to follow.
According to Uber, the company is opening a subsidiary in the Shanghai Free Trade Zone at the same time, as it plans to invest a total of 6.3 billion yuan ($991.5 million) in the country.
The two car-hailing giants are locked in a turf war in China, investing billions of dollars to lure passengers with steep discounts and subsidies to drivers.
However, as in many countries, regulatory issues remain the major uncertainty for car-on-demand service providers.
Didi Kuaidi is currently the dominant player, as according to data from consulting firm Analysys International, it provides 3 million daily rides covering 80 Chinese cities through private car services for 80 percent of market share.
Fashion brands get makeover in China
October 8th, 2015
Customers check out outfits at the fast fashion chain Topshop's first retail outlet on the Chinese mainland. It opened in Galeries Lafayette's store in Beijing this summer.
French store Galeries Lafayette has come up with a new approach to entice customers with affordable, exclusive labels from the likes of Topshop
Fast fashion chain Topshop's first retail outlet on the Chinese mainland opened in August, with lines of young women eager to see what the British brand had to offer.
But this was not just another store opening in one of the countless malls that have sprung up across urban China during the past decade, it was an indication of the subtle shift in the nation's shopping culture.
The brand chose to make its first foray into the Chinese mainland on the sixth floor of Galeries Lafayette (China) Ltd, a 50-50 joint-venture between French department store veteran Galeries Lafayette and I.T Apparels Ltd.
"The introduction of Topshop here sends a strong message," Paul Burke, chief executive officer of Galeries Lafayette China, said in an exclusive interview with China Daily.
"A message to bring more traffic here for people to see something else, because people are not frightened by the price of Topshop."
The French department store opened in Beijing in September 2013 just as China's department stores?aimed at wealthy and high-spending consumers-started to feel the pinch from the central authorities' anti-extravagance campaign.
Since then, it has been trying to find its place in Beijing's Xidan area, a bustling shopping district traditionally associated with younger consumers with relatively low spending power.
Targeting customers aged between 18 and 35, the store has been left relatively unscathed by the impact of the anti-corruption clampdown.
"The young customers are not really involved with these things and they live on true incomes. Whatever they earn, they can spend some on food, clothing and other things to feel good about themselves," Burke said.
Galeries Lafayette has moved into this market niche to distinguish it from traditional Chinese department stores, which have been in decline this year.
The rising middle class and the government's promotion of consumption stimulated their business, said Burke of his peers in the sector, but as far as Galeries Lafayette is concerned, "we are different".
"We are French, fashion forward, affordable and fun," Burke said. "When we think about business, these four elements are in our thinking all the time."
These four factors are the key elements deciding whether the firm will bring a brand to China. Creating a unique and diversified brand mix is also key to what sets it apart from other department stores in China.
Burke found that Chinese young women prefer to shop freely and have a greater choice of brands. Therefore, Galeries Lafayette's Beijing store was designed with no walls separating the many labels on offer.
"People can experiment with different brands and shop freely in our store without being followed by sales staff," Burke said, pointing to something that clearly sets his firm's retail culture apart from those of its Chinese competitors.
And accompanying the introduction of Topshop's first outlet in China, the department store has introduced other elements, which make it stand out from the crowd.
All Chinese department stores have the same brands, the same level of service and similar cafes, but they do not have the French cafe Angelina, Burke said.
Galeries Lafayette's business model has concession brands, which the company directly buys, as well as its own labels and I.T's products.
The concession model allows it to choose brands that are not already in China or Beijing yet. For example, it can select different lines from Red Valentino, which means customers can buy items that they will not find anywhere else in the country.
This means that Galaries Lafayette can fine-tune the range of merchandise and mix of brands to suit local consumers' tastes. In addition, Galeries Lafayette constantly updates its stores and changes the brands on offer.
"You don't want another five years of a brand which everybody hates," Burke joked.
Galeries Lafayette has also discovered young Chinese designers in Paris and introduced them in Beijing, including Chi Zhang, Fiona Chen and Chictopia. The store cooperates with the Beijing Institute of Fashion Technology and showcases some of its designers' best work.
"If customers like them, they stay," Burke said. About 40 to 50 Chinese designers now work with Galeries Lafayette.
These local designs sell well because they are interesting and exclusive. There is also less chance that customers will experience the embarrassment of finding someone else wearing the same clothes.
And the quality of service on offer is what makes customers shop here instead of going online, Burke said. "The traditional department stores' service level is quite low," he added. "We have to make sure our environment is more interesting."
Galeries Lafayette has introduced a VIP room and personal shoppers who will bring clothes that meet customers' requests.
According to I.T's financial report, Galeries Lafayette's revenue increased about 30 percent in the first quarter of 2015 compared to the same period last year. Detailed financial figures have yet to be released.
But the department store is eager to increase its share of China's retail industry, which has continued to expand during the past five years.
The store is also trying to attract more domestic tourists by working with major agencies, airlines and hotels, as its data show a large number of its customers are from outside Beijing.
Strong awareness of Lafayette labels among Chinese outbound tourists is a massive benefit to its expansion plan in the country, according to Burke. It will seek to cash in on the brand by opening 15 new department stores in China, with two due to be rolled out each year. As yet, the company has not revealed exact locations.
The new stores do not necessarily need to be of the same size as its first one in Xidan. "It could take two or three floors in a shopping mall or do things without food or beverages," Burke added.
Guo Zengli, president of the China Shopping Center Development Association of Mall China, pointed out that Galeries Lafayette stands out among foreign department stores, such as Parkson Group, a division of the Malaysia-based Lion Group, which has performed poorly.
"Having a very different model from Chinese department stores, Galeries Lafayette has the patience to cultivate the market and it will see an increase in its sales as consumers in China become more mature and more diversified," Guo said.
By working with its suppliers rather than only making money by renting out space, Galeries Lafayette has developed a competitive edge.
"To be responsible for the merchandise, pricing and consumers, means that once it gets a feel for the market, it will thrive," Guo said.
Telecom operators not to clear remaining traffic data
September 30th, 2015China's top three major telecom operators will launch rollover data services on Thursday, meaning unused data at the end of the month will no longer just disappear.
The operators will launch the service to all subscribers automatically.
Since May of this year, the three major operators have tested this kind of service within certain businesses and through a traffic data donation service.
In July, China's Department of Telecommunication Development urged telecom operators to launch data rollover plans to all the subscribers.
The authority also urged telecom companies to lower Internet prices and elevate connection speeds.
Yhd.com denies unusual pace of departures after managers quit
September 29th, 2015Fast-growing Chinese e-commerce platform yhd.com said Monday that recent staff departures represented normal employee turnover, domestic news portal 163.com reported Monday.
A large number of middle-level managers or department directors are leaving the company, according to media reports that cited information from several staff who had recently left the company.
Though some employees chose to leave, new talent is joining the team, the company was quoted as saying in the report.
After U.S.-based retailer Wal-Mart Stores Inc took full ownership of yhd.com in July, the company continued to provide its customers with a good shopping experience backed by the capital and supply chain of Wal-Mart, according to media reports.
Wal-Mart initially invested in the Chinese online retail platform in 2011 and gained majority control of the site by raising its stake to 51.3 percent in 2012.
The U.S. retail giant took full ownership of the e-commerce company in July, 10 days after two of its co-founders, former chairman Yu Gang and former CEO Liu Junling, resigned "to pursue their next ventures".
Media reports said that the company's employees felt insecure because the founding partners held no more than 20 percent of the company's equity and the welfare benefits fell short of expectations.
However, what matters more is that the staff see no future for the company after the departures of senior executives, domestic news portal jiemian.com reported on July 27.
This year, employees found it difficult to operate the e-commerce platform due to lack of resources.
Also, the self-operated business model of yhd.com did not develop well, according to jiemian.com.
Wal-Mart has not pointed out a direction for the development of the company, the report said.
The Chinese online retail operator accounted for 1.3 percent of the market in terms of transactions on domestic shopping websites in the second quarter.
Meanwhile, Tmall, a business-to-consumer unit of Alibaba Group Holdings, held about 55.6 percent. And China's second-largest e-commerce company JD.com Inc accounted for 25.2 percent, according to data from Beijing-based iResearch Consulting Group released in September.
China says to promote equity crowdfunding to support start-ups
September 28th, 2015China will promote greater use of equity crowdfunding for start-ups to encourage entrepreneurship in the world's second-largest economy, a cabinet document said on Saturday.
China's leaders have repeatedly said they want to promote more entrepreneurial activity in the State-dominated economy to stimulate employment, a top priority as the economy slows.
While they have pledged strong support for online business, however, they have until now generally refrained from showing enthusiastic support for crowdfunding.
A State Council document posted on the government's website called for expanding equity crowdfunding projects to help small companies raise funds as a "useful complement" to traditional equity financing while underlining the need to protect investors' rights and minimize financial risks.
With most Chinese banks unwilling to fund start-ups, crowdfunding has already seen rapid growth, helped by new platforms set up by e-commerce giants such as JD.com Inc.
Crowdfunding is also being used by large companies as funds from traditional channels dry up. Commercial property developer Dalian Wanda Group said in June that it raised 5 billion yuan ($784 million) from investors online and that it would continue to raise money from the public.
But reports have highlighted some of the risks of the unregulated market. A Beijing court earlier this month ordered a restaurant in the capital to pay a fine of 15,000 yuan for deceiving public investors about its intended use for 700,000 yuan raised online, according to a local media report.
The cabinet document give no details about how to address risks but promised that the government would grant easier market access to start-ups.
It also called for the development of third-party credit rating services and a standardized system for collecting, evaluating and sharing credit information.
China's securities regulator said in August that it would soon begin inspecting online equity financing platforms to address risks from illegal activities in online equity financing platforms.
China could account for half of the developing world's crowdfunding by 2025, or $50 billion, according to a World Bank forecast.
Skyworth to buy stakes in 2 Toshiba units
September 25th, 2015Toshiba Corp said it would sell stakes of 5 percent each in two white goods manufacturing units to China's Skyworth Digital Holdings, a move that comes amid a revamp of its operations in the wake of a $1.3 billion accounting scandal.
The sale is part of broad agreement in which Toshiba will use the Chinese electronics maker and retailer's local distribution network to sell refrigerators, washing machines and vacuum cleaners.
Meanwhile, it will be winding down two China sales units.
Shares in Skyworth Digital jumped 7.5 percent by mid-afternoon.
Meanwhile, the benchmark Hang Seng index was down 0.7 percent.
Toshiba's shares ended down 2.4 percent, in line with the broader Tokyo market.
Terms of the equity stake sales in the two China units were not disclosed by either company.
Following revelations that the Japanese laptops-to-nuclear power conglomerate had overstated income going back to fiscal year 2008 to 2009, the company's Chief Executive Masashi Muromachi said this month he was considering a drastic overhaul of what he said were the company's weaker operations.
Xi calls for safe cyberspace, reassures U.S. business titans
September 24th, 2015
Chinese President Xi Jinping talks with tech executives at 8th U.S.-China Internet Industry Forum in Seattle, Sept 23, 2015.
Seeking better ties with U.S. businesses, especially information technology elites, President Xi Jinping called for more cooperation in trade between the two nations on Wednesday. A few hours later he addressed another closely-watched issue – cybersecurity. [Special coverage]
Xi's busy schedule in Seattle took him to a roundtable discussion with business leaders from both countries, including Alibaba founder Jack Ma, Apple Inc CEO Tim Cook and BerkshireHathaway's Warren Buffett.
The visiting president encouraged more investment and reiterated support for U.S. businesses operating in China, hosted by the Paulson Institute. The event highlighted China's market potential.
"We support large American businesses in setting up regional headquarters or research and development centers in China, and encourage more small- and medium-sized companies to expand their businesses in China. Meanwhile, China will keep increasing its investment in the United States," Xi said citing China's market-friendly policies.
Pushing for more active trade cooperation, Xi said trade is mutually beneficial as the American businesses that operate in China and cooperate with Chinese counterparts have played a positive role in China's development and, by harvesting generous profits at the same time, helped boost the American economy.
A few hours later Boeing Co announced a $38 billion package to sell 300 aircraft to China as Xi toured the airplane manufacturer's plant in Everett, 25 miles (40 km) north of Seattle.
Boeing also revealed plans to build an aircraft finishing center in China, its first outside the United States.
To the east of the U.S. west coastal city, at Microsoft's campus in Redmond, where Xi was welcomed by Microsoft's co-founder Bill Gates and its CEO Satya Nadella, he spoke at the 8th U.S.-China Internet Industry Forum that saw the gathering of several tech executives, including Facebook's Mark Zuckerberg, Amazon's Jeff Bezos and Tencent founder Pony Ma Huateng.
A safe and stable cyberspace is of great significance for world peace and development, Xi said.
Addressing cybersecurity, one of the pressing concerns that is believed to sometimes strain China-U.S. relations, he added that China, besides advocating building a peaceful, safe, open, and cooperative cyberspace, proposes that all nations enact Internet public polices which are in accordance with their particular conditions.
"We are on the same boat," said Lu Wei, China's chief Internet regulator, highlighting the two nations' shared pursuit of safer Internet.
Xi also visited Lincoln High School in Tacoma, south of Seattle, along with wife Peng Liyuan. The sports-loving president received a jersey while watching the school's football team practice.
He will head to Washington on Thursday where he will meet his U.S. counterpart Barack Obama.
Holidays spark shopping spree
September 23rd, 2015Travelers are expected to spend more than $1,560 on average in top cities
Big-spending Chinese tourists are embracing a longer vacation as this year's Mid-Autumn Festival falls close to the National Day holiday in October.
Ctrip, China's leading online travel service provider, said the number of tourists who booked long-distance trips during the National Day holiday increased by 150 percent compared with the same period last year.
"Shopping is still one of the major goals for Chinese outbound tourists. We have many tailored travel groups with shopping as the only activity," said Zhang Shuo, publicity officer with the global shopping platform under Ctrip.
The top overseas destinations for shoppers from the Chinese mainland for the coming two holidays include New York, London, Paris, Singapore, Sydney, Tokyo, Seoul and Hong Kong.
Average consumption in the top 10 favorite overseas destinations is expected to surpass 10,000 yuan ($1,569), while in New York, the number could exceed 21,000 yuan.
"We also noticed some changes this year based on the overseas consumption data of the past nine years," Zhang said. "Barcelona, Spain, is gaining popularity. The growth rate surpassed 71 percent year-on-year."
Hong Kong and South Korea used to be the top choice of Chinese mainland tourists. But political agitation in Hong Kong and a fear of MERS in South Korea means they are losing Chinese mainland consumers to Japan.
"Consumption in Hong Kong and South Korea is bouncing back, but it still takes time to reach the previous level," Zhang said.
About 36 percent of Chinese tourists selected shopping as their purpose for outbound tourism, said the Market Research Report on Chinese Outbound Tourist Consumption by the World Tourism Cities Federation.
Zhang Jinfang, 27, a staff member at a government-funded research institute in Beijing, said she had already planned to visit Japan during the National Day holiday.
"Some friends and relatives asked me to buy something for them. So I planned two days for shopping," Zhang Jinfang said. "Not only are prices more reasonable, the quality of goods in Japan is more trustworthy. Besides, I will have more choices if I travel around and buy local brands."
Chen Songchuan, a lecturer at Beijing University of Civil Engineering and Architecture, said the surge of overseas consumption reflected the gap between Chinese consumers' preferences and Chinese-made products.
"Historically, we had many world-famous luxury goods such as porcelain, silk or tea," Chen said. "However, the lack of high-end made-in-China products is pushing Chinese consumers to overseas markets."
Didi Kuaidi signs deal with Lenovo in drive to target corporate clients
September 22nd, 2015Didi Kuaidi, China's largest car-booking mobile app company, signed a corporate deal with Lenovo Group Ltd on Monday.
The agreement with the world's largest personal computer manufacturer marks a new push into the corporate sector as most of its clients are individual customers.
There is also a family connection to the deal. Didi Kuaidi president Liu Qing is the daughter of Liu Chuanzhi, founder and chairman of Lenovo.
Under the agreement, Lenovo will open a corporate account on Didi Kuaidi's online platform, which will allow employees at the PC maker to use the service. Fares will be billed directly to the corporate account.
"Didi Kuaidi boasts abundant car resources and stable dispatching systems," Dai Jingtong, vice president of Lenovo, said. "Its professional services will help Lenovo reduce cost and boost the efficiency in internal management."
Lenovo's office system will be open to Didi Kuaidi, which will have access to the group's list of employees.
In January, the car-booking company launched a corporate platform. So far, 7,200 companies have set up accounts, but Lenovo is the first client to actually use the mobile app version, Didi Kuaidi said in a statement.
Apple Pay sets up shop in Shanghai FTZ
September 21st, 2015An Apple Pay base has been set up in the Shanghai Free Trade Zone (FTZ), according to the Shanghai FTZ management committee.
The company was registered in the Shanghai FTZ in June, according to literature distributed by the management this week, which included the Apple Pay company among ventures established in the zone.
Apple has been working to introduce its Apple Pay service to China and is reported to be in talks with China's bankcard association China UnionPay to tap into the country's nearly 1 trillion dollar mobile payment market.
Apple did not respond to Xinhua's request for comment.
Apple's payment service uses near field communication (NFC) and its fingerprint recognition technology to allow users to make contactless payment in stores.
China UnionPay has been promoting NFC payment across China by teaming with telecom operators and deploying NFC-enabled POS machines at stores.
Such mobile payment methods, however, remain niche despite UnionPay's promotional campaigns. An alternative payment solution, offered by domestic internet firms Alibaba and Tencent, which lets users scan QR code to complete transactions, is far more popular.
Standard system to be applied to all Guangdong manufacturers
September 18th, 2015Authorities in Guangdong province, a major manufacturing hub in South China, unveiled a plan in provincial capital Guangzhou on Thursday to develop a standard system of high-end equipment manufacturing.
The plan covers the development of systems of equipment for intelligent manufacturing, general aviation, urban rail transit and ocean engineering and shipbuilding, which are listed as strategic emerging industries of Guangdong.
According to Zhang Yanfei, deputy director of the Guangdong Quality and Technology Supervision Administration, the system will be of importance to the healthy development of high-end equipment manufacturing in the near future.
"Guangdong's strong electronic and information industry has laid a solid foundation for development of high-end equipment manufacturing, which will help upgrade the province's industrial structure," said Zhang.
The plan was unveiled during a Pan-Pearl River Delta conference on regional quality cooperation.
Yota joins hands with ZTE in next generation to make China debut
September 16th, 2015
Vladislav Martynov, CEO of Yota Devices,delivers a speech during the signing ceremony of Yota Devices with X&F Technology and ZTESC on September 15, 2015 in Beijing.
Russian dual screen smartphone maker Yota Devices signed cooperation agreements with a domestic supply chain and original design manufacturer (ODM) to further compete in the Chinese market.
Shenzhen ZTE Supply Chain Co Ltd (ZTESC), an associate company of Chinese tech giant ZTE Corporation, and Shenzhen X&F Technology Co Ltd, an ODM that focuses on terminal products in the field of communications, singed the deal.
ZTESC, a company with 26 years' experience of supply chain management, will provide integrated solutions of procurement, manufacture, logistics and distribution to Yota in the domestic market.
Another ZTE associated company - Shanghai based ZTE Health Technology Co Ltd, - will work with Yota to embed their elder care application in the new generation of YotaPhone that will be unveiled in China next year.
"YotaPhone is the lone ranger in the smartphone sector; it brings a brand new and distinctive experience to the Chinese customer. We look forward to the cooperation with Yota Devices and will closely work with the company to launch the next generation of YotaPhone," said He Shiyou, president of ZTE Health Technology Co Ltd.
According to Vladislav Martynov, CEO of Yota Devices, the company has been working to choose its partners as the dual display design of the device required a reliable and mature ODM team possessing an innovative attitude.
"The next generation of Yota Phone will come with a high-end performance and a reasonable price," said Martynov. He told chinadaily.com.cn that features such as larger screen and better camera are some of the functions to be improved in the next generation.
He claimed that the price will be slightly cheaper than the existing YotaPhone 2, which is 4,888 yuan ($799).
"YotaPhone 2, the world's first dual screen smartphone with an always-on e-ink display, made its China debut on May 20 this year at the Embassy of the Russian Federation in Beijing. The product has received many positive users' feedbacks in a very short period," said Andrey Ivanovich Denisov, Russia's ambassador to China.
Denisov said during the debut ceremony that YotaPhone represents a new level of technological cooperation between Russia and China.
In November 2014, Russian president Vladimir Putin presented the Russian-designed and Chinese-manufactured YotaPhone2 to President Xi Jinping as the symbol of cooperation between Russia and China in the field of the consumer electronics.
The phone features a quad-core 2.2 GHz Qualcomm Snapdragon 801 chip, a 5-inch, 1080P AMOLED screen and a 2GB random access memory.
Unlike other standard Android-based phones, flipping the phone over reveals the E-ink display which uses zero power unless it is refreshing to receive new information.
Tencent unit to handle intellectual property cases on online literature
September 15th, 2015Tencent Holdings Ltd is beefing up its efforts at tapping into a boom in online literature, opening a new company in Wuhan, the capital of Hubei province, to deal with any intellectual property issues arising from the sale and use of its original material.
The new firm, set up by Tencent's literature unit China Reading Ltd, will manage the adaptations of popular books into mobile games, TV dramas and movies on behalf of Tencent's best online writers.
The move comes after a book, The Journey of Flower, written by Jiang Chenzhou who is better known as "fresh Guoguo" online, generated 2 billion yuan ($314 million) in commercial revenue after its adaptation into a TV drama become a phenomenal hit in China.
"Our goal is to promote writers in the way we present movie stars," said Zhu Jia, China Reading's vice-president.
"The new company will function as an agent to take care of cooperation deals with publishing houses, movie companies, game developers and music enterprises."
Online original literature is becoming one of the most valuable sources of intellectual property.
Online video site iQiyi.com recently launched its own e-commerce shop selling products such as books and T-shirts.
The Journey of Flower's popularity also helped spawn a mobile game, which has since earned around 200 million yuan in monthly income.
China Reading also owns Shengda Literature, one of China's largest online literature platforms.
It has built up a library of 10 million original books and 4 million online writers, the company said on its official website.
Li You, an official at Wuhan Shared Business Incubator, where the new company will be based, said: "This will attract more online writers and entertainment companies to Wuhan, which will help the city become a copyright trading center for original Web-based books."
There are over 100 game companies and animation enterprises in the incubator.
To attract more Internet companies to the second-tier city, the local government has already said it is rolling out favorable policies such as cheaper office space and tax rebates.
Game startups, meanwhile, are also hopeful that the arrival of China Reading will benefit that market, said He Yunpeng, CEO of games firm Hubei Manzu Game Co Ltd.
"Intellectual property is like mining. A great deal of wealth can be dug out of entertainment, and there are huge commercial opportunities to come out of it," said He.
Tencent joins rush to the silver screen
September 14th, 2015Chinese Internet company Tencent Holdings has expanded its entertainment business by launching a film company, joining its major rivals Alibaba Group Holding and Baidu Inc in the fast-expanding domestic movie market.
Tencent Penguin Pictures was launched in Beijing on Friday. The new firm will focus on film and drama production as well as acting as an agent for entertainment personalities.
Penguin Pictures plans to invest in the production of 10 to 15 movies every year and produce eight Internet dramas, Sun Zhonghuai, vice president of Tencent, told a press conference on Friday.
One of the Internet dramas will be adopted from the popular novel The Adventures of Three Tomb Raiders, and the investment is expected to be 5 million yuan ($784,500) per episode.
Before the launch of Penguin Pictures, Tencent had invested in several movies beginning in 2014, including the blockbuster Monster Hunt.
Monster Hunt, a domestic live-action animation, became the new champion in China's film market with box-office revenue of 2.43 billion yuan, breaking the previous record set by Furious 7.
Tencent's main rivals such as Alibaba, Baidu-backed video site iQiyi and Internet television company Youku Tudou Inc have already launched film divisions.
Alibaba Pictures made its debut in Hollywood this year by investing in the latest episode of blockbuster series Mission Impossible: Rogue Nation.
The film generated box-office revenue of 418 million yuan in five days after hitting Chinese screens on Tuesday.
Analysts said the Internet giants aim to take a stake in the country's booming film industry.
China's box-office revenue exceeded 30 billion yuan as of September 5, hitting a record high and surpassing the figure of 29.64 billion yuan for the whole year of 2014, the Xinhua News Agency reported Saturday, citing data from the State Administration of Press, Publication, Radio, Film and Television.
"China's film industry is expected to grow 30 to 40 percent this year, far outpacing the rate of economic growth, as an increasing number of Chinese people go to the theater more frequently," Chen Shaofeng, deputy dean of the Institute for Cultural Industries at Peking University, told the Global Times Sunday.
The development of online sales channels run by e-commerce giants and group-buying websites has also boosted box-office sales, Fu Yalong, an analyst with entertainment consultancy EntGroup Inc, said in a report published on September 2.
Movie ticket sales through Internet channels accounted for 64 percent of the total ticket sales in China during the summer holidays, according to EntGroup.
Nomura Securities estimated Friday that China is likely to surpass the US to become the world's largest film market by 2017.
"Chinese Internet companies such as Tencent and Alibaba have abundant cash flows and large user bases," said Chen.
He noted that their participation in the film industry will promote the rapid development of the sector.
"Meanwhile, they will bring more competition to conventional film production firms," said the deputy dean.
Airbus steps up efforts to recruit talent in China
September 11th, 2015China is poised to become the world's leading country for passenger air traffic, and the market has already become an important region for global aircraft manufacturers.
Consequently, recruiting talent in China has become crucial for them to make their businesses more sustainable.
Airbus Group, the France-based aircraft manufacturer, and Tsinghua University will launch the 2015 China Summer University event on Monday, as part of Airbus Group's University Partnership Program.
The event is the first organized in China since the program's launch in 2014.
"Closely cooperating with top-tier universities and building up a good partnership will ensure absorbing more and more talent for our industry in the future," Philippe Pezet, Airbus Group China Vice President Human Resources, told the Global Times in an interview earlier in September.
Pezet made the remark ahead of the Beijing Air Show, which will open on Wednesday.
Recruitment
In July, Airbus signed a framework agreement to set up an A330 Completion and Delivery Center in Tianjin with its Chinese partners. The center will cover aircraft completion activities including reception, cabin installation, aircraft painting, engine runs and flight tests.
The plant is expected to create 250 to 300 jobs over the long term.
The jobs are part of the company's expansion in China as Airbus said it has about 1,550 employees in the country, including those in Tianjin, Beijing and Harbin, Northeast China's Heilongjiang Province.
"We have high standards. We want people who can speak English. We would like to have people with leadership capabilities, and we would like to have people with the potential to grow and to evolve," Pezet said.
A few of the positions will be occupied by expatriates because a certain number of expatriates will be needed to train the new Chinese employees, Pezet said. Still, expatriates will make up less than 10 percent of the workers at the facility.
The average turnover rate at Airbus China was 6-7 percent in 2014, or about half the national average.
But Pezet remains unsatisfied with the figure, which is still far higher than Europe's average turnover rate of 2.5 percent. He said a turnover rate of 5 percent "would be better."
"We are not recruiting people to hold one position for only a few years. We invest in somebody. We will do our best to develop people, to train, to grow. In terms of selection, we are very cautious and very demanding," Pezet said.
In the next two decades, the average annual growth rate for the domestic Chinese market will be 7.1 percent, though it will grow even faster over the next decade at 8.3 percent on average per year, according to a report released by Airbus in December.
The report also said domestic air traffic in China will become the world's highest within a decade.
Mobility
Working for a multinational company means more opportunities to advance, and it is an important measure to keep the talent in the company.
Airbus usually first offers these opportunities to employees who have worked at the company for at least five years.
The overall goal is for 10 percent of the staff to change jobs every year. That could mean simply changing positions within a division or changing divisions within the group, or even changing the country where they work.
"We started at 1 percent, and last year, we did 6 percent. Our objective for 2015 in China is 8 percent," Pezet said.
However, he said there are lots of obstacles to mobility in China, and accepting geographical mobility is a challenge here. Hukou can be one of constraints on mobility, which is something very specific to China. Europe doesn't have the same constraints.
Challenges
Several years ago, multinationals were seen as desirable places for employees. Nowadays, things are different, as State-owned companies are getting more competitive, and those companies are also in the process of instituting a global management style and offering more and more international positions, which pose a challenge for multinationals in terms of recruitment.
"We face some departures, resignations from people who are willing to move to State-owned companies, so it's complicated and more challenging for us," Pezet said, though he remains confident the company can attract more people.
Still, Pezet worries that very experienced talent is still in short supply in China, as the country's aerospace industry employment market is less mature than that in Europe.
"It's kind of a war for getting experienced people due to the pressure and tension on the job market," Pezet told the Global Times.
Motor sports tourism complex planned
September 10th, 2015The Jaguar Enthusiasts' Club, the world's largest Jaguar automobile association, joined hands with a real estate company on Wednesday on the sidelines of the ongoing Annual Meeting of the New Champions?also known as Summer Davos?in Dalian, Liaoning province.
"They will cooperate in the construction and operation of a 2.4-kilometer-long Formula 3 racetrack in the Dalian Huangyuankou Economic Zone," said Shi Mingqiang, deputy director of the zone's administration committee.
It will be the first Chinese project of the Jaguar club, which operates in more than 84 national and international regions.
"As a top global motor club, the JEC has the capacity to make the track a big success," he said.
About $450 million will be invested for initial construction. Around the racetrack, there will be recreational and commercial facilities, such as a training school for car racing, a luxury seaside hotel, a theme park on motor sports and a shopping center.
"This will be the first high-end sports tourism complex in Dalian," Shi said.
It was one of 13 project agreements Dalian's government bodies and enterprises signed on Wednesday. Total investment reached $8.14 billion, of which $3.4 billion is foreign capital.
Maflow Components (Dalian) Co, a member of Boryszew Group of Poland, announced it will invest $8 million to expand its manufacturing capacity in the Dalian Free Trade Zone.
"Now, we have invested nearly $40 million in the Dalian factory," said Wojciech Szymczyk, the plant manager.
The company provides pipes for air conditioners and other components for big automakers, including BMW and Volvo.
"The Chinese automotive market is huge and will surely keep growing. We will invest according to demand from customers," he said.
More than 1,700 leaders in both public and private sectors from 90 countries and regions are gathering at the New Champions meeting, the ninth gathering, which runs from Wednesday to Friday in Dalian.
The event is a leading global gathering on innovation, entrepreneurship, science and technology. Since the first session in 2007, Dalian and Tianjin have hosted the event in alternate years.
Lu Lin, deputy mayor of Dalian, said the event is a good platform for the city to show itself to the world and to expand its international influence. It serves as a bridge that fosters closer relations between the city and global leading enterprises, Lu said.
Chengdu Hi-tech Zone to take lead in innovative development
September 9th, 2015Chengdu High-Tech Zone, known as one of China's best, has begun construction as the first national innovation demonstration zone in western China, after gaining State Council approval in June.
The new development for the next decade aims to reach an annual GDP of 1.5 trillion yuan ($235.7 billion), gather together 20,000 technical companies, and build three to five new industrial clusters each with an annual output of 100 billion yuan by 2025, taking a lead in the high-end industries and acting as a magnet for the development of the western region.
Wan Gang, minister of Science and Technology of China, said the approval of Chengdu as a national innovation demonstration zone provides Sichuan province with new development opportunities.
He encouraged Sichuan province to take the chance to cultivate a group of innovative enterprises with global influence, and offer good examples and fresh experience for the development of western China.
Founded in 1988 as one of the country's earliest, the zone has attracted more than 1,000 foreign companies, of which 104 are Fortune Global 500 ones. Multinationals including Intel, TI, Dell, Phillips and Siemens have all set up manufacturing bases there. Last year, it ranked third among national high-tech zones for innovation, according to the Ministry of Science and Technology.
Google set to log in again
September 8th, 2015Google Inc is in search of China business again, five years after its abrupt departure from the lucrative market.
The world's largest Internet search provider is aiming to bring its online mobile application store Google Play to the Chinese mainland as soon as this month, multiple sources said.
If it succeeds, it will mark a return of sorts for Google to the mainland market after 2010.
The company, which owns the world's most-used smartphone operating system Android, is working on a "special" version of Google Play in the country, and the app downloading platform will be available for Android devices for sale in China, according to technology news site the information.com.
A Beijing-based app developer on Monday confirmed the story with China Daily, saying the US company has been preparing a China launch for a while.
"It will be a tailored version, meaning the content of the apps will be subject to Chinese regulations and video products, such as movies, will not be available," said the person, who asked not to disclose his name because the details are yet to be made public.
Another source, who also asked for anonymity, said Google is also likely to bring along a number of local companies to provide localization services while launching the app store.
Google refused to comment, when contacted for the story.
Earlier this year, Sundar Pichai, product chief at Google and the company's next CEO, told Forbes magazine that China is important for the company and it will be "a privilege" to serve Chinese users.
Industry data show Google has already missed out the highs of the country's smartphone market. Smartphone shipments in China ended a six-year growth streak in the first quarter, research firm International Data Corp said.
China's smartphone sales are reaching a peak, as shipment growth is being powered by existing users buying new devices, rather than first-time buyers, the IDC said.
In the absence of Google Play, homegrown app stores dominated the market, with 11 stores taking a double-digit market share as of May, according to the Big Data Research Center at the Chengdu-based University of Electronic Science and Technology of China.
Baidu Inc, Qihoo 360 Technology Co and Tencent Holdings Ltd have all set up Android app stores targeting mainland users, with Xiaomi Corp, Lenovo Group Ltd and other hardware vendors following suit. The 360 store, the largest on the market, handles more than 160 million app downloads each day, according to the company.
But China's demand for mobile apps is set to grow.
With China set to account for a huge chunk of app downloads and purchase payment in the near future, Google needs to include it in its own app store.
Although a good number of Google products, including its search engine and map services, are unavailable on the Chinese mainland, the 17-year-old company had never moved out of China completely. It has been promoting its online advertising business to Chinese companies which are looking to expand overseas.
Google representatives, including Chairman Eric Schmidt and lower-level employees such as the head of Google Doodle team, have visited China even in its lowest moment, visiting smartphone retail marketplaces and making public speeches on graphic design and company culture.
Industrial firms around Shanghai Disney scheduled for closure
September 7th, 2015
An aerial view of Shanghai Disney Resort.
(ECNS) -- A total of 153 industrial enterprises surrounding Shanghai Disney Resort are scheduled to be shut down by the end of next year, accompanied by industrial structure adjustment in the area, Jiefang Daily reports.
Most of these enterprises struggle with high-energy consumption, heavy environmental pollution, and low production efficiency.
The adjustment will involve an area of some 10 square kilometers. Following the move, ecological reclamation and public service facilities will become priority.
Shanghai has accelerated progress in industrial structure adjustment in several key areas this year. According to an unnamed director with the municipal Economic and Information Commission, when such adjustments end, some 2 square kilometers of land will be set aside and 40,000 tons of standard coal reduced annually.
Huawei edges close to Apple, Samsung
September 6th, 2015
Richard Yu, head of consumer businesses at Huawei Technologies Co Ltd, presents its new smartphone, Mate S, ahead of the IFA electronics show in Berlin, September 2, 2015.
Company's latest smartphone offering plans to take on competition with innovative features
Huawei Technologies Co Ltd has inched close to Apple Inc in the high-end smartphone market - at least in terms of pricing.
Huawei's latest $780 flagship smartphone, Mate S, is the most expensive handset the Chinese tech giant has yet produced and is set to compete with the next-generation iPhone that Apple plans to reveal next week.
The company's previous flagships were priced in the $500-$650 price range. The lowest retail price for the iPhone 6 Plus, also a pamphlet, is about $750.
Richard Yu, head of Huawei's consumer businesses, said the Mate S deserves its price tag and will put pressure on Apple and Samsung Electronics Co Ltd.
"Samsung is facing great downward pressure and Apple seems to have hit a ceiling in innovation. It is the right time for Huawei to be on the offensive," Yu said at a product launch event in Berlin on Thursday.
Huawei is increasingly becoming a threat to Apple and Samsung after it notched up the highest sales growth rate of 46.3 percent in the second quarter, thanks to strong overseas sales and 4G smartphone sales in China.
By June, Huawei was the largest local handset vendor in China, the world's biggest smartphone market, according to research firm Gartner Inc.
But its 7.8 percent market share lags far behind Apple and Samsung, which took more than a third of the total shipments.
Huawei is striving to put on market more higher-end devices with fancy features so that it can edge out the two overseas giants someday.
In Mate S, the Shenzhen-based company has incorporated a 5.5-inch high-definition display, fingerprint security and the Force Touch display technology which allows the handset to tell the difference between a tap and a hard press on the screen.
Apple is also likely to use a similar technology for its new iPhone model, as the US company is in desperate need of innovative breakthroughs to boost sales. The model is expected to make an appearance during the company's annual product release on Sept 9 in San Francisco.
"The phone redefines how we incorporate touch technology into our smartphones, taking a revolutionary approach to touch-screen control and ushering in a new era for human-machine interaction," Yu said.
Xiang Ligang, an independent smartphone analyst and founder of telecom website cctime.com, said Huawei hopes more female buyers will be attracted by the new model's elegant design and cool features.
"It is a good attempt for Huawei to bond technology with elegance and fashion as it walks into the premium market," Xiang said.
The Mate S will be available on the Chinese market later this month, according to Huawei. The retail price in its home market could be slightly cheaper than in Europe and the United States, based on previous practice.
Factories and services in slowdown
September 2nd, 2015The performance of China's manufacturing and services firms weakened in August, with activity in state-owned industrial companies contracting for the first time in six months and that in private manufacturers falling to a 76-month low, according to surveys released yesterday.
The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in large state-owned industrial companies, landed at 49.7 last month, down from 50 in July and 50.2 in June, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
A reading above 50 is expansion, and below it contraction. The latest figure was the first contraction since February after marginal growth in the past six months.
The Caixin China Manufacturing Purchasing Managers' Index, a similar indicator slanted toward private and export-oriented companies, landed at 47.3 for August, down from July's 47.8 and the worst since March 2009.
The figure has been below 50 for the sixth straight month after a brief rebound in February.
Zhao Qinghe, an analyst at the bureau, said domestic demand remained weak and the manufacturing sector had insufficient growth impetus.
"The slowdown was in part related to China's enhanced efforts on industrial upgrading," Zhao said. "High energy-consuming companies reported faster deterioration in PMI, while the bad weather in summer, including those hot, rainy and windy days, hampered industrial production and exaggerated the weakness as well."
The PMI's component indexes showed industrial production lost 0.7 points from a month earlier to 51.7 in August, while new orders dropped by 0.2 points to 49.7, falling below 50 for the second consecutive month.
Liu Ligang, an economist at Australia & New Zealand Banking Group Co Ltd, said the readings reflected faltering sentiment amid sluggish economic growth and the stock market turmoil.
"China's manufacturing activities remained weak ... We now expect China's growth to expand 6.4 percent year on year in the third quarter," Liu said. "As more easing measures are expected, growth could rebound to 6.8 percent in the fourth quarter."
China's economic performance surprised the market with a 7 percent increase in the second quarter, compared with market expectations of a 6.8 percent rise.
But the data in the past two months, including trade, industrial production, retail sales and fixed-asset investment, all moderated.
China's service firms also reported less vibrant activities. The official non-manufacturing PMI retreated to 53.4 in August from July's 53.9, while the Caixin Services Business Activity Index posted 51.5 in August, down from 53.8 in July and signaled the slowest increase in the current 13-month sequence of expansion.
He Fan, chief economist at Caixin Insight Group, said the expansion of service activities was not strong enough to offset the contraction in manufacturing.
Earlier figures showed net earnings of manufacturing companies contracting for the second straight month in July.
"In the face of continued pressure on growth, macroeconomic stabilization policies must continue and fresh reform measures must be introduced," He said.
"Fine-tuning should go hand in hand with speedier implementation of structural reform to release the full potential of growth and lead the market to confidence," He said.
China manufacturing activity contracts in August
September 1st, 2015China's factory activity continued to lose steam in August, suggesting the world's second largest economy faces prolonged downward pressure, official data showed Tuesday.
China's manufacturing purchasing managers' index (PMI) came in at 49.7 in August, down from 50 for July, according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
The August reading was the lowest since August 2012.
A reading above 50 indicates expansion, while that below 50 represents contraction.
The production sub-index posted at 51.7 last month, still expanding, but lower from 52.4 for July.
The sub-index for new orders came at 49.7, down from 49.9 for July, indicating grim challenges in demand.
Youngest Chinese keener entrepreneurs: survey
August 31st, 2015The youngest generation of the Chinese workforce are more interested in starting their own businesses and are more inclined to change jobs, according to new survey results.
The survey conducted by LinkedIn and data100.com showed 82 percent of working respondents born in the 1990s harbor entrepreneurship ideas, compared with 77 percent of those born in the 1980s.
Based on over 1,000 questionnaires, the poll suggests that the cities of Shenzhen, Beijing and Guangzhou top the chart for entrepreneurship enthusiasm, and that catering is regarded as the ideal sector for starting a business, followed by e-commerce and garment trade.
The "post-1990" generation stay in a job for an average of 18.5 months, while "post-1980" workers stick around for an average of 26.5 months. And while the older of the two groups stress payment and welfare in job hunting, the youngsters care more about their career prospects.
Entrepreneurship is becoming more popular in China, under the encouragement of the government, which hopes to use a wave of startups as a new engine for growth at a time when the economy is slowing. Many cities have set up startup incubators and rolled out preferential policies to encourage youngsters into starting their own businesses.
Warner forms China tie-up
August 27th, 2015
Warner forms China tie-up Pedestrians walk past a Warner Brothers studio in Shanghai. The US company is in talks to partner with China Media Capital to develop Chineselanguage films.
Joint venture with CMC will develop local language movies
Warner Brothers, the studio behind Gravity and Interstellar, is in talks to partner with China Media Capital to develop Chinese-language films for China, where a rapidly growing box office continues to lure Hollywood studios.
The joint venture would be Warner Bros' second venture in China, after partnering with China Film Group to produce and distribute movies.
"We confirm that CMC is now in talks with WB to create a JV. The talks have been going well, but we cannot disclose more details at this stage," a spokesperson for CMC confirmed to Variety magazine on Tuesday. Sources at Warner Bros in Los Angeles also confirmed the partnership discussions, Variety said.
Phil Contrino, vice-president and chief analyst of BoxOffice.com, said that filmmakers are trying to respond to demand from local audiences for homegrown movies, as shown by the latest Chinese box office hit Monster Hunt, which has earned $375 million in China since its July release. The fantasy adventure has become the second-highest grossing film at the Chinese box office, outranked only by Furious 7, the seventh in the fast and furious Hollywood franchise.
"Chinese filmmakers in general are still tapping into what the public there wants from their homegrown products, and we're still getting to a point where homegrown movies are starting to really perform close to what Hollywood movies are doing. That's crucial. Everybody's still kind of learning, and figuring it out," Contrino said.
There have been increasing partnerships between Hollywood and China, with many studios in the United States collaborating with Chinese companies in the hope that it will lead to film releases in China, which allows only 34 foreign films released a year.
Stan Rosen, a Chinese film expert and professor at the University of Southern California US-China Institute, said the combination of the foreign film quota and so-called blackout dates - periods during the year when only Chinese films are allowed to be released, typically around holidays like the Lunar New Year and the summer - mean that Warner Bros' plan to make Chinese-language films is a "better strategy" for the long term.
"The China market is on track to surpass last year's market by August this year and it's going to be the biggest market in the world by about 2018-19, so it makes sense to make Chinese films for the China market. You can't lose," he said.
With the number of movie screens in China increasing almost five-fold between 2010 and 2015 - from 5,000 to around 24,000 - making more movies for the Chinese audience will benefit Warner, he said.
"China Media Capital has been very successful," he said. "Warner is partnering with good people. A lot of details are not yet known, but certainly given the entry in the China market and the increase in film screens, local movies are favored."
Last October, Warner Bros partnered with media company Shanghai Media Group, Chinese investment fund CMC Capital Partners and communications group WPP to create a fund that invests in Chinese and international film, television and live entertainment. It focuses on Chinese-language programming that is distributed in China and around the world, according to Warner Bros.
CMC, a State-backed entity, has another joint venture deal with DreamWorks Animation SKG called Oriental DreamWorks. Oriental and DreamWorks are currently working on Kung Fu Panda 3, the third installment in the popular animation franchise, due for release in January.
Steel firms slip into red as glut persists
August 26th, 2015Most of the steel companies listed on the A-share market have seen a sharp erosion in profits during the first six months of the year, due to the glut in domestic production.
Hongxing Co Ltd, a company whose main shareholder is Jiuquan Iron & Steel (Group) Co Ltd, was the worst-performing listed steel company as of Aug 19 with losses of 1.55 billion yuan ($242 million) in the first six months. Hongxing said the losses were mainly due to production overcapacity, a slowing economy and the significant fall in steel prices.
Beijing Shougang Co Ltd, another major producer, has forecast losses of about 200 million yuan to 300 million yuan for the first half of the year.
According to data provided by the National Development and Reform Commission, large and medium-sized steel companies earned revenue of about 1.5 trillion yuan in the first six months of the year, down 17.9 percent from the same period a year earlier. However, the steel-making business of these firms ran up losses of about 21.7 billion yuan during the period, up 16.8 billion yuan from the same period in 2014.
About 43 steel companies registered losses during the period, while only three reported growth in profits. Fushun Special Steel Shares Co Ltd saw its net profit surge to 131 million yuan, an 803 percent year-on-year growth.
Daye Special Steel Co Ltd reported net profit of 139 million yuan by the end of June this year, up 5.42 percent from the same period in 2014. According to the company, the domestic steel market is still bogged down by production overcapacity and the lack of new growth drivers. Daye attributed its profit growth to measures taken to reduce output costs.
China stocks in sharpest fall since 2007
August 25th, 2015
An investor looks through stock information at a trading hall of a securities firm in Luoyang, central China's Henan Province, Aug. 24, 2015. China stocks nosedived on Monday with the benchmark Shanghai Composite Index dropping 8.49 percent to close at 3209.91 points, the sharpest decline since Feb. 27, 2007.
The Chinese stock markets had their worst day in eight years with the benchmark Shanghai Composite Index tumbling 8.49 percent to close at 3209.91 points.
This is the steepest dive since Feb. 27, 2007, and comes less than a month after a similar plunge on July 27 this year, when the stock market lost 8.48 percent.
The astonishing loss came one day after the government's approval to allow the state pension fund to invest in the stock market, which analysts said should boost the market.
Nearly 2,200 shares tumbled by the daily limit of 10 percent. The overall loss was narrowed to around 6 percent in the afternoon as shares in blue chip companies, such as PetroChina and China Life Insurance, rose sharply. The index quickly fell back after 2 p.m.
Asia stocks across the board dived, too. The Hong Kong Hang Seng Index slumped more than 5 percent on Monday, its lowest point in 17 months. Japan's Nikkei 225 Index closed down 4.61 percent, hitting a six-month low. Singapore's Straits Times Index also tumbled almost 4 percent.
Monday's sharp decline almost wiped out all of this year's gains, despite government intervention, such as pouring in funds and restricting sell-offs.
In its latest move to prop up the market, pension funds were given permission to invest a maximum of 30 percent of net assets in stocks and equities.
The pension fund is worth an estimated 3.5 trillion yuan, however, but it is still unknown at this moment how much the sector will decide to invest, said Industrial Securities in a research report.
The report said that this entry by the pension fund is more of a psychological move by the government to assure investors that the A-share market is not an "abandoned child," the report said.
The future of the stock market still depends on the fundamentals. Overvaluation is one of the main factors stoking fears among investors, said Guolian Securities.
The price-to-equity ratio of the ChiNext Index has been lowered but still stands at 76, similar to the level in November 2010, the highest point before this round of bull market.
Weak economic data also dampened investor confidence. The Caixin flash China general manufacturing PMI retreated to 47.1 in August, the lowest reading since March 2009.
The flash index is the earliest available indicator of manufacturing sector conditions in China. The continuous fall in the index in recent months indicates that the economy is still bottoming out, said He Fan, chief economist at Caixin Insight Group.
As the market continues to struggle, speculation is rife over whether the central bank will cut the reserve requirement ratio (RRR), again. The China International Capital Corp. (CICC) predicts that the central bank will "aggressively lower RRR" by at least another 150 basis points by the end of this year.
On Monday, the Shenzhen Component Index fell 7.83 percent to close at 10,970.29 points. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 8.08 percent to end at 2,152.61 points.
GM China JV builds 200,000 new energy vehicle plant
August 24th, 2015SAIC-GM-Wuling Automobile Co. on Friday started construction of a new energy vehicle plant with the intention of turning out 200,000 vehicles each year.
Investing 3 billion yuan (470 million U.S. dollars), SAIC-GM-Wuling joined many rivals in the new energy vehicle sector betting on huge market potential.
China pays high subsidies on new energy vehicles to reduce pollution.
In the first seven months of this year, sales of new energy vehicles increased by 2.6 times year on year to nearly 90,000 despite weak auto sales in general.
On Friday, the automaker also started operations of an assembly plant with an annual production capacity of 400,000 conventional vehicles.
The company sold 217,000 Baojun cars in the first seven months of the year, up 424 percent.
Established in 2002, the automaker is a joint venture between General Motors, Shanghai Automotive Industry Corp. and Liuzhou Wuling Motors Co. Its sales in 2014 exceeded 1.8 million vehicles.
China increases tax breaks for small businesses
August 21st, 2015The State Council, China's cabinet, on Wednesday decided to extend tax breaks to more small businesses, recognition of their roles in generating jobs and growth.
From Oct. 1, 2015 to the end of 2017, companies with annual taxable income under 300,000 yuan (46,900 U.S. dollars) will have their corporate tax halved, said a statement released after a meeting chaired by Premier Li Keqiang. Previously, the threshold was 200,000 yuan.
The meeting also promised tax breaks for companies with a monthly revenue under 30,000 yuan. They will be exempted from value-added tax and business tax until the end of 2017.
The move is the latest attempt to help small businesses, as they provide nearly 80 percent of urban jobs.
In the first six months, about 2.39 million small and micro enterprises in China paid reduced taxes, saving them about 8.6 billion yuan.
Wednesday's meeting also decided promote big data processors, promising to make government data on transport, medical care, employment and social security available to the public.
The meeting also agreed to free controls on foreign investment in the logistics sector to allow them to establish purchase and distribution centers in China.
Didi Kuaidi and partners invest U.S.$350 million in GrabTaxi
August 20th, 2015China's largest ride-hailing application Didi Kuaidi said it has invested in Malaysia-based taxi-booking application GrabTaxi Holdings along with venture capital firms and China's sovereign wealth fund China Investment Corporation.
The total amount of this funding reached U.S.$350 million, and other investors including GGV Capital, Coatue Management, and existing shareholders, according to an email statement today.
CIC is also an investor of Didi Kuaidi.
Didi Kuaidi President Liu Qing said it would share data mining experience and data technology with GrabTaxi, whose main business is in Southeast Asia, and that the latter's experience in Southeast Asia would also help Didi Kuaidi's overseas expansion.
GrabTaxi's vice president of marketing Cheryl Goh said it currently has no plan to be acquired by Didi Kuaidi, as she was quoted by tech news website Techcrunch.com.
Malaysia-based GrabTaxi currently operates in 26 cities in six countries and has successfully diversified its offering to include private cars and motorbikes.
Didi Kuaidi and partners invest U.S.$350 million in GrabTaxi
August 20th, 2015China's largest ride-hailing application Didi Kuaidi said it has invested in Malaysia-based taxi-booking application GrabTaxi Holdings along with venture capital firms and China's sovereign wealth fund China Investment Corporation.
The total amount of this funding reached U.S.$350 million, and other investors including GGV Capital, Coatue Management, and existing shareholders, according to an email statement today.
CIC is also an investor of Didi Kuaidi.
Didi Kuaidi President Liu Qing said it would share data mining experience and data technology with GrabTaxi, whose main business is in Southeast Asia, and that the latter's experience in Southeast Asia would also help Didi Kuaidi's overseas expansion.
GrabTaxi's vice president of marketing Cheryl Goh said it currently has no plan to be acquired by Didi Kuaidi, as she was quoted by tech news website Techcrunch.com.
Malaysia-based GrabTaxi currently operates in 26 cities in six countries and has successfully diversified its offering to include private cars and motorbikes.
Equities slump on economic concerns
August 19th, 2015
Retail investors check share prices at a brokerage in Qingdao, Shandong province, on Aug 18. The benchmark Shanghai Composite Index plunged by 6.15 percent to close at 3,748.16 points.
Share prices plunged on Tuesday as jittery investors resorted to huge sell-offs on concerns that the government has halted its plan to buy equities to stabilize the market.
The benchmark Shanghai Composite Index sank by 6.15 percent, or 245.5 points, to close at 3,748.16. It was the biggest loss in three weeks since an 8.5 percent dip on July 27.
State-owned enterprises, which are expected to undergo major ownership reforms, led the decline with more than 1,600 stocks on both the Shanghai and Shenzhen bourses tumbling by the 10 percent daily limit.
The market slump came after the country's securities regulator said on Friday that the State-owned margin lender China Securities Finance Corp will not step into the market unless there are abnormal market fluctuations.
The regulator's announcement has been widely interpreted as a signal that the government is ending its direct intervention and letting the market mechanism play a bigger role after the benchmark rebounded by about 15 percent from a bottom on July 8.
But Tuesday's decline underscored that investors' sentiment remained fragile as a slowing economy and the depreciation of the yuan continued to weigh on the market.
Jiang Chao, an analyst with Haitong Securities Co, said that the monetary authorities appear to be in a dilemma over the easing policies and the monetary uncertainty may continue to destabilize the market.
"There is need to inject more liquidity as the depreciation of the yuan is likely to trigger capital outflows. But the market rescue efforts have led to a surge in the broad monetary supply which created a policy dilemma," he said in a research note.
The recovery of the country's home prices has also dimmed investors' expectation for further monetary easing, some analysts said.
Li Daxiao, chief economist at Yingda Securities Co, urged investors not to overreact to Tuesday's decline, but warned about the risk of excess valuations of companies in the military industry.
Share prices of listed military-related companies have ballooned substantially ahead of the country's military parade commemorating the end of World War II and on expectations of major reforms.
The average valuation of the industry has been ranked the top among all industries with the price-to-earnings ratio of most companies exceeding 100 times, according to estimates.
"There is a big risk of the bubble bursting in military-related stocks, which is even worse than the startup board," Li said.
PepsiCo enters China dairy industry via JD.com
August 18th, 2015PepsiCo announced during a press conference in Beijing on August 14 that it has signed an agreement with leading online direct sales company JD.com Inc (JD) to sell Quaker High Fiber Oats Dairy Drink, its first premium dairy product in China, on JD's e-commerce platform.
It is PepsiCo's first launch of a new product exclusively through e-commerce outside of the US, and it showcases both the significance of PepsiCo's entrance into China's popular dairy beverage market and the strength of JD's e-commerce platform. Through this strategic partnership, both parties will provide Chinese consumers with the latest healthy product choices as well as convenient and fast-paced shopping experiences.
PepsiCo is introducing this product to take advantage of China's fast-growing, value-added dairy market and to satisfy consumers' demand for a healthy and fast-paced lifestyle. It is made from the finest Australian Quaker oats and high quality milk from New Zealand.
The Quaker High Fiber Oats Dairy Drink is produced through its patented "Solu-Oats" unique technology, completely blending the grinded oats with milk. The unique drink keeps not only the nutritional ingredients of natural whole grains, but also boasts a very smooth and silky texture with plentiful dietary fiber.
PepsiCo's launch of its first dairy drink on JD is a combination of mutual strengths of both companies. JD has over 100 million annual active users, a mature e-commerce operating platform and a self-owned logistics system covering all of China. The consumer goods sector, in which foods reside, has always been the strategic priority of JD. Launching its brand new products through JD, PepsiCo can quickly promote and popularize its brands and boost its product sales by leveraging JD's platform and premium services.
PepsiCo has rich experience in the oats-based dairy sector around the world, with proprietary patents and technologies in grain research and development, as well as branded products that are popular among consumers, including Quaker Oats, with over 100 years of history, quality and a fine reputation.
The new Quaker High Fiber Oats Dairy Drink will be sold exclusively on JD for two months. The characteristics of the e-commerce platform, coupled with the marketing of digital media, can directly reach consumers in first-tier, second-tire and third-tier cities and even lower, breaking the geographic divisions challenging traditional sales. By marketing a new product exclusively on an e-commerce platform, PepsiCo hopes to understand consumers' varying needs faster and more deeply.
Online and offline interactions will also help PepsiCo conduct product innovation in a faster and better way so as to provide more products to satisfy consumers' changing tastes.
E-commerce has become an important engine in driving domestic consumption, boosting the upgrade of traditional sectors and developing modern services across China. Survey results indicate that Chinese online consumers are ranked among the most advanced in the world. China has over 500 million social networking sites users who are pioneering the world's e-commerce development.
As a global leader within the food and beverage industry, PepsiCo is seizing the opportunity in choosing China as the first international market in the world to launch and promote a premium new product exclusively through e-commerce. Such a campaign demonstrates PepsiCo's long-term commitment to the Chinese market and its confidence in the development of e-commence in China.
Prior to this launch, PepsiCo had invested incrementally in e-commerce business by actively cooperating with major e-commerce platforms in various areas.
"Adhering to the principle of our 'customer-first' mission, JD is committed to providing products with high cost-performance and superior shopping experiences, hence achieving a win-win with our partners," said Shen Haoyu, CEO of JD Mall, "We are very happy to be the platform to launch and sell PepsiCo's first dairy drink product in China."
Mike Spanos, CEO and President of PepsiCo Greater China, also has a confidence in this partnership.
"With the continued development of the Chinese economy, consumers have ever-more demand for healthy and nutritious dairy drink products," he said. "Entering China's dairy beverage market is a crucial piece of our growth strategy, as it opens new opportunities for PepsiCo in China and will allow more Chinese consumers to enjoy the latest and delicious PepsiCo products."
Global automakers scramble to assess damage in Tianjin blasts
August 17th, 2015Global automakers including Volkswagen AG and Toyota Motor Corp are scrambling to assess damage to cars and facilities after two massive explosions in the port city of Tianjin, China's largest auto import hub. [Special coverage]
The blasts that ripped through a warehouse storing volatile chemicals in Tianjin late on Wednesday were so strong that they damaged buildings a few kilometers away.
French carmaker Renault SA said nearly 1,500 of its imported cars stored in a warehouse at the port had been burned while Toyota said the blasts broke windows at its car assembly, logistics, and research buildings, which are jointly run with China FAW Group Corp.
Operations at the Toyota facilities had been closed for a week-long summer holiday and no one was injured.
"In our current view, the damage isn't that severe," a China-based Toyota spokesman said.
Roughly 40 percent of cars imported to China pass through Tianjin's port, or more than 500,000 units in 2014, according to the Xinhua News Agency.
China imported 372.4 billion yuan ($60.8 billion) in cars last year, official data shows.
Subaru maker Fuji Heavy Industries said more than 100 cars that were imported from Japan and were awaiting customs clearance in a warehouse had been damaged by broken windows.
Volkswagen said that some of its imported cars were damaged but did not know exactly how many had been affected. Photographs from the scene showed rows of Beetles and other VW brand cars badly scorched by the explosion.
"We have a task force in the area to find out more and which is primarily concerned with the well-being of our employees," a VW spokeswoman said.
Ford Motor Co, Nissan Motor Co and Toyota also said they were checking their cars parked around the port.
South Korea's Hyundai Motor Corp and Kia Motors Corp had a total of 4,000 cars near the blast site but did not have specific details on the extent of damage, the companies said.
BMW AG said it has two vehicle distribution centers near the port but the damage was unknown given the area had been cordoned off.
Mazda Motor Corp said over 50 cars imported from Japan were also damaged, with peeling paint and scratches.
One nearby showroom was shut on Thursday after its windows shattered, it said.
Lenovo plans to axe 3,200 jobs
August 14th, 2015
A Lenovo outlet in Yichang, Hubei province. The company announced a 51-percent year-on-year decline in net income for its first fiscal quarter on Thursday.
Tech firm says Q1 net income fell by 51% on poor smartphone sales
Lenovo Group Ltd said on Thursday it will lay off 3,200 employees after it announced a 51-percent year-on-year decline in net income for its first fiscal quarter which ended in June.
The cuts, which will mainly occur in the company's newly acquired Motorola Mobility unit, represent roughly 10 percent of its global non-manufacturing headcount.
Yang Yuanqing, chairman and chief executive of Lenovo, said poor smartphone sales and worsening global demand for personal computers necessitated the job cuts.
"We are planning to reduce expenses by about $1.35 billion for this fiscal year, including reductions of about $800 million from the Motorola unit," Yang told China Daily in a telephone interview.
"Lenovo is facing extremely intense challenges in the smartphone market and we need quick actions to address the problems." Yang, however, did not disclose any further details about the layoff plan.
Hit by slowing PC and smartphone demand, the company's net profit dropped to $105 million in the first quarter, compared with $214 million a year ago, Lenovo said. In the PC business, which has been Lenovo's cash cow till now, pretax income fell by 8 percent year-on-year despite a growth in market share.
Lenovo shares fell by more than 5 percent in Hong Kong on Thursday to HK$8.01 ($1.03), an 18-month low.
Antonio Wang, a Beijing-based analyst with research firm International Data Corporation, said the global slowdown in smartphone sales has forced Lenovo to find new ways to cut operating costs.
"I think it is reasonable (for Lenovo to cut jobs) as the international market has not been bright and all the players are facing strong headwinds," Wang said. He expects the company to rebound after witnessing another quarterly drop in profits.
"Lenovo wants to be fully exposed to the losses in the current and subsequent quarters and will try to regain its growth trajectory later this year," Wang said.
Lenovo also pledged to release new Moto smartphones every six months to stay competitive in the handset business.
Chen Xudong, Lenovo's senior vice-president in charge of mobile businesses, said sales of Motorola's G and X series missed targets because of slow device updates and decision-making.
"Lenovo smartphones did not perform well in China due to unsuccessful product designs and marketing strategies," Chen said.
According to Chen, the company is attempting to seek new opportunities in other emerging markets such as the Middle East and Africa to lift shipments.
The 16.2 million units of Lenovo and Motorola smartphone shipped in the second quarter registered a mere 2.4 percent annual growth, while Apple Inc, Huawei Technologies and Xiaomi Corp recorded more than 30 percent growth in shipments, according to IDC.
Lenovo purchased Motorola from Google Inc in early 2014 for $2.9 billion.
Chen admitted that Lenovo handsets are "too complicated" for customers to understand. The company will focus on one or two flagship devices to reach more Chinese buyers in the future, he said.
Lenovo now has three sub-brands for smartphones. Besides Lenovo and Motorola branded devices, its affiliate launched a ZUK-branded affordable phone two days ago, targeting the 2,000 yuan ($333) market.
Nicole Peng, research director at Shanghai-based consultancy Canalys China, said Lenovo fell out of the top five in the second quarter because of sluggish sales and lower China market share.
Peng said Lenovo needs to completely overhaul its smartphone lineup.
Alibaba growth slowest in three years; revenue falls short of analysts' estimates
August 13th, 2015Alibaba Group Holding's revenue for the three months ended June rose 28 percent, missing analysts' estimates, with growth slowing to its lowest rate in more than three years.
China's biggest e-commerce company posted quarterly revenues of $3.27 billion on Wednesday, below an expected $3.39 billion, according to a Thomson Reuters poll of 28 analysts.
The drop in revenue growth came as gross merchandise volume - the total value of goods transacted across Alibaba's platforms - rose 34 percent to 673 billion yuan ($105 billion), also rising at its slowest pace in more than three years.
Alibaba, which has a market value of $194 billion, is branching out from its core online-only shopping platforms in a bid to stem a slowdown in revenue growth and the total value of goods transacted over its websites.
"[We] made significant progress monetizing our mobile traffic, with our mobile revenue exceeding 50 percent of our total China commerce retail revenue for the first time," said Maggie Wu Wei, Alibaba's CFO, in a press release on Wednesday.
On Monday, Alibaba said it would invest $4.6 billion in brick-and-mortar retailer Suning Commerce Group Co Ltd.
The deal could give Alibaba more traction in logistics and electronics, areas in which smaller but growing rival JD.com Inc specializes.
Alibaba's strategic priorities are internationalization, beating out competition in mobile, expanding into rural China and investing in cloud computing, Chief Executive Zhang Yong said in Wednesday's release.
The company also announced a $4 billion, two-year share repurchase program.
Tsinghua arm readies to take on Qualcomm
August 12th, 2015Tsinghua Holdings Co Ltd, a technology conglomerate backed by Tsinghua University, plans to invest at least 30 billion yuan ($4.76 billion) in developing mobile chip technology, highlighting the company's ambition to challenge Qualcomm Inc's dominance in the country's chip market.
"To catch up with Qualcomm as soon as possible, we will pour 30 billion yuan, and probably even more, into the research and development of mobile chips in the next few years," Xu Jinghong, chairman of Tsinghua Holdings, told China Daily in an interview on Tuesday.
Tsinghua Holding said a certain proportion of the money will come from government funding and its partners. In February, its unit Tsinghua Unigroup Ltd said it has received 10 billion yuan from governments to invest in chip companies.
"Frankly, compared with global competitors, we are still three-to-five years behind in technology, especially in cutting-edge 4G and 5G products," Xu said, "but if we don't close the technological gap, we will never win."
The comment came after Tsinghua Unigroup Ltd filed a plan to buy US chipmaker Micron Technology Inc for $23 billion. Xu said earlier it was still in discussions for a potential deal.
"We will continue to expand our presence in the integrated circuit industry through both acquisition and self-research," he said, adding chips will be one of the focuses of the Beijing-based company.
Roger Sheng, senior analyst at research firm Gartner Inc, said the government's emphasis on the semiconductor sector is the biggest advantage for Tsinghua Unigroup.
"Few tech companies in China have such a large amount of capital at their disposal as Tsinghua Holdings does," Sheng, said adding "despite its current technological weakness, it has ambitions and is acting very quickly".
"Qualcomm's pioneering efforts in the sector also established a successful business patten which Tsinghua can follow," Sheng said.
Tsinghua Holdings' intensified efforts to boost its chip-related resources come as the Chinese government seeks to reduce the country's reliance on foreign technology, on worries that it may hurt national security.
The company evolved into the largest chip firm in China after it acquired Spreadtrum Communications Inc, the world's third-largest mobile phone chip maker, and RDA Microelectronics Inc, the fourth-largest, in 2013.
"If we can manage to catch up with Qualcomm technologically, our innovation capability, the huge smartphone market in China as well as the labor cost, which starts rising but is still lower than that of the US, can offer us considerable commercial opportunities," Xu said.
Earlier this month, Tsinghua Holdings announced it has made a breakthrough in chemical mechanical polishing, an important process in manufacturing chips. One of its unit successfully developed the first 12-inch polishing machine in China which could planarize semiconductor wafers to an extent that every square of a nanometer (billionths of a meter) is flat.
"The machine shows that we are the first Chinese company to have mastered the technology, and enables us to produce extremely tiny chips for smart wearable gadgets," said Li Zhongxiang, vice-president of Tsinghua Holdings.
Alibaba, Suning enter into 'marriage'
August 11th, 2015Alibaba, China's largest e-commerce company, and Chinese home appliance retailer Suning have inked a multi-billion dollar collaboration deal for online and high-street sales.
Alibaba will invest about 28.3 billion yuan (4.63 billion U.S. dollars) in Suning to become its second-largest shareholder, while Suning will buy no less than 27.8 million new shares in Alibaba for 14 billion yuan, Alibaba said on microblogging service weibo.com on Monday.
Making the investment through its subsidiary Taobao (China) Software Co. Ltd., Alibaba will hold 19.99 percent of Suning after the non-public offering, slightly less than the more than 20 percent held by Suning chairman Zhang Jindong, according to a statement issued by Suning filed to the Shenzhen Stock Exchange.
The share price was set at 15.23 yuan, 5.76 percent more than the average price in the previous 20 trading days.
Suning was established in eastern China's Jiangsu Province in 1990 and was listed in Shenzhen in 2004.
Trading of Suning's shares was suspended a week ago as it planned this round of non-public offering. Trading will resume on Tuesday, the company said.
Suning said the deal was still "uncertain," as it still needs the approvals by its stockholders' meeting and regulatory authorities, without specifying a time scale.
Suning will hold about 1.09 percent of Alibaba, which is traded in the Unites States, at a price of 81.51 U.S. dollars per share, according to another statement of Suning.
"Both sides will increase efficiency and provide better services to Chinese and overseas customers by linking online and offline businesses," Alibaba said.
More than 1,600 stores, 3,000 aftersales service centers and other offline service stations of Suning will be "seamlessly connected with Alibaba's strong online network," Alibaba said.
Suning will open a flagship shop on Alibaba's brand-focused online retail platform Tmall.com. The two sides will also cooperate on logistics, payment and aftersales services, as well as overseas business integration.
The cooperation will optimize consumer experience, and improve delivery services and aftersales, Alibaba said.
Alibaba chairman Ma Yun said at a press conference Monday that the deal reached after two months of negotiations was "like a wedding."
"If we do not integrate with offline, we will not have a future," Ma said.
Zhang Jindong said that combining online and offline businesses fulfilled not only the needs of the two companies, but also clients' demands.
"Customers do not care whether you are online or offline, they only care whether their needs are satisfied and whether it is convenient," according to Zhang.
If the cooperation model becomes a success in China, it can be rolled out to the global market and help promote the sales of Chinese products globally, Zhang said.
Suning has reaped great benefits from its transition from a traditional chain store to a more Internet-oriented entity.
In 2014, the company's profit jumped 555.28 percent year on year to 946 million yuan.
JD.com Inc narrows loss, stresses cooperation with Yonghui Superstores
August 10th, 2015
Deal part of e-commerce giant's strategy to create a new business model
JD.com Inc, China's second-largest e-commerce site by sales, has released its financial report for the second quarter of 2015 and announced investment into an off-line supermarket.
Over the weekend, JD reported a 61 percent year-on-year rise in quarterly revenue, topping expectations, powered by a jump in the number of shoppers and goods bought on its platform.
Second-quarter revenue of 45.9 billion yuan ($7.4 billion) exceeded an average estimate of 44.45 billion yuan from Reuters.
But the company's growth rate is expected to slow in the third quarter. JD said it sees third-quarter revenue of 43.2 billion to 44.7 billion yuan, which would be up 49 percent to 54 percent from the previous year.
JD, a distant rival to Alibaba Group Holding Ltd, is investing heavily in off-line operations to complement its Internet platform.
The company is taking activities such as warehousing and deliveries into its own hands.
This business model, similar in style to that of U.S.-based Amazon.com Inc, has taken a toll.
JD made a net loss of 510.4 million yuan, shrinking only slightly from the year-earlier 583 million yuan despite the leap in revenue.
The catalyst for that jump was the 118 million annual active customer accounts on JD in the 12 months ended June 30, up 72 percent from the same period a year earlier.
Those customers drove an 82 percent jump in the total value of products sold on the company's platforms in the quarter, to a total of 114.5 billion yuan.
JD also said it will buy 10 percent of Chinese supermarket operator Yonghui Superstores Co Ltd for 4.31 billion yuan, with the right to nominate two directors to the board.
Cooperating with Yonghui is part of JD's online-to-offline (O2O) plan, which is of key strategic significance compared with other O2O projects, JD's CFO Huang Xuande said on a post-earnings conference call, according to media reports.
Yonghui is one of China's top providers of fresh products but apparently its 350 stores cannot cover the national market, Huang said.
As a result, there is ample potential for the two sides' cooperation, Huang said, noting that Yonghui has suppliers and inventories while JD has a wide logistics network.
JD has sought to create a new business model by combining suppliers with online platforms to provide customers with a more convenient and timely service, Liu Xuwei, an industry analyst with market research firm Analysys International, told the Global Times on Sunday.
JD has hired thousands of part-time delivery staff to operate a wider delivery network, which will lower the logistics cost and make the delivery process more efficient, Liu said.
As of Friday, there were more than 50,000 part-time delivery staff registered on JD's logistics platform, with increasing orders, Liu Qiangdong, founder and CEO of JD, said on the conference call.
These part-time staff mainly carry orders for daily necessities from nearby stores to customers' doors, which is a cooperation project called "JD to your front door" between JD and off-line supermarkets.
Although fresh food usually cannot provide high profit margins, customers buy it with high frequency, Liu said, noting winning customers on fresh food purchases will lead a large amount of visits to JD's platform, which is crucial to e-commerce companies.
JD also attracted many visitors from social media platforms such as Tencent's WeChat and QQ.
More than 20 percent of JD's new customers gained in the second quarter came from the two platforms, Huang said.
Flat demand in U.S. starts to hit firms in China
August 7th, 2015Lei Shengzu, manager of China Textiles (Shenzhen) Co, does not mince his words about the future.
"The outlook for the United States textile and apparel market remains clouded by poor visibility," he said.
Lei visited shopping malls and retail stores when he was in New York recently for a three-day international textile and apparel sourcing show at the Jacob K. Javits Convention Center.
"There are few people buying clothes by piles, which, however, was common before the global financial crisis," he said. "Consumer habits have changed since the start of the crisis in 2007."
Last year, the US imported $467 billion worth of goods from China, compared with $440 billion in 2013, according to the US Census Bureau. But through May 2015, imports from China have averaged $37.1 billion a month, which would project to a yearly total of $445 billion.
Textile and apparel imports from China have remained flat after some sizable percentage gains from 2000 to 2009. According to the Office of Textiles and Apparel in the US Department of Commerce, total textile and apparel imports were $41.8 billion in 2014, compared with $41.7 billion in 2013, a rise of only 1.49 percent.
Tepid consumer spending is also echoed by the US GDP report for the first quarter of this year. It showed consumers ratcheted back spending, a key factor in slowing economic growth.
Personal consumption expenditures rose at a downwardly revised 1.8 percent rate from January through March. Spending on services climbed 2.5 percent, but purchases of goods rose 0.5 percent. By contrast, consumer spending was up 4.4 percent in the final quarter of last year.
US GDP contracted at a 0.7 percent seasonally adjusted annual rate in the first quarter, from an initial estimate of 0.2 percent, according to Commerce Department data released in May.
The US Federal Reserve is forecasting growth of 2.5 percent for the next two years, only marginally above the tepid rates from the start of the recovery.
The Financial Times reported after years of virtually no income growth, Main Street is unprepared for positive price fluctuations. Consumers have opted to pocket the recent gains from lower gasoline prices rather than spend them.
Lei said that as the economy becomes increasingly globalized, the ongoing recession in the eurozone is likely to put a dent in the US economic recovery. Lei said he believes the market needs at least two or three years to rebound. Industry insiders have realized that it is harder in the US to find buyers for high-priced, high-end fabrics and products.
"And US buyers tend to be more picky and sensitive in price," said Deng Zhijuan, an official from Shanghai-based High Fashion Textile and Manufacturing Co.
"Big deals are also hard to make. Many buyers are just (looking) for some small quantity shipments. They are either independent designers or online retailers."
Still, there are some bright spots. Zhu Jing, manager of Ningbo Aoqi Technological Knitting Co, said that although the bids are lower, there is still some profit margin.
"As the Chinese market has been open for decades, it has fostered a wealth of potential buyers and business partners who are willing to do businesses with China," he said.
Sinopec denies unit is reducing staff overseas
August 6th, 2015China Petrochemical Corp (Sinopec) said on Wednesday that one of its international units had withdrawn 263 Chinese employees from overseas markets since 2014 so that it could take full advantage of local labor resources.
Lü Dapeng, a spokesman for Sinopec, told the Global Times that the employees were recalled to China by Sinopec International Petroleum Exploration and Production Corp (SIPEPC), a wholly owned subsidiary of Sinopec that is responsible for overseas projects.
"The withdrawal is a normal staff rotation to optimize human resources," Lü said, adding that the move also allowed the company to improve its management capacity and operating efficiency.
Lü's comments amounted to a denial of reports about large-scale layoffs in overseas markets.
Media outlets have reported recently that Sinopec is restructuring its overseas assets and planning to recall 40 percent of its overseas staff in order to reduce costs.
At SIPEPC, "80 percent of the total employees are local people and about 700 employees are Chinese," said Lü, noting that Sinopec's overall overseas divisions have 51,000 employees from various countries and regions.
Analysts and media commentators have attributed the recalls to cost reductions that were made necessary by the slumping global oil and gas sectors.
Energy giants including Royal Dutch Shell Plc, BP Plc, Exxon Mobil Corp and Chevron Corp all recently lowered their revenue forecasts for this year and made large investment cutbacks.
There have been many problems surrounding SIPEPC's overseas acquisitions from 2001 to 2014, such as irregular acquisition procedures, procurement prices that far exceeded the actual values of the assets and irregular consulting fees, financial news website caixin.com reported on Wednesday, citing an internal report of SIPEPC.
Many of SIPEPC's projects in Australia, Syria and Brazil had performed below the expectations that prevailed at the time of purchase, the report said.
The report also said that Sinopec ordered SIPEPC to stop investing in worthless overseas assets and avoid more investment losses.
Young women active in financial management, says report
August 5th, 2015Young Chinese women are more active in financial management than their male counterparts and are more willing to take investment risks, said a recent report.
The report, published by Talicai.com, a website launched in 2012 to provide financial management services for women, based its findings on responses from thousands of urban women aged between 22 and 45 via online questionnaires, telephone and face-to-face interviews. The specific sample of the survey is not available.
The survey found that Chinese women are not afraid of investment risks, and the younger they are, the more active they are in investments. About one-third of the respondents were stock investors, while about 60 percent were also investors in equity funds.
"Most of the young women born after 1985 made significant investments this year. They hold a speculative attitude and have been active participants in the recent capital market rally," said Hua Lei, an account manager with Shenzhen-based Guosen Securities Co.
"An interesting aspect of the recent rally was that, the younger female investors were more active than their middle-aged peers in market-related activities. Not only were they adventurous, but more willing to make risky bets. They are bold investors because they have not experienced any significant losses," said Hua.
Besides, a significant number of the respondents, especially those aged below 30, expressed concerns about investing in precious metals and in online peer-to-peer financing.
Middle-class families tend to manage their growing wealth more rationally. Nevertheless, they still face significant investment challenges and uncertainties.
The survey collected data from women whose average annual income was 78,500 yuan ($12,640) and had investable assets of about 105,000 yuan. Yet another finding from the survey was that most of the middle-income women, who made financial investments, use about 30 to 50 percent of their annual income for such purposes.
The report said that women born after 1990 were more active and open to financial products than those born in the 1980s. Women born after 1990, on average, make their first savings of roughly about 100,000 yuan by the age of 26.4. That is 2.8 years earlier than those born after 1980.
In addition, about 5 percent of those born after 1990 have financing experience of more than five years, and 8.2 percent of them own at least one property.
Bian Wenyue, a 24-year-old who has just come back after studying in the United Kingdom and works as an engineering consultant, is one of the many who opened a stock trading account in January, hoping to ride the rally.
"I have just started working, and my income is not that high. I hope to make some extra money by investing in stocks. It is really exciting to dabble in stocks, despite the fact that some of my money is still trapped in the market. Overall, I did make some gains," she said.
"I also set aside some money to invest in funds, as they offer more stable returns despite less yields. I also spent a small amount of money on buying some online fixed-income products."
According to the report, when making an investment decision, women are willing to listen to their family members, but they still prefer to make the final decisions themselves, and have confidence in their decision-making capabilities.
At the same time, Chinese women are conscious about their personal growth. They spend one-quarter of their income on learning languages, higher studies and on travel.
Looking ahead, most of these young women are expected to have average investable assets of about 120,000 yuan in 2016, with average return rates of 10 percent, the report said.
China's e-commerce trade over 16 trln yuan in 2014
August 4th, 2015Despite an anemic economy, China's e-commerce trade soared in 2014 thanks to improved Internet infrastructure and an increase in cellphone users.
Transaction volume of Chinese shopping websites totaled 16.39 trillion yuan (2.68 trillion U.S. dollars) last year, up 59.4 percent year on year, data from the National Bureau of Statistics (NBS) showed on Monday.
Third-party platforms, like China's largest shopping website Taobao.com, accounted for 44.3 percent, while self-operated stores 55.7 percent, data showed. The country's 20 biggest online websites saw aggregate transactions worth 6.22 trillion yuan, making up around 90 percent of all third-party platforms.
Chinese businesses have turned to the Internet to offload stocked goods in a bid to cut costs and increase profits against economic headwinds, while price-sensitive consumers appreciate online shopping for its convenience and a variety of choices.
NBS official Sun Qingguo said the booming Internet, especially the pervasive mobile network, created an intimate bond between buyers and shopping websites and provided ample space for the development of e-commerce.
China boasted the world's largest 4G network and 361 million online shoppers by the end of 2014.
Stellar growth in e-commerce has lifted online payment and logistics companies as well, Sun said. China overtook the United States to top the world in terms of the business volume in express delivery in 2014.
Sun predicts surging e-commerce will generate fresh consumption demand, prompt a new investment wave and encourage innovation and entrepreneurship across the country.
China considers limiting third-party online payments
August 3rd, 2015China's central bank has proposed limiting the size of transactions through third-party online payment systems like Alipay to ensure security for consumers' information and money.
Under the proposal released for public consultation on Friday by the People's Bank of China (PBOC), the amount shoppers would be able to spend through third-party online payment per day may be limited to between 1,000 yuan (163.5 U.S. dollars) and 5,000 yuan, depending on how sophisticated the system's security checks are.
While platforms that have both digital certification and signature qualification checks will be exempt from the restrictions, the limit would be set at 1,000 yuan per day if the platform has only one qualification check.
If the system has two or more checks but they do not include digital certification and signature, the limit would be 5,000 yuan.
Where they are spending more than the sum allowed, consumers would be transferred to banking payment platforms to pay the surplus, according to the PBOC proposal.
Meanwhile, consumers whose accounts limit them to shopping payments will be allowed to spend no more than 100,000 yuan per year if the system is adopted. Those with more premium accounts that also allow for services like share purchases would be allowed to spend no more than 200,000 yuan per year.
The regulation is based on surveys of Chinese consumers' average spending via third-party payment platforms last year, according to an unnamed source from the PBOC.
The draft guideline also bans third-party payment platforms from opening accounts for institutions running financial businesses such as online lending firms to avoid risks.
Sony lines up new games for Chinese gamers
July 31st, 2015
Shuhei Yoshida, president of Sony's Worldwide Studios for SCE introduces Project Morpheus HMD, the company's latest virtual reality (VR) gear, during a press event held on July 29, 2015 in Shanghai.
A series of new games for Sony's PlayStation 4, PS Vita and virtual reality device Project Morpheus debuted Wednesday at ChinaJoy 2015 in Shanghai.
More than 70 new games will be launched in the Chinese market for PS 4 video game consoles in the coming month, Sony announced.
ChinaJoy, or China Digital Entertainment Expo & Conference, is the largest gaming and digital entertainment exhibition held in the Chinese mainland.
Sony debuted its game console PlayStation 4 in 2013, and started selling the Chinese version on March 20 this year.
Priced at 2,899 yuan ($468) for the basic package and 3,299 yuan for a console plus a camera, the PlayStation Eye, the products are available at Sony Store, Tmall.com and JD.com.
It is the second foreign console allowed to enter the Chinese market after Microsoft launched its Xbox One in late September.
A new rule that allows both foreign and domestic gaming console makers to manufacture and sell their devices anywhere in the country was announced last week, according to a statement from the Ministry of Culture.
Due to government officials' concern over objectionable content, China in 2000 banned gaming consoles via a moratorium. As a result, Microsoft, Nintendo and Sony, three of the world's largest video game console makers, were shut out of China's lucrative video game industry.
In 2014, the country limited foreign console makers to operations within the Shanghai Free Trade Zone (FTZ) in 2014.
Industrial insiders believe that such series of progressive policies could shake up the domestic gaming sector.
According to the working committee of China's audiovisual, digital publishing and game publishing association, in 2014, the sales volume of China's gaming market reached 114.48 billion yuan, up 37.7 percent year-on-year.
In the first half of 2015, the number reached 60.51 billion yuan, up 21.9 percent year-on-year. Since last year, overseas sales volume reached 1.76 billion yuan, reflecting a rapid growth of 121.4 percent.
A model poses with Project Morpheus HMD, Sony's latest virtual reality (VR) gear, during a press event held on July 29, 2015 in Shanghai.
Project Morpheus head-mounted display (HMD)
Shuhei Yoshida, president of Sony's Worldwide Studios, brought Project Morpheus HMD, the company's latest virtual reality (VR) gear, to the press event to demonstrate their Chinese strategies.
VR, also known as computer-simulated life, first appeared in science fiction in the1950's, and was developed for medical use, pilot simulation and military training in the 1990's.
The entire industry began to draw the public's attention as a developer kit named Oculus Rift, which was the first truly immersive VR headset for video games. It was initially mooted on the US crowd-funding platform Kickstarter by 9,522 backers who pledged more than $2 million.
Sony unveiled their bold VR gamble to the world at the Game Developers Conference in March 2014.
During the Electronic Entertainment Expo, or E3, held in Los Angeles this year, more than 20 demos designed for Project Morpheus were unveiled to the public.
"Summer Lesson", "The Deep", "The Playroom VR" and "Hatsune Miku Expo" will be demonstrated at the ChinaJoy PlayStation booth and visitors will have the chance to experience the Project Morpheus on the spot.
"Many people think that Project Morpheus is an accessory to PS4; the truth is that Project Morpheus is a new system, and both happen to work well together," Yoshida said during a group interview after the press event.
"Project Morpheus is still at version one, Sony is trying its best to bring the product to the fans, we are testing internationally, to make sure the product is improving," he said.
Sony announced at Game Developers Conference 2015 that Morpheus' consumer VR headset is due to ship in Q1 2016.
Yoshida said that the global launch time will the same, but he didn't give a specific date and he also mentioned that the device's price has not been confirmed.
According to Yoshida, PC games can be migrated to Project Morpheus. He noted one example, saying that after refined and optimized the code, a user migrated Oculus games to Project Morpheus within just two days.
Sony London Studios' Director Dave Ranyard, whose team is working heavily with the PS VR headset Project Morpheus, believes that VR HMDs could become the 'technological icon of the age', similar to Sony's Walkman in the 1980's and smartphones in today.
Lenovo leads salary list
July 23rd, 2015Yang Yuanqing, CEO of Hong Kong-listed Chinese computer technology company Lenovo Group, topped the 2015 Chinese Hong Kong company CEO salary list released by Forbes China, the daily newspaper Beijing Times reported on Wednesday.
Yang was the richest CEO in 2014 with an annual salary of 119 million yuan ($19 million), putting him in first place for the third consecutive year, according to the report.
This year's list included 334 CEOs of companies from the Chinese mainland that are listed in Hong Kong whose annual salaries exceeded 1 million yuan, up 107 from the previous ranking.
Forbes also released a 2015 Chinese A-share company CEO salary list, on which Ma Mingzhe, chairman of Ping An Insurance Co, was in first place with an annual salary of 109 million yuan.
China LinkedIn users top 10 million
July 22nd, 2015The number of LinkedIn users in China has topped 10 million, a year and a half after the world's largest professional network launched a Chinese version of its online services.
Founded in 2003 in the United States, LinkedIn has more than 300 million users. Before tapping into the Chinese market in February 2014, the company had just 4 million users from China, who registered on its global website.
LinkedIn China chief Derek Shen told reporters Tuesday that measures to boost its presence have included incorporating Twitter-like services Sina Weibo and Tencent Weibo into its platform and allowing users to bind their LinkedIn accounts with those on Chinese mobile app WeChat.
"We published more than 20 reports on the job market in China, which provided career advice for job-hunters," Shen said. He added that helping companies like PC maker Lenovo and telecom equipment maker Huawei recruit talent also enhanced its influence.
LinkedIn hopes to further tap growth by launching a job-hunting application for Chinese graduates, many of whom are struggling as a record number of young people search for jobs amid a slowing economy.
Volkswagen China car sales hit by slowdown
July 21st, 2015China, the world's biggest auto market currently in the throes of slowdown, has become a drag for Volkswagen, which had set a target to outsell Toyota, the world's biggest carmaker by sales volume.
In the first half of this year, Volkswagen's global deliveries shrank 0.5 percent from a year earlier to 5.04 million units as performance in China, its largest sales contributor, fell 3.9 percent to 1.74 million units, the company said yesterday.
That lagged the Chinese market's 1 percent growth in general, which is itself in a dramatic slump from a compound average growth of 16.6 percent from 2005 to 2014.
A 48 percent surge in SUV sales in China was the only bright spot in the first half of this year. And with just one localized SUV in its Volkswagen brand's portfolio here, the wheels of fortune have been on downward spiral for the company.
Sourcing about 30 percent of its sales from China, Volkswagen has a bigger risk exposure from the economic slowdown than its biggest rival Toyota, which accounts for only 10 percent of its sales in China.
Carmakers and dealers are trying to sail through the market downturn together. Volkswagen's Audi brand has set aside a 1.2 billion yuan ($193 million) subsidy plan for its cash-tight dealerships.
Earlier this month, BMW announced up to 2 billion yuan reward package for sales achieved by dealers in the second quarter. That was on top of the 15 percent quarterly sales target reduction.
Price war looms as smartphone market booms
July 20th, 2015
Domestic mobile phone makers demonstrate the selfie functions of their products at a smartphone expo in Nanjing, capital of Jiangsu province. Major Chinese players are gearing up for a price war in the high-end smartphone sector.
China's big players are gearing up for a price war in the high-end smartphone sector, and the only big winner will be the consumer.
Xiaomi Corp, Huawei Technologies Co Ltd and ZTE Corp's Nubia have all rolled out new products in what has been dubbed the "Godzilla" handset business, as they battle to wrestle away more market share from South Korean-based giant Samsung.
"By introducing premium devices, the average price of high-end smartphones will be dragged down," Antonio Wang, an analyst with the United States-based market research company IDC in Beijing, said. "This will benefit consumers."
It will also create more problems for Samsung, which has already been badly mauled by the aggressive tactics of China's big three.
Earlier this month, the world's largest smartphone manufacturer reported that its second quarter operating profit would probably fall by 4 percent to 6.9 trillion won ($6 billion) because of poor sales of its new Galaxy S6, particularly in China.
As the brand loses its mass appeal here, consumers are switching to cutting-edge domestic products from Xiaomi, Huawei and Nubia.
"Chinese smartphone companies are now more willing to invest in innovation by putting state-of-the-art technology into their devices," Xiang Ligang, an independent analyst and founder of telecom website cctime.com, said.
"They know the 'low performance for low price' strategy does not work in today's market. Cheap devices will never make big profit margins," Xiang said.
The rise of China's smartphone companies from low-cost labels to upmarket brands has been meteoric.
Xiaomi shipped out 34.7 million smartphones in the first half of this year compared to 26 million during the same period in 2014 without revealing detailed financial figures.
Huawei announced shipments of 31 million units during the same period, a 40 percent increase compared to last year, without revealing detailed financial numbers. Nubia has yet to report its shipment figures in China.
For Samsung, the data are depressing. In the first quarter of this year, its shipments to the Chinese mainland were 9.6 million devices compared to 20 million during the same period in 2014, according to IDC. That left it in fourth spot behind Apple, Xiaomi, and Huawei in China's smartphone market, which is still the biggest in the world with estimated annual sales of about 400 million handsets.
"It (the fall in Samsung shipments) highlights the volatility of Chinese consumers' brand preferences," Wang, of IDC, said.
And there could be more pain on way for the South Korean company, analysts point out.
Xiaomi, Huawei and Nubia have launched models that target the 3,000-yuan ($480) price range, which used to be Samsung's territory.
The Mi Note Pro from Xiaomi retails at 2,999 yuan, with the company reporting 1 million pre-orders before it hit the stores in May.
The P8 from Huawei came out in April and costs 2,888 yuan, while the Z9 from Nubia is more expensive at $3,499 yuan.
"These new products illustrate that consumers are shifting to devices that provide better user experience," Wang Jingwen, an analyst at Canalys China in Shanghai, said. "They are going up upmarket (which is where Apple and Samsung are)."
At the top of that pyramid is Apple, the iconic iPhone brand. Despite the high cost and high rental fees charged by telecommunication providers to use their networks, the iPhone dwarfs its rivals.
At the start of the year, Apple consolidated its No 1 position in China by introducing a trade-in program, which saw a jaw-dropping 14.5 million smartphones delivered to the Chinese mainland in the first quarter. That was 1 million more units than Xiaomi in No 2 spot, according to IDC.
Since iPhone models retail at around 4,000 yuan, the gap in revenue with Xiaomi was stretched even further. To eventually challenge Apple, China's leading companies will have to come up with better products and better deals.
"Apple's trade-in initiative attracted more mid-end Chinese buyers and further increased the distance between local players," Wang, of IDC, said.
Apart from having Apple and Samsung in their sights, China's big three will have to keep a close eye on a new wave of domestic rivals. "Bringing down prices will be part of their strategy as other players enter the market," Wang said.
Weeks after LeTV Holdings Co Ltd, an online video company, unveiled a large screen Android device, known as Le Max, in April, Xiaomi cut the price of its flagship Note Pro device by 300 yuan.
Motorola Mobility, now a Lenovo subsidiary, also followed suit by announcing a 300 yuan discount on its latest high-end Motorla X series model in a move to target young buyers.
Joining them will be a new smartphone launched by Zhou Hongyi, an Internet tycoon who owns the nation's largest online security company Qihoo 360 Holdings Ltd.
Qihoo has linked up with Dongguan-based budget contract phone maker Coolpad Group to produce the Qiku range in the fall. Prices are believed to be around 3,000 yuan.
"The competition will be extremely fierce this year for Chinese vendors, especially for those who are moving up to high-end segment," Zhou said. "But there will be winners."
30% of global duty-free shopping driven by Chinese travelers
July 16th, 2015Chinese shoppers drove 30 percent of all global duty-free sales in 2014. They have contributed the most to duty-free sales since 2009, and growth in duty-free spending outstrips local retail-sales expansion, said Catherine Lim, senior analyst at Bloomberg Intelligence.
The number of outbound Chinese tourists will surge 19 percent to 139 million this year and rise to 164 million in 2016, which will boost global duty-free and travel-related retail sales, Lim said.
Last year, Chinese tourists spent more than $163 billion on overseas shopping.
Chinese spending on tax-free shopping could hurt the country's retail sales, Lim said. Last year, Chinese duty-free spending grew 18 percent, faster than the 12 percent rise in domestic retail sales, based on Bloomberg Intelligence.
Chinese visitors to Japan surged 113 percent from a year ago in April, the 19th straight month of more than 40 percent growth as weaker yen fell against Chinese currency, data from Bloomberg Intelligence.
With South Korea grappling with MERS and other countries easing visa restrictions, Japan and other nations will draw more Chinese visitors, Lim said.
ZTE unveils 'Axon' phone with dual cameras in U.S. market
July 15th, 2015Chinese smartphone manufacturer ZTE unveiled Tuesday its latest offering "Axon" in New York, a Hi- Fi audio phone the company called its "first phone made in the U.S, for the U.S."
The device, a 5.5-inch unlocked phablet for the U.S., boasts of "duel lens," 13-megaixed and 2-megapixed camera on the rear, which would lead to sharper video capture.
The dual-lens system will allow users focus before and after taking a shot.
The features of the phone included low-light and fast-image capture and high-quality audio.
It is available for order direct from ZTE, Amazon, Ebay starting Tuesday, with shipping beginning on July 27.
Lixin Cheng, Chairman and CEO of ZTE USA, said, "We put consumers at the heart of everything we design, build and deliver, and our phones reflect what consumers want, value, and use. ZTE AXON is a product that devotes to meet all of consumers' requirements."
ZTE USA, the fourth largest smartphone manufacturer and the second largest in the non-contract market in the U.S., has more than 20 million customers in the United States.
Chinese shares continue broad rally
July 14th, 2015Chinese shares rallied for a third consecutive trading day on Monday, following dramatic moves by the government to stabilize the market.
The benchmark Shanghai Composite Index rose 2.39 percent to close at 3,970.39 points. The smaller Shenzhen Component Index surged 4.78 percent to close at 12,614.16 points.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, climbed 5.8 percent to end at 2,683.07 points.
Winners outnumbered losers by 856 to 44 in Shanghai, and by 831 to 11 in Shenzhen. Some 900 shares jumped by their 10-percent daily limit.
More than 1,000 firms continued to suspend trading of their shares.
The combined turnover of the two bourses rose to 1.174 trillion yuan (192 billion U.S. dollars), from Friday's 1.08 trillion yuan.
The Shanghai index climbed above the 4,000-point psychological mark during the afternoon session, before retreating to close at around 3,970 points.
Chinese shares began to pick up on Thursday, after a free fall since their peak in mid-June.
On Friday, the benchmark Shanghai Composite Index leaped 4.54 percent to finish at 3,877.8 points. On Thursday, the Shanghai index soared 5.76 percent, the biggest daily rise in six years.
Before Thursday, the Shanghai index had lost about 28 percent of its value since a spectacular bull run ended with a peak of 5,178.19 points on June 12.
For fear of the market rout threatening overall financial stability, the Chinese government stepped in with measures including pouring in funds and restricting futures trading on a major small-cap index.
On Thursday, Chinese police joined the securities regulator to investigate "malicious short selling", a practice held to be a big contributing factor in the market chaos. The central bank also reiterated that it will continue to support the market's liquidity needs.
Despite the eye-catching rebound, analysts have predicted some continuing instability in Chinese stocks.
Xu Xiaoming, a market commentator, said the rebound lost some momentum in the afternoon trading session on Monday. He said he expects the market to fluctuate in the coming two trading days.
Earlier, Minsheng Securities forecast that the market will struggle at times in the near future, as it will take time to disperse market panic and rebuild confidence.
Wanda 'a work in process' as it pursues shift to e-finance empire
July 13th, 2015Dalian Wanda Group Co Ltd announced moves over the weekend that it said will support its transformation into a services empire by 2018.
The conglomerate said that it would establish a financial group and that it would accelerate its acquisition of banks, securities firms and insurance companies in the second half of the year.
The moves were announced by chairman and founder Wang Jianlin during a strategy presentation in Beijing on Saturday.
Wang said that the vision for the financial group entails a focus on Internet finance, a strategy that will allow Wanda to distinguish itself from traditional financial enterprises.
As part of its transformation, Wanda will reduce the number of physical stores to cut costs and raise profits with the help of e-commerce and online payments, according to Wang.
Wanda now conducts its business in the financial sector mainly through 99Bill Corp, a Shanghai-based online payment service provider in which Wanda bought a 68.7 percent stake for $315 million in 2014.
In June, Wanda and 99Bill Corp jointly launched an Internet financial product to raise funds for Wanda to build shopping plazas.
The crowdfunding effort raised 10 billion yuan ($1.61 billion) within two weeks, according to the presentation.
In terms of expansion and diversification, Wanda will complete the acquisition of three domestic companies and three foreign enterprises in the second half, according to a press release posted on Wanda's website on Saturday. None of those companies was identified.
Wanda spent more than 15 billion yuan in acquisitions in the first half, taking a 20 percent stake in the Atletico Madrid football club in January, acquiring Swiss sports marketing firm Infront in February and buying a dozen cinemas in China and abroad in June.
It also invested 3.58 billion yuan in Suzhou-based online travel platform Tongcheng Network Technology Co on July 3.
Wang said that the group aims to derive more than 65 percent of income from services by 2018, which would be a decisive shift away from its current focus on property.
Alibaba to get boost from rural e-commerce
July 10th, 2015Group expects turnover to jump as more farmers trade online
Alibaba Group Holding said in a press release Thursday that it would generate more than 3 trillion yuan ($483 billion) in transactions this year, as the company is actively introducing e-commerce to rural areas.
"We believe that our global transaction volumes this year will surely surpass that of Wal-Mart Stores Inc," Zhang Yong, Alibaba's CEO, was quoted as saying in a press release e-mailed by Alibaba to the Global Times Thursday. The company handled 2.4 trillion yuan worth of transactions in 2014.
Alibaba's market valuation will rise if it can persuade 700 million people in China's rural areas to embrace e-commerce, according to the press release.
"Alibaba pins hope on rural e-commerce, which not only can generate new growth for the leading online shopping platform operator but also boost the rural economy," said Zhang.
As an example of the huge potential of rural e-commerce, the company revealed in the press release that in June, hundreds of thousands of residents in the rural areas shopped on its online marketplaces every day.
The e-commerce leader has already made strides in rural e-commerce, touting goods on its online consumer-to-consumer marketplace taobao.com to rural residents by painting advertisements on walls since 2013.
And in October 2014, Alibaba announced that it would invest 10 billion yuan to build 1,000 county-level and 100,000 village-level e-commerce service centers around the country within three to five years.
Its arch rival JD.com Inc (JD) also actively carved out space for rural e-commerce, running over 800 e-commerce service centers to support delivery and home appliances maintenance in more than 30,000 villages, a PR representative from JD told the Global Times Thursday.
The companies' foray into the rural market is in line with the aggressive push by central and local governments to promote rural e-commerce.
As the country's rural heartland, Henan Province in Central China had opened in Xinxiang 300 e-commerce service centers as of December. It plans to establish 1,200 in the city alone this year, according to an announcement on the Henan government's website in December.
The Ministry of Commerce and the Ministry of Finance in May reportedly announced that a group of 200 counties in China's central and western regions would receive 2 billion yuan in financial support from the central government as part of a rural e-commerce pilot program.
Premier Li Keqiang, who continuously emphasizes the key role of e-commerce in boosting the real economy, encouraged graduate students and migrant workers to start their own business such as e-commerce in the rural areas during a routine State Council press conference in June.
In May, some rural merchants reaped in as much as 16,000 yuan per month in profit by selling goods on taobao.com, according to media reports.
E-commerce, which can attract investment into and promote sales of local specialties, will play a key role in boosting the rural economy, Feng Lin, a Hangzhou-based independent analyst, told the Global Times.
Data from Ali Research, a market research arm under Alibaba, showed that online sales in rural China are expected to hit 460 billion yuan in 2016, compared to 180 billion yuan in 2014.
Feng's view was also shared by Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting.
"Rural residents like to shop on online marketplaces, which offer an easier and convenient access to various products sold around China and abroad, while farmers can sell their agricultural products online," which will also contribute to the local governments' fiscal revenue, Lu told the Global Times Thursday.
Given China's current economic slowdown, total government fiscal revenue stood at 3.64 trillion yuan in the first quarter of the year, up 3.9 percent from a year earlier. In the same period of previous year, the growth rate was 9.3 percent.
However, analysts said that much work remains to be done to ensure product quality and availability of capital.
E-commerce companies also expect to have specific regulations covering the rural e-commerce category.
JD told the Global Times in an earlier interview in May that the company is working together with local governments to improve distribution standards and quality control system for agricultural goods sold online.
Logistics is another bottleneck in the development of rural e-commerce, as not all express companies have distribution networks covering rural areas, said Lu.
Construction workers 'semi-unemployed' as real estate market cools down
July 8th, 2015
Migrant workers wait to find new jobs.
(ECNS) -- Chinese migrant workers have become "semi-unemployed" as a drop in the real estate market has cooled the construction industry.
About 503 million square meters of construction work was initiated in the first five months of 2015, while the decrease rate dropped 1.3 percent to 16 percent. About 351 million were related to residential houses, which saw a 17.6 percent decrease.
Although real estate is still managing to attract funds, the growth rate has dropped. Despite raising 3.2 trillion yuan (about $520 billion) in investments, the nominal growth rate still dropped 0.9 percent to 5.1 percent. Of the 3.2 trillion, 2.1 trillion was invested in residential houses. The increase rate was 2.9 percent, which was much lower than last year's 14.7 percent.
The construction industry employed more than 61 million or 22.3 percent of Chinese migrant workers in 2014, according to data from the National Statistics Bureau. Right now, a considerable number of migrant workers are finding themselves "semi-unemployed" in a lagging real estate market.
Construction workers have been "chilling" in a "semi-unemployed" mode, according to a construction contractor called Hu Cheng from Jiangxi province. Hu has been actively seeking construction businesses in east China for the past six years.
Since the Spring Festival, China's New Year in 2015, real estate construction work has seen more halts than starts in Nanchang, the capital of Jiangxi.
"Cranes just stand still out there," says Hu. "It's been half a year and I've worked for only about a dozen days. It used to be about one hundred days in previous years."
Pegatron adds staff in anticipation of more orders
July 7th, 2015Taiwan-headquartered contract electronics manufacturer Pegatron Group is reportedly expanding its workforce, a move analysts said on Monday is aimed at gaining more orders of Apple's next generation product at the expense of rival contractor Foxconn.
Pegatron's plant in Shanghai has launched a large-scale recruitment activity, planning to hire 40,000 staff in August to prepare for the mass production of Apple's new generation smartphone, widely tipped to be named iPhone 6s, Shanghai-based newspaper IT Times reported Monday.
Calls to Pegatron remained unanswered by press time, but according to information on the company's website, its Shanghai factory is schedule to hire people in July.
"I heard that Pegatron is hiring a large number of people in Shanghai" and another round of recruitment is expected to take place in September, Wang Yanhui, head of Shanghai-based Mobile China Alliances, told the Global Times on Monday.
The mass recruitment drive indicates that Pegatron has already got large-scale orders from Apple, which usually produces a batch of new devices in advance to cope with the peak sales period right after the introduction of new products, said Wang.
Apple is likely to announce its next smartphones in September, Forbes reported on Friday.
Pegatron Chairman Tung Tzu-hsien was quoted in a February press release posted on its website as saying that without doubt, the company will this year maintain at least the same level of product delivery for Apple as 2014 or slightly higher.
Wang noted that Pegatron is encroaching into Foxconn, another major Apple contractor from Taiwan, in part due to lower costs.
A report issued by New York-based nongovernment organization China Labor Watch in February showed that Pegatron's plant in Shanghai possessed an 8 percent cost advantage over Foxconn's factory in Longhua, South China's Guangdong Province, in 2014, translating into a $61 million advantage per year at just one of many Pegatron factories that serve Apple.
When contacted by the Global Times about whether Foxconn also has plans of expanding Apple production lines, the company's spokesperson said that they are not allowed to make any comments related to its clients.
Against this backdrop, Foxconn has already started diversifying its business, launching its online e-commerce marketplace in March to mainly sell consumer electronics products in the Chinese mainland market.
"Companies like Foxconn and Pegatron need to expand into other businesses to offset the costs of idle labor, because their major client Apple usually demands huge amounts of deliveries in the first and second quarter. Demands for Apple products are prone to decline in the third and fourth quarter, as consumers wait for launch of new versions," said Wang.
Fast fashion labels ride e-commerce boom
July 6th, 2015In February, one month before its first-year anniversary in China, Old Navy served as a sponsor of China's annual New Year's Eve gala.
This was a huge entertainment event that Chinese families watched together during the vacation period. Gap, its trendier sister brand, was also a sponsor.
"It was a promotion where Old Navy gets mentioned and you shake your phone and marketing and campaign messages appear," said Mike Barnes, Old Navy's general manager for greater China.
"Just in that one night?one shake?we got over 800, 000 shakes of people on WeChat. That's a staggering number when you think that we only have eight stores here."
At the time, it only had seven. It is targeting up to 15 by Christmas.
Western apparel and fast fashion brands have been flooding the Chinese market in the last few years. Many, like Zara, H&M and Gap, have succeeded.
Some, like Britain's Marks & Spencer, have erred. A fair chunk accelerated their migration to online sales in the second half of 2014.
Consulting firms like A.T. Kearney predict that China's apparel sector could grow by 15 percent a year until 2020?spurring a feeding frenzy from foreign brands.
"China today is the second-largest apparel market in the world. In five to 10 years it is believed that China will be bigger than the United States," Barnes said. "That's just a ton of opportunity, and that is why you see all the global competitors coming here."
Another "Super Cash" campaign, where customers earned "Old Navy money" that they could either share with friends via social media or redeem off future purchases, was so successful it may even be transferred to the United States.
"Sharing with friends?that is something we have never been able to do in the US," Barnes said. "It is an example of where China is leading the way."
Art Peck, the new CEO of Gap Inc, which also owns Banana Republic, Athleta and Intermix, discussed the shift from bricks and mortar to online and mobile under the term "Retail 3.0" in an interview with Fast Company.
Picking up on this thread, Barnes said: "In markets where you have a store presence, you have a stronger online business. Is there showrooming going on? Sure. Right now we see a need for both to exist. But it is rapidly changing."
Gap reported global online sales of $2.50 billion for 2014, up from $2.26 billion a year earlier.
Although it does not disclose country-specific figures in Asia, media reports said its China revenue hit $300 million in 2013, a number the group was expecting to see triple by 2016-17.
In China, total online retail sales surged 53.6 percent in 2014 to 2.8 trillion yuan ($450 billion), according to a March 31 report by Knight Frank. This accounted for 10.6 percent of all retail sales in the country, up from 7.6 percent in 2013.
Both Gap and M&S now have online stores on Tmall.com and JD.com, the country's leading online marketplaces. M&S saw clothing sales on the former spike 200 percent in the last quarter of 2014. In January, it launched a new dedicated kidswear store on Tmall offering more than 300 lines.
"Continuing our 'bricks & clicks' strategy, we are leveraging e-commerce to strengthen brand awareness and reach across the country," said a spokeswoman for M&S China.
H&M, based in Sweden, launched an online store in China in September and Zara, based in Spain, followed suit on Tmall, the largest B2C website in China, in October.
Old Navy has also jumped on the Tmall bandwagon as it finds non-traditional marketing methods to be the new normal in this country of 1.4 billion, half of whom now live in cities. "Our commercial plan is integrated, whether it's social, digital, omni-channel," Barnes said. "All the pieces should tie together."
Gap reported that its first-quarter global net sales contracted 3 percent year-on-year to $3.66 billion?it did not explain why?but there is no doubt that Old Navy's global success led the conglomerate's fortunes in 2014
Gap posted net sales of $16.44 billion in 2014, up 2 percent from 2013. Gap's sales were down 5 percent during the period. Old Navy's rose by the same margin.
In fact, one of the largest apparel brands in the US?Old Navy is bigger than Levi's, Adidas and Gap?will remember 2014 as one of its most successful years to date in its home market, where it has over 1,000 stores.
Now it must see if it can gain enough traction in China to carry Gap if the same happens here?after first enjoying a nice little piggy-back ride into the market.
"Brand awareness of international fast fashion brands has rapidly improved in China in recent years," said Regina Yang, director and head of research and consultancy at Knight Frank Shanghai.
"They have been successful because their small inventories and quick turnover allow them to adapt to changing consumer demands."
Fast fashion sells because the brands offer lower prices, fashionable designs, immediately available trends, high product variety and a strong global image.
Even though media reports claim it takes H&M and Zara three months to get new product ideas into their stores?or 10 months in Gap's case?clothes can go from the catwalk to the shelf in as little as four weeks.
This clearly appeals to Chinese consumers, who are known to be more fashion-forward and bigger risk-takers than their American counterparts. Often, the younger generation leads the way.
"Though both Gap and Old Navy are considered lower-grade and inexpensive among American consumers, their product lines and price points are attractive to Chinese youth," said Chiang Jeongwen, a professor of marketing at China Europe International Business School, China's top-ranked business school.
Old Navy's China business appears to be flourishing despite it willfully trampling over some of the golden rules for success here?it refuses to localize its products, for example?and at least some credit is due to Gap.
Foreign money pours into Shanghai FTZ
July 2nd, 2015Foreign investors have been flocking to the Shanghai Free Trade Zone (FTZ) as reforms in China's economic testbed keep gaining momentum.
The Shanghai FTZ has attracted foreign investment worth 23.5 billion dollars in the first five months this year, Shanghai Municipal Commission of Commerce said on Wednesday.
The money was five times the amount registered in the same period last year, the commission said.
The Shanghai FTZ was launched in September 2013 to test reform policies.
Foreign investors set up businesses in the Shanghai FTZ as reforms have adapted FTZ regulations in trade and finance to international standards, said Shang Yuying, director of Shanghai Municipal Commission of Commerce.
The commission said reform policies in engineering, tourism, and telecommunications have been particularly effective.
Stock markets show signs of recovery
July 1st, 2015
Chinese shares bounced back from early morning losses and closed sharply higher on Tuesday following a nightmarish two weeks.
After a two-week tumble, China stocks surged on Tuesday as a series of government measures bolstered investor confidence.
The CSI 300 Index, which monitors share prices of the largest companies listed in Shanghai and Shenzhen, jumped by 6.7 percent to 4,473.00 points, while the Shanghai Composite Index gained 5.6 percent to 4,277.22 points, the highest daily gain since 2009. The Chinese A-share market has fallen by about 20 percent from its peak in mid-June.
A series of measures to maintain market confidence have been introduced since Friday, including draft rules to allow pension funds to buy stocks, funds and equity-backed pension products.
That could channel more than 1.5 trillion yuan ($242 billion) into equity-backed investments, including about 15 billion yuan directly into the A-share market, Shanghai Securities News reported.
Pension funds may not be allowed to buy stocks before the end of this year, according to the draft rules, but investor confidence has been bolstered by the news, pushing up sentiments in the A-share market, researchers said.
"Although the pension funds may not help the A-share market in the short term, the draft measure, along with the recent cuts in the reserve requirement ratio and interest rates, show intentions to stabilize market incentives," a research report by Haitong Securities said.
The country's fund association said the falling prices presented valuable buying opportunities and it urged hedge fund managers to make rational investment decisions.
"Confidence is more important than gold," the Asset Management Association of China said on Tuesday. "Sunshine always follows rainy days," it added.
Brokerage firm Guotai Junan Securities said it would lower margin requirements for certain blue chips to lever-age investment values.
Leading asset managers echoed the sentiments to convince investors that the bull market was not yet over.
Managers of private equity funds also stated that they believe the market will continue to be bullish.
"From a mid-to long-term perspective, the foundations of the bull market have not been shaken. Instead, they have been consolidated amid corrections, and the market will be bullish in a more stable and lasting manner. We believe it is a rational decision and good timing for value investing," said Wang Yawei, president of Shenzhen Qianhe Capital Management.
Technology companies and brokerage stocks rallied on Tuesday, with an average rise of the sectors reaching about 8 percent.
Biggest swing since 1992 sends stocks lower
June 30th, 2015Chinese stocks edged down amid volatile trade, with the benchmark Shanghai index swinging the most since 1992, despite the rate cut announced over the weekend.
The Shanghai Composite Index slumped 3.3 percent to close at 4,053.03 on Monday, extending the loss from its peak on June 12 to more than 20 percent. The gauge swung between a loss of 7.6 percent and a gain of 2.4 percent within the market hours.
The Shenzhen Component Index sank 5.8 percent to 13,566.27 at the close.
"Interest rate cut and targeted reserved requirement ratio (RRR) cut simultaneously are a dramatic move. But the market has been anticipating such a move," said Hong Hao, chief strategist at BOCOM International Holdings, in a note released on Monday.
The People's Bank of China has lowered the RRR by half a percentage point and the benchmark interest rate for a third time this year by 25 basis points, announced the central bank on Saturday.
The one-year benchmark deposit rate has been lowered by 115 basis points since the beginning of this year and is now 2 percent, while that of the lending rate has been cut down by 100 basis points in total to 4.85 percent.
"Traders will likely seize the fleeting technical reprieve to exit their positions, and continue to induce short-term volatility," said Hong, adding that the outstanding balance of margin trades through non-brokerage channels can be double the official data of as high as 2 trillion yuan ($322.2 billion).
"The risk led by margin trading is manageable, as pressure tests have shown that the overall leverage ratio is still in check and below the cautious line," said a spokesperson of the China Securities Regulatory Commission in a written reply to media enquiries on Monday.
The forced closure of margin trades over the past two trading days via the HOMS system amounted to no more than 4 billion yuan, and another 2.2 billion yuan was closed on Monday morning, added the spokesperson.
The outstanding balance of margin debt on the Shanghai Stock Exchange fell for a fifth day as of Friday, according to the bourse's data.
Regulators are considering suspending initial public offerings to stabilize the country's tumbling stock markets, reported Bloomberg citing insiders familiar with the matter.
The CSI 300 gauge closed at 4,191.55 points on Monday, down 3.3 percent.
Asia's economic power triggers a capital flood into startups
June 29th, 2015Raising capital for a startup has traditionally been one of the most difficult parts of getting a business off the ground. But times are changing and many Asian startups have become billion-dollar success stories.
In just four years, Xiaomi Corp, China's largest smartphone vendor, became the world's most valuable technology startup with a valuation of more than $46 billion in December.
"Given Asia's high GDP growth and rapidly growing market size, it was natural for investors to look at China and other parts of Asia as places to invest," said Raman Chitkara, who leads the global technology practice at PricewaterhouseCoopers.
"They see the power of Asia?rapidly growing markets, rising new middle class, and growing urbanization?as accelerators for growth and high valuations. There is an entrepreneurial culture in Asia, particularly in China and India, and startups present a certain level of excitement.
"That, plus the potential for economic prosperity by building large-scale value over a short period of time, attracts people to start a business."
Zhongguancun district in Beijing alone gave birth to 49 startups a day last year. The State Administration for Industry and Commerce said nearly 3 million people set up their own businesses for the first time in the nine months from March last year, after China reduced the threshold for those who want to register a business.
At present, China has more than 1,600 technology incubators and hosts more than 1,000 entities investing in startups, with total venture capital exceeding 350 billion yuan ($56 billion).
Early this year, the government decided to set up a new national venture capital fund to help startups and promising entrepreneurs. The $6.5 billion fund will be used to support seed-stage technology startups in the country.
Peng T. Ong, founder of Match.com, the pioneering online dating service set up 20 years ago, recalled his tough days of searching for an investor for his startup business.
"It was harder then," said Ong, who now runs Monk's Hill Ventures, a venture capital firm in Singapore that invests in technology startups in Asia.
"But things have changed dramatically. With more business successes, huge Internet penetration and more mobile telephones, the Asian startup scene is altogether different now."
Flipkart, India's largest retailer by sales, has a success story similar to that of Xiaomi. Now valued at $15 billion, it was started by two friends a few years ago with $6,000 saved from their earnings.
Ma Rui, partner for China at the seed fund and accelerator 500 Startups, said the spectacular success of Internet-based businesses is fueling startup growth.
"Tech entrepreneurship is one of the few ways a talented young person with few resources and dollars can create something that affects millions of people in a fairly short amount of time."
Successful private enterprises are jumping on the bandwagon by developing incubation centers and investing in a growing number of tech startups in the region.
The Internet giant Tencent Holdings Ltd is building a center for technology startups in Chongqing, in partnership with the municipal government. It plans to develop 25 such ideas incubators across the country.
In April, Alibaba Group Holding Ltd announced it would set up a startup incubator for mobile Internet and mobile commerce in the Indian city of Bangalore, and Google has launched its startup incubator Campus Seoul in South Korea.
In India, startups have received some huge investments lately. Based on data compiled by a startup news website, YourStory, in the first quarter of this year 147 deals were put together. Indian startups raised $1.7 billion, registering a 300 percent annual growth. In the first quarter of last year alone, startups in the country raised $450 million. A total of 300 deals were closed last year. Kris Gopalakrishnan, co-founder of Infosys, one of India's biggest IT companies, said most of the investments from global investors or venture capitalists are happening at the seed stage.
"Angel funding typically happens locally," added Gopalakrishnan, who is also chief mentor of Startup Village, a technology business incubator in the southern state of Kerala.
Justin Hall, principal of Golden Gate Ventures of Singapore, said there is now more venture capital in the Asia-Pacific region than at "any other time in recent memory".
"It has had a tremendous catalyzing effect on the formation of new startups, from Singapore to Indonesia. These are exciting times for the sector," added Hall.
Taiwan's export orders drop for second consecutive month
June 24th, 2015Taiwan's export orders dropped for the second consecutive month to 35.79 billion U.S. dollars for May, down 5.9 percent from a year earlier, according to statistics released by the island's economic authority on Tuesday.
For the first five months of this year, overseas buyers placed orders worth 180.47 billion U.S. dollars with manufacturers in Taiwan, a decrease of 0.6 percent year on year.
Export orders are an indicator of actual exports a month or two later, and Taiwan is known as a big production base for electronics. Taiwanese export orders are, therefore, seen as a key reference for the global electronics sector.
Growth in export orders in May was only recorded in the information and communication sector, with an increase of 2.3 percent year on year, driven by strong demand for hand-held and wearable devices.
The electronics sector, however, posted a decrease of 3.5 percent due to emerging market's weak demand for smart phones and a drop in orders for televisions from Japan, the economic authority said.
In addition, two-digit year-on-year declines in export orders were reported in sectors including precision apparatus, plastic and rubber products, chemicals, base metals, and machinery
The largest orders came from the United States, totaling 9.79 billion U.S. dollars in May, up 5.2 percent from the same period last year, according to the economic authority.