Category: "News of China"
Qualcomm plans advanced facility for chip research
June 19th, 2015U.S. company teams up with Chinese vendors; analysts say move will boost market position
Qualcomm Inc is setting up a high-end semiconductor research facility with China's top chip makers. This is the United States-based company's biggest move in China after regulators imposed a record $975 million fine on Qualcomm for anti-competitive practices earlier this year.
Semiconductor Manufacturing International Corp, one of the largest chip foundries in the country, will be in charge of the daily operations of the new research center, which will be located in Shanghai, multiple sources told China Daily on Thursday.
Huawei Technologies Co Ltd and Imec, a Belgium-based nano-electronics research center, will also join the collaboration.
The agreement will be announced in the coming days during Belgian King Philippe's visit to China.
"It will be a ground-breaking partnership for Qualcomm, especially as it has not formed such an alliance till now," said a person familiar with the matter. At least three sources, working for the companies involved and for a third-party organization, confirmed the alliance. Qualcomm and SMIC declined to comment. Huawei and Imec were not reachable on Thursday.
It is unclear how Qualcomm will contribute to the partnership, but local vendors are eager to acquire chip design and manufacturing technologies from the world's largest mobile chipmaker. SMIC and Qualcomm are working together on chips made with the 28 nanometer process technology. The Chinese company is eyeing more techniques with higher precision.
Nicole Peng, research director at Canalys China, said any sort of technology transfer will be welcomed by the government as the company continues to remedy its relationship with authorities.
In February, the National Development and Reform Commission fined Qualcomm nearly $1 billion for violating China's antitrust law. But the investigator did not upset its patent licensing model, leaving the California-based company still hugely profitable in the country. China, the world's hub of electronics, accounted for half of its $26 billion in revenue last year.
"This is a good initiative for Qualcomm especially when it wants to consolidate and strengthen its market position in China," Peng said. "Investing in a R&D center can also allow Qualcomm to leverage its local talent pool."
Cisco Systems Inc said on Wednesday it is investing more than $10 billion in China over the next few years, despite a security-concern-led sales slump in the country.
Personal computer vendor Hewlett-Packard Co also sold the majority of its stake in a communications equipment subsidiary last month to a local partner to win more government procurement orders.
China is moving to locally made information technology products over fears that products provided by foreign companies may have security issues. The change in attitude made an array of overseas providers apprehensive that they were being driven out of the world's most vibrant technology market.
Pledging jaw-dropping investments and patent transfer is becoming a common practice for foreign tech companies to show they value the Chinese market and are eager to be part of government-backed IT projects.
Net giants make inroads in movies
June 17th, 2015Filmmakers insist they have retained their independence despite new investors
In an era of rapid change, it takes only a year for a whisper to grow into a chorus.
This time last year at the Shanghai International Film Festival, Yu Dong of Bona Film Group lamented that all filmmakers in China would eventually become subsidiaries of BAT?short for Baidu, Alibaba and Tencent, the country's triumvirate of Internet giants.
Indeed, this year's festival seems to have been taken over by these outsiders. At a forum called "Big Data: Empowering the Movie Industry", only one of the six panelists was a filmmaker. Xu Zheng, whose 2012 film Lost in Thailand broke the box-office record for a domestic release, is working on a follow-up feature, Lost in Hong Kong.
Alibaba, whose tentacles are all over the movie map, was one of the sponsors of the forum. Late last year, the e-commerce titan increased its stake in Huayi Brothers Media Corp to 8 percent, as did Tencent, making the two the film producer's second-largest shareholders. Early this year, Alibaba paid 2.4 billion yuan ($387 million) for 8.8 percent of Enlight Media, another major film studio, again taking the second-largest shareholder position.
The Internet behemoths have invested heavily in movie-related operations, including crowdfunding and ticketing, but they have yet to show stellar results for movie production.
Some, such as Youku Tudou-affiliated Heyi Pictures, have taken minority stakes in a few titles, but none of them have become runaway hits. Alibaba Pictures has many projects in the pipeline, and it needs a slew of solid winners to establish itself in the content business.
Wang Changtian, Enlight's CEO, said he does not feel he is working for Alibaba founder Jack Ma. "All of our products are designed to satisfy the need of the whole country, so we work for the Chinese film audience," he said.
Bona's Yu Dong, after announcing a 26-picture slate that aims for a total box office return of 10 billion yuan, said he is not ready to decide which Internet giant to work with. "When I hold firm to my own core competency and make good movies, I can fit in with the environment of any of them," he said.
Yu, who is taking his company private because its market capitalization?about 5 billion yuan?is a fraction of the Internet-affiliated rivals such as Huayi, at 79 billion yuan, or Englight, at 73 billion yuan, said that the market is treating his company unfairly for his nonaffiliation with technology leaders.
Meanwhile, Zhang Qiang, CEO of Alibaba Pictures, said he is reassessing the position of his company.
Instead of making it a traditional film production organization, it will use technology to "reshape the business and make it an entertainment company that spans the whole industry chain".
Liu Chunning, CEO of Alibaba Digital Entertainment Group, said: "The Internet raises efficiency with changing technologies while content remains the king. No matter how I hype technology, if I don't produce good movies, people won't go see them."
Alibaba to launch video service
June 16th, 2015
Company aims to create China's equivalent of Netflix
Chinese e-commerce giant Alibaba Group Holding is set to launch streaming video service in two months, a PR representative from the company told the Global Times on Monday, without elaborating on how the service will operate.
Alibaba is not yet ready to announce whether the service will be offered through Internet set-top box or online video platform, the staff said, noting that more details will be disclosed in a month.
Liu Chunning, president of Alibaba's digital entertainment business group, was quoted by Reuters on late Sunday that the online streaming video service will be named as TBO (Tmall Box Office), aimed at redefining home entertainment and creating the Chinese equivalent of HBO (Home Box Office Inc) and Netflix Inc.
As an affiliate of US media and entertainment group Time Warner Inc, HBO focuses on pay-television and subscription video on demand service, according to the company's website. And over 62 million subscribers of Netflix can watch more than 100 million hours of TV shows and movies per day on nearly any Internet-connected screen via a set-top box, according to Netflix's website.
Contents streamed on TBO are expected to be bought from China and other markets, and the in-house productions will also be an option, according to Liu.
Alibaba has been pushing its digital and entertainment strategy since 2014. Alibaba Investment, an investment arm of Alibaba Group, announced purchase of a 60 percent stake in ChinaVision, later renamed as Alibaba Pictures Group, for the price of HK$6.24 billion ($803.7 million) in March 2014, which was seen as a step to explore the cultural and digital entertainment sector.
In July 2014, Alibaba, which had bought 16.5 percent of Youku Tudou's shares in April 2014, announced a tie-up with U.S. entertainment company Lions Gate Entertainment Corp to gain access to the U.S. partner's TV shows and movies.
The launch of TBO is believed to be another big move in Alibaba's digital and entertainment strategy.
But analysts said that the operation of TBO, either as an online video platform or set-top box, will be challenging for the e-commerce giant.
"If Alibaba is considering developing Internet set-top box, the company's priority should be to figure out how to cooperate with a government-approved license provider," Lu Jingyu, an analyst from Beijing-based market research consultancy iResearch, told the Global Times Monday.
The State Administration of Press, Publication, Radio, Film and Television (SARFT) requires Internet TVs and set-top boxes to only have access to online content provided by seven licensed providers, which are mainly State-owned companies such as China Network Television, BesTV New Media Co and Wasu Media, according to a document released by the country's top media watchdog in October 2011.
The SARFT held talks with major online video websites in September 2014, setting a deadline within the month for them to remove their TV apps.
"Such moves hindered the opening of the Chinese Internet TV service," and affected online video platforms and set-top box developers, said Lu.
According to the Reuters report, about 90 percent of Alibaba's online contents would be paid for, either on show-by-show or monthly subscription basis.
"It is a bold move for Alibaba to charge fees for the majority of its online content, as most Chinese people enjoy free online videos, and online video providers like Baidu's iQiyi and Youku Tudou mainly make money from advertisements," Luo Lan, an analyst from Beijing-based market research firm Analysys International, told the Global Times Monday.
A survey of 17,909 Internet users in February by Penguin Intelligence, a research arm under Tencent Holdings, showed that over 75 percent of the participants frequently watched online videos. However, only 20 percent of the participants said they intend to pay for online content.
Three major Chinese airlines to provide in-flight WiFi services
June 8th, 2015
Passengers use WiFi services to surf Internet on mobile gadgets on a flight of China Eastern Airlines.
Three major Chinese airlines, including China Eastern Airlines, China Southern Airlines and Air China, have been approved to provide in-flight Wi-Fi services.
Passengers on these airlines won't have long to wait before they can log on and stay plugged-in during their flights.
China Eastern Airlines has become the first Chinese carrier to provide Wi-Fi services on both domestic and international flights.
According to the Ministry of Industry and Information Technology, the carrier is allowed to use the AsiaSat-6 satellite for Wi-Fi services on its 21 aircraft from June 5.
The services are expected to be offered in a month as the airline clears up several formalities ahead of the launch.
Zhang Chi, deputy director of the company's transition department, explains what this means for the airline.
"According to our market research, over 86 percent passengers will take flights with internet services as a priority. So providing wifi service is an important strategy for the company to attract passengers, and that's why we've decided to make this a standard service in our entire fleet. To make it happen, over 70 aircraft will be modified to install the necessary equipment before 2017."
After the installation is completed, through the AsiaSat-6 satellite, airplanes in the sky can get connected with network devices in base stations on the ground.
China Southern Airlines' senior engineer Mi Jisheng says the state-to-the-art technology enables air passengers to experience faster wifi service on plane than even at home.
"First, with the new technology, the bandwidth will be about 50-fold faster than that of the previous traditional technology. Second, the communication network will be much larger than before, and this time with global coverage. About 99 percent of intercontinental routes will be covered with satellite signals."
Currently, American Airlines, Qatar Airlines and many other foreign airlines offer wi-fi services on flights, with charges ranging from several US dollars to over twenty dollars.
However, Zhang Chi with China Eastern Airlines says their service charges are expected to be free.
"Through wifi access, we will offer a variety of internet services which are free for passengers. The service charges will be shared and paid by the airline and its business partners. We have collaborated with China Union Pay for passengers on the plane to make real-time payment through a cloud platform, which is a breakthrough for online shopping during flights."
With the commercialization of the service, passengers on plane can also enjoy a wide range of duty-free goods.
Experts predict the Wi-Fi service could bring about new business opportunities, especially in social media and data services.
Last year, around 390 million domestic Chinese passengers took flights and spent 1 billion hours in the air.
VAT net to be widened to realty, finance and consumer services
June 5th, 2015The government is likely to come out with a fresh value-added tax reform plan for the real estate, finance and consumer-oriented services industries next month, ending the three-year reform on all service industries, according to unconfirmed reports.
The Ministry of Finance is believed to have already drafted the plan and the same would be announced after approval from the State Council, the cabinet, Xinhua-affiliated Economic Information Daily said on Thursday, quoting unidentified people close to the ministry.
Even if the plan is sent to the State Council this month and approved in July, it would take another few months to finalize the implementation mechanism. So in all probability, the reforms are likely to be implemented by the end of this year, the sources said.
VAT rate for the real estate sector may be set at 11 percent, and for finance and consumer-oriented services industry at 6 percent, the report said. The ministry declined requests to confirm the report.
China started a pilot program to replace business tax with VAT in January 2012 in an effort to avoid double taxation, ease companies' tax burden and encourage the service sector. Reforms have already been implemented in sectors such as transportation, telecommunication and modern services, with real estate, finance and consumer-oriented services the only three sectors untouched.
Policymakers intend to wrap up the reforms this year. It is the debate over some specific issues that has hampered the progress. Among all technical challenges, "credit mechanism" is a focal point, experts said.
The VAT only taxes the "value added" at each stage of the supply chain, which generally allows businesses to credit tax incurred on business-related purchases. The VAT rate is generally higher than the current business tax. Any failure to "credit business expenses might actually increase the tax burden", which is contrary to what the policy intends to achieve.
"VAT invoices may not be readily available for some purchases, therefore the claiming of input VAT credit for the purchases may be limited. Besides land, major cost for developers will likely be raw materials (brick, lime, sand, stone, etc.) and labor. Suppliers of these may be individuals, or small business owners, who may not be able, or may have difficulty in issuing VAT invoices," said Alan Wu, national indirect tax leader at PricewaterhouseCoopers China.
The reforms also pose challenges to the projects that are under construction, or those where construction is completed but the sale is still going on, as it would be impossible to get input VAT invoices for the cost already incurred for credit claims. Since the applicable tax rate might be 11 percent and the current business tax rate is 5 percent, the costs would certainly go up, Wu said.
"A transitional measure might be more helpful to address these difficulties," Wu said.
For the finance industry, controversies are greater. Most countries exempt VAT on financial products. Kenneth Leung, indirect tax leader at Ernst & Young Greater China, said financial services subjected to VAT could be divided into three categories: Interest, earnings from financial trading, and service fees. According to the current policy discussions, the VAT charged on interest expenses and financial products might not be creditable as input VAT temporarily.
However, Wu said the reform will be less effective if any part of the chain is broken (input VAT not creditable), or if VAT on interest is not allowed as input credit. Regarding application of VAT to financial trading, one possible way out would be to continue the current net basis arrangement under business tax, while allowing a net negative position to be carried forward, without limitation, to offset against future positive position.
Gender balance remains elusive
June 4th, 2015
University students at a job fair in Nanjing, capital of Jiangsu province. Women are less likely than their male co-workers to believe that pay equality and equal opportunities exist for both genders in the workplace, a survey shows.
Although progress has been made, equality between male and female professionals remains a critical issue in China.
According to a survey released by global recruitment specialist group Hays on Tuesday, women are less likely than their male co-workers to believe that pay equality and equal opportunities exist for both genders in the workplace.
Hays polled 521 professionals in China, 55 percent of whom were female. Only 7 percent of women aged 25 or under think there is gender inequality of pay. But as they progress in their career, that number increases. About 29 percent of women aged between 26 and 40, and 35 percent of women aged 41 or above think there is gender inequality of pay.
In general, transport and distribution, mining and resources, as well as professional services, drew the most negative answers among both male and female professionals concerning equal pay.
But the majority of polled men think that the situation is not that bad, as only 13 percent of them think that equally capable men and women are not paid or rewarded equally.
"This suggests that most people in executive and senior management roles?the majority of whom are men?still fail to see any inequality when it comes to pay and career opportunities between the sexes. This makes it difficult to see how we will see any significant advancement in this area while the majority of people in senior roles do not recognize it as an issue," said Christine Wright, managing director of Hays in Asia.
In terms of career opportunities, 64 percent of the respondents think that the same career opportunities are available regardless of gender. But when it goes deeper down to study the answers of each gender, it is found that 47 percent of the women said that the same career opportunities were not open to equally capable colleagues of both genders, while only 24 percent of the male interviewees responded similarly.
However, the results in the Chinese market were better than the global average. But this is not a result of Chinese companies' spontaneous efforts to improve workplace equality. The incredible pace of growth in China and the skills shortage in the job market mean that "the country does not have the luxury to discriminate by gender", said Wright.
But it cannot be denied that most companies in China have been supportive of gender diversity policies. About 60 percent of the respondents working in the financial services sector said their companies have a gender diversity policy in place, followed by construction, property and engineering, and information technology and telecommunications.
Lawrence Lee, human resources vice-president for greater China and Mongolia at Hilton Worldwide, said that the company has networking and mentoring programs for female staff, as well as gender equality in its Leadership Committee dedicated to better understanding the needs of female employees. Reflecting the result of Hilton's efforts in this regard is the fact that 51 percent of the leadership positions in China are now held by women.
Wealthy Chinese lift travel spending
June 3rd, 2015Wealthy Chinese spent more on traveling last year with interest in experiential travel emerging as a new trend, a survey has found.
They spent U.S.$58,000 in average household consumption on travel last year, an increase of 5.5 percent year on year, according to the Chinese Luxury Traveler 2015 jointly released by the Hurun Research Institute and ILTM Asia. Their expenditure per capita hit U.S.$22,600.
The wealthy spent an average of 20 days on travel during the year, up 10 percent or two days more than 2013, according to the report which surveyed 291 super rich travelers, or those who spent U.S.$30,000 or more on travel last year.
Australia was the top destination for the wealthy Chinese, with France in second spot. The Maldives came in third in the preferred international luxury travel destinations, followed by Dubai, the survey found.
Leisure trips, polar exploration and global travel were cited as top choices last year, the report said.
The North Pole and South Pole have become popular as one third of the respondents said they went to either place last year, spending an average of U.S.$19,300 per capita.
"The recent popularity of Antarctica for the Chinese luxury travelers shows how much experiential travel is now on the cards," said Rupert Hoogewerf, Hurun's founder.
The report predicted holiday themes to change among the luxury travelers to enjoying local life and culture as well as novel and extreme challenging experiences.
Domestically, Sanya in Hainan Province, Tibet and Hong Kong were the most popular destinations for luxury travelers, the survey found.
Average new home price rises slightly in May
June 2nd, 2015More cities nationwide witness increase compared to April
The average new home price in China's 100 major cities increased by 0.45 percent month-on-month in May mainly due to the central government's policy support, data from a property research firm showed Monday.
Analysts expected the recovery to continue in the second half of 2015.
The average new home price in the 100 cities rose to 10,569 yuan ($1,705) per square meter in May from 10,522 yuan per square meter in April, which was a 0.01 percent month-on-month drop, according to a report released by property research firm China Index Academy (CIA) on Monday.
Moreover, 48 cities out of the 100 saw monthly price growth in May compared to 39 in April. The other 52 cities had monthly home price drops in May, while 60 cities had month-on-month price falls in April, the CIA report said.
"The real estate sector recovered in April and this development continued in May, thanks to the authorities' supportive policies, especially the new mortgage policy issued at the end of March," Gu Yunchang, deputy head of the China Real Estate and Housing Research Association, told the Global Times on Monday.
A joint notice on March 30 from the People's Bank of China (PBC), or the central bank, the Ministry of Housing and Urban-Rural Development and the China Banking Regulatory Commission eased mortgage conditions for second-home buyers and waived transactions taxes on apartment sales.
Afterward, Beijing announced lower down payment requirements for first-time buyers and easier conditions for second-home purchases, which took effect on Monday.
The PBC has also cut interest rates three times since November 2014, lowering homebuyers' financing costs.
Gu said these policies not only lowered the threshold for homebuyers but also gave them confidence in property transactions.
However, the recovery is more obvious in the first- and second-tier cities while third- and fourth-tier cities are still in the process of selling their large home inventories, Zhang Hongwei, research director at Shanghai-based property consultancy ToSpur, wrote in a research note sent to the Global Times on Monday.
"For the whole market, especially in small and medium-sized cities, there will not be a home price surge like what we saw in 2009 due to the remaining inventory of homes as well as the current supply and demand situation," Gu said, noting destocking should be property developers' top task instead of charging high prices blindly.
He also predicted that the property market may perform better in the third quarter of this year.
Zhang said transactions will increase in June because besides supportive policies, property developers, especially the listed ones, will try harder to promote sales in June to meet mid-year sales goals.
FTZ to support Shanghai's innovation plan
June 1st, 2015Shanghai's pilot free trade zone will beef up support for the city's initiatives to build a global technology innovation center and a world financial hub, the zone's regulator said.
"The expanded free trade zone is off to a good start in its first month of operation. Progress is being made on all fronts," said Sun Jiwei, executive deputy director of the zone's administration and head of the Pudong New Area.
The FTZ's steering committee has set 39 tasks it wants to accomplish this year to push forward reforms. They include the transformation of the government's role and follow-up management, as well as the promotion of the "four centers," Sun said, without elaborating.
To support the city's goal to become a world-class center of innovation, the zone will boost finance's role in the technology sector, reform the management of venture capital and private equity funds, expand government-led funds and boost participation of private capital, he said.
The regulator is also considering setting up an investment bank in Zhangjiang High-Tech Park. The regulator will encourage the park to work with financial institutions to develop financial products and services for firms in the technology sector, Sun added.
Efforts will also be made to further boost trade facilitation for high-tech companies, such as streamlining clearance procedures for imports and exports of biological materials in a bid to cut research and development costs for biomedicine firms, Sun said.
The FTZ is seeking to attract more multinational financial institutions after the BRICS New Development Bank chose Lujiazui for its headquarters.
Sunac drops Kaisa takeover offer
May 29th, 2015Indebted firm may solve its problems on its own
Tianjin-based developer Sunac China Holdings announced Thursday morning that it has decided to terminate the offer to acquire a stake in heavily indebted developer Kaisa Group Holdings because "certain conditions precedent have not been fulfilled."
Kaisa later on Thursday also announced the termination on the Hong Kong bourse, but it did not offer details on how it will deal with its debts and whether it is searching for a new acquirer.
On February 6, Sunac announced the offer to acquire a 49.3 percent stake of Kaisa for the price of HK$4.55 billion ($587 million), which was considered a lifeline for the troubled company.
However, Kaisa had to meet some conditions in order to proceed with the deal. Kaisa's debt defaults needed to be resolved, its debts had to be restructured and all irregularities in Kaisa's operations needed to be resolved, according to a filing from Sunac on the Hong Kong bourse on February 6.
Under the termination agreement, Kaisa will now have to refund HK$1.16 billion, half of Sunac's pre-payment, to Sunac before Friday and the rest before December 28, which may be a challenge for the indebted firm, analysts said.
Efforts to reach Kaisa failed as of press time.
Shenzhen-based Kaisa has defaulted on some of its debt payments in the past few months, which is partly the reason why its acquisition deal has drawn much attention, according to analysts.
Kaisa announced on April 20 that it had failed to pay $51.6 million in interest due from two offshore bond notes, becoming the first domestic company default in the offshore bond market.
The company also said it failed to pay a HK$400 million loan from HSBC in January. Kaisa said in a filing in February that its interest-bearing debts had reached 65 billion yuan ($10.48 billion) by the end of 2014.
"I think Kaisa may be seeking to resolve its debt problems on its own [after the deal termination], as the country's overall property market is warming up, which may help improve the company's cash flow," Wang Danqing, a partner at Beijing-based ACME Consultancy, told the Global Times on Thursday.
The central bank has cut the interest rate twice since the beginning of this year, which is also good news for indebted developers, Wang noted.
There were early signs hinting at the possible termination of the deal.
Media had reported on May 26 that Kwok Ying-shing, Kaisa's chairman, had reported to the Hong Kong securities authorities about irregularities in Sunac's acquisition.
The move, if true, showed Kwok's reluctance to sell the stake to Sunac, analysts said.
Kwok resigned from Kaisa as its chairman in December for "health" reasons after he was reportedly involved in an anti-corruption probe against Jiang Zunyu, a former senior Party official in Shenzhen. But Kwok reclaimed the position in April.
Li Zhanjun, an analyst from Shanghai-based housing market research firm E-house China, also said that Kaisa may seek to solve its debt problems on its own, otherwise "it would have held on to Sunac's acquisition offer."
This is not the first time that Sunac is seeking to acquire a developer as it looks to expand in southern China.
Sunac proposed to acquire Hangzhou-based developer Greentown China Holdings in May 2014, but the deal was also terminated in December.
"Sunac's offer to acquire the two companies played a crucial role in helping them [Kaisa and Greentown] weather the tough times," Li told the Global Times Thursday, as the pre-payment may have improved their cash flow.
But analysts said it is still too early to say that Kaisa is out of trouble now. Finance news portal yicai.com reported Thursday that Kwok is negotiating with overseas creditors on debt restructuring plans.
Kaisa still has not released its 2014 financial report.
Earlier media reports said that serious irregularities may have been the reason for the delay.
Sunac's shares on the Hong Kong bourse dropped 5.73 percent after trading resumed on Thursday. Trading in Kaisa shares was still halted Thursday.
Hainan makes industry advances, but further development needed
May 28th, 2015Tourism services and resources have continued to improve in Hainan province over the past six years, despite a global recession, a report has found.
The first of its kind to be issued in Hainan, the report offers data and consulting services for building the southern island province into a world-class tourist destination.
The overall situation of the province's tourism industry is evaluated under categories that include resources, the market for visitors, services and the environment.
The Hainan International Tourism Island Development Index Report (2015) was issued by the Hainan Provincial Tourism Development Commission, the Index Institute of the National Financial Information Center and the Hainan bureau of Xinhua News Agency.
From 2009 - when it was launched - to last year, the index, which measures the quality of the province's tourism industry, increased from a base of 100 with average annual growth of 17.95 percent. It stood at 228.34 in 2014.
Lu Zhiyuan, director of the provincial Tourism Development Commission, said the report provided detailed references for tourism authorities to make decisions when developing the industry, and also for companies to make investment plans.
Despite the achievements, Lu said the goal of establishing Hainan as an international tourism island has not been realized. "It needs to further improve the quality of its tourism products and services," Lu said.
He Lin, a marketing manager at a tourism agency in Haikou, said Hainan lacks high-end tourism brands, such as Macao's casinos.
"Hainan needs to further improve its infrastructure and services," he said.
China's campaign to simplify administration encourages foreign investors
May 27th, 2015Japanese fashion manufacturer and retailer UNIQLO opened its first store in Ma'anshan City in east China's Anhui Province earlier this year, thanks in part to China's campaign to streamline administration.
With the help of a local subdistrict office, Fast Retailing (China) Trading Co., Ltd. managed to obtain a business license, despite lacking an important document.
"We needed the department store's certificate of title for our business license before making orders and employing people. However, the construction work was not done yet and we didn't have much time to wait," said Qiang Lili, a manager with the company.
The company went to the city's government affairs service center for help and learned that Ma'anshan had just launched a new regulation simplifying business location registration.
According to the new rule, which went into effect on December 31, 2014, those who temporarily lack the certificate of title for business license applications can submit proof of location from the local subdistrict office instead.
"We know the streamlining campaign is going on and we experienced the convenience this time. It's encouraging," said Qiang.
In addition to making business registration easier, Ma'anshan has also shortened the vetting period for investment projects. For example, the approval time for industrial projects was slashed from more than 30 to just 17 days.
"Foreign investors came for business opportunities, but the better government affairs services gave us more confidence," Qiang said.
In the first quarter of this year, Ma'anshan City's utilization of foreign direct investment reached 347 million U.S. dollars, up 12.8 percent year on year.
Similarly, foreign direct investment in other provinces also achieved steady growth in the first quarter of this year.
In Hubei, utilization of foreign investment hit 2.24 billion U.S.dollars, up 10.1 percent year on year. In Jiangxi, utilization of foreign investment reached 2.21 billion U.S. dollars, up 10.3 percent, and in Tianjin, it hit 6.37 billion U.S. dollars, up 10.5 percent.
Since 2013, China's State Council has been streamlining government administration to reduce government control and unleash market vitality.
In two years, more than 700 approval items controlled by central government departments have been canceled or delegated to lower agencies, more than a third of all approval items handled by the State Council prior to streamlining.
Following the steps of the central government, local administrations also explored ways to simplify the approval process and lower the threshold for investment.
On May 12, Chinese Premier Li Keqiang again called for more efforts to streamline administration procedures at a national teleconference attended by senior and mid-level officials.
Li said the government will cancel more approval items, make business registration easier and waive administrative charges it deems unreasonable this year.
"It is a positive trend," said Wang Yukai, a professor from the Chinese Academy of Governance. "But to create a better foreign investment environment in the long run, the government management system should also be improved."
Retailers take online route to keep e-commerce firms at bay
May 26th, 2015
Customers browse bonded products at a Guangzhou Grandbuy store. The company, the largest department-store chain in the city, has opened cross-border e-commerce experience sections in three stores that adopt the online-to-offline mode.
Every retailer in China wants a piece of the growing cross-border e-commerce pie. Department stores are no exception, and they see the sector as a promising avenue of transformation in the era of online shopping.
Guangzhou Grandbuy, the largest department-store chain in Guangzhou, capital city of Guangdong province, opened cross-border e-commerce experience sections in three stores on May 15 that adopt the online-to-offline mode, which is "experience in store, purchase online".
People can browse a display of bonded goods in the experience section with help from shopping guides and place orders on gbhui.com, Grandbuy's e-commerce platform, in the store or at home.
"Most customers are not familiar with foreign goods so there is a great need for offline experience stores in cross-border e-commerce," said Liang Hailing, general manager of the e-commerce department of Guangzhou Grandbuy.
Display sites for bonded goods are springing up across the country.
Seven such centers, including the three at Grandbuy, have opened in Guangzhou in the past month.
Similar centers have been set up in Dalian, Liaoning province and Chongqing municipality.
About 100,000 people made reservations to visit Guangzhou's largest shopping and display store for bonded goods, located in the Nansha Free Trade Zone, during the three days after it opened on May 1, according to the Information Times.
But it is unclear whether the store can continue to draw crowds, since it is at least an hour's drive by car or 90 minutes by subway from the city center.
Department store chains with many branches have an edge in terms of sales channels, convenient locations and after-sales service, according to Liang from Guangzhou Grandbuy.
"What we are doing is to open cross-border e-commerce experience stores 'on customers' doorsteps'. Grandbuy has 26 stores, which are its biggest resource to achieve the goal," Liang told China Daily.
The company's first three cross-border e-commerce experience sections are located in bustling shopping areas and convenient to visit by using public transportation. The retail giant will expand its cross-border e-commerce business to all its 26 stores in the coming two to three years, it said in a recent press release.
Customers can return unsatisfactory goods to the department store and get refunds, without the need to apply online and re-ship the goods to overseas sellers.
"Cross-border e-commerce is still new to many Chinese customers and department stores are a familiar and reliable platform for them to embrace the new shopping mode," Liang said.
"Cross-border e-commerce and traditional e-commerce target different consumer groups. Those who will spend on imported goods ... are middle-and high-end customers, a group that largely overlaps with department stores' regular customers."
Scenting a business opportunity, department stores in China have dipped their toes in cross-border e-commerce one after another.
Chongqing Department Store launched its cross-border e-commerce platform in September last year and opened an offline experience store a month later.
Department stores in Guangzhou, where cross-border e-commerce accounts for 70 percent of the country's total, have also shown strong interest. The Guangzhou Friendship Store and Guangzhou Grandview are also preparing to launch such stores, according to Guangzhou Daily.
"Department stores in China are embracing the O2O?online-to-offline?business mode to address the challenge from online shopping. Launching cross-border e-commerce experience stores is one way to meet the challenge," Gordon Lam, general manager of the southern China office of Li & Fung Development (China) Ltd, told China Daily.
"However, they should be careful and not just follow the trend. They need to make a careful review of their supply chain and logistics arrangements to avoid competition between bonded and duty-paid goods as far as possible and ensure efficient delivery."
Ctrip buys eLong stake
May 25th, 2015Travel booking tie-up seen as boosting position
Ctrip.com International Ltd, China's largest online travel service provider, acquired a nearly 40 percent stake in domestic peer eLong Inc, a move analysts said on Sunday will further solidify its position amid fierce competition from its main rival Qunar.com.
NASDAQ-listed Ctrip announced on Friday that it had bought 37.6 percent of eLong from U.S.-based online travel company Expedia Inc on Friday for approximately $400 million, according to a press release on its website.
Upon the completion of the deal on Friday, Ctrip and the US seller also agreed to cooperate with each other in terms of user bases and product offerings, according to the press release.
Meanwhile, Expedia, which held a 62.4 percent share of eLong before the transaction, sold the rest of its ownership in eLong to other purchasers including Guangzhou-based hotel operator Plateno Group at an average price of $14.63 per share, according to a filing by eLong on its website on Friday.
The filing did not reveal the reason for the sale of eLong shares. Neither Expedia nor eLong could be reached for comment on Sunday outside of working hours.
"I'm not surprised to see Expedia divesting shares of eLong, which has suffered big losses and slow growth in its user base," Wei Changren, CEO of Beijing-based Jinlü Consulting, told the Global Times on Sunday.
NASDAQ-listed eLong on April 30 recorded a net loss of 180.7 million yuan ($29.2 million) in the first quarter of the year, widening from 35.4 million yuan over the same period of the previous year.
Its total revenue, gained mainly from accommodation reservation, declined to 225.8 million yuan during the quarter from 262.7 million yuan a year earlier.
ELong cannot really generate a good performance, as its main focus on accommodation reservation cannot help the company steal consumers away from competitors - Ctrip and Qunar - that offer more comprehensive businesses, said Wei.
A report released by Beijing-based market research firm Analysys International on May 18 showed that transportation ticket booking is now the major activity Chinese people conduct via online travel websites, accounting for 71.3 percent of the total transaction volume in the first quarter of 2015, followed by accommodation reservation.
Zhu Zhengyu, an analyst with Analysys International, however, believes that China's online hotel booking market is expected to foresee a fast growth in the following years.
The market reception currently is not warm, but online hotel booking will become heated amid online travel agencies' active promotion and is estimated to reach 112.27 billion yuan in 2017, up 114.8 percent from 2014, wrote Zhu in a research note e-mailed to the Global Times on Sunday.
After the disclosure of Ctrip's acquisition, eLong's share surged 8.67 percent, closing at $22.44 on Friday, while Ctrip closed up 17.56 percent to $84.63.
By contrast, its rival Qunar saw its shares dropping 1.04 percent to reach $52.34 on the NASDAQ on Friday.
The acquisition of eLong can further Ctrip's presence in the online hotel booking market, where the former provides budget and low-end hotel listings and the latter mainly targets high-end consumers, Zhu wrote in his report.
Both Zhu and Wei noted that with eLong as its new partner, Ctrip, which has also invested in rivals Tongcheng and Tuniu respectively in April and December 2014, will generate more pressure on Qunar.
"Merger and cooperation is likely an industry trend, especially in the mobile Internet sector where the accumulation of a user base is costly and uneasy due to a heated rivalry," said Wei, calling for tie-ups between Qunar and Ctrip to help relieve a cutthroat price war between the two giants.
Qunar, backed by search engine giant Baidu Inc, posted a net loss of 1.84 billion yuan in 2014, a big increase from a loss of 187 million yuan in 2013.
The company's final result for the first quarter of 2015 has not been made available to the public.
Ctrip on May 13 posted a net loss of 126 million yuan in the first quarter of the year, narrowing down from the previous quarter's loss of 224 million yuan.
The two companies could not be reached for comment by press time.
Prada gets a makeover
May 22nd, 2015
Based on the 2015 spring/summer collection, Prada's new store designs by some of the most acclaimed costume designers in the film industry, were shown for the first time in Beijing last month.
Top costume designers from Hollywood have re-designed the fashion label's flagship stores around the world. Sun Yuanqing looks at their recent changes in Beijing.
Fashion and film have always been closely linked. In Prada's latest project, Iconoclasts, they come even closer.
In 2009, the Iconoclasts, which literally means creating a classic by breaking the norm, recruited renowned fashion editors such as Carine Roitfeld, Katie Grand, Alex White and Olivier Rizzo to remodel Prada stores in Paris, Milan, London and New York.
This year, Prada invited some of the most acclaimed costume designers in the film industry to recreate its flagship stores, based on the 2015 spring/summer collection. First staged in New York, London and Paris during fashion weeks, the new store designs were shown simultaneously for the first time in Beijing last month.
Among the designers is Milena Canonero, the legendary Italian designer, who recently won an Oscar for her work on The Grand Budapest Hotel. It was her ninth nomination and fourth win at the Oscars. Her portfolio includes classic films such as A Clockwork Orange, Barry Lyndon and Out of Africa.
Canonero re-created her design in Prada's Paris store in Beijing's In88 branch. She drew on the feng shui philosophy, reinventing the space with elements such as water, fire, air, earth and most importantly, human love. Mannequins wore Prada clothes, striking unconventional poses expressing love and loss of love.
The feng shui philosophy has harmony with nature at its core, which compliments the rich and diverse style of Prada's new collection, Canonero says.
"It is very exciting to have this opportunity to display my project in China. I have a great love for this country, its history and traditions. I am interested in seeing how people will react to our Iconoclasts," she adds.
Arianne Phillips, stylist on Kingsman: The Secret Service, was responsible for the re-design of the Shin Kong Place store.
Phillips is a two-time Oscar nominee for Walk the Line and W.E.. She was also nominated for the British Academy of Film and Television Arts awards for A Single Man. She is also Madonna's stylist.
Phillips turned the store into a "cinematic dreamscape that tells stories and creates characters". Natural elements like purple sand, rocks and trees, as well as moss and orchids, adorn the store windows.
"Nature to me is real beauty," she says adding that the latest collection is as close to beauty as nature.
Now, mannequins in the store wear coats covered in patchwork and tribal designs, inspired by Prada's new collection.
Phillips recently directed her first film, a five-minute short for Prada called Passage. The movie, shot in the desert in California, depicts a girl's conceptual journey from one place to another.
The movie aims to give another view of the collection, she says.
Michael Wilkinson, who designed for the movie American Hustle, and his partner Tim Martin brought their work from Prada's Broadway store in New York to its store in China World Mall. They transformed the venue into a party from the 1970s, a great period of self-expression. The store is envisioned as a place where "uptown meets downtown and celebrity meets street style".
Mannequins are dressed in brocade from the Prada spring/summer 2015 collection mixed with archive pieces. The dresses are decorated with mirrored tiles, sequins and stones, as well as headpieces inspired by Peking Opera.
Miuccia Prada, designer and CEO of the fashion house, remains the biggest inspiration for the designers.
"She always surprises me. She doesn't follow trend and we want to honor that spirit," says Wilkinson.
Lenovo, Alibaba in 'smart' alliance
May 21st, 2015
Smart TVs of Lenovo Group Ltd on display at a home appliance expo in Beijing. The company is setting up a new subsidiary to sell televisions online.
PC maker, e-commerce firm in partnership to sell television sets online
Lenovo Group Ltd is setting up a new subsidiary to sell televisions online, the company said on Wednesday.
Joining hands with Alibaba Group Holding Ltd's cloud computing arm, the new company is Lenovo's latest attempt to catch up with market leaders Xiaomi Corp and LeTV Holdings Co Ltd.
Lenovo had until now been a niche player in the TV market after more than three years of unsuccessful competition with Xiaomi and LeTV. Its strategy of relying on existing sales outlets and slow response to emerging demands, such as premium video content and streaming sports broadcasts, were the major reasons cited for its failure to catch up with peers.
Xiong Wen, who has been heading the Internet TV business for Lenovo, was appointed the CEO of the new company called 17TV. On Wednesday, Xiong introduced a 55-inch TV that can play ultra-high-definition and three-dimensional videos content. The product is priced at 2,999 yuan ($483), about 1,000 yuan cheaper than Xiaomi's flagship TV.
Alibaba's cloud unit, which runs a self-developed operating system YunOS, will be pre-installed on the TV sets of Lenovo. YunOS, a four-year-old system, is available on a small number of partners' smartphones, tablets and TVs and its market share is nothing compared to Google Inc's Android.
Xiong did not disclose details of the partnership with Alibaba. Besides operating systems, the Hanghzou-based company will provide video content and an online retail platform for 17TV, according to information acquired by China Daily. Online sales will be the main focus for 17TV.
The new company has also partnered with the video arm of Baidu and Shanghai-based BesTV New Media Co Ltd to provide more than 800,000 hours of content, according to Xiong.
"Lenovo is good at providing high-quality after-sales services and it will be a major strength for us," he said, adding Lenovo-made hardware and service plus Alibaba's software support will help 17TV acquire enough market share to be a strong player. Xiong did not disclose the sales target.
LeTV is looking to sell about 3.5 million TVs and Xiaomi is aiming at 1.5 million units, according to research firm All View Consulting.
Antonio Wang, a Beijing-based analyst at industry consultancy International Data Corp, said grabbing market share will not be the major target for 17TV. Instead, the company will help Lenovo find a way of doing business on the Internet.
"A smaller, more independent TV unit will give Lenovo flexibility and quicker answers to the market changes. Lenovo is desperate to accumulate online marketing capability," Wang said. "Lack of online marketing experience saw it lag LeTV and other Internet-oriented vendors."
Wang said giving Xiong's team a bigger say over marketing may help Lenovo win some of the shipments in the long run.
Tencent Holdings Ltd, Baidu Inc and Alibaba Group Holding Ltd have all been in the smart TV sector for about two years, but stiff competition has driven most of the Internet giants out of the market. Xiaomi and LeTV are the strongest emerging players to challenge traditional TV makers such as Samsung Electronics Co, Sharp Corp and local vendors TCL Corp and Skyworth Group.
The market share of Internet TVs remains small in the Chinese TV market, but the growth is vibrant. About 8 percent of the TVs sold in the country during the first quarter were models that can be connected to the Web, while the proportion was 3 percent a year ago, said All View Consulting.
Tencent to launch ideas incubator in SW China
May 20th, 2015Tencent will build a center for tech startup in southwest China's Chongqing in partnership with the municipal government, the company said on Tuesday.
The 28,000 sq meter shop, located at the new north zone of Chongqing, can house up to 230 startups and will open this year.
Tencent has plans for 25 such ideas incubators across China.
The plan is part of a broader deal between Tencent and Chongqing to let the Internet play a more active role in regional economic growth.
Chinese Premier Li Keqiang has promised to encourage innovation from the grassroots with various forms of government support including funding and office space.
Tencent, Alibaba and Baidu are investing in a growing number of tech startups, necessary in the intense competition to stay ahead in China's internet sector.
Steel companies eye online success
May 19th, 2015
An iron and steel company in Lianyungang, Jiangsu province. E-commerce is expected to help steel firms avoid overcapacity and address low profitability concerns.
The China Steel and Iron Association and several industry partners joined hands to set up the Steel E-commerce Research Center on Monday, with an eye on upgrading and transforming the industry reeling from low profits.
The research center, initiated by the China Metallurgical Industry Planning and Research Institute, will conduct preliminary research for steel companies taking the e-commerce route and also provide suggestions to policymakers to help the industry develop in a healthy and regulated manner.
Li Xinchuang, head of the institute, said existing problems for the industry include vicious competition, inaccurate trading data and improper disclosure of customer information, all of which need to be solved and regulated urgently.
According to industry data, there are 178 steel e-commerce trading platforms at present in China, accounting for about 27.6 percent of the domestic online commodity trading platforms.
Last year, steel e-commerce platforms reported total trading volume of more than 60 million metric tons and transaction value of over 200 billion yuan ($32.34 billion), accounting for about 10 percent of the total steel traded in the country.
Wang Changhui, co-founder of Zhaogang.com, one of the leading steel e-commerce platforms in China, said his platform has about 40,000 monthly active users and they have created a huge database that can be used by other steel companies.
"The logistics cost of steel trading in China is much higher than in other countries," he said. "The platform will effectively cut logistics cost for steel traders by reducing intermediate links."
According to Wang, the platform had an average trading volume of about 3 million tons of steel every month. "We will provide reliable storage, processing, logistics and financing services for small steel traders, which will help them survive in the sluggish market," he said.
Nie Linhai, deputy director-general of the department of electronic commerce and information at the Ministry of Commerce, said China's e-commerce sector had embraced rapid growth in the past few years and it is time to consolidate the gains.
"E-commerce transactions have seen a 40 percent year-on-year growth from last year during the first quarter of this year. However, medium and small-scale steel companies still should do proper due diligence before they take the e-commerce route to avoid risks because innovation is easy to talk about but difficult to achieve," Nie said.
Gan Yong, vice-president of the Chinese Academy of Engineering, said taking the e-commerce route will help steel firms avoid the overcapacity situation and address low profitability concerns.
CICC starts restructuring
May 18th, 2015China International Capital Corporation (CICC), the country's top domestic investment bank, has started restructuring into a joint stock limited company, the firm said on Saturday, as it prepares for an IPO later this year.
The first shareholders' meeting of the joint stock limited company was held in Beijing on Friday, the company said in a statement, adding it elected the company's first session board of directors and supervisory committee.
The company said in March it appointed veteran insider Bi Mingjian as its new chief executive.
Alibaba to invest more abroad with globalization a priority
May 15th, 2015Alibaba Group Holding Ltd will invest heavily in existing and new ventures abroad, making its push beyond the China market a top priority, the Chinese e-commerce leader's new CEO Daniel Zhang Yong said.
Zhang's comments have come at a time when Alibaba aims to maintain its rapid growth even as the prospect of e-commerce saturation at home looms over the company.
"We must absolutely globalize," Zhang said in his first speech since taking up his new post, according to a report on Thursday on Alibaba's news and commentary website alizila.com.
The vast bulk of Alibaba's revenue comes from its dominant domestic online marketplaces, but the company has been investing in a range of sectors abroad. It announced on Tuesday it would set up a cloud computing base in Dubai, and boosted its stake in US e-retailer Zulily Inc.
Alibaba, which handles more transactions on its platforms than Amazon.com Inc and eBay Inc combined, would continue to invest heavily in new and existing overseas operations, Zhang was quoted as saying. Those included AliExpress, a platform for overseas consumers to buy Chinese goods, and Tmall Global, a marketplace for overseas goods to be sold online in China.
Separately, Alibaba said in a press release e-mailed to the Global Times Thursday that the company has made an investment in express delivery firm Shanghai YTO Express (Logistics) Co together with Yunfeng Capital, a private equity firm partly owned by Jack Ma Yun.
The value of the deal was not disclosed in the press release.
China ranks as hub for LCD making
May 14th, 2015China has become a global hub of LCD display manufacturing as domestic firms will start mass production of liquid crystal panels and overseas giants set up facilities in the country, a research firm said yesterday.
The production of large-size LCD panels in China is estimated to reach a capacity of 232.3 million square meters this year, a 7.3 percent increase over 2014, according to Taiwan-based TrendForce.
"Backed by the huge internal demand, China-based TV brand vendors have secured their dominance over the domestic market and setting their sights abroad," said Boyce Fan, senior research manager for TrendForce.
Major Chinese panel manufacturers BOE Technology Group, China Star Optoelectronics Technology and Nanjing CEC-Panda LCD Technology Co have begun mass production in their latest plants at the start of second quarter.
Alibaba to establish technology JV with Meraas
May 13th, 2015Aliyun, Alibaba's cloud computing subsidiary, signed a deal to set up a technology joint venture with Dubai-based Meraas on Tuesday, in order to boost big data and cloud computing services in the Middle East and North Africa region (MENA).
The new company, to be headquartered in Dubai, will offer system integration services to help private companies and government institutions in the region to reduce IT spending.
It will build Aliyun's seventh data center, with four others in the Chinese mainland, one in Hong Kong and one in the United States.
Neither company disclosed the investment amount or their separate stake.
The company will offer services for six key pillars including transport, communications, infrastructure, electricity, economic services and urban planning to help transform the emirate into a smart city, said Meraas Chairman Abdulla Al Habbai.
"We strongly believe that the new company will alter the information technology landscape of the region," said Abdulla Al Habbai.
"Dubai's advanced infrastructure and economic strength is a good match for our technology edge, and with Meraas we will be able to provide local entrepreneurs with vital infrastructure that will ignite innovation and help them to succeed," said Jack Ma, Founder and Executive Chairman of the e-commerce giant Alibaba Group.
The Information and Communication Technology (ICT) industry in the MENA region is witnessing unprecedented growth. An International Data Corporation (IDC) report anticipates regional ICT spending to surpass 270 billion U.S. dollars in 2015.
Smartphone market falls for first time in six years
May 12th, 2015
Smartphone market in China fell for the first time in six years in the first quarter of this year, with the volume reaching 98.8 million units, a drop of 4.3 percent year-on-year, said a report released by market intelligence firm International Data Corporation (IDC) on Monday.
China's overall mobile phone shipments reached 109.8 million units, a fall of 5.6 percent compared to the previous year, according to the report.
"The key reason for the slowdown is the market saturation. How to attract more consumers is the top priority for future development," said Kitty Fok, director of IDC China.
Statistics from IDC showed that domestic smartphone market saw intense competition in the past five quarters, as the top position witnessed frequent changes with Samsung, Lenovo, Xiaomi, Apple all occupying the spot alternatively. "Some brands experienced major slump in sales this quarter," said Wang Jiping, chief research officer of IDC China.
"Another reason for the decline in overall sales is that customer loyalty isn't what it used to be, and that is why we are seeing so many brands," Wang added.
According to Wang, to compete with Apple's iPhone 6 and iPhone 6 Plus, domestic makers are keen on improving their innovation abilities to stimulate consumption. In order to reduce the cost of distribution, some of them have developed new selling methods, such as online sales, physical stores, business to business to consumers (B2B2C), and even crowdfunding.
Tay Xiaohan, Senior Market Analyst with IDC's Asia/Pacific Client Devices Group, told chinadaily.com.cn, that due to the market slowdown in the Chinese mainland, domestic manufactures have accelerated their plans to expand into India and Southeast Asia.
"The golden rule of success is how to depute channels of distribution and build localized marketing strategies," said Tay.
Smartphones that are priced lower than $150 will see more growth, said Tay. The market potential will be realized as more local phone users switch to low-end smartphones.
Guangzhou to offer govt-backed ‘Uber’
May 11th, 2015(ECNS) -- The southern Chinese city of Guangzhou is planning to introduce its own taxi-hailing service as business booms for private Internet-based companies like Uber and the local Didi, Southern Daily reported.
Work to develop the Ruyue (by appointment in English) app, which is supported by the city's Traffic Committee, began in January and internal trials in February.
After participating in tests, taxi driver Chen Ming said the app has three main function options: immediate use, reservations, and a pick-up service. Ideally, the app would help users find a taxi within eight minutes.
A total of 2950 taxis, mostly from state-owned companies, have registered with the system, allowing users to book a ride via telephone, Internet or through the app itself, once it begins operation.
Su Kui, the committee's director of passenger transportation management, said the system represents an innovation in terms of taxi management and will use medium and high-end cars while drivers as employees are free of operational risks or other fees.
It was added that more than enough time has been spent testing the system to better provide services.
An official from a state-owned taxi company said Guangzhou would ensure that cars are legal and safe, with some taxi-hailing services run by Internet-based companies not meeting such criteria.
However, it is estimated that prices obtained via the app would be three times higher than when using a taxi in the traditional way and about five times higher than when using taxi-hailing touts. Currently, taxi-hailing app operators often offer a large subsidy to drivers or users in order to expand their market share.
An insider said state-owned taxi companies have no funds to compete in the price war with Internet giants, but that their strengths lies in safety and experience of drivers.
Ding Li, a professor of economics at the Academy of Social Sciences of Guangdong Province, said the government would be better off mapping out the rules and ensuring sound development of new companies instead of jumping into the market themselves.
China sees travel boom in May Day holiday
May 5th, 2015Heavy rain in some parts of China during the three-day May Day holiday did not dampen the enthusiasm of holidaymakers, with the number of travellers by rail and road both up from a year earlier.
Some 41 million trips were taken by train between April 30 and May 3, an increase of 10.9 percent from the previous year, with 1,505 extra trains running during the period, said the China Railway Corporation.
On May 1, the first day of the public holiday, 11.9 million trips were taken by rail, setting a daily record.
The toll fee exemption during the holiday boosted travellers hitting the road, with traffic on the nation's 10 most important highways growing 2.8 percent from the previous year, data from the Ministry of Transport revealed.
Home prices fall slightly nationwide in April
May 4th, 2015Reduced decrease in 100 big cities a sign of market recovery: analysts
Housing prices in 100 of China's major cities dropped by 0.01 percent month-on-month in April, 0.14 percentage points lower than that in March, data showed Friday, a sign that the housing market is warming up.
The average price of a new home in the 100 cities was 10,522 yuan ($1,695) per square meter in April, data from property research organization China Index Academy (CIA) showed.
For the 10 biggest cities such as Beijing, Shanghai and Shenzhen, new home prices increased 0.12 percent month-on-month to 18,961 yuan per square meter in the month, CIA data showed.
Shenzhen recorded the highest monthly growth rate of 1.09 percent among the 10 biggest cities in April, according to the CIA.
Home transactions have been picking up after the central government loosened the housing down-payment policy on March 30, Li Zhanjun, analyst from Shanghai-based housing market research firm E-house China, told the Global Times on Sunday.
On March 30, the People's Bank of China (PBC), the country's central bank, together with the housing and banking authorities, announced a relaxation on loan requirements.
For home buyers with an outstanding mortgage who are applying for a mortgage for a second home, the minimum down payment was cut to 40 percent, from the previous level of 60 to 70 percent.
Meanwhile, the minimum down-payment rate for first-home buyers who use the public housing funds has been cut to 20 percent from 30 percent.
Zhang Dawei, analyst from Beijing-based Centaline Property Research Center, said that the housing market is recovering more quickly in first-tier cities like Shenzhen and Beijing, where more people plan to buy a second home and could benefit from the lowered second-home mortgage rate.
Though China's second and third-tier cities are still suffering from oversupply in the housing sector, analysts noted that smaller cities would also see local housing market recovery after the policy boost.
"Local governments will launch more policies to support the housing market as a way to boost the economy," Li noted.
The Bureau of Housing and Urban-Rural Development of Foshan, South China's Guangdong Province, decided to stop reviews of home buyers' qualifications starting on Friday, according to Guangzhou-based newspaper Nanfang Daily's report Thursday, making Foshan the first city in Guangdong to lift the home purchase restrictions, the report said.
Also, the central bank announced to lower the reserve requirement ratio (RRR) by 1 percentage point on April 19, the second time it has cut the RRR this year. The move was also seen as a positive step in helping real estate companies obtain financing, according to the CIA's report.
The PBC has also cut the interest rate once this year.
Zhang said the home prices will continue to rebound in the next few months under these supportive policies.
Wal-Mart to open 115 new stores in China
April 30th, 2015U.S. retail giant Wal-Mart Stores Inc plans to open 115 new outlets by 2017 and remodel more than 50 others this year to offset slowing growth in China, a top company executive said on Wednesday.
"Over the next three years, we will increase investment across our business operations in China, as the country is a top priority for us," Chief Executive Doug McMillon told reporters at a news conference in Beijing.
The expansion of Wal-Mart, almost one-third by presence in China, is part of the company's multi-format strategy, which will include super centers and Sam's Club formats in cities such as Shanghai, Shenzhen and Wuhan from 2015 to 2017, creating more than 30,000 jobs.
The U.S. retail chain has spent 600 million yuan ($96.8 million) to remodel more than 90 stores and now plans to invest more than 370 million yuan to upgrade 50 stores this year to better serve the Chinese customers, McMillon said.
The move came after top global retail giants such as the United Kingdom-based Tesco Plc and France's Carrefour SA, found the going tough in China, especially due to slowing economic growth and hot competition from online grocery stores.
Last year, Carrefour closed eight stores, while German retail giant Metro AG said it was closing its consumer electronics business in China. Tesco reported 5.74 billion pounds ($8.6 billion) of net losses, its biggest annual loss in its 96-year history.
Though online grocery businesses have changed the way consumers shop for goods, McMillon said he believes that physical stores would continue to prosper. "Some people may prefer to shop online, but some shop for fun, and they like to select fresh food for themselves, or maybe they want to go out anyway," he said.
Raymond Bracy, Wal-Mart China's senior vice-president of corporate affairs, said that an expanding middle class is encouraging for Wal-Mart to move into the emerging third-and fourth-tier cities, adding that the company would also push for further development of e-commerce.
The retail giant's purchase of a majority stake in the Chinese e-commerce company Yihaodian has been approved by regulators in August.
Since its entry into China in 1996, Wal-Mart has opened 412 stores in 165 cities and partnered with nearly 20,000 local suppliers.
China to adjust resource tax and fees
April 29th, 2015China will reform the resource tax of several natural resources and cut unnecessary fees starting from May, according to a statement released after a State Council executive meeting presided over by Premier Li Keqiang on Tuesday.
Resource taxes of rare earth, tungsten and molybdenum will be levied according to price instead of quantity. Reasonable tax rates will be worked out with no more tax burdens on enterprises.
Meanwhile, the central government will exempt mineral resources compensation fees, and ban illegal charges on the three resources by local governments below the provincial level.
The three resources will also be exempt from export tariffs from May,the Ministry of Finance announced last Thursday.
Nepal quake may dampen China trade
April 28th, 2015Tibet exports to South Asia affected by blocked route
The 8.1-magnitude earthquake that struck Nepal on Saturday and killed over 4,000 people may dampen the Sino-Nepalese bilateral trade, an expert said on Monday.[Special coverage]
Sino-Nepalese bilateral trade might substantially decline in the short term, as a major trade route between China and Nepal had become blocked after the earthquake, said Hu Shisheng, director of Institute of Asian and African Studies at China Institutes of Contemporary International Relations.
The trade route, namely the Sino-Nepalese Highway and opened to traffic in the 1960s, connects Lhasa, capital of Southwest China's Tibet Autonomous Region and Kathmandu, capital of Nepal.
The Xinhua News Agency reported on Saturday that a section of the highway, from Nielamu to Khasa, two towns on the border of Nepal and Tibet, had been blocked by landslides caused by the earthquake.
Hu told the Global Times on Monday that the possible slide in the Sino-Nepalese bilateral trade would not strongly affect Nepal's economy, but it might seriously impact Tibet's economy.
Hu said that Nepal might increase reliance on Indian imports to make up for the loss of imports from China. But "most of the commodities in Tibet have been exported to South Asia via Nepal. When the major route between Tibet and Nepal is cut off, Tibet's export market will be almost completely destroyed," said Hu.
The Xinhua News Agency reported in January that Tibet's exports to Nepal had reached 10.65 billion yuan ($1.72 billion), which accounted for 91.15 percent of the overall trade value in Tibet.
However, an employee of the board of trade of the Tibet local government told the Global Times on Monday that the earthquake "has had little impact" on the bilateral trade between Tibet and Nepal.
Apart from the Sino-Nepalese Highway, another roadway between Jilong, a Tibetan town and Rasuwa, a Nepal district, had also been affected by the earthquake.
The roadway was officially put into use in December 2014 and could connect Tibet and Kathmandu.
But the National Development and Reform Commission released a message on Sunday that a section of the Jilong-Rasuwa roadway had been reopened.
Hu said the Jilong-Rasuwa roadway was in better condition than the Sino-Nepalese Highway. He suggested that the roadway should be improved so it could replace the Sino-Nepalese Highway in trade.
He also said that China's humanitarian aid to quake-hit Nepal could be seen as an opportunity for China to increase infrastructure investment in Nepal in the future.
According to a China Trade News report on April 24, Sino-Nepalese bilateral trade had reached $2.33 billion in 2014, up 3.38 percent year-on-year. China's exports to Nepal surged 3.28 percent to $2.283 billion in 2014, while Nepal's exports to China rose 8.5 percent to $47 million.
Alibaba, China Telecom tie up to sell phones
April 27th, 2015Chinese e-commerce leader Alibaba Group Holding Ltd and State-owned China Telecom Corp Ltd have tied up to sell inexpensive smartphones aimed at boosting mobile commerce in smaller cities and rural areas.
The phones, dubbed "Tianyi Taobao Shopping Handsets," will come installed with either an app for easy access to Alibaba's flagship Taobao online shopping platform or its home-grown YunOS mobile operating system, Alibaba said in a statement late on Friday. Buyers will be eligible for four months of free 2G data service.
The partnership is a bid to deepen Alibaba's e-commerce base in less developed parts of the country and promote its mobile operating system in a shrinking, cutthroat handset market.
Six models produced by Coolpad, Hisense and TCL will come with the Mobile Taobao app pre-installed.
Mobile Taobao is China's most popular mobile shopping app with more than 200 million monthly active users, the statement said.
Another eight models, made by less-known brands including Uniscope, Ctyon and Kingsun, will run YunOS, providing buyers with an Alibaba account for shopping and cloud-based storage, and other services, the statement said.
Some 557 million people in China access the Internet via mobile devices, according to government data.
But shipments in China were 389 million phones in 2014, down from 423 million the previous year, according to China's Ministry of Industry and Information Technology.
In January, Alibaba said the number of mobile monthly active users nearly doubled in the third quarter from the same period the previous year to 265 million.
The proportion of its gross merchandise volume derived from mobile also grew.
Alibaba says it has an 86 percent share of China's mobile commerce market.
In February, Alibaba announced that it was taking a $590 million stake in Meizu, a relatively obscure domestic smartphone maker.
China employment growth slows in new precedent
April 24th, 2015Growth in the number of people employed in China's urban areas slowed for the first time since the global financial crisis in the first quarter of 2015, the Ministry of Human Resources and Social Security (MOHRSS) said on Friday.
January-March, China's employed rural population grew by 3.24 million, 200,000 less than the same period last year, MOHRSS spokesperson Li Zhong said at a press conference.
FTZ to cut travel time within Pearl River Delta
April 23rd, 2015Nansha to spearhead financial reforms, service sector growth, green urbanization in Guangdong
By 2017, it will take only 30 minutes to go from Nansha, which lies at the estuary of the Pearl River, to Hong Kong or Macao.
The area is improving its transportation infrastructure now that it has been designated as part of the China (Guangdong) Pilot Free Trade Zone.
Nansha, a southern coastal district of Guangzhou, the capital city of Guangdong province, is 70 kilometers from Hong Kong, 89 km from Macao and 111 km from downtown Guangzhou. With an area of 783 sq km, similar to Hong Kong or Singapore, it is located in the center of the Pearl River Delta Region, a major coastal economic center adjacent to the Yangtze River Delta Region.
Within the district, 60 sq km comprising seven separate sites have been designated as part of the Guangdong FTZ, which was approved by the State Council last December as one of the nation's four FTZs.
Nansha FTZ is the largest area among the three regions that form the Guangdong FTZ. The other two are Hengqin Island in Zhuhai and Qianhai in Shenzhen, with geographical proximity to Nansha.
"The positioning of Nansha as part of the Guangdong FTZ is that it will be built into the central business district in the Pearl River Delta Region connecting ... Guangdong, Hong Kong and Macao," said Wang Wei, chief planner of the Nansha office of the Guangzhou city planning bureau.
According to Wang, 120 km of high-speed roads have already been completed, out of 200 km in the development plan of Nansha. Those roads include a ring road around Guangzhou, one that connects the area with Hong Kong and Macao, and a highway-rail bridge connecting Shenzhen and Maoming.
"The Nansha zone is going to be the experimental area of Guangdong's endeavor in industrial modernization, financial reform, service industry development and environment-oriented urbanization," noted Wang. "In particular, it is the central region for the integrated development with Hong Kong and Macao."
"By 2017, when most of the transportation routes have been built, it will take only half an hour to go from Nansha to Hong Kong or Macao," said Wang.
Jiaomenhe, an area in central Nansha that covers a mere 3 sq km, will be the service center for foreign investment in the FTZ. A total of 5 million square meters of floor space has been planned for companies' headquarters, particularly small and medium-sized enterprises.
"In my view, an FTZ should just be like Hong Kong," said Wu Yunyuan, the owner of an Australian wine import company, which registered in Nansha right after the Guangdong FTZ was approved by the central government in December 2014.
"One of the biggest attractions of Hong Kong is its duty-free products. I believe Nansha will soon offer duty-free products too," said Wu. "Moreover, I appreciate the efficiency of the FTZ in administration. It took only one workday for me to change my company's main business from wine import from various countries to exclusively from Australia."
The Nansha Harbor in the north, measuring 5 sq km, was originally developed in the 1990s by the late Henry Fok Ying-tung, a Hong Kong tycoon, into a leisure service area. The harbor has 300 yacht berths, and two cruise home ports are being planned.
According to Wang, the establishment of the Guangdong FTZ is driving demand for the office buildings under construction in Nansha.
"We noted surges in property sales in Nansha last November and December," said He Ling, head of the market research department of Savills Property Services (Guangzhou) Co.
"The FTZ is definitely going to benefit the housing market in Nansha in the long run if the planning and development are well implemented."
Guangdong is the first province that released a general development plan within the framework of the national "One Belt, One Road" strategy. The plan lists more than 10 projects for the first three years starting from 2015, including the construction of a power plant in Vietnam and metals investments in Australia.
"Nansha will benefit from the 'One Belt, One Road' strategy not in terms of economic growth but in terms of experiments that will be able to be carried out in the district," said Guangzhou Mayor Chen Jianhua.
The GDP of Nansha last year was 100 billion yuan ($16.3 billion), accounting for only one-17th of the overall GDP of Guangzhou province.
"However, it plays a crucial role in the province's economic modernization, particularly now that (there is) an FTZ. The new economic rules, the business environment, the transformation of industry and the introduction of international standards practiced in Nansha, if successful, will be quickly promoted in the rest of Guangdong province," said Chen.
Largest coal firm in NE China struggles to cut losses
April 22nd, 2015The largest coal mining group in northeast China is struggling to reduce its losses and pay thousands of its employees.
Heilongjiang Longmay Mining Holding Group Co. Ltd., suffered around 5 billion yuan (815 million U.S. dollars) in losses last year due to the drop in coal prices, the exhaustion of mines and high production costs.
With 240,000 employees, the state-owned firm has subsidiaries in Jixi, Hegang, Shuangyashan and Qitaihe in Heilongjiang Province. The group started management restructuring last year in an attempt to give its subsidiaries more power to become self-operating market entities.
However, some managers have not been paid since last September, a senior executive of subsidiary Shuangyashan Mining Co. said on Tuesday.
Structural streamlining should be finished by August, which will reduce the number of administrative employees from 36,000 to 20,000.
The company will also expedite development of its coal-related chemical industries.
Longmay's difficulties reflect the wider economic slowdown in Heilongjiang, which only grew by 5.6 percent last year, much lower than the national rate of 7.4 percent.
Economic growth in Jilin and Liaoning province was also weaker than the national average.
Earlier this month, Premier Li Keqiang urged northeastern regions to offer preferential policies to encourage innovation and entrepreneurship; to promote systemic reform in major state-owned enterprises; and support the growth of micro, small and medium-sized firms, including private enterprises.
"Due to shrinking coal demand and the company's accumulated problems, Longmay faces losses and strained cash flow. However, it is thinking about ways to guarantee employees are paid," an executive of the group told Xinhua.
Song Yufei, acting chief accountant of Longmay Mining, said the group would reduce costs and losses by improving management and follow up outstanding payments totalling 4.8 billion yuan.
In April, the provincial government loaned 500 million yuan to Longmay Mining and earmarked a special unemployment insurance fund of 500 million yuan and another 100 million yuan for those laid-off to find new jobs.
Foreign seed producers to be saddled with tough regulations in China
April 21st, 2015Chinese lawmakers are looking at limiting foreign access to the country's seed production industry.
The Standing Committee of the National People's Congress is now considering an amendment to make seed production part of the national security lexicon.
If passed, this would require seed producers or research firms with any foreign investment undergo new security assessments.
Foreign investment, mergers or technological cooperation by foreign companies with Chinese seed producers will also be strictly scrutinized.
The proposed changes come amid concerns in China about the production of genetically-modified foods.
Automotive industry's profits take a tumble
April 20th, 2015China's auto industry's profits have been on a downward trend this year, plagued by a slowing market and plunging car prices.
The sector's profits dropped by 5.4 percent in the first quarter from a year earlier, according to data from the National Bureau of Statistics.
This is the first quarterly profit decrease in three years, said Chen Xi, a senior analyst from the bureau's China Economic Monitoring and Analysis Center.
The industry's sales profit ratio slumped 0.6 percentage points to 7.9 percent in the first quarter of this year, from the last quarter of 2014.
Almost one-fifth of the automakers and spare parts producers in China were in the red, a 7 percentage point increase, according to the data.
"The hardship could be attributed largely to the market deceleration, car price cuts and growing marketing costs," Chen said.
Total vehicle sales in China climbed by 3.9 percent to 6.15 million units in the first quarter, according to the China Association of Automobile Manufacturers.
Sales of passenger cars decreased by 0.36 percent to 3.10 million units and micro bus sales plunged by 17.84 percent to 32.64 million units.
A slew of carmakers cut prices this year in an attempt to boost sales amid the slowing market.
China's top automotive group SAIC Motor slashed prices of its MG and Roewe models by 10,000 yuan ($1,600) to 20,000 yuan last week.
Shanghai Volkswagen?SAIC's joint venture with Volkswagen?cut the prices of its Touran, Polo, Tiguan, Passat and Lamando models by as much as 10,000 yuan on April 5. The Lamando compact sedan hit the market just three months ago.
On April 11, Sino-US joint venture Chang'an Ford offered price concessions of 7,000 to 11,000 yuan by paying car purchase tax for buyers.
Hyundai Motor's joint venture with Beijing Motor also started providing customers interest-free loans for two to three years earlier this month.
Analysts predict more carmakers will have to join the price war to boost sales later this year to survive.
Shi Jianhua, deputy secretary-general of the auto association, said the overall market downturn would push the auto industry to further polarize.
"Carmakers which have competitive products will continue to have decent profits, but those without competitive products will have meager profits and even losses," Shi said.
According to the statistics bureau, fixed-asset investment in the auto industry has also slowed due to the market downturn.
Fixed-asset investment in the first quarter grew by 5.1 percent year-on-year. The pace is down 18.2 percentage points from a year ago.
Growth of employment in the auto industry also slowed to 3.9 percent in the same time period.
Chinese SMEs confidently join global competition
April 17th, 2015With increasing manufacturing capability and desires to expand their business, more and more Chinese manufacturing companies, especially small and medium-sized enterprises (SMEs), are looking beyond Chinese boundary to join global competition confidently.
At the ongoing Hanover Fair, the world's biggest industrial trade show, nearly one sixth of the exhibitors, came from China.
"With years of investment in technology innovation and improvement in product quality, we feel that we have gained enough strength to compete with foreign companies. So we decided to get out and broaden market overseas," said Li Wenguang, sales chief of a 400-employee manufacturer of reduction drives in China's central Hubei province.
According to Li, the company, Hubei Planetary Gear Boxes, was founded in 2004 and had earned a strong market position in China. But it was not satisfied with the status quo and wished to gain more business.
It was the first time that his company attended a foreign trade fair.
Compared to Li's company, Anyhertz Drive from Shenzhen, which started exporting five years ago, was more experienced in foreign business, as a quarter of the variable-frequency drive manufacturer's total sales come from overseas.
"Our main foreign markets were in Southeast Asia and the Middle East. In Hanover, we wish to get more resources and expand our markets," the company's foreign business chief Ocean Wang said.
For some Chinese SMEs, the purpose of expanding foreign business is not just making money.
"We also wish to help promote our national brand and improve the reputation of 'Made in China'," said Yanbeen Deng, vice president of Sure Instrument from Tianjin.
" 'Made in China' does not mean low price and low quality," Deng said, adding that the competitiveness of Chinese products increased tremendously in recent years thanks to Chinese manufacturers' flexibility in providing services and increasing investment in research and development.
"We see more opportunities as our nation is more and more open to the outside world, and we are confident to join global competition and to win in foreign markets," he said.
At the Hanover Fair, Chinese exhibitors could be seen in almost every exhibition hall.
"I feel that it is a very good strategy of Chinese companies to be here year by year continuously on the trade show," said Jochen Koeckler, a member of the Managing Board of Deutsche Messe responsible for the fair.
"That is a strong signal that China is really willing to be more open, and is willing to be one of the industrial nations of the world."
Realty growth sinks to single-digit level
April 16th, 2015
A man inspects a property model display on June 14, 2014 in Rizhao, Shandong province.
Housing sales remain soft despite several policy easing measures announced by government
First-quarter investment in the real estate industry plunged to the lowest point in nearly six years, according to data released by the National Bureau of Statistics on Wednesday.
Investment in the property sector, a pillar of China's fixed-asset investment, expanded by 8.5 percent year-on-year, dipping from 10.4 percent in the first two months.
The pace of growth was the weakest since July 2009, which was the aftermath of the global financial crisis, and a far cry from the 30 percent-plus rates recorded just four years ago.
In the previous property downturn, which occurred in the second and third quarters of 2012, growth rates remained above 15 percent.
"China's property sector is still in a bad way. Prices continue to slide. Without a turnaround in loan growth, it's difficult to see a rebound in real estate," said Tom Orlik, chief Asia economist of Bloomberg.
Statistics suggest that investment growth in the sector is set for further slowdowns, which would drag down overall economic growth.
For example, funds raised by developers in the first quarter contracted 2.9 percent year-on-year, while new housing starts plunged 18.4 percent.
Yu Bin, a leading scholar with the Development Research Center of the State Council (cabinet), told a news conference earlier that real estate investment growth will decelerate further from 10.5 percent last year to about 7 percent this year. That would be about the same pace as the target for GDP growth.
In the longer term, property investment growth will stabilize in the 7 to 8 percent range, he said.
Investment is a lagging indicator that usually runs about three months behind changes in actual home sales, experts said. Given that relationship, last month's sales performance implies that investment will stabilize in the second half of this year.
First-quarter housing sales by area fell 9.8 percent, the NBS said. That was a big improvement from the whopping 17.8 percent contraction in the first two months.
Calculations by China Daily show that in March, home sales were just marginally below the year-earlier levels: 0.9 percent down by area and 0.2 percent lower in value.
The NBS does not provide single-month data.
However, policy loosening in late March failed to ignite sales, to the surprise of many observers. After a soft patch in the first week of April, sales in the second week continued to fall.
According to the China Index Academy, the research branch of SouFun Holdings Ltd, sales in the 38 cities it monitors fell 11.2 percent last week, compared with the previous week.
In late March, the central bank said that commercial banks could reduce their minimum down-payment requirements to 40 percent from 60 percent for buyers of second homes who have outstanding mortgages on their first homes.
Separately, tax authorities said that individuals selling an ordinary home would be exempt from the usual 5.5 percent tax if they had owned that unit for more than two years, down from five years previously.
The housing authorities also said that the government would curb land supplies in second-and third-tier cities in an effort to rein in oversupply there.
Ding Zuyu, president of China Real Estate Information Corp, said that several factors had undermined the effectiveness of the policy changes.
For one thing, the Qingming (tomb-sweeping) festival is considered an inauspicious time to buy a home. The holiday fell from April 4 to 6.
Another factor, according to Ding, is that the implementation of the support policies is taking time to trickle down to the local level. Further, supplies of new apartments dwindled during the festival.
As the policies take effect nationwide, their impact will be fully felt starting from the second half of April, he said.
Chinese household income continues to grow in Q1
April 15th, 2015The average per capita income of Chinese households continued to rise in the first quarter of the year, the National Bureau of Statistics (NBS) said Wednesday.
Average per capita household income rose 9.4 percent year on year to 6,087 yuan (992.30 U.S. dollars), recording 8.1 percent growth after inflation.
The household income growth rate for 2014 was 8 percent.
Per-capita disposable income for urban people hit 8,572 yuan, up 8.3 percent. The growth rate was 7 percent in real terms.
Disposable income for rural residents stood at 3,279 yuan, up 10 percent. In real terms, it climbed 8.9 percent.
The income gap narrowed with urban residents earning on average 2.61 times more than their rural counterparts, down from a calculation of 2.66 in the same period last year, according to the NBS spokesman Sheng Laiyun.
Income growth surpassed gross domestic product (GDP) growth in the first three months, which clocked in at 7 percent, down from the 7.3 percent registered in the fourth quarter of 2014.
This still meets the official annual growth target of around 7 percent for 2015.
China created 3.2 million new jobs in urban areas in the first quarter, said Sheng, adding an NBS survey showed that China's urban unemployment rate was "stable" at around 5.1 percent, unchanged from the rate in 2014.
The consumer price index, the main gauge of inflation, in the first quarter averaged 1.2 percent, the lowest since the fourth quarter of 2009 and lower than the government target of 3 percent, NBS announced Friday.
Huawei aims high with innovation, entrepreneurship
April 14th, 2015From a company on a shoestring budget at the time of its founding to a world renowned telecommunications giant, Huawei Technologies proves that commitment to entrepreneurship and innovation pays off.
"The only reason why Huawei exists and flourishes is its aim to better serve customers," said rotating CEO Hu Houkun.
"The only way for Huawei to win the market's trust and respect is through diligence," Hu said.
Founded in 1987 with a registered capital of 21,000 yuan (3,400 U.S. dollars), Huawei took only eight years to achieve an annual sales of 1.5 billion yuan.
In 2004, Huawei launched a subsidiary in Britain. Within three years, it had orders from Germany, France, Italy and Spain.
At the end of March, the company reported a 32.7 percent increase in profits in 2014 to 27.9 billion yuan. Its revenue grew to 288 billion yuan, up 20.6 percent.
The growth was due partly to Huawei's development of consumer business, mainly smartphone sales. Consumer business revenue hit 75.1 billion yuan last year, up 32.6 percent.
A close look at the company's track record reveals the main driver behind its growth is its attention to innovation and research and development (R&D). In 2014, 40.8 billion yuan went on R&D, 29.4 percent more than in 2013 and 14 percent of revenue.
In the past decade, Huawei has spent more than 190 billion yuan on R&D. Among its 150,000 employees, more than 45 percent are engaged in innovation, research and development.
Huawei has been granted 36,511 patents and currently holds over 170 key positions in major international standards organizations, driving the improvement of industry standards.
"Huawei endeavors to offer the people of the whole world, especially in developing countries, fast and convenient connections at an affordable price." Hu said.
Huawei's ascent has not been free from obstacles: popularity breeds suspicion. Security forces in the U.S. and the UK accused the company of spying, but Huawei has been cleared through lack of evidence.
The UK's Huawei Cyber Security Evaluation Center, which includes representatives of the British government and intelligence services concluded in a report published at the end of last month that "any risk to UK national security from Huawei's involvement in the UK's critical networks have been sufficiently mitigated."
Beijing seeks new private investment to expand subway
April 10th, 2015Move comes after construction costs soar in past few years
Beijing plans to attract more nongovernment funds to fuel the rapid expansion of the subway network, the company responsible for providing finance and planning new projects has revealed.
Construction costs have almost doubled in the past six years, the Beijing Infrastructure Investment Co said.
The technical and economic performance index, which reflects construction costs, increased to 1 billion yuan ($161 million) per kilometer in 2014 for subway lines in the downtown area, according to figures released by the company. The corresponding figure in 2007 was 571 million yuan.
The municipal government has annual allocations to fund subway construction projects, and these reached 15.5 billion yuan in 2014.
Most of the money is provided by the company, which has invested more than 251.3 billion yuan in the network in recent years?enough to build 110 Bird's Nest stadiums or 246 Water Cube aquatics centers.
Now the capital's municipal government has released a guideline designed to attract more funds from private sources to finance large public projects, including the subway.
Yang Xuhui, an official at the Beijing Municipal Commission of Development and Reform, the city's top economic planner, said companies can invest either alone or as a part of a consortium.
"More than one company has shown an interest," he added.
Beijing was the first city on the Chinese mainland to build a metro system, and there are now 18 lines covering a total distance of 527 kilometers. The total is scheduled to reach around 1,000 kilometers by 2020 to meet the huge demand from the capital's population of more than 21 million. The expansion should ease traffic congestion and reduce air pollution.
The cost of materials, labor, machinery and land acquisition and resettlement has also continued to rise, and this has pushed up the amount of investment needed, the company said.
Metro construction projects in other cities have also been affected by rising costs. It is estimated that at least 3 trillion yuan will be invested nationwide in networks that will cover a total distance of 6,000 kilometers by 2020, official Li Guoyong told China Business Times. Li works in the infrastructure projects section of the National Development and Reform Commission, the country's top economic planning agency.
There are currently two companies involved in running the capital's network?city-owned Beijing Mass Transit Railway Operation Corp, and Beijing MTR Corp, a public-private joint venture with Hong Kong's MTR.
On Feb 8, Beijing MTR Corp paid 15 billion yuan for the right to operate Line 16 for 30 years. It already runs Line 4 and Line 14.
Safety is a major concern both during the construction process and after new lines open.
Le Guiping, a spokesman for Beijing MTR Construction Administration, which is in charge of building the company's projects, said: "We have a safety and emergency command center that monitors the whole process from construction of the facilities to test runs."
The center came into operation in January.
A second monitoring center is designed to ensure that lines operate safely. This supplies information about passenger flows and other data to the government to help it reach decisions on the future development of the network.
Intel offers olive branch of investment for growth
April 9th, 2015Intel Corp said on Wednesday that it will invest 120 million yuan ($19.3 million) to promote grass roots technology innovation in China amid deepening mistrust over information security between the United States and China.
Chief Executive Officer Brian Krzanich has sought to placate the Chinese authorities by pledging wider collaboration with local institutes and universities.
The moves came as the US added three major partners of Intel in the supercomputing sector to a technology embargo list.
Krzanich said that the vibrant atmosphere of innovation in China will help Intel find new business opportunities beyond personal computers and other traditional information technology sectors. "There is a huge opportunity for Intel to continue to grow together (with China). This growth is being driven by the public cloud, network transformation, big data and new IT services," he said.
About 80 million yuan of the investment will be used to set up an angel investment fund. It will be the first seed-stage fund for Intel, and it will focus on companies preparing for going public.
The investment is evidently an attempt to butter up the Chinese officials. Earlier this year, in a move to boost the slowing economy, the central government encouraged individuals to start their own businesses. Ian Yang, president of Intel China, said that the newly announced investments are in line with that strategy.
Intel said that it is also considering deeper research ties with local universities. Chengdu-based Southwest Jiaotong University and Tsinghua University in Beijing are the first partners of the Intel innovation project.
"It is not good enough to bring products that we already developed or already used elsewhere. A real partnership means you bring it first to China," Krzanich said. "We want to share pioneering ideas up front with China."
Antonio Wang, an analyst at consultancy International Data Corp, said a good relationship with the government is becoming critical for Intel and other overseas technology companies because of the "panic" over IT security.
Intel may have to cut loose some of its top research partners in China because of a new order from the US government. Supercomputer centers based in Guangdong province and Tianjin municipality and one at a military academy?the National University of Defense Technology in Hunan province?have been added to a US "Denial List" that bans advanced technologies from being sold to these organizations, US-based technology Website vrworld.com reported on Tuesday.
The report said the ban may damage sales of Intel's Xeon Phi accelerator because the institutes are making the world's fastest supercomputers and will need vast volumes of high-end Intel devices.
Multiple sources at Intel confirmed to China Daily that the US had blacklisted these customers, but they said it was unlikely to harm Xeon products' sales.
"The ban only covers research cooperation that may pose threats to the US. On-market product sales will not be affected," one of the sources said.
China and the US have stepped up information security in the past year, with both claiming to be victims of online espionage.
China is also seeking to ensure IT security by imposing new industry standards. Some foreign technology providers have said these moves are intended to oust foreign companies from the government procurement sector.
Chinese regulators have denied that accusation, saying that local companies must also abide by the regulations.
Busy weekend for property agents
April 8th, 2015
A man examines property models at a housing sales center in Hangzhou, capital of Zhejiang province. Some potential buyers anticipate further easing measures to be taken by the government to kick-start the property sector.
Easing policies lure buyers, but some still prefer to 'wait and see'
Property agents in Shanghai have reported their "busiest weekend" in a quarter, over the three-day Qingming Festival.
However, some also detected a "wait-and-see" attitude among some potential buyers, who still anticipate further easing measures to be taken by the government to kick-start the sector.
On March 30, the central bank and the housing and banking authorities announced a relaxation of loan requirements.
For homebuyers who are applying for a mortgage for a second home, the minimum down payment is cut to 40 percent from the previous level of 60 to 70 percent. The minimum down payment for first-time homebuyers using public housing funds is cut to 20 percent, compared with the previous level of 30 percent, the central bank said.
On the same day, the Ministry of Finance also announced that homes bought at least two years ago would be exempt from capital gains tax. Previously, only homes bought at least five years ago were exempt from the tax.
According to data from fang.com, a property information platform website, 410 transactions were made during the three-day break in Shanghai.
In Shenzhen, meanwhile, property transactions continued to rise, said agents, after the boom during the three-day holiday, as new policies enable more residents to buy a second home for improving housing conditions.
Luo Junlei, an agent with Hanyu Property Ltd in Shanghai, said the latest measures had certainly helped business over the holiday weekend.
"We had to work 12 hours a day during the three-day break as potential buyers flocked to see their potential next homes?I did not even have time for lunch yesterday." he said on Tuesday.
He said some buyers had told him the latest easing policies had encouraged them to go ahead and buy a home this year; however, as buying a home costs "serious money", they were keen to see if any more options are introduced, making the cost even lower than that of now.
Transactions made during the three-day break were mostly spacious middle-and-upper-end apartments in downtown districts, according to Jenny Wu, director and head of residential operations for East China at real estate firm DTZ.
Gu Hanchun, a 57-year-old potential homebuyer, told China Daily: "I have visited seven apartments during the three-day holiday and two of them look good to me.
"But I think I will wait for another month to see if more discounts can be offered on mortgage rates, and if more homeowners will decide to let pro-owned apartments, pushing up supplies and lowering prices."
Some analysts think the new policies introduced in late March mainly benefit those buyers with potentials for improving their housing conditions.
In some other cities, such as Jiangsu province's Suzhou, people rarely make property transactions during the Tomb-Sweeping Day breaks because traditional beliefs consider it inauspicious, some sources said.
The new policies' impacts are also different due to diverged supply and demand in some cities.
Internet boosts packaging sector
April 7th, 2015
A cardboard-box maker in Huaying, Sichuan province. The paper industry is on the upswing in China due to rising demand from e-commerce companies.
Research facility plays key role in Finnish paper chemicals firm's sustainability plans
At a temperature-controlled Kemira laboratory in Nanjing, capital of Jiangsu province, one can find lab workers and technicians huddled over consoles and machines taking notes and entering measurements in carefully calibrated charts.
Most of the research and work at the laboratory is centered on developing additives for water-intensive industries such as the paper industry. Situated in Nanjing's chemical industrial park, it is just one of the many research institutions that is working on cutting-edge technologies for paper and pulp manufacturing industries.
Research findings from the Nanjing laboratory have already made a big difference to the Helsinki, Finland-based Kemira Oyj, the world's largest paper chemicals maker. According to company officials, the new findings have helped Kemira boost annual output by 100,000 metric tons, especially at a time when most of its peers are downsizing production.
Jari Rosendal, president and CEO of Kemira, told China Daily that though the global paper industry has shrunk in size due to less use of printing and writing paper, it is on the upswing in China due to rising demand from e-commerce companies.
"You have no idea of how much it (China) means to the packaging industry," he said. "On days when people go on an online shopping spree, billions of cardboard boxes are consumed."
While online shopping is just one part of the growing demand in China, the other centers on the growing use of paper tissue products. Demand has risen for paper tissue products ranging from basic sanitary paper to niche products like waterproof kitchen paper towels and recyclable tissues, said industry experts.
China has tripled its paper production capacity in the last 10 years, and in 2009 zoomed past the United States as the world's biggest papermaker. The size of the industry can be gauged from the fact that China's three weeks of paper output now equals the entire annual output of Wisconsin, the top papermaking state in the US.
Rosendal said that along with economic growth, China's demand for paper and pulp products has grown quickly in the past decade, but the market is not growing as fast as in the past, as people are going online for news and information, thereby using less printing paper.
Niu Qingmin, president of the Paper Industry Association in Jiangsu province, said that the slowing growth in China's paper industry is a reflection of a so-called periodic excess capacity.
"China's paper industry is going through a period of deep restructuring, because we developed too fast in the beginning, even at the expense of our environment," he said.
"If the highly polluting factories are shut down, it will leave more room for the development of regulated companies. In such a scenario, overcapacity will no longer be an issue," he said.
Niu said that China's paper market will maintain steady growth in the long term, especially in the packaging and tissue sector.
The Finland-based company said it plans to offset losses in stagnant markets like Europe, by focusing on packaging, paper boards and paper tissue business growth in Asia.
Rosendal said that Kemira has more than doubled its capacity in China after setting up the Nanjing facility.
"It is quite an aggressive expansion in China, considering how much we generated for the past year."
The chemicals company raked in about 100 million euros ($124.7 million) in China in 2013, and it plans to invest $100 million on the Nanjing unit, which will be the largest of its kind in Asia.
Kemira acquired the Netherlands-based AkzoNobel's global paper chemicals business in July to help double its paper chemicals business in Asia Pacific, and expand its geographic reach and product portfolio.
"We don't just go around buying up companies to show how big we can get. It is a requirement of the market," Rosendal said. "We believe both production and demand will continue to grow in the world's largest paper market."
JD.com launches equity crowdfunding platform
April 3rd, 2015China's leading online direct sales company JD.com, has launched JD Equity Crowdfunding platform, to help finance the creation of start-up companies in China.
The platform will give China's entrepreneurs access to a broad set of potential early-stage investors.
Under the model, each investment project will be led by a professional investment manager, who will be responsible for working directly with the investee companies.
The platform is expected to be China's largest equity crowdfunding platform.
Veteran corporate strategist upbeat about China economy
April 2nd, 2015China's economy is well positioned to maintain good growth and a number of Chinese companies are becoming ready to be leaders instead of followers in high-tech sectors, a U.S. veteran expert on China's industry and economy said.
Handel Jones, founder, chairman and CEO of US-based International Business Strategies, Inc, made the remarks in an interview with Xinhua.
Moving away from the double-digit growth of the most recent decade, the world's second largest economy has been facing notable downward pressure and has entered a stage known as the new normal, characterized by slow, but higher quality growth.
The economy posted 7.4 percent growth in 2014, its weakest since 1990. The annual growth target was lowered to around 7 percent for 2015, arousing concern over the health and momentum of the economy.
"I'm confident that China, based on how things are going on, what the government is doing and what the companies are doing, is well positioned to have good growth in the next ten years," Jones told Xinhua.
As to the fear-mongers who foresee the collapse of China's economy, Jones said, "the Chinese economy has problems, but if you read the U.S. press, you have the impression that the collapse of the economy is ready to be announced."
"I don't see collapse of the Chinese economy, although it has to be careful about a lukewarm global market, overcapacity or risks arising from expanding local debts," Jones, who is paying his 50th visit to China, said.
The author of the best-selling book Chinamerica, he bases his confidence on the "enormous people assets" and an efficient and visionary government.
"China has a broad base of high quality people assets. There is a strong desire to succeed, and they are very motivated and entrepreneurial," Jones said. It is, however, important that they do not become complacent after initial success. There is a national goal as well as personal goals.
Another guarantee for the success of the Chinese economy is the role of the government in making visionary and grand industrial plans, guiding the industries and building the stage for companies to perform, he said.
"China is excellent at managing big projects and the growth of the electronics industry should be regarded as a big project," he added.
With these advantages, there is a high probability for Chinese companies to become leaders rather than followers in some of the most influential high-tech sectors, including 5G, Internet of things, semiconductors and automobiles, he said.
Taking the telecommunications industry as an example, Jones said, "In 4G, China was behind. But in 5G, China will be the number one due to the well-planned development strategy and companies' commitment as well as the role of government in supporting the corporate sector."
Jones deems the Chinese government's plan to build a 100-billion-USD semi-conductor industry as an excellent example where the government is taking initiative and of where government and industries can cooperate on becoming global leaders.
Jones also authors another best seller China's Globalization: How China Can Become No. 1, which offers insight into how China will drive major changes in the global competitive environment over the next decade. Market forces alone are not sufficient to make the big advances required to be No. 1.
While working with several of China's leading high-tech companies, as well as many foreign companies that are leaders in many market segments, Jones has noticed a change from being followers to becoming innovators and planning to be leaders. "This is a significant change in the mindset in China over the past one to two years," he said.
Jones attributed the change to a sharp increase in R&D investment, a boost in managerial levels and enhancement in entrepreneurial skills as well as confidence in being able to compete in global markets.
Despite the bright future for China's companies, there is still a long way to go before they can become clear leaders and innovators. In Jones' eyes, it might take seven to ten or even 20 years, but "China is on a growth path, and the long-term prospects are positive."
To leap ahead of their counterparts in developed countries, Chinese companies have to first change their mindset and focus on quality and profitability instead of market volume and low cost, Jones said.
Some Chinese companies accept or strive to be low-cost copiers and are satisfied with being No. 2. This has to be changed before China can have its own iphones, he said.
"Long-term strategies for winning have to be well-planned, and close collaboration between corporations and the government is critical," Jones added.
4G, smartphones drive Huawei profit
April 1st, 2015Huawei Technologies Ltd yesterday posted a net profit growth of 33 percent in 2014, thanks to global demand for telecommunications network upgrade to 4G, advanced technologies and booming smartphone sales.
Huawei, the world's No. 2 telecommunications equipment maker, reported a net profit of 27.9 billion yuan (US$4.5 billion). Global revenue rose 21 percent to 288.2 billion yuan in 2014, from 239 billion yuan a year earlier, according to Huawei's audited report by KPMG.
The operator business, Huawei's core business, steadily grew 16.4 percent to 192.1 billion yuan. It has got contracts from overseas markets including Europe, Africa and Southeast Asia.
Huawei has become a core equipment supplier of UK operator EE's 4G network, which will pay 1.5 billion pounds (US$2.3 billion) between now and 2017. It will be the world's fastest 4G network, both sides said.
The booming consumer business, mainly fueled by sales of smartphones like flagship model P7, grew 32.6 percent to 75.1 billion yuan.
The new enterprise business grew 27.3 percent thanks to surging demand of cloud computing and big data. Huawei spent 40.8 billion yuan on research and development in 2014.
SOHO, Baidu eyes China's 1st estate-Internet tie-up
March 30th, 2015Real estate giant SOHO China is likely to join hands with search engine Baidu Inc to sell homes online, two top executives from the companies suggested on Sunday.
It will be the first major tie-up between a landdeveloper and an Internet company if the partnershipis realized.
Attending a panel discussion at the Boao Forum for Asia in South China's Hainan province, Zhang Yaqin, president of Baidu, said he and SOHO Chairman Pan Shiyi was discussing the possibility of a partnership to create a new way to selling apartments inChina.
Details of the discussion was unclear but Zhang said it was in a very early stage.
Pan also showed interest in teaming up with Baidu, the world's largest Chinese-language online search provider.
"China's fortune totaled 180 trillion yuan ($29 trillion) nowadays and half of the sum was contributed by the real estate industry. A cooperation with the booming Internet sector will help the real estate market to create larger value," Pan said.
"Huge potential lies in the integration between the two industries."
SOHO has developed many landmarks in Beijing, including an office-apartment complex in the city's business district and the space-ship like Galaxy SOHO in one of the most ancient areas of the Chinese capital.
Express delivery sector posts massive growth
March 27th, 2015China's express delivery sector is growing six times as fast as GDP, according to an industrial index released by the State Post Bureau (SPB) on Thursday.
In terms of industrial expansion, the sector recorded an average 50.3-percent annual growth during the 2010-2014 period, eclipsing annual economic growth, which came in at 7.4 percent for 2014.
Meanwhile, an index assessing delivery firms' development from four perspectives -- scale of industrial development, service quality, coverage, and development trends -- stood at 282.4 in 2014, up 70.8 on 2013.
SPB chief Ma Junsheng said the express delivery sector has maintained robust and healthy development, with services and coverage both improving.
The number of parcels received by express delivery in China last year reached 14 billion, the biggest volume around the world. The sector's market value hit 204 billion yuan (33 billion U.S. dollars) last year, up 42 percent year on year.
Ma promised earlier that China will help domestic express delivery firms expand overseas this year to support booming cross-border online shopping.
Beijing seeks private funds for metro
March 26th, 2015Beijing will invite more private funds to invest in major projects in seven fields including metro construction, shanty town reconstruction and environmental protection projects, said a key document released by the municipal government on Tuesday.
The capital government released guidelines to attract private funds to invest in the major fields and listed 136 projects in seven public fields on Tuesday. It is the first time that private funds have been solicited for shanty town reconstruction.
The total investment in these projects is expected to exceed 260 billion yuan, reported Beijing Evening News on Tuesday.
Furthermore, a third company may be set up to manage new metro construction. Currently, the metro system is under the management of two companies. With the quick growth of the metro lines in Beijing, the total mileage is expected to exceed 1,000 kilometers by 2020, one of the longest in the world.
On the condition that the metro system be guaranteed safe and efficient, the municipal government will open the metro system to invite more private parties to invest.
But the opening up to private funds does not mean the government will shoulder fewer responsibilities in supervising these fields, said an anonymous official from the Beijing Municipal Commission of Development and Reform.
The government will play a bigger role in managing the growing funds and facilitate the development of the city, the official said.
Dow Chemical CEO suggests more entrepreneurship in China
March 25th, 2015U.S. high-tech firm Dow Chemical's CEO on Tuesday advised China to further encourage entrepreneurship and innovation to climb up the global value chain.
Andrew Liveris told Xinhua that China's transition from low-end to medium and high manufacturing was the right strategy, but to this end, China needed to make more efforts.
He said the government should put in place the right policies, regulations and standards to encourage entrepreneurial innovation to invest in technology that will allow China to move up the value chain.
"You can't go from driving a slow car in a slow lane to a fast car in a fast lane without changing lanes," said Liveris, adding that China should go "crawl, walk, run."
Although the transition is a gradual process, the senior executive said China must move fast as the world was changing so rapidly.
In his view, China has plenty of "brains" and it should organize the "ecosystem" to encourage them to be entrepreneurial. He said: "this is China's opportunity."
"To be entrepreneurial, you have to be taught that there is no boundary to taking a risk as long as you are safe and ethical," said Liveris.
Dow Chemical expressed willingness to assist China's transition to an advanced manufacturing economy as it would help its business.
"We are very suited to providing technology answers to environmental protection, food safety, clean water, sustainable urbanization and green technology," said Liveris.
Amid the current economic slowdown, China is turning to mass entrepreneurship and innovation to boost market vitality.
Premier Li Keqiang said earlier this month that the government will continue to "remove roadblocks and pave the way" for entrepreneurship.
Beijing shuts two more coal-fired power plants
March 24th, 2015
The 66-year-old thermal power plant of Guohua Electric Power Co in Beijing was shut down over the weekend.
Beijing has stepped up its efforts to switch to clean energy after it shut two of the large coal-fired power plants that supply power to the city during the weekend.
Prominent among them is the 66-year-old thermal power plant operated by the State-owned Guohua Electric Power Co, which will be replaced by a gas-fired plant, according to a statement by the Beijing Commission of Development and Reform, the city's economic planner.
The 400-megawatt plant has been running since 1949 in the east of the capital's financial district, along Chang'an Avenue, which passes Tian'anmen Square in the heart of the city.
The closure, which will cut coal consumption by at least 1.3 million tons a year, came a day after a 93-year-old thermal power plant run by Beijing Energy Investment Group closed its doors in western Beijing.
There were four major coal-fired power plants in Beijing to provide electricity as well as heating during cold winter. But the capital has charted plans to shut them down completely by 2016 as the city has been frequently clouded by dirty smog. The first plant that was shut was the 50-year-old Gaojing Thermal Power Plant operated by the State-owned China Datang Corp, which was closed in July. The fourth plant - the Huaneng Thermal Power Plant - is expected to be shuttered next year.
By replacing the coal-fired power plants with gas-fired ones, the capital hopes to cut emissions of 10,000 tons of sulfur dioxide, 19,000 tons of nitric oxide and 3,000 tons of dust every year.
He Jiankun, director of the institute of low carbon economy at Tsinghua University, said that the initiative to use more clean energy is a reflection of the government's resolution to combat air pollution.
"Gradually, all the coal-fired power plants will be phased out in Beijing and replaced by either gas-fired or other clean energy-powered plants," said He, who is also the vice-chairman of the national experts' panel on climate change.
"This is a good thing for the development of clean energy, industrial upgrading and innovation on clean technologies in the field of energy," he said.
In a clean air action plan (2013-2017), the government plans to reduce 13 million tons of coal consumption within five years. By 2014, consumption had been cut by 4.5 million tons. In 2015, the city plans to reduce coal consumption by another 4 million tons and limit the annual coal consumption to 15 million tons.
But He also cautioned that closures of large-scale coal-fired plants may lead to huge overcapacity in coal, steel and cement industries, which have already witnessed heavy losses in recent years.
Coal consumption fell last year for the first time in 14 years, sliding 2.9 percent year-on-year to 3.51 billion tons, according to the National Bureau of Statistics.
Taiwan's jobless rate drops to near 15-year low
March 23rd, 2015Taiwan's unemployment dipped to 3.69 percent in February, marking the lowest level for the month in almost 15 years, the island's statistics authority said Monday.
The rate was 0.02 percentage points lower than that seen in January, according to the statistics agency.
The unemployment rate for the January-February period also hit its lowest level for the same period in almost 14 years.
New jobs for February were mainly created by the service and industry sectors, which added 94,000 and 41,000 new jobs, respectively, for the month.
Hainan expands duty-free program to boost tourism
March 20th, 2015
Tourists select duty-free products in Sanya, South China's Hainan province, Oct 24, 2012.
The range of imported items available at duty-free shops in Hainan was increased on Friday in a bid to promote the island province as an international tourist destination.
An additional 17 types of product, including baby formulas, coffee and air fresheners, have been added to the duty-free program, taking the total to 38.
The revised program announced by the Ministry of Finance also eases restrictions on the amounts of 10 types of imported items that may be bought.
The change applies to popular categories such as cosmetics, perfumes and watches.
Wang Huiping, deputy director of Hainan's Department of Finance, said the changes are in response to complaints from some tourists about the limited choice of goods available.
The initial program was launched in April 2011 on a trial basis.
It allowed individual tourists and Hainan residents age 16 or above to enjoy duty exemptions on certain types of imported goods worth no more than 8,000 yuan ($1,283) in total before flying to other destinations on the Chinese mainland.
Hainan residents can only shop at the duty-free outlets once a year, while others can purchase items twice each year.
Figures from the local customs department show that, between the launch of the program and the end of last year, Hainan's duty-free stores received more than 4.08 million customers who spent a total of 10.9 billion yuan.
The province has two duty-free shops, one in the provincial capital of Haikou and the other in the resort city of Sanya.
A staff member at Sanya said the shop has been stocking up with the new types of goods to ensure there is an adequate supply.
Liu Deqian, a consultant at the Chinese Academy of Social Sciences' tourism research center, said the changes to the program will make the province more attractive to visitors and help to boost its economy.
"During holidays, many Chinese tourists flock to other countries to go on shopping sprees, and this is mainly because goods sold abroad are much cheaper than the same products sold in China," Liu said.
"The revised program may change this situation, as the items that have been added are mostly daily necessities that Chinese tourists eagerly buy overseas."
He said the program has made such goods available in Hainan at attractive prices.
"Since the program caters to both domestic and foreign tourists, it's possible that someday foreign tourists will flock to Hainan for the shopping," he added.
Lenovo, Xiaomi to work on Windows phones
March 19th, 2015
China's Xiaomi Tech's CEO Lei Jun takes a selfie with his cellphone at 2015 CeBIT Technology Trade fair in Hanover, Germany, on March 16, 2015.
Microsoft said on Wednesday that it will partner Lenovo and Xiaomi to develop smart devices that runs the latest version of its Windows operating system.
The U.S. multinational announced an initiative to deepen cooperation with China's leading hardware and software makers to promote Windows 10 on computers, tablets and smartphones, during a two-day conference in the southern city of Shenzhen.
Windows 10 is slated for launch sometime this summer.
Lenovo, one of China's largest smartphone makers and the parent company of Motorola Mobility, will launch Windows-based smartphones this summer, said Tong Fuyao, general manager of Lenovo China.
A separate statement from Microsoft on Wednesday said the Lenovo phone will be a contract device with China Mobile, the country's largest telecom operator.
Chinese smartphone maker Xiaomi, now the third largest in the world, will provide feedback to Microsoft based on a test run of the operating system on Xiaomi's flagship smartphone Mi4 later this year.
Windows Phone accounts for a meager 0.4 percent market share in China in the twelve months ending September last year, compared with more than 90 percent share between Google's Android and Apple's iOS, according to consultancy Kantar Research.
Microsoft's push to expand also faces challenges from Chinese players. NASDAQ-listed Alibaba announced in February an investment in smartphone maker Meizu to promote its own mobile operating system Yun OS.
Alibaba introduces 'Smile to Pay' at CeBit trade fair
March 17th, 2015Chinese vice premier Ma Kai and German Chancellor Angela Merkel both attended the opening of CeBIT 2015 in Hannover, Germany, the biggest computer and software fair in the world.
One of the leading tech companies in China, Alibaba, is showcasing a new face scan payment technology called "Smile to Pay" at the fair.
Alibaba's CEO Jack Ma pulled out his phone, bought an old stamp from Hannover on its e-commerce platform Alibaba.com, scanned his face with the front camera, and said the item had been purchased and was on the way to the Mayor of Hannover's office.
He also says forgetting one's password will no longer be a problem if one uses the new face scan technology, which is currently in beta mode testing.
A spokesperson with Alibaba says Smile To Pay will initially be rolled out in China in the near future but there is no fixed date for an official launch.
The Hannover computer and software fair is open till March 20.
China's free trade zone fever spawns more regional hopefuls
March 16th, 2015Regional delegates to China's annual parliamentary session are pushing to have their jurisdictions included into the country's next batch of free trade zones after three new zones were approved in December. [Special coverage]
The fever to win central government's approval to upgrade existing development areas or set up new FTZs from scratch has been evident during the annual parliamentary sessions, which closes on Sunday.
One proposal came from Zhang Qingjun, mayor of Hefei, capital of east China's Anhui Province, who envisions a free trade zone connecting three other provincial capitals along the Yangzte River.
The rationale behind the proposed free trade zone, according to Zhang, is that the four cities situated along the middle of the Yangtze River face similar development challenges and all aspire to attract more foreign investment.
An inter-provincial free trade zone will also help break jurisdictional barriers for China's central provinces, a move that Zhang says will create a unified market where capital and goods can move with less restrictions.
East China's Shandong Province also wants to have a FTZ in the coastal city Qingdao, provincial governor Guo Shuqing, also former head of China's securities watchdog, told Xinhua on the sidelines of the National People's Congress.
In September 2013, four bonded areas in Shanghai, the country's financial hub, were bundled together into a free trade zone that authorities billed as a testing ground for financial liberalization, allowing greater foreign participation into the country's service sector.
The move to set up FTZs is part of China's effort to allow market forces to play a decisive role in the economy through greater opening to foreign investments into industries and removing restrictions over capital flows.
Yet the FTZ immediately became a coveted notion for local governments looking for a renewed engine to drive economic growth and respond to the central government's reform rhetoric.
Even before the Shanghai project was officially launched, word spread that southern Guangdong province and the coastal municipality Tianjin were also being considered for the initiatives.
By the end of 2014, Tianjin, eastern Fujian province and Guangdong were selected to be part of the second batch of free trade zones, inheriting practices already proved successful in Shanghai and tapping their unique geographical and industrial advantages for further experiments.
Authorities also expanded the Shanghai FTZ to include the city's financial district Lujiazui, where a jungle of skyscrapers houses the country's securities exchanges and leading financial institutions from home and abroad.
The inclusion of Lujiazui is seen as bringing more financial institutions into the game to test how the county's financial sector handles loosening capital controls and a freely convertible yuan.
Before regional delegates flocked to Beijing this month for the country's annual parliamentary sessions, local governments in landlocked Shaanxi, Gansu and Henan also unveiled their ambitions to apply for free trade zones at provincial lawmaking sessions.
These announcements have once again fueled speculation that more FTZs will come along, though the central government has not openly endorsed such proposals.
The rush to apply for FTZs is reminiscent of a similar craze over the past two decades to create development zones across the country to attract corporate investment.
Yet analysts cautioned against creating too many FTZs too soon, fearing that the central government's intention to use FTZs to pioneer more daring reforms will go awry when misinterpreted by local officials as a rebranded excuse to gain more preferential policies.
"A lot of people are still under the misconception that a free trade zone will allow local governments to gain more preferential policies," said Zong Guoying, a deputy to the National People Congress and Communist Party Secretary of Binhai New Area, a development zone that has ceded much of its land to Tianjin's FTZ.
Zong said free trade zones should be a "highland for institutional innovations and reforms" -- a popular catchphrase increasingly used by officials to refer to policies currently reserved exclusively for free trade zones but must be able to be implemented elsewhere in the country.
At the Shanghai FTZ's one-year anniversary in September, officials claimed that the zone has pioneered the streamlining of administrative procedures for setting up new companies, eased foreign investment's entry through a "negative list" approach and promoted cross-border use of Chinese currency.
So far little is known over how the three newly approved FTZs will further Shanghai's experiments. Authorities have also yet to announce dates for their official launch.
Local officials said during Tianjin's local parliamentary sessions in January that the city's FTZ will focus on financial leasing. The Fujian FTZ wants to take advantage of its vicinity to Taiwan to boost cross-Strait trade. Guangdong wants to tap its vicinity with Hong Kong.
The three FTZs, along with the one already in operation in Shanghai, are all scattered along the country's eastern shorelines, with ports handling a majority of the country's trade volume and a combined economic output equivalent to one fifth of the country's total.
"FTZs should be set up in places with economic output big enough for experiments to provide meaningful reference for future reforms around the country," said Liu Enzhuan, a Tianjin-based economic professor who participated in drafting the plan for the city's FTZ.
"FTZs definitely have a role to play in growing regional economies, but the whole idea of making investments within a FTZ easier is based on the premise that companies want to invest there in the first place." Liu said.
Alibaba, SAIC say will launch Internet car in 2016
March 13th, 2015May find it hard to get favorable market reception
China's e-commerce giant Alibaba Group Holdings and State-owned SAIC Motor Corp jointly announced on Thursday that they would launch their first Internet car in 2016.
The car is expected to adopt Alibaba's Yun operating system, enabling drivers to obtain timely traffic information, music service and fast route options based on Alibaba's Internet services such as cloud computing and big data, according to a press release that Alibaba e-mailed to the Global Times on Thursday.
This decision came after the two signed an "Internet Car" agreement on July 23, 2014.
Analysts said Internet cars can be a promising market, which does not just refer to a vehicle connected to the Internet, but is expected to be a next-generation tech product that can communicate with other such products and lead to better traffic management as well as self-driving.
But Feng Shiming, an executive director with Shanghai-based auto consultancy Menutor Consulting, thinks the market is far from taking off and is skeptical about the prospects for SAIC's Internet car.
"I do not think the two companies' first networked car will have a great market reception, because the Internet car is still regarded as a concept by most consumers, who may think about buying one only after at least 5 years," Feng told the Global Times Thursday.
Feng also said he questioned the car's reliability and user experience, citing the quick launch date.
Meanwhile, the two said in the press release that they will set up a 1 billion yuan ($160 million) fund that will also be open to other companies, in an attempt to further integrate their own respective advantages as well as jointly lead the development of China's Internet car industry.
"The establishment of such an open fund will attract more companies' participation and then fast-track the promising Internet car sector in China," Zhang Yi, CEO of Guangzhou-based iiMedia Research, told the Global Times Thursday.
An Internet car may be something that SAIC, China's leading domestic carmaker, can bank on to draw some limelight away from overseas auto brands, which are still widely preferred in China due to advanced technology and high brand value, said Zhang.
China sold 1.47 million domestic brand vehicles during the two months through February, while the overall sales stood at 3.43 million, according to data released by China Association of Automobile Manufacturers on Tuesday.
After the disclosure of its latest cooperation with Alibaba, SAIC's listed arm on the Shanghai bourse saw its shares rise by 4.79 percent, closing at 24.71 yuan on Thursday.
SAIC and Alibaba came together after similar joint ventures were formed by overseas companies.
Apple Inc and carmakers including Ferrari, BMW and Mercedes-Benz introduced an in-car networking and multimedia platform, dubbed as CarPlay, in March 2014, according to information on Apple's website. Three months later after Apple's move, Google Inc announced on its site a similar platform named Android Auto, which is expected to be built in Audi, Hyundai, and Nissan cars.
Alibaba's archrivals in China - Baidu Inc and Tencent Holdings - have also made similar moves. In April 2014, Baidu said it launched an in-car networking system CarNet, featuring location-based services and voice-driven navigation with the advantage of Baidu's mapping technology. A similar product by Tencent called Lubao Box, released at the Global Mobile Internet Conference held in May 2014, offers real-time safety and maintenance information as well as discounted roadside assistance via cooperation with People's Insurance Co of China, according to a statement e-mailed to the Global Times in August 2014.
Both Zhang and Feng think the cooperation between SAIC and Alibaba will likely allow the two to stand out from fierce competition.
Alibaba's advantages, especially in online shopping platforms, can help SAIC's Internet car win over female drivers, which account for a large proportion of Internet cars' potential buyers as they seem to consider the safety and technology of cars more than male drivers, said Feng.
In addition, Alibaba's active expansion into the navigation industry can contribute a lot to its Internet car development, he noted.
In February 2014, Alibaba announced the acquisition of AutoNavi Holdings, which iiMedia in November estimated would seize 50.6 percent of the Chinese mobile mapping and navigation market in 2014, followed by Baidu's mapping services with 39.3 percent.
UK companies seek new opportunities in China
March 12th, 2015China's economic "new normal" can bring more opportunities for UK companies, British business leaders said on Wednesday.
James Sassoon, chairman of the China-Britain Business Council, said China is undergoing a period of further transformation.
"It is stepping away from labor-intensive exports toward a more highly mechanized and service-originated economy, with heightened resilience on domestic demand and added emphasis on environmental sustainability," he said at the China Business Conference in London.
Premier Li Keqiang announced a growth target of about 7 percent for this year at the ongoing National People's Congress annual session as China moves toward a "new normal" of lower, more sustainable growth.
Sassoon added, "We should welcome and embrace these changes, and make sure we are well positioned to seize the opportunities they present."
Attended by about 500 delegates from Britain and China, the conference is organized by the council, a leading organization helping British companies to increase and develop their business with China. The aim is to create a forum for discussion and cooperation to position business between the two countries.
David Robinson, president of Speedo International, which is based in Britain and manufactures and distributes swimwear and accessories, said China's "new normal" will place great emphasis on fitness and healthy lifestyles.
Speedo's products are available in most first- and second-tier cities in China, and the company is now working on increasing its e-commerce presence.
Chris Hill, development manager of Lifecycle Marketing, which provides education programs for pregnant women, said China's "new normal" will boost the market for his business, with great emphasis being placed on healthy lifestyles and quality of living.
Hill said although China's economic growth is slowing, the country still represents a huge market for Lifecycle, with the annual pregnancy rate in China standing at 16 million, compared with 800,000 in Britain.
The company is looking to expand into China through joint ventures and marketing strategies to attract China's emerging middle class, Hill added.
Ni Jian, charge d'affaires at the Chinese embassy in London, explained, "China's growing demand for brands provides great opportunities for reputable British brands with high-recognition and reputation in the Chinese market.
"The fast growth of e-commerce in China will also provide increasing opportunities for British products to enter the Chinese market."
Exports of British cars to China have increased sevenfold since 2009, according to the British Society of Motor Manufacturers and Traders. Last year, 137,410 UK-built cars were exported to China, a year-on-year increase of 14.5 percent.
Last year saw enhanced Sino-UK economic cooperation, with bilateral trade reaching a new high of $80.9 billion, a year-on-year increase of 15.3 percent, according to the Chinese embassy in Britain.
Ni said China's growing need for innovation is leading to a big demand for new technology, techniques and products.
Britain, with its advanced manufacturing, high-technology and clean-technology sectors is well positioned to supply this market, Ni added.
The past year also key mergers and acquisitions and China's investment in the UK exceeded $7 billion.
"As China opens up its service industry further to foreign investment to satisfy its big domestic demand, foreign capital in finance, healthcare, education and pension sectors will have great opportunities to expand in China," said Ni.
What's more, the internationalization of the renminbi is providing great opportunities to the UK, as a competitive offshore renminbi center, Ni said.
Paul Rogers, author of Little Bridge World Ltd, an English language education provider, said that China's new normal will boost the demand for English language learning because highly educated and internationally minded talents will be valued more in the market.
"As China focuses more on innovative growth and internationalization of its companies and industries, there will be a bigger market for English learning," Rogers said.
The internationalization of Chinese firms have also provided great opportunities for Central Hall Westminster, an iconic London venue which is increasingly hosting outbound Chinese events and firms in recent years.
Examples include a conference by the Chinese telecommunications giant Huawei, and also Chinese film festivals in London, said Kevin Blackman, senior sales manager at Central Hall Westminster.
"As Chinese businesses become more international minded as a result of China focusing on international growth and innovative growth, we will have more clients from China, and we are going through a process to adjust our services to their needs," Blackman said.
Sina Weibo sees 77% rise in revenue
March 11th, 2015China's Twitter-like microblog platform Sina Weibo reported a 77 percent surge in net revenue to $334.2 million in 2014, said the company on Tuesday.
Weibo ended last year with a net loss attributable to ordinary shareholders of $63.4 million, which was in part due to the change in fair value of investor option liability and Alibaba's investment in the company, said its latest earnings report.
Its stock was down 5.8 percent to $14.02 per share in after-hours trading after the company released the results.
The microblog platform reported a 78 percent year-on-year increase in advertising and marketing revenues to $264.8 million in 2014.
"On the monetization front, mobile ad revenues now make up more than half of Weibo's total ad revenues," said Wang Gaofei, the company's CEO in the statement, adding that "2015 will be another high growth year for mobile and social marketing in China, and we are well positioned to take advantage of this trend."
For the fourth quarter of 2014, Weibo reported a net revenue increase of 47 percent year-on-year to $105.2 million and a sharp decrease in net income attributable to ordinary shareholders from $21.6 million same period in 2013 to $4.6 million.
The social media projects its net revenues in the first quarter to be between $93 million and $96 million, according to the financial report.
The Beijing-based company debuted on the Nasdaq in April last year with a $286 million initial public offering. It introduced Alibaba as a stakeholder in 2013.
Adidas sees strong sales in China
March 10th, 2015Sportswear group Adidas said sales in China grew 10 percent in 2014 to 1.81 billion euros (US$1.97 billion) as its core products performed strongly.
The company aims to drive further growth by opening special segment stores. The first specialty store for outdoor sportswear is set to open in the first quarter of this year, Colin Currie, managing director for Adidas Group China, said in a media briefing in Shanghai yesterday.
"Although special segment stores only account for a small portion of our total number of stores in China, they offer consumers a special assortment of products," Currie said.
He added that these stores also help Adidas retain customers who would otherwise shop at other stores.
The segmented retail strategy is part of Adidas' overall retail expansion plan in China.
Technology set to transform factories
March 9th, 2015China will rely more on new technologies in future to maintain the vitality of the manufacturing sector, the head of the industry's watchdog said on Friday.
The country is already the world's largest manufacturer, and aims to become one of the strongest in the next 10 years, according to Miao Wei, head of the Ministry of Industry and Information Technology.
The adoption of the "Internet of Things", a technology that enables a wide range of machines and devices to be interconnected, and the introduction of robots are major ways for Chinese factories to improve their global competitiveness, Miao said.
"We are relying on the 'Made in China 2025' strategy to bring down operating costs and boost efficiency and innovation in the manufacturing sector," he said, adding that the 7 percent growth target will be a "very high bar" for traditional manufacturing enterprises to achieve without support from new technologies.
Premier Li Keqiang said on Thursday that China will push forward the integration of modern IT, including cloud computing and big data, with traditional manufacturing segments.[Special coverage]
"Manufacturing is traditionally a strong area for China," Li said in the annual Government Work Report. "We will implement the Made in China 2025 strategy; seek innovation-driven development; apply smart technologies; strengthen foundations; pursue green development; and redouble our efforts to upgrade China from a manufacturer of quantity to one of quality."
The slow pace of adoption of new technology is harming the quality of Chinese manufacturing.
The country has 23 robots for every 10,000 workers compared with a figure of 273 in Germany, Miao said. In Japan and South Korea, the figure is approaching 300.
The low adoption rate for high technology reduces the competitiveness of made-in-China products on global markets.
"While the German government is introducing ideas for building Industry 4.0, many enterprises in China still need to fill the gap between Industry 2.0 and Industry 3.0. The deficit is obvious," Miao said.
Industry 4.0 is a concept of value chain organization in which sensors are installed in machines so that every part of the chain can create, transfer and share statistics, boosting efficiency and product quality. Industry 3.0 and 2.0 are earlier levels of industrial development.
The ministry pledged to encourage local innovation and introduce policies that favor companies willing to adopt more new technology.
'Internet Plus' to fuel innovation, development
March 6th, 2015The notion of "Internet Plus" mentioned by Premier Li Keqiang on Thursday has drawn wide attention, as many see it as a sign of the government's increasing emphasis on the Internet industry.[Special coverage]
When delivering the government work report, Li said, China will develop the "Internet Plus" action plan to integrate mobile Internet, cloud computing, big data and the Internet of Things with modern manufacturing, to encourage the healthy development of e-commerce, industrial networks, and Internet banking, and to help Internet companies increase their international presence.
"From the report, we can see that the promotion of trans-boundary integration of the Internet has become a focus of government work," said Fang Xingdong, chairman of think tank China Labs.
Internet Plus is the integration of the Internet and traditional industries through online platforms and IT technology, it is expected to help economic restructuring, improve people's livelihoods and transform of government functions, according to Wu Hequan, academic of Chinese Academy of Engineering.
Xu Linshen, vice general manager of the Beijing-based Qing-Feng Steamed Dumpling Shop, said: "Efficiency has improved since we brought in an e-commerce system that monitors sales. For example, if sales slip for one particular item we are notified and can investigate the reasons behind it."
The Internet is also a driving force for the transformation of traditional manufacturing. Zheng Jie, a deputy to the National People's Congress (NPC) and general manager of Zhejiang branch of China Mobile, suggested that more "Made in China" products should use intelligent network and mobile Internet technology.
Internet financing is a rising industry and has promoted restructuring of traditional financing institutions. Major banks, including China Merchants Bank, China Minsheng Bank, and China development Bank, have launched online petty loan applications in recent years.
Wu Hequan said Internet Plus not only had economic benefits, but will also improve public services.
"For example, taxi-hailing apps can help save energy and cut emissions. Online appointment with doctors, telemedicine, and video lectures are also more convenient for busy people," he said.
During the ongoing "two sessions", NPC deputy and Tencent chairman Pony Ma, proposed that mobile Internet can be used to to solve social problems, such as medical treatment, education resources and smog.
According to China Internet Network Information Center, China had 649 million Internet users by the end of 2014, and some 557 million used cell phones to get online.
Li Jiang, a consultant of Beijing Municipal Commission of Economy and Information Technology, said, besides market, the government should also take up the responsibility to promote the Internet penetration and application, especially in terms of information security, data sharing among different social sectors, and the setting of IT standards.
In the opinion of Fang Xingdong, the Internet is not only reshaping the economy, society and governance, but is also creating new opportunities to connect China and the rest of the world.
China has been transforming from a follower into a major player in the world's Internet industry during the past two decades, he observed.
"The next decade will be a time for the Chinese Internet to broaden its reach globally," he said, "with the help of Internet, China will pursue its development opportunities with a global vision."
Wanda chairman Wang ousts Ma on Forbes list
March 4th, 2015The less-than-stellar performance of Alibaba Group Holding Ltd's business and shares helped Wang Jianlin, chairman of Dalian Wanda Group Co, to beat Jack Ma to the title of the richest man on the Chinese mainland on the 2015 Forbes Billionaires List.
Recapturing top position from Ma this year, Wang saw his personal wealth rise to $24.2 billion from $15.1 billion a year earlier, according to the rich list released on Monday.
And it was the first time that Wang caught up with American financier George Soros to tie for the 29th position on the world's rich list,
That represents huge progress, considering Wang's 64th position on the same list in 2014.
Wanda Commercial Properties Co went public in Hong Kong at the end of last year, the largest initial public offering by a real estate development company. Wanda Cinema Line Co was listed in Shenzhen at the end of January this year.
As both shares rose, Wang saw his wealth increase accordingly as the largest shareholder.
According to Everbright Securities Co, Wanda Cinema Line has been successful with a large member system. Its performance will be further boosted by the increased number of new screens and the prospering industry.
Ma fell to second place with personal wealth of $22.7 billion, although that was up from $10 billion in 2014. His global ranking was 33rd this year.
Although Alibaba made a record IPO of $25 billion on the New York Stock Exchange in September, its share price sank at the beginning of this year due to disappointing fourth-quarter earnings in 2014 and a skirmish over counterfeit goods between Alibaba and the Chinese industry and commerce regulator.
Li Hejun, chairman of Hanergy Thin Film Power Group, overtook Robin Li of Baidu Inc and Pony Ma of Tencent Holdings Ltd this year to become the third-richest man on the Chinese mainland on the Forbes list with estimated wealth of $21.1 billion. He also saw his global ranking reach 38th this time around.
Hanergy, based in Yunnan province and listed in Hong Kong, saw its share price nearly double since the start of this year from HK$2.77 (35 cents) to HK$5.25. Its market value surged to $19 billion in a two-month period as of February.
After purchasing three Western thin-film solar businesses in 2013, Li added a fourth, Alta Devices from California, in 2014, and is benefiting from Beijing's incentives for the industry.
In all, 213 Chinese billionaires are on this year's Forbes rich list, 71 of whom made their debuts. The number of Chinese billionaires is now only second to that of the US.
58.com acquires Anjuke
March 3rd, 2015Chinese online classifieds market 58.com Inc will buy 100 percent of Shanghai-based real estate Internet platform Anjuke Inc in stock and cash valued at US$267 million.
The deal also includes the issuance of nearly 5.1 million new ordinary shares of 58.com and US$160 million in cash, the company said yesterday.
Zhuang Jiandong, senior vice president of the company, will head the newly combined 58 Anjuke Real Estate Business Group, while Mike Liang, former CEO of Anjuke, is leaving to start a new business related to property.
"There is still very robust demand for real estate in China and the opportunity for the best online real estate platform remains massive," Yao Jinbo, CEO of 58.com, said yesterday.
"After the deal, we hopefully will be the biggest information provider of real estate market by users and revenue." Yao added.
Before the deal, Anjuke had raised US$72 million in four rounds of funding.
Changes crucial to boost new energy car industry
March 2nd, 2015
Visitors look at a Dongfeng electric car. Industry insiders warn against Chinese new energy carmakers falling into the "same trap" of allowing foreign automakers to dominate the Chinese market.
Fresh outlook, policies and subsidies key to hit goals and harness opportunities
The Chinese government is considering new preferential policies for the emerging new energy car industry.
The Ministry of Science and Technology issued a draft of the government's plan to support research and development of new energy vehicles to gain public opinion on Feb 16.
Beijing authorities also announced that the city would be friendlier to new energy car owners, by allowing them to pay less in parking fees and highway tolls by the end of March.
In 2012, the State Council set a goal of getting 5 million new energy vehicles on the road by 2020.
To meet this target the government plans to establish a research and development system and industrial chains for electric cars by 2020.
According to the China Association of Automobile Manufacturers, the output and sales of new energy vehicles in China were 78,499 and 74,763 in 2014, 3.5 and 3.2 times the figure in 2013.
Despite the growth, there is still a way to go to reach the central government's goal to have 500,000 new energy cars on the road by the end of this year.
Compared with sales of more than 23 million cars in China last year, the sales of new energy vehicles only accounted for a small proportion.
Dong Yang, secretary-general of the automobile manufacturers association, said he did not think the government would hit its new energy car goals unless it offered new preferential policies, as projected sales this year are about 150,000 to 200,000.
Ambition
The draft plan said electrification of power, lightweight structure and vehicle intelligence were the core technologies for the future development of new energy cars.
The next five to 10 years will be a period of strategic importance for the reorganization, transformation and upgrading of the global automobile industry.
According to the Ministry of Science and Technology, the Chinese automobile industry faces three challenges: the transition from a global sales leader to a leading manufacturing power, pollution control of car exhausts and energy security and national development at a low carbon level.
The government wants to achieve three goals through developing the country's new energy automobile market: upgrading the automobile industry, protecting the environment and using less fuel.
Several industry insiders believe that with the huge domestic market, electric cars will offer China new opportunities to grow. However, they warned that the Chinese automobile industry should not fall into the "same old trap" where foreign carmakers take the main share of the market.
The government has different attitudes towards electric cars and hybrid electric cars. It offers financial backing for technology research and development, as well as high subsidies for electric car buyers. For hybrid electric vehicles, the government only financially supports technology and promotion.
Big State-owned automobile enterprises' position in the two markets may be the reason why the government acts differently.
In the past 50 years, many Chinese automobile companies established joint ventures with foreign car manufacturers to learn advanced techniques. The result was that foreign players now dominate the Chinese auto market.
The government policies mean that electric cars from foreign companies are not eligible for subsidies, but those from joint venture companies are.
As a result, foreign companies tend to produce electric cars with local joint ventures, which is the "same route" as the development of fuel cars in China.
Industry insiders question whether Chinese companies will learn techniques through the electric vehicle joint venture process to help themselves grow competitively.
So far, the performance of Chinese automobile giants in the new energy industry has fallen flat. FAW's plug-in hybrid car Hongqi is still a concept and Dongfeng Motor Corporation has kept a low profile on new energy vehicles.
Private carmaker BYD is the only real "early bird" in the field.
"With central and local governments' strong support, China now has embraced the best environment for the growth of the new energy vehicle industry," said Hu Xiaoqing, PR and marketing director of Shenzhen BYD Daimler New Technology Co.
Emerging force
With State-owned big names showing lackluster performance in big- and medium-size cities, smaller brands have potential to enter the market, especially in small cities, townships and villages.
Most smaller brands offer low-speed electric cars, which run at speeds of less than 80 kilometers per hour and are sold for between 25,000 yuan ($3,997) to 50,000 yuan. Many electric motorcycle producers can also manufacture the cars.
Public security departments in many places do not issue plates to low-speed electric cars, as they do not consider them "real" vehicles.
However this could change after the government recognized low-speed electric cars as "normal" electric vehicles, in a draft standard for the industry in November.
Unlike big cities, small cities, townships and villages have plenty of land to build charging posts, which is an important foundation for the niche market ignored by many big enterprises.
Jia Xinguang, a Beijing-based independent industry analyst, said the government should focus more on promoting the sale and use of new energy automobiles in medium- and small-sized cities. "The subsidies in the smaller places are much lower than Beijing and Shanghai. They need more battery-charging stations and better after-sales service facilities," he said.
Learn from Germany
The German government's policies for new energy cars could provide inspiration for the Chinese government.
The German authority believes the development of electric cars should be a systemic plan that includes not only vehicles but also intelligent transportation and smart grids.
With this in mind it plans to create a new energy car environment, which will involve vehicles, city planning and an energy and industry chain.
Instead of subsidizing electric cars buyers, the German government financially backs companies in fields such as automobile manufacturing, energy and electric power to develop related products.
Amway sales dip in largest market
February 25th, 2015
An outlet of Amway Corp in Yichang, Hubei province. The company's revenues fell 8 precent to $10.8 billion in 2014.
Amway Corp, the world's largest direct sales company, announced its revenues fell 8 percent to $10.8 billion in 2014 due to a dip in Chinese mainland sales and fluctuations in currency exchange rates.
A survey by China Knowledge Economy's Direct Selling magazine found that Amway's revenue in the Chinese mainland decreased from 29.3 billion yuan ($4.72 billion) in 2013 to 28.7 billion yuan last year, but the Chinese mainland still remained the company's biggest market.
It is the first decline for the Amway in the Chinese mainland after growth rates hit 27 percent over the previous five years and 45 percent for the decade, according to company reports.
"Sales in 2014 reflect the significant efforts by Amway business owners and employees who continue to do well around the world despite challenging operating environments found in several nations that are major markets," said Amway Chairman Steve Van Andel.
"We continue to see great strength globally as select markets hit record sales numbers and others show resilience that point to strong results in 2015," he said.
Some of the company's most-mature markets, including South Korea and Taiwan, registered strong growth in 2014. Sales in Brazil, Mexico, Argentina, Costa Rica, Guatemala, Chile, Panama, Italy and Spain saw double-digit growth, while markets influenced by political unrest and economic slowdowns?Russia, Thailand and Ukraine?showed resilience and produced solid results, according to the company.
Amway's top 10 markets in 2014 were the Chinese mainland, South Korea, Japan, the United States, Thailand, Russia, Taiwan, India, Malaysia and Ukraine.
The company's sales were concentrated in nutrition, beauty, durables and home care, with nutrition products continuing to lead the way, accounting for 43 percent of direct sales revenue.
Beauty products contributed 25 percent, followed by durable products at 19 percent and home care products at 8 percent.
Amway President Doug DeVos said the company is optimistic and well-positioned for growth in 2015 and beyond as it opens five new manufacturing facilities, many new Amway experience centers and improves the online experience.
According to Direct Selling magazine's survey at the end of January, 49 companies had direct sales permits on the Chinese mainland and 46 were operational. Together they generated 159.91 billion yuan in total sales, a 24.3 percent increase over 2013.
The increase shows steady progress in the direct sales industry in the country, said the survey, as domestic companies catch up with foreign peers.
Following Amway, Malaysia-based Perfect China Co Ltd ranked No 2 in China with 28 percent growth in sales to 22.3 billion yuan last year. Herbal health product maker Infinitus China Co Ltd soared 37.5 percent on sales of 16.5 billion yuan. Revenues for skin care and nutrition product maker Nu Skin declined from 6.4 billion yuan in 2013 to 4.4 billion last year.
Property developers’ sales revenue slumps in Jan
February 16th, 2015Shanghai-listed property developer Gemdale Corp announced over the weekend its sales volume fell by 19.8 percent year-on-year in January, making it the latest of a long list of developers which reported declining sales performance in the first month of 2015.
Gemdale Corp said Friday in a statement posted on the Shanghai Stock Exchange that its transaction area fell by 8.6 percent in January from a year earlier, while sales revenue also decreased by 19.8 percent year-on-year.
The announcement came after statistics showed that the total sales revenue of China's 10 leading property developers, including Vanke Co and Poly Real Estate Group Co, fell by 5 percent year-on-year in January and decreased by 58.4 percent from the previous month, according to a report from news portal caixin.com released on Thursday.
Vanke Co, the country's second-biggest developer by sales, registered sales revenue of 23.2 billion yuan ($3.7 billion) in January, falling by 16.1 percent year-on-year.
The slump in transaction areas and sales revenue in January is due to strong purchases from consumers in December under preferential home prices, which reduced the demand for housing in January, Liu Yuan, a senior research director at real estate consultancy Centaline Group in Shanghai, told the Global Times on Sunday.
Most of China's property developers experienced a hard time last year amid a slowing economy and offered price concessions in December in order to reduce the inventory pressure facing their companies, Liu said.
"According to our statistics, transaction areas in 40 major Chinese cities dropped nearly 30 percent in January from a month earlier, but the slump is temporary," Liu said.
The transaction areas and sales revenue are both expected to rebound slightly this year following a raft of forecasted loosening measures such as a potential interest rate cut, which will help to reduce the financing costs of housing loans, Zhang Xu, an analyst with Homelink Real Estate Agency in Beijing, told the Global Times on Sunday.
Xiaomi aims to bite Apple on its turf
February 15th, 2015Xiaomi Corp will initially start small by selling products like smart wristbands and mobile power chargers when it opens an online store in the United States, the Beijing-based company said yesterday.
The store marks the first step for the start-up Chinese smartphone vendor to penetrate the US market, and key products like smartphones and tablets won't be sold initially, said Xiaomi.
The new US online store, called Mi.com, will sell products such as bands, chargers and headphones, Xiaomi said at its first press conference in the US yesterday.
"We will bring more exciting software and hardware products to more consumers in overseas markets," Lin Bin, Xiaomi's president, said in a statement.
Xiaomi currently sells its products in China and seven other markets, including Singapore and India.
By the third quarter of last year, it ranked the No. 1 smartphone vendor in the Chinese market, the world's biggest.
Xiaomi yesterday also said that a total of 100 million users globally are using its MIUI operating system.
Xiaomi expects to sell 100 million phones this year after it sold 61.1 million units last year, a 227 percent jump from 2013, beating its annual target of 60 million units.
In 2014, Xiaomi's revenue surged 135 percent to 74.3 billion yuan (US$11.91 billion).
After the firm raised US$1.1 billion in December, privately-owned Xiaomi is said to be valued at US$45 billion.
Manufacturing sector reaches critical juncture
February 13th, 2015Closures, overseas investments illustrate plight facing local factories
Now is not a good time to be a Chinese factory owner. According to recent media reports, a growing number of local manufacturers are opening plants in the US as they seek to avoid the badge that comes with selling "Made in China" products.
Meanwhile, many other local factories are struggling with labor shortages, rising costs, overcapacity problems and thinning demand. In response to such pressures, low-end manufacturers are increasingly investing in Southeast Asia, where production costs are more competitive.
Both of these trends signal the need for change in China's manufacturing sector. Over recent decades, Chinese factories have become synonymous with low-quality, low-value-added products. Local manufacturers need to shake off this image by moving up the production chain. And with China's GDP slowdown weighing on the country's industrial sector, the need to advance is more pressing than ever.
According to reports, several of China's largest and historically most successful manufacturing enterprises have not been immune to the challenges brought by changing times. Silitech Technology Co, a major supplier for Nokia, has suspended production since November. At its peak, the Suzhou-based company had more than 10,000 employees, but has reportedly struggled since Nokia sold off its handset division to Microsoft last year.
In December, United Win Technology Co, also in Suzhou, Jiangsu Province, announced its closure due to a financial crisis. It had previously been a major supplier for Apple Inc and had also cooperated with Chinese smartphone brand Xiaomi. The company's closure is said to have left more than 2,000 workers unemployed.
Similar shutdowns are also said to be plaguing many of China's traditional manufacturing hubs - including Dongguan, Guangdong Province, and Wenzhou, Zhejiang Province.
Of course, not all of the worries facing factory bosses are bad. Improvements in Chinese labor laws have made workers more willing to fight for better pay and conditions. For instance, upwards of 2,000 workers at Yue Yuen, a shoe factory in Dongguan, reportedly protested recently in front of the company's gate for greater social security benefits. Yue Yuen is an assembler and producer for a host of big-name global brands, including Reebok, New Balance, Puma and Timberland.
But while China's manufacturing sector has been expanding at a rapid clip for decades, most local factories remain at the bottom of the technological food chain, where they subsist on rock-bottom unit pricing and outdated technologies. Without upgrades and reforms, producers will become even more marginalized. Those who cannot adapt will be weeded out by the market.
Chinese planners have suggested that the country's path toward a "new normal" pattern of development will necessitate greater innovation in the manufacturing sector. In a report issued Tuesday, research firm IDC described the agonies facing Chinese factory owners, while also putting forward predictions for the year ahead. During 2015, analysts at IDC foresee - among other things - the rise of intelligent factories, cloud computing and industrial robots (the latter of which could soon put many low-skilled Chinese workers out of jobs).
Chinese manufacturers will have to pursue these and other technological innovations if they want to stay in business. Fortunately, China is rapidly emerging as a research powerhouse. In 2012, the country overtook the European Union in terms of research spending as a percentage of GDP, according to a report issued in 2014 by the Organization for Economic Co-operation and Development.
The need to transform through innovation and research is particularly great among manufacturers focused on the highly competitive consumer market. If given the choice, many Chinese will purchase Japanese or South Korean-made goods. Such products typically carry high-price tags but are widely seen as being of higher quality than Chinese-made equivalents.
Chinese manufacturers need to focus especially on technologies that will help them become more specialized. They must also build brand value through higher-grade products. Ultimately, companies will have to choose development models that conform to their own conditions. Finding the right path forward won't be easy, but sitting still in changing times is a surefire way to fail.
Chinese phone makers welcome Qualcomm fine
February 12th, 2015Chinese cellphone makers on Wednesday expressed their support of a record anti-trust fine levied on U.S. chip maker Qualcomm.
The National Development and Reform Commission (NDRC) ruled Qualcomm had abused its market dominance and charged discriminatory fees in the Chinese market when licensing mobile chip technology. The company was ordered to pay 6.09 billion yuan (994 million U.S. dollars).
Telecom giant Huawei told Xinhua that the NDRC's decision would benefit telecom product manufacturers and Chinese consumers, as well as improve intellectual property protection.
Huawei said the decision would create a fairer competitive environment and would prompt domestic research.
ZTE also welcomed the anti-trust ruling as it would have a significant effect on the global telecom industry.
The NDRC's investigation began in November 2013. The watchdog said the fine would stop the company's monopolistic practices, safeguard fair market competition and protect consumers' interests.
It said Qualcomm improperly bundled unrelated licenses with baseband chip sales, forcing Chinese customers to pay for licenses they did not need.
San Diego-based Qualcomm said in a statement that it would honor the fine and modify its licensing practices.
China's machinery sector continues to grow in 2014
February 11th, 2015China's machinery industry continued to expand in 2014 but at a softer pace due to sluggish domestic demands and piling inventories, new data showed on Wednesday.
The added value of the sector increased 10 percent year on year in the last year, slightly down from 10.9 percent in 2013, data from the China Machinery Industry Federation (CMIF) said.
Chinese machinery enterprises posted combined revenues from main businesses at 22.2 trillion yuan (3.62 trillion U.S. dollars), up 9.4 percent from a year ago. The revenues grew 13.8 percent in 2013.
Chen Bin, executive vice president of the CMIF, said the industry, still plagued by overcapacity, will likely continue to slow as they are confronted with weakening demands and fierce competition at home.
Motorola Solutions Inc exploring sale
February 9th, 2015Walkie-talkie and radio systems maker Motorola Solutions Inc is looking into a possible sale, Bloomberg reported, citing people familiar with the matter.
Potential buyers could include private equity firms and defense contractors including Raytheon Co, Honeywell International Inc and General Dynamics Corp, Bloomberg reported, citing one of the sources.
The 87-year-old company is working with financial advisers as it looks for a buyer, Bloomberg cited the sources as saying.
The sale process has been going on for several months, though a deal isn't on the immediate horizon, one of the sources told Bloomberg.
Motorola Solutions spokesman Kurt Ebenhoch declined to comment on rumors or speculation.
Yum! records 16% sales drop in China
February 6th, 2015US company considers regaining Chinese consumers as top priority after food supply scandal last year
Yum! Brands Inc, operator of big-name fast-food chains like KFC and Pizza Hut, has recorded a drop in its China unit sales in the fourth quarter ending December 27, 2014 due to a food supply scandal, which analysts Thursday said will continue to weaken Chinese consumers' confidence in the following year.
The same-store sales in China, the US fast-food company's No.1 market for profit, slid 16 percent year-on-year in the quarter, according to a full-year earning report released by Yum! on Wednesday US time.
The fall in the China division, however, was less severe when compared with the 19.4 percent dip projected by analysts surveyed by Consensus Metrix.
As for the whole year, the company posted a 8 percent drop in the operating profit of its China unit, in comparison with a 1 percent increase globally.
The losses for Yum! stood at $0.20 per share in the fourth quarter, or $86 million in total.
The company put down the underperformance to a food supply scandal erupted in 2014.
"Overall results in 2014 were disappointing as the Chinese supplier incident in July offset our strong first half of the year," Greg Creed, Yum! Brands Inc's CEO, was quoted in the report as saying.
After media reported on July 20 that one of Yum!'s suppliers, Shanghai Husi, was using expired meat, sales in China's KFC and Pizza Hut chain restaurants suffered a massive blow.
The company, which quickly cut ties with the supplier as well as its parent OSI Group LLC, still saw same-store sales in China fall 14 percent year-on-year in the third quarter ending September 6. By contrast, the quarter ending roughly one month before the scandal tidings recorded a robust growth of 15 percent.
Greed said the company's top priority now is to restore Chinese consumers' confidence, anticipating "a strong second half of 2015" due to "the turnaround gains momentum, led by menu innovation across the year."
New offerings would include premium coffee and revamped children's dishes, according to media reports, citing Joey Wat, president of KFC China.
In late January, Beijing Morning Post reported that over 300 KFC stores in Beijing had started to sell coffee products.
Its major rival McDonald's Corp is also reportedly trying to win back Chinese consumers via menu adjustment. McDonald's on January 23 reported a 4.8 percent drop in fourth-quarter sales for the region including China and Japan amid the fallout from the Shanghai Husi scandal.
Despite the efforts, analysts holds a pessimistic attitude toward the recovery of Yum! as well as that of McDonald's in the Chinese market.
"The food supply scandal severely dampened the faith for the US fast-food chain brand in China, where consumers are paying increasing attention to food quality along with the rising standard of life," Yan Qiang, a partner and industry analyst with Beijing-based Hejun Consulting, told the Global Times Thursday.
Yan noted that a full recovery needs at least one more year.
It is not the first food scandal to have occurred to Yum! in China. Chinese media allegations that KFC used tainted chicken in 2012 already caused a national scare and some damage to Yum!'s reputation in the country.
Regardless of those food scandals, US fast-food chains are also confronting fierce competition from domestic fast-growing counterparts, Tian Guangli, an expert at Beijing-based consultancy Longce Think Tank, told the Global Times Thursday.
"Many new rising stars such as pancake brand Huang Tai Ji have a better understanding of how to draw and maintain consumers' attention in this modern Internet era than traditional fast-food chain operators including Yum!," said Tian.
Finance companies launch new funding program for female entrepreneurs
February 5th, 2015China's first funding program aimed at providing finance exclusively to female entrepreneurs has been launched by a group of heavyweight finance organizations.
International Finance Corporation, Ant Financial Services Group, a subsidiary of Alibaba Group Holding Ltd, and Goldman Sachs Foundation will jointly run the program.
The funds to be offered - through loans from Ant Financial Services' microcredit arm Ant Credit, with the backing of IFC and Goldman Sachs - are expected to benefit around 46,000 female entrepreneurs. The program has 500 million yuan ($80.13 million) available to it.
"The market opportunity for financial products designed specifically for female entrepreneurs is huge", said Ji Min, deputy director of finance research institute of the People's Bank of China, with few, if any, currently on the market.
Karin Finkelston, IFC's vice-president for Asia Pacific, said women starting out tend to invest their business knowhow in different directions from their male counterparts, for instance into family-oriented fields, including children's education and family healthcare, which often represent appealing prospects for financial companies.
On the flipside, however, research shows that women entrepreneurs have traditionally found it hard to get financed, and if they do, the amounts approved can be tiny, even as little as 10 percent of what they are seeking, said Finkelston.
She claims her own organization, however, is female-friendly when it comes to financial support, a philosophy shared with its partner in the new fund, Ant Financial Services, which already has a strong client base of female-led startups, many of which run their businesses on Alibaba's online market platform.
Yu Shengfa, Ant Financial's vice-president, said that just over half of the business owners using Alibaba's online market platforms are female.
IFC provided 1 billion yuan in senior loan funding to Ant Credit in 2014 which it loaned, in turn, to 62,000 micro-, small and medium-sized enterprises across China.
Online-based Ant Credit's role is to evaluate potential borrowers' creditworthiness based on their transactional and behavioral data, without the need for deposits, it says, or using any assets as guarantees.
By the end of March 2014, Ant Credit had loaned 190 billion yuan for more than 700,000 small and micro-business.
Ding Qinyan, 26, an Ant Credit customer, started her online apparel store on taobao.com when she was still in college.
Her first online business loan was granted in 2013, for the deposit needed to join an online sales campaign.
Based on Ding's sales records and credit history, the application was approved within a minute at an interest rate of 0.0005 percent per day.
Lenovo posts profit fall in fiscal Q3
February 4th, 2015Lenovo Group, the world's biggest personal computer maker by shipments, posted on Tuesday a drop in its fiscal third quarter net income, a result caused in part by its completion of the acquisition of unprofitable handset maker Motorola Mobility.
In the quarter ending December 31, 2014, the company recorded a net income of $253 million, a 5 percent dip from $265 million a year earlier, while its revenue rose 31 percent year-on-year, reaching $14.1 billion, according to a financial report filed to the Hong Kong bourse on Tuesday.
The profit, though it fell from the same period in 2013, still beat Bloomberg analysts' estimate of $182.4 million.
Lenovo attributed the profit fall mainly to two major acquisitions completed during the quarter. Its net income before non-cash acquisition-related accounting charges was $327 million, up 23 percent year-on-year, according to the filing.
In October 2014, the group closed its $2.91 billion purchase of Motorola Mobility from US tech giant Google Inc and a $2.1 billion takeover of International Business Machines Corp's low-end server unit.
"They [the two recently acquired businesses] are definitely becoming our growth engines," Yang Yuanqing, Lenovo's CEO, was quoted as saying in a press release posted on the group website.
The group said it sold more than 10 million Motorola phones worldwide during the fiscal quarter, achieving record shipments.
However, Lenovo's mobile business, including Motorola, recorded a pretax loss of $89 million during the three months through December, much more than the loss of $2 million over the same period in the previous year.
The increased losses in the mobile unit indicate that Motorola, targeting mid- and high-end customers, has yet to be able to offset the losses generated by Lenovo's previous focus on the low-priced segment to snatch market share, said Zhang Yi, CEO of Guangzhou-based iiMedia Research.
"The mid- and high-end segments are a crucial turf for Chinese smartphone makers to raise their profit margin," Zhang told the Global Times Tuesday.
Huawei appears to have already made a dent in the segments with its Ascend Mate series. Xiaomi Inc, famous for its low-budget phones, also jumped into the higher-level battlefields via its newly released flagship Mi Note, which the company claimed could be compared with Apple's devices.
Against the backdrop, Motorola introduced three flagship smartphone models into the Chinese mainland market on January 26, to help Lenovo further woo mid- and high-end phone users.
Despite the efforts, Zhang is concerned that it may be hard for Motorola's newly released smartphones to help Lenovo's money-losing mobile unit return to profitability immediately.
The group should further enhance the brand value via effective marketing so as to undercut foreign rival Samsung in China's fiercely competitive smartphone market, Zhang noted.
By contrast, Li Yi, secretary-general of the China Mobile Internet Industry Alliance, showed more confidence in Motorola's future.
"I think that the Motorola brand will bring profit to Lenovo, given Lenovo's mature distribution channel in China and Motorola's powerful selling network abroad. Motorola's patent portfolio can also facilitate the Chinese phone maker's progress in the overseas market," Li told the Global Times Tuesday.
The group expects Motorola to contribute over 40 percent of its smartphone shipments in the following fiscal year, the Wall Street Journal reported in early January, citing Liu Jun, president of Lenovo's mobile business group.
Lenovo's PC unit continued to be the main contributor to the company's total revenue, although the proportion in the quarter fell slightly to 65 percent from 81 percent of the previous fiscal quarter, while mobile businesses' share of the total revenue during the third quarter increased to 24 percent from 13 percent in second quarter.
As the world PC market is becoming more saturated, Lenovo is pumping up efforts to seek new potential growth in other segments such as smartphones, said Li.
Apart from launching new hardware devices, operations like gaming and clouding also appear to be areas Lenovo wants to bank on. In April 2014, Lenovo announced the launch of its gaming mobile app marketplace for Android smartphones.
Xiamen's strengths benefit free trade zone
February 3rd, 2015Xiamen, a coastal city in Fujian province, has an unparalleled advantage in building a free trade zone given its talent pool and rich experience of innovative policies, Fujian Governor Su Shulin said.
In a Government Work Report, Su said the Fujian free trade zone, with its proximity to Taiwan, will focus on cross-Straits cooperation and enhance exchanges of goods and services.
"Xiamen should set a terrific example of strengthening cross-Straits ties through the free trade zone," Su said.
The Fujian free trade zone, which was approved in December and is scheduled to open in March, covers 118 square kilometers and includes the cities of Xiamen, Fuzhou and Pingtan.
More favorable policies should be implemented to attract Taiwan professionals by making their lives easier, said Chen Qiuxiong, director of the organization department of Xiamen's Party committee.
While Xiamen offers a platform, the talent from Taiwan will bring technological support for the city's goal of building a free trade zone, Chen added.
A recruitment event catering to Taiwan professionals will be held in March in Xiamen, highlighting sectors such as new energy, marine engineering and cultural and creative industries, according to the city's Federation of Taiwan Compatriots.
According to the plan, Xiamen will recruit 300 Taiwan experts on management, science and research by 2020.
Yao Yuangen, a researcher at the Fujian Institute of Research on the Structure of Matter, suggested Xiamen make a foray into aircraft leasing and prepare for overseas financing of large-scale equipment.
3D printing ready to revolutionize manufacturing
February 2nd, 2015After decades of development, 3D printing is now ready to revolutionize manufacturing
In October, the southern Chinese city of Changsha launched an industrial park. What sets it apart from other manufacturing centers is that it is poised to play a key role in the growth of Chinese technology.
The development is China's first hub for 3D printing technology, and was established with an immediate goal to produce 100 3D printers, and to triple the number of devices by 2016. Taking Changsha's lead, the cities of Wuhan and Zhuhai have announced plans to develop similar industry hubs.
Other countries in the Asia-Pacific region are also focusing on this fast-growing technology.
Over the next five years, Singapore plans to invest $500 million to boost skills in advanced manufacturing, focusing heavily on 3D printing.
Companies in Japan are already marketing inexpensive desktop 3D printers, while South Korean conglomerates are widely using the technology.
After decades of development, 3D printing has emerged as a viable and affordable technology, increasingly used by both the private and public sector. While problems remain, it could eventually revolutionize the manufacturing sector that many countries in Asia depend on for economic growth.
"3D printing has been around since the 1980s and has been expanding into mass production and specialized manufacturing since then," says Maria Smith, head of law firm Baker & McKenzie's trademarks practice in Hong Kong.
"The business is growing rapidly. In 2013, the (global) market size was estimated at $2.5 billion. It is projected to reach $16.2 billion by 2018."
3D printing, also known as additive manufacturing, has already been used to produce cars, buildings, guns and even artificial body parts.
"In the medical field, Chinese scientists have gone a step further, using live tissue to create organs and print ears, livers and kidneys," adds Smith.
As it becomes increasingly accessible and affordable to consumers, the technology is making it possible for products to quickly reach the market with less labor-intensive production required.
But these benefits are also a cause for concern. As 3D printing allows for the quick and easy copying of products, it is, in turn, presenting fresh challenges for regulators that have yet to adapt to the technology and for companies seeking to protect their intellectual property rights.
Once prohibitively expensive, the technology that makes 3D printing possible has evolved substantially.
Hewlett-Packard in October introduced a 3D printing technology 10 times faster and 10 times more precise than existing technologies. The Multi Jet Fusion 3D printer is set to launch in 2016.
In November, General Electric announced its plans to invest $32 million in developing an additive manufacturing facility in the United States?a factory that operates using 3D printers.
In Asia, XYZprinting, a company backed by Taiwan's electronic manufacturing conglomerate Kinpo Group, launched the world's first allin-one 3D printer with built-in scanner.
The da Vinci 1.0 AiO, weighing around 20 kilograms and resembling a large microwave, is available to buy for $799 through e-commerce websites including Newegg.com and Amazon.
A 3D printer introduced in late 2014 and developed by China Aerospace Science and Industry Corp is due to be mass-produced and available later this year.
Li & Fung, a Hong Kong-based consumer goods design, logistics and distribution company, has in recent years run a series of 3D printing initiatives. In 2013, it carried out Asia's first in-store 3D printing retail experience at a Toys R Us outlet in Hong Kong. Li& Fung has also explored the possibility of teaming up with other companies like Samsung Electronics Co to drive the technology further.
"With nearly 30 years of development, 3D printing technology is already quite mature," says Luo Jun, secretary-general of the World 3D Printing Technology Industry Alliance.
"It has been widely used for design in creative industries and printing teeth or bones in the biomedical field," adds Luo, who is also executive-president of the China 3D Printing Technology Industry Alliance. "Manufacturing and the aerospace industry use it to print complex moldings and components, or customized buildings."
Paul Shao, CEO of Trustworthy (Beijing) Technology, a 3D printer company that distributes systems developed by brands including 3Shape and Roland, says the region is quickly finding its way with 3D technology.
"In Asia, the markets in Japan, China and South Korea are more mature in terms of 3D printing, but we can see many regions like Southeast Asia and central Asia are joining the game in trading and applications," Shao says.
A country's 3D printing capacity is closely linked with its competitiveness in traditional manufacturing, he adds.
"Compared with the US, Europe and Japan, China is still at an infant stage in terms of innovative design, precision processing and economic power. We have much space to grow in many key technology areas such as laser and materials. But we are getting closer and closer," says Shao.
The evolution of supply chains is also driving the development of 3D printing. More brands are using just-in-time supply chains that make good use of the technology, getting products manufactured more quickly and into the hands of consumers.
In other regional markets, many of which rely on labor-intensive manufacturing for economic growth, the technology is less mature. Examples are Thailand and Malaysia, two middle-income countries moving up the value chain.
Thailand imports all of its 3D printers from the US, Canada or Germany because it lacks the technology to make its own, despite being a prodigious supplier of microchips.
But as Luo points out, the use of 3D technology in the region is likely to gather more pace.
"3D printing technology has been growing fast in China with more than 100 companies involved in industry, biomedicine, creative (industries), architecture, materials and software. China's 3D printing market has seen more than 40 percent growth for two consecutive years," says Luo.
China's Ministry of Science and Technology has included 3D printing technology in the National High-Tech Research and Development Program, which sponsors research in key high-technology fields. The Ministry of Industry and Information Technology, or MIIT, is accelerating the process to launch support policies.
"The Ministry of Education is planning to bring 3D printers into schools," Luo adds.
In September, MIIT announced it was working on a plan to promote the industry.
"We will see greater usage of 3D printing with increased affordability encouraged through government initiatives," says Andy Leck, managing principal and head of the IP practice at Wong & Leow, a member firm of Baker & McKenzie in Singapore.
"Key examples of these initiatives include the Singapore government's Productivity and Innovation Credit scheme and the investment of $500 million over five years as part of the government's Future of Manufacturing program," he says.
All this attention, however, may be creating a bubble. After a boom in raising capital through 2013, many 3D printer manufacturers have performed badly, particularly in terms of their stock price.
The share prices of some major 3D printer producers have dropped significantly over the past year. US-based ExOne fell from $66 in January to $21 in November, Stratasys slid from $134 to $105 and 3D Systems plunged from $96 to $36. In the same period, Germany's Voxeljet dropped from $47 to $12.
A number of linked companies listed in China's A-share market, such as those involved in robotics, have not performed well, either.
One exception is Guangdong-based polymer materials company Silver Age, which saw its value grow from 6.16 billion yuan ($994 million) in January to 17.45 billion yuan in November.
And if IP issues and fears of a bubble are not enough of a concern, the industry in Asia still faces a couple of other challenges including the high cost of materials and a dependence on imports. Another hurdle is the lack of a mature business model for companies in the sector.
Mobile health sector expected to hit 12.5b yuan by 2017
January 30th, 2015China's mobile healthcare market is expected to see fast growth and hit 12.5 billion yuan ($2 billion) by 2017, according to a report released by China Medical Pharmaceutical Material Association at a press conference on Wednesday.
According to the 2014 China Medical Internet Development Report released by the CMPMA, there are more than 2,000 mobile healthcare applications in China.
The report states that the market in China will expand by 400 percent when compared to 2013 when the market was at about 2.36 billion yuan.
The dramatic growth of the mobile healthcare market can be largely attributed to the fast development of China's mobile internet, said Long Yan, deputy president of CMPMA at the conference.
As of 2014, the number of China's internet users through cell phones was 527 million.
While the market has grown, Long said a number of healthcare apps were pulled from app stores over the past year due to poor performance and user retention.
Companies are required to integrate the online apps with offline services and products to cater to the developing trend of the mobile healthcare industry, added Long.
Taobao responds to disputed inspection report
January 29th, 2015China's largest shopping website, Taobao.com, gave an official response to a controversial quality inspection report by the country's commerce regulator on Wednesday.
The online store will file a complaint to the State Administration for Industry and Commerce (SAIC) based on accusations of a senior official's improper supervision, according to an announcement on Taobao's Sina Weibo account.
"Director Liu Hongliang followed improper procedures and his legal assessment was emotional," Taobao said, "He reached a conclusion that was not objective, bringing a negative effect on Taobao and e-commerce businesses."
"We welcome any supervision that is fair but oppose nonfeasance and random or malicious official actions," the post said.
The move is the latest salvo between Taobao, the most profitable branch of e-commerce giant Alibaba Group, and the SAIC since the latter published a quality inspection report on Jan. 23 that gave Taobao the lowest rank in terms of certified product rate.
FAIR OR NOT?
At the core of the quarrel is the question of whether or not Taobao was fairly treated.
The SAIC's sample test showed that only 37.25 percent of surveyed commodities sold on the website were authentic, lower than a 58.7-percent average of major online shopping platforms. Taobao's major rival, JD.com saw its rating at 90 percent.
Taobao fired back on Tuesday and said it was unfairly treated.
It claimed the inspection was flawed in logic and contradicted previous data, pointing out the authority only made a sample of 51 items which cannot represent the enormous trade volume on the platform.
The SAIC's survey had a 20-item sample for JD.com, a 10-item sample for Yhd.com and only a 1-item sample for Zol.com.
Tuesday's post was deleted shortly after but still stirred heated public debates with majority opinions in favor of the company.
Shi Yuzhu, a celebrity and board chairman of Giant Interactive Group, said the sample was too small compared to the website's 1 billion commodity categories (as Taobao claimed). "The sample was a little pale if statistically speaking," He said.
Responding to the claims, an SAIC official Yang Hongfeng said the survey just aimed to evaluate market risks and warn against illegal activities and no e-commerce firms were targeted.
Yang said the survey was conducted by a third party to look for problems instead of showing how poor the product quality was in online shopping, and the results should not be over-interpreted.
On Tuesday, another SAIC official, Yu Fachang said strengthening supervising efforts in online market is their legal duty and related officials have conducted activities in line with the law.
FAKE OR NOT?
An anonymous government official in east China's Zhejiang Province, where Alibaba's headquarter is located, said Taobao, while refuting the survey, avoided the question that if there were fakes on its platform and the responsibility it should take.
Yang said Alibaba has not paid enough attention to illegal operations on its platform and with no effective measures to tackle the problems, which triggered a honesty crisis for the group and brought a negative effect to the sector.
On Wednesday, the SAIC published a white paper regarding Alibaba, which listed five problems in the company's shopping platform including loose access requirement, slack inspection of commodity information, chaotic management of sales and a defective credit rating system.
Taobao.com, having grown to the most popular online shopping platform in China, allowed influx of fake commodities and illegal transactions, the white paper said.
The white paper was compiled based on a closed-door symposium of the SAIC and Alibaba in July, 2014. The meeting was chaired by Liu and no information was released at that time to avoid a negative impact on the group's IPO.
Taobao's announcement did not deny there were counterfeits traded via its platform but said the website was also a victim and would not shirk the responsibility of removing fake goods.
Alibaba's chairman, Ma Yun described fakes as long-existing viruses that have always plagued economic development.
AT LEAST ONE THING AGREED
Although the SAIC and Alibaba still remain locked in debate over the certified product rate, both sides agree on tough action against counterfeits.
Ma promised the group would mobilize all the resources to help address the problem and called for combined efforts from society instead of unbacked accusations.
Taobao announced on Wednesday that it would initiate a "special operation battalion" comprised of 300 specialists to cooperate with officials to crack down on fake goods.
Yu said the administration will continue to act hard against illegal activities to safeguard online market order and consumer interests.
Jin Zhanming, economics professor of Tsinghua University, said a sound interplay should form between producers, online platforms and regulators with all sides having responsibilities to safeguard market order.
Ericsson on solid ground despite economic slowdown
January 28th, 2015Global telecom manufacturing giant Ericsson remained resilient despite large patches of economic slowdown around the globe, by reporting a solid $1.68 billion in net income last year.
The company, together with China's Huawei, is a major supplier of fast mobile broadband that facilitates a blossom of new mobile business – online commerce, online social community and a flurry of other models.
Ericsson is also a major vendor contributing to 3G and 4G infrastructure build-up in China, supplying equipment and technology to China Mobile, China Unicom and China Telecom.
Ericsson's sales were strong in Asia, the Middle East and Europe, but it said business in North America will remain sluggish with telecom operators there saving cash for more spectrum auctions later. Ericsson has anticipated the North American mobile broadband business to remain slow in the short-term.
"We will continue to proactively identify efficiency opportunities. Ericsson's cost and efficiency program, with the ambition to achieve savings of approximately 9 billion SEK, with full effect during 2017, is progressing well," said Hans Vestberg, president and CEO of Ericsson.
Last year, Ericsson made an end to its traditional chipset-making business, after terminating a handset joint venture with Sony in 2009.
Total sales of Ericsson hit 228 billion SEK ($35 billion), flat with the year earlier, adjusted for comparable units and currency factors.
Telecom services showed stable growth driven by managed services and systems integration sales. In Q4 2014 alone, Ericsson signed 17 new managed services contracts with a variety of major operators.
In 2015, Ericsson is said to continue its progress on the Networked Society strategy, focusing on market growth agenda, industrial transformation and corporate profitability.
"In line with our strategy, we have invested into our targeted areas -- IP networks, cloud, TV & media, industry & society and OSS & BSS. Sales in targeted areas showed a growth of more than 10 percent in 2014, " said Hans Vestberg.
Social media help companies tap into pool
January 26th, 2015
A job hunter scans the code at a recruitment fair in Handan, Hebei province. Job ads are being seen more frequently in social media such as micro blogs and WeChat, in recent years.
With social media engaging massive numbers of users in China, platforms like WeChat and micro blogs are increasingly being used as recruitment tools.
Job ads from private recruiters and companies are seen more frequently on micro blogs and WeChat, a sign that Chinese employers have begun to embrace social media recruitment, a move that helps them tap into a larger pool of talent.
"The use of WeChat and micro-blogging is becoming a popular way to recruit. It's fashionable among recruiters who have accounts on social media platforms," Zhu Hongyan, a senior career consultant at Zhaopin, an employment website, told China Daily.
"Using social media enables recruiters to reach out to a wider audience more effectively, given that such platforms have become the major information-sharing tool among the prime working age population," Zhu said.
WeChat enables 468 million monthly active users in the third quarter of last year, while micro blog users surpassed 275 million, according to the China Internet Network Information Center.
WeChat enable users to assemble a huge number of contacts and access a large audience.
Smile Xu, managing director at sports marketing agency Miles Group, posted a job ad for an account manager on her WeChat account in early December and quickly received a dozen resumes.
"Though the number of interested applicants was fewer than expected, they were of better quality compared with traditional recruitment," said Xu, who regularly posts photos of work and events her agency promotes.
"At least people understand what they are applying for," she said. "Friends, acting as matchmakers, will brief potential candidates they know about a job because they are in the same field and know what the job entails."
Fu Zhu, the former recruitment head of e-commerce giant Jingdong, said the traditional hiring channel is facing the challenge of cost and quality, as social recruiting through platforms like WeChat and LinkedIn provides a more time-effective channel.
"Using traditional methods, we can only select from active candidates who send resumes for certain positions. But in China, more skilled employees are passive candidates who can be better reached through social recruiting channels," said Fu.
Rather than submitting resumes randomly at job fairs and on employment sites, job seekers can now reach recruiters directly and take advantage of targeted job referrals.
"In my WeChat group talk, classmates, teachers and some alumni constantly forward selected employment information related to my specialty, which helps me to target employers more effectively," said Zeng Qinbing, a senior student at Dongguan University of Technology in Guangdong province.
However, high-profile employers in China appear to prefer the traditional approach to recruitment.
In August 2014, Maximum Employment Marketing Group conducted research on the status of WeChat recruitment for Fortune 500 companies.
While 80 percent of Fortune 500 companies operate in China, only 7 percent have set up specific career accounts on WeChat, and of those, only 19 percent support direct application through WeChat.
"Despite the growing awareness, social media recruiting remains in the early adoption phase," said Zhaopin consultant Zhu.
Profit growth of China's state firms slows
January 23rd, 2015Profitability of China's state-owned enterprises (SOEs) was squeezed in 2014 amid slackening momentum in the economy as it registered the weakest growth since 1990.
Combined profits of SOEs reached 2.48 trillion yuan (404.66 billion US dollars), up 3.4 percent from one year earlier, the Ministry of Finance said in a statement on Thursday.
The growth slowed from 4.5 percent reported in the first 11 months last year and 5.9 percent in 2013.
Business revenue climbed 4 percent year on year to 48.06 trillion yuan while operating costs rose at a faster pace of 4.5 percent to 46.66 trillion yuan.
By the end of December, total assets gained 12.1 percent from the beginning of 2014 to 102.12 trillion yuan while liabilities grew 12.2 percent to 66.56 trillion yuan, the ministry said.
It said auto making and pharmaceutical industries posted strong profit increases, while sectors such as coal mining and chemicals saw notable declines in profits.
Bright prospects for job seekers in China
January 22nd, 2015Multinational companies' increased interest in the Chinese market and the rapid expansion of domestic companies will boost job prospects and salaries in the country this year, a new survey said on Wednesday.
According to the Salary Survey 2015 released by global recruitment specialist Robert Walters, Chinese employees who plan to change jobs in 2015 can expect their salaries to go up by 15 to 25 percent on average, while those who choose to stay may see wage increases of about 6 to 8 percent.
Employees in Beijing working in industries like accounting and finance, human resources, and marketing can expect a 20 percent growth in wages if they opt for a new company. Professionals working in sales, as well as in engineering-related research and development sectors are likely to see their salaries increase by up to 30 percent.
Employees in Shanghai can expect salary increases of around 20 percent if they are looking for new opportunities in sectors like finance and accounting, banking, human resources, information technology and sales.
The survey expects pharmaceutical and chemical industries to be the top hirers this year, with employees working in the operations and manufacturing sectors of these two industries expected to realize salary hikes of about 30 percent if they switch to another company.
Sales professionals in the luxury industry will see little growth in salaries this year due to the industry stagnancy.
Even though the rising salaries of Chinese professionals have prompted concerns about rising labor costs in China, Alistair Cox, chief executive officer of global recruitment firm Hays Plc, said it is needless to worry about the fewer opportunities. On the other hand, Cox finds it a good signal as the economy is becoming more developed, people are getting more disposable income and standards of living are improving.
"There is a massive domestic market as well, which in many ways is under-leveraged," he said.
Though the number of employees planning to switch jobs is set to drop slightly from the level seen in 2014, it still remained quite high, with over 71 percent of the 2,448 respondents keen on a change.
The competition for qualified talent, preferably those with overseas working experience, solid knowledge of the domestic market, and higher bilingual proficiency, will be even more intense in 2015 among multinational companies, aggregated by the fact that a growing number of multinational companies are moving their regional headquarters to first-tier cities, said Wang Qiang, managing director of Robert Walters China.
Domestic companies are not lagging behind. In order to hire qualified candidates, a large number of them are providing competitive salaries and compensation packages, as well as equity incentive plans. As a result, some experienced professionals have given top priority to domestic companies, said Wang.
ZTE posts 94% jump in net profit in 2014
January 21st, 2015ZTE Corp, China's biggest listed telecommunications equipment maker, yesterday posted a 94 percent jump in net profit in 2014 due to surging demand for 4G network equipment and high profit margins from growing sales of smartphones overseas.
Its net profit totaled 2.63 billion yuan (US$423 million) last year. Revenue reached 81.2 billion yuan, up 7.99 percent, ZTE said in a statement to the Shenzhen Stock Exchange yesterday.
The rapid development of 4G services in 2014 fueled the demand for 4G base stations.
By November, China boasted 75 million 4G users. China Mobile, China Unicom and China Telecom have built a total of 700,000 base stations, surpassing an original target of 500,000 stations.
On the other hand, ZTE expanded business in overseas smartphone markets which offer higher profit margins compared with the domestic market.
ZTE aims to double sales to 20 million units in the US market this year.
The company also plans to surpass LG to become the No. 3 US smartphone vendor within two or three years, according to Cheng Lixin, chief executive of ZTE North America.
China banks' 2014 new yuan lending hits record high
January 15th, 2015China's new yuan-denominated lending in 2014 hit record high at 9.78 trillion yuan (1.58 trillion U.S. dollars), up 890 billion yuan from one year earlier, latest data showed on Thursday.
In December, banks' new lending reached 697.3 billion yuan ,up 214.9 billion yuan from the same month of 2013, said the People's Bank of China (PBOC), the central bank.
M2, a broad measure of money supply that covers cash in circulation and all deposits, increased 12.2 percent year on year to 122.84 trillion yuan at the end of December, according to the PBOC.
The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, rose 3.2 percent year on year to 34.81 trillion yuan at the end of December.
Total social financing in 2014 stood at 16.46 trillion yuan, 859.8 billion yuan less than 2013, according to data released by the central bank.
Foreign banks optimistic about future performance in China: report
January 14th, 2015Foreign banks in the Chinese mainland continue to be optimistic about their future performance going forward, according to a report released by Ernst & Young Greater China here on Tuesday.
"The regulatory landscape continues to challenge foreign players, while alongside are also the opportunities generated from the evolving RMB internationalization and interest rate liberalization," Managing Partner of Financial Services at Ernst & Young Greater China Jack Chan said.
In terms of total assets, based on the China Banking Regulatory Commission's 2013 annual report, foreign banks' market share in China was just 1.73 percent as of Dec. 31, 2013, below the market share of 1.84 percent back as of Dec. 31, 2004.
According to the report, foreign banks in China expect a modest improvement in performance over the next three years. Half of the participants predict a slight improvement, while 45 percent of them hope to see a significant improvement.
Despite the optimism, the report said many of the CEOs that they have surveyed find the market challenging and complicated by issues surrounding financial reform and economic uncertainty.
The most difficult regulatory challenge in 2014 was access to the bond market, followed by the myriad of rules and regulations and capital and liquidity constraints, Chan said.
As China's economy evolves, the foreign banks believe it is critical that the capital markets open up and the foreign banks participate more fully in the bond market, he said.
The report is based on interviews with 41 foreign bank CEOs and senior bank executives based in Shanghai, Beijing and Hong Kong and conducted during August and September 2014.
It examines the challenges facing players as they push to improve their footprint in China. It also looks at the trends and regulatory reform that is shaping the market and offer insights into ways of driving growth now and in the future.
Hainan drug firm sues Tencent over derogatory posting
January 9th, 2015Internet giant Tencent Holdings Ltd may be facing a lawsuit from a pharmaceutical company based in Hainan province for allowing the spread of false information via its instant messaging platform WeChat.
In July, a WeChat post claimed that a medicine known as nimesulide granules, produced by Hainan Honz Pharmaceutical Co Ltd, had caused at least four deaths.
The drug is intended for the treatment of ear, nose and throat infections.
In early August, Honz reported the case to the local public security authorities, which determined that the rumor was false.
In December, Honz posted on its official WeChat account what it said was an apology from the source of the rumor as well as the case description from the local police to refute the rumor, but this move had little effect.
It then served notice on Tencent, urging the latter to delete, screen out and break the links of the false information, but it said it received little positive response from Tencent. The drug firm visited the headquarters of Tencent in mid-December to negotiate, it said, but was disappointed again.
As a result, Honz filed a lawsuit against Tencent. Haikou city's Xiuying District People's Court has put the case on record, the pharmaceutical company said on its official website on Tuesday.
Tencent told China Daily on Thursday that it had not received any legal claims.
Since the rumor spread on the Internet, sales of nimesulide have been heavily affected, as have sales of other medicines under the same brand, Honz told China Daily.
According to Guosen Securities Co Ltd, annual sales of nimesulide were about 100 million yuan ($16 million) between 2012 and 2014.
Honz is the largest nimesulide producer in China.
"With the rapid development of social media, which is represented by WeChat, rumors go viral due to the incomplete oversight system. It is quite difficult to monitor users' behavior and words on social media, let alone take any regulatory or administrative steps.
"If there are no effective measures taken soon, there will be more individuals and companies that are harmed by rumors. The task of refuting rumors will also become even more difficult," the company said in the response.
However, there appears to be a silver lining for the company. The Supreme People's Court in October issued a judicial interpretation regarding Internet infringement, in which the plaintiff could order the Internet service provider to give the name, contact information and Internet address of an Internet user who is suspected of infringement.
"Technically speaking, all the requirements set by Honz can be met," said Liu Haiyang, partner of the Guangzhou-based Guangda Law Firm, who is the attorney for Honz in this case.
"Tencent has the obligation to delete, screen out and break the links of the false information as an Internet service provider. As there is no precedent of a similar case, the case from Honz is very likely to set a precedent for later Internet infringement cases."
Firms grappling with compliance talent shortage
January 7th, 2015
Graduates seek prospects at a job fair in Hangzhou, Zhejiang province. They face tougher challenges in a slower economy.
Recruitment agencies find it difficult to satisfy demand as need for specialized regulatory professionals grows in several sectors
The Chinese job market will see rising demand for compliance professionals in 2015, a report suggests. The United Kingdom-based recruitment specialist Hays Plc said in its forecast that the huge growth in demand for compliance experts will be the most important trend in the next 12 months.
The government's anti-graft campaign, as well as ongoing changes in the regulatory environment, will lead to the increased demand for compliance professionals, and the trend is expected to continue in the coming years.
According to Simon Lance, regional director of Hays in China, compliance staff usually see their salaries rise by 15 percent every year. But due to the huge shortage of candidates, experienced professionals are very likely to see their salaries increase by 30 percent or even 40 percent.
The closer cooperation between China and the United States after the 2014 APEC meeting, which was held in Beijing in November, will also result in higher demand for such talent, said Lance.
This is largely because the Chinese market will open further, and Chinese companies will need to learn more in terms of compliance.
Lance said that the demand for compliance talent will be even higher in the banking industry and elsewhere in the financial sector, including insurance, funds and securities firms, as well as in the pharmaceutical industry.
Global insurer Allianz SE got involved in compliance affairs in 2008 and set up its own compliance department one year later. The compliance staff increased from three to four people in 2014, of whom three have legal backgrounds.
Maria Zhang, head of the human resources department of Allianz China General Insurance Co Ltd, said: "Within Allianz, the compliance department is mainly responsible for working closely with the supervisory authorities and submitting reports or documents as required. It will also implement compliance projects within Allianz and manage contracts, internal controls and legal affairs.
"It is an independent department that also provides legal and compliance advice to other departments," Zhang said.
Pete Chia, managing director of recruitment service provider BRecruit China, also said that the healthcare, vehicle, finance and high-tech sectors have a higher demand for compliance talent.
"We foresee cooperation between China and the US will be booming in the above industries. During this process, mergers and acquisitions are definitely the favored strategy for companies on both sides.
"Compliance people play the important role of making sure the acquisition and operations after the acquisition in one country obey the laws and policies of another country," Chia said.
"Recently, we received many assignments from pharmaceutical clients, which urgently seek candidates who are well-versed in the laws of both China and the US."
"Healthcare, vehicle, finance and high-tech companies are keen to find compliance staff. Generally, they have very specific requirements, but language skills, law certifications in both the US and China, and deep project experience are preferred by MNCs.
"Salary is not the only key factor in retaining these people. Based on feedback from our candidates, they care more about the job scope, authority and career development," he said.
Zhou Tian, 30, received a law degree last summer and soon landed a compliance job in a local securities company in his hometown of Wuxi, in Jiangsu province.
To him, this is an ideal job, which is a little bit different from traditional legal work while also giving him a chance to enter an industry that provides opportunities to learn new things.
"The Chinese legal system is not yet mature. Neither is the Chinese finance industry," said Zhou.
"There are only a few people working as compliance professionals at present. Therefore, if I can really obtain more financial knowledge, I can do the job really well in the long run. And the salary is also quite good, this is already quite attractive to me."
Chia from BRecruit also added that the growing number of Chinese companies going public in overseas markets have helped boost the demand for compliance talent, with jobs in investor relations getting a lot of attention from Chinese companies.
"Many companies consider an IPO not as an end goal but as the starting point to enter the global market. This vision boosts the demand for compliance talent," he said.
However, it is quite difficult to find the right compliance talent in China. Lance from Hays said that the pool of candidates is quite small in the country, but that is also the case globally.
Chia said that the major way to find such people is still the internal referral, as many compliance openings are not publicized.
SOE employees divided by pay gaps
January 6th, 2015Under pay reform measures which took effect Thursday, salaries and expense accounts have been slashed for senior executives at 72 centrally administrated State-owned enterprises (SOEs).
For many years, a widening gap between executive salaries and the wages of ordinary workers has been a major source of public discontent. Obviously, the new year's salary reduction measures signify an important step toward social equality.
Nevertheless, some worry that mid-level managers could potentially outearn their bosses. Others believe ordinary staff may soon make more than their supervisors. In reality, those who contribute the most should be compensated more for their work, regardless of their standing within a company.
Of course, pay gaps exist throughout the State sector. Through their connections with Beijing, employees at central government-led SOEs typically enjoy higher pay and better working conditions than their peers in non-central SOEs.
To further promote fairness, relevant authorities should consider reducing salaries not only for senior executives at centrally administrated SOEs, but for rank-and-file workers at such enterprises as well.
Smartphones help boost e-commerce
January 5th, 2015
People look at the new handset during a mobile phone trade fair on June 27, 2014.
Plans by Alibaba to boost its presence are a sign of vast opportunity
Looking for trustworthy suppliers of agricultural produce in India can be a tough job for Fan Chengliang, a Chinese businessman who exports Indian spices to China.
Fan, 40, launched his business in March last year in suburban Hyderabad, a city in southern India with a population of more than 6 million. During the harvest season, he had to travel hundreds of kilometers every day to purchase peppers from the local dealers.
"For newcomers like me, it's difficult to appraise whether a supplier is credible or not," Fan says. "It always takes a long period to establish trustworthy relationships with local businessmen."
However, finding reliable suppliers using online business-to-business services is expected to become easier for businessmen like Fan, after Alibaba Group Holding Ltd, China's largest e-commerce company, recently announced plans to boost its investment in India.
On Nov 25, Jack Ma, the founder and chairman of Alibaba, said while visiting India that the nation with the world's second-largest population offered huge potential for e-commerce.
"We will invest more in India, and we will work with Indian entrepreneurs and technology companies," 50-year-old Ma said at the India-China (Zhejiang) Business Cooperation Conference.
Alibaba currently has a small presence in the Indian e-commerce market. Ma, whose company is responsible for 80 percent of online retail sales in China, made the announcement two months after Alibaba's record initial public offering in New York raised $25 billion.
"In the next three years, one of the key strategies for Alibaba is to globalize, to ensure that more small businesses around the world use our services," he said.
According to Ma, Indian businesses have already become the second-largest presence on Alibaba after Chinese companies, and roughly 400,000 Chinese customers buy goods including spices, chocolates and tea from Indian sellers through the online platform.
Small business boost
There is huge scope for "mutual engagement" in technology between India and China, which could benefit many small businesses, Ma added.
The Economic Times, a Mumbai-based newspaper, said that during the visit, Ma was scheduled to meet with Kunal Bahl, the 31-year-old cofounder of Snapdeal.com, which styles itself as the Indian version of Alibaba.
Snapdeal, founded in 2010, has become the fastest-growing and largest online marketplace in India, with more than 25 million registered users and 50,000 business sellers.
In October, Japan's Soft-Bank, the largest shareholder in Alibaba, pumped $627 million into Snapdeal to become the largest investor in the Indian online company as well.
Gu Jianbing, public relations director of Alibaba, did not confirm if a meeting took place between Ma and Bahl. It remains unclear how Alibaba will cooperate with its Indian partners.
The Indian government does not allow foreign direct investment in business-to-consumer e-commerce, but it does so in marketplaces where third-party sellers sell directly to shoppers through e-commerce platforms.
The online sales market in India is still at an early stage compared with China. According to Technopak Advisors, a New Delhi-based consulting company, the online trade volume in India was about $2 billion in 2013. The number was $300 billion in China at the same period.
However, the large population of young people in India has made the market more promising and attractive for investors like Alibaba.
Mobile shopping
The cheap smartphones that are popular in India are also expected to boost the country's online trade volume. Bahl recently told Tencent Group, one of China's biggest Internet firms, that about 65 percent of Snapdeal's current sales were reached through mobile phones, far more than the 5 percent of only a year ago.
In India, smartphones are being sold in rural areas where "even the safety of purified water could not be guaranteed", Bahl told Tencent.
Competition in the Indian e-commerce market has become fiercer with companies like Amazon, which entered India in 2013, stirring up the industry. Wal-Mart India has also taken its cash-and-carry wholesale stores into the virtual space, allowing customers to order online for home delivery.
India's aggressive homegrown companies such as Flipkart, a leading e-commerce website launched in 2007, have also become powerful competitors. In June, Flipkart raised $1 billion in new capital to support its expansion, especially in mobile technology.
Flipkart says it has 22 million registered users and handles 5 million shipments per month. "The number of visitors on Flipkart.com is greater than the population of the top 10 Indian cities," says the introduction on the company's official website.
For Fan, the Chinese businessman, the rapid growth of the Indian e-commerce market means more choices when he selects business partners.
"If I can get more information about the suppliers through the Internet, I will not have to travel hundreds of kilometers every day during the harvest season, enduring the stimulant smell of peppers," he said.
Working priorities shift for new graduates
December 29th, 2014
A job seeker receives interview at a job fair for postgraduates in Beijing, capital of China, Dec 18, 2014. About 18,000 opportunities were offered at the fair.
More young people set sights on growth opportunities, good salaries
For Chinese college students, jobs in the Chinese government or at State-owned enterprises, government-funded institutions and NGOs have become less and less appealing in the past three years.
Recent survey of online jobs site Zhaopin Ltd found that only 36 percent of Chinese college students still want to work within the "system", which refers to governments or government-related organizations in 2014.
The percentage was as high as 54 percent in 2012.
Among the top 10 employers of 2014 in the eye of college students, only two are State-owned enterprises?China Telecom and ZTE.
More and more college students prefer to work "outside the system", including in multinational companies, private companies or even their own startup business, the survey shows. Internet companies are gaining much more attention than before.
Liao Wenyu, a senior student at Beijing Normal University, said she prefers to work in a place where she can achieve her personal values instead of one where she is holding an "iron rice bowl".
"The parents' generation prefers to have jobs with a fixed income with no risk of bankruptcy and being laid off, so they'd like me to work as a civil servant or teacher, but I'd rather not," Liao said. "I care more about the work environment, opportunity for growth, and a salary that can support a decent life in modern cities like Beijing."
Wang Wenping, human resources director with Qihoo 360 Technology, said the company is trying to attract talent by encouraging innovation, which has proved good for talent recruiting as well as the ompany's development.
"The majority of our team is very young. The post-'80 generation accounts for most of our staff members," Wang said. "In our daily work, we will not put limitations on the work. For an example, if you have a good idea, you can report directly to the president."
Wang said the 360 portable Wi-Fi router is the result of innovation from a group of young people in their company.
"The president will also talk directly to the talented people we are interested in," Wang said. "We will not say that we are the best employer. People can find that out from the salaries we offer, the working environment as well as the attention they get from the high level."
Guo Sheng, CEO of Zhaopin Ltd, said the trend mentioned earlier in the article is closely related to the ongoing economic and industrial adjustment.
"The college students are not as keen to be civil servants or working for State-owned enterprises as before. I think this is a good trend. Because it means that private sector and even midsize and small enterprises are becoming more appealing," Guo said. "The means the monopoly of State-owned enterprises in certain fields is not as strong as before."
"Besides, China is also undergoing transformation to green and service-orientated industry and expects consumption to be the new engine of growth," added Guo. "This also has some effect on job election."
China may ease investment rules in free trade zones
December 26th, 2014China may to ease investment rules in three new free trade zones (FTZs) in south China's Guangdong Province, southeast China's Fujian Province and north China's Tianjin Municipality and current Shanghai FTZ, if proposal to the effect is approved by the legislature.
The National People's Congress (NPC) Standing Committee will Friday debate on the proposal from the State Council to temporarily adjust regulations about administrative approvals in these FTZs.
Toy factories face fight for survival
December 25th, 2014Producing more than $453m worth of goods annually, companies in one county are adapting fast to change
Every year, as parents select the Christmas toys that could make them the world's best Mom and Dad, few will realize that the machines that made them, or the workers that packed them, were probably from eastern China.
More than 90 percent of the wooden toys produced in Yunhe county, in eastern Zhejiang province, are exported to the European Union and the United States.
With a toy production history dating back 40 years, the county now accounts for one-third of China's wooden toy exports.
Its 732 toy-making companies manufactured more than 2.77 billion yuan ($453.1 million) worth of toys last year, however, new challenges are mounting, most obviously the rising cost of labor and stagnating global demand.
"The time has passed when wooden toymakers made high and quick profits," said Lin Hongbing, chairman of Zhejiang Hongyuan Toy Co.
"Workers' wages are increasing by 10 percent each year, and it is impossible for us to raise the price of our products by that," he said.
Lin said that other costs, too, are rising, such as transportation and electricity. "Inevitably, as a result profit margins can only go lower and lower."
Statistics from the General Administration of Quality Supervision, Inspection and Quarantine show that China's toy exports were worth $24.73 billion in 2013, down 1.64 percent from 2012, as the global market for their goods stagnated.
"Overseas customers are much more cautious. Previously they would take a fixed number of products every year and often over-order, happy to cover that cost. Now they would place orders only for what they know they can sell," said Lin, whose company managed to maintain its normal export level in 2013, about 30 million yuan.
But many firms have not been so lucky.
The majority of the country's wooden toy-making companies are original equipment manufacturers?those that make parts or products that are used in another's end products?which means low added value, or the difference between the price of their finished products and the cost of making them, said Mao Fengming, secretary-general of the Yunhe toy association.
For a toy that is sold at $8 in the US, for instance, a producer in Yunhe is now likely to make around 20 cents.
"They have to upgrade their facilities and technologies to keep competitive on the international market," Mao said.
To move further up the value chain, many of Yunhe's toy producers have started to realize the importance of building their brands.
A decade ago, the country had just 11 recognized wooden toy brands; now there are more than 240, according to the toy association. But branding can be expensive.
Liao Fuxin, vice-president of the China Toy Association and president of Zhejiang Xinyun Wood Industry Group, Yunhe's largest wooden toy producer, said his company has 70 percent of its products made through OEMs, with 30 percent being its own brands. It is targeting parity in the two categories in the next two years.
Liao said compared with the company's own brands, OEM products bring about much higher margins. It also functions as an original design manufacturer for retailers such as US retail giants Wal-Mart Stores Inc and Costco Wholesale Corp. "We are in charge of the design and manufacturing process. But products have to be rebranded for specific target markets," he said.
Liao concedes that the business model might not be sustainable long term?but "we are trying to pitch our own brands to consumers whenever possible", he said.
Also vexing many of the toymakers are the frequent changes in technical standards of some of their target markets.
"The technical barriers to trade in the developed markets, especially, are adding hefty financial pressure. All the companies here are working hard to keep up, raising the safety standards of products," Liao said.
The EU makes the most frequent changes, according to Yao Ting, an official with the Lishui Entry-Exit Inspection and Quarantine Bureau.
The standards on the sounds produced by toys, for instance, have been revised twice in recent years. But despite the changing standards, the county has maintained a record on product safety, with not one single alert on quality issued from the EU or US for 60 consecutive months.
Yunhe is one of nine national quality and safety demonstration zones now certified by the AQSIQ for industrial export products.
"The changing standards and high requirements actually offer companies the opportunity to improve products quality," Liao said. "Without the technical barriers, Yunhe's toy industry would not have prospered as it has."
The standards expected of this often labor-intensive industry also mean that companies constantly remain under pressure to upgrade their equipment, an issue becoming all the most urgent as labor costs rise, and staff shortages grow.
More than 20,000 people, or one-fifth of the county's population, are employed in the toy industry, but fewer remain willing to do the work due to its often-tedious nature.
"Young people would not do this job. In most cases we can only recruit women in their 30s or 40s," said Lin Hongbing from Zhejiang Hongyuan Toy.
Many toymakers, including Lin's company, have automated some of their production, on painting, for instance.
Mike Sagan, supply chain director for the US-based toymaker KidKraft, which buys more than 2 million sets of toys from the county annually, believes Yunhe's competitive edge remains in the skill of its workers. But he also warns that its competitiveness could be lost without adequate investment in machinery and technology.
HK and mainland markets to see strong new listings in 2015: Deloitte
December 24th, 2014Hong Kong's stock market is forecast to raise 180 to 220 billion HK dollars (23 to 28 billion U.S. dollars) from about 110 IPOs next year, backed by a large pool of candidates seeking to be listed, according to a report by Deloitte China.
Seven to eight large-scale initial public offerings (IPO), mainly from financial institutions and pharmaceutical companies, are expected among Hong Kong's IPO activities, said the report.
The financial institutions include small and medium-sized banks, insurance companies, and brokerages that serve clients across the border, Deloitte said, adding that Internet financing and interest rate liberalization are spurring the new listings.
Hong Kong's IPO market performed well in 2014 and is expected to be the world's second-largest IPO venue for the second consecutive year.
Deloitte expects the A-share market on the Chinese mainland to have about 180 to 200 new listings and raise 100 to 120 billion yuan (16 to 19 billion U.S. dollars) in 2015, given the regulator's plan to moderately increase IPO activities.
Small and medium IPOs from companies in the manufacturing, technology and consumer business sectors will play a crucial role in the market.
As for this year, Deloitte said though more companies completed their IPOs in the second half, the total number of IPOs and IPO funds raised in the year was still far behind those in 2012.
Wumei to buy stake in B&Q China
December 23rd, 2014
Pedestrians walk past a B&Q store near Tiantongyuan, a residential community in Beijing.
Kingfisher, the United Kingdom-based home improvements retailer, said on Monday that it had agreed to sell a 70 percent stake in its loss-making B&Q China business to Wumei Holdings Inc for 140 million pounds ($219 million), a move that is expected to boost Wumei's retail presence.
The agreement follows Kingfisher's announcement in March of its plans to look for a strategic partner to help develop its B&Q business in China, which is made up of 39 stores and employs 3,000.
"I am delighted to have found a strong retail partner who will help us realize the financial value of our business in China," said Véronique Laury, chief executive of Kingfisher. The transaction will enable Kingfisher to focus on its main businesses in Europe, including the UK market leader B&Q and Castorama in France, said Laury.
Kingfisher, which has B&Q and Screwfix in the UK and Castorama and Brico Depot in France, is Europe's biggest home improvement retailer.
Beijing-based Wumei, the leading retail chain store operator, has a retail network of about 650 supermarkets under the brand of Wumart and 10 department stores in northern, eastern and western China.
The deal is subject to approval by the Ministry of Commerce, and if approved, is likely to be completed during the first half of next year.
Jason Yu, general manager of Kantar Worldpanel China, a global consumer information provider, said the bold step will help Wumart move into the highly fragmented and competitive home improvement sector. "But Wumart will have to learn how to survive in the challenging home improvement sector," he said.
Wumart had a 6.7 percent value share in the North China region's grocery retailing sector, Kantar Worldpanel said, adding that the year-on-year growth trend was more or less flat, despite it being the top retailer in the region.
As one of the key local players in the China grocery sector, Wumart has faced several challenges, including cutthroat competition from the e-commerce sector.
Yu said such deals are common in the retail sector. "B&Q may be able to leverage on the local market expertise of Wumart," he said. "The combined group will have larger scale as well as a stronger eco-system, a shopping center with both Wumart hypermarket as well as B&Q store, and better negotiation power and property portfolio. It will also allow Wumart to expand their business in regions where they do not currently have a presence."
In 2012, Home Depot Inc, the largest home-improvement retailer in the United States, closed its remaining seven big box stores in China after it decided to shift its focus to specialty and online outlets in China.
Yu said Western home improvement retailers rely very much on the do-it-yourself concept?consumers buy the raw material and do the home improvement at home. However this does not work well in China as consumers typically rely on home improvement specialists to do the work.
Though B&Q and some other Western retailers started to offer these kind of services at their stores, it was not as competitive as other players. Most of the Western retailers had fewer stores and relatively weaker negotiation power with suppliers. As a result, they are also not able to offer advantageous prices, Yu said.
He said the recent cooling down of the real-estate market has led to weaker demand for home improvement-related work. Within the home improvement sector, the only successful example is Sweden's Ikea that really wins based on the unique customer experiences it creates, he said.
Macao sees more hotel employees in Q3
December 19th, 2014The number of full-time hotel employees in China's Macao Special Administrative Region reached 45,584 at the end of the third quarter of 2014, up 2.6 percent year-on-year, official figures showed on Thursday.[Special coverage]
According to the Statistics and Census Service, the average earnings of the hotel employees in September rose by 10.7 percent year-on-year to 15,750 patacas (1,972 US dollars).
Restaurants in the region registered 23,831 full-time employees at the end of September, up 9.3 percent, with their average earnings growing 8.4 percent year-on-year.
The number of employees of the financial sector stood at 6,530 full-time employees at the end of the third quarter, an increase of 2.7 percent.
Experts say the increase of employees in the non-gaming sectors could be seen as an indicator of Macao's efforts to diversify its gambling-dominated economy.0 In the region with a population of around 630,000, the gaming industry accounts for about 80 percent of its revenue.
Asia to become world's largest e-commerce market: EIU
December 17th, 2014Asia is set to surpass North America and snatch the title of the world's largest e-commerce market this year, said the Economist Intelligence Unit (EIU).
According to a report published on Tuesday in Beijing by the EIU, an advisory company under the Economist Group, it is estimated that retail sales in Asia will grow by an average 4.6 percent on a volume basis to 7.6 trillion U.S. dollars, compared with 2.5 percent in North America and 0.8 percent in Europe in 2015.
Report editor Laurel West said that the Asian consumer market was largely driven by the rising independence and economic power of Asia's women, and female consumers in Asia are showing an unprecedented enthusiasm for online shopping.
The report is based on a survey of 5,500 women across major cities on the Chinese mainland, Hong Kong, Taiwan and Macao, as well as countries including India, Japan, Singapore and the Republic of Korea. Among the survey respondents, 43 percent were in managerial, executive or professional services jobs.
Nearly half of the women agreed or strongly agreed that they preferred online- to in-store shopping. The proportion on the Chinese mainland was as much as 69 percent. Sixty-three percent of those polled browsed the Internet at least once a day for products and services, with nearly 30 percent doing so twice or more per day.
When choosing an online retailer, price and quality were the main factors considered, followed by genuine products and convenience.
Volvo to launch online car sales in global marketing strategy shift
December 16th, 2014Volvo Car Corp said it will start selling vehicles online as it rolls out new models to compete with German luxury rivals such as BMW.
The Swedish carmaker, controlled by Zhejiang Geely Holding Group, will gradually introduce Web sales and spend more on digital advertising, it said as it outlined changes to its global marketing strategy on Monday.
Volvo raised its 2014 sales goal in August as it launched a revamped XC90 crossover, the first vehicle developed under Geely's ownership.
"The plan is to have all our car lines in all our markets offered digitally," Volvo sales chief Alain Visser said in an interview.
Few manufacturers have tried selling directly online. A notable exception is Tesla, whose electric car sales have cut out traditional dealers, leading to conflict and effective exclusion from parts of the US.
But Volvo has assured its 2,000 global dealerships, half of which are in Europe, that it has no such plans.
"If you say the word e-commerce, initially dealers get nervous," Visser said.
"We don't see a car distribution network without dealers in the foreseeable future," he said, adding that vehicles sold online "will still pass through the dealer network" for delivery.
The Swedish carmaker plans to withdraw from all but one motor show per year in each of three regions - Europe, North America and Asia - and stage its own global event instead.
Volvo also said it would not follow rivals into city-center boutique dealerships of the kind increasingly used by BMW, Mercedes-Benz and Audi.
"We're a different brand with limited financial means," Visser said. "We don't believe in building these big palaces."
Some 80 percent of Volvo customers already shop online for other goods, the sales chief added, and research suggests many will do the same for cars in future.
But some analysts such as Stuart Pearson of Exane BNP Paribas remain skeptical, citing weak orders from experimental online sales of BMW's i8 hybrid sports car.
"BMW has tried it in Germany, but they really haven't had a huge amount of volume," Pearson said. "People still want to go into dealers."
Economic growth may slow to 7.1%
December 15th, 2014China's economic growth could slow to 7.1 percent in 2015 from an expected 7.4 percent this year, held back by a sagging property sector, the central bank said in a research report on Friday.
Stronger global demand could boost exports, but not by enough to counteract the impact from weakening property investment, according to the report published on its website.
China's exports are likely to grow 6.9 percent in 2015, quickening from this year's 6.1 percent rise, while import growth is seen accelerating to 5.1 percent in 2015 from this year's 1.9 percent, it said.
The report warned that the US Federal Reserve's expected move to raise interest rates sometime next year could hit emerging market economies.
Fixed-assets investment growth may slow to 12.8 percent in 2015 from this year's 15.5 percent, while retail sales growth may quicken to 12.2 percent from 12 percent, it said.
Consumer inflation may hold largely steady in 2015, at 2.2 percent, the report noted.
China's economic growth weakened to 7.3 percent in the third quarter of 2014, and November's soft factory and investment figures suggest full-year growth will miss the central government's 7.5 percent target and mark the weakest expansion in 24 years.
Economists who advise the government have recommended that China lower its growth target to around 7 percent in 2015.
China's employment situation is likely to hold up well next year due to faster expansion of the services sector, despite slower economic growth, said the report.
Tencent's private bank to open soon
December 15th, 2014First of a group of firms to start banking operations
Internet giant Tencent Holdings will be the first among a batch of private companies to start its banking business soon after getting approval from the banking regulator, which analysts said Sunday will help finance the country's cash-starved small businesses.
China Banking Regulatory Commission (CBRC), the country's top banking regulator, said in a statement on Friday that it has granted approval to Tencent, China's largest Internet company by market value, to start its banking operations.
WeBank, founded by Tencent, Shenzhen Baiyeyuan Investment Co and Shenzhen Liye Group, is the first one among five private banks that had been approved by the CBRC in the second half of 2014 to open its door to clients.
Financial news portal caixin.com reported on Friday that WeBank would start its operations on December 28.
WeBank, with a registered capital of 3 billion yuan ($490 million), has a business scope that includes personal banking, corporate banking and international banking.
WeBank would focus on serving individuals as well as small and medium-sized enterprises with innovative financial products based on its social networking platform WeChat, Xu Hongcai, director of the Department of Information under the China Center for International Economic Exchanges, a Beijing-based think tank, told the Global Times on Sunday.
Tencent, the operator of -China's most popular instant messaging app WeChat with over 468 million monthly active users by the end of September, has advantages in online payment, experts said.
Given the firm's large number of users, WeBank is expected to abandon the traditional way of accepting money deposits by setting up branches, Xu said.
The country's cash-starved small businesses, which find it hard to get loans from existing commercial banks, could enjoy more flexible online financial services offered by banks such as WeBank, he noted.
Analysts expect that following the launch of Tencent's bank, reforms in China's banking industry will be accelerated in 2015 to promote the process of opening China's banking sector to private capital.
On November 30, the Legislative Affairs Office of China's State Council issued draft regulations containing 23 articles on the standardized deposit insurance system to solicit public opinions.
Yin Zhongli, a researcher at the Chinese Academy of Social Sciences, told the Global Times on Sunday the deposit insurance system will be established in China for the first time starting in 2015 to guarantee the safety of private bank deposits and set up a bankruptcy mechanism for commercial banks.
In addition, ramped-up reforms in the finance sector that involve interest rate liberalization will also be improved next year to support the development of private banks, Guo Tianyong, a finance professor at the Central University of Finance and Economics, told the Global Times on Sunday.