Tencent 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.
A customer shops at Wal-Mart's Zhaohui store in Hangzhou on Tuesday. Wal-Mart, the world's largest retailer by revenue, decided to shut down more than 20 outlets in China this year.
Closing part of company's plan to jettison underperforming stores
Wal-Mart Stores Inc, the world's largest retailer by revenue, plans to shut down another underperforming store?in Hangzhou, Zhejiang province?in late April, while a compensation dispute with employees from an inland store that closed in March remains unsolved.
Hu Yinghua, a saleswoman at Wal-Mart's Zhaohui store in Hangzhou, said they had a meeting on Wednesday afternoon as a formal notice of the closing of the store by the end of this month.
"The informal notification came on Tuesday night via text message. We have to choose before April 23 whether to be sent to other Wal-Mart stores in the city, or leave the company with a certain amount of compensation," she said.
Hu said upper-level managers explained during the meeting that the closure was strategically necessary.
There were a few customers at the store on Wednesday, but some shelves were already empty.
Shirley Zhang, media director from Wal-Mart China's Department of Corporate Affairs, confirmed that the store will close on April 23 as a part of the company's plan of shutting down those failing to make a profit.
The multinational company has opened about 400 stores on the Chinese mainland since it entered the market in the mid-1990s. The company decided to shut down more than 20 outlets in China this year because those stores comprise about 9 percent of the total, but have contributed only 2 to 3 percent of the total sales volume from 2013 to date, she said.
"We take these moves to achieve quality of growth, and we think the strategy adjustment will help us to better meet the demands of customers," she said.
Zhang said the company has tried to make proper arrangements for the employees affected by the closures, including allowing them to transfer to any outlet in China and subsidizing their relocation expenses, including transportation and accommodations.
However, the company's retreat from Changde was not seen as reasonable or fair by most of its local employees. More than 70 out of 135 employees from the store have asked their trade union to seek better compensation from the company after Wal-Mart told the workers on March 5 that the store would be closed in two weeks.
Huang Xingguo, chairman of the Changde store's trade union, said Wal-Mart did not provide an official notification to the trade union in advance for such a vital decision as the law stipulates and failed to show due respect to its employees.
"The day they announced the closure, employees from other cities arrived at the supermarket to replace our workers. It was humiliating and discriminatory," said Huang, whom employees elected as the trade union chairman in 2013.
He said the union has asked city authorities for formal arbitration to seek workers' rights in terms of collective negotiation, higher compensation for the mass layoffs, and pay for time not worked during the dispute.
"We ask Wal-Mart to double the existing compensation, but that is negotiable if the company is willing to resume dialogue," he said. "However, the company is busy removing its assets and has refused dialogue since late March."
Huang said Wal-Mart's tough stance was backed by inappropriate intervention from the local government.
He said the district's labor department provided written material to recognize that Wal-Mart closed its store in Changde legally, and police arrested several workers who took part in peaceful protests on March 21.
A labor inspection official surnamed Tan from Changde's Wuling district, who has been working as a mediator in the case, said the situation is "complicated" and urged workers to resort to legal channels to defend their rights.
Zhang, the media director from Wal-Mart China, defended the company's moves.
"Personally, I feel sympathetic toward these workers and understand their requirement for higher compensation, but our company has to handle that in accordance with the law," she said.
But Chang Kai, head of the School of Labor and Human Resources at Renmin University of China who participated in the legislation work for the Labor Contract Law from 2006 to 2008, believes Wal-Mart lacks legal justification for its behavior.
"The Changde outlet is just a branch of Wal-Mart, so it can't terminate employees' contracts under the name of disbanding the enterprise," he said. Under Chinese law, the company needs to provide an official resolution from a shareholders meeting to legitimize its decision to end its contracts with employees.
"What Wal-Mart did is actually a mass layoff, which requires the employer to inform workers one month in advance and listen to the trade union's suggestion for staff reallocation, which Wal-Mart has failed to do," he said.
Chang also said the trade union of Changde's Wal-Mart seeking better treatment for workers is significant, as it will set an example for similar cases in the future.
An 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.
China'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.
A 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.
China'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."
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