Recruiting in China

Dianping Holdings and meituan.com, China's two largest online-to-offline (O2O) services providers, on Thursday announced that they have formed a new company that will become "a leading platform in the Chinese O2O sector."

In response to the move, China's top search engine Baidu Inc, the operator of another O2O services provider Baidu Nuomi, said late on Thursday that it will not be challenged by the new firm.

In a joint statement, China's leading group-buying website Meituan and top business review site Dianping said the new company will adopt a co-CEO governance structure, with Meituan CEO Wang Xing and Dianping CEO Zhang Tao becoming the new company's co-CEOs.

The former rivals said that they would retain their respective personnel management structures, brands and independent business operations.

Other details including the name of the new company and financing were not announced.

But the combined company could be worth as much as $20 billion, and it could raise $2 billion to $3 billion in the first round of fundraising, according to media reports.

Media also said the move could pose a serious threat to Baidu Nuomi, run by Baidu, which announced in July that it would invest as much as $3.2 billion in Nuomi over the next three years.

Baidu shrugged off media claims, saying that it was the new company that would be threatened by Baidu Nuomi.

"We believe that this merger is an extreme measure that shows just how seriously Meituan and Dianping view the threat from Baidu Nuomi," Baidu said in a statement e-mailed to the Global Times on Thursday.

Baidu said that the difficulties Meituan and Dianping have had in raising money and the rapid erosion of their respective market positions in the face of Baidu Nuomi's growth drove them to the merger.

Baidu also pointed to its performance in the O2O market as evidence that it will be strong in the face of any competition. It said Baidu Nuomi has been gaining about 2 percentage points a month in market share by gross merchandise volume, while Meituan's market share has been declining.

Liu Xuwei, an analyst with market research firm Analysys International, agreed overall with Baidu's assessment.

"I think the major point behind this cooperation is to raise capital," Liu told the Global Times Thursday, noting the overall capital market is in bad shape.

Liu also noted that Meituan and Dianping are facing strong competition in an increasingly competitive O2O field with major players such as Baidu Nuomi.

But Baidu Nuomi will also face pressure from the Meituan-Dianping venture, he said.

Liu believes Meituan and Dianping's new venture will help them to gain profits, given the two companies' huge market share and the "enormous" market for O2O businesses in China.

Car-hailing service provider Didi Kuaidi and the U.S.-headquartered rival Uber Technologies are to apply for legal status in China as the market, crucial to both, is expected to fill its regulatory gap soon.

Didi Kuaidi, a firm valued at $16 billion and backed by Chinese Internet giants Alibaba Group Holding and Tencent Holdings, said it had received a license to offer privately-registered car bookings in Shanghai, and was seeking permission from other cities.

Uber China also said on Thursday that it was "actively preparing" documents to apply for the car-booking license to meet new regulations governing the sector expected to be announced soon.

Shanghai's initiative to close regulatory grey zones came as China is moving to release its first regulation on ride-hailing services via mobile apps, and could prompt other cities to follow.

According to Uber, the company is opening a subsidiary in the Shanghai Free Trade Zone at the same time, as it plans to invest a total of 6.3 billion yuan ($991.5 million) in the country.

The two car-hailing giants are locked in a turf war in China, investing billions of dollars to lure passengers with steep discounts and subsidies to drivers.

However, as in many countries, regulatory issues remain the major uncertainty for car-on-demand service providers.

Didi Kuaidi is currently the dominant player, as according to data from consulting firm Analysys International, it provides 3 million daily rides covering 80 Chinese cities through private car services for 80 percent of market share.

Customers check out outfits at the fast fashion chain Topshop's first retail outlet on the Chinese mainland. It opened in Galeries Lafayette's store in Beijing this summer.

French store Galeries Lafayette has come up with a new approach to entice customers with affordable, exclusive labels from the likes of Topshop

Fast fashion chain Topshop's first retail outlet on the Chinese mainland opened in August, with lines of young women eager to see what the British brand had to offer.

But this was not just another store opening in one of the countless malls that have sprung up across urban China during the past decade, it was an indication of the subtle shift in the nation's shopping culture.

The brand chose to make its first foray into the Chinese mainland on the sixth floor of Galeries Lafayette (China) Ltd, a 50-50 joint-venture between French department store veteran Galeries Lafayette and I.T Apparels Ltd.

"The introduction of Topshop here sends a strong message," Paul Burke, chief executive officer of Galeries Lafayette China, said in an exclusive interview with China Daily.

"A message to bring more traffic here for people to see something else, because people are not frightened by the price of Topshop."

The French department store opened in Beijing in September 2013 just as China's department stores?aimed at wealthy and high-spending consumers-started to feel the pinch from the central authorities' anti-extravagance campaign.

Since then, it has been trying to find its place in Beijing's Xidan area, a bustling shopping district traditionally associated with younger consumers with relatively low spending power.

Targeting customers aged between 18 and 35, the store has been left relatively unscathed by the impact of the anti-corruption clampdown.

"The young customers are not really involved with these things and they live on true incomes. Whatever they earn, they can spend some on food, clothing and other things to feel good about themselves," Burke said.

Galeries Lafayette has moved into this market niche to distinguish it from traditional Chinese department stores, which have been in decline this year.

The rising middle class and the government's promotion of consumption stimulated their business, said Burke of his peers in the sector, but as far as Galeries Lafayette is concerned, "we are different".

"We are French, fashion forward, affordable and fun," Burke said. "When we think about business, these four elements are in our thinking all the time."

These four factors are the key elements deciding whether the firm will bring a brand to China. Creating a unique and diversified brand mix is also key to what sets it apart from other department stores in China.

Burke found that Chinese young women prefer to shop freely and have a greater choice of brands. Therefore, Galeries Lafayette's Beijing store was designed with no walls separating the many labels on offer.

"People can experiment with different brands and shop freely in our store without being followed by sales staff," Burke said, pointing to something that clearly sets his firm's retail culture apart from those of its Chinese competitors.

And accompanying the introduction of Topshop's first outlet in China, the department store has introduced other elements, which make it stand out from the crowd.

All Chinese department stores have the same brands, the same level of service and similar cafes, but they do not have the French cafe Angelina, Burke said.

Galeries Lafayette's business model has concession brands, which the company directly buys, as well as its own labels and I.T's products.

The concession model allows it to choose brands that are not already in China or Beijing yet. For example, it can select different lines from Red Valentino, which means customers can buy items that they will not find anywhere else in the country.

This means that Galaries Lafayette can fine-tune the range of merchandise and mix of brands to suit local consumers' tastes. In addition, Galeries Lafayette constantly updates its stores and changes the brands on offer.

"You don't want another five years of a brand which everybody hates," Burke joked.

Galeries Lafayette has also discovered young Chinese designers in Paris and introduced them in Beijing, including Chi Zhang, Fiona Chen and Chictopia. The store cooperates with the Beijing Institute of Fashion Technology and showcases some of its designers' best work.

"If customers like them, they stay," Burke said. About 40 to 50 Chinese designers now work with Galeries Lafayette.

These local designs sell well because they are interesting and exclusive. There is also less chance that customers will experience the embarrassment of finding someone else wearing the same clothes.

And the quality of service on offer is what makes customers shop here instead of going online, Burke said. "The traditional department stores' service level is quite low," he added. "We have to make sure our environment is more interesting."

Galeries Lafayette has introduced a VIP room and personal shoppers who will bring clothes that meet customers' requests.

According to I.T's financial report, Galeries Lafayette's revenue increased about 30 percent in the first quarter of 2015 compared to the same period last year. Detailed financial figures have yet to be released.

But the department store is eager to increase its share of China's retail industry, which has continued to expand during the past five years.

The store is also trying to attract more domestic tourists by working with major agencies, airlines and hotels, as its data show a large number of its customers are from outside Beijing.

Strong awareness of Lafayette labels among Chinese outbound tourists is a massive benefit to its expansion plan in the country, according to Burke. It will seek to cash in on the brand by opening 15 new department stores in China, with two due to be rolled out each year. As yet, the company has not revealed exact locations.

The new stores do not necessarily need to be of the same size as its first one in Xidan. "It could take two or three floors in a shopping mall or do things without food or beverages," Burke added.

Guo Zengli, president of the China Shopping Center Development Association of Mall China, pointed out that Galeries Lafayette stands out among foreign department stores, such as Parkson Group, a division of the Malaysia-based Lion Group, which has performed poorly.

"Having a very different model from Chinese department stores, Galeries Lafayette has the patience to cultivate the market and it will see an increase in its sales as consumers in China become more mature and more diversified," Guo said.

By working with its suppliers rather than only making money by renting out space, Galeries Lafayette has developed a competitive edge.

"To be responsible for the merchandise, pricing and consumers, means that once it gets a feel for the market, it will thrive," Guo said.

China's top three major telecom operators will launch rollover data services on Thursday, meaning unused data at the end of the month will no longer just disappear.

The operators will launch the service to all subscribers automatically.

Since May of this year, the three major operators have tested this kind of service within certain businesses and through a traffic data donation service.

In July, China's Department of Telecommunication Development urged telecom operators to launch data rollover plans to all the subscribers.

The authority also urged telecom companies to lower Internet prices and elevate connection speeds.

Fast-growing Chinese e-commerce platform yhd.com said Monday that recent staff departures represented normal employee turnover, domestic news portal 163.com reported Monday.

A large number of middle-level managers or department directors are leaving the company, according to media reports that cited information from several staff who had recently left the company.

Though some employees chose to leave, new talent is joining the team, the company was quoted as saying in the report.

After U.S.-based retailer Wal-Mart Stores Inc took full ownership of yhd.com in July, the company continued to provide its customers with a good shopping experience backed by the capital and supply chain of Wal-Mart, according to media reports.

Wal-Mart initially invested in the Chinese online retail platform in 2011 and gained majority control of the site by raising its stake to 51.3 percent in 2012.

The U.S. retail giant took full ownership of the e-commerce company in July, 10 days after two of its co-founders, former chairman Yu Gang and former CEO Liu Junling, resigned "to pursue their next ventures".

Media reports said that the company's employees felt insecure because the founding partners held no more than 20 percent of the company's equity and the welfare benefits fell short of expectations.

However, what matters more is that the staff see no future for the company after the departures of senior executives, domestic news portal jiemian.com reported on July 27.

This year, employees found it difficult to operate the e-commerce platform due to lack of resources.

Also, the self-operated business model of yhd.com did not develop well, according to jiemian.com.

Wal-Mart has not pointed out a direction for the development of the company, the report said.

The Chinese online retail operator accounted for 1.3 percent of the market in terms of transactions on domestic shopping websites in the second quarter.

Meanwhile, Tmall, a business-to-consumer unit of Alibaba Group Holdings, held about 55.6 percent. And China's second-largest e-commerce company JD.com Inc accounted for 25.2 percent, according to data from Beijing-based iResearch Consulting Group released in September.

China will promote greater use of equity crowdfunding for start-ups to encourage entrepreneurship in the world's second-largest economy, a cabinet document said on Saturday.

China's leaders have repeatedly said they want to promote more entrepreneurial activity in the State-dominated economy to stimulate employment, a top priority as the economy slows.

While they have pledged strong support for online business, however, they have until now generally refrained from showing enthusiastic support for crowdfunding.

A State Council document posted on the government's website called for expanding equity crowdfunding projects to help small companies raise funds as a "useful complement" to traditional equity financing while underlining the need to protect investors' rights and minimize financial risks.

With most Chinese banks unwilling to fund start-ups, crowdfunding has already seen rapid growth, helped by new platforms set up by e-commerce giants such as JD.com Inc.

Crowdfunding is also being used by large companies as funds from traditional channels dry up. Commercial property developer Dalian Wanda Group said in June that it raised 5 billion yuan ($784 million) from investors online and that it would continue to raise money from the public.

But reports have highlighted some of the risks of the unregulated market. A Beijing court earlier this month ordered a restaurant in the capital to pay a fine of 15,000 yuan for deceiving public investors about its intended use for 700,000 yuan raised online, according to a local media report.

The cabinet document give no details about how to address risks but promised that the government would grant easier market access to start-ups.

It also called for the development of third-party credit rating services and a standardized system for collecting, evaluating and sharing credit information.

China's securities regulator said in August that it would soon begin inspecting online equity financing platforms to address risks from illegal activities in online equity financing platforms.

China could account for half of the developing world's crowdfunding by 2025, or $50 billion, according to a World Bank forecast.