Category: "News of China"
Labor laws need to be overhauled
June 16th, 2014You see them everywhere in Asia.
They push street carts selling food and drinks, sell newspapers and water on busy intersections, and collect garbage for recycling while breathing in thick black smoke from the exhausts of trucks, buses and cars.
In the countryside they tend to small plots, growing just enough food to survive.
Despite Asia's massive economic gains over the last 30 years, very little of this new wealth has managed to trickle down to the grassroots, or what economists call the "informal economy".
The millions who work in the informal economy are not covered by formal employment agreements, which are so common in developed economies.
The International Labour Organization estimates the informal economy accounts for 60 percent of Asia's workforce.
The real challenge facing governments in emerging Asia is how to improve and protect those in the informal sector who have no protection from the non-payment of wages, and who can be retrenched at any time without notice or compensation.
They work in dangerous, low-skilled jobs with poor occupational health and safety conditions. None of them are protected by social security nets.
On the other hand, the formal sector - areas such as manufacturing, financial services and technology - is suffering from a growing skills shortage.
Asia reaped huge economic benefits when manufacturing migrated from many developed countries. Low-end manufacturing has even been migrating from China.
The World Bank has said the region's policymakers need to enact "labor regulations and social protection policies to benefit all workers, including those in the large informal economy".
Christophe Duchatellier, the Tokyo-based CEO of human resources firm Adecco Asia, says there has been a "significant deregulation of challenging labor laws" in many countries in Asia.
But he says that more deregulation still needs to be done if countries are to become "competitive from a labor perspective". Duchatellier says that over the last 20 years there has been a steady shift of industrial manufacturing from the West to the East.
Much of that shift was prompted by low productivity, high taxes and high wages in the West. "Companies need to do things cheaper and faster," he says, adding that the idea of a full-time job or 'job for life' is fast becoming a thing of the past in many global and regional markets."Young people want more options and will have more employers than we did in the past."
He believes Asian universities and schools need to better prepare young people entering the workforce with the right skills to help them get jobs.
"We need to remember that for the majority of the world, education is about preparing people to get a job. More 'later-in-life' retraining and re-skilling is needed for those in sunset industries and where new technologies are emerging. And companies need to encourage more apprenticeships," Duchatellier says.
A report released earlier this year by the World Bank, East Asia Pacific at Work: Employment, Enterprise and Well-Being, said: "Asia has seen rising productivity amid a brisk structural transformation, with large movement of people into cities and higher output in agriculture, manufacturing and services."
"Countries that were poor a generation ago successfully integrated into the global value chain, taking advantage of low labor costs," the report said.
Commenting on the report, Axel van Trotsenburg, regional vice-president of World Bank East Asia and Pacific, said: "The unprecedented economic development in East Asia Pacific has provided jobs and lifted millions of people out of poverty and has been a triumph of working people.
"It's time now to consolidate growth by adopting social policies that protect people, rather than any particular sector, location or profession."
When well-designed, those policies should make sure social protection and labor regulations benefit the most vulnerable workers in society."
The World Bank said that as economic growth is moderating and labor costs are rising, "constraints of the region's current labor market and social protection policies are becoming a more pressing issue".
China's property climate index drops in May
June 13th, 2014China's property development climate index dropped 0.77 points from April to 95.02 points in May, the National Bureau of Statistics (NBS) said on Friday.
The figure has declined month on month for four consecutive months.
In the first five months, the country's investment in property development rose 14.7 percent year on year to 3.07 trillion yuan (about 500 billion U.S. dollars), slowing down by 1.7 percentage points from the Jan.-April period, the NBS said in a statement.
State Council makes logistics industry's growth a priority
June 12th, 2014China is stepping up its efforts to develop its logistics industry, as the government announced its goal of building a modern national logistics service system by 2020.
The State Council's executive meeting, chaired by Premier Li Keqiang, approved a plan on Wednesday to develop the logistics industry in the middle and long term.
The move aims to lower the operational costs of logistics enterprises and improve logistics infrastructure networks, as well as to develop large-scale companies to improve the industrial chain, according to a statement released after the meeting.
China's economy has grown at a fast pace, but its logistics and transportation sector as a whole remains in comparatively early stages of development.
The fierce competition has created a market in which rivals offer similar and limited services.
A total of 12 logistics issues, including services for agriculture, manufacturing, industrial material supply chain and recycling materials, will become priorities because these businesses can create more new market growth points to the industry, the statement said.
The government will accelerate the reform pace to upgrade the management style of various couriers and crack down on illegal charges and regional protectionism to create a fair market environment.
It also promised to ensure land supplies and use for building logistics service facilities such as warehouses and package sorting centers, to improve the statistical system of logistics costs, and to introduce preferential financial policies for the sector.
Zhou Zhicheng, deputy director of the research department of the China Federation of Logistics and Purchasing in Beijing, said making medium- and long-term plans is a useful way to optimize industrial structure, as diversified distribution models and the fast development of e-commerce today have changed the operation method and network density of China's logistics market.
"As more Chinese companies are inclined to expand and create new businesses nationwide, their demand for logistics will expand beyond coastal cities, with broader national network coverage, and consistent, upgraded and standard services will become a key differentiator in comparison with previous market condition," Zhou said.
The meeting also arranged the work details of building an economic belt along the Yangtze River to underpin China's sustainable economic development.
The statement stressed that the Yangtze River Delta is a key pole in China's economic growth while the central and western regions along the belt boast the largest space for further economic growth.
China Mobile eyes 100b devices with 5G network
June 11th, 2014China Mobile Corp's chairman Xi Guohua described his vision of the next-generation telecom network on Wednesday, saying the company is aiming to build a super-fast 5G network that could bring 100 billion mobile devices on the network.
The 5G technology, which remains on papers, will have a connection speed similar to the fiber Internet, the fastest fixed-line connection as of today, said Xi.
Xi, who heads the world's largest carrier by subscriber number, did not disclose the possible launch date of 5G service. Analysts believe commercial use of 5G in China is years - if not a decade - away because the previous technology just kicked off in the country this year.
Local research of next-generation telecom technologies is most likely to get government support in the coming years however, meaning the development process could be greatly shortened.
Liu Lihua, vice-minister of the Ministry of Industry and Information Technology, told the Mobile Asia Expo on Wednesday that development of 5G technology will receive a "full government support" in the years ahead.
China Mobile launched its 4G networks in the country about half a year ago. Coverage of China Mobile 4G is mostly confined in city areas in developed coastal regions today. Xi pledged to add the amount of 4G stations to half a million by year end.
Will China's housing market strike iceberg?
June 10th, 2014
Will the bubble in China's real estate burst in the near future, just like the titanic hitting the iceberg?
The answer may be no, some experts said.
After a round of soaring prices, the housing market is showing increasing signs of cooling down.
May was the fifth consecutive month in which the rate of price growth slowed.
Worries raised high that the decline may continue as banks become reluctant on mortgage lending.
According to official data, sales of residential property slumped 7.7 percent during the first quarter of 2014 to 1.1 trillion yuan (about 176.6 billion U.S. dollars). Month to month, home prices have been falling in more of the 70-strong pool of major cities surveyed by the National Bureau of Statistics.
When asked whether China's housing market is experiencing a "turning point" as sales have plunged in recent months, Feng Jun, chief economic manager with the Ministry of Housing and Urban-rural Development, said recently changes in the housing market are normal and should be viewed in a broader context.
He reiterated that the aim of property control policies is to create a balanced and steady market.
"The policy is to protect reasonable buying demand and to restrain investment," he said.
The fact is that the underlying demand-supply equation has changed, with ongoing construction exceeding the demand of a growing urban population and upgrading.
Meanwhile, investment demand is being eroded by stagnant property prices, the anti-corruption drive and investment alternatives such as wealth management products and overseas assets, according to investment bank UBS AG.
"We do not expect a sudden collapse of property prices or a financial or balance-of-payments crisis, as is often seen in emerging economies," said Wang Tao, China economist with UBS.
A big drop in construction activity—even without a large price correction—would likely have a serious negative impact on the industrial complex and, through that, economic growth and banks' balance sheets.
Hence, at present the real estate market is facing a serious adjustment, and the era of the secular property boom is forever behind us, he added.
More grads still opting to start own businesses
June 10th, 2014
Graduates use posters to promote themselves at a job fair in Bozhou, Anhui province, on Sunday.
The percentage of Chinese college graduates choosing to start their own businesses has risen for three consecutive years, a survey shows.
It also found that the average monthly salary of self-employed graduates is higher than those who are not.
Of the college students who graduated in 2013, 2.3 percent started their own business, higher than the figure for 2012 (2 percent), 2011 (1.6 percent) and 2010 (1.5 percent).
This is according to the 2014 Chinese College Graduates' Employment Annual Report, released on Monday by MyCOS, an education consulting and research institute in Beijing.
The survey polled 268,000 graduates from 28 provinces and regions.
Chen Yu, vice-president of the China Association for Employment Promotion, said the increase results from government efforts in recent years to support graduates in starting their own businesses, such as reduced intervention, the offer of micro loans and cuts in taxes and fees.
"These measures provide a good environment for college graduates who intend to start their own businesses," Chen said.
The survey also found the education sector is graduates' preferred choice when they decide to start a business, with 15 percent of them choosing to begin their careers in this area.
Other areas, including retail, wholesale, architecture, media, information and telecoms, are among the top choices.
Feng Lijuan, chief consultant at 51job.com, a major recruiting website in China, said starting a business in these fields is comparatively easier and college graduates have a bigger chance of keeping their businesses going.
"The education sector, especially test-oriented training, is expanding quickly in China and therefore college graduates, as a group of highly educated people, can easily find a place in it," Feng said.
Research shows post-1990 generation picky about jobs
As for the retail and wholesale industries, Feng said a series of online trading websites such as taobao.com provide a simple and convenient platform for college graduates to establish their own online stores.
The report shows that only 8 percent of self-employed college graduates started their own businesses because of difficulty in landing jobs, while 48 percent did so because they wanted to become entrepreneurs.
Other reasons include having good entrepreneurial ideas, being invited by friends or peers to start a business together and believing in the income prospects of entrepreneurship.
The report said college students who started their own businesses after graduating in 2010 now earn an average of 8,424 yuan ($1,349) a month, 41 percent higher than the average for all college students who graduated that year.
Despite the good incomes earned by college graduate entrepreneurs, experts voiced concern for such businesses.
Feng believes that real entrepreneurship lies in innovative developments in areas such as the high-tech sector.
"But most Chinese college graduates can't make it with their current knowledge structure and therefore most of the Chinese graduate entrepreneurs end up in the service industry."
Chen said, "An ideal entrepreneurship program can solve the problem of college graduates' employment and also create new industries and promote the development of the economy, science and technology, just like Steve Jobs and Apple did."
Businesses more active in Beijing Fair
May 30th, 2014Bruno Masier, chairman of World Trade Point Federation, a not-for-profit organization helping trade, said he saw more companies, rather than institutions, appear at the China Beijing International Fair for Trade in Services.
Maiser, who had attended all the CIFTIS, also the Beijing Fair, since its launch in 2012, told chinadaily.com.cn on Wednesday this indicated that real players are taking opportunities in the sector of trade in services.
He said the federation has brought 60 businesses from more than 40 countries to the fair and deals worth 120 billion yuan will be signed by the closing ceremony on June 1, according to a Beijing Daily report.
In addition to companies attending with help from global institutions, some specializing in traditional Chinese medicine also took the chance to showcase products or services.
Fan Kui, chairman of Hunan Hongyao biological Polytron Technologies Inc, set up late last year, said his company needs this platform to let people know what they can do.
Fan said his company has developed a cream, containing Chinese herb extracts which, according to clinical experiments, can help control blood sugar when applied to the skin. Fan said the product can be used in elderly care but it may take a year for people to know of its existence.
The Beijing Fair was launched by the Ministry of Commerce of China and the Municipal Government of Beijing in 2012 and has been held annually.
Vanke president says property sector's golden era over
May 29th, 2014The days of rapid growth in China's real estate sector are over, but the government's urbanization drive will continue to fuel demand for the next 15 years, the country's biggest residential property developer China Vanke Co said.
After climbing at double-digit rates through most of last year, home prices in China started cooling in late 2013, with the annual growth in average new home prices slowing to an 11-month low in April as a sustained campaign to clamp down on speculative investment and easy credit gained traction.
Vanke president Yu Liang said the slowdown heralded the end of the golden era for Chinese real estate, but said the outlook remained healthy.
"The white silver era has just begun," Yu told reporters at its research and development center in Dongguan in South China's Guangdong Province this week.
"The industry is now after quality and service and back to real demand...The industry was worth 8.1 trillion yuan ($1.30 trillion) last year, even growing at a single-digit rate, it's still large enough for us."
His comments came nearly a week after ratings agency Moody's lowered its outlook for China's property sector and forecast flat to 5 percent yearly growth over the next 12 months, compared to 26.6 percent growth at the end of 2013.
Yu said he believed government measures to curb speculation in the property sector had worked and prices were now more sustainable.
"I don't agree there's a bubble. Since the tightening measures in 2008, financial leverage of developers and individual investors has dropped significantly," Yu said.
Analysts said the latest land transaction prices have shown that the market is becoming more rational.
"Land sales in first-tier cities weakened in April as housing prices softened. It's important for developers to time and source the land purchase better because land cost is a big factor to determine margins," said Hong Kong-based analyst Karen Kwan.
Kwan said developers in April were bidding on average 40 percent higher than the asking price at land auctions, compared to 80-100 percent above opening bids last year. Transaction prices in April were also 1 percentage point lower than the previous month.
She said data also showed that developers had been delaying some new housing projects so she expected less oversupply in the fourth quarter.
New housing starts in the first quarter fell 25.2 percent compared to a year ago, sparking concerns that a sharp drop in construction activity and falling prices would weigh on economic growth in the world's second-largest economy.
Yu's comments came just days after the chairman of SOHO China sounded an alarm over the real estate sector.
"I am not upbeat about the residential market. I think China's real estate is like the Titanic and it will soon hit an iceberg up front," local media quoted Soho China chairman Pan Shiyi as telling a financial forum last week.
China Vanke also aims to get listed in the second half of June, Yu said.
Guangdong launches local stimulus plan
May 29th, 2014Authorities in Guangdong province, an economic powerhouse in South China, plan to allocate a large sum of money this year to boost its economy.
According to a financial budget report submitted to a provincial legislative meeting for approval on Wednesday, the province will arrange for up to 64.7 billion yuan ($10.47 billion) to support development of infrastructure, maintain stable trade growth, expand consumption and promote the transformation of industry.
The move comes after relatively slow economic growth in the first four months of 2014.
The province's gross domestic product grew 7.2 percent year-on-year in the first quarter, or 1.3 percentage points lower than the same period last year, data from the Guangdong Provincial Statistics Bureau show.
"The economy faces pressures, and there are some uncertain factors ahead, following a tough trade situation, sluggish performance in the real estate sector and weakening demand in domestic consumption," Zeng Zhiquan, director of Guangdong Provincial Finance Department, said. "That's why we had to introduce financial measures to keep stable economic development for the whole year."
Guangdong, a longtime leader in terms of economic development in China, has a GDP growth target of 8.5 percent for 2014.
"A prompt and efficient financial policy is of great importance to adjusting the economy, given the slower economic growth of the past few months," Zeng said. There's "an urgent need for the government to introduce measures to boost the economy."
Of the budget, up to 14.8 billion yuan will come from local Treasury bonds, Zeng said.
"We expect that financial input will drive more social investment, which will help boost infrastructure development and expand domestic consumption," Zeng said.
Guangdong's fixed investment increased 17.3 percent year-on-year in the first three months, 2.2 percentage points lower than the same period last year.
Before the financial measures, the provincial government also decided to exempt 39 administrative fees for businesses from May 1.
"In such an economic situation, the exemption of administrative fees and increased financial support represented the government's determination to cope with the economic slowdown," Zeng said.
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May 28th, 2014
Expected salary of university graduates has fallen to 3,680 yuan per month, a record low in past four years, the Beijing News reported on Wednesday.
According to China Graduates Employment Pressure Report of 2014 released by Beijing Youth Stress Management Service Center, the expected salary was 5,537 yuan in 2011, almost 2,000 yuan more than this year.
It also shows that there are more than seven million university graduates this year, the highest number in history. However, salary and employment pressure are at the lowest in past four years.
Although the expected salary this year was a slight drop compared to 2013, but seen against the 5,537 yuan in 2011, the decline was substantial.
Meanwhile, with the drop in expected salary, the employment pressure also fell from 18.17 percent last year to 16.91 percent in 2014.
China's foreign companies pay top salaries
May 27th, 2014Employees in China's foreign-invested companies earned more than any other group last year, according to new survey results released Tuesday.
The National Bureau of Statistics (NBS) said in a statement on its website that foreign companies paid an average annual salary of 61,694 yuan (10,001 U.S. dollars) to their employees in 2013, topping all other types of companies.
State-owned companies paid the second highest at 56,728 yuan, while companies with investment from Hong Kong, Macao and Taiwan paid 49,683 yuan to employees, the statement showed.
The NBS tracked 870,000 companies in 16 sectors for the survey. The average salary of all tracked companies was 45,676 yuan.
Post-1990 generation picky about jobs: research
May 26th, 2014
The young generation shows a different attitude, which makes them more frequently miss a job interview, turn down offers and have no qualms about quitting if the work is not to their taste.
Members of the post-1990 generation looking for work apply for multiple positions and hold high expectations of the jobs, a reflection of young people's changing attitudes amid the country's development, recent research showed.
When fresh graduates do snag a job interview, they are also more likely to miss it, turn down offers and have no qualms about quitting if the work is not to their taste.
These were some of the main findings of research conducted by leading Chinese recruitment website 51job.com.
Of those surveyed, 45.1 percent of employers said more than half of job candidates failed to turn up on time for interviews.
More than 60 percent of fresh graduates also felt they needed help from their parents to look for work, the research showed.
The website surveyed 2,357 enterprises and 1,230 fresh graduates nationwide over 15 days in 2013.
Liu Jinjin, deputy director of the human resources department at the Social Sciences Academic Press, said members of the post-1990 generation are picky about employment and it was common for them to break appointments for job interviews.
"Most of the post-1990 generation are the only child in the family. Their living conditions have greatly improved from that of the post-1980 and post-1970 generations. They don't experience much pressure in life so they pay closer attention to personal preferences and interests when hunting for a job," Liu said.
The post-1990 generation also does not care about the amount of money they make. Instead, the working environment, the happiness they derive from their work and respect from others are what matter most, she said.
"The post-1990 generation does not think twice about leaving in their first year of work. If they lose interest in a job or are not clear about their future career path, they will quit easily," Liu said.
Members of the generation are also more self-oriented. They want more time for themselves and are not willing to work overtime.
Their attitude to life is more casual, Liu said.
Zhang Gao, the campus brand director of Chinese Internet search giant Baidu, said a survey it conducted this year found that the post-1990 generation focus on work-life balance.
"They need some space when they work and don't want to be managed too strictly," Zhang said, adding that members of that generation often choose to work according to their interests and have their own ideas and views about work.
Zhu Guangchuan, 22, will graduate from Sanya College in Hainan province this July. He told China Daily he is now working as an Internet salesman for a local travel company.
"I chose this work out of interest. I think the salary is not the most important factor, and I focus on the opportunities for career development," he said.
Zhu said he once received about five notices for job interviews but only attended the one he was most interested in.
"My parents are open-minded, so they respect my personal choice," he said.
Sun Wan, born in 1990, is a fresh graduate who majored in Japanese. She said 30 to 40 percent of her classmates are not working after their graduation. Many plan to go abroad or take up postgraduate studies.
"I am not desperate for a job, although I have received some offers from employers. I plan to undertake a one-year training program in Japan then hunt for a job there. I like their corporate culture, and I also specialize in Japanese."
Sun said she once had an internship at a hotel but gave it up because the work was very tiring.
She said she follows her heart when job-hunting.
"If I don't like the work in Japan, I will consider coming back home." Her family does not require her to work immediately, she said.
Members of the post-1990 generation also pose challenges for employers.
Feng Lijuan, the chief consultant at 51job.com, said members can access lots of information online every day and have many work opportunities, so they compare and deliberate on different positions and might not stay in a company for long.
Feng said employers should communicate with their post-1990 employees regularly and provide counseling to help them solve problems.
This generation is very sensitive and has a lot of self-esteem, so employers need to be concerned about their temperaments and ways of communication, she said.
Roche's office in Hangzhou 'sealed off'
May 22nd, 2014Swiss pharmaceutical company Roche AG China's Hangzhou office is said to have been sealed off by the local administration, according to news portal Netease.com.
Meanwhile, the company's Beijing office is reportedly under investigation, according to the Chinese website.
"More than 20 officials rushed into the Hangzhou office, shut down the door, and asked employees not to leave," the news portal quoted a Sina Weibo user on Wednesday.
China Daily tried to contact one staff member at the company, but he refused to answer the phone.
The reported sealing off of Roche's office comes after an executive with British drug maker GlaxoSmithKline was charged last week for allegedly bribing doctors and hospitals to use the company's drugs.
Roche, the world's largest manufacturer of cancer drugs, has said it has seen continued strong growth in China in recent years.
Preliminary manufacturing PMI beats expectations
May 22nd, 2014
Workers assemble molybdenum refining equipment at a Citic Heavy Industries Co Ltd plant in Luoyang, Henan province.
A preliminary Purchasing Managers Index for China's manufacturing sector in May has beaten expectations, suggesting that the economy is stabilizing.
The PMI, released by HSBC Holdings Plc and Markit Economics, was at 49.7, exceeding the 48.3 median estimated by analysts. It was also a big rise from a final reading of 48.1 in April.
At the same time, the number remained below the expansion-contraction mark of 50. The final reading will be released June 3.
China, Russia pledge stronger cooperation in trade, energy
May 21st, 2014
Chinese President Xi Jinping (R) and Russian President Vladimir Putin sign a joint statement aimed at expanding cooperation in all fields and coordinating diplomatic efforts to cement the China-Russia all-round strategic partnership of cooperation after their talks in Shanghai, east China, May 20, 2014.
China and Russia on Tuesday vowed to beef up cooperation in a wide range of fields, including finance, trade, energy and transportation infrastructure.
The pledge came in a joint statement during a visit by Russian President Vladimir Putin. Putin is in China for the 4th summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) in Shanghai and a state visit at the invitation of President Xi Jinping. Xi held talks with Putin in Shanghai on Tuesday.
According to the joint statement, the two countries will expand local currency settlement for bilateral trade, cross-border investment and financing and will strengthen exchanges for the formulation of macro-economic policies.
The two pledged to increase bilateral trade to 100 billion U.S. dollars by 2015 and 200 billion U.S. dollars by 2020 from nearly 90 billion U.S. dollars last year.
The two will work to ensure balanced trade, optimize trade structure and expand mutual investment in fields like transportation infrastructure, mining development, and housing projects in Russia, said the statement.
The two sides vowed to deepen cooperation in the petroleum industry, kick-start Russia's supply of natural gas to China as soon as possible and jointly develop coal mines in Russia. The two also will consider jointly building power plants in Russia to increase power supply to China.
The two countries will strengthen cooperation in major projects in the peaceful use of nuclear energy, civil aviation, research on basic aerospace technologies, satellite navigation and manned space flight, said the statement.
The two will speed up the construction of cross-border transportation infrastructure, including bridges on cross-border rivers, and Russia will facilitate China's goods shipment using its railway networks, ports and through the Northern Sea route, said the statement.
The countries also pledged constructive cooperation in the use and protection of water resources in cross-border rivers as well as in the establishment of cross-border nature reserves to protect biodiversity.
Spirit of success moves nation's entrepreneurs
May 20th, 2014
A worker with the Jiangxi-based high-tech company Shanshui Electronics Co Ltd sorts circuit boards. Tens of thousands of private equity and venture capital firms are believed to be behind China's vibrant technology, media and telecommunication sector.
Gong Yan, assistant professor of entrepreneurship at the China Europe International Business School, shows passion when he talks about Tesla Motors Inc.
For him, the California-based company represents a "disruptive innovation" that few Chinese companies have achieved.
Tesla, he says, is to the vehicle industry what Apple Inc has been for the mobile phone industry. It's tossed out what people think of as being a car.
Its "disruptive innovation" is reflected mainly in its product and business model. Tesla produces battery-powered electric cars. It provides car owners with a free battery-charging service through a nationwide network of solar-powered charging stations.
Unlike buyers of conventional cars that rely on massive dealer networks, Tesla consumers can go to its direct sales stores for test drives, place orders online and enjoy cloud-based after-sale service.
Chinese electric car companies don't lag too far behind Tesla in terms of technology, Gong said. On the contrary, a few companies such as Shenzhen-based BYD Auto Co Ltd have developed an edge in some electric car-related technologies. What they lack, according to Gong, is a "revolutionary" aspect to their products and the will to pursue an "extreme" consumer experience.
Companies do not necessarily have to be "revolutionary" to be successful. Most companies succeed as they follow well-established paths and improve their products incrementally. In this regard, Gong said it's "not fair" to compare BYD and Tesla because they are totally different companies.
"It is difficult to compare Tesla with any other company because it is really disruptive, in its business model and product," he said.
That doesn't mean Chinese companies haven't got a chance. Chinese enterprises are rapidly catching up with their Western competitors in many fields. Contrary to popular perception, there is little difference in the mobile Internet field, said Gong, who completed a doctoral degree in the United States and taught at the University of California, Irvine before joining CEIBS.
"The mobile Internet industry in China is so developed that I believe it could soon export some innovation to the rest of the world," Gong said. "So far, Chinese entrepreneurs have excelled at application-oriented fields, such as the mobile Internet and electric cars. But if you look at fields that are more closely related to basic science, such as medicine, there is a huge gap with the US."
Behind China's vibrant technology, media and telecommunication sector, Gong said, are tens of thousands of private equity and venture capital firms, as well as millions of entrepreneurs who aspire to be tomorrow's Elon Musk (chief executive officer of Tesla).
China's VC model is copied from Silicon Valley, so both extensively focus on the TMT sector. That focus has offered a good financing environment for entrepreneurs in that particular sector, but it's a much less friendly environment for other industries, according to Gong.
"In China's TMT sector, the problem is not lack of money but a lack of creative ideas. China's social enterprises face a much tougher environment," he said. "In Silicon Valley, nearly a quarter of the venture capital funds have gone into social enterprises, but here the share is minor.
"If you also consider charitable foundations and crowdfunding in the US, which support social enterprises, the gap is huge."
Another potential risk of VCs' focus on TMT in China is that too many entrepreneurs might be tempted to join this field despite lacking the passion and resources, Gong said.
"So for entrepreneurs, it is important to care about what VCs care about, but not to follow them blindly. You can't dance to the VC firms' beat," he added.
But Gong is no pessimist when it comes to China's entrepreneurship. He said his interaction with domestic entrepreneurs convinced him that the nation's entrepreneurial spirit is high.
Cultural factors are also on China's side, he said, because "no fear of making mistakes", a vital trait for entrepreneurs, is much more prevalent here than in other East Asian nations.
"You look at any entrepreneurship index, and you find China is among the highest in the world. This is a country full of passion for entrepreneurship. I see no sign that the fever is waning. Quite the opposite," he said.
The only factor that may hinder this innovative impulse, according to Gong, is government regulation in many industries. China's most dynamic sectors are also those least regulated, and there's a good reason for that.
More Chinese companies choose US as destination to go public
May 20th, 2014A senior vice president with NYSE Euronex says that more and more Chinese enterprises are attracted to do initial public offering (IPO) in the United States and predicts that around 15 to 20 of them could go public in the States this year.
"What I've seen is a nice building process from two years ago when we only had two IPOs. One of them VIP (Vipshop Holdings Limited) was listed here and did extremely well," said David A. Ethridge, senior vice president and head of the Capital Markets Group at NYSE Euronext, in a recent interview with Xinhua.
Shares of Vipshop, an online discount retailer, were traded at around 165 U.S. dollars per share Monday, compared to 6.50 dollars per share since it announced its IPO in March 2012. China's social gaming portal YY Inc., which was listed on Nasdaq in November 2012, also saw its shares surge to around 56 dollars per share from its IPO price of 10.50 dollars apiece.
Two things happened to increase the likelihood of companies coming from China, Ethridge said.
"One was the public capital markets in the U.S. were very strong," he said. The major U.S. stock indices traded up 25 percent or more during 2013, which is very helpful to all IPOs and certainly helpful to the technology sector with most of the companies coming from China in the technology arena, he explained.
"The second thing that happened was the Chinese companies that were already public were trading up," which helped investors feeling positive about these IPOs coming from China, he said.
Ethridge said he doesn't believe accounting concerns should be an issue today with Chinese companies. "They've got first-class, world-class advisors around them."
"As we came into 2014, you saw a lot more people thinking positively about the IPO market in the United States, and likewise, you saw the same thing in China," Ethridge said. "I think it will obviously depend on whether the IPO windows are there and if you are confident about launching (IPOs)."
So far, there have been seven Chinese companies having listed their shares in the U.S. stock market.
China's e-commerce giant Alibaba Group Holding Ltd. filed its IPO in the United States on May 6. It is expected to be one of the largest stock listings in history.
"So I feel good about the way the market looks right now," Ethridge said.
Ethridge believes that the technology sector is expected to see the most Chinese companies' IPOs this year.
"If we are going to use the past as a harbinger of what we'll see in the future, then you have to say will be technology companies. Most of the companies we've seen from China have been technology-oriented, many of them internet-oriented. And so I would expect the same," he said.
Ethridge said one piece of advice he would give to Chinese companies planning to list stocks in the U.S. market is that "they need to be able to project their result and tell others how they will do in terms of their revenue profitability, and do it with confidence, and then actually beat those numbers."
Ethridge said that U.S. investors welcome Chinese companies " very much" judging from the growing number of China-based companies that went public in the U.S., their valuation and extraordinary performance after their IPOs.
"For the public investor, to see a country the size of China and that kind of growth rate on top of it is astounding, and I think that is always in the back of their mind," he said. "The question is will the company execute and how do they take advantage of that growth rate."
China's changes continue to dazzle Western world
May 19th, 2014
Humphrey Hawksley says over the years China has achieved tremendous economic growth.
Country is achieving growth in its own way, says BBC correspondent
People in the West still have not "got their heads around" the astonishing changes in China over the past 20 years, a leading BBC foreign correspondent says.
"The difference between China (then and now), in my view, is quite confusing to the West," says Humphrey Hawksley, who set up the BBC's bureau in Beijing in 1994.
Nevertheless, the "image of China in the Western eye has shifted in recent years from a mysterious developing country to an economic power closely intertwined with the global economy", he says.
Hawksley recalls his early days of reporting in China when it was difficult to get editors interested in stories that were not linked to the West's criticism of the country's lack of Western-style democracy.
But over the years China has achieved tremendous economic growth, brought a large proportion of its population out of poverty and shown the world that those things can be achieved without Western-style democracy. China is "winning the game", he says.
By that he means that for other emerging economies China has presented an alternative model of achieving economic growth, which is often the thing they are looking for.
"In my travels around the world, in the poorest parts of Africa or Latin America, people want their children to be safe, they want a clinic to be nearby, they want a road. They don't want 'isms', which are all mechanisms to deliver those things."
Though China's economic success is amazing, he says, he is not entirely surprised, having got to know some of the country's political leaders in the 1990s.
One memorable figure for him is Zhu Rongji, who served as mayor of Shanghai between 1987 and 1991, during which time Hawksley interviewed him.
"In his office, he had a big map of Shanghai, which he put on the floor. We were all leaning on the floor, and he said, 'We're going to do this and that, and by 2020 we're going to have a better infrastructure like New York'."
Zhu's determination and attention to detail persuaded Hawksley that he was capable of transforming China's economy. Zhu later became the country's vice-premier and later premier, from 1998 to 2003.
Although Hawksley expected huge growth in Shanghai, he was astounded by the transformation when he saw it.
"I remember some years back flying into Pudong Airport, there is a six or eight lane highway, and all those very wacky buildings, and you think 'My God, this is going to be a fantastic city in 20 years, 50 years, or a hundred years.'"
For a country emerging from poverty, its infrastructure boom symbolizes hope for a better life, and a sense of purpose and future, he says.
"So if you're the poorest of the poor, and you wake up to see a skyscraper, and new airport, you can think you're a part of a system that will deliver it for you."
The turning point of the West's perception of China was the 2008 financial crisis, he says, when China fought against the crisis side by side with Western countries and won respect from them.
"During the 2008 financial crisis, it was Western institutions that were going down. China could have taken advantage of that and used it to weaken the West because it had the US treasury bonds, but it didn't do that. It could have gone the other way, but it didn't.
"It brought the realization to those in the West that China could be 'a very mature ally in times like this, and the deals could be done, and it was all pushing forward the Western world's economy'."
That realization has resulted in the West dealing with China as an important economic power, and it is increasingly acceptable for Western leaders to talk to Chinese leaders about trade and investment without having to always bring up the topic of "democracy", he says.
Having closely witnessed China's economic miracle, Hawksley says strong government intervention in infrastructure development and manufacturing is an important aspect of China's success.
Both aspects of the Chinese economy required significant government direction because a lot of China's infrastructure delivery is built in anticipation of future market demand, and China's manufacturing growth was facilitated by a favorable exchange rate to encourage exports. These could not be achieved by the private sector alone.
"Essentially China became the factory for the world. It created jobs for everybody, and there is a spread of wealth coupled with infrastructure growth. You wake up in the morning, and realize you can go on a better train, or get better seats, and that means a lot to many people."
This kind of attitude is especially inspiring for other emerging countries like those in Africa, where China has been welcomed as a partner in building infrastructure.
"What the Chinese say is that they will build a road, a stadium, and they don't tie it with anything else. The engineers go and do that, whereas Western aid is tied with 'human rights and democracy'."
From his experience in Africa, Hawksley has witnessed countries where global institutions such as the World Bank and the International Monetary Fund have helped for a long time, and yet there are still no roads between two big towns because large institutions are often inefficient in dealing with practical matters.
"All the people want is for the roads to be built, so that (their) children can go to the hospital, and the magistrate can go to court. If you don't build your road, everything breaks down."
Hawksley joined the BBC in 1981. Since the early 1990s he has traveled in China frequently on assignment. When he set up the BBC's Beijing bureau it consisted of just him and a cameraman, but together they reported many memorable stories.
China in those days was still mysterious to many people, partly a result, Hawksley believes, of the country having a long history and a rich culture, and partly a result of China experts in the West making out that the country is more mysterious than it really is to strengthen their credentials and worth.
"Western people who spend years studying Chinese want to keep the mystery up. You could draw mystery around everything you want, but essentially it is not there."
Hawksley says one example is guanxi, which means social connections and is a concept Westerners often talk about to explain why many things are done so differently in China. But essentially social connections help in getting things done in any country, he says.
In recent years the growth of Western media in China has also helped demystify China, giving Western audiences a more objective and multifaceted view of China, Hawksley says.
"China now has more foreign press going there, and it has its own press doing quite good investigations. (The media are) a lot freer than 20 years ago."
Facebook Considering New Sales Office in China
May 16th, 2014
Facebook (FB) is considering opening a new office in Beijing, despite the fact that the service has been blocked by censors in mainland China since 2009.
"Chinese exporters and developers are finding Facebook is an excellent way for them to reach customers outside China," a spokesperson said.
"Today, our sales team in Hong Kong is supporting these Chinese businesses, but because of the rapid growth these businesses are achieving by using Facebook, we are of course exploring ways that we can provide even more support locally and may consider having a sales office in China in the future."
Given the company is only mulling the idea, the timing of any such move and potential staffing remains unclear. Facebook currently operates an office in Hong Kong, where the social network is available to users.
“In the near term, Chinese companies want to use Facebook to advertise to customers in markets like Indonesia in Southeast Asia where Facebook is strong, despite rising competition from Tencent's WeChat,” said Shaun Rein, managing director of the Shanghai-based China Market Research.
Facebook’s attempt to re-enter China comes 9 months after Chief Operating Officer Sheryl Sandberg traveled to Beijing to meet with Cai Mingzhao, head of China’s State Council Information Office, the government agency that oversees internet regulation. CEO Mark Zuckerberg visited China on a private trip in December 2010.
“[Mark] Zuckerberg and Sandberg have been much smarter in dealing with the Chinese government than Google's executives who were far too arrogant and contentious,” Rein says, citing Google’s exit from mainland China in 2010 over disagreements on search censorship.
However, the likelihood of Facebook becoming available within the Great Firewall anytime soon is small, with instability rippling through the region from the western region of Xinjiang to the eastern city of Hangzhou.
China remains one of the largest untapped markets for Facebook. According to its most recent earnings report, Facebook earned $354 million in revenue from Asia in the first quarter of 2014. China currently has 618 million internet users, according to the China Internet Network Information Center.
Since its 2009 ban, Facebook’s Chinese competitors Renren, Sina, Weibo and Tencent’s WeChat have soared in popularity.
Twitter (TWTR) and Google’s (GOOG) YouTube are also blocked in China, among many other websites. However, some U.S. social media firms have managed to remain active. LinkedIn (LNKD), which is not blocked, broadened its business in February and launched a Chinese-language site. CEO Jeff Weiner acknowledged in a statement that working amid censors “raises difficult questions but it is clear to us that the decision to proceed is the right one.”
Technology becoming new economic engine of Chengdu
May 16th, 2014
Wang Fengde (second from right), vice-director of China Bluestar Chengrand Chemical Co Ltd, tests products together with researchers.
Transformed over two decades from China's biggest base for heavy industry in the western region, Chengdu is now thriving with a modern economy built on high-technology industries that are driving its growth and providing a window on its innovative strength.
Many of these opportunities come from China's national strategy of building the Silk Road economic belt, as well as soaring consumption power and the application of various advanced technologies.
Eager to gain higher profits from exports, Chengdu has moved toward a low-carbon, high-tech economy by curbing overcapacity and reducing the scale of heavy and energy-intensive industries on the one hand, while on the other encouraging high-tech industries to accelerate the speed of innovation and talent recruitment.
He Li, director of Chengdu's development and reform commission, said that an increasing number of domestic and international companies are building new manufacturing facilities for high-tech products, research centers and logistics hubs in Chengdu. Thus, the city is preparing to scale up efforts to improve services for strategic emerging industries and productive service sectors over the next five years.
"High-end industries, including next-generation information technology, biotechnology, precision machinery manufacturing, energy conservation and environmental protection, plus financial and business services, will further upgrade the competitiveness and innovative capacity of Chengdu and Sichuan province as a whole," He said.
The Chengdu government in February announced an overall strategy of reform, innovation, transformation and upgrading, and optimized its five strategies to push forward the city's industrial transformation and optimize the structure of high-tech industries, environmental investment, and urban and rural planning.
"We are also providing high-tech companies in incubators with access to public research facilities, helping them explore the market and offering them help in human resources as well as financing. Office space, dormitories and apartments for their employees can also be arranged," said He.
To build an efficient public service platform for more than 20,000 high-tech companies in the city, different government divisions such as the finance bureau and science and technology bureau have formulated subsidies and stimulus policies to encourage innovative activities.
Sun Ming, chairwoman of the Chengdu Federation of Industry and Commerce, said another component driving development is the central government's intention to promote urbanization and narrow the gap between the more industrial coastal cities and the underdeveloped interior and western frontier regions.
"Because the future of Chengdu's economy will be decided by innovative breakthroughs in high-tech industries, local universities and vocational colleges have been quick to adjust their curricula to follow trends in the city's changing job market and produce talented people with practical skills to fit into the teams in various small and medium-sized companies," said Sun.
"This new economic shift has already made an impressive change, helping Chengdu's high-tech companies reach more new marketplaces. They have managed well to ship their products to international and domestic destinations through well-developed international rail freight systems and air routes, as well as highways, in recent years," Sun said.
China Bluestar Chengrand Chemical Co Ltd, which makes chemical materials for civilian and military use, is one of many Chengdu companies that reflect this trend. It expects to raise production capacity of para-aramid fiber by 10,000 metric tons next year.
The company now produces 1,000 tons of the strong, heat-resistant fiber annually. It is widely used in the aerospace industry - particularly to produce ballistic-rated body armor - bicycle tires, asbestos substitutes and disaster rescue equipment.
Supported by favorable policies such as tax cuts and new land use rights offered by the Chengdu government, as well as qualified local university graduates, Bluestar Chengrand has begun research on the project's second phase. It plans to invest about 3 billion yuan ($486 million) in Chengdu to establish a production line for para-aramid and equipment to manufacture composite materials.
The expansion, with operations expected to start in 2015, will make the company the third-largest producer of para-aramid in the world after Wilmington, Delaware-based E. I. du Pont de Nemours & Co and Japan's Teijin Ltd, Wang Fengde, vice-director of Bluestar Chengrand, said.
"Para-aramid fiber is used in the production of components for automobiles, airplanes and high-speed trains, of which western China produces a lot," Wang said. "We will keep investing 10-15 percent of our annual sales into research and development every year, and we'll also consider adding several new research labs and a department in Chengdu."
The Chengdu-based company has received a high volume of orders and inquiries for the use of various new materials from traditional domestic factories in recent years, Wang said. They are interested in upgrading the technical content of their products. Interest has come from shipyards, garment factories, shoe manufacturers and tire producers in the Pearl River Delta, Yangtze River Delta and the Bohai Bay region.
Bluestar Chengrand's revenue rose to 530 million yuan in 2013, up 20 percent from the previous year. It has over 500 employees, including 200 scientists and researchers in different departments. It has sold para-aramid to countries including Germany, France, Turkey, Spain and Italy last year, at relatively competitive prices.
Yahoo! to recruit new blood after student protest
May 15th, 2014Yahoo! will recruit 100 local employees after witnessing the younger generation's potential amid the Sunflower Movement, Yahoo! Inc. Asia-Pacific region Senior Vice President Rose Tsou said yesterday.
This has been the second positive response from the business world following conclusion of the Sunflower Movement, the protest led by students who occupied the Legislative Yuan to show their disapproval of the Cross-Strait Trade in Services Agreement.
Tsou said that the Sunflower Movement provided a lot inspiration for her firm, especially after seeing how local students successfully used the Internet to generate tremendous energy.
That is an ability previous generations didn't have, Tsou said.
When all industries are facing the impact of Internet development, this could prove to be either the best or most challenging era for young people, she added.
Tsou said that Yahoo! Inc. will be looking for talents from different fields, including advertisement, engineering and product planning.
According to the company, a summer internship will be launched to recruit roughly 20 people in order to form an elite team.
The company added that the interns will receive salary and benefits enjoyed by fulltime employees, but their project will also be evaluated based on standards for fulltime employees as well.
Tsou said that the Internet industry needs to keep improving in order to avoid being eliminated, and that Yahoo Inc. aims to become the largest company in the world.
According to Tsou, the company currently has over 1,000 employees in Taiwan, which makes it the largest Internet company on the island, and over half of its employees are between the ages of 25 and 34.
Tsou said that Yahoo Inc. has always been looking for people who can communicate and work well with others, adding that the company hopes to find young people who can think independently and perform well.
Huang An-chieh, chairman of the Accton Technology Corporation, recently said that the Sunflower Movement gave him the courage to reflect upon himself, prompting him to resign in order to allow others to take over.
Women on Boards in Taiwan
Taipei Financial Center Corp. Chairwoman Christina Sung became the first head of the newly established Women on Boards, aiming to push for new laws that will increase the number of female chief executives.
According to Sung, only 14 percent of chief executives in publicly traded companies are women.
Nine officials, scholars and business leaders also joined the organization, including Tsou, Pacific Sogo Chairwoman Huang Ching-wen and L'Oreal Taiwan Chairwoman Amy Chen.
Bank rules eased in Shanghai FTZ
May 15th, 2014China's banking regulator has simplified administrative approvals and lifted the loan-to-deposit requirement for banks in the Shanghai free trade zone, allowing them to have greater flexibility in supporting business and testing the water for further financial reform, according to a report by Xinhua News Agency on Wednesday.
According to the new rules issued by the China Banking Regulatory Commission through its Shanghai branch on Wednesday, banks do not have to get approval from local banking authorities before setting up branches or appointing executives in the China (Shanghai) Pilot Free Trade Zone (FTZ), Xinhua reported.
Instead, they will be able to file with the authorities afterwards.
Furthermore, banks' branches in the FTZ will not have to meet the normal loan-to-deposit requirement. Banks have also been advised to set up independent liquidity risk management systems and give necessary funding support for their lending business in the FTZ.
"The new regulations give banks more freedom to conduct business in the FTZ," a Beijing-based banker told the Global Times Wednesday on condition of anonymity.
Normally, the establishment of new bank branches and appointment of executives requires approval from the regulator, and it can take a month for the executives to be officially appointed, he said.
Currently, banks are required to have a loan-to-deposit ratio of 75 percent, which means that they are only allowed to lend up to 75 percent of the deposits they have.
The ratio may vary among different branches, so long as the bank's overall loan-to-deposit ratio meets the requirement.
Bank branches in first-tier cities like Beijing, Shanghai and Guangzhou have tighter limits, with loan-to-deposit ratios as low as 50 percent.
Under the new rules, bank branches in the FTZ may lend freely without the loan restriction, which will help free up more capital to support the local economy, the banker noted.
However, "the new practice could make it more difficult for the bank headquarters to balance the internal interests among branches within and outside the FTZ," he said.
Scrapping the loan-to-deposit requirement could even help rein in shadow banking activities, he said, adding that a lot of off-balance-sheet lending or shadow banking activities are motivated by restrictions on bank lending.
The banking industry has long been calling for the elimination of the loan-to-deposit requirement, given the increasing pressure on attracting bank deposits amid interest rate liberalization and fierce competition from high-yield wealth management products offered by online financial service providers.
The loan-to-deposit requirement will be gradually phased out, and the pilot program in the FTZ will serve as a test ground for a nationwide rollout later, Guo Tianyong, a finance professor at the Central University of Finance and Economics, told the Global Times on Wednesday.
A total of 31 financial institutions including 20 foreign banks have registered with the FTZ, with total lending of 65.35 billion yuan ($10.6 billion) by the end of the first quarter, according to media reports citing the Shanghai banking regulator.
"The new rules are welcome," Standard Chartered Bank told the Global Times in an e-mail on Wednesday. Standard Chartered has a sub-branch registered in the FTZ.
Clients want more transparent and efficient financial services, the bank said, adding that it hoped for further improvements in the FTZ.
The FTZ is developing a free trade account system to facilitate financial investment, Zhu Min, deputy director of the Shanghai FTZ administrative committee, said at the Boao Forum for Asia on April 11.
Key programs for the FTZ include easing the cross-border use of the yuan, liberalizing interest rates for loans, and facilitating offshore financing and outbound investment.
E-commerce driving demand for warehouses
May 14th, 2014
An automatic distribution center, the largest in terms of daily handling capacities in Asia, will be in operation in July in Shanghai. To cope with the e-commerce surge, as much as $2.5 trillion may need to be invested in land and warehouses over the next decade and a half, one builder said.
Alibaba Group Holding Ltd's plans for a giant initial public offering in New York highlight the vast potential for e-commerce in China - and the weak link the logistics industry must fix if those explosive growth projections are to be reached.
The aging warehouses that supply goods to customers across the world's second-largest economy are already creaking under the strain, lacking the state-of-the-art technology that has fueled the rise of Amazon.com Inc.
By 2020, China's e-commerce sector will be larger than those of the United States, Britain, Japan, Germany and France combined, KPMG reported. To cope with this surge, as much as $2.5 trillion may need to be invested in land and warehouses over the next decade and a half, one builder said.
That's drawing the attention of global private equity firms like Blackstone Group LP and Carlyle Group LP.
"The real cost of building warehouses is going to be staggering," said Jeff Schwarz, cofounder of Global Logistic Properties Ltd (GLP), the biggest foreign builder of logistics facilities in China. That translates to about 2.4 billion square meters of new warehouses - or two-thirds of the land mass of Taiwan.
Alibaba controls 80 percent of all online retail in China, and its logistics partners delivered 5 billion packages last year. While transport has kept pace with Alibaba's rise, warehousing is in serious need of a makeover. Fewer than 20 percent of China's warehouses are categorized as modern, with fully computerized tracking systems and the latest in retail technology, according to GLP.
And many facilities serving Alibaba and its peers are in areas that are tough for trucks to access. They often lack raised loading bays to let packages roll off conveyor belts: Instead, the vehicles are loaded by hand.
That can cut into profits. Despite China's wages being much lower than those in the US, it can cost over twice as much to transport goods in China, GLP said.
Improving the logistics of China's warehouses has been prioritized by none other than Alibaba cofounder Jack Ma. Last year, Alibaba announced plans to lead a consortium to invest $16 billion in the first phase of building a national logistics business, a unit of Alibaba to be chaired by Ma. Alibaba declined to comment for this article.
Alibaba's efforts haven't gone unnoticed. US e-commerce company ShopRunner, a rival to Amazon, will use Alibaba's domestic logistics network when it launches in China later this year.
JD.com Inc, ranked second in China e-commerce, is also investing. In a filing for its own US listing worth up to $1.7 billion, it said it plans to spend up to $1.2 billion over the next three years to buy land and vehicles and to build warehouses.
Meanwhile, real estate developers such as China Vanke Co Ltd are diversifying into warehousing as a hedge against a faltering residential property market.
"China's warehouse and logistics providers are trading at favorable valuations. In China, logistics space per capita is only 1/12th of that in the US, and providers stand to benefit as e-commerce expands," said Tony Hsu, a portfolio manager at Dalton Investments.
So far this year, GLP has built 280 warehouses in China, creating about 2 million square meters of floorspace at a cost of $1.2 billion.
Blackstone, Asia's largest private equity real estate investor, said it is in talks with several China real estate developers as it eyes the warehouse sector.
China to boost employment for college grads
May 14th, 2014Preferential policies will be granted to encourage college graduates to work at grassroots or start businesses in a move to boost employment, the State Council, China's cabinet, announced on Tuesday.
Graduates that decide to work at grassroots will be provided with tuition compensation or a reduction in their student loan, the State Council said in a statement.
Small-sum guaranteed loans or subsidies will be given to new graduates to open online shops, it said. Small and micro businesses in technology will benefit from similar policies once they recruit a certain amount of college graduates.
According to the statement, state-owned enterprises are required to publish employment information on the Internet to safeguard a level playing field in recruitment.
The authority urged governments at all levels to give top priority to boosting employment among college graduates.
Figures from the Ministry of Education show 7.27 million university students will enter the job market this year, mostly in June and July. The number is 280,000 more than last year.
China has been confronted with a tough employment situation due to slowing economic growth, with an increasing number of jobless people, including college graduates and employees from sectors plagued by overcapacity.
Foreign developers seek partners, clients in China
May 13th, 2014
Visitors to a property exhibition in Beijing last month inquire about an overseas project. Wealthy Chinese people are increasingly looking into foreign real estate investment opportunities.
Wealthy Chinese are increasingly looking for overseas real estate investment opportunities-so foreign developers are coming to China in search of clients and business partners, especially in the luxury-residential sector.
Chinese real estate companies' overseas expansion affords individual investors a path to interests abroad, especially in developed countries with stable profit returns and a good natural environment.
"In past years, Chinese investors have not been very enthusiastic when I introduced real estate projects in Canada," Neil Labatte, president and CEO of Talon International Development Inc, said. In the past six months, though, he's taken many calls about buying into the Canadian housing market. It's a "good sign of growing passion" from rich Chinese looking to spend dollars there as their focus shifts away from home, he said.
Shanghai-based international investor Greenland Group announced in March a 67,000 sq m project in Toronto, Canada's largest city, as its latest overseas real estate acquisition. In the past year, Greenland announced deals in Australia, Malaysia, South Korea, Spain, Thailand, the UK and US.
Labatte said Chinese companies and individuals have accumulated enough wealth over past decades that many are now seeking out real estate services as part of their plans to establish businesses abroad. Individual investors who relocate outside China to settle or for work need to make a residential investment.
"There is a clear change of Chinese investors' strategy in the Canadian real estate market," said Labatte. "Families have been the majority of Chinese buyers of Canadian housing; usually for their kids' education. They tended to buy large villas or luxurious apartments in high-end communities in the suburbs." Now the purchases are of high-end downtown projects for both living and investment, he said.
Xu Dingmu, a businessman with a company headquartered in Beijing and employing 30 people, said his firm is opening a branch in Canada and he would like to purchase a floor in Toronto for office use.
"In the past, I would have preferred to rent a place, like we do in Beijing," Xu said. "However, I plan to buy a floor because it will give me a stable profit return even if I close down the company there someday."
He said the big time for China's real estate market has passed and it's not a bad idea to put some money into Canada if someone isn't expecting huge returns from it.
Data from Jones Lang LaSalle Inc, an investment management firm offering specialized real estate services, show China's outbound commercial real estate investments reached $7.6 billion last year, up 124 percent year-on-year. It estimated Chinese investors will spend more than $10 billion in 2014 in overseas commercial real estate markets.
Against that background, foreign developers are looking for Chinese partners to jointly seek out potential clients in China. Talon is the developer behind the Trump International Hotel & Tower Toronto, in the heart of Canada's financial district.
Labatte is optimistic about the future of those projects, saying that the new rich generation in China has better taste and higher requirements for their housing.
"They want to be closer to vibrant city life with convenient facilities," he said. "They want to have a luxurious lifestyle that a high-end project can provide - waiters, concierge, dining and party services included."
He said Chinese investors are at the starting line of commercial real estate investment in Canada and the potential is huge.
At present, US and European investors lead commercial real estate investment in Canada. Chinese investors will follow rapidly, Labatte said.
"We are not here to only sell a project," he said. "We are seeking Chinese developers to partner up" with.
He said many raw materials are imported from China for real estate construction, so Chinese companies' strong network of contacts will benefit cooperation.
Jaguar's joint venture integrates services
May 12th, 2014With their sights set on long-term development in China, Jaguar Land Rover and its local joint venture Chery Jaguar Land Rover Automotive Co Ltd announced the establishment of their integrated marketing sales and service organization on Friday.
The sales organization is jointly managed by both sides' sales and marketing divisions. It will be responsible for the development and distribution of the Jaguar brand, Land Rover brand and Chery Jaguar Land Rover's local brand in China.
Lu Yi, chief of staff at Jaguar Land Rover China, was appointed president of the sales organization, and will report directly to Bob Grace, president of Jaguar Land Rover China, Chery Jaguar Land Rover President Chris Bryant and Deputy President Zhu Guohua.
The organization consists of five functional structures: operations, after-sales, Jaguar brand, Land Rover brand and joint venture brand.
Lu was also designated as marketing, sales and service executive vice-president of Chery Jaguar Land Rover.
The sales organization proved both parties' commitment to enhancing and expanding their operation in China, with the ultimate aim to satisfy the demands of Chinese consumers with high-quality products and services.
In the first quarter, Jaguar Land Rover China's sales surged 36 percent year-on-year to 29,500 units. This stabilized its fourth position in the country's luxury vehicle segment. The locally produced vehicles by Chery Jaguar Land Rover are expected to help the British brand grow further in the sector.
Jaguar Land Rover China and Chery Jaguar Land Rover will continue to implement far-reaching strategies for the China market. Both companies are firmly devoted to long-term development of the China market.
Ctrip's quarterly profit drops 25 pct amid fierce competition
May 9th, 2014Ctrip.com International, which runs one of China's major travel booking websites, Wednesday (US time) reported a 25 percent drop year-on-year in the net profit for the quarter through March amid domestic fierce competition in the country's booming online tourism market.
In the first quarter, the company's net profit was 115 million yuan ($19 million), falling for three consecutive quarters, according to a financial report posted on the NASDAQ. Its revenue jumped 36 percent year-on-year to 1.6 billion yuan.
Analysts attributed the profit slide to huge spending on promotion and acquisition over the period.
According to the financial report, total operating costs hit 1.06 billion yuan, a surge of 52 percent year-on-year. And expenses on sales and marketing activities in the first quarter increased by 61 percent to 430 million yuan from last year.
"Being confronted with increasingly heated rivalries in China's online tourism market, Ctrip poured lots of money and effort into marketing so as to maintain its current leading position," Wei Changren, general manager with Beijing-based Jinlü Consulting, told the Global Times Thursday.
Major Chinese online travel booking websites such as Ctrip, eLong and Qunar started a price war with each other last year, in an attempt to capture a leading position in the promising online tourism market, which is expected to reach 465.01 billion yuan in 2017, more than twice the figure of 220.46 billion yuan in 2013, read a report by Beijing-based market research company iResearch.
In July 2013, Qunar, backed by Baidu, one of China's leading Internet companies, reportedly announced a promotion for hotel reservations during the summer vacation, offering clients 25 percent discounts on hotel room fees.
In December, Ctrip kicked off a similar activity for the whole month with up to 30 percent discount on room charges.
Ctrip also spent 200 million yuan on promotional efforts for its resort ticket purchase business in the first quarter of 2014, according to media reports.
Despite huge costs in marketing, the company still made a series of investments in its peers recently, indicating that its cash flow is in fairly good condition, Yang Yang, an industry analyst with iResearch, told the Global Times Thursday.
Ctrip is now ly.com's second largest shareholder with the acquisition of a 30 percent stake in this Suzhou-based attraction ticket service provider for $200 million in late April.
It is also one of the anchor investors for Nanjing-based travel website tuniu.com in connection with its proposed IPO, eyeing tuniu.com's edge in leisure package tour business.
According to financial reports, Ctrip has never suffered losses after getting listed in the US market, while its major rival Qunar has yet to turn into profitability. The NASDAQ-listed Qunar recorded a loss of 187 million yuan in 2013.
But Yang said that Qunar will threaten Ctrip's predominant position in the OTA (online tourism agent) segment in the near future, as the former is starting to tap the market and has a stronger ability to bargain with off-line hotels and airlines due to support from Baidu.
Baidu is Qunar's major shareholder, owning 61.05 percent of the company.
The OTA market, where online tourism websites run businesses like off-line traditional tourism agents, is promising, which was led by Ctrip in the first quarter with 51.9 percent, according to iResearch.
ELong came in second with 9.3 percent, ly.com ranked third with 6.2 percent.
Both Yang and Wei noted that Ctrip's investment in peers could help it gain access to their user bases and even tap their competitive resources.
But the latter integration and cooperation may not go through smoothly, as its rivals may just want the capital injection and be unwilling to share core resources and technology with Ctrip, Yang said.
China has world's 3 largest companies: Forbes
May 9th, 2014China became home for the first time to the world's three biggest public companies and five of the top 10, according to the Forbes Global 2000 List released on Thursday.
Industrial and Commercial Bank of China (ICBC) held onto its No.1 spot for a second year, followed by China Construction Bank and Agricultural Bank of China.
The other two were Bank of China -- another of the "Big Four" Chinese banks -- and PetroChina, ranking ninth and tenth, respectively.
Chinese mainland and Hong Kong added 25 to the 2014 list, more than any other country, for a total of 207.
The United States accounted for the other half of the top 10 spots, and held onto its crown with 564 companies on the list. Japan trailed the U.S. with 225 companies in aggregate, despite losing 26 members this year.
The magazine said its Global 2000 is a comprehensive list of the world's largest and most powerful public companies in terms of revenues, profits, assets and market value.
The 2014 list hailed companies from 62 countries, up from 46 in its inaugural 2003 ranking. In total, these companies raked in revenues of 38 trillion U.S. dollars and profits of three trillion with a market value of 44 trillion.
"The list presents an annual snapshot of the ever-changing global business landscape," the magazine wrote.
Job Listing Site Zhaopin Is The Latest Chinese Company To File For A U.S. IPO
May 8th, 2014Zhaopin, China’s biggest job recruitment site, has filed for an initial public offering on the New York Stock Exchange under ticker symbol ZPN. It plans to raise up to $100 million.
Companies that stand to benefit from the IPO include Seek International, Australia’s largest online job site, which owns a 79% stake in Zhaopin, and Cavalane Holdings, which holds 19.3%.
Zhaopin was founded in 1994 and had 74 million registered users as of 2013 and about 10.5 million job postings from 250,000 unique customers in the fiscal year ending June 2013, when it recorded $147 million of revenue. Most of that amount, or 84.3%, came from its online recruitment business.
Its filing is one of several Chinese tech companies that will or are expected to hold U.S. IPOs this year. The most notable is Alibaba, China’s biggest e-commerce firm, which is expected to hold its IPO soon. Its public offering may value Alibaba at more than $100 billion.
Microblogging platform Sina Weibo also recently held its IPO (though its value fell after censorship by the Chinese government) and Alibaba rival JD.com is reportedly planning a U.S. offering for later this year.
The high profile of these companies mark a turnaround in investor sentiment toward Chinese stocks listed in the U.S. since 2012, when share prices fell after several firms pulled out of the U.S. stock market in response to accusations of improper accounting by regulators.
As Re/code’s Kara Swisher noted in an article about Alibaba’s imminent IPO, investor interest in Chinese tech stocks also runs counter to their U.S. counterparts, including Box, which recently delayed its own IPO.
Zhaopin is raising funds as its competition increases in China. According to TechNode (TechCrunch’s partner site in China), the top three job listing and recruitment sites in the country are Zhaopin, 51job, and ChinaHR.
For example, LinkedIn entered the Chinese market in February. Though China is a notoriously difficult market to tap for foreign tech companies, LinkedIn already had four million registered Chinese users from 80,000 different companies on an English-language site that had been accessible in the country for 10 years before its official launch.
As part of its official launch, LinkedIn told TechCrunch’s Ingrid Lunden that the company had formed a joint venture with Sequoia China and CBC to expand its business in the country and develop localized services. For the company, China presents a potential market of 140 million professionals, or about one in five of all knowledge workers globally, according to LinkedIn CEO Jeff Weiner.
Zhaopin also has to contend with several domestic challengers that have attracted investor attention by focusing on specific markets. These include Liepin, an executive recruiting platform that landed a $70 million Series C round in April; Neitui, an IT job site; and RenRen Headhunting, a crowdsourcing recruiting app.
Alibaba files for IPO in US
May 7th, 2014
Alibaba Chairman and Non-executive Director Jack Ma.
China's e-commerce giant Alibaba has filed initial public offering (IPO) document to the U.S. Securities and Exchange Commission (SEC) with plans to raise one billion U.S. dollars, according to SEC information and well-informed sources.
Announcing this in an internal communication to employees, founder and chairman of Alibaba Ma Yun said, "Becoming a listed company has never been our goal. It is a tactic and means to realize our mission."
In its filing Alibaba gave no date for the proposed IPO or whether it would be on the New York Stock Exchange or Nasdaq. It cited its advantageous placement in a nation in which e-commerce is fast becoming a way of life, as Chinese consumers turn to the Internet to buy innumerable items.
Noting that being listed in the United States will expose Alibaba to chanlleges in the global financial market, Ma said,"Not all companies have the opportunities to face such global chanlleges. We are honored to be one of them."
Analysts said the one billion U.S. dollar is only an initial figures and that the actual amount could be much bigger.
Often described as a combination of EBay and Amazon, Alibaba handled $240 billion of merchandise in 2013. With more than 7 million merchants, it has more than $2 billion in revenue and profit of more than $1 billion.
Alibaba's sheer size could weigh on the stock price of US rival Amazon.com if the Chinese company's shares are added to indexes and portfolios targeting e-commerce and related sectors, analysts said.
"Amazon simply doesn't measure up to the size of Alibaba's earnings and earnings growth rate," analyst Robert Wagner wrote.
Alibaba's announcement continues a flurry of IPO filings by Chinese technology companies. Internet security application developer Cheetah Mobile is expected to go public on the New York Stock Exchange on Thursday in an IPO expected to raise $153.75 million to $178.35 million. Tuniu, an online tour-booking website, plans to hold an IPO Friday on the Nasdaq Stock Market in a $120 million IPO.
Three weeks ago, Weibo Corp, the Chinese micro blogging service owned by Sina Corp and Alibaba Group Holdings Ltd, raised $285.6 million in a Nasdaq IPO while real-estate listings website Leju Holdings Ltd raised $100 million in an initial offering on the NYSE.
"The key question for China is how much new money, if any, Alibaba will raise in this US IPO," said Peter Fuhrman, chairman and CEO of Bejing-based China First Capital.
If all the cash goes to Japan's Softbank and US's Yahoo, then it's hard to see how Alibaba, its customers and the hundreds of millions of Taobao-addicted Chinese consumers will benefit from the IPO. US web-portal company Yahoo is a 24 percent Alibaba shareholder, while Japan's Softbank has a 37 percent stake.
ChinaHR jobs recruitment firm may float in Hong Kong
May 6th, 2014ChinaHR, the fast growing Asia-focused recruitment company owned by Leslie Buckley and Denis O'Brien, is mulling over plans to float in Hong Kong.
Buckley told the Sunday Independent that an IPO was "one of the options" being considered by the group in coming years. He noted that the investment in China was "a long-term play".
ChinaHR, formerly Saon, sold its European operations to Stepstone for around €76m last year. Its core Chinese business is forecast to grow by 60 per cent this year, having placed 1m jobs. Denis O'Brien owns 75 per cent of the recruiter, and chairman Buckley the other 25 per cent.
"One of the reasons we decided not to sell it to Stepstone was there was still plenty of heavy lifting to be done, which would see more value created over the next two years," Buckley added. This would give the firm further bulk, should it consider raising money on stock markets.
Some of the proceeds of the sale of its European operations will be reinvested in the Chinese operations, according to Buckley. "We've already put in about €60m," he said. The company may need between €20m and €40m more as it moves towards profitability over the next 18 months.
The company employs 2,600 staff in 26 cities across China, though it has a reach into 180 cities.
The acquisition of rival Monster.com in early 2013 catapulted ChinaHR into the number three slot in the competitive Chinese recruitment market. The market leaders are 51 Jobs and Zhaopin. Buckley indicated that ChinaHR was about half the size of Zhaopin, which plans to raise $200m in an IPO this year.
"There's a lot of small companies setting up every day there. The consolidation will come and we're in a very good position," Buckley added.
ChinaHR may seek acquisitions of between €2m and €10m as it continues its growth spurt. "We're always looking at acquisitions and we have an open mind."
While further buyouts may be on the cards, the sheer size of the Chinese jobs market means that there are enormous opportunities for organic growth. "We have moved into other products. We were about 90 per cent online, now we're about 55 per cent online and 45 per cent off line," Buckley said.
Forecast for foreign trade appears grim
May 5th, 2014
Canton Fair, China's largest trade fair, is held every spring and autumn in Guangzhou. Guangdong's trade value dipped sharply in March.
Imports and exports in Guangdong province, which account for nearly a quarters of the country's trade, will face more pressure this year after the southern economic powerhouse reported a sharp drop in trade numbers during the first three months, local government officials say.
Guangdong's trade value fell by 25.2 percent year-on-year to 1.36 trillion yuan ($217 billion) in the first quarter, with exports falling by 22.4 percent to 794 billion yuan, according to provincial customs data.
The customs authorities forecast a grim trade outlook for exporters in the province, especially in the booming Pearl River Delta, and say they will face more challenges due to an unstable global market and increased domestic labor and production costs.
In March, Guangdong's trade value dipped by nearly 38.6 percent year-on-year to 471 billion yuan, according to customs officials.
Lin Jiang, head of the public finance and taxation department of Lingnan College at Sun Yat-sen University in Guangdong, says that the lower trade numbers are a grim reminder that the province needs to change its economic growth model by upgrading industries and boosting domestic consumption.
Before the big trade drop in the first quarter, local authorities had set a trade growth target of just 1 percent in 2014.
Guangzhou, the provincial capital, also expects a lower trade growth target of 3 percent this year as the city will give priority to transforming its economic structure to focus on large investment projects.
Last year, Guangzhou's exports grew by 6.6 percent from 2012 to $62.8 billion, with actual use of foreign investment reaching $4.8 billion, according to the local government.
"The lower growth target, together with the sharp trade drop in the first three months, signals that Guangdong will no longer rely heavily on trade to maintain economic growth," Lin says.
Setting a lower trade growth target means that Guangdong has to develop new growth engines to sustain its leading role in the country's economy, Lin adds.
Guangdong's economy has taken pole position nationally in the country since the reform and opening-up process started. Last year, its GDP grew by 8.5 percent from 2012 to surpass $1 trillion.
In the past five years, Guangdong reported negative trade growth only in 2009, a year after the global financial crisis.
In 2013, Guangdong's import and export value increased by 10.9 percent from a year earlier to $1.09 trillion, according to a provincial government work report.
The province's export value increased by 10.8 percent year-on-year to $636.5 billion last year, the report says.
Guangdong will strive to increase domestic consumption by promoting Guangdong-made products across the country and will continue to optimize investment structure this year, according to the report.
Citing the first quarter statistics, Lin says Guangdong's trade structure has changed a lot, from heavily relying on processing trade in the past to high-tech and value-added exports.
"The trade structure is improving and a growing number of exporters have turned to innovation-driven trade," Lin says.
In sharp contrast to the processing trade, which reported a 22.6 percent decline year-on-year, Guangdong's general trade in the first three months increased by 13.9 percent year-on-year to 550 billion yuan.
Manufacturers in the Pearl River Delta, a major manufacturing and trade hub in Guangdong, also expect a bleak trade outlook in the months ahead.
Zeng Zhaoyang, a manager at the trade department at Guangdong Hopeful Electric Co, says the company reported a loss both in export value and business profits in the first quarter of the year.
"The fast export growth in the 1990s is long gone. Now we are struggling," Zeng says.
The company, a home appliance maker based in Foshan, Guangdong, reported a 10 percent year-on-year drop in exports last year, according to Zeng.
Stiff competition and increased labor and production costs have also squeezed business profits in recent years, Zeng says.
"We have to boost research and design investment and develop more product varieties for overseas markets so that we can stay profitable," he says.
A total of 2,000 exporters in Guangdong surveyed in a recent report by the Shenzhen-based Onetouch Business Service Co reported an export increase of only 1.44 percent year-on-year in the first three months of 2014.
However, Zhu Xiaodan, governor of Guangdong, said during the annual local legislative meeting in January that the province would maintain stable trade growth this year by introducing a series of measures to encourage local companies to better tap the international market.
"We will develop varieties of international markets, support local exporters to participate in overseas trade events, cultivate more overseas sales channels and carry out cross-border e-commerce for sustainable trade growth," Zhu says.
China's first mobile virtual operator launches business
May 5th, 2014T.Mobile, a unit of Telephone World Digital Group, on Sunday became China's first mobile virtual network operator (MVNO) to offer wireless voice and data services.
Currently, the services, wholesaled from China Telecom, are restricted to Hangzhou, capital of east China's Zhejiang Province, but they will expand to other parts of Zhejiang later, the company said without elaborating.
MVNOs do not own telecommunications infrastructure but provide services through network access they have leased at wholesale rates from another mobile operator.
Telephone World Digital Group is one of 19 companies, mostly privately owned, that have received mobile virtual network operator licenses. The companies also include subsidiaries of e-commerce giant Alibaba, and retailers Suning, JD.com and D.Phone.
Several other virtual operators are also expected to begin services soon. Suning and D.Phone started taking pre-orders for their telecom services on May 1.
Zou Xueyong, secretary general of the Industry Association of the Mobile Virtual Network Operators, said the mobile virtual network operators are expected to bring a "catfish effect" to the country's telecom industry, improving prices and services through competition.
"The virtual operators will help push forward reforms in the telecom industry and drive down prices of telecom services," Zou said.
However, many industry insiders remain cautious.
An executive from an MVNO, who declined to be named, said the virtual operators are not expected to bring about sweeping changes to the industry, which is dominated by three state-owned basic telecom operators -- China Mobile, China Unicom and China Telecom -- due to their unequal relations.
It might take a long time before people accept the virtual operators, he said.
The virtual operators will each need 1 million active subscribers to reach the break-even point, said an executive with China Telling Communications who declined to be named.
Sony sells VAIO PC unit
May 4th, 2014Sony Corporation (Sony) and Japan Industrial Partners Inc (JIP) on Friday announced that Sony and a business arm of JIP have entered into an agreement regarding the sale of Sony's personal computer (PC) business operated under the VAIO brand, Sony said on its website.
Following this agreement, Sony's PC business, which is operated in Japan under the VAIO brand, and certain related assets will be transferred to the JIP subsidiary.
Top Chinese dairy company reports 84 pct growth in 2013
April 30th, 2014Yili Group, China's largest manufacturer of dairy products, reported net profits of 3.2 billion yuan ($520 million) in 2013, up 84.4 percent from the previous year, according to its yearly report released on Tuesday night.
Yili took in 47.78 billion yuan in sales revenue last year, according to the report.
Yili's major rival Mengniu Group had sales revenue of 43.36 billion yuan in 2013 with net profits of 1.63 billion yuan, according to its yearly report.
Yili's strong performance was boosted by its integration of global resources and upgrade of products and research, said Chen Lianfang, a dairy industry analyst.
The company reported net profits of 1.088 billion yuan in the first quarter of this year, up 121.8 percent year on year.
Its baby milk powder plant in New Zealand, with an annual production capacity of 47,000 tons, is expected to begin operation in June, according to Zhang Jianqiu, executive president of Yili.
Yili inaugurated its research and development center at Wageningen University this February in the Netherlands, becoming the first Chinese dairy R & D center in Europe.
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April 30th, 2014
China Mobile employees promote its services in Yichang, Hubei Province. With more than 780 million subscribers in the Chinese mainland, China Mobile made inroads into Hong Kong by acquiring China Resources Peoples Telephone Co Ltd in March 2006.
Mainland carrier 'proves it can thrive' in tough, saturated market
China's biggest telecom carrier said its expansion to Hong Kong eight years ago has proved it can survive in one of the world's most competitive telecom markets, according to the company's Hong Kong chief.
State-owned China Mobile Communications Corp is the parent company of China Mobile Ltd, which has more than 780 million subscribers in the Chinese mainland. But many have said that the company's position reflects the high barriers to entry in its home market, not its competence.
Its success in Hong Kong demonstrates that China Mobile can thrive in an environment that is full of strong rivals, said Tiger Lin, chairman of China Mobile Hong Kong Co Ltd, in an interview with China Daily.
This year "marks the eighth year since China Mobile entered Hong Kong. It was tough work to gain a foothold here and win local customers," Lin said.
China Mobile Hong Kong, a wholly owned subsidiary of China Mobile, has seen its market share exceed 20 percent, compared with 13.6 percent in 2006. Lin said the company has become one of the top three telecom operators in Hong Kong by subscriber numbers, although he declined to provide specifics.
China Mobile made inroads into Hong Kong by acquiring China Resources Peoples Telephone Co Ltd in March 2006. Now, it has more than 1,000 employees in Hong Kong, mostly local residents, and directly runs 48 sales outlets in the city.
"Hong Kong's telecom market is highly competitive. We have five to six players in the field, all striving to grab a share out of the city's limited population," Lin pointed out.
The local government is only responsible for issuing spectrum licenses and doesn't limit new entrants. In Hong Kong, it's easy to enter the telecom industry but hard to survive, Lin added.
PCCW Ltd, the company led by Richard Li, the son of Asia's richest man, Li Ka-shing, holds a majority interest in PCCW-HKT Telephone Ltd, which is a dominant player in Hong Kong's telecom service market.
Hutchison Telecommunications Hong Kong Holdings Ltd, a unit of investment conglomerate Hutchison Whampoa Ltd, operates mobile services under a branch in Hong Kong known as Three.
Not all wireless network operators enjoy sound and stable growth rates in Asia's financial hub. Hutchison Telecommunications said 2013 net profit fell 25 percent to HK$916 million ($118.1 million) because of a weak market response to smart mobile phones and devices.
"Hong Kong's mobile service market is pretty saturated. So it is not an easy job for carriers to maintain stable development," said Colin Light, digital consulting leader at PricewaterhouseCoopers. It is particularly hard for smaller telecom operators to move up a notch when bigger ones have a tight grip on market share, he said.
According to the government's Office of the Communications Authority, the mobile subscriber penetration rate in Hong Kong was 241 percent as of January 2014, more than two times that of the mainland. It indicates that everyone in Hong Kong has at least two mobile phones.
Lin said it would be quite difficult for China Mobile to overtake local competitors and gain the top position in Hong Kong, but that the market provides valuable experience for developing businesses in the mainland.
"Hong Kong's telecom market is mature and fully competitive. We gain experience from this fierce competition and acquire in-depth understanding of product development," said Lin.
In addition, by launching a merged fourth-generation network in Hong Kong in 2012, China Mobile was able to test a domestic 4G standard in a real commercial environment, paving the way for a nationwide commercial rollout a year later.
New player seeks to enter mobile search industry
April 29th, 2014
People visit UCWeb's stand to try out its mobile browser at a mobile Internet trade show in Beijing.
Browser firm UCWeb forms Shenma Inc in joint venture with Alibaba
UCWeb Inc, a leading Chinese browser maker and app distributor, has formed a joint venture with China's e-commerce conglomerate Alibaba Group Holding Ltd to offer a mobile search service, a move that may become a threat to search giant Baidu Inc.
The Beijing-based UCWeb said on Monday at a ceremony celebrating the 10th anniversary of its founding that the mobile search joint venture will be called Shenma Inc.
The budget for the joint venture was not revealed, but UCWeb confirmed that it owns roughly 70 percent of the mobile search company.
Yu Yongfu, chief executive officer of UCWeb, said the time is ripe to enter the market as the booming mobile Internet offers his company a great chance to reshape its brand. "Mobile messaging, mobile search and mobile browsers are the three key demands in the era of mobile Internet," he said.
"Since no one company has established a dominant position in mobile search, we believe we enjoy a unique advantage to build Shenma into becoming No 1 in mobile search."
According to iResearch Consulting Group, the mobile search market will be worth $1.3 billion this year and $2.5 billion next year. Baidu currently leads the field due to its established position in the PC-based search engine sector.
Baidu saw its first-quarter revenue soar 59.1 percent year-on-year to 9.5 billion yuan ($1.53 billion).
Robin Li, Baidu's founder and chief executive officer, said during a first-quarter earnings conference call that traffic on Baidu's mobile search app should surpass personal computer-based search traffic this year.
Despite Baidu's solid performance, Yu said UCWeb has great advantages in mobile search as his company has built its business on the mobile browser.
"The design of mobile search should be mobile-centered rather than personal computer-based," he said.
Yu said that text-based search requests will be reduced in the mobile Internet era. More and more search requests are expected to be made through voice or even images.
According to the company's statement on Monday, UCWeb has integrated Alibaba's search department into Shenma and hired a team of experts from China's search giant Baidu Inc as well as Google Inc.
Lu Jingyu, an analyst with iResearch, said that as a mobile browser provider with more than 500 million users across the globe, the UCWeb browser can help Shenma wrestle market share away from Baidu.
"Moreover, by integrating with Alibaba's system, it is expected that people will search for and purchase products from Taobao.com and Tmall.com. The merchants on the two e-commerce platforms of Alibaba all can become potential advertisement buyers of Shenma," she said.
But Shenma still has a long way to go if its goal is to surpass Baidu as a mobile search giant in China, said Lu. "As none of Shenma's unique features have been released yet, I can see the emergence of a strong competitor but not a dominator," she said.
Shanghai developer cuts prices
April 29th, 2014Gold Tai Yuen Group, a Shanghai-based property developer, announced over the weekend a nearly 30 percent price cut for its high-end residential project in a Shanghai suburban area, the latest sign of a property cooling down in first-tier cities.
"The price is now 36,000 yuan ($5,724) per square meter on average, and we will offer 60 apartments this time," a staff member at the sales office, who did not give her name, told the Global Times on Sunday.
The Yulong Palace project, located in Shanghai's Pudong New Area and still under construction, has 113 apartments for sale ranging from 220 to 300 square meters. Since sales of the project kicked off on October 26, 2013, only 7 units have been sold as of Sunday, with an average price of around 50,000 yuan per square meter, data from the Shanghai Real Estate Trading Center showed.
The price cut is to celebrate the 18th anniversary of the group's establishment, Gold Tai Yuen said in a statement sent to the Global Times.
But analysts said the pricing of the project is still too high. In comparison, the average per capita disposable income of Shanghai's urban residents was 43,851 yuan in 2013, according to data from the Shanghai statistics authority.
Gold Tai Yuen's move has also strengthened views the cooling down of property prices has now spread to first-tier cities from second- and third-tier cities like Hangzhou in East China's Zhejiang Province and Wuxi in East China's Jiangsu Province, where some developers have been cutting new home prices since February.
"It's just a start. I believe more developers will join in to cut their home prices in first-tier cities as a means to spur sales and recoup funds, especially those cities with large inventories of unsold apartments," Yang Hongxu, deputy director of E-house China R&D Institute in Shanghai, told the Global Times Sunday.
New home sales have cooled down remarkably in the first quarter in Shanghai, given banks' credit policy adjustments and potential homebuyers' wait-and-see attitude, the local statistic authority said in a statement published on Wednesday.
Sales of new homes grew by 6.1 percent year-on-year to reach 4.185 million square meters in the first quarter of 2014, compared with a 43.3 percent year-on-year growth seen during the same period last year, the statement said.
In Beijing, growth of home prices will rise at a slightly slower pace this year compared to last year, as the municipal government plans to build 50,000 units of affordable homes, the Beijing Academy of Social Sciences said in a report released Thursday.
Yang expects the sluggish property market to have a negative influence on China's economic growth this year.
Wal-Mart replaces CEO for China region in Asia leadership shuffle
April 28th, 2014US retailer Wal-Mart Stores Inc, the world's largest retailer by revenue, has appointed a new chief executive for the China region, where the world's largest retailer is battling stiff competition from local rivals.
Sean Clarke, a Wal-Mart veteran and current chief operating officer in China, will take over the China CEO role from June 1, a statement from the firm said over the weekend. The current China chief executive, Greg Foran, will become Asia CEO.
China is key to Wal-Mart's international ambitions but it has stumbled in a market where consumers value safe and authentic food over the low prices the retailer is famed for. Wal-Mart has been in China for 17 years.
This year, Wal-Mart was embroiled in a scandal over tainted donkey meat. Workers also went on strike at some of its stores.
It is now changing its China approach, closing some big stores that never caught on with locals and focusing more on its own-brand products and imports, quality and safety.
Last week, the retailer announced a store closing in Hangzhou, provincial capital of East China's Zhejiang Province, marking the seventh closure since March.
Clarke has been with the grocery chain for 15 years, including the last two in his current role in China overseeing areas from logistics and merchandise to marketing.
"Sean has been a key contributor to our improved performance in China. His experience and background uniquely prepare him for this role and will ensure continuity for our progress in China," outgoing China CEO Greg Foran said in the statement.
Shanghai apartment sells for record $36.85m
April 25th, 2014A duplex at Tomson Riviera set a record in Shanghai for a single apartment when it sold for 228.5 million yuan ($36.85 million) Thursday.
The average price for the 986-square-meter unit in the heart of Little Lujiazui in Pudong New Area was about 231,000 yuan per square meter, also a city record.
The buyer had purchased an 824-square-meter duplex in the same development for 150 million yuan in November and has decided to replace it with the bigger unit, according to Oriental Morning Post, citing Bao Haifeng, director of sales at Tomson Group.
The Post didn't say how much the buyer sold the 824-square-meter duplex for.
The city's luxury housing segment has been stable this year. A total of 29 units, or 8,641 square meters of new homes with an average price of more than 100,000 yuan per square meter have been sold since January, according to Centaline Property.
A Sun Hung Kai Properties luxury residential project in Lujiazui saw nine units sold this year for an average price of 104,800 yuan per square meter, Centaline data showed.
The Bund House, a Greentown project in Huangpu District, recently offered a 690-square-meter duplex with an asking price of around 230 million yuan, or more than 333,000 yuan per square meter.
Chip maker targets China's middle class
April 25th, 2014MediaTek Inc, a Taiwan-based mobile chip maker, is aiming at China's growing middle class for increased sales of mid-price smartphones and wearable devices.
"The current market structure is about to change dramatically because of the enlarging middle class population and weaker phone subsidies from carriers," said Johan Lodenius, chief marketing officer of MediaTek.
He estimated the number of users of mid-price smartphones in the market is set to triple in coming years as the global middle class nudges up to near 5 billion by 2030.
More than 65 percent of the population will come from China and other Asia Pacific economies, doubling from less than one-third in 2009.
Looking forward, the company will focus on more affordable mid-price devices, Lodenius said.
"Higher than $700 phone products are so expensive for customers," he said.
Wearable devices powered by MediaTek chips are likely to be released later this year.
The company expects to release the world's first eight-core LTE smartphone chip in the third quarter.
China is the world's largest smartphone market followed by the US, and shipped close to 300 million smart devices last year, according to Wu Lianfeng, associate vice-president of International Data Corp China.
The Chinese market will see explosive growth in smartphone and tablet sales this year, primarily through telecom operator and online channels, according to the IDC.
MediaTek has been known as a low-end mobile chip maker. It was the world's third-largest maker of chips in 2013 by shipment, following Qualcomm Inc and Broadcom Corp from the United States.
The company shipped more than 600 million smartphone chips in 2013, including 350 million for featured phones and the rest for smartphones and tablets.
Less than a month before MediaTek unveiled its attempt to enter a higher-end market, Intel Corp, maker of high-speed x86-based chips, announced it will provide cheaper products for Chinese original equipment manufacturers.
The move was believed to position the US company to gain market share.
Microsoft to seal takeover of Nokia's handset business
April 24th, 2014Microsoft will complete its acquisition of Nokia's handset business this Friday, according to a Microsoft's statement, thus ushering a new chapter for Nokia.
In total, Microsoft will wrap up 5.4 billion euro ($7.5 billion) for the takeover this coming Friday.
"The completion of this acquisition follows several months of planning and will mark a key step on the journey towards integration," Microsoft said in Monday's statement.
Industry-watchers believe that this deal could open "a new chapter" for Nokia, rather than closing the book on the company.
With its market share greatly eroded, Nokia, once a giant of mobile phone business, fell victim of intense competition from its rivals Apple and Samsung.
Jobless rate 5.17 pct in march, survey says
April 24th, 2014China's polled unemployment rate in March was 5.17 percent, slightly lower than in February, said Li Pumin, secretary-general of the National Development and Reform Commission, on Wednesday.
It was the first reference to the jobless rate since Premier Li Keqiang mentioned it in an article in the Financial Times in September.
Traditionally, the government publicizes the urban registered unemployment rate. That number has long been criticized as a biased and deflated one. It also has rarely changed, staying at about 4.1 percent since 2010.
As an alternative, the government has administered a monthly survey in 65 major cities. The number is currently available only to policymakers and has not been made public.
Premier Li said in September that China's polled unemployment rate was 5 percent for the first half of 2013. Li Pumin did not elaborate on what the number was in February this year.
Citing the low unemployment and moderate inflation rates, Li Pumin said the economy is stable and healthy. As a result, the government does not foresee having to roll out stimulus measures.
Toyota sells more than 10 million vehicles globally in FY 2013
April 23rd, 2014Japan's Toyota Motor Corp. said Wednesday that its global group sales in fiscal 2013 gained 4.5 percent from the previous year to 10,133,000 units, becoming the first automaker whose annual sales topped 10 million units.
According to the corporation, the upbeat sales in the one-year period towards March were partly boosted by strong performances in North Korea and China. The consumption sales tax hike from April 1 also stimulated last-minute buying in domestic market.
The automaker also projects its group vehicle sales will total 10.32 million units in the next fiscal year.
Weibo makes debut on Nasdaq
April 18th, 2014
Weibo Corp, Twitter Inc's counterpart in China, made its debut on the Nasdaq in the United States on Thursday, becoming the first publicly traded Chinese social media company.
The micro-blogging service, owned by Sina Corp and Alibaba Group Holding Ltd, priced its initial public offering at $17 per share, which was at the bottom of its planned range between $17 and $19. It opened unchanged at the issue price.
The Beijing-based company, which began trading publicly under the ticker WB, said it hopes to sell 16.8 million Class-A American depositary shares, less than its original plan of selling 20 million shares.
The IPO would allow Weibo to raise up to $328.44 million in capital. Twitter Inc raised $1.8 billion from its IPO in November 2013.
Charles Chao, chief executive officer and chairman of the board of Sina Corp, said the setting of any IPO price is based on demand and supply in the stock market.
"Because of the recent downturn of the IPO market in the US, we are happy that we can still set Weibo's IPO price at the bottom of our initial targeted range," Chao said at an online media briefing to a group of reporters on Thursday night Beijing time, ahead of the IPO.
Weibo, which reported a monthly active user base of 144 million as of March this year, first filed for its IPO on March 14, joining seven other Chinese Internet companies seeking capital in the US. That doesn't include China's e-commerce conglomerate Alibaba, which is approaching a highly anticipated IPO in the US.
Alibaba agreed a year ago to buy a 19 percent stake in Weibo for $586 million and plans to exercise an option to raise that stake to 32 percent.
Weibo was established in 2009. The company has only been profitable in the fourth quarter of 2013. The company reported a net loss of $47.4 million in the first quarter of this year. This is more than twice the $19.2 million loss it posted in the same quarter last year.
Revenues of $67.5 million in the first quarter of this year were more than double the previous year's, but they fell about 5.5 percent from the previous quarter. The company attributed the shrinking revenues to the seasonal effects of the Chinese Lunar New Year, saying the performance was in line with its expectations.
Analysts worried that Wall Street investors may not be as enthusiastic about Weibo as they were about Twitter's IPO five months ago.
Tian Hou, chief analyst with T. H. Capital LLC, an independent research and investment advisory firm, said it was no surprise Weibo failed to reach its initial target of raising $500 million as it suggested it would in its Securities and Exchange Commission filings.
"The primary reason is the downturn of the overall stock market in the US. Many US-listed Internet companies, such as China's e-commerce company Vipshop Holdings Ltd and China's search giant Baidu Inc, saw their share prices drop in recent weeks," Tian said.
Wang Xiaofeng, an analyst with US-based consultancy Forrester Research Inc, said Weibo missed the best time to go public because of the changing dynamic in the Internet industry in China, which has seen more powerful competitors emerging over the past year.
"We are all aware that it has been 'beaten up' by Tencent Holdings Ltd's WeChat, which is the most popular messaging app in China's mobile Internet sector," she said.
According to Wang, the two platforms differ in their potential for public broadcasting and promotional use, to which Weibo is currently better suited.
"The biggest challenge for Sina Weibo therefore is finding a way to increase the targeting ability of its current advertising and provide more effective marketing offerings to marketers before they find alternative social platforms on which to market or before user activity drops further," she said.
Zurich Insurance hunts for M&A targets in China
April 18th, 2014Swiss giant, attracted by possibilities for growth, seeking Shanghai branch
Zurich Insurance Co Ltd is actively seeking merger and acquisition opportunities in China to fuel its business expansion, a company executive said on Thursday.
"We are looking for appropriate M&A opportunities to boost our presence and expand our business scope," said Stuart A. Spencer, chief executive officer of general insurance for the Asia-Pacific region.
He said Zurich adopted a "defensive" stance during the global financial crisis. Now, thanks to a solid balance sheet, the company wants to be more aggressive.
"We have no preference as to whether the target should be a domestic one or an international one having operations in China, but it should be a strategic and cultural fit with our business," Spencer said.
Last April, the China Insurance Regulatory Commission approved the Swiss company's plan to transform its Beijing branch into a wholly owned subsidiary, making it easier to expand across the country.
Spencer said the company has since submitted an application to the CIRC to open a branch in Shanghai.
Zurich General Insurance Co (China) Ltd generated premium income of 496 million yuan ($80 million) last year, up 16.6 percent year-on-year.
"We expect to maintain a growth rate no lower than that this year," said Spencer. "And we aim to achieve a healthy profit margin within three years."
China's economic growth has been slowing, but Spencer said that the company is still extremely bullish on its business prospects in the nation.
"China's economy remains very resilient, and it is incredible for the world's second-biggest economy to maintain such rapid growth," said Spencer.
The country's economic restructuring to give consumption more of a role is good news for the insurance industry, he said.
According to Spencer, the company doesn't plan to be the largest player in the market. "We aim to generate underwriting returns, and we will not be seduced by mere rapid growth," said Spencer. "Massive scale never interests us, but we do want to be bigger than the scale we have right now," he added.
The company is closely watching conditions in the vehicle insurance market, but its focus remains on liability insurance and special financial insurance, according to Spencer. Profit margins in vehicle insurance are regarded as not very attractive.
China's continued urbanization and rising household wealth will sustain the growth dynamics in the country's nonlife insurance sector, but intense competition will further weaken the sector's underwriting margins in 2014, Fitch Ratings Inc said in a report.
In light of contracting underwriting margins, Fitch believes small insurance companies with limited operating scale and less diversified insurance books will post weaker operating results in the coming year.
Nonlife players are likely to see premium growth of 15 to 20 percent over the next 12 to 24 months, according a report by Standard & Poor's Financial Services LLC.
But the segment's performance can be volatile and subject to unexpected natural disasters. Inadequate pricing, or underestimated risk profiles, of commercial property and marine lines in China are likely to persist because of stiff competition, according to S&P.
Major listed Chinese nonlife insurers will still achieve growth in their underwriting surpluses, albeit at a slower pace, because of diverse revenue streams and better spread of risk.
"Ongoing business expansion coupled with slower surplus growth will continue to pose a strain on insurers' capital adequacy, although many insurers improved their solvency adequacy through fresh equity injections or subordinated debt issues over the past year," said Terrence Wong, director of insurance at Fitch.
Jaguar Land Rover aims for sustainable growth in China
April 17th, 2014
This year the Jaguar F-TYPE gains traction in Chinese market.
Jaguar Land Rover China finished the first quarter of 2014 positively, with sales of more than 29,500 vehicles, marking a year-on-year growth of 36 percent.
Models with 3.0L engines and less made up about 98 percent of the sales, due to their fuel efficiency and enhanced performance.
In line with the healthy market development, Jaguar Land Rover is starting a new chapter of sustainable growth in China, with a focus on customer satisfaction.
"After our pivotal year in 2013 when China became both Jaguar and Land Rover's single largest global market, this year we are glad to see continued growth as even more Chinese consumers appreciate our British brands," said Bob Grace, regional president of Jaguar Land Rover Greater China.
"Moving forward, our customers remain at the heart of everything we do, as we target sustainable development in China. As we do so, we are also endeavoring to further our efforts to give back to the communities we operate in with our CSR programs," he said.
Making drivers feel 'alive'
With customers attracted to its "Alive" brand, Jaguar grew a healthy 49 percent year-on-year, selling more than 6,100 units.
Sales of consistent bestsellers, like the Jaguar XJ and XF, were driven by the appeal of the 2.0L I4 turbocharged and 3.0L V6 supercharged engine variants, which offer added efficiency without sacrificing performance.
This year, the dynamically capable, performance-focused Jaguar, the F-TYPE, also gained traction in Chinese market, as an all-aluminum two-seater sports car engineered for high performance.
Determined to "never stop achieving", Jaguar plans to go even further in the market with new products and campaigns featuring new ambassador David Beckham who embodies the brand spirit.
Innovating premium SUVs
Land Rover strengthened its position as a world-leading premium SUV maker with its first quarter sales of more than 23,400 units, up 33 percent.
Popular models like the Freelander 2 and the Range Rover Evoque with the world's first 9-speed automatic transmission, continued to lead the line-up.
The success of the all-new Range Rover and Range Rover Sport, which feature the lightweight all-aluminum monocoque body structure, prove that customers appreciate the benefits of advanced engineering and an enhanced driving experience.
As Land Rover celebrates 25 years of the Discovery, it will feature its Discovery Vision Concept Vehicle at the upcoming Beijing Auto Show.
Putting customers first
Leveraging its network of 248 authorized and 144 operational dealer partners throughout China, Jaguar Land Rover is committed to serving its customers as best it can.
As the automaker enters a period of sustained development in China, its "customer first" philosophy will continue to drive its foremost goal of delivering excellence, whether in products, services, or brand experiences.
Disney-Shanghai partnership portends a creative boost
April 17th, 2014Walt Disney Studios and Shanghai Media Group Pictures will co-develop stories with Chinese elements, says an executive of the Magic Kingdom.
"The deal focuses on the weakest point in the Chinese film industry, the storytelling," says Stanley Cheung, managing director of The Walt Disney Company, China.
Under the deal, US-based action, adventure and fantasy writers will team with locally based Chinese writers and filmmakers to develop stories and scripts that bear all the hallmarks of Disney films and feature authentic Chinese elements fit for local co-production and aimed at the international market.
The two sides will jointly set up a fund, collecting scripts in both English and Chinese and co-owning the copyrights.
"SMG is proud to work with Disney to create a new era of classic content featuring uniquely Chinese storytelling elements for audiences around the world," says Su Xiao, chief executive officer of SMG Pictures.
"The combination of our media coverage and understanding of the China market and Disney's long-standing success in telling magical stories will surely spark a brand-new chemistry that transcends age and borders."
China's box-office revenue has sustained rapid growth over the past decade. In 2013, the year's gross was 21.8 billion yuan ($3.5 billion), second only to the United States.
The first quarter of 2014 has seen a 31-percent rise over the same period last year, reaching 6.7 billion yuan.
For Hollywood blockbusters, only 34 of which can be imported for theatrical release every year in China, the country has become a tempting territory.
"The Chinese market is absolutely an important market now," says Cheung. "Films with Chinese elements should sell."
The cross-cultural exchange will expand training opportunities between Chinese and US writers and filmmakers.
In 2012, Disney joined with the Ministry of Culture's China Animation Group to be a founding partner of the National Chinese Animation Creative Research and Development Project. The initiative, now in its third year, aims to advance China's animation industry and train local talent and promote the development of Chinese content and franchises.
In the Beijing Film Festival, which opened on Wednesday, Disney will host a forum on animation, to be attended by the producer and visual artist behind Frozen, the Academy Award-winning Disney film that has generated nearly 300 million yuan in ticket sales in China.
The nongovernmental communications between filmmakers in the two countries have also been expanding.
In 2013, Paramount Pictures and the Motion Picture Association of America invited five Chinese directors, including Xue Xiaolu of Finding Mr. Right and Wuershan of The Painted Skin series, to visit their studios and see a preview of the films for summer 2014. The directors also met with executives of different departments and exchanged their visions for the industry.
The MPA is also hosting a film workshop during the Beijing Film Festival. Hollywood producers and executives and established Chinese filmmakers will spend two days together, during which rising directors will pitch their stories.
"Creativity is not built in one day," says Cheung of Walt Disney.
"But I have full confidence that we will finally find appealing global stories with a Chinese touch."
Internet recruiter aims for base of millions
April 16th, 2014Liepin.com, China's leading Internet-based recruitment service provider, plans to set up a global talent development center with a base of 20 million professionals by the end of 2014, its CEO said on Tuesday.
The company announced on the same day that it received C-round financing totaling $70 million from equity investment companies Warburg Pincus and Matrix Partners China, which amounts to the largest investment in the sector for the past five years.
Liepin.com previously received A - and B-round financing totaling about $10 million from Matrix Partners China.
The new funding will be used to set up a global talent development center and promote the company's brand, Chief Executive Officer Dai Kebin told China Daily.
Dai said the company has already signed up 11 million professional staff, and the candidate base will reach 20 million by year-end.
Dai said Liepin.com has more than 100,000 enterprise clients, and each pays the company more than 10,000 yuan ($1,600) annually.
"Our profits mainly come from enterprise clients and employees," said Dai, adding that the fees for enterprise clients are very competitive compared with those charged by traditional recruiters.
A headhunter in China will charge an employer about 20 percent to 30 percent of an employee's annual income, but Liepin.com charges only for a package of services, said Dai.
"Liepin.com will promote the healthy development of the Chinese recruitment services market because we solve the problem of information asymmetry," said Dai.
Dai said headhunters who only can provide employees' resumes will be less competitive.
"Warburg Pincus has been following the Internet-based recruitment sector closely in recent years and was impressed with Liepin's unique business model and the changes Liepin has brought to the recruitment sector," said Julian Cheng, a managing director of Warburg Pincus.
Cheng said traditional Internet-based recruitment agencies basically operate as advertisement platforms for employers, but Liepin.com has created an online model that is built around the needs of professionals and members.
"After witnessing the rapid growth of Liepin.com in the past three years, Matrix Partners China is more and more convinced that Liepin's business model is shaking up the current Internet-based recruitment sector and has singled itself out as the one to win," said David Zhang, a founding managing partner of Matrix Partners China.
Zhang said the new investment will help the company improve its vertical platform, which incorporrates personal computers, mobile and call center services. That in turn will maximize the value it will provide to its professional members.
According to Zhang, Matrix Partners China favors investing in platform companies, and Liepin.com is a career development platform connecting employers, headhunters and professional managers, and catering to their recruitment needs.
"But operating a good platform company is very difficult, and Liepin.com has made it, so we are not afraid that the Internet giants such as Baidu, Alibaba or Tencent will enter the market," said Zhang.
Beijing ranked most global city on the mainland
April 15th, 2014
Beijing has made it into the top 10 of the world's most global cities for the first time, ranking eighth in the A.T. Kearney Global Cities Index.
The index, introduced in 2008 by the global consulting firm, includes 84 cities.
Beijing scored an overall 3.5 in five categories, including business activity, human capital, information exchange, cultural experience and political engagement. It stood out from other Chinese cities in terms of the number of Fortune 500 companies, international schools, broadband subscribers and museums.
New York, London and Paris have held fast to their positions as first through third since 2012.
"The increasing global importance of Chinese companies has helped catapult Beijing to fourth place on the business activity dimension. This, together with some improvement in scores for human capital and cultural exchange, has been more than enough to offset declining relative performance in information exchange and international political engagement," A.T. Kearney experts explained.
Johnson Chng, managing director of A.T. Kearney Greater China, said, "Clearly Beijing went up in the ranking due to its rising importance as a business center in addition to being the political center of China."
However, he added, the air pollution issue is now a growing concern for many Beijing residents that, if not addressed soon, will cause an outflow of talent.
"In fact, many of my friends and business associates have moved out of Beijing in the last six months, and many are indeed contemplating the idea, too, for the sake of their family," he said.
In a recent survey conducted by MRIC Group, an international executive recruitment firm, 47.3 percent of the 269 respondents in Beijing said they would like to relocate this year because of air quality concerns. The most-preferred destinations are North America, Shanghai, Europe, Hong Kong, Singapore and New Zealand.
As human capital is weighing ever more among the five categories, some companies have to improve the working environment to retain talent regarding the air quality in Beijing.
"Companies should prepare air purifiers especially when the buildings don't have such machines," said Robert Parkinson, founder and managing director of the international recruitment group RMG Selection.
Shanghai, ranking 18th in the index, was the only city on the Chinese mainland that came close to Beijing. In fact, it scored higher than Beijing in human capital, given its larger foreign-born population. Shanghai also performed well in business activity.
Beijing lags behind Shanghai in human capital because of the capital city's "size of the foreign-born population, scores of universities in the global 500, number of inhabitants with tertiary degrees, international student population and number of international schools," explained Chng from A.T. Kearney.
On the other hand, Shanghai ranked lower due to a less-ideal score in political engagement. Specifically, Shanghai is home to a smaller number of international organizations, embassies and consulates, think tanks, political conferences and local institutions with international reach.
The Shanghai Pilot Free Trade Zone will certainly help the city's globalization in the long term. However, the impact and the speed of that depends on policy implementation as there are still lots of details to be sorted out in terms of how exactly Shanghai FTZ will work, Chng said.
"In the short term, I do not see any material change as most companies are simply trying to take advantage of the FTZ to help with the existing business rather than attracting significant new business," said Chng.
Other Chinese cities in the list saw their rankings drop.
Guangzhou dropped from its rank of 60 to 66 this year due to a significant decrease in political engagement. Shenzhen dropped from 65 to 73 due to a decline in its human capital score.
Tencent seeks innovation with Qianhai bank
April 15th, 2014Tencent is scouting for innovation opportunities in Internet finance in the Qianhai Economic Zone in Shenzhen as the company has won the license to set up a private bank.
"Tencent will initiate the establishment of a privately-owned bank in Qianhai, Shenzhen," the Internet giant said in a statement yesterday. Qianhai has been picked as a special economic zone in Shenzhen to boost cross-border trade and investment with Hong Kong.
Tencent, whose private bank proposal is currently being reviewed by the China Banking Regulatory Commission, will leverage its advantage in the Internet industry to focus on online finance innovation to better serve its users more efficiently, according to the statement.
Tencent is hiring senior managers to develop the new bank's strategy, China National Radio said on its website yesterday, citing unnamed sources from the Shenzhen Financial Services Office which, however, didn't comment.
Chen Zhiwu, professor of finance at the Yale School of Management, said at the Boao Forum last week that private banks should operate in regions that lack financial services and where state-owned banks don't have a presence. He suggested Gansu, Yunnan and Shaanxi provinces and the Guangxi Zhuang Autonomous Region.
The State Council has approved the program to set up five private banks in Shanghai, Tianjin and the provinces of Guangdong and Zhejiang.
E-membership shows strong potential in O2O business
April 10th, 2014An online membership product jointly launched by department store operator Intime Retail (Group) Co Ltd and e-commerce giant Alibaba Group Holding Ltd has showed strong potential for developing online-to-offline business by gaining 1.7 million users within a month.
According to a press release from Intime Retail on Wednesday, the virtual membership card helped Intime gain more than 1.7 million members in 30 days. The department store operator gained about 1.3 million offline members during the past 16 years since it was founded.
The e-membership, which launched on March 8, is the first online membership product in China that allows customers at brick-and-mortar stores to make payments for offline purchases through mobile phones.
The innovative e-product named Yintaibao is integrated with customers' membership information. Members can enjoy the advantages of Intime membership by taking their smartphones to any brick-and-mortar store of the company across China, and can pay through mobile devices as well.
The e-membership product is a major move by Intime and Alibaba to develop their online-to-offline business.
Alibaba said at the end of March it had invested as much as HK$5.37 billion ($692.5 million) in Intime to develop its online-to-offline business.
The investment is expected to give Alibaba a stake in Intime of about 9.9 percent when the deal is completed. The convertible bonds are estimated to allow Alibaba to take no less than 25 percent of Intime when it converts those bonds into common stock shares within three years.
German companies upbeat on China's future growth
April 8th, 2014China's growth slowdown is normal as it is going through an economic transformation period, with the transition offering new opportunities for foreign firms, an official from the German Chamber of Commerce has told Xinhua.
"We expect general growth to slow which is a natural economic development when the reference base is increasing. The switch from a rapid to a more sustainable economic progress in China is the right course," said Alexandra Voss, executive chairwoman of the German Chamber of Commerce, North China, on Monday evening during an interview.
China is heading in the right direction by rebalancing its economy and slowly introducing consumption as one of the main economic drivers in addition to exports and large-scale investments in infrastructure development like highways and housing, she added.
There are about 4,500 German companies operating in China. Of these, 60 percent are members of the German chamber. In 2013, 400,000 people in China were employed by German companies.
According to the organization's annual Business Confidence Survey, members of the German chamber are very positive about their business forecast in the coming years. In 2012, 22.4 percent of respondents perceived their business outlook to be improving; in 2013 this rose to 40.5 percent, showing more confidence in the development of the Chinese market.
Chinese President Xi Jinping said during his visit to Germany in late March that China's internal impetus is driving the country's sustainable and stable growth, thus providing a huge market and opportunities for its cooperation partners, including Germany.
China needs "German quality", while Germany's growth requires the Chinese market and "China speed", the president said.
During his stay in Germany, Deutsche Bundesbank and People's Bank of China announced the establishment of a clearing center for transactions with RMB in Frankfurt am Main, the business and financial center of Germany.
"This important step is highly beneficial for many German SMEs doing business with Chinese counterparts by easing financial issues between them and lowering the transition costs of deals," Voss said.
She predicted that certain strategic industries will grow and offer opportunities during China's market-oriented reform, such as sustainable urbanization, green building creation and energy saving consultation.
The strong focus of the Chinese government on environment and energy and its decision to put more emphasis on these areas will bring great business opportunities for German companies, she said.
But Voss pointed out that German companies still see themselves confronted with a number of challenges in China such as Intellectual Property Rights protection. They also expect easier and wider market entry for foreign companies.
"We reckon that a successful execution of the reforms will ignite competition, provide more opportunities, and minimize challenges for foreign companies. Then it is only a matter of time before natural market forces facilitate more sustainable growth", she said.
Jack Ma's firm buys into financial software company
April 4th, 2014A company in which Chinese e-commerce billionaire Jack Ma Yun owns 99 percent of has agreed to buy a 20.62 percent stake in the country's leading financial software company Hundsun Technologies Inc for 3.3 billion yuan ($531.3 million) in cash, Shanghai-listed Hundsun said in a filing on Thursday.
That will give Ma's investment management firm Zhejiang Finance Credit Network Technology a controlling share of Hundsun, the filing said.
The deal has not been finalized yet and still needs the approval from the Ministry of Commerce.
Analysts said that Ma's acquisition aims to improve Alibaba Group's Internet financial services technologically, even though Hundsun tried to emphasize in the filing that the deal has nothing to do with the e-commerce giant, founded by Ma.
"Hundsun does a good job of providing IT services for traditional financial institutions. And the acquisition could help Alibaba obtain certain experience over how to run financing offline directly from Hundsun and further its presence in China's financial services sector," said Li Chao, an Internet financing analyst with Beijing-based market research firm iResearch.
Hangzhou-based Hundsun, founded in 1995, provides software solutions to financial clients including banks, insurance firms, brokerages and fund management companies.
According to the company's annual report, it held a leading position in providing IT services for financial businesses including fund management and banking. The report for last year is not available on the Shanghai bourse.
Upon the completion of the deal, the company and its shareholders will stay independent in terms of human resources, operations, finances and structure, said Hundsun. Its trading will be resumed on Tuesday.
According to the filing, it has no plan of changing current main business in the next 12 months either and the deal will not impact the financial results this year.
But Li said that some of its financial clients may consider turning to Hundsun's rivals, as Alibaba's current financial services compete with those offered by traditional financial institutions.
Chinese Internet companies including Alibaba, Baidu and Tencent Holdings, are all stepping up efforts in providing financial services, which has become a big threat to banks, according to Li.
Alibaba set up a financial service platform, named "Zhaocaibao," in Shanghai Thursday, enabling financial institutions and customers to complete transactions online, news portal 163.com reported.
But the firm told the Global Times Thursday evening that it did not hold any press conferences about "Zhaocaibao."
The deal also raises concerns that Alibaba's Internet finance company may get access to Hundsun's financial database and gain an unfair advantage, according to media reports.
Manufacturing data a mixed bag
April 2nd, 2014China's manufacturers had a mixed performance in March with state-owned companies reporting the first rebound in four months while private firms saw their business plunge to an eight-month low, two separate surveys showed Tuesday.
It was not a surprise that the survey results were divergent, analysts said, generalizing that China's economy remained on the soft side since the rebound was so limited in scale.
The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in China's state-owned industrial companies, ticked up to 50.3 in March from 50.2 a month earlier, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
A reading above 50 means expansion, and the latest rate was the first increase since November.
The components showed that production edged up to 52.7 in March from February's 52.6, while new orders rose 0.1 point to 50.6, and employment gained 0.3 points to 48.3. Input prices lost 3.3 points to 44.4, indicating little inflationary pressure for the future.
Zhao Qinghe, an analyst with the bureau, said the indices indicated a stabilizing industrial sector in the world's second-largest economy.
"Chinese manufacturers resumed their businesses after the Spring Festival holiday, which helped push up the official PMI," Zhao said. "The warming-up demand in external markets also bolstered the headline index, with new export orders returning to growth for the first time since December."
However, the HSBC PMI, which gauges conditions at mostly private and export-oriented manufacturers, fell to 48 in March, an eight-month low that was down from 48.5 in February.
It marked the third straight month that the HSBC PMI pointed to contracting activities.
Qu Hongbin, chief economist for China at HSBC Holdings Plc, said the latest deterioration was the strongest since July 2013.
"It confirmed the weakness of domestic demand conditions," Qu said. "This implies that the first-quarter economic growth is likely to fall below the annual target of 7.5 percent."
Li Maoyu, an analyst at Changjiang Securities Co, said China's activities were on the soft side even through the official PMI staged a slight rebound. "The increase in the official PMI was so weak that it can't defy the economic slowdown which was evident in many sectors."
Huawei overtakes Ericsson in revenue
April 1st, 2014Shenzhen-based Huawei Technologies Ltd surpassed arch rival Ericsson Inc for the first time in 2013 after it posted an 8 percent rise in revenue to 239 billion yuan (US$38.4 billion), China's biggest telecommunications equipment maker said Monday.
Huawei, which last year posted the fastest profit growth in four years, also expects revenue to grow 10 percent annually from this year to US$70 billion in 2018.
Huawei's net profit rose 34.4 percent to 21 billion yuan last year as it benefited from a steady carrier business and rapidly growing enterprise and consumer activities.
Its revenue in 2013 beat Ericsson's US$35.3 billion revenue.
"Thanks to the favorable global macro-economic and industry environment, as well as the effective execution of our company strategy, Huawei achieved our business targets for 2013," Eric Xu, Huawei's chief executive, said in a statement.
Huawei, now the world's No. 3 smartphone maker, benefits from companies investing heavily in cloud and mobile computing as well as selling more telecom devices and smartphones, industry insiders said.
Although Huawei's carrier network business grew only 4 percent, it still accounted for 166.5 billion yuan or 70 percent of its total income. The enterprise business surged 32 percent while the consumer business, including the phone unit, jumped 18 percent last year.
China's 'Apple City' - Assembling iPhones In The Urban Shadows
April 1st, 2014Employees who toil long hours for low wages at the Chinese factories that assemble the iPhone are part of the dark side of the country's rush to urbanization.
“Apple City,” where the Foxconn factories build the iPhone and other products for California-based Apple, is a strange new town, a patchwork of defaced countryside and overpopulated urban areas on the outskirts of southern Zhengzhou.
When the Taiwanese company Foxconn’s factories and their 300,000 workers established themselves here in the capital of the Henan province two years ago, the area was deeply disrupted by a chaotic urban boom. Some villages were destroyed, others were pierced by four-lane avenues, and corn fields are still surrounded by contruction sites.
In Dazhai, one of the villages at the edge of the immense square factory buildings, farmers just finished hastily building three-story, cube-shaped brick towers that offer “standard rooms, with hot water and Internet.” The little streets between them, paved with poor-quality concrete or simply covered with clay, are swarming with young people.
Needless to say, the village landlords are very happy. “Business is running smoothly,” murmurs a slightly stout woman whose family rents 62 rooms, each for for 600 yuan ($100) a month.
Apart from the few workers unwilling to stay in the dormitory or who live with their partners, these slumlords put up the thousands of employees and students attracted by this sweat economy with tiny profit margins and fierce competition. Though they are underpaid, Foxconn employees do spend in the local economy. But already, the barracks are in a pitiful state.
Apple City is in the early stages of urbanization, where nothing is made to last, with inadequate infrastructure and poor-quality material. “It seems like a joyful place after work with lots of young people,” says Liu Yang, a 27-year-old man from Sanmexia, a town bordering the Yellow River west of Zhengzhou. “Everybody has fun, but don’t go by appearances.”
Liu is distraught by this incredible concentration of young proletarians left to their own devices. He himself had become a supervisor at Foxconn and had managed to save a little nest egg, but he tried to start a business and lost everything. He’s now back at square one as an unqualified worker.
Inside the factory, discipline is sacred. But off duty, the law of the jungle prevails. In other words, the workers can’t rely on the police or on security forces to help them if they have a problem. A small mafia network is sucking the lifeblood out of the most fragile ones.
What, you don’t want to work here?
Perhaps unsurprisingly, Foxconn is having trouble recruiting workers. Xiao Bing, a former employee who owns a small recruitment agency, complains about how difficult it is to find “clients.” At best, he finds one or two per day. To interview, applicants need only an ID card. The maximum age of candidates was raised from 35 to 40, because people “are in constant transit,” he says.
One worker, 36-year-old Wang, a strong man with short graying hair, says he initially wanted his wife and son to come here and join him. “But it’s unthinkable,” he says. He comes from a rural area in the north of the province, where he left a steel mill job he found was too “hard” and “dirty.”
It didn’t take him long to become disillusioned at Foxconn. For starters, the dormitory is an hour away by bus and costs him 900 yuan ($150) a month, food included. Without extra hours, he is left with 1,000 yuan ($165 dollars) after tax per month, less than at the steel mill, where he earned 3,000 yuan monthly for eight-hour workdays. “They’re robbers,” he says of his new employer.
Wang’s crushed hope is telling. By bringing factories closer to pools of workers — such as in Henan, a poor province with close to 95 million inhabitants — industrial relocations were supposed to facilitate the urbanization of local migrants. But for these young workers, ending up in a dormitory in their region of origin tastes more like defeat than social promotion.
“I earn less here than I did working in electronics in Shanghai in 2008,” Xiadeng says angrily as he sits on the upper mattress of a bunk bed in the room he shares with five other workers. And these living conditions don’t exactly encourage job retention.
And yet, the airport economic zone in which Foxconn is located is undergoing a massive administrative reorganization. Established in 2013 as a new district of Zhengzhou, its population is expected to rise from 600,000 to four million.
Citizens in transit
The goal for the zone is to “avoid being too dependent on Foxconn and to vary the types of industries,” explains Liu Shaojun, professor of urbanism at Zhengzhou University. Five years from now, some villages will have been razed and absorbed by the suburbs. Their population will have been relocated. There will also be social housing, but not for those who work at Foxconn. “For that, they would need to have the same rights as people who live in the city, but they move too much,” he explains.
Indeed, Foxconn employees are officially still living in their hometowns because none of the numerous localities situated around the factories would be able to legally integrate that many new inhabitants in one go. Besides, those villages, where the land is owned collectively, are self-managed. The inhabitants, who are responsible for the infrastructures, don’t care about urban rationality or the environment. Only profits matter.
This ecosystem enables Foxconn to build iPhones at an enviable cost. “Quality” urbanization promoted by Chinese leaders is not a consideration for Foxconn or for the local authorities. “The dominant approach in China is very pragmatic,” explains Chinese studies expert Chloé Froissard. “Big cities integrate those they’re interested in, who have qualifications or take care of themselves. There is no logic of welfare state or of equal rights.”
In the karaoke rooms set up in the cellars of the dormitories, the young workers maintain that they have no intention to rot in Apple City. Of course, they would like to live in Zhengzhou, but their priority is to save money before trying to obtain an urban “hukou” (China’s domestic passport and household registration system). They are frightened of unemployment.
“If there’s no more work, I'll have nothing left,” says Liu Yang, the former supervisor. “At least with my hukou, I’ll always have a piece of land.” In the meantime, like hundreds of thousands of others, he will have to make do with being a citizen in transit.
Cities that have potential can resist bubbles
March 31st, 2014How do people compare China's housing market with the bubble in Japan in the 1980s, or that in the US in the 2000s? It is an important question because it determines the answer to an even larger question: What is a safe bet for investors in China?
The business media has run features about China's "ghost towns" built with huge investment and row after row of empty houses showing little trace of human activity.
In the last couple of weeks, more alarms were sounded - such as local real estate companies going under after failure to pay back their debt, and development funds defaulting when their bonds matured. The government has not stepped in to bail out the companies, and is unlikely to do so.
Even an economically-strong central government would balk at intervening, given the potential scale of the problem. It can address the issue only in a select number of cities and industries.
Economists say at least 60 percent of all companies listed on the A-share market have invested in real estate development during the last decade of unprecedented rise in asset prices. And, needless to say, all banks have housing mortgages as a main source of revenue.
Wouldn't it be a nightmare if real estate prices tumble in city after city, and even in Beijing and Shanghai, and if the real estate industry proves poisonous to banks' credit standing, and to the bond and stock markets?
No, no, no, say officials. We'll manage to do just fine, they pledge. But investors need to know how.
On the national level, officials may be right because, unlike the US or Japan, China is still a developing country in a number of ways such as in per capita income. Large numbers of people are still moving to big cities from rural and frontier regions to seek off-farm jobs, and from small cities to seek jobs with better rewards.
In response, the central government has come up with a plan to, from 2014 through 2020, help 100 million workers from rural areas who already work in cities to enjoy all social benefits, help a second 100 million poor urban residents improve their housing, and help a third 100 million move into the cities in central and western China.
Overall, China's urbanization ratio (people living in cities versus the entire population) is just above 50 percent. The figure is still lower if only those certified as urban residents are counted. A general tumbling of real estate prices is only possible when a nation's urbanization ratio exceeds 60 percent, said an official from the Ministry of Housing and Urban-Rural Development, citing examples that the same index is about 70 percent in the US, 67 percent in Japan and 65 percent in Europe.
However, all this applies only at the macroeconomic level. There could still be a world of difference between one city and another. While the country may still be some distance from a housing market collapse, dangerous over-supply (evidenced by all the ghost towns) will cripple the economies of second-, third- and fourth-tier cities that fail to attract new workers.
This is already happening. It is bringing down smaller real estate developers and is a threat to banks with high exposure to housing and other development projects in smaller cities.
Challenges in the air to foreign recruitment
March 28th, 2014The continual smog affecting the country's major cities has created problems in terms of recruiting workers at foreign-invested companies as expatriates fear to put their own and their families' health at risk, industry insiders said.
The biggest issue is not so much investment or business decisions but recruitment, according to Roland Decorvet, chairman and chief executive officer of Nestle for the Greater China Region.
"We are really struggling to persuade people to move to Beijing - especially people with children," he told China Daily.
"We certainly don't want to increase our offices here. We'd rather increase them in places other than Beijing."
Decorvet said the company has made an effort to clean the offices' air and has given subsidies to employees for air cleaners at home.
But what employees worry about most is their children, said Decorvet, who as of May 1 is leaving Nestle to take a position at Mercy Ships, a charity organization.
The Swiss native will be succeeded by John Cheung, who is from Hong Kong.
For its part, Panasonic Corp of China said that it is paying a "hazard bonus for those foreign employees located in a challenging environment".
In negotiations this spring, revisions of salaries and labor conditions were discussed based on the air quality in China, the company's communication office said. But no decision was made.
The Financial Times reported on March 12 that the Japanese electronic company would offer air pollution compensation to their workers in China.
Panasonic is not the first to subsidize expats living in smog-affected cities, but it is the first to acknowledge that the allowance is specifically related to smog, according to Max Price, partner of Antal International China, a recruitment specialist based in the United Kingdom.
Price from Antal called it a dangerous precedent, which could be seen as putting a price on the health of individual workers.
Employers already are offering extra health insurance for foreign workers in China, with some companies "pollution-proofing" their buildings with air filters and window sealing, he said.
Such situations have become more prevalent. Some foreign professionals have decided that enough is enough and have asked for repatriation or an assignment away from China, according to Price.
"It is becoming more of a factor as time progresses. Polluted air is a major issue for foreign professionals, especially those looking to move to China with families," he said.
The pollution issue used to be offset by significantly higher salaries, but with the cost of living rising in expat areas, the salary benefit is not as attractive, Price noted.
Della Peng, human resources director for ManpowerGroup China, a workforce solution provider, said she is aware of the issues surrounding smog.
"Some enterprises could find it hard to recruit foreign employees if the air situation is not improved," said Peng.
Several managers have been transferred out from China due to the problem, she said.
But she said that, overall, the allure of working in China - one of the most crucial markets for international companies - still outweighs environmental issues, which are likely to be improved in the future.
In addition, she said, employers are making efforts to balance the costs and opportunities. For example, despite the concerns over smog, the number of inbound visitors last year has increased, she said.
Measures taken by foreign-invested companies to lure more expatriates include subsidies to those assigned to smog-affected regions or implementation of flexible working hours, she said. Many companies have moved expatriate professionals to less-polluted cities.
HK, US sign tax information agreement
March 26th, 2014Hong Kong and the United States Tuesday signed an agreement on exchange of tax information.
Hong Kong's Secretary for Financial Services and the Treasury, K C Chan, on behalf of the Hong Kong Special Administrative Region( HKSAR) government, signed the agreement with the US consul general to Hong Kong and Macao, Clifford A Hart on behalf of US government.
It is the first tax information exchange agreement (TIEA) signed by Hong Kong, after the legal framework for entering into TIEAs with other jurisdictions was put in place in July last year.
Chan said the signing of the TIEA with the US demonstrates Hong Kong's continued commitment to fulfill its international obligations on promoting tax transparency.
Chan added, "The TIEA with the US has adopted highly prudent safeguard measures to protect taxpayers' privacy and confidentiality of information exchanged."
The TIEA will become effective after Hong Kong has completed the necessary legislative procedures for bringing the agreement into force.
FTZ 'negative list' may be cut by 40 pct to boost more interest
March 25th, 2014Administrators said more detailed policies will be introduced in the China (Shanghai) Pilot Free Trade Zone this year in order to boost interest and push forward reforms.
Zhou Zhenghua, head of the Development Research Center of Shanghai Municipal People's Government, said at a news conference in Shanghai on Sunday that the so-called "negative list" for the FTZ may be cut by 40 percent in 2014, meaning more sectors will be opened up to investors in the zone.
The Shanghai government published the list of areas that are off-limits or come with restrictions to investors in the FTZ last September. The list currently includes 190 special regulatory measures, covering a broad range of activities.
Zhou said 40 percent is a target the municipal government aspires to, although if or when it can be reached depends on decisions made by various departments within the central government. "But even if only 20 percent or 30 percent of the current version is cut, it will be a huge step forward," he said.
Last November, the Shanghai municipal government said its negative list would be modified to further support trade and financial reforms.
The list is reviewed annually, according to Shanghai municipal government.
Yang Xiong, Shanghai's mayor, said two concerns stood out. "One concern is the list is too long. Another is how to secure its transparency," said Yang.
Zhou said the 2014 version of the negative list should clarify some of the restrictions to investors. Shanghai's pilot free trade zone will liberalize more services as well as ease a threshold for foreign capital in emerging sectors this year as it continues with its economic upgrading, said Jian Danian, deputy director of the China (Shanghai) Pilot Free Trade Zone Administration.
"Further liberalization of service sectors, including senior care, architectural design, accounting and auditing, e-commerce and film production, is among the priorities for the pilot zone this year," Jian said.
The administration also plans to lower the threshold for foreign investment in emerging industries such as marine engineering equipment, aerospace manufacturing and new energy, he said.
As many as 23 measures for reforming the FTZ's service sector were introduced in 2013 and, so far, 22 have been implemented. The only one not introduced yet is the restricted license bank.
Zheng Yang, head of the Shanghai Financial Services Office, said that a new batch of details for FTZ financial reforms will be introduced soon, including some that are designed to facilitate convenient exchanges for investment and financing.
According to a note from Haitong Securities, enterprises and investors should have fresh confidence in the FTZ as policy relaxations in the zone accelerate and favorable conditions boost trade.
Auto dealers in the doldrums amid price war
March 24th, 2014
With inventories rising amid an intense price war, auto dealers in China are having a tough time making a profit, according to a report by British consulting firm Deloitte.
Dealer margins are hurt by their heavy reliance on new vehicle sales, a challenge compounded by rising operational, labor and financing costs, said the report based on surveys and in-depth interviews with dealers.
The report said one cause for dealer doldrums is the low percentage of revenues from parts and after-sales services.
Deloitte said the average profit margin at Chinese auto dealers was less than 2 percent of revenues in the first half of 2013, well below the industry benchmark of 3 percent.
Statistics also show that the ratio of dealer overheads - which include expenses in sales, management and financing - was more than 7 by the end of 2013, up 1 percent from the previous year.
Since 2011, Deloitte has researched and surveyed auto dealer performance to provide insights about the risks and challenges in the industry. It then formulates strategies to address problems.
Its latest report was based on a questionnaire and nearly 100 interviews with executives at auto dealers and carmakers in China.
"While auto sales will be buoyed by sustained economic growth, the structure of the auto market is not mature, compared with the Western world," said Winhon Chow, a managing partner at Deloitte China.
"Heavy reliance on new car sales can leave overall profitability exposed to uncertainties in the external environment. There is a long way to go for the profit structure to tilt toward the back-end segments (of parts and services). Chinese auto dealers also need to bear the brunt of increased overheads."
After years of rapid development, the Chinese auto market began to slow in 2011. In the wake of the global economic recovery, there has been a moderate but steady rebound over the last three years.
Modest growth
Sales growth has continued at a single-digit pace and prospects remain weak as the industry matures. After years of high-gear expansion, the auto dealership sector now faces an era of modest growth, according to Deloitte.
New challenges include high risk of cash liquidity problems and piling-up inventory.
In the first half of 2013, a drastic increase in production amid modest growth in sales led to excessive inventory. Some 74 percent of survey respondents attributed the oversupply to fierce market competition.
The Deloitte report said high inventories will give rise to funding and liquidity problems exacerbated by the lack of external financing and scarcity of internal capital at dealerships.
"After all, it is a capital intensive industry - auto dealers have always been operating with great balance sheet stress. Usually, they are highly leveraged to meet capital needs. Loans from local commercial banks are cited by 64 percent of respondents to be one of their major sources of financing," said Chow.
One of the emerging trends in the industry is expansion of sales networks into second and third-tier cities, partly due to government purchase restrictions in mature first-tier cities and partly because of pent-up consumer demand in smaller cities.
But the trend will make it harder for auto dealers to manage their sales networks, especially when qualified management and technical professionals are in short supply in lower-tier cities, said the Deloitte report.
With the steady recovery of China's auto market offset by challenges that emerged in 2013, the report advocated stronger cooperation among automakers, dealer groups and independent dealers, as well as tighter controls on capital, expenses and staff.
The report also highlighted the need for staff retention and transformation of the overall business model.
China Mobile hits profit slump amid competition, new projects
March 21st, 2014
China Mobile Ltd's booth at the 3-15 International Consumer Goods Exhibition in Dalian on March 13. Provided to China Daily
China Mobile Ltd, the world's largest telecom carrier by subscribers, experienced its first annual net profit decline in more than a decade after the company invested heavily in mobile network projects and was put under pressure by Internet companies.
At a news conference in Hong Kong on Thursday, China Mobile said its revenue reached 630 billion yuan ($101 billion) in 2013, up 8.3 percent year on year.
But the company's net income was dragged down by a disappointing second half; it fell by 5.9 percent from the previous year to 121.7 billion yuan.
China Mobile's shares on the Hong Kong stock exchange dropped by 3.6 percent to HK$67 ($8.63) per share at the market's close on Thursday. During the day, the company's stock was traded at HK$66.55 per share, its lowest point in five years.
China Mobile's profit growth rate has fluctuated greatly in the past decade. The Chinese telecom operator enjoyed double-digit growth in terms of net income between 2004 and 2008, thanks to major expansions to the country's vast rural areas.
In 2007, China Mobile recorded its highest annual net profit growth rate of 32 percent.
But the figure dropped to single digits in 2009 and in the ensuing years, it hovered at or below 5 percent.
China Mobile attributed the weak performance to the effects of over-the-top (OTT) products, such as WeChat, on traditional voice and text messaging businesses, along with a more saturated telecom market with fiercer competition.
Other factors, including hefty investments in building a speedier fourth-generation (4G) mobile network and handset subsidies for flagship smartphone models such as Apple Inc's iPhone devices, all played a role in squeezing China Mobile's net profit.
Xi Guohua, chairman of China Mobile, said, "China Mobile will vigorously push forward the development of 4G service and will lower the 4G user threshold."
Since China Mobile was granted a 4G (TD-LTE) license last December, the company has taken the lead in launching 4G commercial services. It said the 4G business has been "positively received by its customers" and revealed that about 1.34 million people had subscribed to its 4G service by February.
The company said it plans to build the world's largest 4G network, with 500,000 base stations, that will cover every city, key village and urban area in counties by the end of 2014.
But the foreseeable future for China Mobile is not rosy, many analysts said, since the company has no choice but to spend a lot on both network construction projects and handset subsidies.
Meanwhile, outside pressure coming from Internet companies will only get worse, said Sandy Shen, telecom analyst with Gartner Inc.
"Trends show more people are likely to stick to instant-messaging mobile applications such as WeChat and that few of them will go back to rely on traditional voice and text messaging services," Shen said.
But Xiang Ligang, a Beijing-based telecom expert, said it may be a good thing for China Mobile to see a reduced net profit.
"If China Mobile gives up the mind-set of always pursuing an extraordinary performance, it will stop pushing its employees too much, and stop imposing so much pressure on the industry, which causes abnormal competition in the market."
Foreigners allowed bigger stakes in Chinese companies
March 21st, 2014Relaxed regulation unlikely to create big short-term waves amid low stock market confidence: Analysts
Foreign investors can own more of a listed Chinese company after rules were relaxed to draw long-term overseas capital.
Qualified Foreign Institutional Investors (QFII) and Renminbi Qualified Foreign Institutional Investors (RQFII) can hold up to 30 percent of a company, under a guideline issued by the Shanghai Stock Exchange on Wednesday.
That had earlier been capped at 20 percent of total outstanding shares in a company. Foreign investors will soon also be able to invest in more financial products, including asset-backed securities and preferred shares, according to the authority.
Analysts said the move is meant to attract more long-term capital and boost China's equity market. It is in line with the Chinese leadership's plan to further open up the capital market.
QFII and RQFII are programs for licensed foreign investors to buy and sell yuan-denominated "A" shares on the Shanghai and Shenzhen stock exchanges.
State Administration of Foreign Exchange data show that in February, China issued total quotas of $52.3 billion under the QFII program and 180.4 billion yuan ($29.32 billion) under the RQFII program, which allows investments using offshore yuan.
QFIIs increased holdings in more than 20 Shanghai-listed companies, according to their annual reports. The Bank of Ningbo Co Ltd and Ping An Insurance (Group) Co of China Ltd were among companies that got the most QFII investment, Securities Times said on Thursday.
Analysts said foreign investors, favoring long-term value investment, are cautious about China's stock market, which has suffered bearish sentiment since 2008 and has been hurt by insider trading and price manipulation scandals.
"The overall amount of QFII and RQFII investment is still limited on the A-share market, so the impact of the new rules may be limited in lifting the market," said Zito Ji, an analyst with a mutual fund in Shanghai.
Investors cite corporate governance as a problem. Analysts say a lack of clarity about how Beijing will tax profits from QFII investments has also restrained some investors, Reuters said.
A weakening yuan and a pressured property industry is dragging investor confidence in China's stock market.
The benchmark Shanghai Composite Index slumped by 1.4 percent to 1,993.48 on Thursday. And Shenzhen Component Index dived to a five-year low to 6,698.2.
Smog and slowing growth make it hard for US firms to recruit in China
March 20th, 2014China’s smog was making it harder for foreign firms to convince top executives to work in the country, the American Chamber of Commerce in Beijing said on Tuesday, offering some of the strongest evidence yet on how pollution is hurting recruitment.
About 48 percent of the 365 foreign companies that replied to the chamber’s annual survey, which covers businesses in China’s northern cities, said concerns over air quality were turning senior executives away.
Pollution was “a difficulty in recruiting and retaining senior executive talent”, the report said. This year’s figure is a jump from the 19 percent of foreign companies that said smog was a problem for recruitment in 2010.
China’s slowing economy, however, remained the top risk for companies, the report said.
Foreign executives increasingly complain about pollution in China and the perceived impact it is having on their health and that of their families. Several high-profile executives have left China in recent years, citing pollution as the main reason for their decision to go.
Almost all Chinese cities monitored for pollution last year failed to meet state standards, but northern China suffers the most. It is home to much of China’s coal, steel and cement production. It is also much colder, relying on industrial coal boilers to provide heating during the long winter.
The capital Beijing, for example, is surrounded by the big and heavily polluted industrial province of Hebei. It is also choked by traffic.
By contrast, China’s commercial capital Shanghai, in the south, suffers less air pollution. Indeed, a similar survey conducted by the American Chamber of Commerce’s Shanghai branch did not even ask if pollution was affecting recruitment.
Premier Li Keqiang “declared war” on pollution at the opening of parliament this month.
Shanghai Disneyland to feature first Pirates-themed land
March 19th, 2014Shanghai Disneyland, the first Disney park on the Chinese mainland, will feature scenes and characters from the blockbuster "Pirates of the Caribbean" movies, Shanghai Disney Resort announced on Wednesday.
The first-ever Pirates-themed land in any Disney park will be named "Treasure Cove," according to a press release.
A major attraction at the Treasure Cove will be "Pirates of the Caribbean: Battle of the Sunken Treasure." This is a boat ride that incorporates new effects and technologies, and guests will be enlisted to travel with Captain Jack Sparrow on an epic journey to find Captain Davy Jones' treasure.
Wednesday also marks the completion of the key structural work on the Pirates attraction.
"We are excited to celebrate this new milestone in Shanghai Disney Resort's development," said Bill Ernest, president and managing director for Asia with Walt Disney Parks and Resorts.
He said the resort's theme park will be home to "a first new themed land and attraction, inspired by the phenomenal Pirates of the Caribbean movies that were originally inspired by a Disney attraction."
"It is truly unique to Shanghai Disney Resort," added Ernest.
"We are excited to see the Disney Imagineering team continue to bring the most advanced technologies and construction techniques to China, working collaboratively with local talents, in building this modern and innovative park," said Fan Xiping, chairman of Shanghai Shendi Group, Disney's Chinese joint venture partner in Shanghai Disney Resort.
Construction of Shanghai Disney Resort began in 2011 in the Pudong New District and is scheduled to open at the end of next year.
The complex will include Shanghai Disneyland, a Magic Kingdom-style park, two themed hotels, a large retail, dining and entertainment venue, recreational facilities, a lake and parking and transportation hubs.
China Unicom launches 4G services
March 19th, 2014China Unicom, the country's second-largest wireless operators in terms of subscribers, launched its 4G service Tuesday, making it the last of the country's three major wireless carriers to do so.
China Unicom's 4G monthly package starts at 76 yuan ($12.26), with 200 minutes call time and 400 megabytes wireless traffic, while a similar package could cost 88 yuan at its major rival China Mobile.
At a partner conference Tuesday, China Unicom launched a total of 61 terminals together with companies including Samsung and Lenovo, and 25 of the new terminals launched are China-developed TD-LTE (time division-long term evolution) terminals.
At the event, China Unicom also signed this year's sales contracts with 16 companies. Terminal sales would top 188 million units in 2014, media reports said.
The company will first provide 4G services in 25 cities including Beijing, Shanghai, and Guangzhou in South China's Guangdong Province, and by the end of this year, its 4G services will expand to 300 cities, Web portal tech.qq.com reported Tuesday.
China Unicom will initially use the China-developed TD-LTE network, but it is also planning to adopt the FDD-LTE (frequency-division duplexing) network after the government issues licenses for the standard. The FDD-LTE standard has already been used in countries such as the US and the UK, earlier media reports said.
The Ministry of Industry and Information Technology issued 4G TD-LTE licenses to China's three major telecommunication companies in December. China Mobile launched 4G services in the same month.
China Unicom's smaller rival China Telecom launched 4G services in February, but it only released the price policy for mobile data, with the price policy for calls and voice yet to be published.
Analysts noted that with China Unicom finally joining the competition, the price of 4G services may get lower in the future.
There have been complaints about the expensive 4G service charges by China Mobile's since the launch of its 4G services.
China Unicom had gained a head start in the 3G arena, as it was the first company to introduce the contract Apple handsets to China. By January, China Unicom had total 3G users of 126 million.
China Mobile had 206 million 3G subscribers by January, and China Telecom had 103 million 3G subscribers, according to their filings on the Hong Kong bourse.
Real estate developers’ sales drop
March 14th, 2014Real estate investment in China slowed in the first two months of this year as property sales declined in the same period, official data showed on Thursday, the latest sign of a slowdown in the country's housing market.
Property investment grew 19.3 percent year-on-year in the first two months of the year, which is 0.5 percentage points slower than the annual growth in 2013, data released by the National Bureau of Statistics (NBS) showed Thursday.
Sales of properties including residential homes, offices and commercial premises fell 0.1 percent year-on-year in terms of floor space in the period and declined 3.7 percent in terms of value, the data showed.
Meanwhile, Beijing-based Securities Daily reported Thursday that 30 real estate developers saw a sharp decline of sales in February from January.
The 30 companies, including major developers such as Poly Real Estate Group and Gemdale Group, reported total sales revenue of 66.5 billion yuan ($10.83 billion) in February, down 39 percent month-on-month, the report said.
Many of the companies have also shown year-on-year drops during the period. Leading developer Poly Real Estate sold 685,900 square meter of apartments in February, down 24 percent month-on-month and 24.77 percent year-on-year. Its sales contracted 8.38 percent year-on-year to 7.73 billion yuan, the company said Monday.
Developer Gemdale sold 112,000 square meters of apartments in the month, a drop of 25.33 percent month-on-month and 17.04 percent year-on-year, and the value of the sales dropped 16.67 percent year-on-year to 1.35 billion yuan, according to a company statement on Saturday.
Analysts noted that seasonal factors contributed to the month-on-month decline, such as the Spring Festival holidays in early February for which the country had seven days off. However, the more alarming fact is that many of them have reported deteriorating year-on-year performance.
Tight liquidity and sluggish markets in third- and fourth-tier cities are also reasons behind the year-on-year drop in major developers' performance, analysts said.
In December, 13 cities including Shanghai, Guangzhou and Hangzhou raised required down payment amounts for the purchase of second homes. Beijing may also raise the down payment for property purchase, according to media reports.
Besides, oversupply in some third- and fourth-tier cities has also prompted speculation that prices would drop and some consumers have adopted a wait-and-see attitude.
Hong Kong-listed Central China Real Estate, which mainly focuses on lower-tier cities, has seen its sales revenue dropping 11.1 percent in February, to 400 million yuan.
However, analysts said that developers' performance may rebound slightly in March, as the month has been a traditional boom season in the past.
Alibaba expands its footprint into media
March 13th, 2014Alibaba Group Holding Ltd, China's Internet conglomerate, will spend about $800 million buying the control of a Hong Kong-listed media group, a move that will enable the e-commerce giant to tap into digital content production.
Alibaba will pay HK$6.24 billion ($804 million) for a 60 percent stake in ChinaVision Media Group Ltd, which has a rich business portfolio from print media, television and films to mobile games.
The purchase of ChinaVision Media's new stock, at a 22 percent discount to the last closing price, will take the stake held by Alibaba and parties acting with it to 70.8 percent, according to a ChinaVision filing to the Hong Kong stock exchange on Tuesday.
The investment from Alibaba pushed the share price of ChinaVision up about 186 percent to HK$1.83 on Wednesday from the previous closing price of HK$0.64.
The deal is Alibaba's second major move in the merger and acquisitions field this year after the Internet titan bought mapping service AutoNavi Software Co Ltd in February for a price of $1.1 billion.
The deal was designed to help Alibaba to access ChinaVision's television programs, films and other digital content, which are experiencing surging demand from China's rapidly growing number of mobile Internet users.
"The demand to acquire data and content over mobile and mobile-related devices is absolutely enormous," said Colin Light, China digital consulting leader for PricewaterhouseCoopers in Hong Kong. The deal enables Alibaba to leverage its huge mobile and Internet-based users into an adjacent market, namely content media, he added.
In a telephone interview with China Daily, Light said observers have seen a dramatic trend around the world that media consumption is shifting from big screens, such as televisions, to small screens on mobile devices.
The shift is particularly strong in China, where more than 80 percent of Chinese Internet users access the Internet via mobile devices. The shift of media is expected to lead a shift in advertising money, according to a recent report from PricewaterhouseCoopers.
Almost 75 percent of digital advertising comes from search and display in China.
Alibaba offers to buy digital mapping company AutoNavi
There are currently few contenders big enough to take on Baidu Inc's 80 percent share of the search market. Yet key social media sites such as Sina Weibo and Tencent's popular mobile messaging app Wechat, which has more than 600 million accounts, are beginning to grab a share of the digital advertisement market, said the report.
"Through building online retail platforms, Alibaba serves as a commodity trader. In the same way, it can become a digital content trader. The investment fits naturally with Alibaba's business model," said Light.
According to ChinaVision Media's official website, the company participated in the production and distribution of some very well known movies and television dramas in China.
In addition, the company co-manages the Beijing Times, the biggest morning newspaper in the Chinese capital, and has been jointly developing a mobile television business with People.cn, an information interaction online platform created by People's Daily, a major State-own media company in China.
"When a company grows to a certain size, it is only a matter of time before they look to own media channels to gain a certain sway in public opinion," said Tian Hou, chief analyst with T.H. Capital LLC, an independent research and investment advisory firm.
She added that getting involved in media content production is also in line with Alibaba's mobile strategy. The company announced earlier this year it would enter the mobile gaming industry. ChinaVision media also produces mobile games.
Privately funded banks to be launched
March 12th, 2014Ten private companies will launch five banks that are entirely funded by private capital in Tianjin, Shanghai, Guangdong Province and Zhejiang Province as part of a pilot program, Shang Fulin, head of the China Banking Regulatory Commission, said Tuesday.
The establishment of the private banks, which was approved by the central government in January, is considered a vital step in the country's financial reform and its opening-up of the banking sector to private capital.
Internet giants Tencent Holdings and Alibaba Group will be among the 10 companies approved to participate in the pilot program, Shang said, adding that the five private banks should have differentiated market positioning.
Shang did not provide details about the names of the five banks, or the amount invested in them.
The website of People's Daily quoted Shang as saying on Monday that the 10 companies will also include Fosun International, a real estate conglomerate, and Chint Electrics Co, an electrical equipment maker.
Each bank must have two private investors, Shang said, and they will be allowed to open for business when they have made sufficient preparations.
The private bank that Tencent plans to initiate will specialize in providing products for the burgeoning online finance sector, a staff member of Tencent told the Global Times Tuesday on condition of anonymity.
"Tencent will utilize its advantages in the Internet service industry, and [launch] online financial products based on the services provided by the traditional banking sector," the source said.
The staff member said the bank will be located in Qianhai, a district of Shenzhen in South China's Guangdong Province. Qianhai was approved by the State Council in 2010 as a test ground for the free cross-border flow of the yuan and financial innovations.
A staff member of Alibaba, which is a partner in Yu'ebao, one of the country's most popular online money market funds, told the Global Times Tuesday that Alibaba is working with China Wanxiang Holdings Co to apply for a private bank license.
"Now our application materials are still being reviewed," said the staff member, who wished to remain anonymous.
Wanxiang Holdings is part of China's biggest auto parts company Wanxiang Group, which is based in Hangzhou, East China's Zhejiang Province.
The Alibaba source declined to comment on the location or market positioning of the bank.
Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times Tuesday that the private banks will offer loans of up to 1 million yuan ($162,879) that will mature in less than two years.
The banks' major customers will be those that have difficulty in getting loans from large commercial banks, Dong said, such as small and micro-sized businesses. That is why the new program will not have a disruptive impact on the banking sector or influence the interest rate, he said.
According to Shang, the private banks will be regulated in the same way as large commercial banks, but their performance will be more market-based.
Milestones in opening up to private investment
May 23, 2012 The State Council required sectors including railways, telecoms and banking to draw up detailed rules for encouraging private investment.
May 26, 2012 The China Banking Regulatory Commission (CBRC) said it would encourage greater private investment in the banking sector, without imposing restrictive or other additional conditions.
Jun 19, 2013 The State Council said China should set up private banks and financial lease companies that bear the burden of risk on their own.
Mar 11, 2014 CBRC chief Shang Fulin said China will set up five private banks on a trial basis.
Salary hikes will kick-start consumption
March 11th, 2014When China's economic growth is targeted at 7.5 percent and domestic demand becomes the main engine driving growth, it is crucial to implement measures to increase salaries and create an economy more conducive to consumption, officials and executives agree.
In working to hike domestic demand, China will focus on boosting consumption, Premier Li Keqiang said in his recent work report to the National People's Congress.
But since consumption is dependent on disposable income, salary increases become more significant and should be in line with the growth of the Consumer Price Index, CPPCC members said during a panel discussion.
"The government should have a specific target in improving the payroll level and release a guiding index," said Yang Yuanqing, chairman and chief executive officer of Lenovo Group Ltd.
Public institutions currently are finding it difficult to catch up with CPI growth, let alone private companies.
"Government offices are supposed to be the leader of salary increases," said Yang.
China's domestic consumption accounts for less than half of its GDP. Economic growth still relies on exports and investments, according to Yang.
"Once consumption is expanded, the economy will be less reliant on the changeable overseas markets. It will ease China's conflicts with trading partners," he said.
Still, the problem of creating consumption hot spots and getting people to spend more at home remains a tough one.
Chinese tourists tend to prefer shopping overseas. Creating a better consuming environment will be a critical part of pulling them back.
More than two-thirds of luxury spending by Chinese mainlanders was carried out overseas in 2013, up from 2012, according to the China Luxury Market Study from consultancy Bain & Co.
Of course, with the rise of e-commerce, the price of goods is more transparent, and the cost of logistics is lower.
"Still, the government can prompt a new round of consumption tax reform and lower high tariffs on imported luxury goods," said Yang.
Zhu Zhixin, vice-chairman of the National Development and Reform Commission, agreed, saying there is hope for salary reforms.
"We are now suggesting that residents' income should be in accordance with the increase of GDP," said Zhu.
In fact, salaries in China continue to rise. The trend has made the nation's workforce more expensive than in neighboring countries, according to Zhu.
"But for years, wages in government offices and public institutions were kept almost constant," said Zhu.
The government's work report also mentions that the government will support nongovernmental investors in various types of services, with a focus on elderly care, health, tourism and culture, as well as implementing a new system of paid vacations.
The number of domestic tourists amounted to 3.25 billion and total income in the sector reached 2.9 trillion yuan in 2013.
"Although we have rules on paid vacations, we are not strictly implementing these rules," said Zhang Xuewu, president of China National Travel Services Group.
IBM fires 19 in labor dispute
March 11th, 2014Tensions rose at an IBM factory in Shenzhen as 19 workers were fired on Monday, ostensibly for violating company policies, according to one of the strikers.
More than 1,000 workers at IBM Systems Technology Co (ISTC), the server-making unit of IBM Corp, spontaneously walked off the job on March 3 to protest the factory's offer of severance packages ahead of a scheduled acquisition by personal computer giant Lenovo later this year.
"The factory terminated the labor contracts of 19 worker representatives. We were fired immediately and got no compensation. It's a sort of revenge," said Wen Yong, who has been working at the factory for 10 years.
The fired employees were said to have violated company policies by causing a production shutdown, Wen said.
Most strikers remained sober and non-violent as the strike entered its eighth day. But some of the workers staged sit-in protests on Monday evening.
The strike was triggered when workers at ISTC were notified on March 3 to that they had one week to decide whether to resign or stay on as Lenovo employees. The factory offered a 6,000 yuan ($980) severance payment for workers who chose to leave before March 7.
On Sunday, in an apparent sign of compromise, ISTC management said that workers who are willing to sign contracts with Lenovo before March 12 would get an extra 30,000 yuan bonus, half of which would be paid by the end of April and the rest in the first month after Lenovo takes the reins.
But workers who accept the new plan are required to resume production immediately and to ensure normal operations and good product quality.
According to Wen, about 100 of the strikers signed the contracts, but the rest continued to "protect their rights and fight for their benefits".
Apart from the dissatisfaction about the severance packages, many of the strikers expressed anger about what they said was the company's rude and abrupt decision to proceed without seeking their input, forcing them to make a life-changing choice on short notice.
"I have been working for the factory for 20 years and felt it's a part of my life. But obviously the company doesn't think the same way," said Hou Hongbo.
The district government, local human resources managers and trade unions are working hard to mediate between the IBM management and the workers, said Wen Xianqing, a press official at Futian district government.
One official, who asked not to be identified, said IBM was too rough in its handling of the workers, though its actions are legal.
"The company is backed by a powerful legal team, so its move is in line with Chinese laws, but the decision is merciless to the workers," the official said.
Lawyer Li Jianyong called the workers "unreasonably troublesome", and said they would hurt the healthy development of the companies.
"IBM is offering much more than what the law requires to the workers. They have no reason to strike and suspend production," he said.
In January, Lenovo, the world's biggest producer of personal computers, said it would buy IBM's x86 server unit for $2.3 billion. The deal is expected to close in the fourth quarter of 2014, according to Lenovo Chief Financial Officer Wong Wai-ming.
Tencent to buy 15 pct stake in JD.com
March 10th, 2014Chinese Internet firm Tencent plans to buy a 15 percent stake in JD.com, a major online direct sales company in China, before the latter launches its initial public offering (IPO) in the United States.
The purchase, representing 251,678,637 outstanding JD ordinary shares, will cost Tencent 214.6 million U.S. dollars and its e-commerce branches, according to Tencent's statement filed with Hong Kong exchange on Monday.
After the purchase, Tencent will continue to buy 5 percent of JD's outstanding ordinary shares on a post-IPO basis, the statement said.
In return, JD will take over Tencent's business-to-consumer (B2C) and consumer-to-consumer (C2C) platforms wanggou.com and paipai.com, with all capital, assets, liabilities transferred to JD. It will also gain a minor stake in Tencent's other online shopping website yixun.com and the right to buy the site's remaining shares.
The cooperation, dubbed as the two companies' overall business collaboration in e-commerce business, aims to win a leverage in the competition with another Chinese e-commerce firm Alibaba, which owns and operates the country's largest online purchase platform.
In addition, Tencent will offer JD level 1 access points at WeChat and Mobile QQ, two of the most popular communication mobile applications developed by Tencent, to boost the latter's growth in physical goods e-commerce, the statement said.
The two firms will also further ties in mobile applications and payment solutions, with JD being regarded as Tencent's preferred partner in certain business areas.
Liu Chiping, president of Tencent, will become a member of JD's board after the purchase agreement.
Waiting and searching for missing flight continue
March 10th, 2014China is making all-out efforts to locate the missing passengers on board Malaysia Airlines flight MH370, almost two-thirds of them from China, as family members prepared to fly to Malaysia. [Special coverage]
Forty-seven hours after the aircraft lost contact with ground control center, relatives of the passengers on board the missing flight who are settled in Hotel of Lido in Beijing, seems calmer than earlier Sunday.
Malaysia Airlines will help relatives of passengers on board its missing flight to fly from Beijing to Kuala Lumpur, said the airline's spokesman on Sunday.
As of 10 pm, most of the relatives are applying passports and visas, however they are still overwhelmed by sadness.
An old man surnamed Li from the nearby Hebei Province, who has never been abroad, decided to go "see his kid for the last time".
However some are still hesitating about the trip. An old couple whose children were on the plane worried that the language barrier would not help them getting more useful information.
The carrier will arrange for five relatives of each passenger on the MH370 flight to go to Kuala Lumpur, its point of departure, but the first departure will carry only two relatives of each passenger, said Ignatius Ong Ming Choy, representative of Malaysia Airlines, at a press conference.
Beijing police launched an emergency mechanism to make sure the relatives of passengers can get their passports within one hour.
Ahmad Jauhari Yahya, the airline's Chief Executive Officer, said a 93-person work group has come from the company's Kuala Lumpur headquarters to take care of passengers' families and handle their passports and visas.
The Boeing 777-200 aircraft left Kuala Lumpur International Airport at 0:41 a.m. Beijing time on Saturday and was expected to land in Beijing at 6:30 a.m.
Contact with the flight was lost along with its radar signal at 2:40 a.m. Beijing time on Saturday when it was flying over the Ho Chi Minh air traffic control area in Vietnam.
The flight was carrying 12 crew members and 227 passengers, including 154 Chinese.
ALL-OUT EFFORTS
The whole country has joined the families of passengers on board the missing plane to pray for their safety.
Chinese President Xi Jinping on Saturday ordered the Ministry of Foreign Affairs as well as Chinese embassies and consulates overseas to strengthen contact with departments of relevant countries and pay close attention to the search and rescue work.
All-out efforts must be made for any emergency treatment necessary in the aftermath of the incident, Xi said in his instruction.
The CAAC demanded its air traffic management office keep in touch with its Malaysian counterpart, and ordered Beijing Capital International Airport to comfort relatives and friends of the passengers on board the missing flight.
An emergency response team assembled by the Ministry of Transport (MOT) set out early Sunday from south China's Sanya Port in Hainan Province to the sea area where it is thought the missing Malaysia Airlines flight MH370 might have crashed.
The largest patrol vessel in South China Sea "Haixun 31" departed from Sanya on Sunday afternoon and is scheduled to arrive at the site on Tuesday afternoon, carrying 50 rescuers and facilities such as a maritime helicopter and sonar systems.
Rescue vessel "South China Sea Rescue 101" is carrying 12 divers and salvagers, and will join another rescue vessel, "South China Sea Rescue 115," at the rescue site.
The latter ship is scheduled to arrive at the site on Monday afternoon, while "South China Sea Rescue 101" will get there on Tuesday afternoon, according to the MOT.
"South China Sea Rescue 101" is 109.7 meters long, with 6,200 tonnes of full load displacement.
Meanwhile, another rescue vessel, "Tai Shun Hai" of China Ocean Shipping (Group) Company arrived at the possible site at 9 a.m. Sunday and started searching, according to the MOT.
POPPING UP MYSTERIES
Two passengers were confirmed boarded the plane operated by the Malaysian Airlines with stolen passports, according to the international police agency Interpol.
China's Ministry of Public Security has decided to send a work team to Malaysia to investigate the case after the confirmation of Interpol and was made after a consultation with the Malaysian side that called for a joint investigation into the matter, said the ministry late Sunday.
"We will join the investigation. Communication with Malaysian civil aviation authorities is underway. We'll keep updating the latest news," according to Li Jun, deputy director of CAAC.
A large oil slick stretching 100 nautical miles was found near Tok Bali, Kelantan Sunday by Malaysian Maritime Enforcement Agency, and chemical test has been done with no result has been published.
Late Sunday afternoon, Vietnam sent a boat to investigate a " strange object" spotted by a Singapore search plane near Vietnam's Tho Chu island.
The objects were suspected to come from the Boeing 777 aircraft, Vietnamese press reported earlier. But Rahman has ruled out the possibility that they were from the ill-fated jet.
UNSETTLED WHEREABOUTS
Rescue work remains challenging as there is no exact location of the possible crash site.
The searching vessel has detected no clues yet after a 9-hour-search covering about 145 nautical miles, according to the MOT.
Another Chinese coast guard vessel also reported no findings of the missing plane and is expanding searching area with technical aids.
The airline has told the passengers' families to "prepare for the worst result."
But the public has continued blessing for good news.
"To all 239 lives and 154 compatriots, how are you? The rescue continues and we are still waiting, please do not give up. We know that you are delayed but we don't believe in your not coming home. MH370, China is ready for pickup, to welcome you home." a post on China's twitter-like Sina Weibo read.
Shanghai housing index climbs at slower speed
March 7th, 2014Shanghai's existing housing index rose for another month in February, albeit at a slower pace.
The index, which checks price changes of pre-owned homes across the city, rose 2 points, or 0.06 percent, to 2,943 points last month, extending gains for the 21st straight month, the Shanghai Existing House Index Office said yesterday.
In January the index rose 0.26 percent, and 0.63 percent in December.
Citywide, the pre-owned home prices climbed in 49 of the 130 areas monitored by the office while 31 saw a decline. Prices were flat in the remaining 50 areas, the office said.
Baidu to be buying, doing more mobile applications
March 7th, 2014Nation's largest search engine ready to shift toward new platforms
Baidu Inc, China's largest online search company, is working to develop new products that can replace the search engine to become its most recognized gateway in the mobile Internet era, said Robin Li, the company's chief executive officer.
Li didn't elaborate on the new products but said that last year Baidu spent about 4 billion yuan on research and development. Most of it, he said, was used to develop products that will be as vital to the mobile era as the search engine has been in the personal computer-based one.
"If we had only wanted to maintain our leading position in search, we would have spent only about 20 percent of that amount on R&D," said the 45-old-year Li, who, with a net worth of $12.1 billion, is ranked the third-richest man on the Chinese mainland, according to the latest world's billionaires list from Forbes.
Li shared his vision about innovation and the Internet in an interview with China Central Television on the sidelines of the annual session of the National Committee of the Chinese People's Political Consultative Conference.
He said his Beijing-based company's main competitor is the changing Internet landscape in China, where more than 500 million out of the roughly 600 million Internet users in the country have access to the Internet through mobile phones.
"In the PC era, the search engine was the sole gateway for people to find information on the Internet. But now the channels to gain access are diverse. People have various applications on their smartphones to meet different kinds of demands," he said.
In order to move quickly in the rapidly changing market, Baidu last August bought app store 91 Wireless for $1.9 billion and picked up 59 percent of group-buying website Nuomi the same month. The company moved to gain full control of Nuomi earlier this year.
The US-listed company saw its investment pay off, as mobile accounted for more than 20 percent of Baidu's total revenues in the fourth quarter of last year, the company said in an unaudited 2013 finance report released at the end of February. Apart from shifting to mobile, Li sees opportunities ahead because the Internet has revolutionized many traditional sectors, from retail to finance.
China's online shopping market has grown rapidly to become the world's largest. Many Internet companies, including Baidu, launched financial services last year to offer users better returns than typical bank deposits in a convenient format.
"I don't know much about finance," Li said. "What we do here is to use Internet thinking to improve the efficiency of traditional finance, to simplify purchasing procedures and give better user experience," he added.
Li said that in the future, there will be no dedicated Internet companies, "because every company will somehow embrace the Internet in some way".
Li's self-made Baidu has become involved in finance, online video, tourism and publishing. He said it will certainly expand into new sectors.
"With Internet thinking, there is a lot of room in terms of efficiency improvement in healthcare and education," he said.
How LinkedIn Plans to Conquer China
March 6th, 2014With more than 277 million users worldwide, LinkedIn (NYSE: LNKD ) is not only the largest professional social network, it is also one of the best-monetized websites ever created. Unlike Facebook (NASDAQ: FB ) or Google, which mainly rely on advertisements to generate revenue, LinkedIn obtains revenue from its users through advertising, premium memberships, and human resources solutions.
However, despite being one of the best-monetized websites, it is becoming increasingly difficult for LinkedIn to continue growing. In the fourth quarter of 2013, revenue came in at $447 million, up 47%. That being said, management predicted revenue of $455 million-$460 million for this quarter, well below the Street consensus. The company's projections raised worries that it may be starting to have trouble mining its audience for more revenue. At the same time, the company added only 18 million accounts in the fourth quarter, which barely matched the average of additional accounts that LinkedIn has gained in the previous quarters. To improve revenue and user metrics, the company recently announced the introduction of a Chinese-language website. Can LinkedIn succeed in China?
A great opportunity
LinkedIn will be offering a localized version of its website, after more than a decade of having an English-language site there. The company will also be establishing a joint venture with top private equity firms China Broadband Capital and Sequoia China, to attempt to connect more than 140 million Chinese professionals.
Without any doubt, China represents a huge business opportunity for LinkedIn, which already has more than 4 million members in the world's second-largest economy. With a labor force of more than 800 million people, China also has a huge population of active Internet users. Most companies in China still do not use LinkedIn or similar alternatives as recruiting tools, but this could change if LinkedIn succeeds in registering enough users.
Note that LinkedIn will become one of the few U.S. social networks with direct exposure to China. Facebook, the largest social network, recently reported revenue of $2.59 billion for the fourth quarter of 2013, an increase of 55%, year over year. However, it has no official presence in China. Eventually, this will become a big problem for the company, which already has more than 1 billion registered users.
Several challenges ahead
LinkedIn will have to compete against several social networks that are already present in the Chinese market. Tianji, a networking site owned by Viadeo, has more than 15 million users in China, where it has been in the market since 2005. Tianji is popular due to some highly social features, like the ability to invite friends and colleagues to evaluate themselves using a Myers-Briggs-type online personality test.
Ushi is an important competitor that released an invitation-only platform in 2010. The company raised $1.5 million in a first round of funding, and has several chief executives registered in its user base. Ushi, which monetizes its site by charging for some premium features, has a deep understanding of Chinese business customs. Before the release, the team spent months in face-to-face meetings with several top executives and business leaders in order to convince them to become early members. This allowed Ushi to become an exclusive hub for elite professionals at an early stage.
On top of competition, LinkedIn will have to comply with several local rules in order to remain online. Complex regulations in China are a reason for the absence of U.S. social media companies in the world's second-largest economy. Facebook has been blocked by firewalls since mid-2009.
Final Foolish takeaway
LinkedIn, the largest social network oriented to professionals, will release a localized version of its website for the Chinese market. This is a privilege, and LinkedIn will become one of the few U.S. social media companies with direct exposure to China. However, there are several challenges ahead, including fierce competition from local competitors like Tianji and Ushi. To succeed in this market, LinkedIn will need to adopt a growth strategy based on a deep understanding of Chinese business customs.
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Chinese woman become youngest billionaire: Forbes
March 6th, 2014A Chinese young woman has become the youngest billionaire in Forbes magazine's latest annual billionaire list 2014 which was unveiled on Monday (US Time).
Twenty four-year-old Perenna Kei Hoi Ting is a newcomer to the list, replacing former Facebook co-founder Dustin Moskovitz as the youngest billionaire.
Hailing from Hong Kong, Kei owns an 85 percent stake in Shenzhen-based Logan Property Holdings through various companies and a family trust.
Her father, Ji Haipeng, is chairman and CEO of the Hong Kong Stock Exchange-listed company, which went public in December 2013.
China signals move to regulate Internet finance
March 5th, 2014China will not ban web-based financial products like Yu'E Bao, but will strengthen regulation to guide the healthy growth of Internet finance, China's central bank officials said Tuesday.[Special coverage]
With this reassurance, made four times in one day on different occasions by three top central bankers, the dust seemed to have settled following months-long debate about the fate of popular Internet financial products.
The emergence of Yu'E Bao and its peers has brought joy for millions but also unnerved many. Whether authorities should step in to regulate the burgeoning Internet finance has been a widely watched topic as China's lawmakers and political advisors gather this week in Beijing to discuss the country's social and economic policies.
DAVID VS.GOLIATH
Internet financial products like money market fund Yu'E Bao, created by e-commerce giant Alibaba, have been instant hits among the Chinese public.
Chinese people have pulled money from traditional banks, which offer a maximum 3.3 percent interest rate for one-year deposits, and moved it to web-based money market funds like Yu'E Bao, which offers a seven-day annualized yield of nearly 6 percent.
The better interest rate enabled Yu'E Bao to attract 81 million users with aggregate deposits estimated at around 500 billion yuan (81 billion U.S. dollars) in just eight months.
Big banks are not happy. At a time when China's liquidity is generally tight, such a big migration of money has eaten up much of their profits.
Yu'E Bao and its peers have quickly been labeled "blood suckers" by commentators, while the public has seen the banks and their low rates as miserly.
Rounds of tit-for-tat between the two sides showed no signs of abating until the authorities weighed in on Tuesday.
China will not ban Internet finance, but will improve regulations in the area, said Zhou Xiaochuan, governor of the central bank.
"China encourages technological applications in the financial sphere," he said.
"Improvements must be made in existing policies, supervision and regulation as they cannot cope with new things such as Internet finance and guide its healthy development," said Zhou.
Internet finance encourages innovation and development, and what it needs is improved and coordinated supervision, said Pan Gongsheng, a vice governor of the central bank.
Despite being supportive of innovative financial products like Yu'E Bao, the central bank will take "appropriate measures" to prevent possible risks arising from the sector, said Yi Gang, another vice governor of the central bank.
Yi said the central bank will closely watch market changes to prevent possible risks while warning investors to be more cautious in their choices.
It seems that David has gotten the better of Goliath again, at least for now.
PROFITS VS. RISKS
Financial innovations like Yu'E Bao are nimble and attractive, but economic pundits have warned that they are not risk-free and should be regulated to avoid any adverse effect on the general economy.
China International Capital Corporation, China's largest investment bank, said in its latest research note that Yu'E Bao has placed 92 percent of its assets in interbank deposits and used the different terms of maturity between investors to reap high interests.
However, such Web-based money funds may face huge risks, warned Lyu Suiqi, deputy dean of the finance department at Peking University.
"As the assets of Internet finance products like Yu'e Bao increase, so will their liquidity management pressure," Lyu said, adding that such money funds rely too much on interbank deposits for high interest.
Their ability to bargain with traditional banks will weaken as market liquidity improves and more competitors enter the race, he said.
Millions of investors woke up on Tuesday to find the seven-day annualized interest of Yu'e Bao eased to 5.93 percent, the lowest level since December.
"The biggest problem for the development of Internet finance is default risks that might inflate within a short period of time," said Li Daokui, an economist and member of the National Committee of the Chinese People's Political Consultative Congress, the top political advisory body.
That said, there is no reason to throw the golden baby out with the bath water if a little amount of regulation will nurture financial innovations for maximum benefit to the Chinese economy.
Not only do these new products offer a sign of hope for individual savers, but they have assisted micro businesses and spurred China's interest rate reform.
"The public is more concerned about what real changes Yu'e Bao could bring to the financial monopoly," said Xu Xuelan, secretary-general of the Chinese Institute of Electronics. "We are expecting much more reform resolve and action in this regard."
Housing market shows signs of cooling after decade of growth
March 4th, 2014Higher mortgage rates, concern over impact of tax reduce volume of transactions as year gets underway
Experts say there are signs of cooling in the Chinese property market after a decade of growth, with the transaction volume starting to fall and mortgage rates rising nationwide.
Jia Kang, head of the Institute for Fiscal Science Research under the Ministry of Finance, said China's housing market also showed signs of a differentiation in prices in January, which may lead to a price slump in second- and third-tier cities, although prices in Beijing and Shanghai are likely to maintain their current level.
"Although precisely how the trend in differentiation will develop is yet to be seen, second- and third-tier cities will be more vulnerable than Beijing and Shanghai during this round of market fluctuation," he said on the sidelines of a news conference of the Hainan-based China Institute for Reform and Development in Beijing on Friday.
Jia advised investors to take care when making investment decisions.
China's real estate sector showed signs of cooling at the beginning of 2014, with most of the nation's cities recording falling transactions on both a yearly and monthly basis. Prior to that, the Chinese property market witnessed 12 years of sustained growth.
According to the real estate research institute China Real Estate Information Corp, shrinking supply and tightened mortgages played important parts in the drop in the number of transactions.
Li Wei, head of the Development Research Center of the State Council, said in a recent speech on the Chinese economy that new home construction may be slashed given the high stockpiles of homes in third- and fourth-tier cities, where supply has exceeded demand.
Li's team previously concluded in a report that housing demand will increase at a much slower pace after 2012 and demand will continue to slide under raised mortgage rates and an upcoming property tax.
Li warned about an "important change" expected to take place in China's property market after its breathtaking growth of more than a decade.
A declining market outlook was also linked by some experts to rising mortgage rates, with nearly 90 percent of 69 bank branches in 22 Chinese cities no longer offering preferential mortgage rates to first-home buyers, according to the China Real Estate Information Corp.
"We have to watch closely the trend of price differentiation in different cities, take precautions and note the role of the government in real estate control," he said, adding he believes it is highly unlikely China's property market can maintain the rises it witnessed in previous years because the environment for industrial development and the inner drive for expansion have both been altered.
Jia, from the finance institute, suggested speeding up legislation regarding property tax because more people are looking forward to the government expanding its trial to regulate the market.
In the two cities where property tax has been levied as a pilot program since 2011, individuals in Shanghai are taxed at a rate of 0.4 percent or 0.6 percent of the total price of their property annually if the housing area for each person exceeds 60 square meters. In Chongqing - the other trial city - the tax is levied only on high-end properties, such as villas, at a rate between 0.5 percent to 1.2 percent of the property price on an annual basis.
"We have to be prudent about bringing more cities into the trial and be especially cautious when drawing a watershed between homes where a tax is beneficial and those in which it isn't. Any expansion of the trial should be aimed at regulating the high-end property market, instead of levying taxes on all properties alike," he said.
Police relax entry rules on recruitment of Chinese
March 3rd, 2014Police have relaxed several conditions pertaining to recruitment to encourage more Chinese to join the force (PDRM).
Deputy IGP Datuk Seri Bakri Zinin said aspects related to salary, promotion opportunities and others to entice the participation of the Chinese might be reviewed.
"We are targeting about 5,000 Chinese in stages because we need to look at the capacity and our need to provide basic training and courses," he told reporters.
He said the number of Chinese police personnel made up only 1.87 per cent of the total police strength.
Bakri said the force had also formed a special team to ensure the participation of the Chinese could be implemented as soon as possible.
"They will explain to society, especially the Chinese community, on joining the PDRM. We are doing that, this is our initiative, to ensure we get suitable candidates in the PDRM," he said.
Bukit Aman Management Department director Datuk Seri Fuzi Harun said the police viewed the participation by the Chinese seriously as the community made up 30 per cent of the population.
"So, less than two per cent have joined the PDRM, it does not look good, so we have to improve this figure...to ensure this programme is successful, we will relax the entry conditions," he said.
Bukit Aman Personnel (Recruitment) assistant director ACP Saiful Azly Kamaruddin said the exercise for the recruitment of new police constables for the first session this year, would be carried out on Monday.
He said the relaxation of conditions included a pass in Bahasa Malaysia in SPM apart from passing a vision test or by using glasses or contact lenses by obtaining V/6/9.
"We understand the entry requirements, which prior to this were too stringent for the Chinese community, namely, credit in Bahasa Malaysia while there are those among them who are not fluent at all.
"So, we consider this situation a special one for the Chinese community," he said.
Based on statistics, as of Dec 31 last year, Malays (90,156 people) dominated the force, followed by Indians (3,659 people) and Chinese (1,974 people), while the rest were from other communities, he said.
He said the lack of Chinese staff was due to several reasons, including salary, which was regarded as still low, while parents did not encourage their children to join the PDRM.
"According to a study, most of them do not realise a constable can bring home RM3,000 a month, if all the allowances are included," he said.
For the recruitment on Monday, the Chinese were encouraged to download the application form from the PDRM website at www.rmp.gov.my.
The form should send it to the nearest police station or to the Personnel Recruitment Unit at the federal police headquarters in Bukit Aman.
China Unicom to announce 4G services
February 28th, 2014China United Network Communications Co Ltd, known as China Unicom, said on Thursday that it would announce its official TD-LTE 4G services and packages in 25 major cities in China on March 18.
"The 4G service will be expanded to 56 cities by May 17 and reach 300 cities by year-end," said Lu Yimin, executive director and president.
Lu said that the company is actively building its TD-LTE network infrastructure nationwide. It's also conducting a large-scale test of FDD-LTD services on its current WCDMA technology.
Three carriers in China received licenses in December to operate 4G services. Two-China Mobile Communications Corp and China Telecom Corp Ltd-have already launched 4G services in the mainland.
China Mobile had 4G services in 16 cities as of Dec 31, catering to the smartphone market. China Telecom offered 4G services starting in January, but only through data cards and wireless routers.
Chang Xiaobing, chairman and chief executive officer of China Unicom, said that operators will adapt different approaches to provide 4G services and the company is communicating with relevant government authorities to speed up the issue of FDD-LTE licenses.
The country's biggest fixed-line operator increased its 3G base stations by 76,000 to 407,000 in the past year. 3G service revenue rose 50 percent to 89.8 billion yuan ($14.6 billion), accounting for about 60 percent of China Unicom's mobile service revenue.
"Our first priority in 2014 is still to improve our 3G WCDMA network and set up our TD-LTE gradually. Meanwhile, we will prepare to deploy the FDD-LTE network, if approved by the government," said Chang.
Lu said the company will have advantages over competitors in terms of 4G services.
"We have a sound user base in the north of China, and we are the biggest internet operator in the world," he said.
As of January, the company had 280 million mobile subscribers, having added 41.6 million new ones in 2013.
China is expected to have 30 million 4G mobile network service subscribers by year-end, according to the Ministry of Industry and Information Technology.
The company reported operating revenue of 295 billion yuan in 2013, up 18.5 percent. Net profit climbed 46.7 percent to 10.4 billion yuan.
Baidu's profits flat on marketing costs
February 27th, 2014China's largest search engine, Baidu Inc., said Thursday that its net profits slid 0.4 percent year on year in the fourth quarter of last year to 2.78 billion yuan (460 million U.S. dollars).
The slight drop was mainly due to climbing marketing costs, especially for its mobile products.
The company's expenditures in sales, general business and administration surged 135.1 percent year on year to 1.86 billion yuan in the final quarter, according to an unaudited business statement.
Its revenue surged 50.3 percent from a year earlier to 9.52 billion yuan in the final quarter, indicating healthy growth.
Li Yanhong, the company's chief executive, said the company has made remarkable progress in the mobile business and established a leading position in the mobile market, including in search, mobile application distribution and location-based services.
In the fourth quarter, mobile business accounted for more than 20 percent of Baidu's revenue, Li said.
In 2013, the company's total profits edged up 0.6 percent to 10.52 billion yuan, and its total revenues soared 43.2 percent to 31.94 billion yuan.
Brand challenge of smart and wearable bands
February 25th, 2014
Chinese telecom giant Huawei Technologies Co Ltd has shown faith in the fledgling smart wearable market with the world's first hybrid smart band for both Bluetooth calling and fitness tracking.
Shenzhen-based Huawei demonstrated TalkBand B1 at the Mobile World Congress held in Barcelona, Spain, on Sunday.
The smart band, which is worn on the wrist, has a 1.4-inch, flexible organic light-emitting diode (OLED) display and removable earpiece.
Huawei said the device can connect to people's smartphones so they can stay updated with all the information they need with just a quick glance.
The TalkBand B1's fitness tracking feature can record how many steps one has taken, what one's sleep quality is and how many calories one has burned, according to Huawei.
The product will be available for 99 euros ($136) and be out in China next month, whereas Japan, the Middle East, Russia and Western Europe will have to wait until the second quarter of 2014.
Richard Yu, chief executive officer of the Huawei consumer business group, said the company needs to start early in order to acquire a good position in the wearable device industry.
"Because (the smart band market) is new, manufacturers can only march forward by taking tentative steps," Yu said at a news briefing in Barcelona.
Huawei is not the first Chinese company to launch a smart wearable product.
ZTE Corp, Huawei's crosstown rival, released its first smart watch in Las Vegas at the Consumer Electronics Show in January.
Zeng Xuezhong, ZTE's executive vice-president, pointed out that the wearable gadgets market is a "blue sea", since no company currently dominates this new field and every player has an equal opportunity.
Global smart-watch shipments reached a record 1.9 million units in 2013, according to Strategy Analytics, a US-based research company. Matt Wilkins, the company's director, said, "We estimate that less than 1 percent of all smartphones shipped worldwide were bundled with smart watches in 2013, so there remains huge scope for smart-watch growth."
"It is very early days, of course, but the smart-watch market is starting to take shape," Wilkins said in a research note.
South Korea-based Samsung Electronics Co Ltd, of course, poses the most obstacles for Chinese players hoping to gain a major share in the smart wearable market.
Samsung accounted for more than half of the world's smart band shipments in the second half of 2013, according to research firm Canalys.
In the same period, Sony was the No 2 smart-band vendor, with a 19 percent global share.
"Samsung launched Galaxy Gear with a major marketing push that received significant consumer interest," said Chris Jones, principal analyst at Canalys. "Shipments of the device took Samsung to the top of the smart-band category, although disappointing sell-through will necessitate more promotional activity in coming months."
Canalys estimated this will be the year that wearables become a key consumer technology. The smart-band segment is expected to reach 8 million annual units shipped.
Daniel Matt, another Canalys analyst, said he expects the high-margin smart bands that incorporate sophisticated sensor technology will offer vendors great profit potential.
"With increased awareness about personal well-being, having a computer on your wrist will become increasingly common," Matt said in an email to China Daily.
Huawei's Yu predicted that smart-band gadgets likely will utilize cloud technology and that more and more smartphones will be tied to specific wearable products in the near future.
Sina Weibo mulls IPO: report
February 25th, 2014
Comparison of Sina revenue structure between 2012 and first three quarters of 2013 Source: iResearch Inc, Graphics: GT
China's Twitter-like microblogging service provider Sina Weibo is mulling raising a $500 million share issue in the US for the second quarter of 2014, a media report said Monday.
The company has hired Goldman Sachs and Credit Suisse to manage the New York listing, the Financial Times reported Monday, citing two people familiar with the matter.
Sina Weibo's public relations office was unavailable for comment when contacted by the Global Times as of press time.
Alibaba Group, China's leading e-commerce platform, paid $586 million for an 18 percent stake in Weibo in April last year, valuing the microblogging business at $3.3 billion.
Alibaba's public relations department also declined to comment on the issue Monday when contacted by the Global Times.
Normally Internet companies offer 10-15 percent of their stake for IPO, meaning Sina Weibo could be now worth about $4-5 billion, Wang Guanxiong, a Beijing-based expert on IPOs, told the Global Times Monday.
Sina is due to report its fourth-quarter earnings after the close of trading on Monday in New York.
Some analysts expect its Weibo platform to reach breakeven in the fourth quarter of 2013.
"Turning profitable will be the basis for Weibo's IPO," Lin Juan, analyst at research firm Wedge Partners, said in a research note released earlier this month.
"We think Weibo is ready for IPO since management restructuring has finalized, as well as the platform turning profitable," Lin noted.
In the previous quarter that ended September 30, 2013, advertising revenues generated by Sina Weibo posted a 125 percent year-on-year surge to $43.7 million, while non-advertising revenues from Weibo's value-added services, such as Weibo membership fees and games, also roared by 121 percent year-on-year to $9.7 million.
"Alibaba's joining in has speeded up the microblogging platform's commercialization process," Ding Daoshi, deputy managing editor of IT website sootoo.com, told the Global Times on Monday.
Sina Weibo's listing comes at a time when microblogging services in China are losing appeal due to strengthened government regulation and fast emergence of other social networking services, analysts said.
The number of Chinese microblogging users dropped 9 percent year-on-year to 280.8 million by the end of December 2013, China Internet Network Information Center said in a report published on January 16.
The report sent Sina's share price tumbling 7 percent on the same day.
Weibo is facing increasing competition with Tencent Corp's mobile messaging app WeChat, which is more private than Weibo, Ding said.
Sina Weibo's daily active users amounted to 60.2 million by the end of September 2013, while WeChat boasted 272 million monthly active users, data from the two companies showed.
Sina Weibo's offering also follows a number of Chinese companies which have been flocking to the US stock markets in their biggest numbers since 2010.
"The current market environment is favorable to China-based Internet companies, as US investors have gradually regained their appetite for Chinese stocks based on better performance of some newly listed Chinese firms since the second half of 2013," Li Ling, an analyst at ChinaVenture Investment Consulting, told the Global Times on Monday.
Jd.com, a major online platform in China, announced in January a plan to raise $1.5 billion in a US IPO that would be the largest by a Chinese Internet company.
Property developers slash home prices
February 24th, 2014Two property developers slashed their prices and created turmoil in the Hangzhou housing market, the local Qianjiang Evening News reported Sunday.
Hangzhou-based DoThink Real Estate slashed the price of 200 apartments by 12 percent from 18,000 yuan ($2,956) to 15,800 yuan per square meter on Tuesday. The homes immediately sold out.
Zhejiang Guanghong Real Estate Development Co announced a 4,000 yuan cut in a project on Friday, prompting angry homeowners to topple a model
Alibaba invests in online education service
February 18th, 2014Alibaba Group announced Monday that it has invested nearly $100 million in online education service TutorGroup, with two partners, Singapore investment company Temasek and Shanghai-based Qiming Venture Partners.
According to a statement sent to the Global Times, TutorGroup plans to use the funding to further growth across the Asian market, and also expand its market share in the America.
TutorGroup won a $15 million investment from Qiming Venture and CyberAgent in April 2012.
Founded in 2004, Shanghai-based TutorGroup, with more than 2,000 teachers in 60 cities across 30 countries and regions, provides real-time interactive language learning.
The company estimates the adult English language-learning market in the Chinese mainland is growing fast at 25 percent annually, and the market size will reach over $21 billion by 2016.
In the mainland alone, TutorGroup expects sales to see a triple-digit annual growth rate in the coming few years.
Last year, Alibaba launched online education platform Taobao Classmate, and this investment is regarded as another step for the e-commerce firm to explore the online education market.
Chinese private and online education has been growing in recent years with a wave of startups receiving significant financing.
In December 2012, online English training service 51Talk raised $12 million in financing from funds backed by a domestic Internet company Xiaomi.
Mismatch showed in job supply, demand
February 17th, 2014Employment seekers at job fairs want positions that aren't available
Job seekers and potential employers left Beijing's job fairs disappointed this weekend, as the available positions didn't match what the prospective employees were looking for.
The four major career fairs marked the launch of the first job-searching season of 2014, as migrant workers flock to or soon will return to cities after Spring Festival, and millions of college students look for employment before they graduate in the summer.
One disappointed recruiter was Bu Chenyu, investment manager of financial firm Hua Yi Gold (Beijing) International Management Co.
Bu said he had 15 employees handing out fliers with job descriptions at the job fair at the National Agriculture Exhibition Center, but the outcome "failed to meet my expectations".
"Most job hunters shopped around at different booths and had little patience to know more about our company or were inclined to leave a resume," Bu said.
Bu's company was seeking 100 investment consultants and five investment managers, offering generous benefits that include several subsidized trips home and abroad a year. But the company received only about 50 resumes, and more than half the job seekers are soon-to-be college graduates with little work experience, he said.
"I noticed that almost all companies attending the fair needed to hire sales personnel, which intensified the competition," he said.
Also hunting for employees in the crowds on Sunday morning was Zhao Can, a recruitment agent from Future PI, a company in Beijing that provides business management services. Zhao's company was paid to hire 36 employees for a building material manufacturer.
"I start a conversation with people I feel are suitable for our jobs and ask them what they expect of their future employers," he said. He added he believes more recruiters than job seekers were at the fair.
Yu Hongxing, an administrative chief from Baigao Education, a training institution in architectural industry, said most job seekers came to the fair with a wait-and-see attitude even though the company offered an annual salary of 1 million yuan ($164,800) for senior sales managers.
"Most of our job vacancies are related to investment and sales, but we found out that many job hunters are not interested in such challenging jobs, but prefer office work like administration, which we don't need," he said.
Some job seekers also noticed the mismatch in what they want to do and the positions that were available.
Zhao Liyuan, a senior from Xingtai, Hebei province, who is majoring in communication technology, came to the job fair at about 8:30 am on Sunday before the fair opened.
However, after carefully reading the brochure that listed all the job vacancies at the fair, the 22-year-old Zhao realized that there weren't any jobs that would enable him to become a communication technician, the position for which he has trained for three years.
Companies attending the two-day fair planned to hire 20,000 workers for 8,000 positions, according to the fair organizer, Chaoyang district's human resources service center.
Wang Guangzhou, a researcher at the Institute of Population and Labor Economics under the Chinese Academy of Social Sciences, said the discrepancy between jobs wanted and offered shows that China's labor market will have a labor shortage and structural imbalance in the long run.
"China's working-age population reached a turning point in 2012 and began an accelerated decline," he said.
"However, our education system has failed to adjust accordingly with the demographic change. Our students trained in colleges cannot meet the demand of the market, and it is hard for them to find jobs they like."
He said it will take time for China to upgrade its economy and reform the educational system to relieve the labor shortage.
Lenovo reports quarterly revenue tops $10b
February 14th, 2014It's the first time the PC vendor has broken through the milestone
Lenovo Group Ltd on Thursday reported its quarterly revenue broke through the $10 billion barrier for the first time because of strong global demand.
Top executives also explained to shareholders how they are going to maximize profit gains from the recent acquisitions that cost Lenovo more than $5 billion.
The world's largest personal computer vendor said the revenue in its third fiscal quarter that ended on Dec 31, 2013, stood at $10.8 billion, a jump of 15 percent year-on-year.
Earnings also surged 30 percent compared with a year ago to $265 million.
Yang Yuanqing, chairman and chief executive officer of Lenovo, said business in PC-plus areas, including smartphones, tablets and servers, was driving profit growth.
"The Motorola (Inc) and IBM (Corp) server acquisitions are a perfect fit with our PC-plus strategy," said Yang.
He also tried to calm investors who were questioning the company's profitability after spending $3 billion to acquire the money-bleeding Motorola Mobility from Google Inc. Motorola Mobility makes Android smartphones and Bluetooth accessories. Yang said the business will quickly begin contributing to the company's performance.
But Yang was hesitant to estimate his company's earnings prospects, saying the two acquisitions are still awaiting approval from the United States government. Consequently, the effect on short-term earnings are difficult to predict.
"Buying Motorola is a quicker way for Lenovo to access the premium smartphone market with a leading Android offering than trying to do it with its existing design teams and brand reach," said Frank Gillett, vice-president and principal analyst at Forrester Research.
"Using Motorola, just as Lenovo used the IBM ThinkPad brand, to gain quick credibility and access to desirable markets and build critical mass, makes a lot of sense," added Gillett.
Sun Qi, vice-president of industry consultancy Sino-Market Research Ltd, also believes the Motorola unit will extend the Chinese company's performance in global markets.
Lenovo was the second-largest smartphone maker in China last year with more than 40 million shipments, according to Sun.
Lenovo's quick move into portable device markets has given the company an upper hand in future competition, analysts said.
In the past quarter, Lenovo's revenue surged in Europe, the Middle East and the Americas. Sales outside China contributed more than 60 percent in revenue, according to its financial report.
"Lenovo was early to embrace Android as a tablet operating system while the likes of HP (Hewlett-Packard Co) and Dell (Inc) waited for Windows 8 and prioritized margins over volume," said James Wang, an analyst at Canalys.
"Lenovo's strategy has paid off, not only in its home market but worldwide. Lenovo still has the potential to grow its global notebook shipments and has emerged as a challenger in the tablet space," added Wang.
The analyst said Lenovo shipped three times as many tablets worldwide in the past quarter as HP and Dell combined.
Lenovo CEO Yang said earlier the company will challenge Samsung Electronics Co and Apple Inc globally, using a bigger product spectrum and more affordable prices.
Will LinkedIn make it in China?
February 13th, 2014Professional networking site LinkedIn Corp appears to be making preparations to start operations in China, the country with the world's largest Internet population.
The California-based firm has made some major moves recently that have been seen as steps towards officially expanding its service into China. The company announcedit has hired Derek Shen, founder of Nuomi.com, a Chinese website similar to Groupon, to head its Chinese operations. It also started to integrate with China's popular mobile messaging app WeChat weeks ago.
"We believe LinkedIn is uniquely positioned to penetrate the Chinese market and could serve as one of the few sites to have a meaningful presence in both the People's Republic of China and many Western markets," said Blake Harper, an analyst with Wunderlich Securities.
Harper expects the company's expansion into China to move slowly and methodically.
"We expect the company to continue to take it slow with its Chinese development efforts and any impact to the member or corporate customer base is likely longer term," he said.
Founded in 2003, LinkedIn has grown to be the world's largest professional network on the Internet with more than 200 million members. While LinkedIn has no Chinese-language site yet, it does have 4 million registered users from the country.
China is home to 618 million Internet users and 500 million mobile web users as of the end of last year. However, China is proving to be a tough nut to crack for some of the world's biggest web players.
"eBay, Yahoo!, and Google have essentially failed in China and Amazon is facing stiff competition as the Chinese appear to have a preference for local, home based companies," said Victor Anthony, an analyst with Topeka Capital Markets.
LinkedIn would be entering a market as similar local websites are racing to take advantage of the heated job-recruitment market. For instance, 51job.com, China's leading online recruitment company, claimed it had more than 73 million registered users in 2013. Other popular Chinese recruiting agencies including zhaopin.com and chinahr.com also hold a significant share of the market.
Will LinkedIn be the one that succeeds? Anthony said that remains to be seen and much depends on whether or not a Chinese upstart enters the market with a similar and compelling offering.
"My understating is that there aren't any compelling offerings in China today," he said. "In that case, if past trends are consistent, then LinkedIn may face a similar difficult hurdle as its US Internet counterparts before it. If no one comes along with a serious and compelling offering, then LinkedIn has a strong chance of succeeding."
Anthony said based on what he has seen over the past 12 years following the Internet media space and watching US based Internet companies enter China, he does believe that competition will follow LinkedIn.
"LinkedIn's hurdle is to convince Chinese citizens - and the Chinese government - that it offers a premium solution in the professional development and recruitment space and that it is not just another US company asking Chinese citizens and corporations to open up their wallets," Anthony said. "A healthy relationship with the Chinese government would also of course help."
Beijing to Hold Special Recruitment Event for Female Grads
February 13th, 2014A special recruitment event for female university students will be held in Beijing from March 7th to 9th. No male-relevant content will be presented in the recruitment information. This event is all about women.
During the second session of the 14th Beijing Municipal People's Congress held in January this year, Tan Lin, member of the Secretariat of the All-China Women's Federation (ACWF) and delegate of the Beijing Municipal People's Congress, said that 51.4% of Chinese university students are female and nearly half of all masters and PhD students are female. However, female students face a far more difficult job-searching environment than men. "A lot of employers do not even look at female applicants' resumes but simply tell them the position has been filled," according to a survey conducted by ACWF.
This is the primary reason why the Beijing Student Career Center and the Beijing Women's Federation have decided to hold this special event specifically for female students only. Gender discrimination in the workplace is a serious issue and should be addressed with effective and pragmatic methods.
Mobile payment platform ‘will go far’ to lift consumption
February 12th, 2014China has established its first national mobile payment platform using near field communication technology as part of an effort to boost information consumption, a senior central bank official said.
People's Bank of China Deputy Governor Li Dongrong said in an interview on Monday that the platform, which enables communication among mobile payment providers such as financial institutions and mobile network operators, began trial operations at the end of last year.
The platform has already been connected to the mobile payment branches of seven organizations, including China Construction Bank Corp, China CITIC Bank Corp Ltd, China Everbright Bank Co Ltd, China UnionPay and leading telecom operator China Mobile Communications Corp.
The platform "provides a solid infrastructure foundation to help China boost domestic information consumption and make the sector a new driver for economic growth", Li said.
He said that mobile finance has entered an era of "standardization", so it's important to provide an integrated ecosystem with unified standards to help mobile payment providers cooperate.
Colin Light, China Digital Consulting Leader for PricewaterhouseCoopers in Hong Kong, said that very few countries in the world have successfully built a single platform that links financial institutions and mobile network operators.
"The biggest obstacle for banks and mobile operators to operate in a unified way is to build scale. You need a scale advantage to reach wide acceptance of payments," said Light.
Despite the obstacles, Light said that near field communication-based mobile payments have a very promising future. The technology has the potential to replace cash, credit cards and debit cards.
NFC-based proximity mobile payment facilities allow users to make payments quickly and conveniently by tapping their phone on any NFC-enabled terminal at checkout
But proximity mobile payments accounted for just 0.8 percent of the third-payment mobile market in China in 2013 due to the scarcity of terminal devices, said consultancy iResearch Group.
Transactions in China using third-party mobile payments surged 707 percent year-on-year to 1.2 trillion yuan ($$197 billion) in 2013.
Although the PBOC has given strong support to develop NFC-based proximity mobile payments, Wang Weidong, an analyst with iResearch Group, said there are many hoops to jump through before the technology can compete with the popular Internet-based mobile payment system, Alipay.
"First, there are not many NFC-enabled smartphones in China. To promote proximity payment, you need people to buy mobile devices that are tailor-made to use this technology.
"Second, how do you educate and nurture a group of people who are comfortable using proximity payments? That's also important because it is very difficult to change the habit of users," Wang said.
Industry group enters fray in Qualcomm probe
February 11th, 2014Mobile phone chipmaker Qualcomm Inc may be facing tough headwinds in China after a telecommunications trade union submitted "substantial evidence" to the country's top economic planner in the midst of an antitrust probe.
Mobile Phone China Alliance, comprising some 30 handset makers and telecommunications equipment providers, has submitted an investigative report to the National Development and Reform Commission, calling Qualcomm's business model "detrimental to China's mobile phone industry".
Overcharging on patent fees and bundle-selling of services are two major accusations leveled at the world's largest chip manufacturer, according to the alliance's secretary-general, Wang Yanhui.
"What's happening to China's mobile phone industry now is like what happened to its DVD industry years back," Wang told China Central Television on Sunday.
"Patent holders levied exorbitant licensing fees and grabbed the majority of profits," he said.
Licensing has become a crucial revenue stream for Qualcomm, according to the report, which said it charges from 4 to 6 percent of the wholesale price of a handset. And that does not include chipset charges if mobile phone companies pay to install Qualcomm's chips.
The US giant has even established a subsidiary exclusively for charging patent fees, said Wang, which he said "draws a thin line between proper licensing and monopolistic moves".
Qualcomm was put under antitrust scrutiny in November as Chinese authorities vowed to lay out more assertive plans for antitrust enforcement in six emerging industries.
The government agency has yet to disclose details of the investigation, citing the sensitivity of the issue.
Qualcomm's China-based spokesman couldn't be reached for comment on the latest development.
Its chief executive officer, Paul Jacobs, said in January that he was "not aware of" any activity violating China's anti-monopoly law and that his firm had handed over requested documents to the NDRC, which helps oversee antitrust issues.
A Beijing-based lawyer who is providing legal advice on antitrust issues to Qualcomm said the investigation could last at least a year, because of the complexity of the case.
The lawyer, who declined to be identified, urged the government to take into consideration the time, resources and money that the company has invested in its research and development process.
"It is for the same reason that pharmaceutical producers are sometimes allowed to receive a higher profit in the first couple of years after a new drug is produced. It is a way to protect intellectual rights and encourage innovation," he said.
The probe and the potential fine — which could end up totaling more than $1 billion — come as China gears up for the launch of high-speed fourth-generation LTE mobile communication networks.
As the world's largest smartphone market, China is now the single biggest source of revenue for Qualcomm, representing 49 percent of its sales in the past fiscal year.
Heavyweight smartphone makers, from Apple Inc and Samsung Electronics Co Ltd to domestic players Lenovo Group Ltd and Yulong Computer Telecommunication Technology Co (the maker of Coolpad), all have adopted its telecommunications chipsets.
According to research firm Strategy Analytics, Qualcomm maintained a 53 percent share of the global market for smartphone processors by the second quarter of 2013.
"Royalty rates are critical, notably when we are transitioning into a 4G era," said Coolpad's deputy general manager, Li Bin.
Shipments of 4G-enabled smartphones are expected to top a half-billion units in China by 2015, according to data collector Canalys.
Qualcomm was the star of the 3G era, but its dominant position is being somewhat eroded by companies like MediaTek, maker of cheap smartphone chipsets, said Xu Zhen, a researcher for d1net, an information technology portal in Shanghai.
Qualcomm's current edge lies in its particularly strong adaptation in chips that communicate with both LTE and other older cellular technologies, Xu noted.
"Since the nascent 4G network has yet to be fully established, mobile phone chips should support seamless handovers for both voice and data to cell towers with older network technologies such as GSM. Such smooth transaction can only be, at least for now, realized by Qualcomm," said an analyst with China Mobile Co Ltd, the country's top mobile communication carrier, who declined to be identified.
Qualcomm is no stranger to substantial fines.
In 2009, South Korea's Fair Trade Commission fined the company 273 billion won ($252 million), the agency's biggest ever penalty against a single company, for abusing its dominant position in CDMA modem chips.
Shanghai becomes Asia's most stylish city
February 11th, 2014
Shanghai now reigns as the fashion capital of Asia, beating out Hong Kong and Tokyo, according to the latest research by Global Language Monitor, a United States-based firm that follows trends in word usage.
Survey lists it No 10 in world for residents' focus on haute couture
Shanghai has surpassed Tokyo and Hong Kong to become Asia's most stylish city, a new survey has found.
According to research by Global Language Monitor, a United States-based data research firm that catalogs trends in word usage, Shanghai is the reigning fashion capital of Asia, ranking 10th worldwide.
New York ranked first in the 10th annual survey on global fashion cities, followed by Paris and London.
Asia is well-represented in the top 20, with Tokyo at No 11, Singapore at No 19 and Hong Kong at No 20. Beijing didn't make the top 55.
"As China further emerges onto the world stage, Shanghai leads the fashion charge," said Bekka Payack, the New York-based fashion director for the outfit.
Global Language Monitor tracked more than 250,000 print media and social media channels looking for buzzwords associated with fashion and haute couture. It then traced the contextual usage and frequency of the words to set a gauge for ranking global fashion houses.
China's commercial hub deserves to be Asia's fashion capital, said Qi Xiaozhai, dean of the Shanghai Commercial Economic Research Center.
"Shanghai has made a triumphal return by jumping 12 places from last year's ranking. It should return to its rightful place in the top 10," Qi said.
Shanghai has become a hot destination for multinational brands seeking to engage a population with an increasing disposable income and craze for the latest lineups. For instance, Apple has four retail outlets in Shanghai, more than Tokyo and Singapore combined.
Besides, luxury shoppers in Shanghai continue to splurge on fancy items, with average consumer's spending even more than New Yorkers. Shanghai residents spent an average of $1,000 on their last purchase, double the amount of their New York counterparts, according to Milan-headquartered marketing firm ContactLab.
Around 91 percent of Shanghai residents said they plan to make a similar purchase in the next six months, compared with 77 percent of New Yorkers.
Chinese account for 29 percent of the world's luxury expenditures, a Bain & Co study found in December.
In world-class cities like Shanghai, shoppers have grown more sophisticated as they realize the only way to show their uniqueness and personality is through "fashion with personalized mix and match", not with accessories that everybody can wear, said Brunno Lanes, a Bain partner in China and lead author of the study.
Shanghai residents have the style and figure to carry out the latest fashion trends, said Sujata Sahai, a translator and documentary writer from India who lives in Shanghai.
"I find people here are a lot more brand-conscious and spend a great amount on fashion. They all turn out very pretty," she said.
Shanghai is ahead of Singapore and Hong Kong in terms of getting dresses properly matched, said Sahai, who has traveled extensively in the region.
The landmark China (Shanghai) Pilot Free Trade Zone is likely to gain further traction among foreign businesses lured by loosened investment curbs, said Sun Lijian, vice-dean of the School of Economics at Fudan University.
High-end retail chains, including Lane Crawford and Galeries Lafayette, have recently entered the Chinese market. Meanwhile, as mainstream Western labels have occupied nearly every street corner, domestic brands should aim to redefine China's fashion trends, Sun said.
For instance, the biannual Shanghai Fashion Week, a festivity that once attracted the likes of Jean Paul Gaultier and Vivienne Westwood, is giving heed to local brands this year.
"Indigenous brands were given a boost after China's first lady Peng Liyuan wore all made-in-China outfits during her foreign tour. Wealthy trendsetters will like distinctive high-end goods that require a trained eye to detect. These are opportunities for Chinese brands," Sun said.
Private banks to be on the rise
January 29th, 2014Since China Minsheng Bank Corp became the first private bank in 1996, the government has not approved any others, although it has allowed a small amount of private capital to be invested in commercial banks. This will soon change as the government opens up the financial sector to private enterprises.
China now has five State-owned commercial banks, three policy banks, 12 joint-stock banks, 144 city commercial banks, 47 foreign capital banks and numerous banks in towns and rural areas. The introduction of private banks will introduce more competition to the industry to the benefit of private businesses strapped for capital.
Until now, the names of more than 40 private bank applicants have gained pre-approval from the State Administration for Industry and Commerce. However, the success of Minsheng, which was founded at a time when loans for small and medium-sized enterprises were relatively undeveloped, is unlikely to be repeated today given the many financial products fighting for customers' attention. Some private banks are bound to fail if they do not have a sound risk-control system.
With the opening up of the banking industry to private capital after 14 years of hiatus. The biggest change in the policy is that private enterprises have seen their status elevated from "equity participator" to "initiator", according to the guidelines issued by the State Council in July that encourages more private capital to enter the financial industry.
Private banks that are filing for approval fall into two categories. First, there are enterprises or business associations that seek easier financing channels for the industry. For instance, Suning Commerce Group Co Ltd, a leading home appliance retailer, was the first listed company to announce its plans to apply for permission to launch a private bank. Other public corporations have also formed groups to create their own private banks.
The second category is more ambitious. This sector is the Internet companies that want to build a line of services on their own financial platforms, such as Tencent Technology (Shenzhen) Co Ltd.
Companies aiming to get a pieces of the pie in private banking cover a wide range of industries including e-commerce, real estate, food, garments, electrical equipment, technology and aviation.
Why does private banking look so enticing?
The Chinese banking industry has been enjoying lucrative profitability. According to the half-year profit statements of 2,467 A-share companies in 2013, the total net profits of the 16 listed banks amounted to 619.1 billion yuan ($102.1 billion). up 13.54 percent from the same period last year, accounting for 54.3 percent of total A-share profits. Although profit margins in banks have been decreasing in recent years, the large net profits still have a great appeal to private businesses.
Private banks can ease the difficulties in financing and acquiring loans by private enterprises. According to a study conducted by Qianzhan Industry Research, a Beijing-based research group, a mere 1.3 percent of small and medium-sized enterprises could conduct direct financing. Others accumulate capital through bank loans and private capitalization. However, because of their relatively low credibility, high management costs and banks' preferences for large-scale companies, only 10 percent of SMEs have access to bank credit. It is predicted that SMEs will need 17.5 trillion yuan in capitalization in 2014.
Possible bankruptcy
Severe competition in the banking sector stands in contrast with the private sector's enthusiasm. The profits in the banking industry are highly concentrated. Among the 16 listed banks, the profits of the top five State-owned banks made up 75.5 percent of the total profits in 2012. The total assets of city commercial banks accounted for a mere 9.4 percent of the total assets held by banking financial institutions.
Experts have been applauding the opening up of the banking sector to private capital. However, there are bound to be risks ahead.
Jin Liqun, chairman of the sovereign wealth fund, China Investment Corp, said some of the private banks are bound to go bankrupt.
State-owned banks are not going to go bust because customers are assured their deposits will be safely managed because the central Party and the government will not cheat their own people, said Jin. Private banks, on the other hand, face the risk of bankruptcy. But people don't have to be overly concerned because development comes with risks, he added.
"Deposit insurance needs to be put in place to protect customers' interests in case of bankruptcy," said Jin. "I heard of opposition from large banks that claim the insurance system is nothing but a burden because they are not going to go bankrupt. However, these banks have been given government protection to be exempt from bankruptcy, which attracts customers to put their money into their accounts. What is the cost of establishing an insurance system compared with their vested interests?"
Experts also warn that the current enthusiasm may not pay off.
"Private companies should remain cool-headed before they enter the industry," said Ba Shusong, deputy director-general of the Financial Research Institute of the State Council Development Research Center. He cited a case in Taiwan in which 16 private banks gained approval in 1992, but where only six remain.
Generally speaking, banks see no profits within the first three years after their establishment. Companies should wait until the industry has undergone consolidation before they try their luck.
4G's high cost has mainland buyers balking
January 29th, 2014
Salesman explaining 4G mobile phones at a Samsung outlet in Beijing, on Jan 2, 2014.
While the many tech-savvy young people in Hong Kong are rushing to embrace the faster and better mobile service offered by fourth-generation technology, their counterparts in the major cities of the Chinese mainland have been stunned by the high cost of entry into the new world of communication.
How costly is it? 4G services offered by China Mobile Ltd on the mainland are almost five times the equivalent package offered by the same company in Hong Kong.
China Mobile is the first among three mainland carriers to offer 4G services, initially covering 13 cities, including Beijing, Shanghai and Shenzhen.
Of the five different China Mobile monthly packages, three are currently available. The cheapest costs 138 yuan, with 0.6 gigabytes of Internet usage and 500 minutes of domestic calls. The most expensive one costs 338 yuan, including two gigabytes of mobile data and 2,000 minutes of calls nationwide.
However, the company offers totally different and much cheaper packages at its Hong Kong branches.
China Mobile Hong Kong provides local users with two packages. For a monthly fee of HK$218 ($28) users can have 5GB of Internet usage and unlimited calls within Hong Kong. The other package includes 1GB of mobile data and 1,800 minutes of phone calls. This one costs only HK$128 — 100 yuan a month.
The huge price difference in 4G services between the Chinese mainland and Hong Kong has drawn criticism of and suspicion about Chinese telecom operators.
"I do not think it is fair for the same company to charge differently for similar services," said 27-year-old Zhang Hui in Shanghai. She said she wanted the speed that 4G can provide but balked at paying the high cost.
"But what can you do? We do not have a choice," she said.
Gao Shu, a spokeswoman for China Mobile's Beijing branch, refused to comment on the monthly fee, saying that it is a subject for users.
Gao added that China Mobile does have an extra package of 180 yuan for 5GB of mobile data. There will be 1GB free of charge, if subscribers make the purchase before March 31.
Telecom analysts on the mainland attributed the high initial cost to the lack of real competition. In Hong Kong, they said, the stiff competition among the many carriers and service providers is instrumental in keeping prices low.
Jane Zhang, principal research analyst in carriers and mobile services with Gartner Inc, a US information technology research and advisory firm, said it is comparatively easier for carriers to promote 4G services in Hong Kong, given the benign infrastructure and popularity of mobile Internet. However, the mainland requires a huge initial investment to cultivate the market.
"For the time being, the 4G network by China Mobile can only cover major parts of Beijing. It takes time before the services and network become mature. The company has to set a high price to cover the initial cost."
Ashley Sheng, a telecom analyst with Shanghai-based securities company Shenyin & Wanguo Securities Co, said the price gap comes from the fierce competition among various telecom operators in Hong Kong.
"China Mobile is in a monopoly position on the mainland, so it can set a very high price for the new technology. While in Hong Kong, where 4G has been quite popular and China Mobile has so many local competitors, the company has to follow the local scenario."
Sheng said the price is not unreasonable, given the higher speed and huge demand for the 4G services.
4G technology has enabled mobile service users to enjoy data download speeds many times faster, at 80 Mbps, according to China Mobile's tests.
On average, it will take about one minute to download a high-definition movie of 700 megabytes.
"It creates a dilemma," Sheng said. "While the 4G network should drive up demand for video streaming, file-sharing and browsing services over mobile networks with faster and better quality, subscribers have to be very careful when using it. Otherwise, it will take about a day or two to use up the 0.6 GB."
Its counterparts in Hong Kong, on the other hand, are providing cheap and convenient 4G services.
At present, there are five telecom operators in Hong Kong, namely China Mobile Hong Kong, CSL Ltd, Hong Kong Telecommunications (HKT) Ltd, Hutchison Telephone Co Ltd and SmarTone Mobile Communications Ltd, all of which provide comparatively cheaper 4G services to local users.
PCCW Ltd, the parent company of HKT, charges HK$148 for 1GB of usage and unlimited calls in Hong Kong. At a price of HK$238 users can have 5GB of usage. Another operator, Three Hong Kong, charges HK$239 for 5GB of usage a month.
Sheng said that the environment for telecom industries in Hong Kong is quite different from the mainland's.
Hong Kong has a high penetration rate for mobile devices and the most sophisticated telecom market in the world, which has resulted in low prices.
The first commercial 4G service was launched in Hong Kong in November 2010. At present, all five mobile network operators in Hong Kong have deployed 4G services utilizing Long Term Evolution (LTE) technology.
According to Hong Kong government statistics, as of December of 2013, the number of mobile service subscribers was 17 million, representing one of the highest penetration rates in the world, at about 236 percent. Among them, about 11.5 million were 3G/4G service customers.
There are also about 20,000 public Wi-Fi access points in the city, giving free Internet access to the users.
A spokeswoman from the Office of the Communications Authority in Hong Kong told China Daily that the telecommunications market in Hong Kong has been fully liberalized, and prices of mobile service plans are determined by market forces.
"Factors behind the competitive 4G prices include the comparatively higher population density in urban areas, availability of affordable backhaul connections from fixed network operators and a tech-savvy population that is willing to adopt new technologies," she said.
Customers have ample choices of mobile network operators, based on their preference of pricing, promotion and product offerings, and network coverage.
On the other hand, operators in Hong Kong are competing for users and continually upgrading their network coverage and capabilities to meet customer demand, she added.
Sheng said Hong Kong telecom operators can only maintain a very narrow profit margin of 7 percent to 8 percent generally, given the intense competition. China Mobile can hardly make any profit with its packages in Hong Kong, given its small user number and market share.
"China Mobile has a very high gross profit in general, about 20 percent. The company does not rely on its Hong Kong operation for revenue. It is more like an overseas promotion for its brand," she said.
Zeng Jianqiu, a professor with Beijing University of Posts and Telecommunications, said it is quite common for operators to charge high fees with the latest technology.
"When the 2G or 3G services were first launched, we all experienced high prices at the beginning."
He added that as 4G user numbers increase, telecom operators may adjust monthly fees.
Sheng said China Mobile will probably lower the price once 20 percent of its 767 million users are using the latest 4G services. Before that, the company may sell extra usage packages to users if their monthly amount runs out.
She added that ultimately, the price for 4G services will be the same as its current 3G services, or about 100 yuan for 2GB of data. But the pricing will never be as cheap as that in Hong Kong.
China's 2013 urban unemployment rate at 4.1%
January 28th, 2014Over 13 million jobs were created in China in 2013 while the urban unemployment rate in the world's second largest economy stood at around 4.1%.
The unemployment rate edged up to 4.05% at the end of the fourth quarter from 4.04% at the end of the third quarter, the Chinese Ministry of Human Resources and Social Security said today.
A total of 13.1 million new jobs were created in urban areas last year, and 5.66 million people were re-employed, state-run Xinhua news agency reported.
Gross revenue of social insurance funds increased 13.8% year on year to 3.29 trillion yuan ($ 539.03 billion), while gross expenditure totalled 2.65 trillion yuan, up 19.6% from a year ago, ministry spokesman Li Zhong said.
China's social insurance funds contain five parts: basic pension funds, basic medical insurance, unemployment insurance, work-related injury insurance and maternity insurance.
Wechat's 'Licaitong' attracts 800m yuan, challenging Yu'E Bao
January 26th, 2014
Tencent's Wechat users transferred more than 800 million yuan to the app's wealth management platform, "Licaitong" on Jan 22. Provided to China Daily
Tencent's Wechat users transferred more than 800 million yuan to the app's wealth management platform, "Licaitong" on Jan 22, the day it was launched, Morning Express reported Thursday.
The newcomer "Licaitong", which literally means a wealth management facility, serves as a spear for Internet giant Tencent, which wants to do full justice to its popular instant messaging smartphone app, Wechat, and gain a foothold in China's increasingly competitive Internet finance sector.
"Yu'E Bao", the first such wealth management tool, received 350 million yuan on June 13, 2013, the day it was rolled out by e-commerce giant Alibaba's payment platform Alipay. Search engine Baidu's wealth management product "Baifa" ushered in one billion yuan on its launch day in October last year, due to the claimed eight percent annualized return rate.
The 7-day annualized return rate of "Licaitong" was 7.5290 percent on Jan 23, while the return rate of "Yu'E Bao" was 6.4859 percent, according to Morning Express.
Full steam ahead for Shanghai Disney in 2015
January 24th, 2014
Visitors take photos of Mickey and Minnie Mouse at the exhibition commemorating the Walt Disney Company's 90th anniversary in Zhengda Square in Shanghai on Dec 18, 2013. Provided to China Daily
Shanghai Disney Resort will have completed operational plans this year for traffic and safety, as well as coping with a flock of visitors ahead of the resort's opening at the end of 2015.
"We'll make plans taking into consideration the particulars of the domestic market based on the experience of holding the 2010 Shanghai World Expo," said Fan Xiping, chairman of Disney's Chinese joint venture partner in Shanghai Disney Resort, Shanghai Shendi Group.
"For example, large visitor flows are expected during the National Day holiday and the weekend after the national college entrance exam," Fan said on Wednesday.
"We'll be committed to ensuring a safe and orderly operation, especially when there's a huge visitor flow or bad weather, to keep the best service standards and create an immersive and unforgettable experience for guests," said Fan.
Construction of six themed zones in the resort as well as two Disney-themed hotels and retail, dining and entertainment districts are also on track in the 3.9-square kilometer resort in Pudong.
Construction of a "mountain", an attraction in the resort's Magic Kingdom-style theme park, started last week. The mountain will be the second highest structure at Shanghai Disney Resort after the Enchanted Storybook Castle. On completion, it will stand as the highest mountain in Pudong, according to the public communications department of Shanghai Disney Resort.
"The main projects in Disneyland will be completed this year and people will see the outlines of the castles and themed lands," Fan said.
They are also promoting the development of surrounding projects in the Shanghai International Tourism and Resorts Zone, which will include an outlet complex and ecological gardens.
Some political advisers urged Shanghai to introduce more world-class cultural and entertainment projects to build the zone into an international attraction.
"The Shanghai tourism department may talk to more first-class projects that have global recognition, who I believe will be interested and confident of the prospects of the zone in Shanghai, to build the city into a destination for travelers from around the world," said Guo Guangchang, a member of the Shanghai Committee of the Chinese People's Political Consultative Conference and chairman of Fosun International, which is involved in industrial operations and asset management.
These projects should be complementary to Disneyland so that visitors will have rich and novel experiences, he said.
Chen Chao, another committee member, said prestigious cultural influence is an important factor when tourists look for a destination.
Chinese tertiary industry soars in 2013
January 23rd, 2014Economic numbers from China's tertiary industries have exceeded those of the country's secondary industries for the first time in 30 years.
Tertiary industries include things like the service sector.
The new numbers suggest a change in direction for the Chinese economy, including a stronger focus on enforcement in tertiary sectors.
NBS Commissioner Ma Jiantang says those sectors combined to make up more than 46% of China's economy last year.
NBS spokesperson Sheng Laiyun says researchers are now trying to figure out whether the emergence of the tertiary market last year is a trend, or just a blip.
He states that he believes the change is the result of years of policy changes and adjustments, affecting business structure and development.
Chen Fengying, director of the Institute of World Economic Studies, says changes in the Chinese economy fit nicely with current global trends.
"The world economy has experienced a downturn in the past few years, China has seen a decline in its exports in the past two years. China cannot rely on exports alone; it must stimulate domestic consumption as well. The rise in its tertiary sectors is a success for the central government and its policies regarding economic transformation."
Lu Zhengwei, chief economist at Industrial Bank, says e-commerce is one result of the transformation in economic structure.
"New shopping habits and powers have emerged, such as the young generations' shopping online; 2013 has seen a significant rise in e-commerce. This is different from the trend in commodity sales and it shows the power the young generation has in e-commerce."
As a manufacturing power traditionally, China's secondary industry faces new challenges.
Chen Fengying says that China stills needs it to create more jobs and boost the economy.