Category: "News of China"
Jack Ma becomes richest person in Asia
December 12th, 2014
Jack Ma, founder and executive chairman of China's Alibaba Group, has become the richest person in Asia.
The 50-year-old founder of China's biggest e-commerce company surpassed Li Ka-shing, the Hong Kong property tycoon who has held the top spot in Asia since April 5, 2012, according to the Bloomberg Billionaires Index.
He has a $28.6 billion fortune, according to the Bloomberg ranking. Li has a net worth of $28.3 billion.
Ma has added $25 billion to his fortune this year riding a 54 percent surge in the company's shares since its September initial public offering on the New York Stock Exchange. At that scale, Alibaba is on the verge of becoming one of the 10 most valuable companies in the world.
Alibaba, whose online marketplaces?Taobao and Tmall?had 307 million active buyers in China as of September, saw revenue rise to 16.8 billion yuan ($2.74 billion) between July and September, according to Bloomberg.
Chinese social networking company Momo debuts on Nasdaq
December 12th, 2014
Yan Tang (C, front), founder and chief executive officer of China's mobile social networking platform Momo Inc. attends the ceremony of ringing the opening bell at the NASDAQ in New York, the United States, on Dec 11, 2014.
China's mobile social networking platform Momo Inc. listed its shares Thursday on the NASDAQ global select market.
The company announced that its initial public offering of 16 million American depositary shares (ADSs) was priced at 13.5 US dollars per ADS for a total offering size of 216 million dollars.
Momo's shares opened trading at 14.25 dollars a share under the ticker symbol "MOMO".
Morgan Stanley, Credit Suisse, J.P. Morgan, and China Renaissance Securities are acting as joint bookrunners for the offering.
The company has granted the underwriters an option, exercisable within 30 days from the date of the final prospectus, to purchase up to 2.4 million additional ADSs at the price of 13.5 dollars.
Yan Tang, founder and chief executive officer of the company, said: "Momo was established in 2011. It's still a very young company. We are caught in the era of rapid spread of mobile Internet in China, and have correct positioning for our products."
"Funds raised will be used for research and development, marketing and downstream industries for equity acquisitions," Tang said.
Momo connects people in a personal and lively way through a mobile-based social networking platform. With precise location- based features, Momo enables users to connect with each other and expand relationships from online to offline.
Momo's platform includes the Momo mobile application and a variety of related features, functionalities, tools and services that it provides to users, customers and platform partners.
According to the company, Momo had 60.2 million active monthly users and an average of 25.5 million daily active users in September.
Alipay bill brings memories and booming business
December 10th, 2014Yvonne Fang could not believe her eyes when she saw a total transaction volume of 500,000 yuan (81,000 US dollars) on Alipay over the past 10 years.
"I hope my husband never sees the bill," she joked.
Alipay, an online payment platform launched by Alibaba in 2004, sent reports to its 300 million users on Monday detailing their spending over the past ten years.
The reports showed spending and investment through Alipay, together with an estimate of the users' assets in another 10 years judging from the spending and investment history.
Reviewing her spending since 2007, Fang, 30, found the first item she bought online was a blouse for only 69 yuan, one third of the tag price. "I even showed it off to my foreign colleague and recommended she turn to online shopping," recalled Fang, who now works at an international public relations company.
During her time spending online, she has grown from a fresh graduate into the mother of a two-year-old girl. The items she bought have also changed from clothes for her and her boyfriend, to furniture for their home, to baby things. "How time flies," she said.
The record not only brought a lot of memories, but exposed just how big the e-payment business has become in China.
According to the overall report, also released on Monday, the number of Alipay transactions reached 42.3 billion, with Guangdong, Zhejiang, Shanghai, Beijing and Jiangsu the top five regions.
Apart from online shopping, the report also included payments for mobiles, electricity and gas, credit card payments and fund transfers; services that Alipay offers free of charge.
Mobile payments accounted for over 50 percent of total online payments in 2014. The less developed regions in the west grew much faster than the developed east.
The regions with the highest percentage of mobile payments in 2014 were autonomous regions of Tibet -- where mobile payments were almost 63 of the total -- Ningxia and Inner Mongolia, and Shaanxi Province.
Chen Jin, director of the research center of modern services with the University of International Business and Economics, said mobile payments in sparsely populated western regions with poor transportation, have grown rapidly in recent years because of the popularity of smartphones and mobile Internet.
Following Alibaba's 25 billion dollar New York IPO in September, founder and board chairman of Alibaba Jack Ma told state media that Alipay will also go public someday, hopefully on the A-share market.
To that end, Alipay has started working with hospitals, stores and supermarkets, offering doctors appointments and payment services.
In Beijing, supermarkets such as Wu-Mart and Merry Mart are offering 10 percent discounts to encourage customers to pay their bills with their mobiles through Alipay.
Chen said Alipay, usually engaged in micropayment, has had to expand their community services with the "online to offline", O2O, and provide convenience to compete with UnionPay.
"With no more card swiping and signature needed, I'd rather use Alipay for convenience," said Cao Peng, a customer who paid his bill at a Merry Mart outlet in Beijing, adding that all he needed to do was to scan the bill code to make the payment with his smartphone.
Job hopping up, pay rises likely to be slower
December 9th, 2014Job hopping rose in 2014 as companies face challenges to their business, and the not-so-good news is that salaries are expected to rise slower next year, recruitment portal 51job.com said in a report yesterday.
The overall job hopping rate was 17.4 percent this year, 1.1 percentage points higher than that in 2013, the website said in a report covering 3,217 employers and 4,138 employees.
The report attributed the higher rate to employers failing to meet staff's salary expectations and more companies involved in mergers and acquisitions.
Employers said they have raised salaries by 8.1 percent in 2014, down from the 8.3 percent in 2013, the report said.
They expect salaries to rise 7.9 percent in 2015.
"The economy in 2014 was relatively weak and investment slowed down especially in the real estate, manufacturing, energy and chemical industries," it said.
"These factors made companies cautious about their salary strategy. We expect economic uncertainties will remain in 2015 and salary increase will further slow down next year."
The high-technology sector will lead the salary rise with 9.4 percent projected for next year, followed by finance firms as they expand to new areas such as the Internet, the report said.
Hebei in need of Beijing talent
December 3rd, 2014About 50 key enterprises and government institutions are planning to recruit more than 4,500 talented students from 15 academic institutions based in Beijing, reported the Xinhua News Agency.
More than 1,700 gifted students with Master's or PhD qualifications attended the recruiting conference held by Hebei Province's government in Tsinghua University on November 16, and about 900 students were recruited. The enterprises and government institutions are recruiting talented students from 12 different fields, with the average annual salary being offered mostly above 100,000 yuan ($16,333). In recent years, the Hebei Province government has issued many new policies to introduce highly talented students with high paying jobs and good welfare.
More and more shoppers are going mobile
December 2nd, 2014The retail data on both Black Friday in the US and the 11-11 "Valentine's Day" shopping spree in China show that a sizable number of the transactions were completed through handheld devices and the Internet, a trend that retailers and e-commerce enterprises might want to keep an eye on.
This year's holiday shopping season got an earlier than usual start as a number of retailers launched online sales on Thanksgiving Day or even earlier. Luxury retailers like Neiman Marcus and Bloomingdales started offering deals a week early on their websites and the strategy seemed to work well.
ChannelAdvisor, an e-commerce company based in North Carolina, said roughly 2,700 online retailers had witnessed in general a 20 percent growth in Thanksgiving holiday sales volumes over last year, with Amazon leading the pack with a 25.9 percent growth year-on-year.
According to IBM's Benchmark data released on Nov 30, mobile played a bigger role this year especially on Thanksgiving Day when mobile and online retail accounted for 52 percent of all online traffic. By 6 pm EST on Black Friday in the US, mobile traffic accounted for up to 46.7 percent of all online traffic — an increase of 24 percent over the same period last year, said the report.
Hand-held devices such as smartphones are noted to have played an increasingly important role on this weekend, but all did not go well everywhere.
According to Cathpoint Systems, a web performance monitoring company, Best Buy had undergone three crashes after its Thanksgiving sales began. The first outage took place from 5-6:30 am (EST); the second was 8-9:30 am, both on Thursday. On Black Friday, the company's website crashed again at 10 am.
Market observers also noticed that despite retailers running early sales, Black Friday still generated the biggest online sales volumes, which were up 8.5 percent over the same period last year, according to IBM.
Meanwhile, though mobile on Black Friday didn't claim over half of online traffic as it did on Thursday, the percentage of online sales steadily increased. Mobile sales accounted for 26.1 percent of all online sales on Black Friday, an increase of 24.7 percent over last year.
For China's largest e-commerce company, Alibaba, which reported a record high of more than $9 billion in sales within 24 hours on Nov 11, the story was similar.
Alibaba's researchers found that 43 percent of sales on Nov 11 were generated through mobile devices and the Internet.
Li Jingming, president and chief architect of Alipay US, told China Daily that the company had prepared to cope with the increased online shopping population, and has tailored their services and tools to better meet clients' needs. In October, Alipay launched ePass, a new service that will help US and European retailers sell products directly to Chinese shoppers.
By integrating into Western retailers' websites as an alternative payment solution like eBay's PayPal, ePass is expected to help overseas merchants tap into China's rapidly growing online shopping community without actually expanding their presence in the Chinese market.
Through ePass, American and European merchants would enable Chinese shoppers — with a good command of English — to have access to foreign retailer's websites and buy directly online, Li explained.
"It functions like a combination of cross-border foreign currency settlement with overseas delivery solutions from Alibaba's Smart LogisticsNetwork in China, also known as Cainiao," Li said.
"We are trying to make it easy for Western merchants to reach Chinese consumers without actually being present in China," Li said, noting that with ePass, retailers can save themselves the headache of establishing bricks-and-mortar warehouses or hiring staff in China.
Lenovo to build 50 cloud computing hubs in China
December 2nd, 2014Lenovo Group Ltd will invest 300 million yuan (US$48.7 million) to build 50 cloud computing centers in China as the world's biggest personal-computer manufacturer makes its latest move to tap the booming enterprise service market.
Lenovo also aims to establish the centers in some overseas markets like the United States and Germany. It will also train more than 1,000 experts in cloud computing, data analysis and storage and backup services.
Lenovo, which just completed the US$2.1 billion acquisition of IBM's low-end server business, wants to help firms do "business transformation in cloud" through the new united end-to-end services covering both Lenovo and former IBM services. The enterprise services are expected to be adopted in all industries especially in finance, education and health care sectors, said Ye Ming, former IBM executive and now Lenovo's vice president.
"Enterprise is a core place for Lenovo to explore in its PC Plus strategy in long-term development," Ye said yesterday in Shanghai.
The new CEMS (cloud, enterprise, mobility and services) business now accounts for 15 percent of Lenovo's total revenue, up from only 3-4 percent last year, according to Ye.
In October, Lenovo's Chairman and CEO Yang Yuanqing said the company aims to generate a revenue of 10 billion yuan in enterprise services in the near future after acquiring IBM X86 server business.
Ford planning more SUV traction with the all-new Everest
December 1st, 2014
Ford unveiled the all-new Everest in early November in Beijing.
Ford unveiled a seven-seat SUV in early November in Beijing in response to the growing consumer enthusiasm for large sporty vehicles.
Chairman and CEO of Ford China John Lawler said target customers of the powerful offroad SUV are those "who love life, have dreams and boast an adventurous spirit" in emerging economies like China and India.
Lawler said the model was designed at Ford's design center in Australia with "the Asia-Pacific region in mind" following extensive research into markets and consumer preferences?the most research ever conducted for a vehicle developed by Ford in the region.
"Customers told us they wanted an SUV that balances off-road toughness with a refined, comfortable interior, and we listened," said David Dewitt, exterior design manager, Ford Asia Pacific. "This vehicle reflects what the consumer wants, inside and out."
Highlights of the new Everest include best-in-class 225 mm of ground clearance and its ability to forge through water as deep as 800 mm, deeper than any competitor.
It also has several powerful and efficient engine options: the latest generation of Ford's tried-and-tested four-cylinder 2.2-liter and five-cylinder 3.2-liter Duratorq TDCi diesel engines, and a new 2.0-liter EcoBoost petrol engine.
The new Ford Everest also offers a number of segment-first features including a curve control technology to help drivers maintain control when approaching turns too quickly.
The latest generation of Ford's in-car connectivity solution, SYNC 2, lets drivers use natural voice commands to control the car's entertainment system, climate controls and connected mobile devices more easily than before.
In China, the SUV will be produced at Ford's partner Jiangling Motors Co and is expected to hit the road in 2015.
"Things are going as scheduled at our Xiaolan plant," said JMC Chairman Wang Xigao at a press conference after Everest's launch ceremony.
The Xiaolan plant has a production capacity of 300,000 units. In addition to Everest, it is producing the Ford Transit light commercial van.
JMC President York Chen said the production of the Everest marks the beginning of JMC-Ford cooperation in the passenger vehicle segment, adding other models will come in the future, but the agreement does not include cars.
Chen added that JMC will expand the number of its dealerships by 40 percent to ensure it will make the SUV accessible across the nation.
Lawler said he is optimistic about the performance of the model but said he has not set a sales goal for it.
Ford sold 813,412 vehicles in the Chinese market in the first three quarters of the year, a 26 percent surge from the same period in 2013. Its share of the SUV market grew from 0.3 percent in 2012 to 4.5 percent in 2013.
Wal-Mart axes senior jobs, stores
November 28th, 2014Wal-Mart Stores Inc, the world's largest retailer, has dismissed around 20 mid- and senior-level executives and closed stores in China as part of a restructuring aimed at countering growing pressure from local rivals and online retail sales.
The company said the measures will optimize the organization.
"As we have previously stated, we are transforming our business to meet the needs of a rapidly changing market and customers. Reorganization has been a necessary business reality," it said in a statement, adding that the jobs cuts have been agreed by mutual consent, with the company paying compensation in line with the laws and regulations.
The retailer also said it had shut some outlets and was remodeling dozens more as the overhaul continues.
It insisted, however, it was making "good progress" toward opening around 110 new stores across China between now and 2016, within a plan that also includes new distribution centers, and creating what it called "a highly efficient supply chain and enhanced compliance process".
Wal-Mart, based in Bentonville, Arkansas, is facing stiff competition in China, and earlier this year also had to withdraw donkey meat products from sale in its stores after they were found to contain fox DNA.
Among the executives being sidelined are vice-presidents from its hypermarket business Wal-Mart China and its wholesale arm, Sam's Club China, according to two Wal-Mart China employees, who asked not to be named. Others have been removed from divisions including merchandising and innovation, they said.
Many of the dismissed have at least 15 years' working experience, according to local media reports.
"This is a sign that Wal-Mart is facing more competition as well as cost pressures," said Ben Cavender, principal of the Shanghai-based China Market Research Group.
"This looks like an attempt to streamline their operations, to cut costs and become more efficient."
The current overall economic climate as well as the fallout from bad publicity from its own and other food safety scandals are also hurting the brand, said Cavender, while at the same time competitors are becoming more efficient and competing more aggressively.
Jason Yu, general manager of consumer information organization Kantar Worldpanel China, said the US retailer has seen a relentless growth in competition from local retailers as well as from e-commerce.
He said e-commerce now accounts for a 3 percent share of total fast moving consumer goods sales and continues to record incredible growth.
"This is achieved at the expense of modern trade retailers, especially in the first- and second-tier cities," he said.
Other Wal-Mart restructuring efforts included its integration of nearly 30 purchasing offices into eight regional purchasing offices in November 2012.
The company reported a 0.8 percent fall in China sales during the quarter to Oct 31, which it attributed to government austerity measures and deflation.
Net group urges operators to step up controls on apps
November 27th, 2014Mobile network operators and smartphone application providers in Beijing drew up an agreement on Wednesday to enhance internal controls, improve supervision of the content of apps and keep the industry in good order.
The growth of mobile technology has brought a great deal of convenience for users who surf the Internet or keep in touch via social media networks while on the move.
However, smartphone applications with security gaps, or that are used to spread rumors and pornography, have created problems, according to the Beijing Internet Association.
The association, in an effort to tackle such problems and clean up the industry, has urged 50 mobile network operators and application providers across the capital to sign the agreement.
The document calls for stricter inspections of apps before they are uploaded to online stores.
Zhang Yuejin, director of the association's information security committee, said the agreement is intended to maintain a fair competitive environment in the industry, while encouraging Internet giants to behave in a more socially responsible way instead of focusing only on earning money.
Net group urges operators to step up controls on apps
China had 632 million Internet users at the end of June, including 527 million who access the Web from mobile devices, and the total is expected to rise to 850 million next year.
"Smartphone applications represent the most advanced Internet technology, so the information they carry and the degree to which they are safe will affect the future development of the industry and people's lives," Zhang said.
Xu Xiaolong, deputy manager of the app store run by smartphone maker Xiaomi, said his team spends a considerable amount of time removing applications with unacceptable content every day.
"Apps with pornographic content are the ones our inspection team deletes most frequently, followed by ones that steal money from users," Xu said. At least 200 requests for apps to be removed from the store are received every day, he added.
"If we find someone who uploads unacceptable apps five times, he is put on a blacklist," he said. "Some apps are found to have problems after they pass through our inspections, which requires us to increase checks on the updated contents."
Yu Dan from search giant Baidu said he supports the improvement of internal controls by mobile network operators, and added that the agreement is timely.
The Cyberspace Administration of China, the nation's Internet watchdog, said at the beginning of the month that it is working on guidelines for smartphone applications to ensure that the industry develops in line with the law.
Tong Liqiang, director of the authority's Beijing branch, said then that the guidelines were among a number of rules for the Internet that the organization is studying.
Yu said, "Wednesday's agreement is a timely measure that can be said to echo the decision to draw up app guidelines."
Yang Hongpeng of security software provider Qihoo 360 said stricter inspection of apps by companies could reduce security risks online. However, he said the city's government should establish uniform standards for the removal of apps.
Wal-Mart lays off 30 execs
November 27th, 2014Retailing giant Wal-Mart Stores Inc said Wednesday it has laid off some 30 senior executives in its China unit in an effort to "streamline and simplify" its business, Bloomberg reported.
The departure of these executives is "consistent with actions taken over the last several months," Ray Bracy, Wal-Mart's China spokesman, said in an e-mail reply to Bloomberg.
This is not the first time Wal-Mart has decided to downsize its workforce in China. In March this year, employees at Wal-Mart store in Changde, Central China's Hunan Province, launched a protest as they were unsatisfied with the company's employee resettlement plan, news portal 163.com reported Wednesday.
Battle looms over mobile pay systems
November 26th, 2014China's thriving mobile payment market will witness a new battle for dominance between Apple Inc and its local smartphone rivals, with industry insiders anticipating a direct showdown between Apple Pay and a home-grown digital wallet service in late 2015.
Analysts said the Android Pay project, which is led by Shanghai-based bankcard association China UnionPay, will have widespread support from Chinese handset vendors.
These vendors sell about 300 million Android operating system-based phones each year in the country.
Citing anonymous sources, Shanghai-based newspaper China Business News reported on Tuesday the proposed service will be launched in the third quarter of 2015 and UnionPay is seeking partnerships with local smartphone manufacturers.
UnionPay would not confirm the existence of the Android Pay project, but it did express an interest in establishing a new payment service.
In a statement to China Daily, the company said: "We have been constantly trying new technologies and business models in the mobile payment sector."
Established in 2002, UnionPay has about 400 domestic and overseas members.
Wang Yanhui, secretary-general of the industry organization Mobile China Alliance, said in his micro-blog account that UnionPay had decided to team up with local handset makers as early as last week.
Major smartphone makers, including Xiaomi Corp, Lenovo Group Ltd and ZTE Corp, had not announced any such arrangements as of Tuesday.
Sources from Lenovo's supply chain told China Daily that the company is developing a new phone equipped with fingerprint unlocking capability. The feature can be used as a substitute for entering passwords before transactions.
Only a handful of local smartphones support near field communication, a technology used in wireless handset payment services. Virtually no brick-and-mortar stores in China have installed cashier systems that accept NFC-enabled payments.
NFC is not popular even in the United States, where Apple first deployed its wireless payment service known as Apple Pay. The service is available only in selected stores in the US, including McDonald's Corp restaurants and department stores run by Macy's Inc.
Popular retailers such as Best Buy Co Inc (electronics), Wal-Mart Stores Inc and two major pharmacy chains (CVS Health Corp and Rite-Aid Corp) do not accept Apple Pay.
Over the past week, Apple announced it had started to accept online payments made through UnionPay cards at its Chinese mainland app store. The US-based company subsequently kicked off a UnionPay-customers-only promotion campaign by lowering the download price of more than 100 apps to 1 yuan (16 cents).
Analysts speculated this move meant Apple would soon launch Apple Pay on the Chinese mainland.
According to industry consultancy Forrester Research Inc, Apple Pay's technology will accelerate payments and enable new customer experiences in the coming year.
"China and Australia will run ahead with Apple Pay on mobile (in 2015)," Forrester said.
It also said that the mobile payments landscape in China and other Asia-Pacific markets would remain fragmented over the next year. Wang said the official Apple Pay launch in China is likely in March 2015.
Li Ye, a researcher from Analysys International, said that with China opening up the bank card clearing market, UnionPay's position as the only bank card organization is being challenged.
"Quick emergence of third-party online transaction channels forced UnionPay to find new business models suited to the mobile Internet era," Li said.
The mobile transaction volume of third-party platforms exceeded 2 trillion yuan in the third quarter of this year, a jump of 25.6 percent year-on-year, statistics from Analysys International show.
"Although Apple Pay has yet to enter the Chinese market, it has heightened local players' interest in mobile phone payments and NFC technology," it said.
Shanghai vows to build international insurance center by 2020
November 26th, 2014Shanghai's municipal government announced plans to create an advanced insurance market that meets the demand of economic and social development for the metropolis, with plans to make itself an international insurance center by 2020.
The insurance penetration rate, or premiums as a share of GDP, has goals to rise by six percent and the insurance density, the per capita premium, will reach 7,300 yuan (1,189 U.S. dollars) in the city by the year of 2020, according to the detailed enforcement proposal released on Tuesday to implement the State Council's plans of speeding up development of the modern insurance services.
Taking advantage of the Shanghai Pilot Free Trade Zone, the municipal government pledged to accelerate system innovation and opening up of the insurance sector in the proposal.
Shanghai will also highlight the insurance sector's functions in building an international financial center and shipping service center, and increase the role of insurance in promoting social security.
Merger plan lifts BesTV, Oriental Pearl
November 25th, 2014Shares of Shanghai-based BesTV New Media Co and Shanghai Oriental Pearl Group surged on news that the two companies would merge as part of the city's push to reform state-owned media companies.
BesTV is merging with Oriental Pearl through a share swap with one share for every 3.04 shares of the target company, valuing the latter at 10.69 yuan (US$1.74) per share, according to a stock exchange filing yesterday. BesTV surged by the daily limit of 10 percent to 35.19 yuan.
Oriental Pearl would be delisted on completion of the deal. The company's shares also jumped 10 percent to 12.01 yuan yesterday.
BesTV will also acquire companies such as SMG Pictures, Wings Media, Shanghai Interactive TV, and TV shopping company Oriental CJ through a private placement at 32.54 yuan per share to cement its market position and diversify revenue streams.
"Through the acquisition, BesTV now covers the whole industry including content production and Internet distribution channels, and it fits with China's reform and consolidation in the media sector," China International Capital Co said in a research note yesterday.
BesTV will also issue new shares to raise up to 10 billion yuan through a private placement with 10 institutional investors, including Shanghai Media Group Investment Center, the Bank of Communications Culture Investment Fund and China Merchants Fund.
Part of the capital will be used to fund Internet TV projects at the new entity after the completion of the merger.
Parent Shanghai Media Group will remain the controlling shareholder of BesTV with 45.07 percent after the merger.
Market needs say in pricing meds
November 24th, 2014The National Development and Reform Commission (NDRC) has lowered drug and medicine prices more than 30 times over recent years. Yet some drugs are still being sold at inflated prices, while other low-cost medicines are often in short supply.
As in all markets, pricing is a key factor in the sale of medicines as it naturally affects the supply and demand of various products. The NDRC's decrees alone cannot effectively lower medicine prices because the commission's regulations clash with the natural order of the drug market.
Regulators must give more leeway to drugmakers when it comes to setting the prices of their products. This is not to suggest that proper supervision is unnecessary with various factors affecting prices. While the government does have a responsibility to regulate prices of electricity, water, medicine and other services and commodities that are closely related to the public good, allowing the market to play its role in resource allocation is essential in coordinating the healthy development of the drug industry. Only by granting more discretion to drugmakers will efforts to reform the medical industry truly be realized.
App developers given Google platform
November 21st, 2014
The Google Inc stand at a mobile Internet expo in Beijing. The search provider has started to allow app developers in China to sell items through Google Play.
Google Inc is making its most aggressive move on the Chinese mainland since a high-profile exit from the market nearly five years ago.
The Internet giant said on Thursday that it has started to allow app developers in China to sell their products through Google Play, an online app store installed in more than 1 billion Android smartphones worldwide.
Industry sources speculated that Google is preparing for a more significant move that would let Android phone users in China download apps from the store, which cannot be done at present in the world's biggest smartphone market.
Google was careful in phrasing its app announcement because the move could potentially make available the first major Google service in China since early 2010. After months of skirmishing with local regulators over information security, Google gradually withdrew its core services from the mainland in that year.
Google's products, including its online search engine and mapping service, are not available on the mainland.
"Today we are simply opening Google Play to Chinese developers and giving them the ability to bring their applications to a global audience?just like what we've done in more than 60 other countries," Google said in an e-mailed statement to China Daily.
Developers in China will be able to sell apps via Google Play in 130 overseas markets. Google will help developers collect revenues from in-app purchase and subscription services. The revenues will be transferred to developers' Chinese bank accounts.
App developers in China had to find an overseas agent to manage the payments in the past.
Chris Yerga, Asia-Pacific managing director of Google Play, said: "Chinese developers will be able to explore global business through the Android platform. They will have a chance to build a real international business."
Also on Thursday, US tech website The Information reported that Google intends to introduce a version of Google Play to China in hopes of tapping into a market that accounts for about half of the global population that is using the Google-developed Android operating system.
"The company has indicated its intention to reverse a longstanding Google policy and distribute its app store with phonemakers and other potential partners in China," said the report, citing an unidentified source.
Google declined to comment.
Wang Jun, a senior analyst with Beijing-based consultancy Analysys International, said Google has already missed the key window of opportunity to return to the Chinese app market.
"Local players are taking firm control over the Android app-distribution market. There is not much room left for Google Play," Wang said. He said that most Chinese smartphone producers do not pre-install Google Play on their devices, making it harder for the service to reach out to customers.
Baidu Inc, Qihoo 360 Technology Co Ltd and wandoujia are the country's top three app distributors, according to the China Cloud Degree Registration Center, an app distribution monitoring organization. The three platforms handled more than 70 percent of the country's total game app downloads as of August, the center said.
According to Google, more than 1 billion Android devices, including smartphones and tablets, are installed with Google Play globally. The app store now has more than 1 million utility and gaming apps with total downloads exceeding 50 billion.
Apple Inc, who operates Android's rival system iOS, is also trying to grab more revenue in China. The company teamed up with local bankcard association China UnionPay in an attempt to spur app sales and to bundle more bankcards. It is launching a promotion campaign on the mainland by lowering some of the apps' prices to 1 yuan (16 cents).
Chinese yuan-linked financial products rise in S Korea
November 20th, 2014The Chinese yuan-linked financial products rose in South Korea ahead of the launch of a market where currencies of the two countries would be traded directly and the implementation of a bilateral free trade agreement (FTA).
Shinhan Bank, one of South Korea's four leading banks, said Thursday that it rolled out the yuan deposit product, named China Plus Time Deposit. It has five maturities, including one month and a year, and the deposit rate was set at 3.15 percent.
Hana Bank and Korea Exchange Bank launched a joint yuan deposit product with a maturity of six months and a year earlier this month. The deposit rate was more than 3 percent.
The yuan deposit rate almost doubled the rate of the South Korean won-denominated deposits offered by local banks. The won deposit rate stays at a mid- to upper-bound of 1 percent.
The rise in yuan-related financial products came as the two countries are expected to implement the bilateral FTA next year. South Korea plans to launch the direct trading market between the yuan and the won within this year.
A South Korean news media reported that the financial regulator plans to increase the portion of yuan settlement in trade with China to 20 percent in the long term.
In 2013, South Korea and China traded 228.8 billion U.S. dollars of goods and services, among which 1.2 percent was settled with the Chinese yuan.
Wuzhen to host World Internet Conference
November 18th, 2014The World Internet Conference, which will take place in Wuzhen, a town in East China's Zhejiang province, on Wednesday, has attracted more than 1,000 participants from across the world.
The conference, held from Wednesday to Friday, will focus on several hot issues in the cyberspace, including cyber security, online anti-terrorism crackdown, mobile network and cross-border e-commerce.
It is the first time that China is holding such a top-level conference related to Internet. Guests include government officials from various countries, cyberspace specialists and technology enterprises tycoons, such as Zhou Hongyi, head of Qihoo 360, Chinese largest security software manufacturer, and Jack Ma, the founder and board chairman of Alibaba, China's largest e-commerce business.
According to the organizer, the Cyberspace Administration of China, the country's top Internet watchdog, the meeting has also attracted almost 700 journalists from the world and 500 volunteers have been deputed to serve the guests.
In addition, participants can enjoy fast-speed free Wi-Fi in Wuzhen, and the town will become the permanent place to hold the conference in future.
Major private steel company files for bankruptcy protection
November 17th, 2014Haixin Iron and Steel Group, the largest private iron and steel enterprise in Shanxi Province, has started bankruptcy reorganization procedures, according to a local court on Monday.
The company, located in Wenxi county, had an annual steel output of five million tonnes and was ranked second only to Shougang Changzhi Iron and Steel Company, another state-owned enterprise, within the province. It is also the largest privately-owned company in Shanxi.
According to public data, the company recorded 10.46 billion yuan (1.71 billion U.S. dollars) in debt compared with 10.07 billion yuan in its account.
Production was suspended on March 18, due to industry overcapacity, a stagnant market, tightened credit and management issues.
In August, four lenders to Haixin filed bankruptcy plans to the Yuncheng Intermediate People's Court, aiming to reorganizing five companies within the group.
New copyright trading base set up in FTZ
November 14th, 2014Move aims to boost cross-border transactions
A national copyright trading base was launched in the China (Shanghai) Pilot Free Trade Zone (FTZ) Thursday, with the aim of using the advantages of the FTZ to promote the copyright industry, Chinese financial news portal yicai.com reported Thursday.
The national-level copyright trading base, which is the first of its kind in the Yangtze River Delta region, was approved by the National Copyright Administration on September 28, the report said.
Xu Jiong, director of the Shanghai Copyright Administration, said that the new base will protect copyright and encourage cross-border transactions for cultural products, according to the report.
Beneficial trade policies for the FTZ and the financial reforms that have been conducted there have already been positive for copyright trade growth, it noted.
The national base can be a helpful platform for individuals to sell the copyrights for their works, Wang Qian, a professor with the School of Intellectual Property at the East China University of Political Science and Law in Shanghai, told the Global Times Thursday.
However, it may not be that effective in terms of large-scale copyright transactions, such as for foreign movies, TV dramas or literature works that the Chinese market usually buys, he noted.
The copyrights for these cultural products are mainly held by large companies. For instance, the copyrights for animated films are dominated by two US-based firms - Walt Disney Company and Pixar Animation Studios - Wang noted.
For larger transactions such as this, sellers and buyers can easily reach each other without needing any special platforms, according to Wang.
Zhao Zhanling, a Beijing-based intellectual property lawyer, agreed with Wang and said that small copyright transactions may benefit from the new base in Shanghai.
Usually, copyright transactions for more popular products such as TV shows are dominated by a small number of companies, he told the Global Times Thursday.
For example, the fierce competition among China's online video websites for copyrights for popular US TV dramas in previous years has forced up the prices, even if the battle for copyright has been less intense since two major video websites - youku.com and tudou.com - merged in August.
The new base in Shanghai might function as more than just a platform, according to financial news portal cs.com.cn, which reported Thursday that the base will seek policy breakthroughs in fields such as tax, financing and registration for copyright trade.
The FTZ facilitates overseas art works' entry into the domestic market with fast customs clearance, and tariff and value-added tax (VAT) payments can be delayed until after sales rather than before, Li Wei, an employee at a cultural communications firm in Shanghai, was quoted as saying in the yicai.com report. Overseas buyers do not pay the 8 percent tariff and 17 percent VAT if cultural products are purchased through the FTZ, Li said.
China's copyright trade is still at an early stage, cs.com.cn reported Thursday.
Cross-border copyright trade revenue is decided by a country's soft power, Wang said, noting that China does not currently export as many cultural products as it imports.
Xiaomi, Youku Tudou agree video content cooperation
November 13th, 2014TV, smartphone hardware maker might also invest $300m in iQiyi video provider
Chinese smartphone maker Xiaomi Technology Co reached an agreement with US-listed Chinese video streaming firm Youku Tudou Inc Wednesday to invest in the distribution and production of online video content, a move analysts said will be a win-win solution for the two companies.
The two companies will cooperate in online video content and technologies, according to a press release that Xiaomi e-mailed to the Global Times Wednesday. It didn't specify how much the smartphone maker would invest in the video streaming firm.
Xiaomi announced on November 4 that it would inject $1 billion to develop its Internet TV content.
"The first batch of money (of the $1 billion) has been invested in Youku Tudou… Xiaomi will join in content distribution and production with Youku Tudou to provide favorable content to Xiaomi fans... The two companies will dedicate themselves to pushing forward the online video industry in China," Xiaomi founder and CEO Lei Jun said on his personal Sina Weibo account Wednesday.
To expand its TV content business, Xiaomi hired Chen Tong, a former executive at Chinese Internet firm Sina Corp, to manage its TV business.
Chinese media also reported Tuesday that Xiaomi will invest $300 million in online video provider iQiyi, which China's biggest search engine Baidu Inc owns a 96 percent stake of.
Calls to iQiyi went unanswered by press time Wednesday while Xiaomi refused to comment on this event.
Xiaomi's moves in video content come a year after it unveiled its first 47-inch smart TV in September 2013, which has since gradually gained popularity among users.
The burgeoning TV hardware business of Xiaomi, including its TV sets and set-top boxes, "has already developed well," and further "expansion in TV content will increase its profit space further," Luo Lan, an analyst at Analysys International, a Beijing-based Internet consultancy, told the Global Times Wednesday.
Luo suggested Xiaomi and Youku Tudou focus on improving the quality of their TV content in the face of intense competition in the sector.
In addition to Xiaomi, other Internet companies also launched smart TVs to capitalize on the burgeoning market.
In September 2013, China's biggest search engine Baidu's online video provider iQiyi launched a 48-inch smart TV called "TV+" in partnership with domestic TV maker TCL Corp. In the same month, domestic e-commerce giant Alibaba launched three smart TV models in partnership with Shenzhen-based appliance firm Skyworth.
Luo noted that the cooperation between Xiaomi and Youku Tudou was "a win-win solution," as Xiaomi will enable Yuku Tudou to get more access to the huge amount of Internet and mobile users that Xiaomi has accumulated since it was set up in 2010.
Youku Tudou's expertise in the production of original content will also be helpful for improving the user experience for Xiaomi TV and smartphones, said Luo.
The total sales value of Xiaomi smartphones, TV, as well as its set-top box on Tmall, a leading Chinese e-commerce website operated by Alibaba group, hit 1.56 billion yuan ($254.28 million) on November 11, which is dubbed "Singles' Day" in China, Lei Jun disclosed on his Weibo.
Xiaomi ranked third in the global top smartphone manufacturers list due to its focus on China and adjacent markets, according to the latest report by the International Data Corporation (IDC), a global market research company.
According to IDC, the global market share of Xiaomi stood at 5.3 percent, following Samsung with 23.8 percent and Apple's 12 percent in the third quarter.
Weaving a high road to growth
November 12th, 2014
Workers at the Beijing Institute of Fashion Technology prepare traditional Chinese-style outfits for participants in the 22nd Asia-Pacific Economic Cooperation Economic Leaders' Meeting held on Monday and Tuesday in Beijing.
Chinese silk company uses APEC platform to highlight global plans
Riding on the back of endorsements from global leaders during the Asia-Pacific Economic Cooperation leaders' meeting in Beijing, Chinese silk major High Fashion Silk (Zhejiang) Co Ltd is looking to spread its reach beyond the nation and enhance its standing as an icon of Chinese culture, a company official said on Tuesday.
High Fashion Silk, a leading woven silk and knitting fabric producer from Xinchang in Zhejiang province, rocketed to instant fame after top global leaders wore the company's glitzy New Chinese Suits during the APEC welcome ceremony in Beijing on Monday night.
"We are honored to be the sole fabric provider for the APEC meeting," said Lin Ping, chairman and chief executive officer of High Fashion Silk. "China is the cradle of cultivated silk and we hope the endorsement from global leaders and their spouses will lead to more taking to Chinese-style fashion."
Lin said the company had offered four lots of fabric totaling 6,000 meters for the APEC meeting. Two sets were made from the top mulberry silk, while the other two were a blend of top mulberry silk and wool.
"Our focus is to transform and become a cultural and creative company, based on supportive policies and our own advantages," said Lin.
According to Lin, the entire fabric-making process for the APEC took over a month to complete. "We traveled on the ancient Silk Road to draw inspiration for colors and designs. The finished product was achieved after 60 processes spread over one month.
"The New Chinese Suit stands for peace, happiness and beauty," Lin said.
The fabric designs for the APEC meeting represent China's commitment and vision to be a global leader in quality, he said. The same vision has now been translated into the commercial parlance of haute couture, which refers to the creation of exclusive custom-fitted clothing.
"We are planning to open several stores in Beijing soon," said Lin, adding that in Shanghai, the company has inked cooperation agreements with Donghua University (formerly China Textile University).
High Fashion Silk posted flat revenue growth of 1 billion yuan ($164 million) last year and a net profit of 30 million yuan during the same period. During the past three years, its total output in terms of value exceeded 2 billion yuan, with $80 million in exports.
The company has an annual production capacity of 10 million meters of woven silk, 1,000 metric tons of silk knitting fabrics, 3 million pieces of home textiles and 3 million silk neckties.
The company is also looking to improve its technology and innovative skills by using its 38 patents and advanced equipment from Italy, Germany, France, Switzerland and Japan.
The main brands, designers and retailers it cooperates with are the Guangzhou-based Exception de Mixmind, Uniqlo Co Ltd from Japan, and Calvin Klein Inc, Diane von Furstenberg and Macy's Inc from the United States.
Besides High Fashion Group, the parent company of High Fashion Silk, other leading silk companies in China include Wujiang Dingsheng Silk Co Ltd in Jiangsu province, Hangzhou-based Wensli Group, Zhejiang Jiaxin Silk Co Ltd and Jiangsu Xinmin Textile Science and Technology Co Ltd.
China's exports of genuine silk products in 2013 totaled $3.5 billion, up 3 percent, while imports rose 3.5 percent to $260 million, according to data from the General Administration of Customs.
Shanghai-based CharColn Consulting said the value of Chinese silk products accounts for less than 0.5 percent of the nation's entire textile industry, but these are high-value products with a strong cultural aspects.
China's chip industry awaits boom despite challenges
November 10th, 2014While China is known as the "world's factory," seemingly capable of making everything, semiconductor chips have been conspicuously absent on the "Made in China" list.
Statistics show that China's chip imports in 2013 grew 20.5 percent to reach 231.3 billion US dollars, exceeding imports of other goods, including crude oil. In fact, they have consistently topped China's import list over the past decade.
Considered "the heart" of all electronic devices, chips are vital for developing the broader information industry. Experts have called for more government support and industry innovation, as prolonged underdevelopment of China's chip sector could derail the country's economic upgrade and blunt its competitiveness.
SMALL CHIP, BIG BUSINESS
Chips are widely used in computers, consumer electronic devices, automotive electronics and Internet communications. Though small in size -- and getting smaller as technology advances -- chips are high in value and represent an important link in the information industry chain.
"There are several stages in the production of a semiconductor chip, including its design, manufacturing, assembly and testing," said Zou Xuecheng, a professor of semiconductor engineering at Wuhan-based Huazhong University of Science and Technology.
A semiconductor chip with production value of 1 US dollar translates into 10 US dollars in growth for the related information industry, and adds 100 US dollars to a country's Gross Domestic Product (GDP), Zou said, citing IMF research.
"With China's consumption of chips exceeding 200 billion US dollars, it means 20 trillion in GDP growth for the world's economy," Zou added.
However, China has failed to make gains in the chip production process. Though China's semiconductor use accounts for more than half of the global market, the country is overly dependent on foreign chip suppliers.
The market share for chips made by domestic manufacturers is merely 10 percent in China, according to Li Ping, vice general manager of XMC, a semiconductor manufacturer based in Wuhan.
Though 77 percent of cell phones sold on the global market are made in China, only 3 percent of chips in those phones are from Chinese suppliers, Li added.
According to a research report issued last year by the State Council, China's cabinet, China has the capacity to produce around 1.2 billion cell phones, 350 million computers and 130 million color TVs a year. Yet, Chinese companies have been reduced to worker bees for the international companies that take the lion's share of profits through patent fees on chips.
BOOM, BOON
China's industry insiders lament being mired in a vicious circle: companies cannot gain a competitive edge and increase profits without owning key technologies, while meager profits limit their ability to invest in research and development.
Countries such as the United States and Japan have long attached great importance to the semiconductor industry, promoting it as a strategic sector with huge research expenditures funneled into the field.
The world's leading chip makers spend lavishly on research and expanding their production capacity. Statistics show that in 2012, Samsung invested 14.2 billion US Dollars and Intel spent 12.5 billion US Dollars.
Those amounts dwarfed what Chinese players can earmark for chip research. The fledgling industry is faced with scanty resources, even with government help. Semiconductor Manufacturing International Corporation (SMIC), China's biggest chip maker, is only able to spend 100 million US dollars on research and production expansion a year.
Financial aid alone, however, cannot pull Chinese chip makers up, as the sophisticated industry also calls for top talent.
"The key is an abundance of talented researchers, but we have seen an exodus of talent in recent years," said Yang Zhiyong, general manager of the electronics division of Wuhan-based FiberHome Technologies Group.
Yang Chunshi, professor at Xiamen University, said research institutions should focus on developing technologies that are suitable for industrial applications instead of a blind pursuit of high-end technology. He added that companies should also take the initiative and embrace new technologies, as dated production modes spell trouble.
Ma Xinqiang, Chair of China's HGTECH, believes that with patience and persistence, China's chip industry can thrive as the ongoing "Third Industrial revolution" powered by the mobile Internet, the Internet of Things and cloud computing will unleash great potential.
Experts share Ma's optimism. They predict that as the volume of China's domestic chip industry is expected to reach 160 billion US dollars next year, the industry will see more positive changes.
Xiaomi to raise $1.5 bln in latest funding boost: report
November 10th, 2014Chinese smartphone manufacturer Xiaomi Inc. is talking to investors and banks to raise about 1.5 billion U.S. dollars in its fifth round of financing, local media reported.
The fundraising target is roughly 1.5 billion U.S. dollars, which would be the largest investment (excluding IPO) raised by any Chinese company backed by venture capital, financial news website Jiemian of the Shanghai United Media Group reported on Saturday.
One of the investors is said to be DST Global, a London-based investment firm that focuses on Internet companies, Jiemian said in the report.
Xiaomi, currently the world's third-largest smartphone maker after Samsung and Apple, will use most of the money raised to develop video content for Xiaomi TV, according to the report.
Xiaomi has said it will spend about 1 billion U.S. dollars to expand its own TV content. It hired Chen Tong, former editor-in-chief of popular news portal Sina.com, to revamp its Internet video business.
Xiaomi founder and CEO Lei Jun said that Xiaomi shipped 18 million smartphones in the third quarter, an increase of 18 percent from the previous quarter.
For the first nine months, Xiaomi, whose name means "millet" in Chinese, shipped a total of 44 million units, Lei said.
Xiaomi was founded in April 2010 by Lei and his friends in Zhongguancun, Beijing's technology hub, which has been called "China's Silicon Valley." Xiaomi's first smartphone debuted on Aug. 16, 2011.
In another development, Hong Kong-based South China Morning Post reported on Thursday that Xiaomi Inc., which is valued at 50 billion U.S. dollars, is aiming for an initial public offering as early as next year.
"Xiaomi is one of the large Chinese technology companies that would tap the IPO market next year," the newspaper quoted a source as saying. "Hong Kong investors seem to be more receptive of hardware than software firms, making the city the likely IPO destination for Xiaomi."
The current market appetite for technology firms with a clear growth outlook, such as Alibaba Group, is an incentive to do it soon, the newspaper said.
Xiaomi is seen by investors as the most likely candidate to become the next "Chinese IT legend" after Alibaba, which completed a 25-billion-dollar IPO in the United States in September.
Global market researcher International Data Corporation (IDC) said in its latest report that Xiaomi jumped onto the list of top 5 manufacturers for the first time at the number 3 position thanks to its focus on China and adjacent markets, which resulted in triple-digit year-over-year growth.
In the third quarter of this year, Xiaomi's global market share stood at 5.3 percent, following Samsung's 23.8 percent and Apple's 12 percent, according to IDC.
Foreign language apps find a larger following
October 31st, 2014There has been a surge in the use of foreign language apps accessed by smartphones, according to a survey, with women in particular keen to be taught via their handset.
The study, carried out jointly by the country's leading Internet education provider Hujiang.com and the online education platform of Baidu Inc, shows the most popular customers are the female, college students or white-collar workers, under the age of 30?a profile which accounted for 80 percent of users of the services.
In a sizeable snapshot of 25,000 users of Internet-based education products, 58.4 percent were women.
"The young people are generally keen to improve themselves through multiple ways and resources," said Dong Xiaoliang, director of mobile business department of Hujiang.
Some 44.7 percent of mobile education users were based in second-tier cities, 26.5 percent came from first-tier cities, and nearly 30 percent subscribed from third- and fourth-tier cities.
The survey found that laptop or computer-based online education was prevalent in cities throughout the country and included a wider cross-section of society, said Dong.
"Compared with other areas, first-tier cities on the whole have more abundant educational resources available, both online and offline.
"Resources in second-, third- or fourth-tier cities are accessed from more sources."
Foreign language studies were by far the most popular type of course, with a dominant 89.3 percent of respondents, followed by those accessing courses in lifestyle and hobbies (13.8 percent), and career certification and examination (13.5 percent).
The report also revealed many were not deterred by cost, with nearly one-third of those surveyed saying they would happily spend 500 yuan ($82) or above, while 27.3 percent chose free offerings.
"In recent years people have got into the habit of making more payments for using their smartphones, helped by the increasing popularity of e-commerce apps," Dong said.
About half of those surveyed said they used their educational apps before they went to bed, with 38.8 percent gaining access to their course riding in an automobile and 37.6 percent during their lunch break.
The average weekly time studying on their mobile device was five hours, the report said.
A 26-year-old woman respondent named Qi Na was included in the study.
"Smartphone-based education has made studies more convenient and efficient," she said.
"For example, I can read English news through my mobile phone when I wait for a bus or take a break from work. And I don't have to take a book with me every day."
Li Xuhui, founder of the nonprofit online education website Kuxuexi, said smartphone-based Internet education is appealing especially to people who need to study at fragmented times.
"The innovation of Internet technology and the prevalence of PC and smartphones allow people to learn whenever they want and wherever they are," Li said, adding that mobile Internet education will become more common.
According to the China Online Education Report 2013-14, released by Internet consultancy iResearch Group, the online education market in China was worth around 84 billion yuan in 2013, a 19.9 percent increase on the previous year.
The latest industry estimates suggest the number of online learners is expected to grow to 120 million over the next three years.
Xiaomi ranked world No. 3
October 31st, 2014Xiaomi Inc has become the world's third-largest smartphone vendor and taken the lead in China since entering the market only three years ago, research firms said yesterday.
Xiaomi won over consumers by offering them inexpensive models but with high-end features and selling them online. Globally, Xiaomi had a market share of 6 percent in the third quarter, just behind Samsung Electronics and Apple Inc. Samsung dominated with 25 percent, but down from 35 percent a year earlier while Apple fell slightly to 12 percent, according to Strategy Analytics, a US-based research firm.
"Xiaomi was the star performer," Strategy Analytics' Executive Director Neil Mawston said in a statement.
Other research firms including IDC and IHS iSuppli also put Xiaomi as the No. 3 player in the global smartphone market, ahead of domestic rivals Lenovo and Huawei.
Beijing-based Xiaomi expects to sell 60 million smartphones with revenue of 70-80 billion yuan (US$11-13 billion) this year after selling 26.1 million units in the first six months.
Evergrande launches infant formula product
October 28th, 2014Evergrande Group, a Chinese private conglomerate involved in property development, agriculture and sports, launched an infant formula on Monday following its acquisition of New Zealand dairy producer Cowala Dairy Ltd. last month.
The Guangzhou-based group also plans to build a dairy manufacturing base in China to tap the lucrative market. Chinese consumers have preferred to buy foreign brands following a series of tainted milk scandals in recent years.
The infant formula product under the name Cowala will hit the market nationwide soon, according to an announcement at its launch ceremony on Monday.
The Evergrande Group, which runs China's most successful football club, Guangzhou Evergrandetaobao Football Club, appointed three players to serve as global promotion ambassadors for Cowala infant formula on Monday.
The group, established in 1997, made its fortune through real estate development, but has been diversifying its business in recent years by investing in agriculture, cultural tourism, dairy, livestock and sports.
The group's sales in 2013 reached 100.4 billion yuan (16 billion U.S. dollars), while sales in the first eight months of 2014 reached 90 billion yuan, according to its official website.
Chery Jaguar Land Rover Changshu plant fully operational
October 27th, 2014
The China-made Range Rover Evoque rolled off the production line of Chery Jaguar Land Rover's plant in Changshu, Jiangsu province.
The first China-made Range Rover Evoque rolled off the production line of Chery Jaguar Land Rover's plant in Changshu, Jiangsu province, on Oct 21, signaling the joint venture is ready to begin full business operation. It is also the first full-scale automobile manufacturing facility of Jaguar Land Rover outside the UK.
The 10.9 billion ($1.78 billion) yuan plant, a joint venture between Chinese automaker Chery Automobile and Jaguar Land Rover, is designed to produce 130,000 vehicles each year.
China has been Jaguar Land Rover's largest market since 2012, accounting for almost one-fourth of its sales globally, and one in five Range Rover Evoques has been sold to China since its debut in 2011.
Locally made Evoques will reach the market in early 2015 and the automaker will make public their prices at that time.
Addressing questions whether the locally produced vehicles are equally good as those manufactured in the United Kingdom, president of Chery Jaguar Land Rover Chris Bryant said quality is the joint venture's No 1 objective.
"Chery Jaguar Land Rover remains committed to delivering excellence in its quest to lead the Chinese premium automotive industry through its historic British lineage, world-class quality and unique shared value approach," he said.
As a major milestone for the first Sino-British premium automotive joint venture, the opening ceremony also signifies the dawn of a new era for the Chinese premium automotive industry.
Yin Tongyue, president and CEO of Chery Automobile, said, "I strongly believe that Chery Jaguar Land Rover has a promising future and will provide premium auto products that exceed every Chinese consumer's expectations."
Dedicated to becoming a leading enterprise that inspires excellence in the premium automotive market in China, the joint venture has taken several steps to ensure it can provide top-of-the-line quality for its customers. These include establishing an industry leading quality control system, an advanced R&D Center and a nationwide sales network.
Equipped with top international standard press, body, paint, trim and final shops - along with an engine plant - the Changshu plant is "one of the world's most advanced and efficient manufacturing facilities", the company said.
Among other facilities, it has 306 robots that undertake 85 percent of the welding work and 20 percent of the finished models undergo full-vehicle checks at the plant's quality center, according to the company.
Bryant said another critical element to ensure quality is to make sure employees understand the quality the automaker wants to deliver.
"I will give you an example. Our first workers at the plant were hired in June 2013, more than half a year before we started operation, so that they can understand the quality requirements," he said.
Workers in key positions have received three months training in the UK and 95 percent of all workers in the plant have at least five years working experience, the company said.
Bryant also said local suppliers are selected according to the same standards as those in the UK.
"The Changshu plant is a significant milestone in our commitment to the Chinese market. We are small, but China is huge," said Ralf Speth, CEO of Jaguar Land Rover at the plant's opening ceremony.
Success story
Jaguar Land Rover sold 92,300 vehicles in the first nine months of the year in the Chinese market, a 38.7 percent surge from the same period a year earlier.
Now that the plant is fully operational, many in the auto industry believe the British premium brand will further close its gap in sales with the three German marques.
However, Bryant said sales alone are not the joint venture's focus. "Both volume and profit are the output of a successful business. And we will be successful when we deliver to customers what they desire and deserve. So we focus not on the sales but on improving customer satisfaction."
Chery Jaguar Land Rover has established a superlative operation and management structure, with a highly practical and efficient management team that is fully committed to realizing the joint venture's long-term development in China, and to fulfill consumer expectations and needs with its products and services.
Through its jointly managed Integrated Marketing Sales and Service organization established earlier this year, Chery Jaguar Land Rover will promote efficient operation of marketing, sales and after-sales service work, to ensure customers enjoy the best possible relationship with the joint venture, as well as establish its position in the forefront of the premium automotive market in China.
Zhu Guohua, deputy president of Chery Jaguar Land Rover, said the joint venture has built a network of 243 dealerships nationwide, and will add more to extend excellent sales and after-sales services to Chinese customers.
In addition to the Range Rover Evoque already in production, Zhu said that by 2016, the plant will be producing three Jaguar Land Rover models. He added the plant would also produce joint venture brand models in the future.
Therefore, the joint venture is investing in making new breakthroughs in product research and development with the construction of a research and development center.
Staffed with more than 290 experienced product development engineers, the center covers product planning, project management, process, system and engineering applications, trial production, testing for finished vehicles, product localization design, improvement of emission and engine performance as well as new energy development.
Where have China's big group-buying websites gone?
October 27th, 2014Just five years ago, when you wanted to watch a movie you went into a cinema and bought a ticket. These days, however, you can use your Internet-connected mobile phone to group-buy a virtual ticket, which can be exchanged for a real ticket.
If that seems easy and inexpensive, it is, and the ease and possible profit margin was not lost on eagle-eyed investors and others. The situation today is something of an economic mystery.
From Sept 23 to 5:30 pm, Oct 21, a total of 17,085 people group-bought their movie tickets, together with popcorn and a bottle of fruit juice, for 31 yuan ($5) on nuomi.com, a Chinese group-buying website. The original price for a single ticket in the cinema on Fuxing Road, Haidian district, Beijing is 90 yuan (almost $15).
The arrangement, and many like it, seemed like a win-win situation. Consumers saved money, while goods and service providers, such as restaurants, hotels and hairdressers, were able to capitalize on their unused capacity, promote their brand, or expand their service area.
South Beauty, a high-end restaurant chain hit hard by China's frugality campaign, group-sold 12,165 "dinners for four people" at a price of 298 yuan on the group-buying sub-site of Dianping.com, a website where people post their reviews for restaurants, from April 11 to 5:30 pm, Oct 21. The original price was 1,234 yuan.
Tuan800.com, a group-buying navigation site, which also releases regular data analyses, provides a general picture of the industry. According to the website, a total of 120 million people in the Chinese mainland group-bought something or some service in August, up 109 percent year-on-year. Tuan800 added that the value for all these group-buying deals for this single month reached 7.7 billion yuan, up 108 percent year-on-year.
But just as group-buying seemed ready to enter daily life for good, Chinese group-buying websites - once the darlings of venture capitalists, now face an unpredictable future with many being gobbled up by larger companies and acquired, others vanishing from the Internet all together.
The following examples beg the question: what happened to China's major group-buying websites?
October 2014, Lashou.com
Sunpower Group announced on Oct 19 it had acquired Lashou.com, one of China's earliest group-buying websites, but has not disclosed the deal price, according to caixin.com.
Sunpower, headquartered in Nanjing, capital of South China's Jiangsu province, has five business focuses, including real estate, health care and retail. ?Zou Yan, spokesman for Sunpower, told caixin.com that the acquisition of Lashou.com was to help improve Sunpower's O2O (online-to-offline) platform.
Lashou.com, which went online in March 2010, received a total of $166 million yuan from investors between April 2010 and April 2011, according to Tuan800.com. Lashou even tried to go public, the first Chinese group-buying website to launch an IPO in the United States, and was valued at $1.1 billion yuan, but it failed at last.
Group-buying deals worth 300 million yuan were made on Lashou.com in the first eight months of this year, down 1.77 percent year-on-year, according to Tuan800..
The company might now have a market share of only five percent, according to a survey cited by caixin.com.
March 2014, Didatuan.com
Didatuan.com, which went online in July 2010 as a group-buying website and once had a top-five trading volume, closed its group-buying business on March 31 and turned to develop a group-buying navigation service, according to information posted on tuan800.com on April 3.
At the moment, however, didatuan.com cannot be accessed online.
January 2014, Manzuo.com
Shenzhen-listed Suning Commerce Group Co Ltd, China's leading retailer, announced on Jan 27 it has fully acquired Manzuo.com, which went online in January 2010 and was China's first group-buying website, according to cnstock.com. The exact details of the deal were not announced.
Manzuo.com was integrated into Suning's local life department and Fang Xiaohai, Manzuo's founder, stayed in Suning to expand the conglomerate's O2O business.
Group-buying deals worth 70.8 million yuan were made in the first eight months of this year on Manzuo.com, up by 3.74 percent year-on-year, according to Tuan800.
August 2013 to March 2014, Ruomi.com
Baidu announced in August 2013 that it would invest $160 million into Ruomi.com and would gain a 59 percent stake of the group-buying website that went online in June, 2010.
At the end of 2013, Shen Boyang, the CEO of Ruomi.com resigned and on March 6, 2014, Ruomi was rebranded Baidu Ruomi.
According to Tuan800, group-buying deals made on Baidu Ruomi in the first eight months of this year hit 727.6 million yuan, up 7.55 percent year-on-year.
January 2013, 24quan.com
Du Yinan, founder of 24quan.com, a group-buying website, said his company has been closed due to failed talks with investors, Qilu Evening News reported on Jan 14, 2013.
August 2012 to January 2013, GaoPeng.com
In August 2012, GaoPeng.com, the Chicago-based Groupon Inc's China joint venture, merged with Chinese group-buying website Ftuan to form a new company called GroupNet.
However, on Dec 12 the same year Ftuan was renamed GaoPeng and its domain name was changed back to gaopeng.com on Jan 15, 2013.
China adds 10.82 million new jobs in Jan-Sept
October 24th, 2014China's job market proved to be quite resilient although the economic growth slowed in the first nine months, according to data from the Ministry of Human Resources and Social Security (MHRSS) on Friday.
From January to September, 10.82 million new jobs were created, or 160,000 more than a year ago, MHRSS said.
At the end of September, the urban registered jobless rate stood at 4.07 percent, lower than the annual employment control rate of 4.6 percent targeted by the government.
However, the registered jobless rate may undercount the actual unemployment numbers as a survey among 31 big- and medium-sized Chinese cities found the unemployment rate remained at around 5 percent in the first eight months.
The new jobs created in the first nine months exceeded the government's full-year target of at least 10 million new jobs this year.
Stocks slide as data fails to lift sentiment
October 24th, 2014China's manufacturing sector data failed to ease concerns about capital outflows as investors continued to stay away, bringing down Shanghai shares for the third straight day.
The benchmark Shanghai Composite Index lost 1.04 percent to 2,302.42.
China's six most active exchange-traded funds that track indexes measuring the performance of blue-chip shares have seen 5.37 billion yuan (US$877 million) of redemption this month, the Securities Times reported yesterday, citing data from the Shanghai and Shenzhen exchanges.
Analysts said the redemption indicated a bout of profit-taking by institutional investors pessimistic about the outlook of blue chips.
Fears that new share sales will divert funds from existing shares also weighed on the market as three companies started to take subscriptions for their initial public offerings yesterday. Six other companies will start taking subscriptions from today.
The stock market fell yesterday despite data showing the flash HSBC manufacturing purchasing managers' index rose to a three-month high of 50.4 in October, slightly up from a final reading of 50.2 in September.
But the sub indexes were not as encouraging as the headline index, with new orders sub-index edging down to 51.4 from 51.5 in September and new export orders falling to 52.8 from 54.5.
Gold shares declined after gold prices eased from a six-week high on stronger US dollar. Zhongjin Gold fell 3.2 percent to 8.26 yuan. Zijin Mining Group lost 3.2 percent to 2.43 yuan.
Novelis says China plant to boost sales
October 23rd, 2014
An aluminum sheet processing plant in Zouping county, Shandong province. Global demand for aluminum sheets for vehicles is forecast to record a compound annual growth rate of 30 percent by the end of 2020.
Novelis Inc, the world's largest supplier of light-weight aluminum automotive sheets, said on Tuesday that its new plant in Changzhou, Jiangsu province, would help cater the growing global demand for the fuel-efficient light metal.
The US-based company has invested $100 million on the plant that will produce 120,000 metric tons of light-weight aluminum every year. It will also help the company expand its global footprint to meet the rapidly growing market demand for automotive aluminum as automakers seek to reduce the overall weight of vehicles to enhance fuel efficiency.
Each 10 percent weight reduction can lead to fuel savings of 5 to 7 percent, said Steve Fisher, senior vice-president and chief financial officer of Novelis.
The company expects global demand for aluminum sheets for vehicles, which can be used in lightweight vehicle structures and body panels such as hoods, doors, fenders and lift gates, will record a compound annual growth rate of 30 percent by the end of 2020.
Global use of light-weight aluminum automotive sheets may reach 1.58 million metric tons by 2025.
Shashi Maudgal, president of Novelis Asia, said that in Asia alone, the use of aluminum in auto bodies by major car-making countries is around 50,000 metric tons.
Phil Martens, president and CEO of Novelis, said: "Global automakers seeking to drive fuel efficiency, higher performance and innovative design can now source locally produced Novelis aluminum automotive sheets in every major region where they make vehicles."
Fisher said Novelis has a global market share of more than 50 percent in light-weight aluminum automotive sheets, and the plant in Changzhou will help the aluminum maker solidify its leading position in the industry.
Liu Qing, managing director of Novelis China, said that he believes the company would have a market share of over 50 percent in China also.
Novelis aluminum products are used in more than 180 models of vehicles globally, including some operating in China, and the Changzhou plant will serve domestic demand including the car-making hubs in the Yangtze River Delta, said Liu.
Novelis is planning to triple its automotive sheet capacity to 900,000 metric tons by 2015, and has invested more than $550 million since 2011 to meet the goal.
Auto sales to decelerate
October 22nd, 2014Growth in China's auto sales will likely slow to 4.6 percent this year, lower than the previous forecast of 8.3 percent, Bloomberg Tuesday quoted the head of the country's auto association as saying.
Dong Yang, secretary-general of the China Association of Automobile Manufacturers (CAAM), noted a slowdown in sales over the past two months and said the industry body was looking into the reason for the weakness.
Auto sales rose 2.5 percent in September compared with the same month a year earlier, its slowest pace in 19 months, dragged down by sluggish sales of commercial vehicles such as trucks, the CAAM said last week. Sales rose 4 percent in August.
Shanghai financial sector buzzing
October 21st, 2014Financial innovation, market development and the globalization of the yuan have boosted the index tracking Shanghai's financial industry by 5.3 percent in the first half of this year, a joint industry report said yesterday.
The Shanghai Financial Prosperity Index rose to 3,242 points by the end of June, up 164 points from last year, boosted by innovation activities, market development and the yuan's internationalization, the Shanghai Financial Association and Roland Berger Strategy Consultants said in the joint report yesterday.
The sub-index measuring the general development of the city's financial industry gained 4 percent to 4,517 points as the foreign exchange, money, fund and gold markets ranked the top four by market growth.
Another sub-index that tracks the development of the yuan's internationalization jumped 84 percent from last year to 36,024 points.
"Financial innovation such as cross-border yuan settlement under the current account and for foreign direct investment, and yuan-denominated two-way cash pooling tools launched in the Shanghai pilot free trade zone gave a fresh impetus to the internationalization of the yuan," Jerry Zhang, chief executive officer of Standard Chartered Bank China, said yesterday.
"Meanwhile, the Chinese currency has also gained more acceptance in overseas markets," Zhang said.
Shanghai FTZ to hold 1st culture fair Oct 15,2014
October 15th, 2014Shanghai's pilot free trade zone will hold its first culture licensing fair in November for cross-border trading of authorized cultural products.
The event offers a gateway for Chinese cultural enterprises to showcase their creations such as artworks, animation and online games and to expand their licensing network worldwide. It will also offer a platform for international intellectual property right holders to source for Chinese partners.
"Taking advantage of the zone's opening-up policies, cross-border cultural trade via the zone will enjoy easier customs clearance and bonded warehousing services," said Ren Yibiao, general manager of the National Base for International Culture Trade (Shanghai), the organiser of the fair.
More than 100 exhibitors from home and abroad will attend the fair to be held from November 13 to 15 in the FTZ.
China has widened access for foreign investors in the cultural industry in the zone. With a bonded warehouse for artworks, the FTZ also helps boost cross-border art trading by easing procedures and cutting time and costs for artworks to enter and leave the country.
China’s state sector leaders embrace pay cuts of up to 60%
October 14th, 2014The corporate reporting season for China’s largest state-owned enterprises, which concluded last month, featured an unusual theme. Despite earning far less than their international counterparts, the men who steer the country’s largest companies welcomed recently announced plans to cut their pay.
“The biggest difference between China and western countries is that we pursue the goal of getting rich together,” Fu Chengyu, head of the country’s largest refiner, told reporters. “If you want to earn big sums, you should not be an SOE executive.”
As Sinopec chairman, Mr Fu earned Rmb863,000 ($141,000) in 2012, a paltry figure when compared, for example, with the more than $3m earned by Christophe de Margerie at the French oil major Total. The contrast in other sectors is even starker. The president of Bank of China, one of the country’s “big four” lenders, was paid Rmb997,000 ($163,000) last year – or less than 1 per cent of the $20m pocketed by JPMorgan’s Jamie Dimon.
According to local media reports, leaders of the country’s top 50 SOEs will face pay cuts of up to 60 per cent as the government imposes an annual pay cap of Rmb900,000. President Xi Jinping announced plans to rein in executive pay in August, but the new guidelines have not yet been released by the ministries of finance and human resources.
In August Zhang Yun, president of Agricultural Bank of China, said he would “firmly support and strictly implement the decision”. Mr Zhang, who earned just over Rmb1m in 2013, faces a pay cut of at least 10 per cent.
Those who welcome Mr Xi’s initiative, which coincides with China’s most ambitious anti-corruption campaign, argue that it is misleading to compare SOE executives with their international counterparts, especially in industries that are protected from overseas and private sector competition.
“SOEs enjoy a lot of policy support from the government,” says Gao Minghua, a corporate governance expert at Beijing Normal University. “Those factors must be removed before you can compare SOE executives to multinational executives.”
The more important comparison, he adds, is between SOE executives and their own employees: “There is a large income gap in China that is having a negative impact on society. The salary gap between senior executives and average employees must be appropriate. If too small, it will lessen executives’ initiative. If too big, it will lead to social instability.”
According to a recent pay study co-authored by Mr Gao, senior executives at listed Chinese financial companies are paid 50 times as much as the average worker.
“It doesn’t make sense to benchmark Chinese SOE executives against western – and especially American – executives,” agrees Kjeld Erik Brodsgaard, director of Asia research at the Copenhagen Business School. “None of these guys are ever going to become the head of GE or a big American financial institution. They stay in China and move around as civil servants. In a Chinese context they are supermanagers.”
Mr Fu at Sinopec is a classic example of a Chinese supermanager. He had previously run China’s largest offshore oil company, Cnooc, and his transfer to Sinopec was decided neither by the refiner’s board nor by the State-owned Assets Supervision and Administration Commission.
Better known as Sasac, the government commission is nominally charged with administering China’s largest SOEs; in fact, it is overshadowed by the Communist party’s powerful Organisation department, which both transferred Mr Fu to Sinopec and appointed his successor at Cnooc. “Sasac was supposed to manage and control these companies but it never really happened,” says Mr Brodsgaard. “Sasac was not authorised to receive dividends from these companies and doesn’t even appoint their chairman and chief executives.”
Sasac’s authority was further undermined last year by the arrest of its former head, Jiang Jiemin ; the former SOE oil executive was caught up in a larger investigation into his patron, Zhou Yongkang, who once sat on the Communist party’s all-powerful standing committee and ran China’s domestic security services.
Additional reporting by Wan Li
Banking on growth in mobile tech
October 10th, 2014
A visitor reads a brochure in front of a promotional board at the opening of the 2014 China Internet Conference on Aug 26 at the Beijing International Convention Center.
Early-bird advantage bound to help 'unconventional' 99wuxian.com
Mobile devices will soon play a more important role in everyday lives and encompass a range of activities like locking a door, driving a car, booking a table at a restaurant, paying utility bills and shopping, said Zhang Li, president of 99wuxian.com.
The Hong Kong-incorporated company operates an online marketplace that can be used on smartphones and other handheld devices and allows consumers to purchase physical and intangible items through online service providers. "It (mobile devices) is certainly the future," said Zhang.
Shopping via mobile phones is something that is already familiar to most Chinese consumers, says Zhang, adding that she buys groceries from the online supermarket Yihaodian.com while waiting for a train or plane. But what her company is doing is something much more than that. 99wuxian, often likened to an unconventional B2B2C platform, serves as a bridge that connects the commercial banking system and product providers on its mobile phone e-commerce platform.
According to Tianjin-based Tian Hong Asset Management Co Ltd, the number of users who have bought the popular online financial product Yu'ebao introduced by Alibaba exceeded 100 million by mid-July, with the total volume of the product amounting to over 574 billion yuan ($93 billion).
It is trends like these that have made commercial lenders realize the magnitude and importance of Internet technologies and the role that they play in long-term growth, said Zhang. "The Internet technologies have helped the commercial lenders get connected to more stores and users and thereby more profits."
99wuxian.com was officially launched in 2011 and considers itself a bridge that caters to all needs. The company says that several online and offline stores are connected to commercial lenders through its mobile phone platform. Thanks to the growing number of products and services on the platform, 99wuxian also earns good revenue.
At the same time, Zhang admits that the changing market landscape was not something that she envisaged when the company was set up. "I used to believe that payment channels are indispensable for the future development of mobile Internet. But over time, I have realized that it is more important to provide value-added services to customers. Demand for payment services will increase along with the growth in the products and services on the platform," she said.
Zhang believes that transactions made from mobile phones will ultimately define the future consumption trends. "Though mobile e-commerce started rather late in China, in 2009 to be precise, it has evolved rapidly from 2012 onwards. Several e-commerce leaders such as Alibaba and JD.com have included mobile payment results in their financial reports lately, and such business accounts for 20 to 30 percent of their overall revenue."
Mobile Internet, Zhang says, is one sector where companies like 99wuxian are in the same boat as others. "Every player is at the same stage. On the other hand, in e-commerce, companies like Alibaba are way ahead of competition. We have decided to focus on mobile Internet, as it is our core capability and inherent advantage and something for which we have abundant resources. More importantly, we are one of the early birds," Zhang said.
99wuxian managed to make profits just a year after it was established, which is rare among e-commerce companies. Its total transaction volume amounted to 4.96 billion yuan last year, while profits during the first six months of the year stood at about 5.9 million yuan.
Currently, 99wuxian has 32 million registered users. But the company and the lenders it has been working with have around 330 million consumers who have downloaded the smartphone applications. In this sense, about 10 percent of 99wuxian's partners' customers have turned into its users, Zhang said.
"What this means is that there is ample room for growth. We plan to increase the total number of registered users to 100 million by the end of next year," she said, adding that the company is already the market leader in the B2B2C sector in China.
Though 99wuxian successfully listed its shares in Australia last year, Zhang says that the company's rapid growth has not been truly reflected in its share prices. "We are considering other capital market options so that they truly reflect the company's value. We also have a rich treasure trove of valuable customer data.
"Every Internet company will follow a zigzag path when they are trying to expand their businesses. This is something that no one can avoid. Therefore, we don't want to go a roundabout way when it comes to the capital market. That's why we decided to go public. I am happy that we are on the right track for continuous, rapid long-term growth," she said.
To Zhang, everything is about timing. "You have to pick the right timing. One cannot start too early, as there is no mature market yet. But you cannot start too late either, because that would mean lagging behind," she said.
Describing herself as "an old soldier in the Internet industry", Zhang says she has remained with the Internet industry all through her career. During her first three years of working at Hong Kong's largest information and communications technology company PCCW, she worked with the team to promote broadband Internet and helped boost revenue of the business by over 40 percent within two years. After that, she joined Ctrip in 2000 and soon became the general manager of Ctrip Hong Kong, where she managed to bridge the gap between today's largest online travel agency and overseas hotels.
Recognizing the trends is also important for companies to succeed, she says, adding that most of 99wuxian's early customers were in the age group of 23-35. But the same has now changed to 18-47. "It is just a matter of time," she said.
"We seldom bought things online in the past. But now consumption habits have changed tremendously. Mobile phone users are always more active than the personal computer users and Internet companies develop more rapidly than traditional industries in general. Mobile users tend to rapidly pick up new habits," she said.
Holiday bank card outlay climbs 25%
October 9th, 2014Bank cardholders spent 51.6 billion yuan ($8.4 billion) through China UnionPay's payment network during the seven-day National Day holiday, up 25 percent from the same period a year ago, as travel-related expenditure increased.
The volume of interbank transactions also jumped 27 percent from a year ago to 420 million, the country's sole bankcard transaction firm said yesterday.
Shopping contributed the most — 80 billion yuan — during the holiday, China UnionPay said.
Railway and airline tickets as well as other transport-related spending jumped 56 percent from a year ago. The spending at scenic spots and hotels rose 39 percent and 10 percent respectively.
The size of cross-border bank card transactions through UnionPay network rose 9 percent while the number of transactions soared 36 percent.
Total spending at restaurants and eateries gained 7 percent while the average amount of each transaction fell 8 percent.
China Mobile plans to enter Internet market
October 9th, 2014China Mobile, the country's largest mobile carrier by subscribers, is mulling to set up an Internet firm, media reported Wednesday, a move experts said is aimed at boosting its instant messaging (IM) service.
Lin Zhenhui, chairman of China Mobile International Ltd, would serve as general manager of the preparatory group, according to domestic telecom information portal ccidcom.com.
China Mobile did not respond to the Global Times' request for comment by press time.
The new Internet company may integrate and further develop China Mobile's IM business Fetion, Ma Jihua, an industry expert at Beijing Daojing Consultant Co, told the Global Times Wednesday.
Given the carrier's large subscriber base, China Mobile's Fetion has the potential to compete with the country's Internet giant Tencent, operator of China's most popular IM app WeChat, said Ma.
Fetion, launched in mid 2007, was initially used by China Mobile's cell phone subscribers, but has now lost traction.
Fetion has garnered only 6.47 million users as of July, according to its website, while WeChat had accumulated over 438 million monthly active users by the second quarter.
The decision to establish an Internet firm may boost China Mobile's earnings and help the company win back some consumers, Fu Liang, a Beijing-based independent telecom analyst, told the Global Times Wednesday.
China Mobile failed to report expected financial results in recent quarters.
The net profit of China Mobile fell by 8.5 percent year-on-year during the first half of the year, according to its financial report released in August.
"In addition, it seems to be a good timing for China Mobile to enter the Internet market, as the company has made an early start in the 4G market, making it possible to offer Internet services using 4G networks at greatly improved speed," Ma noted.
Lenovo closes purchase of IBM’s x86 server business
September 30th, 2014China's leading PC computer maker Lenovo Group Ltd announced Monday that it would close an acquisition of IBM's x86 server business on Wednesday for a purchase price of approximately $2.1 billion, an important move for the company to step into the global server market.
The acquisition will make Lenovo "the third-largest player in the $42.1 billion global x86 server market," according to a press release from Lenovo and IBM e-mailed to the Global Times.
Lenovo noted that it is buying IBM's x86 server business intact and is committed to following the IBM x86 product roadmap, including Flex and x86-based PureFlex integrated systems.
IBM will continue to provide maintenance delivery on Lenovo's behalf for an extended period of time, said Lenovo, without specifying a period.
The acquisition will enable Lenovo to extend its "capabilities in enterprise hardware and services," and make it "a strong number three in the global server market," Yang Yuanqing, chairman and CEO of Lenovo said in the press release.
The acquisition by Lenovo is an important step for the PC maker to extend its business globally, Xiang Ligang, president of cctime.com, a telecommunication news portal, told the Global Times. "It will be a new engine for Lenovo following its PC business."
Despite the fact that IBM's x86 server is low-end server, the acquisition, "which is just beginning for Lenovo to set foot in the server sector, will enable Lenovo to win more business clients globally," Xiang noted.
Lenovo acquired IBM's PC business, including the ThinkPad line of PCs, in 2005.
Some observers were quoted by Reuters as saying that they "expected the deal would take longer to close because of uncertainty about how US regulators might respond to a Chinese company buying a server business during a time of cyber-security tensions between the US and China."
But Lenovo said that its transaction "satisfied regulatory requirements and conditions, including clearance by the Committee on Foreign Investment in the US."
Consumer attention shifts to smartphones
September 29th, 2014
Joseph WebbHead of digital at TNS Asia-Pacifi c
While television sets still sit in almost every Chinese home, television no longer commands the dominance it once did. Consumer attention, especially during evening prime time, is increasingly being diverted by smartphones and tablets.
Two thirds of Chinese watch television every day, while 33 percent watch online videos daily, either on personal computers, tablets or mobile phones, according to TNS, a research firm under the Kantar division of the WPP Group.
In its most recent Connected Life report, TNS said the ratio of those forsaking television for online entertainment is higher than the global average of 25 percent.
Globally, nearly one third admit to "screen-stacking," a phenomenon whereby they use multiple devices at the same time, for instance, using their mobile whilst watching TV.
Out of the average of 3.9 hours that Chinese Internet users spend online everyday, mobile devices make up 2.2 hours.
Joseph Webb, head of digital at TNS Asia-Pacific, sat down with Shanghai Daily in an exclusive interview to discuss the research findings and what they mean to advertisers.
Q: What's the biggest change you see in this year's Connected Life report?
A: The shift is toward mobile devices, with more and more lower-priced smartphones available on the market. Local handset makers such as Xiaomi and Huawei give a wider group of consumers access to online media.
Last year, we saw the trend appear in the 16-30 age group. This year, it is extending to mainstream mass consumers.
The surprising thing is the change in the media landscape brought about by the shift toward mobile. Smartphones and tablets are driving online video watching. Compared with mature markets like Europe and the US, Chinese consumers watch less TV and more online videos.
Q: Was there anything surprising in your findings?
A: Despite all the talk about China being the biggest e-commerce market in terms of money spent, it is actually very underdeveloped in terms of the proportion of people buying online. Major concerns are still security of payments and product integrity. Once information transparency is resolved and consumers feel more assured, more value can be realized through online retailing.
Q: What about attitudes toward advertising?
A: There is usually a greater level of cynicism toward advertising in mature markets. The more advanced an economy, the more consumers are bored by advertising.
But it's different in China. Here, there isn't such a long-term legacy because the earliest advertising dates back only about 35 years. The advertising industry has enjoyed huge growth since then, and consumers have not yet grown cynical. Maybe the next generation will be, but for now, most consumers are quite open to branding. There is a huge potential for marketers.
Q: Which advertising formats work best with consumers?
A: Brands need to fight harder to cut through the media congestion during the evening prime time, so there are three major trends at the moment. First, a quiet, focused time for the message is essential — for example, before office hours or during commuting periods. The second is finding a brand relevant to those times — working out when your message is most likely to resonate with people. A coffee brand, for example, would find the morning hours most ideal. The third trend is integration of formats, rather than just relying on a single channel.
My advice? Don't advertise on just TV alone. You need to combine different formats to maximize the impact on people during prime times.
Technology and the media landscape in China have changed very quickly into a polarized market. Residents in first-tier and second-tier cities have the latest handsets, but some may still be using a feature phone and a sharing TV with their families.
In a recent study we did for a premium car brand, we found they were seeking to target a female audience without diluting the nature of a very masculine brand. It's hard to achieve that through TV alone. It would be a lot easier to identify what TV shows and websites attract female audiences and then deliver a targeted message.
Q: There is a lot of discussion about dwindling TV viewership. What do you think about the role of TV sponsorship?
A: Castrol recently launched a campaign during the Chinese Idol program, where viewers vote for the candidate to keep in the game. It's a clever move to reach a large viewing audience through sponsorship, while at the same time driving engagement through a Castrol mini-site to give viewers a further impression of how engine oil can protect a vehicle and give it better performance.
Brands are trying to use online channels to forge long-term, lasting relationships with consumers.
Only 64 percent of Chinese viewers devote undivided attention when watching TV while 36 percent are simultaneously engaged in some form of digital activity, slightly lower than the global level of 41 percent.
The growing challenge is that the number of people who exclusively focus on watching TV will get even smaller in the future. The rest will be split over various forms of media because their attention will be more fragmented. Marketers need to be prepared for TV's role to be weakened in the future, although, at the moment, it's still where most advertising expenditure goes.
Q: What about mobile shopping?
A: In global markets where a mobile device is the only access to the Internet, there is very little e-commerce because of trust issues.
In China, the proportion of online sales completed through mobile channels is still less than 20 percent, yet this is one of the most advanced markets for mobile commerce. There are more innovative business models here because software like WeChat offers a convenient payment channel.
This could become a big challenge for a platform like Taobao, which may see commerce increasingly turning to WeChat.
Chinese tech companies love to go it alone and are constantly trying to take other players' market share. For example, Alibaba is adding social features to Taobao and Tmall, while Tencent hopes to catch up with e-commerce through new WeChat functions.
Marketers need to focus on categories where people are dedicating more time to research and reading online comments. It's important to capitalize on that trend because people are more likely to pick up their smartphones and search for price and product information.
In China, categories in the lower price range — such as personal care, cosmetics, baby care and household products — are driving online research as people try to find the best deal for themselves.
Travel and personal care are the top categories where consumers are willing to engage with brands and offer user-generated content.
Mobiles also offer a good channel for brands with normally low levels of engagement because they are much easier to search and interact with.
'More progress lies ahead' for FTZ
September 28th, 2014Officials say crude oil futures trading may be the next innovation in zone
Officials of the China (Shanghai) Pilot Free Trade Zone on Friday promised there would be more progress, including the launch of crude oil futures later this year, ahead of the first anniversary of the experimental area.
The Shanghai International Energy Trading Center, a new arm of the Shanghai Futures Exchange, may launch crude oil futures this winter, said Zheng Yang, head of the Shanghai Financial Service Office, at a briefing on Friday.
The trading center was established last November, and it was the largest company registered in the FTZ with registered capital of 5 billion yuan ($815 million). It aims to serve as a platform for international futures trading of oil and other resources.
According to Zheng, the energy trading center is preparing for the launch of crude oil futures.
The Shanghai Stock Exchange also plans to set up a trading platform for international financial assets, said the official.
The FTZ was officially launched on Sept 29, 2013. Its major achievement in the past year has been the streamlining of administrative procedures.
The "negative list" approach, which aims to make it easier for foreign companies to enter the Chinese market, has reduced the number of banned items from 196 to 139.
As of Sept 15 this year, there were 12,266 new companies set up in the FTZ, of which foreign companies accounted for 13.7 percent, and 283 foreign-funded projects were launched in the FTZ.
"The momentum of foreign enterprises is improving, which means the free trade zone has passed the initial evaluation," said Ai Baojun, director of the FTZ, who is also deputy mayor of Shanghai. Ai said logistics costs in the zone have declined by 10 percent.
In late October, the FTZ management committee will release another list that will refine its power and procedures, increase transparency and broaden market access for investors in the FTZ.
When asked about Dai Haibo, the former executive deputy director of the FTZ who was removed in early September, Ai said Dai's removal was a normal change of personnel, and Dai was still carrying out his duties in the government, such as drafting the 13th Five-Year Plan (2016-2020).
Ai did not reveal the successor to Dai.
Time-honored brands eye young consumers
September 28th, 2014More than 200 Chinese time-honored brands across the country will exhibit their classic and new products in Shanghai at a fair starting from Friday, in the hope of developing popularity among younger consumers like they did in their parents and grandparents.
The four-day exhibition has been held for seven consecutive years in Shanghai, and 237 Chinese companies from Beijing, Tianjin, Chongqing, Shanghai and provinces of Guangdong, Fujian, Heilongjiang, Jiangsu, Zhejiang, Yunnan and Shandong will set up 385 booths in an area of 8,500 square meters this year.
These time-honored brands are eager to show that they not only preserve traditional Chinese culture but also keep up with times. These brands range from food and dining, clothing and accessories, to jewelry, arts, health-care, and modern service.
Some latest products, such as Warrior shoes, Seagull's latest digital camera, will also be shown in the exhibition, and visitors will be allowed to try some of these new products.
Net foreign exchange sales 'no problem'
September 26th, 2014The State Administration of Foreign Exchange on Thursday sought to allay worries about potential short-term capital flight, saying that the latest foreign exchange figures partly reflect increasing bank deposits in foreign currencies.
The August statistics showed that Chinese banks, for the first time in 13 months, sold more foreign currencies than they bought.
"There hasn't been any substantial change in China's capital inflows or outflows. The gap in the data exists in the form of growing foreign exchange deposits," said Guo Song, director of the capital account management department at the SAFE.
Foreign-currency deposits rose by $15.4 billion last month while loans dropped $3.3 billion, according to Guo.
"It means that companies and individuals are more willing to hold foreign currencies, which is a positive change indicating that the market outlook on the exchange rate has become more reasonable," he said.
In August, Chinese banks sold $147.4 billion in foreign currencies and bought $146.6 billion, yielding an $800 million deficit, according to the SAFE.
The regulator also emphasized taking a "prudent" approach toward the liberalization of the capital account, signaling no imminent or bold reforms in further opening the capital market.
But Guo said the SAFE will pursue the goal of gradually removing restrictions on the yuan's convertibility, creating greater convenience and giving the market more investment freedom.
China has reduced the number of items that require administrative approval from 59 to 20 under the capital account, according to the SAFE.
The agency is studying how to liberalize the rule that imposes a $50,000 ceiling on individuals' annual conversion of yuan to meet the growing demand for foreign currencies.
Adobe to shut China R&D unit, lay off 300, amid poor quarterly results
September 25th, 2014Computer software maker Adobe Systems Inc will shut its Chinese R&D arm, it said Wednesday.
The California-based company will maintain its China sales offices in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan, Adobe said in a statement on Wednesday, but R&D operations will cease by the end of December.
Layoffs have already begun and will affect around 300 people, a person familiar with the matter told Reuters.
"Adobe's presence in China will be focused on market development activities moving forward, and it will be dissolving and closing its R&D branch there," the company said. "Adobe will maintain its sales presence in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan."
On September 17, Adobe reported its worst quarterly revenue for Asia in the last five years. For the three months ended August 29, sales in Asia fell 25 percent to $148.2 million.
Adobe's overall net profit dropped 46 percent year-on-year to $44.7 million in the period.
Media reports Wednesday said that employees of Adobe will get compensation depending on how long they have worked at the company.
The company has been downsizing its business in the region in the past few years.
In 2012, the company closed its unit in Taiwan and said that its business in Taiwan would be moved to its Hong Kong branch.
Adobe, founded in 1982, makes popular software such as Photoshop and Dreamweaver.
Ningbo kicks off job fair to seek overseas talent
September 25th, 2014About 1,500 domestic companies have taken part in the fair, releasing more than 1,000 human talent and science projects. An estimated 8,000 new jobs will be introduced during the event.
Each year, the local government undertakes a survey to show the types of jobs that are most needed. This year, the city adopted for the first time a comparative study method to evaluate the city's talent resources and competence in the regional market by researching the job markets in Shanghai, Hangzhou, Suzhou and Wuxi, all located in the Yangtze River Delta economic zone.
The survey concluded there were 587 urgent job needs, covering five economic sectors. It also showed the market demand for innovative talent is still high, as most companies are used to adopting rather than inventing new products and technologies.
Seven job positions stand out as most urgent for the city — new-material engineers, car components engineers, senior architects, e-commerce managers, fashion designers, pharmaceutical experts and automation equipment experts.
The job fair places a premium on attracting those who have acquired a master's or a doctorate degree overseas. The local government will provide "mother care" services for such talents, offering them funds, welfare, houses, family settlement and healthcare.
Huawei most innovative domestic company: survey
September 24th, 2014
SOEs lag behind private firms in terms of creativity
Shenzhen Huawei Investment & Holding Co, the parent of technology giant Huawei, unseated e-commerce giant Alibaba Group as the top innovative domestic company in the Chinese mainland, according to the findings of an annual survey released on Tuesday by global consulting firm Strategy&.
Tencent Holdings, the third most innovative domestic company on last year's ranking, moved up one spot on the 2014 list, while Alibaba was ranked No.3 this year, ceding its innovation crown to last year's runner-up, according to a report based on the survey.
Nearly 400 executives from both Chinese and foreign companies joined the survey, which was conducted this spring and summer.
"Huawei is probably seen as the Chinese company which most embodies innovation - not just in [the mainland] but also globally," Steven Veldhoen, a Beijing-based partner at the consulting firm, told the Global Times after the release of the survey, referring to the rankings based on the input of business executives.
Smartphone vendors Beijing Xiaomi Technology Co, Meizu Technology Co, and electric-car maker BYD Co are new to the list of domestic innovators, among which, eight of the top 10 firms are in the high-tech or Internet arena, the report said, attributing the phenomenon in part to the highly open and intensely competitive nature of the sectors in the mainland market.
Chinese companies, particularly those expanding overseas, are increasingly turning to innovation as a significant driver of business growth.
The survey found that innovation is the first priority for 42 percent of domestic companies, compared to 21 percent of multinational firms.
In a sign that domestic companies are gaining traction in innovation, 65 percent of multinational respondents said that their companies are confronted with Chinese competitors that are just as or even more innovative, the survey results showed.
China is attaching greater importance to innovation in its reform-bound economy.
Speaking at the opening ceremony of the Summer Davos Forum in Tianjin on September 10, Premier Li Keqiang said the Chinese economy has maintained steady and sound growth in recent years, owing to reform and innovation.
"China's innovation involves not only technology but more of institution, management and growth models," said the premier, pledging stepped-up reforms to remove restraints on innovation by individuals and companies.
The survey also revealed concerns over the lack of innovation in the country's State sector.
"State-owned enterprises (SOEs) are, on the whole, seen as lacking impetus in innovating their products and services," Wang Jun, a research fellow at the China Center for International Economic Exchanges, a Beijing-based think tank, told the Global Times on Tuesday.
The monopoly positions of most SOEs dampen their zeal for innovation to achieve higher earnings, Wang said, noting that an ineffective incentive mechanism for innovation for SOE management also works as a drag on innovation in the State sector.
But with the deepening of SOE reform, which includes launch of pilot programs on mixed ownership, the level of innovation in SOEs is expected to rise, he believes.
A separate list that names the top 10 innovative foreign companies in the mainland market was also announced on Tuesday, placing Apple Inc, Samsung Electronics and Volkswagen Group China among the top three.
It is hardly a surprise that Apple tops the list, given "the ubiquity of Apple products and services, and its imitators," remarked Veldhoen.
Baidu and CGB join hands
September 23rd, 2014China's leading search service provider Baidu Inc signed a strategic partnership agreement with China Guangfa Bank on Monday to provide better services to bank customers.
Under the deal, Baidu will use its advantage in big data and location-based service to support China Guangfa Bank to offer more tailor-made and smarter services to customers.
Beijing-based Baidu will use big data technology to carefully evaluate people's individual needs in wealth management products so as to help the bank better serve its customers in the increasingly digital era.
Baidu will also use its deep knowledge in location-based service to help the bank to select good locations to expand its brick-and-mortar network.
Higher demand lifts Pearl Delta exports
September 17th, 2014Business continued to improve for small and medium-sized exporters in the Pearl River Delta in August, lifted by increased overseas demand and government policies to support foreign trade, a report said on Tuesday.
Shenzhen Onetouch Business Service Co, a subsidiary of Alibaba Group Holding Ltd, found that exporters' confidence was positive in August.
The trade climate index stood at 102.65, with many Delta exporters reporting increased orders.
"The situation will continue to improve in the months ahead because overseas demand for Chinese goods increases at the end of each year," said Xiao Feng, deputy general manager of Shenzhen Onetouch.
Rising orders in the past two months and stable production, labor and exchange-rate conditions helped exporters make more profits, according to Xiao.
Xiao said that government trade-boosting incentives had proven effective.
"In particular, new business models such as cross-border e-commerce and comprehensive foreign trade services have helped exporters gain more orders," Xiao said.
The nation's total trade increased 4 percent year-on-year to $367.09 billion in August, according to the Ministry of Commerce.
Exports to major markets including the United States, European Union and the Association of Southeast Asian Nations increased by 11.3 percent, 12.8 percent and 12.7 percent, respectively.
"The increased value of foreign trade in the past two months was mainly due to implementation of a series of government policies to support the stable growth of foreign trade," said Shen Danyang, a spokesman for the Ministry of Commerce.
The trade increase in August followed a surge of 14.5 percent in July.
According to Shen, export procedures have been streamlined and export rebates have been improved.
"We have also introduced measures to help companies tackle financing difficulties, with credit and insurance institutes providing financial services for about 25,000 small and medium-sized enterprises," Shen said at a press conference on Tuesday.
He said that cross-border e-commerce and comprehensive trade service business have had strong government support.
"But we are not sure that China's foreign trade can maintain this momentum ... as many uncertainties remain in the global and domestic markets and some companies face difficulties in exporting," Shen said.
Global media's take on Alibaba's IPO
September 16th, 2014Alibaba's impending IPO is one of the most talked-about stories in the world. Here is a selection of quotes from international and Chinese media.
"...at the valuation currently being discussed, Alibaba would be more expensive than more-established and better-known companies such as Google Inc. or eBay Inc."
Alibaba IPO: a big deal, and, backers argue, a real steal
-- Wall Street Journal, on Sep 12
"The most critical task Alibaba faces: Reaching the 500 million Chinese consumers who shop, chat, play games and basically run their entire digital lives on smartphones."
Alibaba IPO: Jack Ma's scrappy start-up takes on US
-- USA Today, on Sep 12
"For Alibaba, it was part of a continuing effort to make the instant gratification of global e-commerce accessible to China's expanding middle class. If the biggest Internet company in the world's most populous nation succeeds, it will make everything from culinary delicacies to flashy luxury goods available with a few keystrokes.
The degree to which Alibaba can deliver on this promise will help determine how much the company is ultimately worth and to what extent it can open up the enormous Chinese market to both global retailers and small businesses in search of growth."
Alibaba is bringing luxury, fast, to China's middle class
-- New York Times, on Sep 11
"As so is told by many brokerages, there's always chance for [Chinese] retail investors to grab a bite of Alibaba's IPO. To secure this opportunity, one has to be well-loaded and have some luck.
If you want to be Alibaba's shareholder, most of brokerages will require $1 million as liquid asset in your account and a minimum subscription of $400,000. Still, no guarantee for a successful allocation."
How could retail investors grab a bite of Alibaba shares
-- Caixin, on Sep 12
"Though Chinese consumers have driven Alibaba's financial success, they'll largely be left out of the company's stock offering."
Chinese gripe at being left out of Alibaba's $21 billion IPO
-- Bloomberg, Sep 15
"Alibaba is a 'hybrid' under the context of globalization. It reveals the financial development in China and its immeasurable potentials, while at the same time exposes shortcomings of Chinese venture capitals and difficulties for companies to seek domestic financing. Alibaba is a real 'multinational' company in the internet age. It has been seeking best opportunities globally and grown into 'first of the world'."
-- Global Times, May 8
Whirlpool gets approval for acquisition of Hefei Sanyo
September 16th, 2014U.S. appliance-maker Whirlpool Corporation received approval from the China Securities Regulatory Commission to acquire a 51 percent stake in the Shanghai-listed Hefei Rongshida Sanyo Electric Co. Ltd (Hefei Sanyo), according to a Hefei Sanyo statement released on Monday night.
It is the final approval required for the acquisition process.
The transaction will cost Whirlpool 3.382 billion yuan (550 million U.S. dollars), according to the statement.
China will become the world's largest white goods market and is the focus of Whirlpool's global layout. The acquisition will combine Whirlpool's technologies with Hefei Sanyo's local market expertise to grow its market share, according to the statement.
Michigan-based Whirlpool, with an annual sales revenues of more than 18 billion U.S. dollars, entered into the Chinese market in 1994 but has lagged behind local brands like Haier.
ABB CEO stresses confidence in China's economic growth, market outlook
September 10th, 2014ABB Inc, a global grid equipments and automation technologies giant, Tuesday stressed its confidence on China's economic growth and market outlook, as they are continuously bolstered by industry upgrade, energy efficiency, automation applications, alongside with huge infrastructure programs.
Ulrich Spiesshofer, chief executive of ABB, said in a group interview in London that China is a very important market to ABB, as well as a significantly important platform for ABB to take the company to the next level.
Though China's economic growth is expected to decelerate in the future compared to its past 35-year performance, the country's ambitious blueprint on industry upgrade, energy efficiency , automation application, alongside with huge infrastructure programs are still able to boost its economic outlook and the rosy picture for the industries concerned, said Spiesshofer.
"We are very optimistic on China's long-term development in infrastructure programs," he said.
Spiesshofer also elaborated its understanding on China's "new normal" pattern of economic growth.
He said China has to tackle with the environmental pollution problems from economic growth, and this could happen in two ways, one is to cut down the energy consumption per unit of gross domestic product, the other one is to create environmental friendly technologies.
Spiesshofer added that ABB will collaborate with Chinese government for their action on anti-trust, a process that could incubate and optimize the competitive market environment,
On the same day at its annual Capital Market Day in London, Spiesshofer announced a surprising four billion U.S. dollars share buyback plan after the stock's dismal performance over the past year.
ABB also outlined the new long-term targets for the company, with plan to increase operational earnings per share by 10 to 15 percent on a compound annual basis from 2015 to 2020. And the like-for-like sales is expected to grow by four to seven percent per year over the same period.
On Friday last week, however, the world's largest power-grid maker announced a strategic collaboration with China's BYD Co., Ltd. to jointly develop new solutions for energy storage building.
The Switzerland-based ABB Group of companies operate in around 100 countries and employ about 145,000 people.
Among the Fortune 500, size isn't everything
September 5th, 2014A record 100 Chinese corporations made the Fortune Global 500 list this year, including 91 companies from the Chinese mainland.
The list shows that Chinese companies are rising in international stature. However, according to a report from the China Business News this week, 16 of the Chinese mainland companies on the list ran in the red in 2013. By comparison, there were only four US companies on the list that ran at a deficit.
These companies won high positions on the list based on their total assets and average revenues, but they lagged behind other companies in terms of profit.
For example, the 95 companies based on the Chinese mainland and in Hong Kong earned an average profit of $3.22 billion over the past fiscal year, below the average of $3.91 billion for all the companies on the list, according to media reports.
Chinese mainland companies also employed more workers to earn their profits. The Chinese mainland companies on the list had 190,000 employees on average, well above the average of 130,000 workers for all the companies on the list.
It is obvious that there are huge gaps in efficiency between mainland companies and their international competitors. To catch up, mainland companies should not only concentrate on expanding their size, but also focus on boosting their competitiveness.
Among the companies on the Fortune Global 500, there were 16 from the mainland that had a total deficit of 37.7 billion yuan ($6.11 billion) in 2013. Most of these companies are in industries suffering from overcapacity, such as coal and steel. They include Ansteel Group, Aluminum Corp of China and Kailuan Group. All 16 companies used to be industrial powerhouses, but overcapacity problems in their industries have taken a toll.
The central government has taken note of the overcapacity problems. It has issued calls for companies in these industries to upgrade to more advanced technology to improve productivity and reduce carbon emissions.
During this period of adjustment, many companies have sought to boost their productivity through mergers and acquisitions, which has left many of them heavily in debt, according to a report in June by China Chengxin?International?Credit?Rating?Co.
The report also mentioned that many State-owned enterprises (SOEs) have trouble controlling costs.
Indeed, most of the Chinese companies made the Fortune Global 500 list simply because of their size, which was the result of the aforementioned mergers and asset restructuring.
For instance, Ansteel Group was born of the merger of Anshan Iron and Steel Group Corp and Panzhihua Iron and Steel Group Corp in 2010. Hebei Iron and Steel Group was the result of the merger of Tangshan Iron and Steel Group Corp and Handan Iron and Steel Group Corp in 2008.
It is easy to build a giant company through mergers and acquisitions, but without long-term planning, the combined company is likely to face a host of problems, particularly in industries rife with spare capacity.
For instance, Hebei Iron and Steel Group has made the Fortune Global 500 list for six straight years. The company produced as much as 42.8 million tons of crude steel in 2013, the most of any company in China. Still, the company reported a net loss of $138 million last year. Scale doesn't necessarily translate into profit. A company has to hone a competitive edge.
Losses haven't been limited to companies in industries struggling with overcapacity. Three other mainland firms also reported losses recently, including COSCO Group and China National Chemical Corp.
COSCO reported a deficit of nearly 2.28 billion yuan in the first half of this year due in part to the sluggish international shipping market.
It should also be noted that the Beijing-based oil giant Sinopec Ltd became the first Chinese company to break into the Fortune Global 500's top three, trailing US retailer Wal-Mart Stores Inc and Royal Dutch Shell.
China National Petroleum Corp and State Grid Corporation of China also made the top 10. But they are SOEs in industries monopolized by the State.
These companies on the list highlight China's growing economic strength. However, they still need to prove they can be profitable in a competitive market.
Online finance to expand household investment
September 5th, 2014
Internet-based services will make credit more accessible: BCG
The rise of Internet-based finance in the Chinese mainland is set to catapult the average household's investment readiness and credit accessibility of small businesses in the coming years, management consultancy Boston Consulting Group (BCG) said in a report released on Thursday.
Currently, the demand of the vast majority of households in the Chinese mainland for low-cost, more efficient financial services are unmet, which, coupled with the advancement in technology and the Chinese government's support for financial innovation, serve to drive growth in online finance in the market, Tang Tjun, Hong Kong-based senior partner and manager director at BCG, told a news conference in Beijing on Thursday while releasing the report.
In 2013, mainland households with investable assets below $100,000 accounted for 94 percent of the mainland's total number of households, far above the ratios in developed markets which generally stand below 50 percent, data from BCG showed, indicating unaddressed demand for more affordable and accessible investment conduits.
With sustained growth momentum expected in Internet-based financial services, investment readiness of normal households will grow substantially over the next few years, according to the BCG report.
The consulting group estimates that by 2020, the number of mainlanders purchasing fund-based wealth management products as a percentage of the total population will rise to 25-30 percent from a mere 3 percent in 2012.
For small and micro-sized enterprises and individually owned businesses in the country, the emergence of online financing will also help meet their credit demand that has long been marginalized. As a result, the number of small and micro-sized enterprises receiving credit will surge to 30-40 percent of the total by 2020 compared to 11 percent in 2013, the BCG report predicted.
As for emerging areas in online finance, particularly peer-to-peer (P2P) lending which involves tremendous risks, differential business models that target specific financing needs must be sought for survival in the face of uncertain prospects, David He, principal for the consulting firm in Beijing, said at the news conference.
In a sign of prevailing risks for P2P lending in the country, 11.3 percent of more than 1,100 P2P platforms in the country have been shut down or fled with clients' money by July, said a report released in late August by rong360.com, a Beijing-based online private lending search service provider.
While the country has yet to lay down detailed rules for the regulation of the fast-growing P2P arena, tougher policies are expected to be in the pipeline to rein in the risks of unrecoverable loans, Feng Lin, a senior analyst at Hangzhou-based China E-Commerce Research Center, told the Global Times on Thursday.
Possible rules could include putting a licensing system in place to filter out the unqualified players and setting reserve requirements for P2P platform operators, Feng suggested, noting a coordination between different government bodies such as the People's Bank of China (PBC), the country's central bank, and the China Banking Regulatory Commission (CBRC) is also essential in the oversight of the emerging online finance trend.
A registration mechanism with transparent disclosure of investors and intermediary service providers, namely operators of P2P platforms, also needs to be created, He Bo, an analyst at Shanghai-based fund consultancy Howbuy, told the Global Times on Thursday.
Detailed regulations specifically designed for the P2P sector may come out as early as the end of the year, according to recent Chinese media reports which are yet to be officially confirmed by either PBC or CBRC.
Top Chinese companies grow, but face bottlenecks
September 3rd, 2014
16 banks made more profits than top 300 manufacturing companies
Despite their growing size, China's top companies are facing profitability and innovation bottlenecks compared with their global counterparts, according to a recent domestic ranking of China's top 500 companies released on Tuesday.
In the 2014 edition of the Top 500 Chinese Enterprises, unveiled in Beijing Tuesday, China's oil giant Sinopec Group snatched the top slot for a 10th consecutive year with revenues of 2.95 trillion yuan ($479 billion).
The list was complied by the China Enterprise Confederation (CEC) and the China Enterprise Directors Association based on Chinese companies' 2013 revenues.
Although total profits for the 500 companies grew by 10.6 percent from the previous year to 2.4 trillion yuan in 2013, their profit-revenue ratio edged down for a third consecutive year, dropping 0.1 of a percentage point to 4.24 percent.
"Although the growth rate of China's top companies slowed down from over 20 percent two years ago, they continue to expand. They accounted for 35 percent of the nation's total tax revenue in 2013," Li Jianming, deputy director at the China Enterprise Confederation, told the Global Times Tuesday.
A total of 92 of the companies also landed in the US-based Fortune Magazine's rankings of the world's 500 largest companies, Li said.
However, some experts point out that bigger does not necessarily means stronger. Weak profitability and ability to innovate mean that many of these companies still have a long way to go before they can be counted among the world's best companies.
Li Jin, chief researcher with the China Enterprise Development Research Institute (CEDRI), said many of the top 500 companies are State-owned enterprises(SOEs) that lack vitality and efficiency, and lack incentives to reform, although he added that the central government aims to change this.
Jin said that China's top 500 companies are concentrated in the resource and manufacturing sectors, with fewer companies in high-value added sectors such as IT.
Experts said that relatively few top Chinese companies are technical leaders in their fields.
Two such examples, PC manufacturing giant Lenovo and telecommunications equipment maker Huawei Technologies, ranked 45th and 48th on the list respectively.
"[As a whole, these companies'] ability to innovate is weak. As the economy has slowed down, the rate of increases in R&D investment dropped for a second straight year in 2013, which is alarming," Li Jianming of CEC said.
In 2013, Chinese companies' investment in R&D grew by 7.36 percent year-on-year. That figure was 11.37 percent in 2012 and 16.50 percent in 2011, according to news portal 163.com.
According to Li, the manufacturing sector's profitability is at concerning levels.
"The 16 Chinese banks on the top 500 list made more profits than the top 300 manufacturing companies combined in 2013, and accounted for over half of the total profit of the top 500 companies, raising concerns of a 'hollowing-out' of domestic industry," Li Jianming said.
In comparison, the top 18 US banks only accounted for around 10 percent of total profit for the top 500 US companies.
With SOEs occupying the top 37 spots on the list, home appliance retailer Suning Commerce Group Co took the 38th spot as the largest company from the private sector, with annual revenues of 279.81 billion yuan.
The 2014 version of the list includes 200 companies from the private sector.
A total of 131 companies reported revenues of more than 100 billion yuan in 2013, up from 123 companies a year earlier, while the top 500 Chinese companies had combined revenues of 56.68 trillion yuan in 2013, up 13.31 percent from a year earlier, according to CEC.
Weak sentiment dampens sales of Shanghai new houses
September 2nd, 2014New home sales fell for the second straight month in Shanghai in August amid weak sentiment.
The sales of new homes, excluding government-funded affordable housing, fell 6.7 percent from July to 654,000 square meters, the lowest volume in three months, Shanghai Deovolente Realty Co said in a report released yesterday.
"Despite a cooler-than-expected weather in August, most homeseekers continued to take a 'wait-and-see' attitude as they hope for significant price cuts by developers," said Lu Qilin, a Deovolente researcher.
But few developers have offered attractive discounts — a major reason for the sluggish sales, Lu said.
The average cost of a new home fell 0.3 percent from July to 26,290 yuan (US$4,276) per square meter.
China Eastern Airlines' profits decline 98 pct
September 1st, 2014China Eastern Airlines, one of the country's leading carriers, has posted a net profit drop of 97.76 percent from the same period last year in the first half of 2014.
With a net profit of 14 million yuan (2.28 million U.S. dollars), the company registered a business revenue of 42.59 billion yuan in the first six months, according to a statement it filed to the Shanghai Stock Exchange on Sunday.
The revenue was a 2.68-percent increase from the same period last year, said China Eastern Airlines.
It attributed the lackluster performance to "geopolitical instability, fewer high-end business travelers, and more convenient high-speed railway services."
The airline foresees both opportunities and challenges in the second half of this year due to a mixed picture consisting of "uncertainties in global economic recovery, continuous growth in China's airline market, and fierce competition."
By June 30, the Shanghai-based carrier had 485 planes, including 459 passenger ones, 12 cargo, and 14 corporate jets under its trusteeship.
Jack Ma tops China’s rich list
August 29th, 2014Jack Ma Yun, the 49-year-old founder of Alibaba Group Holding Ltd, has become China's richest man with a net worth of $21.8 billion, Bloomberg reported on Thursday citing its Billionaires Index.
Ma's assets include a 7.3 percent equity in China's largest e-commerce business, which is preparing for what could be the largest IPO in US history.
Ma is $5.5 billion wealthier than Ma Huateng, founder of Tencent Holdings Ltd, China's largest Internet company by market value.
Robin Li Yanhong, founder of Internet search engine Baidu Inc, ranks the third on the list of the richest people in the country.
Property price to rise for another 3 to 5 years
August 29th, 2014China's housing price is likely to rise for another 3 to 5 years, said a senior executive with Shanghai's leading property developer Greenland.
The ratio between the total price and the annual rent income of a property in the Chinese market is around 50 to 1, while that of the Japanese and Hong Kong markets were as high as 80 to 1 before they collapsed, said Geng Jing, vice-president of Greenland Holding Group.
So the Chinese property market is still hasn't reached its upper limit, Geng said to an audience including a delegation of 30 students from the University of Cambridge at an event held by the Chinese Students & Scholars Association of Cambridge.
The delegation took a tour of Shanghai for the 30 anniversary of the CSSA Cambridge. The tour included visits to the top 25 companies in the city.
Foreign firms in China release CSR reports
August 27th, 2014Fifty-three foreign enterprises in Shanghai collectively released for the first time their corporate social responsibility reports on Aug 12.
An enterprise's commitment and performance to fulfill its CSR is a new benchmark included in the evaluation system for Shanghai authorities to examine a foreign enterprise's comprehensive performance and contribution to the development of the city, according to Shanghai Municipal Commission of Commerce.
The collective release of the CSR reports shows foreign enterprises have been attaching more importance to the China market, said Liu Jinping, head of Shanghai Association of Enterprises with Foreign Investment.
"Releasing a global CSR report has been a conventional measure for an enterprise to show its commitment to market, community and society. However, releasing a CSR report that is devoted to the China market shows an enterprise's increasing awareness of being part of the China market," said Liu.
The CSR reports cover the foreign enterprises' involvement and investment in various aspects of the community, including environmental protection, product quality, charity contributions and social education.
On average, each of the foreign enterprises has already released three CSR reports. Some have released reports consecutively for seven years.
Experts and market insiders said an enterprise's commitment and performance to shoulder its CSR reflects the enterprise's capacity and competence in various ways.
"The fact that an enterprise can contribute a lot to the environment, employees, communities and society means that the enterprise is well-run, profit-making and has good credit to realize all these contributions. A poorly run enterprise may not have enough resources to secure employee safety and product quality, not to mention shouldering other responsibilities," said a social science professor at Fudan University.
Johnny Kwan, senior vice-president of country plat-form and functions, BASF Greater China, said that in China the chemical industry has been making efforts for sustainable development.
One measure is to leverage more resources through building up a supply chain with social responsibility awareness, involving more partners to contribute to environmental protection, charity, employee welfare and other fields.
Some other enterprises have been improving their internal mechanism to improve operational flows to realize better compliance to their CSRs.
Shanghai has been improving conditions for foreign investment, and the city has also been raising the quality of investment, said Liu.
Departments and authorities have been appealing to high-caliber enterprises in terms of social output and financial output with higher administration efficiency and fair, open, transparent conditions, according to Shang Yuying, director of Shanghai Municipal Commission of Commerce.
Encouraging enterprises with foreign investment to release their CSR reports is also a step that pushes forward enterprises' disclosure system and builds up Shanghai's credit management, said Liu.
"As an enterprise's commitment to and performance of CRS is included as a benchmark for evaluating the enterprise's performance and contribution to the city, Shanghai may have a better insight into the role of foreign enterprises in the city's economic and social development," said Liu.
More than 2,000 foreign investment projects started in the first half of 2014 in Shanghai, of which 1,016 were focused in the China (Shanghai) Pilot Free Trade Zone, about 46.7 percent of the total number, according to Shang.
Alipay starts online financing for SMEs
August 26th, 2014
Zhaocai Bao was designed to connect the investment activities of 300 million individual investors in China with the financing needs of 1 million small and medium-sized enterprises. Its annual sales volume is expected to reach 1 trillion yuan in the next two to three years.
China's largest online payment provider Alipay announced the official launch on Monday of Zhaocai Bao, an Internet finance platform that aims to reshape financing for small businesses to the tune of 1 trillion yuan ($162 billion) within three years.
For investors, the Zhaocai Bao (Money-drawing Treasure) platform offers products with average annualized returns of between 5.4 percent and 6.9 percent. In comparison, the annualized return rate for Yu'ebao, China's largest money market fund, has fallen to about 4.1 percent since its launch in June 2013, while China's one-year fixed-term deposit rate is 3 percent.
Zhaocai Bao is different from Yu'ebao as its major product consists of loans to small businesses, while the latter is a money market fund managed by Tianhong Asset Management.
"We aim to connect the investment activities of 300 million individual investors in China with the financing needs of 1 million small and medium-sized enterprises," said Yuan Leiming, CEO of Zhaocai Bao.
In addition to the higher return rate, Zhaocai Bao has set the threshold for investors at a mere 100 yuan. And risk of bad loans is underwritten by insurance companies.
Although products on Zhaocai Bao are bound by a fixed maturity ranging from three months to three years, investors are allowed to "liquidate" the product before its due date by transferring it via the platform to other investors, after paying a 0.2 percent transaction fee, so they can still enjoy the original annualized return rate.
At the borrowers' end, Yuan said the financing cost for SMEs on Zhaocai Bao is about 7 percent, much lower than the average 18 percent financing cost for small and medium-sized companies, and the time it takes to borrow money can be as short as 10 seconds.
"The traditional approach for banks is to collect small pieces of capital, put them into a pool and then go search for borrowers, which pushes up the overall cost," Yuan said.
"Our capability of cloud computing and big data processing enables direct integration of every piece of capital with the borrowers, which significantly reduces the cost," he said, adding that the average Zhaocai Bao deal totals around 200,000 yuan and that Zhaocai Bao takes a 0.1 percent transaction fee on every deal.
Since a test run in April, Zhaocai Bao has already sold 11.4 billion yuan in financial products to a half-million customers, according to its official Web page, which is linked to Taobao.com. Forty financial institutions are currently working with the platform, while another 100 are waiting in the line.
By comparison, Yu'ebao currently has about 100 million users with transactions totaling 600 billion yuan.
"The aim for Zhaocai Bao is to reach 1 trillion yuan annual sales volume over the next two to three years," Yuan said.
According to independent statistics, China is home to 800 online lending websites, with close to 100 billion yuan worth of transactions in 2013.
Chen Jin, CEO of China's first online insurance vendor, Zhong'an Insurance - which is also one of Zhaocai Bao's partners - said the transition from Yu'ebao to Zhaocai Bao reminds him of Taobao.com and Tmall.com, and marks a strategic transformation for China's largest e-commerce conglomerate, Alibaba Group Holding Ltd.
Wu Zhigang, chief information officer for China National Investment and Guaranty Co, said that as most of China's individual investors are vulnerable to risks, a platform like Zhaocao Bao could effectively lower those by offering a high degree of information and comparisons.
"It's a good example of inclusive finance," he said.
Gome H1 profit up 115%
August 26th, 2014Chinese electronics retailer Gome Electrical Appliances Holding Ltd said on Monday that net profit for the first half of the year climbed 115.2 percent as a successful move toward e-commerce helped the firm stretch its net profit margin.
The firm posted a net profit of 693 million yuan ($112.7 million), up from 322 million yuan in the same period a year earlier, it said in a filing to the Hong Kong Exchanges and Clearing Ltd. Its net profit margin doubled to 2.38 percent from 1.19 percent.
Like its main rivals, Gome has been pushing increasingly online to help turn around flagging offline sales that dragged the firm into the red in 2012. Gome ompetes in China with firms like Suning Commerce Group Co Ltd, but online rivals such as JD.com Inc are becoming a challenge.
Gome, backed by private equity firm Bain Capital, saw first-half revenue climb 7.4 percent to 29.1 billion yuan.
The firm's shares were closed at HK$ 1.36 on Monday with 3.03 percent growth, outflanking the benchmark Hang Seng Index, which was up 0.22 percent.
FINANCIALS: Chinese firm 51Jobs posts positive results
August 25th, 2014HR solutions provider 51Jobs’ revenue increased 13% year on year in the second quarter, reaching RMB457.5m (£44.3m) and exceeding the company’s guidance range.
Rick Yan, president and chief executive officer of 51Jobs, said: “In the second quarter, we made good progress in our customer acquisition efforts, as we saw robust expansion of the unique employer user base in our online business.”
Online recruitment services revenues increased 15.8% over Q2 2013 to RMB312.0m (£30.2m).
Human resource-related revenues, which exclude advertising, increased 15.6% to RMB143.2 million (£13.9m). This was primarily due to growth and use of business process outsourcing and training services.
51Jobs is a human resource solutions provider, offering recruitment solutions, training and assessment, HR outsourcing and consulting services.
Mobile games market to expand 11.8% annually in five years
August 22nd, 2014China's mobile game market is expected to grow an average of 11.8 percent in the next five years if the user base stays stable with a massive shift toward smartphones and tablets, an industry report says on Friday.
Last year, mobile game players accounted for over 50 percent of China's mobile Internet users, PricewaterhouseCoopers said in its Mobile Game Industry Insight 2014.
"The development of mobile devices and network environment provides much faster mobile access and huge potential for the mobile game market," said Vincent Cheuk, PwC China TMT partner.
The number of products and downloads of sports and strategy types of games across China's mobile game platforms is significantly greater than that of martial-arts role playing and social games, the report shows.
Meanwhile, mobile game players' payment habits have changed as domestic game players become more willing to pay for in-game tools or functions and "free game + in-game purchases" model will continue to be the most profitable business model for mobile games in the future.
Yhd sees healthy future in online OTC sales
August 21st, 2014
An yhd.com banner displays at an exhibition on June 28, 2014 in Nanjing, Jiangsu province.
Analysts: Pharmaceutical retailers may face technology-driven shakeup
Yhd.com, a Shanghai-based online supermarket controlled by Wal-Mart Stores Inc, has been given permission by China's Food and Drug Administration to sell over-the-counter medicines online, a first in the nation.
The FDA in late July included Yhd.com in an online medicine retail pilot project. With the license, all the third-party pharmaceutical retailers that have set up online shops on the company's website are allowed to sell medicines directly to consumers.
Previously, they could sell only certain categories of health and beauty products such as medical devices and cosmetics.
At present, however, only OTC drugs can be sold online. Prescription drugs, which account for the majority of China's massive pharmaceutical market, are not included in the project.
Many of the big names in China's e-commerce industry, such as JD.com Inc, are going through the application process, hoping to tap into the online medicine industry. But analysts warned that there are many hurdles, particularly at the policy level, that stand in the way of profit.
According to a press release from Yhd.com on Wednesday, more than 10 pharmaceutical retailers have already set up online stores on its platform, which has more than 60 million registered users. Yhd.com said that it expects to add another 50 pharmaceutical retailers by the end of year.
It has set an ambitious goal of having 200,000 OTC medicines by the end of the year, said the company.
Vice-President Liu Tong said that getting permission to sell OTC drugs online will expand the company's business portfolio and help it provide better one-stop shopping for customers.
Most important, with the help of the Internet, customers anywhere can easily buy safe drugs at reasonable prices, said Liu.
"By setting up stores on Yhd.com, pharmaceutical chain stores can effectively reduce their operating costs, therefore eventually lowering the prices of medicines," said Liu.
The Internet has revolutionized many traditional sectors, such as retail, videos and finance, and created high-growth sectors.
China's e-commerce market is already the world's largest. And traditional brick-and-mortar stores must change or be left with a decreasing retail market, experts say.
Will the Internet work the same magic with the pharmaceutical industry? Probably not, at least in the short term, said analysts.
Lu Zhenwang, an independent Internet expert and chief executive officer of the Shanghai-based Wanqing Consultancy, said that the nation's pharmaceutical market is valued at more than 1 trillion yuan ($162.5 billion) annually, but OTC drugs only account for 20 percent of the total.
"The prices of OTC medicines are usually not very high. If you include the delivery cost, the medicines you buy online may even be more expensive than those you buy at local pharmacies," Lu said, adding that the market also excludes those with acute conditions who cannot wait for delivery.
Qiao Yu, an analyst with IT consultancy Analysys International, said those with chronic diseases are often elderly people who are not tech-savvy enough to place orders online in any case. And some people may also shy away from buying drugs online because they worry that insurance will not cover the bill.
Despite these challenges, many e-commerce companies and pharmaceutical retailers still see online medicine as a strategic sector. "With the continuation of medical reform, there's hope that the government will allow the sale of prescription drugs online, which will quickly make the market more dynamic," Qiao said.
Zhaopin seeks new platforms in China
August 20th, 2014THE Chinese online job-market business backed by Seek and gaming billionaire James Packer is working on rolling out educational services in the world’s fastest-growing economy over the next 12 months, fresh from its successful listing on the New York Stock Exchange.
A recruitment remedy for China's mismatched labour market
August 19th, 2014In China, both a labour shortage and unemployment have emerged as problems in recent years. The number of university students scheduled to graduate in June 2014 is 7.27 million, increasing by 280,000 from 2013. Following 2013, at the time considered the most difficult year for jobseekers in history, 2014 is expected to be even harsher.
Problems in the labour market in China, a key region for Japanese companies advancing overseas, are also attracting attention in Japan. This paper provides a few perspectives on the Chinese labour market, which combines a labour shortage with challenges for jobseekers.
High unemployment amid a labour shortage
Although a nationwide labour survey did not include unemployment rates, we will look at the Chinese labour market using statistics from job placement services. According to the latest statistics on job offers and applications, as of the January-March quarter of 2014, there were 1.293 million young jobseekers who graduated in the last year or earlier but had yet to find a job through employment agencies in 102 major cities.
As the population of these major cities accounts for approximately 46.7 per cent of the total population of large and mid-size Chinese cities, we can estimate that the number of young jobseekers who have graduated, but have yet to find a job, totals more than two million.
Using data from the survey, I also tried to estimate the unemployment rate in those 102 major cities. I employed data on the working population in major cities and the number of job seekers who have not found employment (newly graduated unemployed persons and rural immigrant job seekers) based on the international standard set by the International Labour Organisation (see Figure 1).
Figure 1. Unemployment rate in major Chinese cities
Source: Calculated by the author from statistics on job placement services in China.
The unemployment rate, including rural migrants in major cities in the first quarter of 2014, is 8.7 per cent; excluding them is 6.9 per cent. Unemployment rates before the first quarter of 2014 are also close to these numbers, suggesting that the high unemployment rate has continued.
The unemployment rate is high not because unemployed people lack the ability to work. Looking at the age distribution of all job seekers in these 102 major cities (of whom 96.0 per cent are unemployed), workers aged 45 or younger account for 89.9 per cent of the unemployed, indicating a large population of young workers. In addition, 54.7 per cent of job seekers have specialist or vocational qualifications. Regarding the type of job, 44.1 per cent of job seekers look for technical jobs, while 25.8 per cent seek marketing, sales, or service jobs. Abundant, high-quality labour in the Chinese labour market still exists.
Job offers still buoyant
The high unemployment rate cannot be blamed for the sluggish job offers. Despite the slower economic growth, job offers from companies are still buoyant. As indicated in Figure 2, the job-offers-to-seekers ratio in the first quarter of 2014 was 1.1, showing that there are still more job offers than job seekers.
Figure 2. Job-offers-to-seekers ratio in China
Source: Statistics on job placement services in China (http://www.chinajob.gov.cn/) and CEIC Database
With regard to the buoyant job offers, I demonstrated in my recent book that labour productivity is the most persuasive of the factors that have an impact on the job-offers-to-seekers ratio in China.
As shown in search theory, the larger the income earned from a job, the larger will be the rate of return gained from job creation for companies, which will result in more job offers. Given that productivity in developing countries will improve through not only technological innovations on their own but also through their efforts to catch up with developed nations, a higher rate of increase in productivity can be expected. For that reason, even if the economy slows down somewhat, buoyant job offers are likely to continue because of the support for higher productivity.
Reasons why a labour shortage coexists with high unemployment
So why do labour shortage and high unemployment co-exist in China? I analysed this in my book. I explored the matching efficiency in the labour market by estimating the matching function between job offers and job seekers in urban labour markets in China based on search and matching theory.
Figure 3 shows the values of matching efficiency on the vertical axis. From the figure, we see that matching efficiency in China declined sharply from the late 1990s to the 2000s.
Figure 3. Matching efficiency in the Chinese labour market
Source: Liu (2013 a, b)
* A conceivable cause of the sharp decline is the increase of the inflow and outflow of workers into and out of companies, reflecting the establishment of new companies and the disappearance and downsizing of old state-owned enterprises following economic and corporate reforms, which led to friction in the labour market. This decline was also attributable to imperfect information between job offers and jobseekers.
* I also found that a rise in productivity has a significant negative impact on matching efficiency and showed that a mismatch has arisen between unemployed persons and companies seeking highly-skilled workers.
* Lastly, although it was not dealt with by quantitative analysis in the book, a skill mismatch and a geographic mismatch have some bearing on this phenomenon.
For example, the job-offers-to-seekers ratio for security maintenance staff is surprisingly high in Nanjing at 4.0, while it is only 0.2 in Shanghai.
One way to improve matching efficiency is through employment agencies, as I find that the matching efficiency is very high in areas where there are many employment agencies. As employment agencies are organisations that provide information mainly on job offers and job seekers, they are useful for increasing matching efficiency by correcting imperfect information. Although it is, of course, difficult to increase substantially the number of employment agencies in a short period of time, it would be beneficial for companies to put more efforts into recruiting activities in order to bring many job seekers and secure the labour force.
Although the coexistence of unemployment and labour shortage is seemingly contradictory, it is observed in labour markets not only in China but also in many other countries. Even though it is impossible to eliminate imperfect information in the actual economy, there is room for improvement. If the matching efficiency in the labour market increases, it seems possible to lower both the labour shortage and the unemployment.
This article was originally published at VoxEU.org. Reproduced with permission.
Big five banks plan bond sales to boost capital
August 15th, 2014
A Bank of China branch in Yichang, Hubei province. China's top five banks will raise 128 billion yuan ($20.8 billion) over a two-week period.
China's top five banks will raise 128 billion yuan ($20.8 billion) in a two-week bond offering spree following a yearlong hiatus, as regulators signal a willingness for lenders to aggressively tap fixed-income markets.
The country's banking regulator began phasing in new higher capital adequacy requirements last year, in line with global rules known as Basel III, and aggressive implementation of the third Basel accord is a key element of China's plan to fortify banks against risks from a slowing economy.
China Construction Bank Corp and Agricultural Bank of China Ltd, the country's second and third-largest banks, respectively, have announced plans to raise 50 billion yuan worth of Basel III-compliant Tier 2 capital via domestic bond issues on Friday.
Bank of Communications Co Ltd, the country's fifth-biggest lender, plans to raise 28 billion yuan on Monday.
The issues follow two large offerings last week, the first from the country's top five banks since early 2013 and China's transition to Basel III.
Industrial and Commercial Bank of China Ltd and Bank of China, the country's largest and fourth-largest lenders, together offered 50 billion yuan of bonds last week.
The flurry of offerings shows Chinese regulators have signed off on the giant deals despite their potential drain on market liquidity, and are comfortable with the new Basel III-compliant bond structure, sources told IFR Asia, a Thomson Reuters publication.
China's economy showed further signs of softening in July despite a burst of government stimulus measures, and banks have tightened lending to risky areas such as the property sector.
The government embarked on a massive credit-fueled economic stimulus program from 2008 to 2010 to pull the economy through the global financial crisis. Many analysts expect a large portion of bank loans extended during that time to turn sour.
The fundraising spree still leaves China's top lenders lagging regional counterparts.
Asian banks (excluding Japan and Australia) have raised more than $32 billion in Basel III compliant securities to date, which includes $26 billion issued in 2014, in local and international markets, according to Moody's data.
Steven Chan, a banking analyst at Maybank Kim Eng, a Singapore-based research firm said the amount being raised was small viewed against the assets of China's top lenders. "It's very small compared with the trillions of assets," he said.
China's big State-owned banks have announced plans to raise $43.5 billion in on- and offshore Tier 2 capital by the end of 2015.
Agricultural Bank of China plans to sell 50 billion yuan of Tier 2 securities, Bank of Communications is in for 40 billion yuan and China Construction Bank for 60 billion yuan. ICBC is eyeing a total of 60 billion yuan, while Bank of China will make a play for the same.
All that makes for a total of 270 billion yuan in Basel III compliant bonds that will hit the market - more than from any other single country.
Lenders are issuing to replace old-style Tier 2 bonds that are about to mature and hold yields down, Chan said.
"If you don't repay bondholders, the yield will increase automatically, so the best way is to issue bonds at a similar or lower rate to repay the earlier one."
A total of 93 billion yuan of subordinated bonds from China's commercial banks will mature next year, according to China Central Depository & Clearing, a State-owned clearinghouse for onshore bonds.
Beijing housing sales slump 30 pct
August 15th, 2014Beijing home sales fell at a slightly slower pace in the Jan.-July period as price declines drove potential home buyers to snap up bargains last month.
Real estate developers in the city sold 5.05 million square meters of housing during the first seven months of this year, down 30.3 percent year on year, the municipal bureau of statistics said in a statement Thursday. The decline for the first half of the year was 35.2 percent.
Housing starts edged 3.8 percent lower to 8.04 million square meters against the backdrop of a gloomy property market.
Sales of commercial buildings, which include residential and commercial property, fell 31.5 percent, compared with 34.8 percent for the first half. The sales reached 6.77 million square meters, it said.
China's property market remains weak prompting dozens of cities nationwide to lift three-year-old purchase limits in a bid to revive sales and boost the economy.
Nationwide, property sales witnessed a steeper decline in the Jan.-July period. Sales in terms of floor area dropped 7.6 percent year on year, 1.6 percentage points higher than the decline seen in the first half.
Tencent earnings in Q2 up 58%, beating estimates
August 14th, 2014Mobile platforms continue to give a lift to Internet company's portfolio
Tencent Holdings Ltd, China's largest listed Internet company, reported strong quarterly earnings on Wednesday as the company further deepened mobile engagement across its social, gaming and media platforms.
Net profit for the quarter ending in June jumped 58 percent year-on-year to 5.83 billion yuan ($947 million). Revenue in the quarter climbed 37 percent to 19.75 billion yuan.
The solid performance in the second quarter beat analysts' estimates of 5.73 billion yuan in revenue, a Reuters report said.
Ma Huateng, chairman and chief executive officer of Tencent, said in a statement that the company's ecosystem continues to expand as it pursues the strategy of working with category leaders, including NavInfo, a mapping service provider, and 58.com, a local listing platform.
"We are seeing the benefits of this approach, as evidenced in the successful listing of JD.com. Looking forward, we will continue to grow our platform, invest in areas such as online-to-offline business and content production, and enhance our user experience," he said.
The Shenzhen-based Tencent seems to have succeeded in integrating its social networking tools, such as mobile messaging tools mobile QQ and WeChat, with companies in which it invests, such as JD.com Inc, China's largest online direct sales platform.
Tencent, which has engaged in a buying spree along with e-commerce conglomerate Alibaba Group Holding Ltd since late last year, has made a lot of investments, including taking a 15 percent stake in JD.com in March.
Through connecting its core social capabilities with JD.com, users of Tencent's WeChat, a dominant mobile social tool in China, can purchase directly from the e-commerce giant through a direct access point on the app. Tencent said that the combined monthly active users of WeChat, both in and outside China, increased by 57 percent year-on-year to 438 million by the end of June.
Neil Flynn, head equity analyst at chineseinvestors.com, a leading analysis firm for US-listed Chinese companies, said a year-on-year profit growth of 58 percent was very impressive given the size of Tencent.
The Beijing-based Baidu Inc also reported a net income that beat analysts' estimates in the second quarter in late July. The search giant saw its net income grow by about 34 percent year-on-year to 3.55 billion yuan in the quarter that ended in June, fueled by strong growth in mobile applications.
"Out of China's big three tech firms, Tencent has a major advantage over Alibaba and Baidu because it has the WeChat messaging platform, which is simply untouchable," said Flynn, who has followed China's Internet sector for years.
Alibaba last year tried to launch a similar service called Laiwang, but it just could not compete.
"What we are seeing is that Tencent is adding more and more features to its platforms, such as a permanent link to JD.com, so that users never have to leave the Tencent ecosystem," Flynn said. "I think we will continue to see more of these features because Tencent can help other firms get greater exposure to customers through its QQ and WeChat platforms.
"WeChat will essentially become a portal for users where they can not only message friends but also shop and play games. From this, we will see stronger advertising revenues because advertisements can be personalized for each user," he said.
Tencent reported that its online advertising business increased by 75 percent quarter-on-quarter to 2.06 billion yuan in the second quarter. The company's financial report noted that "this primarily reflected more favorable seasonality in the second quarter, as well as the positive impact of the FIFA World Cup and our strategic cooperation with JD.com."
China unveils support for insurance industry
August 14th, 2014The Chinese government on Wednesday unveiled measures to develop the insurance industry, vowing to raise premium incomes to 5 percent of GDP by 2020.
The package, announced on the State Council website, let the insurance industry play a bigger role in the fledgling social security network.
The second of its kind since 2006, the package could see citizens paying an average of 3,500 yuan (565 U.S. dollars) per capita in premiums by 2020.
Commercial insurance will become the primary undertaker of individual and household programs and an important supplier of corporate pensions and health insurance.
The insurance will be given a bigger role in the prevention and relief of disasters and accidents through the introduction of catastrophe insurance products.
Insurance funds will be encouraged to invest in bonds and equities to support major infrastructure projects, urban renewal and urbanization.
The government will encourage the house-for-pension insurance experiment and launch a pilot program to introduce compulsory insurance for environmental pollution, food safety, medical accidents and campus safety.
Zhao Xianghuai, an analyst with Guotai Junan Securities, believes the package will open more space for China's insurance industry, which had a total assets worth 9.4 trillion yuan by the end of June this year.
"The package has elevated the position of the insurance industry and created new room for development," Zhao said.
Boosted by the announcement, Chinese insurers rose across the board on the stock markets, with New China Life Insurance Co., Ltd. leading the gains, up 3.57 percent to 25.27 yuan.
Shanghai GM staff says antitrust probe report incorrect
August 13th, 2014Having struggled for a long time to make a dent in China, LG Electronics expects to seek a fresh start in the market with its recently released flagship smartphone.
The G3 smartphone was launched in China by the Seoul-headquartered consumer-electronics giant on Fridaytogether with South Korean actor Lee Min-ho, who enjoys huge popularity in China after playing leading roles in South Korean shows including Boys Over Flowers.
The sale of the handset started exclusively Monday via jd.com, China's second-largest online retailer by market share. PR representatives with JD.com Inc and LG refused to reveal the sales figures when contacted Tuesday.
The gadget appears to be something LG could bank on to fight its way to the top of China's fiercely competitive smartphone arena.
Indeed, the G3 has received a lot of praise from the media and tech experts. US tech news network The Verge reported on May 27 that LG sets "the new benchmark for overpowered smartphones" with its G3 by being the first big name to apply a Quad HD display, nearly twice the resolution of Full HD display, to smartphones.
However, analysts said that the G3 may suffer a cold market reception as China has become increasingly tough for foreign handset manufacturers, except Apple Inc.
??Seeking a new start
"G3 is expected to make LG's products more popular among consumers, which is the most crucial step toward the company's revival in China's phone market," Shin Moon-bum, CEO of LG's China unit, told reporters during a group interview held in Beijing Friday.
Yet, even after years of hard work in the Chinese market, LG has always been a marginalized brand. As early as 2012, there were even market rumors of its retreat from the market.
According to a report issued by US-based market research firm IDC in late July, the company did not even crack the top 10 list in China in the second quarter, despite being the fifth-largest smartphone vendor worldwide over the same period.
"I believe the G3 would contribute a lot to the company in the market…although we had a late start [in China's smartphone market], we can make a difference in five years," said Shin.
To cater to Chinese consumers and meet the requirements of local telecom carriers, the company appears to have put more effort in customizing its G3, which entered China nearly three months later than its public release in other markets.
For instance, the G3 for Chinese users supports dual SIM cards and 4G cellular telecom networks as well as 2G and 3G networks, in response to China's ongoing transition from 2G or 3G telecommunication services to 4G.
Shin expected the sales of the G3 in China to more than triple that of its predecessor the G2, launched in the market on September 2013. He did not set a target date or reveal a specific figure but said that over 60,000 units of the G2 were shipped in China in its early stages.
Some analysts predicted that LG's global G3 shipments would hit 3 million in the third quarter, according to media reports. However, those numbers are small when compared with the 108.5 million smartphones that US-based market research firm Canalys said were shipped in China during the second quarter.
The gadget has reportedly taken on Samsung's Galaxy S5 at home, hitting sales of more than 100,000 units within five days after the phone's release in the country in late May, while sales of the Galaxy S5 in South Korea stood at only 7,000 to 8,000 a day in its first week.
Uphill challenges
The success achieved by the G3 in its home market would be unlikely in China's fiercely competitive smartphone battleground, Wang Yanhui, head of Shanghai-based Mobile China Alliance, told the Global Times Sunday.
LG's G3 seems to have no distinctive advantage over feature-rich phones offered by local players such as Beijing-based Xiaomi Technology.
"Higher resolution is one of the G3's major selling points, but it's not a necessity for me and would further shorten the device's battery life," said Li Yu, a 29-year-old Beijing resident, who prefers cheaper homegrown Android phones over global ones which he said have failed to offer appealing features worth their high costs.
While LG priced the G3 at 3,999 yuan ($649.8) for price-sensitive Chinese consumers, which is much cheaper than its launch price of 899,800 won ($869) at home, that is still more than twice as expensive as phones developed by Chinese companies.
The company's South Korean rival Samsung, No.1 global smartphone vendor in the second quarter, has already felt the squeeze in China.
Its share of the market by sales volumes reached 15.4 percent in the second quarter, down from 18.1 percent in the first quarter, while Xiaomi was second with 13.5 percent, Beijing-based market research firm Analysys International said on August 6.
Canalys even said in a report on August 4 that Xiaomi became China's top smartphone vendor by sales in the second quarter with 14 percent, outselling Samsung for the first time. Canalys ranked Samsung second in the report but without disclosing its share in China.
Boosting brand
In order to stand out, foreign companies like LG and Samsung need to ramp up efforts in brand enhancement, said Zhang Yi, CEO of Shenzhen-based iiMedia Research.
"Foreign brands barely have any chance to snatch a slice of the medium- and low-end phone market, which is already dominated by local peers," Zhang told the Global Times.
Zhang's opinion was shared by LG's senior executives, who believe the G3 can help the company build up a high-end image in the minds of Chinese consumers.
Both Zhang and Wang believe it is not easy for LG to stand out as a premium brand in the Chinese phone market, where its current brand strength is rather weak.
"For me and most people around me, LG is a global premium manufacturer of home appliances other than smartphones," Beijing's Li said. "Only Apple is a high-end phone brand."
In addition to brand enhancement, LG also needs to broaden its selling network in China, said Wang. "The tie-up with the three local telecom carriers is significant for its future performance, as they account for 40 percent to 50 percent of handset sales in China."
LG shows no intention of having local carriers sell the G3. While jd.com for now is LG's only sales partner to cut distribution costs, the company said they will provide off-line options for Chinese consumers later.
Road less traveled leads to success for UCWeb chief
August 12th, 2014
A UCWeb stand promotes its mobile game distribution platform 9game at an exhibition in Guangzhou.
Yu Yongfu has his eyes on a billion users, and overseas ventures are vital to realize that goal
Starting as an entrepreneur, then becoming a successful business owner before becoming an angel investor is a well-trodden career path in the corporate world.
But investor-turned-entrepreneur Yu Yongfu is an exception.
Yu, who quit as vice-president of China's leading venture capital investment firm Legend Capital Management LLC and joined startup mobile browser company UCWeb Inc in 2006, said that being an investor is like sitting in the passenger seat of a car, while being a chief executive officer means you are in the driver's seat.
"Being a passenger is comfy, but without having the fun of a driver who controls the wheel of the car," said the 38-year-old.
Yu, who agreed to sell UCWeb to Alibaba Group Holding Ltd in June in China's largest Internet takeover, is determined to steer his Guangzhou-based company through a global expansion plan, especially after teaming up with the deep-pocketed e-commerce giant.
"Our goal is to rapidly double the number of people using the UC browser to 1 billion. If you look at Internet companies around the world, only Google Inc and Facebook Inc have established user groups that are as large as 1 billion.
"I think UCWeb and Tencent Holdings Ltd's WeChat are the two companies in China that have the potential to grow their user bases to that size," he told China Daily.
The goal cannot be reached without expanding to overseas markets, said Yu, who admitted that one of the main reasons he agreed to sell UCWeb to Alibaba is that the extremely profitable e-commerce giant can give his company's globalization plan a strong push.
UCWeb, the second-largest mobile browser in China after Tencent's QQ browser, is known for reducing data usage for those who surf the Internet through mobile devices.
The company saw its market share by active users in China drop 3.2 percentage points quarter-on-quarter to 31.6 percent in the first quarter of 2014, according to Analysys International. But its globalization strategy, launched in 2010, seems to be going well.
The company claims that its mobile browser has a market share of more than 10 percent in 10 countries. The UC Mobile browser even became the leading mobile browser in India earlier this year, accounting for 35 percent of the market.
But Yu wants UCWeb to have 1 billion users in three to five years and 50 percent from countries outside China.
"Being part of the Alibaba Group means that UCWeb is able to invest more in its overseas expansion. Alibaba is a very profitable company, which allows us to focus on long-term development rather than make short-term money," he said, adding that Alibaba's rich experience in tapping into e-commerce markets in other countries can also be valuable to UCWeb.
Yu said that 2014 is the year for UCWeb to gear up its globalization plan with a strong focus on developing countries.
When testing the waters in a new market, UCWeb tends to fly its engineers there and introduce its product to local tech fans. It will set up offices only when the number of users in a particular country reaches 20 million.
It has local offices in India, Indonesia and the United States, and it is expected to set up offices in Russia and Vietnam later this year.
"The Internet is the industry that is most suitable for global expansion. Users usually don't care which country the service provider comes from as long as the product is good," he said.
Unlike the personal computer-based Internet sector, which was pioneered by Western companies (US companies in particular), Yu said that Chinese firms can be leaders instead of followers in the mobile Internet industry.
"The mobile Internet has a lot to do with lifestyle. For example, people in the US and Europe spend a lot of time driving to work, while the majority of Asian people use public transportation to commute. That means that Asian smartphone users on average spend more than two hours every day on the mobile Internet."
The strong reliance on the mobile Internet leads to innovation. What's more, the PC-based Internet is an industry with a unified world standard, while the mobile Internet industry varies among regions, he said.
Wang Jian, an analyst with the Beijing-based Internet consultancy Analysys International, said that as one of the earliest mobile browser companies in China, UCWeb has strong advantages in going abroad as China has the most complex market in the world.
"Chinese users are very demanding and they are not used to paying, even if your product is good. So for those companies that have already established themselves in China, it is safe to say that they are ready to conquer other markets," said Wang.
Yu agreed, saying that entering a new market is like doing subtraction. "Sometimes we simply remove some features from the Chinese version of our product and it can become a hit in other countries," he said, adding that the most important thing to do when going abroad is choosing the right market.
He has divided the global market into four areas: China, developing countries, Japan and South Korea, and Europe and the US.
The top priority for global expansion is developing countries, because Chinese mobile Internet technologies are usually two years ahead of what is available in those countries. He said UCWeb has no plans to move into Japan or South Korea at this stage because it is very difficult to break into their industrial chains.
"The US and Europe are not easy markets, either. But we will keep looking for opportunities in those markets," he said.
Neil Flynn, head equity analyst at Shanghai-based website Chineseinvestors, which provides financial analysis of US-listed Chinese companies, said the most important aspect of Chinese companies' development strategies should be to expand into emerging economies.
"Consumer trends are similar to those in China, and these firms will have the experience and knowledge to profit," said Flynn, who has followed Chinese Internet companies for years.
"In the Western developed economies, we see the likes of Google and Amazon being dominant players for the same reason. These countries have similar consumer trends, so it's relatively easy for them to adapt their business models."
It might seem that UCWeb has chosen the right path, but Jane Zhang, principal research analyst at technology research Gartner Inc, begged to differ, saying that a mobile browser cannot serve as a powerhouse that will ensure sustainable growth for Yu's company.
She argued UCWeb's core selling point in China is saving money through reduced data usage. That alone, she said, is not enough to attract users in other countries.
"Most importantly, a browser itself is not badly needed by users in the mobile Internet era. If they want search facilities, or social media or shopping, they can directly go to apps with the necessary functions without going through browsers like they used to do in the PC Internet era," Zhang said.
It seems that UCWeb is aware of the challenges. But Yu said that the odds of success are usually higher when most people don't recognize an opportunity.
UCWeb has already launched a mobile game distribution platform called 9game and a mobile search engine known as Shenma, aiming to use a multiproduct strategy to hook more users on its way to becoming an information service gateway.
Wanda invests in premier LA site
August 11th, 2014China's leading commercial property developer, Wanda Group, said over the weekend that it plans to invest $1.2 billion to build a mixed-use development complex at a premier site in Beverly Hills, Los Angeles, the company's first step into Hollywood's film industry.
Wanda said in a statement it will also set up an office in Los Angeles to handle entertainment sector investments, while its New York office will be responsible for commercial sector investments.
"The Los Angeles project is expected to aid China's entry into Hollywood's film industry and generally promote Chinese culture abroad," the company said.
Pilot pay at flag carrier to soar by 360m yuan
August 8th, 2014
An Air China airliner arrives at Guiyang's international airport in Guizhou Province. The flag carrier of China will spend 360 million yuan to raise its pilots' compensation. The move is expected to benefit 4,560 pilots at its five subsidiaries.
Air China raising salaries following protests by captains over long hours
Air China Ltd, the flag carrier of China, will spend 360 million yuan ($58.06 million) to raise each of its pilots' income by 80,000 yuan annually on average, which will benefit 4,560 pilots at its five subsidiaries.
The pay-raise plan is under discussion and still awaiting approval, an insider told China Daily.
In order to reward core employees, captains and instructors will get 18 percent more annual income on average, which will be around 174,000 yuan per person, said the plan. Usually, pilots' income is combined with a basic salary and floating wage, called an hourly fee and calculated by their flight hours.
Air China will increase the percentage of the floating wage, and the hourly fees of flight instructors will go from 409 yuan to 549 yuan, according to the plan.
"We are basically satisfied with the plan, although the increase is not very large," said a captain from Air China, who declined to be identified.
Air China had no official comment on the plan yet, said Ding Yue, a spokesman for the airline. An internal Air China document said that the company planned to spend 360 million yuan on pilots' pay raises.
The carrier's financial report showed that its net income was 3.319 billion yuan in 2013. The airline also forecast that its net profit would drop by 55 to 65 percent in the first half of 2014 compared with the same period in 2013.
But even with the raises, Air China pilots still will make less than pilots of other airlines, some business insiders said. Pilots' salaries at Air China are lower than other carriers in China, "especially compared with privately owned airlines", said Zhang Qihuai, vice-president of aviation law research for the China Law Society.
Zhang said as the flag carrier and State-owned carrier, Air China attracts pilots for its resource advantages.
But the rising privately owned and local airlines, which pay much higher salaries, are threatening the State-owned carrier's superiority, he said. "To raise salaries for pilots is a huge advance for Air China, but it is still low for the industry," Zhang said.
The plan was floated following the signing of a public letter by hundreds of Air China pilots in April. They complained of such things as long hours and unequal treatment of Chinese and foreign pilots.
"The company provides more benefits to Chinese pilots, such as medical treatment and pensions, which the foreign pilots have to foot themselves," Air China said, explaining why the carrier pays foreign pilots a higher salary. It did not address the issue of the hours.
"Money is not everything for the pilots, who are already a high-income group, and they want more labor rights," Zhang said.
During the peak season, some pilots work close to 100 hours per month, which is the authority's upper limit, said a captain from a domestic airline. The reason is a lack of pilots in China, Zhang added.
At the end of 2013, 35,505 pilots were licensed to fly in China, while the number of civilian aircraft totaled 2,145, according to the Civil Aviation Administration of China.
Boeing Co forecast in 2013 that China would need to add 77,000 new pilots during the next 20 years.
Internet vital to China's economic transformation
August 7th, 2014
Businesses, policymakers should look to technology for efficiency gains
With some 632 million Internet users, China is now in the midst of a digital revolution. Last year alone saw the country's number of active smart devices grow from 380 million to 700 million, according to a report from Umeng, an app analytics firm. Meanwhile, its e-tail market stood at 1.84 trillion yuan ($295 billion) in annual sales in 2013, surpassing the size of the US market and becoming the largest in the world, data from iResearch show.
Until now, China's Internet economy, which is already 4.4 percent of GDP, has been largely consumer-focused, while many Chinese businesses have been slower to go digital. Across most sectors of China's economy, the Internet holds the promise of large improvements in labor productivity. As companies embrace Web technologies, their operations become more efficient, translating into productivity gains.
According to a McKinsey Global Institute (MGI) report, the Internet could fuel some 7 to 22 percent of the incremental GDP growth through 2025, depending on the speed and extent of Internet adoption by Chinese enterprises. By that point, it could generate 4 to 14 trillion yuan in annual GDP. Some 10 trillion yuan will be at stake in annual GDP by 2025, so capturing this potential will be critical for China's future competitiveness, particularly as the country's labor costs increase and its demographic dividend diminishes.
Perhaps even more important, the next wave of Internet development will help China shift toward an economic model driven by productivity, innovation and consumption. The heavy capital investment and labor force expansion that fueled China's rise over the past two decades cannot be sustained indefinitely. The Internet, by contrast, is facilitating the ongoing process of moving China's industry from less productive to more innovative and technologically advanced business models.
Much of the Internet's impact will likely come in the form of productivity gains. China has posted high rates of labor productivity growth in recent years, but its progress began from a very low base, so the productivity remains well below the levels in advanced economies. Meanwhile, China's labor force is projected to begin shrinking by 2015. To avoid a slowdown and continue to improve living standards, China will have to make its existing labor and capital stock more efficient, and wider technology adoption will be central to this effort. As Chinese companies digitize their operations on a wider scale, they will gain the ability to streamline operations, open new sales channels, accelerate the research and development process, and become leaner.
Take small and medium-sized enterprises (SMEs) as an example. Going digital can neutralize some of the disadvantages faced by Chinese SMEs today. The Internet provides a platform for entrepreneurs with new ideas to scale up rapidly and at low costs. It once took years to establish a huge sales force and wide distribution network, but e-commerce marketplaces grant SMEs instant and direct access to consumers, along with associated support services, such as payment and logistics.
Moreover, limited access to capital is a common challenge for SMEs. Yet, this picture is about to change. Big data to manage credit risks and online channels to reduce transaction costs provide financial institutions with greater capabilities to increase lending to SMEs. Private banks and Internet finance providers are injecting new competition into the financial services sector. Alibaba, for instance, provides micro-loans to its e-merchants. In addition, the Internet can also boost the export capabilities of SMEs, turning them into "micro-multinationals." They can reach overseas consumers directly by listing on foreign B2C and C2C platforms. In fact, 3,835 Chinese sellers were already on eBay with more than $100,000 in sales as of November 2012.
When SMEs have a platform for growth, collaboration and experimentation, the overall economy benefits. The rate of innovation increases, as new ideas and offerings can now be tested and rolled out quickly, easily and cheaply, introducing more competition and thus raising productivity in various industries.
The growth of SMEs in China could also create a disproportionate number of jobs. Helping SMEs flourish could mitigate job losses that could occur as labor productivity improves in the rest of the economy. China's ability to realize these benefits will depend on whether SMEs recognize the advantages the Internet can provide and are willing to adopt it in large numbers.
Facilitating more widespread Internet adoption is nothing simple; the Internet can also be a disruptive force. So the government is expected to face multiple policy challenges in harnessing the Internet for economic growth. First, a balanced set of regulations enhancing privacy protection and data sharing could remove constraints on big data adoption. Second, liberalize markets to encourage new innovations, allow robust competition and accelerate productivity. Third, the government can ensure that training programs are available to help workers continually refresh their skills. Fourth, building out networks is crucial to bringing more of the population online and facilitating industry adoption.
New-energy vehicles exempted from tax
August 7th, 2014Lack of charging network dampens consumer enthusiasm
The Chinese government formally announced Wednesday to waive the purchase tax for new-energy vehicles in a bid to support the industry but experts said there is still a bumpy road ahead.
From September 1, 2014 to December 31, 2017, new-energy vehicles approved for sale in the Chinese market, including imported ones, will be free from purchase tax, according to a notice jointly released by China's Ministry of Finance, Ministry of Industry and Information Technology and the State Administration of Taxation Wednesday.
The new-energy vehicles approved for sale in the Chinese market include electric vehicles, plug-in hybrid electric vehicles and fuel cell vehicles.
The three governmental bodies will release a new-energy vehicle catalogue later to specify the vehicles that will be exempted from purchase tax, and automakers as well as vehicle importers can start applying for the preferential tax policy starting now, according to the notice.
The new policy follows a decision made at a State Council meeting on July 9, which said consumers who buy new-energy -vehicles can be exempted from the purchase tax, which is equal to 10 percent of the net vehicle price, from September 1 till the end of 2017.
"The notice shows that the government is supporting new-energy vehicles as it promised, which is a good news for the industry," Gao Jian, an industry analyst at Shanghai-based consultancy LMC Automotive, told the Global Times Wednesday.
In a bid to promote the new-energy vehicle industry, the government has released a number of policies, such as requiring the share of new-energy vehicles to be at least 30 percent in government procurement of vehicles by 2016 and making provisions for additional subsidies for new-energy vehicle purchase.
Several first-tier cities including Beijing and Shanghai have also adopted favorable license plate policy for new-energy vehicles.
With the subsidy and purchase tax exemption, the low-priced domestic new-energy vehicles will become more appealing to customers, but the shortage of charging facilities remains the biggest concern, Gao noted.
Without a stable charging facility network, it will be hard to persuade general customers, he said.
New-energy vehicles have failed to generate enthusiasm among the Chinese consumers due to a lack of charging stations and reliability and driving safety concerns caused by immature technology, according to a research note by global management consultancy A.T. Kearney on China's new-energy vehicle market sent to the Global Times Tuesday.
The new-energy market may bloom for a while with government support but it will not be able to achieve long-term growth without a strong natural demand from consumers, according to the research note.
Alibaba offers lifeline to Nokia China workers
August 6th, 2014Alibaba Group yesterday offered a glint of hope to the thousands of Nokia Corp employees expected to lose their jobs as a result of Microsoft Corp's takeover.
The United States-based software giant plans to lay off 18,000 jobs globally by next year after completing its US$7.2 billion acquisition of the former world No. 1 phone maker.
About 90 percent of Nokia's China workforce — most of whom are based in Beijing and Tianjin — are set to lose their jobs by the end of this year.
Hangzhou-based Alibaba, however, said on its Sina Weibo account that it will seek to recruit people laid off from Nokia China to help develop its cloud computing business.
"Nokia is a great company ... and we are willing to offer a platform for those employees to achieve their dreams," the world's biggest e-commerce firm said.
Mercedes-Benz to cut prices of auto spare parts in China
August 4th, 2014Beijing Mercedes-Benz Sales Service Co, the German premium carmaker's sales, marketing and after-sales unit in China, announced on Sunday that it would lower the prices of some of its spare parts in the country in response to Chinese authorities' ongoing antitrust investigation of the auto sector.
The price cut, which will take effect on September 1, covers over 10,000 spare parts of all Mercedes-Benz models, and will be as much as 15 percent for some parts after the adjustment, the company said in a statement e-mailed to the Global Times.
"The adjustment…would lower costs for users and further enhance Mercedes-Benz's competitiveness in the after-sales market," the statement said.
In July, the company already lowered its maintenance prices by around 20 percent.
The price adjustment comes at a time when the auto sector is undergoing an antitrust investigation launched by China's top economic planner, the National Development and Reform Commission (NDRC), and the Ministry of Commerce.
Several premium auto brands have decided to lower their prices recently.
The China unit of UK high-end auto brand Jaguar Land Rover, for example, said on July 25 that it would cut the prices of three models in China by some 200,000 yuan ($32,366.13) each on average.
FAW-Volkswagen Automotive Co, which produces Mercedes-Benz' rival brand Audi in China, announced on July 26 that it would lower the prices for spare parts.
In a statement e-mailed to the Global Times in late July, the company said that its Audi unit has been "actively" cooperating with the investigation launched by the Chinese authorities.
As Mercedes-Benz follows suit, BMW, another premium auto brand in the Chinese market, is also very likely to make similar decisions, Wu Shuocheng, editor-in-chief at industry portal auto.gasgoo.com, told the Global Times on Sunday.
Wu noted that the price cut could bring benefits to both consumers and the overall after-sales market.
It is a foreseeable trend for high-end carmakers to lower their prices in China because of increasing competition, said independent analyst Zhang Zhiyong.
"But the authorities' antitrust investigation will increase their price cuts," Zhang said.
"As a result, the price difference between premium cars sold in China and abroad will be narrowed," he added.
Chinese authorities have stepped up efforts to fight monopolistic behavior. In the latest case, the State Administration for Industry and Commerce confirmed last week that it had launched an antitrust investigation into Microsoft Corp.
Avaya eyes China's medium-sized firms
August 1st, 2014Avaya, a global provider of business communications and collaboration systems and services, has an ambitious plan to target China's medium-sized firms, said Lily Fu, channel director of Avaya (China) Communication Inc, in Beijing.
"We used to get most of our income from large enterprises, but in recent years the medium-sized firm market has showed growing strength with climbing revenues," Fu said during an interview with China Daily website in Beijing.
"We are confident about China's medium-sized firm market and are willing to help our customers realize their big dreams", said Fu.
On July 22, 2014, Avaya announced that Jingtian&Gongcheng, one of China's first private and independent partnership law firms, has deployed an integrated Avaya IP Office voice and video collaboration solution to provide staff in the Beijing headquarters and three branch offices with rich tools to enhance collaboration and operational efficiency.
"Smaller and medium-sized businesses are eager to enhance their competitive edge with leading communication and collaboration technologies, and demand flexibility, scalability and ease of management. Avaya is focused on providing dynamic organizations like Jingtian&Gongcheng with tailored solutions that deliver significant business results, which will adapt and grow with their changing needs, and deliver full voice, video, data and mobile collaboration on a single platform", said John Wang, Greater China Managing Director of Avaya.
More than 400,000 Avaya IP Office systems, the company's flagship collaboration solution for small and medium-sized businesses, have been deployed worldwide, supporting more than 15 million users.
The IP Office business maintained growth in China for 19 consecutive quarters.
"Avaya is not the only provider of comprehensive solutions to the small and medium-sized enterprises, but we are the best. We do not simply put several product lines together, but making tailored product set for them," said Fu.
Earlier, the company had announced plans to form a special team in China to provide services to small and medium-sized firms.
"We will input more during the approaching fiscal year of 2015," said Fu.
More freedom set for booming game market
July 31st, 2014
A character from a video game is set up in Shanghai New International Expo Center for ChinaJoy 2014, the country's biggest annual game fair that opens on Thursday.
China will simplify the procedures needed to launch video games and strengthen intellectual property rights to boost the industry, Shanghai Daily learned at ChinaJoy 2014 on Wednesday.
Integration among games, films, telecommunications and theme parks is a rising trend in the domestic market, industry officials said during the opening of the country's biggest annual game fair.
The government will continue improving efficiency by giving more cities the power to approve games, greatly simplifying application procedures, said Sun Shoushan, deputy director of the State Administration of Press, Publication, Radio, Film and Television.
Shanghai is the only city now allowed to approve games, Sun said.
In the first half of this year, revenue in the domestic game industry totaled 49.6 billion yuan (US$8.03 billion), up 46.4 percent from the same period last year. Mobile games accounted for a quarter of the total and jumped 395 percent year on year. Domestic game firms generated combined revenue of US$800 million overseas, rising 67 percent year on year, Sun added.
But some game titles based on popular novels and films face IPR problems, which holds back the industry, speakers told the forum.
"New policies must be set to crack down and prevent IPR infringement in the industry while game developers should have a better understanding of their social responsibilities," Sun said, without providing more details.
About 30 executives from leading firms including Tencent Inc, Shanda Games, Qihoo 360, Giant and Blizzard Entertainment shared ideas about the industry and their development strategies.
Chen Jie, vice president of Qihoo 360, said mobile games will be the company's new focus as the number of users increased from 170 million a year ago to 250 million now.
"It's more convenient to play mobile games on smartphones because people always bring their phones with them," said Xiao Hong, the chief executive of Perfect World.
The speakers spoke highly of industry integration between gaming companies and other sectors like film and literature.
Cheng Wu, vice president of Tencent, said they will continue focusing on cooperating with various industries such as creative art and media to provide a variety of games.
Huayi Brothers, one of China's top film studios, plans to work with different companies to build a theme park in Suzhou. Huayi Chairman and CEO Wang Zhongjun said the goal is to combine games and movies with recreation facilities.
Microsoft Corp's Xbox One will debut on the Chinese mainland in September with a starting price of 3,699 yuan (US$596) through local partner BesTV, making it the first foreign game console to be sold on the mainland in the past 14 years.
More than 70 games by 25 developers including EA, Ubisoft, Tencent and Perfect World will be available for the Xbox on its mainland debut.
Chinese-language and free games will also be available for the new Xbox. Other games will cost from 99 yuan to 249 yuan each, according to Microsoft.
Game console sales were banned in 2000, but it was lifted with last year's launch of the China (Shanghai) Pilot Free Trade Zone. In May, Sony Corp said it would set up a joint-venture with Shanghai Oriental Pearl Group to bring the PlayStation 4 console to China.
Both Sony and Microsoft are attending ChinaJoy 2014.
Meanwhile, Microsoft will also offer a Kinect package with the Xbox One for 4,299 yuan, which includes several games. The Xbox One and Kinect package costs US$449 on Amazon.com in the US market, 35 percent cheaper than the price on the Chinese mainland.
Yum Brands says China sales hit by food scandal
July 31st, 2014Fast-food owner Yum Brands says the food safety scandal connected to one of its meat suppliers has had a "significant, negative impact" on its sales at its KFC and Pizza Hut outlets in China over the past 10 days.
In a regulatory warning to investors, Yum says if the sales impact is sustained, it will have a material effect on full-year earnings.
Yum Brands has severed its relationship with Shanghai Husi, the meat processing facility which has been accused of repackaging expired meat products and selling them to fast food outlets, including KFC and Pizza Hut.
Gaps widen in property markets
July 30th, 2014So far, 23 Chinese cities have loosened restrictions on home purchases, accounting for half of the total 46 cities that imposed such restrictions over the past several years. To strengthen the market, local authorities will have to cut their reliance on administrative measures. But given the general market climate, abandoning earlier restrictions will not solve the market's problems once and for all.
Nowadays, the housing markets in Beijing, Shanghai, Guangzhou and Shenzhen are still quite imbalanced. To put the brakes on price speculation, restrictions will likely remain in effect in first-tier cities where real demand is high.
In many of China's less-populated cities though, investment in the housing market is mainly a product of local fiscal policy. This has pushed supplies well ahead of demand. This partly explains why many of these cities are easing or removing earlier curbs.
It bears noting though that the restrictions imposed on these smaller cities were often quite limited to begin with. And due to official negligence, many curbs existed in name alone. The real test for the government will come only after housing inventories are digested and local officials wean themselves away from land transfer revenues.
Time for image overhaul at Huawei
July 29th, 2014
The booth of Huawei Technologies Co Ltd at an Internet conference in Beijing. The Kirin 920 chip of the high-tech giant is regarded as an announcement that the company is increasingly innovative and internationally competitive.
As the dust settles on China's high-tech giant Huawei Technologies Co Ltd's latest innovation, a new wonder chip, the Kirin 920, it is important to review the significance of this new product.
In the month since the Kirin 920 was announced, it has certainly captured the attention of the media. The tone generally has been one of admiration and respect for the chip in a market long dominated by the United States in general and US-based Qualcomm Inc in particular.
On a technical level, Huawei's Kirin 920 provides support for QHD displays, 4K video recording and a high-speed LTE category-6 platform. None of Huawei's global competitors, not even Qualcomm, can match this functionality.
Huawei's Kirin 920 announcement also signals that the company as well as other Chinese companies are increasingly innovative and internationally competitive.
Technical innovation is an absolute necessity to remain competitive both domestically and globally, but it is not sufficient by itself.
Huawei needs to match its impressive technical innovation record with equally impressive brand image creativity and innovation.
The high-tech industry, perhaps with Apple Inc as the only exception, is dominated by software and electronic engineering advances and specialists. As a result, brand imaging is often relegated to a "bolt on" added by an outside marketing agency.
Huawei, therefore, can step further ahead of its global rivals by matching its latest Kirin 920 innovation with a brand image overhaul and redesign.
The key to any successful brand image is the set of associations chosen that collectively form a powerful impression in the minds of the brand's target market.
Here, Huawei could demonstrate real innovation and some courage by choosing associations that evoke a powerful Chinese image.
Chinese history, rich in artistic imagery, is full of such associations.
It is important to stress what sort of brand image Huawei should target. Huawei already has an enviable worldwide reputation, for technical excellence and innovation, but high-tech consumers also value a brand that attaches itself to an important aspect of their lifestyle.
High-tech brands also need to be seen as lifestyle solutions and provide a certain amount of "personality" as well as effective technical delivery.
Huawei, like many of its global high-tech rivals, does not appear to have considered any sort of emotional brand personality, but now is the time.
But with China's 5,000-year history and an abundance of associations from which to choose, where should Huawei start?
Perhaps an effective starting point would be inside the typical high-tech global consumer's mind, where the company can uncover their knowledge and appreciation of Chinese history.
Such a starting point will undoubtedly lead to one of the nation's most famous literary works, The Romance of The Three Kingdoms, a brilliant novel that winds through Chinese history with a multitude of rich characters.
Huawei could "attach" some of the book's characters and images in order to build a brand with real personality.
Intellectual giant and masterful military strategist, Zhuge Liang, could feature prominently in any brand imagery and enable Huawei to begin to build an emotionally powerful, competitive brand.
Huawei continues to lead Chinese companies' international expansion with technical excellence and creativity, but it is brand image innovation that is much needed now.
LinkedIn, WeChat planning closer cooperation
July 25th, 2014After launching a Chinese-language website in February, the Chinese branch of the world's largest professional networking company LinkedIn Corp is set to strengthen its cooperation with reigning mobile messaging application WeChat.
Derek Shen, president of LinkedIn China, said on Thursday that the professional networking site with more than 300 million members globally expects to roll out a service that can tie LinkedIn users' accounts to the ones they have on WeChat.
Shen, who joined the United States-based LinkedIn in January to assist the Internet giant in tapping China's professional networking market, declined to give a detailed description of the cooperation.
But he said his Beijing-based team is considering the possibility of allowing WeChat's more than 500 million users in China to log onto LinkedIn through their WeChat accounts or even communicate with LinkedIn users on WeChat rather than the traditional way of sending messages to users' registered email addresses.
"People have two identities. One is about their personal life; the other is about their professional life. WeChat has done a great job of enriching people's private lives. But the cooperation with LinkedIn can help its users build their professional identities," he said.
LinkedIn has made China one of its top priorities by creating a joint venture with Sequoia China and China Broadband Capital in January in an attempt to connect with more than 140 million Chinese professionals.
Compared with January, the number of LinkedIn's daily new users jumped 80 percent in July. The company reported that its Chinese users exceeded 5 million by the end of May.
Nearly 1 million of them use LinkedIn's Chinese language website, which was launched at the end of February.
Shen said he was satisfied with LinkedIn China's track record in its first six months in China and is hoping to boost Chinese user numbers to 10 million by early next year.
The push will not be through advertisements, however; rather, LinkedIn is planning to launch creative campaigns, including holding offline seminars jointly with top universities or MBA programs, to attract the attention of high-quality talent in China's biggest cities.
Statistics from LinkedIn showed that more than 60 percent of its users live in Beijing, Shanghai, Guangzhou and Shenzhen. In addition, 42 percent of its users hold manager-level positions or above.
As a newcomer to China, LinkedIn is also planning to meet with some of the well-established players in China's professional networking market.
Tianji.com, a Beijing-based platform, boasts more than 18 million users. Founded in 2005, it said its user numbers have soared by an average of 500,000 per month over the past year.
He Miao, marketing director of Tianji.com, said that as the market matures, more and more Chinese are realizing they need a separate platform to meet the demands of building a career.
The key to running a successful professional networking system in China lies in localization, she said.
"People in the West are more open to contacting strangers online and exploring business opportunities through online connections, even if they don't know each other well," He said.
Chinese Internet users seldom contact those they do not know well. "They have to become friends first before doing business together. So we have to specially design products and features to improve the interaction and make them know each other better through our platform," she said.
Jin Xiaolei, an analyst with Beijing-based Internet consultancy Analysys International, said that teaming up with WeChat is a smart move for LinkedIn as more and more people have used the mobile messaging application as a tool for communicating work-related information.
"But digging deeper and meeting the demands of Chinese users requires a long-term commitment. It is still too early to tell what LinkedIn's future in China will be," she said.
"But what is sure is that the Chinese professional networking market is going to heat up, with LinkedIn serving as a good catalyst."
SAIC signs deal on Internet technologies with Alibaba
July 24th, 2014Shanghai-based automaker SAIC Motor Corp Wednesday signed an agreement with Internet giant Alibaba Group on applying more Internet technologies to SAIC's future products, news portal tech.sina.com.cn reported.
The cooperation will enable SAIC to use Alibaba's "YunOS" operating system as well as its mapping and music services in the automaker's future products, according to the report.
Prior to the Wednesday deal, SAIC has already made efforts to bring the Internet to its vehicles.
SAIC in 2010 developed a vehicle system called inkaNet that enables car owners to get access to vehicle information on both personal computers and smartphones.
The system has reportedly been applied to most models of the company's self-developed Roewe brand.
Major carmakers and Internet companies have all been trying to tap into the opportunities in the development of "Internet of Vehicles," a concept that generally means making driving more intelligent using Internet technology.
Leading wireless operator China Unicom has cooperated with major domestic carmakers such as Zhejiang Geely Holding Group to provide 3G telecommunication services to their products.
China Unicom also signed a similar agreement with US premium carmaker Tesla in April.
"There will be more cooperation between Internet companies and automakers in the future as 'Internet of Vehicles' represents the future trend," independent auto analyst Zhang Zhiyong told the Global Times Wednesday.
Zhang also noted that "Internet of vehicles" means great opportunities for domestic carmakers and Internet firms.
Testing times for foreign fast-food chains
July 23rd, 2014Meat scandal exposes loopholes in quality control and supervision
A meat supplier's practice of selling expired chicken and beef to top fast-food chains in China has highlighted loopholes in ensuring quality and safety in the food supply chain in the country, pushing companies to be more proactive in auditing and testing, experts said.
The Shanghai Food and Drug Administration confirmed on Tuesday that the Shanghai Husi Food Co Ltd was found in violation of the law, after five batches (5,108 boxes) of their chicken, beef and pork were discovered to have problems.
The meat supplier, wholly owned by Chicago-based food company OSI Group LLC, sells meat to nine fast-food chains, including McDonald's Corp and KFC parent Yum Brands Inc, coffee chain Starbucks Corp and Burger King Worldwide Inc.
The involved brands have halted using products from Husi. McDonald's and Yum said they will resume purchases when they can ensure the food complies with laws and standards. Neither said what suppliers they would use in the meantime.
The scandal came as multinational food producers and retailers have expanded their outlets and factories aggressively in China, one of their most important markets.
Yum, the parent company for KFC and Pizza Hut, has opened 6,387 outlets in China so far, and it had a market share of about 5 percent in 2013.
McDonald's has 2,000 outlets, which accounted for 2.6 percent of the fast-food market last year. About half of Yum's revenue and 35 percent of its operating profits came from the Chinese market last year.
But their rapid expansion was not accompanied by a similar improvement in managerial capacity and training, resulting in continued food safety scandals, said Zhao Ping, deputy director of the Chinese Academy of International Trade and Economic Cooperation, which is under the Ministry of Commerce.
Fast-food chains, which have developed quickly in China in recent years, many through franchising, have been weak in implementing the industry standards and ethical principles that they follow in developed markets, she said.
"Multinationals should require their operations in China to follow the same standards in terms of food safety as in developed markets," Zhao said. "It is an excuse for food producers to lower their standards only because local regulations are loose and food safety and security awareness are weaker."
Companies should invest in internal training and set up appraisal systems that involve food safety issues, she said.
Zhao said fast-food restaurants are also responsible for unsafe food purchased at their outlets, because they should have supply chain controls at their logistics centers that deal with this issue before products are shipped to the stores. Even when products are labeled as qualified, fast-food chains should send samples for third-party testing.
The latest incident is "a wake-up call for Chinese consumers, who have long believed that foreign fast-food brands follow higher standards than domestic ones", Zhao said.
These fast-food brands should be prepared to lose a number of loyal customers, she added.
The incident is not a simple case of negligence by an individual company but an exposure of the systemic risk in the food supply chain, which damages consumer trust and brand loyalty, she said.
Ben Cavender, an analyst at Shanghai-based China Market Research, said the reason why it appears that multinational food companies are involved in more misconduct in China than in other markets is because most of the markets are not as big or fast-growing as the market here in China.
In many ways, suppliers in China are still "professionalizing" their operations and do not always hold same standards that apply in Western Europe and the United States, he said.
Because of all these issues, it is difficult for foreign-invested suppliers to maintain quality and offer consumers safe products the way they should, even though the supplier situation has improved a lot, he said.
Hu Min, leader of the professional team of the China Federation of Logistics and Purchasing and its specialized committee for purchasing and supply chain management, said that food safety testing standards and frequency should be improved at all stages of the logistics and supply chains.
In recent years, many international retailers have learned a lesson and put more resources into food testing to prevent food safety scandals.
Wal-Mart Stores Inc came under the spotlight early this year after a supplier's donkey meat was found to contain fox meat. It also came under fire for selling expired duck meat in 2011.
Walmart China said the company will increase its investment in food safety to more than 300 million yuan ($48.6 million) between 2013 and 2015, focusing on Increasing supplier audits and tests for suppliers.
It will increase DNA testing on meat products and spend more on facility audits and inspections of primary producers. The number of facility audits and inspections of primary producers was up 50 percent in 2013 compared with a year earlier, it said.
More sectors open to foreign investors in FTZ
July 2nd, 2014
Shanghai on Tuesday shortened the negative list that bars overseas investment into some sectors in the Shanghai free trade zone (FTZ), a policy move designed to lower the entry barriers for foreign investors into the Chinese market, but analysts suggested that the focus should be on the rules for a wider market.
The newly revised version of the negative list cut the number of bans and restrictions on foreign investment in the FTZ to 139 items from the previous 190 items.
One of the biggest changes is made in the financial sector. In the previous version of the negative list, foreign investors were not fully allowed to participate in the banking industry and the services offered by finance, trust and currency brokerage companies. But in the revised version, foreign investors can do business in these sectors as long as they abide by the related regulations.
Other sectors that are newly opened to foreign investors include oil refinery, nonferrous metal smelting and the wholesale market, according to a statement on the website of the China (Shanghai) Pilot Free Trade Zone.
The easing of restrictions is in line with the market expectations, Zhang Yugui, director of the School of Economics and Finance at the Shanghai International Studies University, told the Global Times on Tuesday.
But Zhang also noted that foreign investors should have more access to the services industry, as core industries such as the manufacturing sector are still firmly controlled.
Shanghai FTZ, launched in September 2013, was seen as a testing ground for financial reforms, commodities trading and logistics.
Shanghai adopts a "negative list" approach for foreign investment in the zone, which ensures foreign companies can invest without any restriction if a sector is not on the list.
The number of bans or restrictions that the new negative list has lifted for foreign investment is not the central issue. What matters more is whether what has been achieved in the FTZ can be extended to the whole country, analysts said.
"At present, the newly opened sectors that are excluded from the shortened negative list actually don't attract much interest from foreign investors, and the policy is only confined to the free trade zone. What overseas investors value the most is the massive market potential in the whole country," Qiang Yongchang, director of the International Trade Study Center at Fudan University, said on Tuesday.
The actual impact of the policy innovations carried out in the FTZ on the dynamics of the entire Chinese economy is the fundamental issue, instead of the specific policy privileges, Qian pointed out. The opening of the sectors is an unprecedented move in China, and where the line should be drawn for the restrictions in the future will require time and patience to figure out, he said.
The People's Bank of China has held an internal discussion and expects the rules related to the negative list could be expanded beyond the FTZ by the end of this year or early next year, Zhang said without elaborating.
"It's just an anticipation for now, and whether it will be achieved depends on China's risk control ability, as an open capital market is vulnerable to arbitrage," Zhang noted.
"The reduction to the scope of the negative list re-establishes European companies' confidence in China's commitment to the China (Shanghai) Pilot Free Trade Zone," said Stefan Sack, vice president of the European Chamber and Chairman of its Shanghai Chapter in a statement e-mailed to the Global Times Tuesday.
There is, however, still great room for further eliminating many of the remaining barriers to foreign investment in the zone that would bring benefit for both European business and China, Sack said.
Shanghai court accepts case against Apple Inc
July 1st, 2014The Shanghai No 1 Intermediate People's Court yesterday accepted a civil suit from a local company against United States tech giant Apple Inc for trademark infringement in relation to a cellphone app.
The case was filed after the plaintiff, Shanghai Homevv Co, discovered Apple was selling an online shopping program via its app store that carried Homevv's registered trademark and referenced its website.
The product, however, had been produced by Shanghai Woshang Information Technology Co, which registered it with the Apple store.
Following the discovery, Homevv last month made several requests for Apple to remove the program from its store, but received no reply, Ma Yongjian, a lawyer representing the plaintiff, told Shanghai Daily.
Apple was unavailable for comment yesterday.
Homevv said it registered a trademark for its website in 2012 and developed the application earlier this year.
It said it wanted to have the product featured in the Apple store and made three approaches to the company in April and May. Each time, the app was rejected, with the US company saying on the third occasion that the product already existed, Ma said.
It was then that Homevv discovered the alleged imposter, and decided to take legal action, he said.
The company is demanding more than 100 million yuan (US$16 million) in compensation from Apple and Shanghai Woshang Information Technology Co, the court said.
It is also seeking public apologies from the pair and has requested they stop infringing its trademarks. Homevv also asked Apple to remove the app from its store and told Woshang to destroy it.
The court has yet to set a date for the hearing.
Tencent, 58.com partner up
June 30th, 2014Tencent Holdings, China's largest Internet company by market share, announced Friday that it is buying a 19.9 percent stake in the Chinese online marketplace 58.com Inc for $736 million, an important move analysts said for Tencent to promote its online-to-offline (O2O) connection of businesses.
Unlike the traditionally separate business models of off-line shopping and e-commerce, O2O is a new model that makes online payment a necessary step in a wide range of off-line services.
Yao Jinbo, founder and Chief Executive Officer of 58.com, confirmed on his Sina Weibo late Friday that the strategic cooperation project was completed within 10 days without disclosing further information.
Shanghai may launch international gold exchange in FTZ
June 27th, 2014Shanghai may launch an international trading board for gold in the China (Shanghai) pilot Free Trade Zone this quarter.
The new trading board in the FTZ is expected to attract foreign participants as China hopes to have a bigger influence on global gold prices.
The FTZ is expected to attract a gold inventory of 1,000 tons.
Gold sales rose to 323 tons in the first quarter, up 0.8 percent from a year earlier, local media reports said citing the Shanghai Gold Exchange.
Xu Luode, secretary-general of the bourse, said earlier that the international board would adopt Shanghai Gold -- a spot gold trading mechanism similar to the Loco London Gold.
Clariant plans R&D center in Shanghai
June 26th, 2014Swiss specialty chemicals company Clariant said on Wednesday that it plans to establish a research and development center in Shanghai.
The R&D Center, expected to be operational by 2015, is intended to cater to the burgeoning Chinese specialty chemicals industry, which Clariant has been serving since 2011, by providing enhanced technical service and developing catalytic solutions tailored to China's requirements. The company's previous ventures in China have focused on coal-to-methanol catalysts.
The center will focus on coal-to-chemicals and specialty applications while developing new catalysts for hydrogenation applications and supporting Clariant's pre-existing Chinese production sites.
German state honors Huawei for investments
June 24th, 2014Chinese tech company Huawei received Monday the NRW.INVEST Award in the western German city of Duesseldorf for its outstanding investments in the German state of North Rhine-Westphalia (NRW).
For the 10th time, NRW Economics Ministry and NRW.INVEST, the state's economic development agency that deals with support for foreign investors, have presented the NRW.INVEST Award.
With this award, NRW honors exemplary investments at the business location. This year, three companies received awards, including Huawei, the American package delivery company UPS and the French company Air Liquide.
North Rhine-Westphalia is a leading location in Germany for foreign investments. According to NRW Economics Minister Garrelt Duin, about a quarter of investment projects in Germany flew to the state in 2013.
"Engine of the development is Asia," NRW.INVEST CEO Petra Wassner said at Monday's presentation ceremony.
According to NRW.INVEST, the number of foreign investment projects in NRW jumped to 236 in 2013, a 12 percent increase compared to the previous year. Again, China led the country ranking with 63 investment projects.
Huawei, a Chinese multinational networking and telecommunications equipment and services company, has been making large investments in NRW's capital city of Duesseldorf. Currently, 650 employees are working in the company's headquarters for Western Europe and Germany which is located in Duesseldorf.
Changan Ford moves into new phase of rapid development
June 23rd, 2014Changan Ford stepped into a new phase in capitalizing on China's automobile market when the company announced Thursday the opening of 88 new dealers to join its massive dealer points around China.
A grand opening ceremony held in Shanghai featuring traditional Chinese performances like drums and lion dancing mirrored the automobile giant's Chinese ambition - keep striding confidently forward in the world's largest automobile market.
Changan Ford has successfully introduced a number of new models including the Ford New Focus and Ford Kuga.
In 2013, Changan Ford sold an accumulative total of 678,951 units, a year-on-year growth of 62 percent over 2012.
In the first five months of 2014, the Changan Ford lineup had sales of 330,771 units, with an accumulative year-on-year increase of 43 percent.
Consumer demand, resulting in the sales increase, created Changan Ford's need for the expansion of its dealer points.
With the newly launched 88 dealers, the total number of Changan Ford's dealer points in China rises to 750, and the figure is still growing.
"The newly-opened 88 dealers allow us to better serve our growing Chinese customer base and improve their ownership experience. With the growth momentum, we expect to exceed 800 dealer points in China by the end of 2014," said Marin Burela, president and CEO of Changan Ford Automobile Co.
As vehicles in first-tier cities started to be oversupplied, Changan Ford mapped out one-third of its dealer points deep into the less developed central and western regions in China.
About 75 percent of dealer points are based in small cities, which the company said represents the growing customer demand in these areas.
What drives the expanding of dealer points is an ever growing manufacturing capacity.
"We will launch our third plant in Chongqing in the future and you also know that our Hangzhou plant will also go into production in 2015, and both of these investments are being made strategically to ensure that we meet demand with supply in the area where we see the market is growing, " Burela told reporters during the interview.
Germany bullish on investments in China
June 20th, 2014
Economic rebalancing is likely to usher in a "new era" of German investment in China, said Lothar Herrmann, chairman of the German Chamber, after the German Business Confidence Survey 2014 launch on Wednesday.
German companies operating in China reported robust performance and relative optimism for 2014 despite the economic slowdown.
"We do believe at the German Chamber that there is optimism because our technology can contribute to the next level of development in China," said Herrmann.
German investment going forward is expected to be driven by its technologies in automation, digitalization and renewable energy, which are seem as possible solutions to the challenges facing China during its economic rebalancing.
Of the 417 members that participated in the survey, 23 percent expect to exceed their business targets for this year compared to only 17 percent expecting to not to achieve or only partly achieve their targets, up 9 percent and down 4 percent respectively from 2013.
Forty-nine percent of the companies expect economic conditions to improve, with 75 percent of the automotive sector maintaining a positive outlook.
The majority also welcomed reforms with 70 percent of companies viewing the central government's reform agenda as having potentially positive effects on their businesses.
However, this positive sentiment is yet to translate into investment as 48.6 percent of companies stated that initiated policies will have no influence on their investment decisions.
Human resources issues still remain the biggest challenge to German businesses operating in China. However, human resource issues are on the decline as German companies appear to have gained experience in how to deal with the challenges of doing business in China.
E-commerce giants competing fiercely during June
June 19th, 2014
Tmall launches major discounts to rival JD sale
China's leading online retailer tmall.com launched Wednesday a sales promotion for consumer electronics and home appliances, a move analysts said heats up the battle with its major rival JD.com Inc (JD) which regards the day as a special shopping festival due to it being the anniversary of the company's founding date.
Tmall.com, backed by the country's e-commerce giant Alibaba, offered discounts between 60 and 70 percent for home appliances and lowered smartphones' prices by 100 yuan ($16) to 1,000 yuan.
Meanwhile, JD, which has been building up a shopping spree atmosphere since June 1, rolled out its strongest sales promotion to date for Tuesday to Friday, cutting prices of consumer electronics by up to 2,000 yuan and providing 90 percent discounts for some home appliances.
The four-day event is a part of JD's 20-day promotion for its 11th anniversary this year on Wednesday, involving consumer electronics, cosmetics, food and books. The promotion has triggered the price war between the e-commerce players.
Tmall.com also launched a four-day sales promotion from Monday, which analysts said mainly focus on consumer electronics and home appliances in response to JD's strongest discounted sales. JD's smaller rival yhd.com (YHD) even claimed on its official website that all consumer electronics it sold would be 50 yuan cheaper than those on JD from Monday to Wednesday. Gome.com and suning.com, the home appliance online shopping platforms of major local retail chains, also joined the price competition almost during the same period.
"JD is under siege," said Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting.
He explained to the Global Times Wednesday that all e-commerce platforms intend to tap the profitable consumer electronic retailing sector where JD has further consolidated its leadership after combining with yixun.com, a consumer electronics online shopping platform developed by Tencent early this year.
Despite the ambitious efforts of YHD and Gome, Lu said that they can hardly pose big threats to JD.
Tmall is JD's strongest rival and is likely to win the battle this time due to its large user base, said Li Yi, secretary-general of the China Mobile Internet Industry Alliance.
A report issued in May by Analysys International shows that Tmall is the most preferred online shopping platform with its active users reaching 112.06 million in the first quarter of 2014. The active users on JD hit 44.2 million, ranking in second place.
Tmall's strong cooperation with the three State-owned telecom carriers and domestic home appliance makers also give it more competitive advantages over JD, said Lu.
During this sales promotion, Li Xiao, a Beijing-based white-collar worker, went to Tmall and bought a trendy smartphone Wednesday.
"The reason to choose Tmall instead of JD is simple. The three telecom carriers all opened online flagship shops on Tmall and offer discounted phones on the platform that cannot be found on JD or other platforms," she told the Global Times Wednesday.
A total of 500,000 handsets have been sold in the first 10 hours, accounting for half of the average daily sales of smartphone in China, according to a press release e-mailed to the Global Times Wednesday by Tmall.
A PR representative from JD told the Global Times Wednesday that the average sales of handsets and related accessories reached more than five per second on Wednesday morning.
Both Lu and Li Yi believe that the price war is still the major promotion method in China where many consumers are sensitive to price, but they said e-commerce platforms this time are also trying other ways of marketing to attract people.
Between May 30 and June 14, JD sent cash gifts - which can be applied to online purchases - worth 1 billion yuan to users of its mobile application to draw attention to its sales promotion.
Tmall is also giving away cash gifts worth 50 million yuan to shoppers during its current promotion.
Although consumers can benefit from the heated competition and price war [during this period], Li Yi suggested that they consume reasonably and buy things that are really needed.
"Some goods may be even more expensive than before. People need to carefully compare the price tags of goods before placing an order," he noted, calling for more supervision from the authorities during the sales.
Lu noted that these retailers are all focusing on consumer electronics and home appliances, which is a wise decision given that June usually sees many purchases of such goods.
Big sales will challenge e-commerce platforms' logistics and post-sales services, which need to be further improved, he remarked.
Alipay-housing authority launch virtual transport card
June 19th, 2014Alipay, the e-payment arm of Alibaba Group Holding Ltd, teams up with China's Ministry of Housing and Urban-Rural Development to launch a service on Wednesday that allows commuters use public transport without IC cards or waiting in line to buy a ticket.
Through wiping near-field communications-supported mobile phones at readers at public transport stations, people can travel in a more convenient style. What they need to do is to buy a NFC-enabled mobile phone, download Alipay Wallet, the app of Alipay, and apply for a virtual public transportation card through the app.
The service is one part of Alipay's project named "future pubic transportation", which aims to build a public system that offers convenient service in the mobile Internet era.
The NFC-based public transportation service co-launched by Alipay and the housing authority is expected to be available soon in 35 cities, including Shanghai, Tianjin, Shenyang and Ningbo. According to Alipay, as many as 60 cities in China are expected to join the project by the end of this year.
Ma Hong, director of the pubic transportation service center at the Ministry of Housing and Urban-Rural Development, said that with the economic progress, people are traveling more frequently.
"Because different cities use different IC cards for public transport, people have to buy new cards whenever they go to a new city. It is high time to find a unified solution to this problem," Ma said, adding that thanks to the service co-launched by Alipay and her ministry, people can now travel in a more convenient way.
Through teaming up with Alipay, which has about 100 million mobile users, the ministry can effectively boost the user group of the virtual IC cards. Alipay said in a statement that it will open its resources to mobile phone makers and public transport authority in order to improve the transport system in China.
Robot sales shift to higher gear as labor force wanes
June 18th, 2014
Robotics companies are expected to triple sales in China to around 110,000 sets by 2020 as more Chinese manufacturers embrace the high-end growth path, a senior industry official said on Tuesday.
Wang Ruixiang, head of the China Machinery Industry Federation, said based on the rapid growth of the nation's robotic industry in recent years, the federation has set a high target and the government will continue to provide support for the industry's development.
By 2030, sales of industrial robots will reach 290,000 sets and a couple of Chinese companies would be among the top five robotics companies in the world, Wang said.
"As the world's second-largest economy, China has huge potential in the robot market, which is prompting more foreign and domestic companies to invest in the sector," he said.
According to a recent United Nations report, China is likely to see a sharp fall in its labor force by 2015. The labor shortage and the lack of advanced technologies represent huge business opportunities for the robotics sector, said Song Xiaogang, secretary-general of the China Robot Industry Alliance.
According to data provided by the alliance, 37,000 industrial robots were sold in China last year, a 36 percent growth over 2012.
China became the largest robot consumer market, with one-fifth of the global market share, overtaking Japan and the United States in 2013, said the alliance.
Haier Group, a consumer electronics and home appliances company, is one of the Chinese firms that is embracing robotics in a big way. The company plans to cut 10,000 employees this year after laying off 16,000 employees in 2013, according to Zhang Ruimin, chief executive officer of the company.
Zhang said most of the layoffs this year will target mid-level employees, as the mechanization process gathers momentum. He constantly stressed the idea that in the long run the manufacturing sector would need to use more technology like robots.
Haier is not alone in using robots among home appliances companies.
Foxconn Technology Group, an electronics manufacturer, plans to use 300,000 robots by the end of this year to replace repetitive and dangerous jobs on the production line.
Although the industry is booming with a rapid growth rate in recent years, Chinese robot makers are still facing challenges like lower market share in high-end products as well as shortages in innovation and technology, Song said.
Foreign companies produced more than 27,000 of all the robots sold in China last year. About 80 percent of these are multi-joint robots, with advanced technologies. Chinese companies mainly produce coordinate robots, which are mostly used for delivering goods in different industries.
"Despite a top market demand, China has only a few leading firms that are able to compete internationally," Song said. "Due to the scarcity of technical talent, the robotics industry has encountered a bottleneck, especially when it comes to detailed industry segments."
He Rui, director of Mianyang Fude Robot Co Ltd, a Sichuan-based company, said the company has been undertaking research and development on new types of robots that can be used by various clients.
"We are focusing on areas that are not dominated by foreign companies," he said.
He added that the company sold about 40 industrial robots last year. Fude Robot aims to triple revenue from the current 20 million yuan ($3.22 million) to 60 million yuan in three years.
China surpasses US as world's top corporate borrower
June 17th, 2014
Sluggish capital market limits funding: expert
The Chinese mainland has surpassed the US as the world's top corporate borrower, and higher debt risk in the world's second-largest economy may mean greater risk for the world, a report said on Monday.
However, Chinese economists noted that the debt risk in China's corporate sector is still well under control.
Nonfinancial corporate debt in the Chinese market was estimated at around $14.2 trillion by the end of 2013, overtaking the $13.1 trillion debt owed by the US corporations, a progress happening sooner than expected, said a report from the Standard & Poor's Ratings Services on Monday.
The report expects that by the end of 2018 debt needs of mainland companies will reach $23.9 trillion - around one-third of the almost $60 trillion of global refinancing and new debt needs.
"It [the mainland surpassing the US as the largest corporate borrower] is not surprising at all, as the [size of] mainland non-service sector has already surpassed that of the US," Tian Yun, an economist with the China Society of Macroeconomics under the National Development and Reform Commission, told the Global Times on Monday.
Cash flow and leverage at mainland corporations has worsened after 2009, and debt risks in the property and steel sectors remain a particular concern, the report said.
Private companies are facing more challenging financing conditions - highlighted by China's first corporate bond default case of Shanghai Chaori Solar Energy Science and Technology Co in March and another case of default of leading private steel maker Shanxi Haixin Iron and Steel Group.
"The capital market has been sluggish during the past few years, leading to the fast growth in corporate debts," Xu Hongcai, director of the Department of Information under the China Center for International Economic Exchanges, told the Global Times Monday.
Experts noted that the rapid growth in debt reflected some problems of the Chinese economy, but the size of the debt is still in a safe range and will not cause major risks as the economy remains stable.
"The problems of the Chinese economy are institutional and structural," Tian said, "By addressing these issues, debt risks can be managed."
Tian further noted that most corporate debts in China are internal debts, thus debt problems in the country will have limited impact on the rest of the world.
The report also said a possible contraction in "shadowing banking" will be detrimental to businesses as general.
But Xu noted that China's tighter supervision of the "shadow banking" sector will make it more transparent and better-regulated, which will reduce the potential risks in the sector.
'Made-in-China' shines at World Cup
June 17th, 2014Though the Chinese soccer team is again absent from the World Cup, Chinese products, from mascot Fuleco to official instrument the caxirola and hybrid buses, stand out.
"Since March, our factory has continuously received overseas orders. By the opening of the event, we had exported more than one million footballs," said Wu Xiaoming, general manager of a sports products manufacturer in Yiwu city, in east China's Zhejiang province. Many orders came from South American countries.
The World Cup has been great for Yiwu, the world's largest wholesale center for small commodities and accessories. "Our clients are mainly from Europe. Since April last year, we have sold nearly two million caxirolas," said Wu Xiaogang, manager of a company which produces the cheerful instrument. Compared to the vuvuzela at the 2010 World Cup in South Africa, the profit on each caxirola is more than double. It is estimated that around 90 percent of caxirolas worldwide are produced in Zhejiang and Guangdong provinces.
"Because of the World Cup, the sale of commodities to soccer fans has increased by nearly 30 percent and are mostly wholesaled overseas," said Cheng Li, a dealer in Yiwu. Brazilian buyers are Cheng's main clients.
In the first five months, Yiwu's total exports to Brazil totalled 160 million U.S. dollars, up 31.4 percent year-on-year. Exports of sports commodities to Brazil were 2.78 million dollars, up 42 percent from the same period last year.
The soccer spectacular is a platform for Chinese products to display their strong competitiveness, more added value, higher quality and innovations.
Kayford Holdings Ltd, is the only licensee outside Brazil for plush mascot and 3D figurines.
"We have the final say on the pricing of the 3D figurines," said Li Hong, president of Hangzhou Landward, the parent company. The company has designed nearly 100 types of commodities in five categories for the mascot series.
"Made-in-China" has become "China marketing" as the company can freely select suppliers and distributors, said Li.
The company has sold more than one million of its mascot products to 39 countries, said Huang Kunlun, chief sales manager.
"What we feel most proud of is that no quality complaints have been received," he said. "'Made-in-China' is no longer a synonym for low-end products of poor quality."
Other Chinese products are also shining at the World Cup.
Hybrid buses developed and produced by a subsidiary of China's leading railway car manufacturer CSR Corporation Ltd, ferry the public between the airport and downtown Curitiba, one of the host cities.
As the sole Chinese sponsor at the soccer extravaganza, China's major solar energy company Yingli Green Energy has provided 27 sets of photovoltaic systems for lighting devices in all the hosting cities.