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.