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.
More steel, cement plants will be closed due to overcapacity
May 8th, 2014China will close more steel and cement plants this year than originally planned to deal with overcapacity, the industry ministry said.
The nation decided to eliminate 28.7 million tons of annual steel capacity and 50.5 million tons of cement capacity this year, the Ministry of Industry and Information Technology said in a statement today.
That compared with an initial target of 27 million tons for steel and 42 million tons for cement as outlined by Premier Li Keqiang in his government report earlier this year.
The country's crude steel output rose to a record high of 779 million tons last year.
China has been phasing out old and inefficient capacity in its industrial sector as part of efforts to revamp its growth model and fight pollution.
The ministry also said 420,000 tons of annual aluminum capacity and 115,000 tons of lead smelting will be eliminated this year.
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.