07/14/15

Permalink 10:30:13 am, by dacare, 340 words, 78 views   English (US)
Categories: News of China

Chinese shares continue broad rally

Chinese shares rallied for a third consecutive trading day on Monday, following dramatic moves by the government to stabilize the market.

The benchmark Shanghai Composite Index rose 2.39 percent to close at 3,970.39 points. The smaller Shenzhen Component Index surged 4.78 percent to close at 12,614.16 points.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, climbed 5.8 percent to end at 2,683.07 points.

Winners outnumbered losers by 856 to 44 in Shanghai, and by 831 to 11 in Shenzhen. Some 900 shares jumped by their 10-percent daily limit.

More than 1,000 firms continued to suspend trading of their shares.

The combined turnover of the two bourses rose to 1.174 trillion yuan (192 billion U.S. dollars), from Friday's 1.08 trillion yuan.

The Shanghai index climbed above the 4,000-point psychological mark during the afternoon session, before retreating to close at around 3,970 points.

Chinese shares began to pick up on Thursday, after a free fall since their peak in mid-June.

On Friday, the benchmark Shanghai Composite Index leaped 4.54 percent to finish at 3,877.8 points. On Thursday, the Shanghai index soared 5.76 percent, the biggest daily rise in six years.

Before Thursday, the Shanghai index had lost about 28 percent of its value since a spectacular bull run ended with a peak of 5,178.19 points on June 12.

For fear of the market rout threatening overall financial stability, the Chinese government stepped in with measures including pouring in funds and restricting futures trading on a major small-cap index.

On Thursday, Chinese police joined the securities regulator to investigate "malicious short selling", a practice held to be a big contributing factor in the market chaos. The central bank also reiterated that it will continue to support the market's liquidity needs.

Despite the eye-catching rebound, analysts have predicted some continuing instability in Chinese stocks.

Xu Xiaoming, a market commentator, said the rebound lost some momentum in the afternoon trading session on Monday. He said he expects the market to fluctuate in the coming two trading days.

Earlier, Minsheng Securities forecast that the market will struggle at times in the near future, as it will take time to disperse market panic and rebuild confidence.

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07/13/15

Permalink 11:01:04 am, by dacare, 321 words, 79 views   English (US)
Categories: News of China

Wanda 'a work in process' as it pursues shift to e-finance empire

Dalian Wanda Group Co Ltd announced moves over the weekend that it said will support its transformation into a services empire by 2018.

The conglomerate said that it would establish a financial group and that it would accelerate its acquisition of banks, securities firms and insurance companies in the second half of the year.

The moves were announced by chairman and founder Wang Jianlin during a strategy presentation in Beijing on Saturday.

Wang said that the vision for the financial group entails a focus on Internet finance, a strategy that will allow Wanda to distinguish itself from traditional financial enterprises.

As part of its transformation, Wanda will reduce the number of physical stores to cut costs and raise profits with the help of e-commerce and online payments, according to Wang.

Wanda now conducts its business in the financial sector mainly through 99Bill Corp, a Shanghai-based online payment service provider in which Wanda bought a 68.7 percent stake for $315 million in 2014.

In June, Wanda and 99Bill Corp jointly launched an Internet financial product to raise funds for Wanda to build shopping plazas.

The crowdfunding effort raised 10 billion yuan ($1.61 billion) within two weeks, according to the presentation.

In terms of expansion and diversification, Wanda will complete the acquisition of three domestic companies and three foreign enterprises in the second half, according to a press release posted on Wanda's website on Saturday. None of those companies was identified.

Wanda spent more than 15 billion yuan in acquisitions in the first half, taking a 20 percent stake in the Atletico Madrid football club in January, acquiring Swiss sports marketing firm Infront in February and buying a dozen cinemas in China and abroad in June.

It also invested 3.58 billion yuan in Suzhou-based online travel platform Tongcheng Network Technology Co on July 3.

Wang said that the group aims to derive more than 65 percent of income from services by 2018, which would be a decisive shift away from its current focus on property.

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07/10/15

Permalink 10:14:44 am, by dacare, 693 words, 122 views   English (US)
Categories: News of China

Alibaba to get boost from rural e-commerce

Group expects turnover to jump as more farmers trade online

Alibaba Group Holding said in a press release Thursday that it would generate more than 3 trillion yuan ($483 billion) in transactions this year, as the company is actively introducing e-commerce to rural areas.

"We believe that our global transaction volumes this year will surely surpass that of Wal-Mart Stores Inc," Zhang Yong, Alibaba's CEO, was quoted as saying in a press release e-mailed by Alibaba to the Global Times Thursday. The company handled 2.4 trillion yuan worth of transactions in 2014.

Alibaba's market valuation will rise if it can persuade 700 million people in China's rural areas to embrace e-commerce, according to the press release.

"Alibaba pins hope on rural e-commerce, which not only can generate new growth for the leading online shopping platform operator but also boost the rural economy," said Zhang.

As an example of the huge potential of rural e-commerce, the company revealed in the press release that in June, hundreds of thousands of residents in the rural areas shopped on its online marketplaces every day.

The e-commerce leader has already made strides in rural e-commerce, touting goods on its online consumer-to-consumer marketplace taobao.com to rural residents by painting advertisements on walls since 2013.

And in October 2014, Alibaba announced that it would invest 10 billion yuan to build 1,000 county-level and 100,000 village-level e-commerce service centers around the country within three to five years.

Its arch rival JD.com Inc (JD) also actively carved out space for rural e-commerce, running over 800 e-commerce service centers to support delivery and home appliances maintenance in more than 30,000 villages, a PR representative from JD told the Global Times Thursday.

The companies' foray into the rural market is in line with the aggressive push by central and local governments to promote rural e-commerce.

As the country's rural heartland, Henan Province in Central China had opened in Xinxiang 300 e-commerce service centers as of December. It plans to establish 1,200 in the city alone this year, according to an announcement on the Henan government's website in December.

The Ministry of Commerce and the Ministry of Finance in May reportedly announced that a group of 200 counties in China's central and western regions would receive 2 billion yuan in financial support from the central government as part of a rural e-commerce pilot program.

Premier Li Keqiang, who continuously emphasizes the key role of e-commerce in boosting the real economy, encouraged graduate students and migrant workers to start their own business such as e-commerce in the rural areas during a routine State Council press conference in June.

In May, some rural merchants reaped in as much as 16,000 yuan per month in profit by selling goods on taobao.com, according to media reports.

E-commerce, which can attract investment into and promote sales of local specialties, will play a key role in boosting the rural economy, Feng Lin, a Hangzhou-based independent analyst, told the Global Times.

Data from Ali Research, a market research arm under Alibaba, showed that online sales in rural China are expected to hit 460 billion yuan in 2016, compared to 180 billion yuan in 2014.

Feng's view was also shared by Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting.

"Rural residents like to shop on online marketplaces, which offer an easier and convenient access to various products sold around China and abroad, while farmers can sell their agricultural products online," which will also contribute to the local governments' fiscal revenue, Lu told the Global Times Thursday.

Given China's current economic slowdown, total government fiscal revenue stood at 3.64 trillion yuan in the first quarter of the year, up 3.9 percent from a year earlier. In the same period of previous year, the growth rate was 9.3 percent.

However, analysts said that much work remains to be done to ensure product quality and availability of capital.

E-commerce companies also expect to have specific regulations covering the rural e-commerce category.

JD told the Global Times in an earlier interview in May that the company is working together with local governments to improve distribution standards and quality control system for agricultural goods sold online.

Logistics is another bottleneck in the development of rural e-commerce, as not all express companies have distribution networks covering rural areas, said Lu.

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07/08/15

Permalink 09:54:22 am, by dacare, 248 words, 96 views   English (US)
Categories: News of China

Construction workers 'semi-unemployed' as real estate market cools down


Migrant workers wait to find new jobs.

(ECNS) -- Chinese migrant workers have become "semi-unemployed" as a drop in the real estate market has cooled the construction industry.

About 503 million square meters of construction work was initiated in the first five months of 2015, while the decrease rate dropped 1.3 percent to 16 percent. About 351 million were related to residential houses, which saw a 17.6 percent decrease.

Although real estate is still managing to attract funds, the growth rate has dropped. Despite raising 3.2 trillion yuan (about $520 billion) in investments, the nominal growth rate still dropped 0.9 percent to 5.1 percent. Of the 3.2 trillion, 2.1 trillion was invested in residential houses. The increase rate was 2.9 percent, which was much lower than last year's 14.7 percent.

The construction industry employed more than 61 million or 22.3 percent of Chinese migrant workers in 2014, according to data from the National Statistics Bureau. Right now, a considerable number of migrant workers are finding themselves "semi-unemployed" in a lagging real estate market.

Construction workers have been "chilling" in a "semi-unemployed" mode, according to a construction contractor called Hu Cheng from Jiangxi province. Hu has been actively seeking construction businesses in east China for the past six years.

Since the Spring Festival, China's New Year in 2015, real estate construction work has seen more halts than starts in Nanchang, the capital of Jiangxi.

"Cranes just stand still out there," says Hu. "It's been half a year and I've worked for only about a dozen days. It used to be about one hundred days in previous years."

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07/07/15

Permalink 10:12:59 am, by dacare, 426 words, 70 views   English (US)
Categories: News of China

Pegatron adds staff in anticipation of more orders

Taiwan-headquartered contract electronics manufacturer Pegatron Group is reportedly expanding its workforce, a move analysts said on Monday is aimed at gaining more orders of Apple's next generation product at the expense of rival contractor Foxconn.

Pegatron's plant in Shanghai has launched a large-scale recruitment activity, planning to hire 40,000 staff in August to prepare for the mass production of Apple's new generation smartphone, widely tipped to be named iPhone 6s, Shanghai-based newspaper IT Times reported Monday.

Calls to Pegatron remained unanswered by press time, but according to information on the company's website, its Shanghai factory is schedule to hire people in July.

"I heard that Pegatron is hiring a large number of people in Shanghai" and another round of recruitment is expected to take place in September, Wang Yanhui, head of Shanghai-based Mobile China Alliances, told the Global Times on Monday.

The mass recruitment drive indicates that Pegatron has already got large-scale orders from Apple, which usually produces a batch of new devices in advance to cope with the peak sales period right after the introduction of new products, said Wang.

Apple is likely to announce its next smartphones in September, Forbes reported on Friday.

Pegatron Chairman Tung Tzu-hsien was quoted in a February press release posted on its website as saying that without doubt, the company will this year maintain at least the same level of product delivery for Apple as 2014 or slightly higher.

Wang noted that Pegatron is encroaching into Foxconn, another major Apple contractor from Taiwan, in part due to lower costs.

A report issued by New York-based nongovernment organization China Labor Watch in February showed that Pegatron's plant in Shanghai possessed an 8 percent cost advantage over Foxconn's factory in Longhua, South China's Guangdong Province, in 2014, translating into a $61 million advantage per year at just one of many Pegatron factories that serve Apple.

When contacted by the Global Times about whether Foxconn also has plans of expanding Apple production lines, the company's spokesperson said that they are not allowed to make any comments related to its clients.

Against this backdrop, Foxconn has already started diversifying its business, launching its online e-commerce marketplace in March to mainly sell consumer electronics products in the Chinese mainland market.

"Companies like Foxconn and Pegatron need to expand into other businesses to offset the costs of idle labor, because their major client Apple usually demands huge amounts of deliveries in the first and second quarter. Demands for Apple products are prone to decline in the third and fourth quarter, as consumers wait for launch of new versions," said Wang.

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07/06/15

Permalink 02:23:23 pm, by dacare, 973 words, 75 views   English (US)
Categories: News of China

Fast fashion labels ride e-commerce boom

In February, one month before its first-year anniversary in China, Old Navy served as a sponsor of China's annual New Year's Eve gala.

This was a huge entertainment event that Chinese families watched together during the vacation period. Gap, its trendier sister brand, was also a sponsor.

"It was a promotion where Old Navy gets mentioned and you shake your phone and marketing and campaign messages appear," said Mike Barnes, Old Navy's general manager for greater China.

"Just in that one night?one shake?we got over 800, 000 shakes of people on WeChat. That's a staggering number when you think that we only have eight stores here."

At the time, it only had seven. It is targeting up to 15 by Christmas.

Western apparel and fast fashion brands have been flooding the Chinese market in the last few years. Many, like Zara, H&M and Gap, have succeeded.

Some, like Britain's Marks & Spencer, have erred. A fair chunk accelerated their migration to online sales in the second half of 2014.

Consulting firms like A.T. Kearney predict that China's apparel sector could grow by 15 percent a year until 2020?spurring a feeding frenzy from foreign brands.

"China today is the second-largest apparel market in the world. In five to 10 years it is believed that China will be bigger than the United States," Barnes said. "That's just a ton of opportunity, and that is why you see all the global competitors coming here."

Another "Super Cash" campaign, where customers earned "Old Navy money" that they could either share with friends via social media or redeem off future purchases, was so successful it may even be transferred to the United States.

"Sharing with friends?that is something we have never been able to do in the US," Barnes said. "It is an example of where China is leading the way."

Art Peck, the new CEO of Gap Inc, which also owns Banana Republic, Athleta and Intermix, discussed the shift from bricks and mortar to online and mobile under the term "Retail 3.0" in an interview with Fast Company.

Picking up on this thread, Barnes said: "In markets where you have a store presence, you have a stronger online business. Is there showrooming going on? Sure. Right now we see a need for both to exist. But it is rapidly changing."

Gap reported global online sales of $2.50 billion for 2014, up from $2.26 billion a year earlier.

Although it does not disclose country-specific figures in Asia, media reports said its China revenue hit $300 million in 2013, a number the group was expecting to see triple by 2016-17.

In China, total online retail sales surged 53.6 percent in 2014 to 2.8 trillion yuan ($450 billion), according to a March 31 report by Knight Frank. This accounted for 10.6 percent of all retail sales in the country, up from 7.6 percent in 2013.

Both Gap and M&S now have online stores on Tmall.com and JD.com, the country's leading online marketplaces. M&S saw clothing sales on the former spike 200 percent in the last quarter of 2014. In January, it launched a new dedicated kidswear store on Tmall offering more than 300 lines.

"Continuing our 'bricks & clicks' strategy, we are leveraging e-commerce to strengthen brand awareness and reach across the country," said a spokeswoman for M&S China.

H&M, based in Sweden, launched an online store in China in September and Zara, based in Spain, followed suit on Tmall, the largest B2C website in China, in October.

Old Navy has also jumped on the Tmall bandwagon as it finds non-traditional marketing methods to be the new normal in this country of 1.4 billion, half of whom now live in cities. "Our commercial plan is integrated, whether it's social, digital, omni-channel," Barnes said. "All the pieces should tie together."

Gap reported that its first-quarter global net sales contracted 3 percent year-on-year to $3.66 billion?it did not explain why?but there is no doubt that Old Navy's global success led the conglomerate's fortunes in 2014

Gap posted net sales of $16.44 billion in 2014, up 2 percent from 2013. Gap's sales were down 5 percent during the period. Old Navy's rose by the same margin.

In fact, one of the largest apparel brands in the US?Old Navy is bigger than Levi's, Adidas and Gap?will remember 2014 as one of its most successful years to date in its home market, where it has over 1,000 stores.

Now it must see if it can gain enough traction in China to carry Gap if the same happens here?after first enjoying a nice little piggy-back ride into the market.

"Brand awareness of international fast fashion brands has rapidly improved in China in recent years," said Regina Yang, director and head of research and consultancy at Knight Frank Shanghai.

"They have been successful because their small inventories and quick turnover allow them to adapt to changing consumer demands."

Fast fashion sells because the brands offer lower prices, fashionable designs, immediately available trends, high product variety and a strong global image.

Even though media reports claim it takes H&M and Zara three months to get new product ideas into their stores?or 10 months in Gap's case?clothes can go from the catwalk to the shelf in as little as four weeks.

This clearly appeals to Chinese consumers, who are known to be more fashion-forward and bigger risk-takers than their American counterparts. Often, the younger generation leads the way.

"Though both Gap and Old Navy are considered lower-grade and inexpensive among American consumers, their product lines and price points are attractive to Chinese youth," said Chiang Jeongwen, a professor of marketing at China Europe International Business School, China's top-ranked business school.

Old Navy's China business appears to be flourishing despite it willfully trampling over some of the golden rules for success here?it refuses to localize its products, for example?and at least some credit is due to Gap.

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