Recruiting in China

May drive small players out but help sector's development: experts

Search engine giant Baidu Inc is altering its pay-for-performance service for crowdfunding platforms to favor larger, better-financed participants with significant shareholders, a move that experts said Tuesday will benefit the industry in the long term.

"We've gotten a notice from Baidu that the company won't open new accounts for crowdfunding platforms that offer pay-for-performance services," an employee of Shanghai-based crowdfunding platform zhongchoujia.com, who preferred to be anonymous , confirmed to the Global Times on Tuesday.

Pay-for-performance services allow companies to be featured more prominently in Baidu's search results.

The notice said that crowdfunding platforms will only be eligible to use pay-for-performance services in Baidu if they meet at least one of five criteria, which include membership of the Payment & Clearing Association of China, having shareholders from banks or having the support of State-owned enterprises, according to the employee.

Platforms that don't qualify were supposed to be dropped from pay-for-performance services as of Tuesday, the employee said, although the account of zhongchoujia.com was still active because Baidu probably still needs time to deal with the issue.

Baidu didn't respond to the Global Times' request for comment as of press time.

The five conditions are basic requirements, and further metrics will be used to evaluate each platform's financial condition, a person close to the matter told the Global Times on Tuesday, speaking on condition of anonymity.

Baidu's requirements are unfair to small crowdfunding firms that are heavily dependent on the Internet, said the zhongchoujia.com employee.

Crowdfunding is the practice in which new companies or project managers privately raise funds from a large number of investors. In many cases, using the Internet is the best or only way of doing so.

"There's some background to Baidu's action. For instance, government authorities have been calling for controlling financial risks since 2015," Chang Zongfeng, co-founder of baichouhui.com, a Shanghai-based crowdfunding platform, told the Global Times on Tuesday. "Also, Baidu needs to improve its public image by reducing risks."

Baidu announced in May it would set aside 1 billion yuan to compensate users who were harmed by fraudulent marketing information on its website.

The government authorities requested Baidu to take several remedial measures in May after the death of a 21-year-old student Wei Zexi who used Baidu to search for the hospital to treat his cancer.

"During the short term, some crowdfunding firms that depend on the search engine to raise user flow will be affected a lot," said Chang, noting that some other search engines may follow Baidu's moves.

However, there are risks in the crowdfunding industry caused by "irregular practices," noted Chang.

For example, some firms lower the requirements for investors and some dubious products are offered on some platforms looking for investors, said Chang.

As of the end of the first quarter this year, there were at least 399 online crowdfunding firms in China, with 132 firms having been closed or transiting to other businesses, according to a report by Beijing-based financial information provider -01caijing.com in May .

In the first quarter, online crowdfunding firms raised about 3 billion yuan in total.

"It's good for Baidu to strengthen the regulations, which will benefit the industry in the long term," noted Chang. "In particular, equity crowdfunding should have more stringent requirements for investors as it's riskier than crowdfunding ordinary projects of lower value."

Yu Wenhui, founder of vchello.com, an equity crowdfunding platform based in South China's Guangdong Province, agreed with Chang.

"Strict regulation is good for the sound development of the industry," Yu told the Global Times on Tuesday.

Baidu could work with government authorities to evaluate platforms' qualifications, said Yu.

Technicians check a pilotless helicopter at a startup company in the Binhai New Area of Tianjin.

Finance leasing is becoming the second-largest source of capital, after bank loans, for small and medium-sized businesses in Tianjin, an industrial and logistics hub in northern China, according to the city's financial watchdog.

"The finance-leasing segment is in expansion mode, as it offers much-needed funds to various companies, especially those small and medium-sized ones," said Sun Jingyun, deputy director of the Tianjin Bureau of Financial Affairs.

Small and medium-sized enterprises often have difficulty getting bank loans, so finance leasing provides much needed liquidity because of its more flexible policies, added Sun.

Baolai Precision Machinery Industry Group in the city is a beneficiary of the booming finance-leasing business. In the past decade, the company bought manufacturing equipment through 27 finance-leasing deals worth 60 million yuan ($9.23 million).

Baolai has more than 800 high-end processing machines and 50 quality detection devices. According to company President Cui Yachen, more than 40 percent of its equipment was bought through finance leases, and the value of the company's annual output increased by 20 percent on average over the past 10 years.

Cui said it is more difficult to obtain bank loans, and their repayment periods are comparatively short, placing a big strain on the company's cash flow.

"Although the fee for finance lease is higher, repayment periods can stretch as long as three to five years, granting us more time for product sales and the repayment pressure is much lower," Cui noted.

To cut the costs for firms in finance leasing, the Tianjin municipal government is offering a subsidy to lessees.

"From 2016 to 2017, Tianjin will provide 3 billion yuan in subsidies, to cover about 70 percent of leasing fees for qualified enterprises," said Chen Yu, deputy chief of the Tianjin Bureau of Financial Affairs.

The annual interest rates for finance leasing range from 5 percent to 8 percent. The government subsidy will help cut the rate to less than 3 percent for Baolai, which is heading for a stock market listing in August.

In contrast, a local bank loan's average annual interest rate is about 5.16 percent.

Cui said Baolai plans to spend 10 million yuan buying new equipment through finance leasing this year, and another 30 million yuan to 50 million yuan next year.

Statistics from the Tianjin government show there are 773 finance leasing institutions in the city, and the overall value of leasing on asset has hit 680 billion yuan.

China's central bank drained 220 billion yuan (33.85 billion U.S. dollars) from the market this week to ensure stable money supply.

This follows a drain of 290 billion yuan from the financial system last week.

The People's Bank of China (PBOC) conducted 360 billion yuan in seven-day reverse repurchase agreements (repo) this week, a process in which central banks purchase securities from banks with an agreement to resell them in the future.

With 580 billion yuan's worth of repos maturing this week, the PBOC ended up draining a net 220 billion yuan from money markets.

On Friday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, was down by 0.1 basis points to 2 percent.

The Shibor for seven-day loans fell 0.3 basis point to 2.326 percent. The Shibor for three-month loans dropped 0.2 basis point to 2.894 percent.

Yang Yuanqing, chairman and CEO of Lenovo.

Lenovo Group Ltd announced on Wednesday the establishment of a $500 million investment fund, seeking new growth points as the world's largest personal computer maker is wrestling with a declining global demand for PCs and a faltering smartphone business.

The fund, solely financed by Lenovo, will be used to finance startups in cloud computing, big data, artificial intelligence, robotics, Internet Plus and other emerging sectors.

Yang Yuanqing, chairman and CEO of Lenovo, said the new investment unit, Lenovo Capital and Incubator Group, will help the company find the biggest commercial opportunities in the next decade.

"We won't place a limit on the size of our investment in innovation as long as startups' products fit with Lenovo's broad strategies and really boast cutting-edge techs," Yang said.

According to Yang, Lenovo is also encouraging its employees to work on innovation projects, which can grow into independent firms, become the company's units and leverage capital from other investment firms to scale up.

He Zhiqiang, Lenovo's senior vice president in charge of the new investment unit, said the company will invest in 10 to 20 startups every year and help spin off at least 10 companies from Lenovo's internal incubation projects this year.

"We value quality over quantity, with focus on early-stage startups," He said, adding the company is also eyeing overseas investment opportunities.

Lenovo's intensified efforts to boost innovation came as the company is facing mounting pressure in the PC and smartphone businesses, two of its major revenue sources.

In the first quarter of 2016, Lenovo failed to make its way into global top five smartphone vendors for the first time, according to the research firm International Data Corp.

The company is having difficulty in reviving its appeal to consumers who are willing to buy more expensive handsets while its Chinese peers Oppo Electronics Corp and vivo Mobile Communication Technology Co Ltd leap forward.

In the same period, the global demand for PCs hit a nine-year low, despite that Lenovo maintained its leading position in terms of quarterly shipments.

Di Jin, a research manager at IDC China, said Lenovo's products are facing fierce competition, so it makes sense for the company to look beyond smartphones and PCs for new opportunities.

Frasers Hospitality, an international serviced apartments and hotel residences owner and operator, will continue to vigorously expand its portfolio in China as it remains confident in the country's rise as a global economic powerhouse.

The Singapore-headquartered company plans to open 10 more properties in China's key cities within the next couple of years, apart from its existing China network which currently stands at 14 properties.

The new launches will be located in Tianjin, Wuxi, Chengdu, Shanghai, Shenzhen, Nanchang, Dalian and Changsha, and will cover three of its brand offerings including Fraser serviced residences, Modena by Fraser serviced residences and Capri by Fraser hotel residence brand.

"With the exponential growth that we have witnessed over the last 11 years, there is no question that China is, and will continue to be an integral growth market for Frasers Hospitality," said Choe Peng Sum, chief executive officer of Frasers Hospitality. "Our growth strategy is very much parallel to that of China's plans to develop new infrastructure and master planned cities as they present tremendous growth opportunities."

The strengthening of Frasers Hospitality's portfolio in China, which is right on track to reach its goal of 30 properties with 7,000 units by 2019, is a significant contributor to the company's global expansion target of 30,000 units by 2019.

The company's portfolio worldwide, including those in the pipeline, stands at 139 properties, or 22,800 units, across more than 80 cities, according to the company.

Steel and iron ore futures in China steadied on Thursday, while other commodities fell as a key exchange stepped up measures to combat speculation behind a recent market surge.

Financial investors have charged into Chinese commodities futures this year, driving up contracts including iron ore, rebar, cotton and even eggs, leading many to warn of similarities with a boom in the country's stock markets, which reversed into a sharp crash last summer.

This week has seen a marked pullback as exchanges raised the cost of trading to avoid mirroring the outcome in stocks.

Coking coal futures were the hardest hit on Thursday, falling by the downside limit of 6 percent, after the Dalian Commodity Exchange imposed higher transaction fees for the fourth time in a week.

Dalian doubled the transaction fees on key steelmaking raw materials, coking coal and coke futures, from Thursday. It will also widen the trading limit for both contracts to 7 percent from 6 percent from Friday and increase the minimum margin to 9 percent from 8 percent

Steel rebar on the Shanghai Futures Exchange, the leader of last week's big spike, closed up 0.8 percent at 2,539 yuan ($391.8) a ton.

Cotton on the Zhengzhou Commodity Exchange fell 3.8 percent, Shanghai aluminum dropped 2.8 percent and Dalian soybeans fell 2.7 percent.