Recruiting in China

More than half of China's listed companies have published preliminary financial results for the first nine months of the year, with the majority of them expecting better profits.

So far, 1,702 of China's 2,800 companies listed in Shanghai and Shenzhen have announced preliminary financial estimates for the Jan-Sept. period. More than 58 percent said their profits increased in the last nine months.

Among the top ten gainers, seven were in the manufacturing sector, according to market information provider Eastmoney.

Companies in the steel, electric equipment, agriculture, entertainment and chemical sectors recorded the best performance, with profits rising 332 percent, 256 percent, 96 percent, 79 percent and 50 percent, respectively.

Weapons, construction material, real estate, and mechanical equipment companies suffered the heaviest blows in the third quarter, with profits falling 183 percent, 25 percent, 24 percent and 22 percent, respectively.

According to Wang Delun, an analyst with China's third largest brokerage, Guotai Jun'an Securities, many heavyweight companies have yet to release their financial results.

Firms will pool drivers to cope with intensifying competition

China's leading car-hailing firm UCAR Technology Inc announced Thursday an agreement involving strategic cooperation with online car-hailing app Edaijia, in a joint effort to provide customers with high-quality services.

The companies will jointly promote the brand in the domestic market and seek cooperation in terms of capital, according to the press release sent by UCAR to the Global Times on Thursday.

UCAR and Edaijia will pool driver resources, the release said, and a premium driver training project will be launched.

"The cooperation will help the two companies to complement one another with the aim of creating the best mobile traveling service platform," Lu Zhengyao, president of UCAR, said Thursday at a briefing in Beijing.

Yang Jiajun, CEO of Edaijia, noted Thursday at the same briefing that Edaijia focuses on the safety of its riders and will continue to offer them good services to expand its market share.

Edaijia, which specializes in offering online designated driver services, has been focusing on the sector for four years. These services are usually aimed at people who avoid driving their own cars after a night out drinking.

Media reports said the agreement was reached because UCAR didn't have enough drivers to meet demand, while Edaijia had an ample pool of drivers. Experts said that the agreement would meet each company's needs and allow them to battle rivals jointly.

The services provided by Edaijia will be available in 298 cities nationwide with more than 200,000 registered drivers, according to Yang.

UCAR faces fierce competition from numerous rivals such as US-based car-hiring firm Uber Technologies Inc and Didi Kuaidi, backed by domestic Internet giants Alibaba Group Holding and Tencent Holdings.

In the second quarter, UCAR was the third-largest Internet car-hailing firm in the Chinese mainland with 466,520 active users of its car-hailing platform, after Didi Kuaidi with 3.59 million and Uber with 649,640, Analysys International said in a report in August.

Cooperation among car-hailing companies will become more common as competition intensifies, Zhang Shuang, deputy manager of the Internet research center of Beijing-based research firm CCID Consulting, told the Global Times on Thursday.

"Such cooperation will soon change the competitive situation in the industry," Zhang forecast.

Edaijia has encountered intensified competition from Didi Kuaidi, which launched designated driver services on July 28.

Edaijia aims to lower its operating costs and win more market share in this sector through sharing the platform with UCAR, Zhang said.

Unlike Uber and Didi Kuaidi's customer-to-customer model (C2C), which connects private car owners with riders, UCAR uses a business-to-customer (B2C) model under which it serves riders with its own drivers and cars, which are primarily from its main shareholder Car Inc.

"UCAR created a new way for the government to manage the car-hailing sector as the company has stricter rules to manage its drivers and is able to make good use of resources," Hu Dan, senior consulting manager at consultancy iResearch Consulting Group, told the Global Times on Thursday.

The cooperation agreement will play a vital role in making the sector more normal, Hu said.

Zhang said that given the market situation in China, UCAR's B2C model will lead to a more sound business environment than Didi Kuaidi's C2C model.

UCAR, which got listed on the Hong Kong stock market in fall 2014, secured $550 million in a second round of financing in September, after which UCAR was valued at $3.6 billion, a statement released in September by CAR Inc showed. And in the first round, which closed in early July, the company raised about $250 million, according to media reports.

A customer shops at a supermarket in Huaibei, Anhui province, on Oct 13, 2015.

Producer Price Index decline 'may facilitate restructuring process'

Inflation edged down for consumers in September and producer prices continued to contract, suggesting that the rate of economic growth may lose steam in the third quarter as demand remains weak.

But an hopeful scenario could be seen in the service sector, where prices are rising rapidly. A boom in services can prevent a hard landing by the world's largest emerging economy, economists say.

The Consumer Price Index, a main gauge of inflation, moderated to 1.6 percent year-on-year in September, down from 2 percent in August, the National Bureau of Statistics reported on Tuesday.

In the first three quarters, consumer prices were 1.4 percent higher than a year earlier, lower than the government target of 3 percent and below the 2.2 percent reading for the same period last year.

"The low inflation level can reflect economic weakness," said Chang Jian, an economist at Barclay's Capital in China.

Meanwhile, factory gate prices, as measured by the Producer Price Index, declined by 5.9 percent in September from a year earlier, extending its streak of negative readings to 43 months, compared with a 5.9 percent drop in August and a 5.4 percent fall in July, the statistics bureau said.

In the first nine months, PPI declined by 5 percent year-on-year.

According to Li Jing, an economist at HSBC Bank, "Prolonged weak inflation will not only weigh on firms' profits and add to their debt burdens but also lead to poor market expectations regarding incomes and prices."

The bank predicted more decisive policy easing in the coming months to counter the potential deflation risks.

However, some economists have seen positive signals in the expansion of the service sector.

Data from the NBS showed that service prices rose 2.1 percent in September from a year earlier the strength of domestic tourism, box office receipts and restaurant spending, among other things.

A research note from Goldman Sachs said booming service prices, together with the easing of industrial product prices, suggests that policymakers are successfully transferring the economic growth pattern away from investment and toward consumption.

It is also a wise choice to stop the country from entering the so-called middle income trap, the research said.

Lian Ping, chief economist at the Bank of Communications, said the PPI may continue to decline for the rest of this year, which may help reduce the backward production capacity while facilitating the restructuring process.

China's producer prices continue to fall in September, signalling prolonged weakness in aggregate demand, data from the National Bureau of Statistics showed on Wednesday.

The producer price index, a measure of costs for goods at the factory gate, fell 5.9 percent year on year, unchanged from the rate seen a month earlier.

The reading also marked the 43th straight month of decline.

Minsheng Securities reckons the index will stay in negative territory in the foreseeable future as China still has a long way ahead to digest its over-capacity in upstream industries.

In addition, the country's ongoing economic restructuring means a trending slowness in demand for traditional industrial goods, which will restrain prices.

Month on month, producer prices in September edged down 0.4 percent.

Output prices of production materials fell 7.7 percent in September, contributing 5.8 percentage points of the PPI drop during the month, while those of consumer goods edged down 0.3 percent during the period.

The data came along with the release of the consumer price inflation index, which edged up to 1.6 percent in September, slightly below the market forecast of 1.8 percent and 2-percent rise in August.

The downcast PPI and slowing CPI highlighted deflation pressure for China, Minsheng said, projecting a high possibility of further cuts in interest rates and the bank reserve requirement ratio in the fourth quarter.

China is battling a property downturn, industrial overcapacity, sluggish demand and weak exports, which dragged growth down to 7 percent for the first half of the year. Growth data for the third quarter is due next week.

IMAX is looking to target high net-worth individuals in China and real estate developers in the country with its new $400,000 home theater system, according to a company executive.

Robert Lister, chief business development officer for IMAX Corp, told China Daily that the company is looking to target three segments of the market: wealthy individuals, high-end real estate developers, and home designers that individuals consult when they furnish their homes.

"Before we even launched the product, a lot of the market research we did were on things like Bentleys and Ferraris - things that are the very, very high-end of luxury goods and there seems to be a great appetite for that in China as more capital flows to the middle class and the upper class," he said. The product has only been available since June, and Lister said the company is optimistic about sales. "We do have a lot of confidence," he said.

IMAX China, a subsidiary of IMAX that focuses on China, listed on the Hong Kong Stock exchange last week. It teamed up with TCL Multimedia Technology Holdings Ltd to manufacture the 20-feet-by-10-feet screens that will play IMAX movies at the same time they are available for release in theaters. Homeowners will pay a fee for movies, a figure that IMAX is negotiating with various studios, according to Lister.

The company unveiled the luxury home-entertainment system at Le Royal Méridien Shanghai for customers in the summer. The system features sound isolation, acoustics, wall treatments and audio-visual content from IMAX.

"Our strategic partnership with TCL, one of the world's leading entertainment technology manufacturers, strengthens both companies' positioning in China, with its rising demand for premium entertainment, and creates an ideal launch-pad for global expansion in the home entertainment sector," said Lister at the time of the product launch.

Eric Wold, an analyst with B. Riley & Co who follows IMAX, said that the home-theater system's price point means that IMAX doesn't need a huge number of sales to make the venture economically viable.

"It's not as much of a gamble as it would be. They've spent 20-30 years developing the technology, so to partner with TCL and launch a smaller system, it's expensive but you don't need a lot of sales to make it work," he said. "The people that can afford this are not the people who go down to your local multiplex on a Saturday night and sit next to the riff raff and pay $12. They're happy to sit in their homes. There's a market for it."

The Chinese box office is the second-largest in the world, earning $4.8 billion in 2014, a 34 percent increase over the previous year. China is ranked right behind the US, which took home $10.4 billion last year, a 5 percent decrease from the year prior. Many analysts predict that China's box office will overtake the US' by the end of the decade.

IMAX has 251 screens in China, and is planning to build 217 more. IMAX announced on Oct 8 that it reached a deal with Chinese company Omnijoi Cinemas to open an additional 15 IMAX theater systems in China. Its box office revenue was $183 million last year

IMAX China made its Hong Kong Stock Exchange debut on Wednesday, becoming the first Hollywood company to list shares in Hong Kong and raising $248 million to do so. It priced its shares at 31 Hong Kong dollars ($4), and closed at 34.25 Hong Kong dollars on opening day, about a 10 percent increase. Shares were 36.5 Hong Kong dollars at market close on Oct 9.

"Going public has been part of our long-term China strategy, and we believe the introduction of local Chinese investors into the business will further solidify our position in the Chinese market," CEO Gelfond said on opening day.

Wold said that the company is clearly aiming for the Chinese market, where a third of its business now exists, adding that there will be a continuation of growth trends within the movie industry and increasing demands from customers who will pay to watch films.

"IMAX China's stock's up 18 percent in the two days since it became public, so clearly the valuation has gone higher already," he said. "They haven't seen a degradation in demand, they haven't seen a degradation in box office numbers per screen. It's held up. That bolsters optimism."

This month, President Xi Jinping has two priorities on his schedule, one at home and one overseas.

First at home, he will join China's other top decision-makers in a plenary session of the Central Committee of the Communist Party of China, which is expected to roll out a draft of the development program for 2016 to 2020. This, it is believed, will mainly aim to give a final push so China's per capita income doubles from its 2010 level by 2020.

And abroad, after his September state visit to the United States, Xi is due pay a visit to the United Kingdom, during which he is likely to further explain to the world how China intends to play its due role as global stakeholder.

Xi will also likely outline the opportunities China's new five-year plan offers the UK, Europe and the rest of the world.

With China deepening its efforts to restructure its economy, the Europe Union and China are becoming increasingly interlinked in trade, investment and people flows, due to their natural complementary as a result of their differing development stages.

In fact, this may produce a second wave of growth after the first wave brought about by China's accession to the World Trade Organization in 2001.

In that year, the bilateral trade volume was $76.6 billion. It had soared to $615 billion by the end of 2014.

The coming five years offer a golden opportunity for China and the European Union to solidify the foundations of their bilateral partnership, if both sides demonstrate enough vision and determination to push forward the existing momentum.

That is to say, China's accession to the WTO was the incentive for China and the EU to deepen their trade and economic relationship. Now, Beijing and Brussels have realized the urgency of injecting new momentum into their relations after taking advantage of the WTO dividend for years.

The two sides have decided to speed up their bilateral investment talks and will try to finalize the text for negotiations by the end this year. They have signed a memorandum of understanding that makes China the first foreign country to join the European Union's 315 billion euro Investment Scheme, and Brussels has shown its intention to get a piece of the pie that China's Belt and Road Initiative is creating. An EU-China fund may also be in the works.

More importantly, many European Union countries have become founding members of the Beijing-led Asian Infrastructure Investment Bank, despite Washington's disapproval.

To sum up, on top of their already active economic and trade activities, a bilateral investment pact, a joint government-led fund and a new international financial institute are set to be three crucial important institutional arrangements between China and the EU in the coming five years.

The bilateral investment pact and a joint fund to facilitate investment into each other's mega programs still take time to realize. But most likely, the three important arrangements can all be put into operation by 2020.

And Brussels and Beijing can do more.

Both sides should show more ambition and vision and announce their agenda for starting free trade talks soon. China and the EU account for a population of nearly 1.9 billion people and about one-third of the global economy, which are telling statistics showing the potential if the market barriers between them were to be removed.

Europe is still mired in economic difficulties as a result of the global financial crisis, and the euro's fate still hangs in the balance to some degree. China too has been experiencing an economic slowdown.

Therefore, the leaders of both sides should lay solid institutional foundations for achieving common prosperity, they should not risk letting the opportunities of the coming five years slip through their hands. That will be benefit both sides, not only by 2020, but beyond.