Recruiting in China

Lenovo Group, the world's biggest personal computer maker by shipments, posted on Tuesday a drop in its fiscal third quarter net income, a result caused in part by its completion of the acquisition of unprofitable handset maker Motorola Mobility.

In the quarter ending December 31, 2014, the company recorded a net income of $253 million, a 5 percent dip from $265 million a year earlier, while its revenue rose 31 percent year-on-year, reaching $14.1 billion, according to a financial report filed to the Hong Kong bourse on Tuesday.

The profit, though it fell from the same period in 2013, still beat Bloomberg analysts' estimate of $182.4 million.

Lenovo attributed the profit fall mainly to two major acquisitions completed during the quarter. Its net income before non-cash acquisition-related accounting charges was $327 million, up 23 percent year-on-year, according to the filing.

In October 2014, the group closed its $2.91 billion purchase of Motorola Mobility from US tech giant Google Inc and a $2.1 billion takeover of International Business Machines Corp's low-end server unit.

"They [the two recently acquired businesses] are definitely becoming our growth engines," Yang Yuanqing, Lenovo's CEO, was quoted as saying in a press release posted on the group website.

The group said it sold more than 10 million Motorola phones worldwide during the fiscal quarter, achieving record shipments.

However, Lenovo's mobile business, including Motorola, recorded a pretax loss of $89 million during the three months through December, much more than the loss of $2 million over the same period in the previous year.

The increased losses in the mobile unit indicate that Motorola, targeting mid- and high-end customers, has yet to be able to offset the losses generated by Lenovo's previous focus on the low-priced segment to snatch market share, said Zhang Yi, CEO of Guangzhou-based iiMedia Research.

"The mid- and high-end segments are a crucial turf for Chinese smartphone makers to raise their profit margin," Zhang told the Global Times Tuesday.

Huawei appears to have already made a dent in the segments with its Ascend Mate series. Xiaomi Inc, famous for its low-budget phones, also jumped into the higher-level battlefields via its newly released flagship Mi Note, which the company claimed could be compared with Apple's devices.

Against the backdrop, Motorola introduced three flagship smartphone models into the Chinese mainland market on January 26, to help Lenovo further woo mid- and high-end phone users.

Despite the efforts, Zhang is concerned that it may be hard for Motorola's newly released smartphones to help Lenovo's money-losing mobile unit return to profitability immediately.

The group should further enhance the brand value via effective marketing so as to undercut foreign rival Samsung in China's fiercely competitive smartphone market, Zhang noted.

By contrast, Li Yi, secretary-general of the China Mobile Internet Industry Alliance, showed more confidence in Motorola's future.

"I think that the Motorola brand will bring profit to Lenovo, given Lenovo's mature distribution channel in China and Motorola's powerful selling network abroad. Motorola's patent portfolio can also facilitate the Chinese phone maker's progress in the overseas market," Li told the Global Times Tuesday.

The group expects Motorola to contribute over 40 percent of its smartphone shipments in the following fiscal year, the Wall Street Journal reported in early January, citing Liu Jun, president of Lenovo's mobile business group.

Lenovo's PC unit continued to be the main contributor to the company's total revenue, although the proportion in the quarter fell slightly to 65 percent from 81 percent of the previous fiscal quarter, while mobile businesses' share of the total revenue during the third quarter increased to 24 percent from 13 percent in second quarter.

As the world PC market is becoming more saturated, Lenovo is pumping up efforts to seek new potential growth in other segments such as smartphones, said Li.

Apart from launching new hardware devices, operations like gaming and clouding also appear to be areas Lenovo wants to bank on. In April 2014, Lenovo announced the launch of its gaming mobile app marketplace for Android smartphones.

Xiamen, a coastal city in Fujian province, has an unparalleled advantage in building a free trade zone given its talent pool and rich experience of innovative policies, Fujian Governor Su Shulin said.

In a Government Work Report, Su said the Fujian free trade zone, with its proximity to Taiwan, will focus on cross-Straits cooperation and enhance exchanges of goods and services.

"Xiamen should set a terrific example of strengthening cross-Straits ties through the free trade zone," Su said.

The Fujian free trade zone, which was approved in December and is scheduled to open in March, covers 118 square kilometers and includes the cities of Xiamen, Fuzhou and Pingtan.

More favorable policies should be implemented to attract Taiwan professionals by making their lives easier, said Chen Qiuxiong, director of the organization department of Xiamen's Party committee.

While Xiamen offers a platform, the talent from Taiwan will bring technological support for the city's goal of building a free trade zone, Chen added.

A recruitment event catering to Taiwan professionals will be held in March in Xiamen, highlighting sectors such as new energy, marine engineering and cultural and creative industries, according to the city's Federation of Taiwan Compatriots.

According to the plan, Xiamen will recruit 300 Taiwan experts on management, science and research by 2020.

Yao Yuangen, a researcher at the Fujian Institute of Research on the Structure of Matter, suggested Xiamen make a foray into aircraft leasing and prepare for overseas financing of large-scale equipment.

After decades of development, 3D printing is now ready to revolutionize manufacturing

In October, the southern Chinese city of Changsha launched an industrial park. What sets it apart from other manufacturing centers is that it is poised to play a key role in the growth of Chinese technology.

The development is China's first hub for 3D printing technology, and was established with an immediate goal to produce 100 3D printers, and to triple the number of devices by 2016. Taking Changsha's lead, the cities of Wuhan and Zhuhai have announced plans to develop similar industry hubs.

Other countries in the Asia-Pacific region are also focusing on this fast-growing technology.

Over the next five years, Singapore plans to invest $500 million to boost skills in advanced manufacturing, focusing heavily on 3D printing.

Companies in Japan are already marketing inexpensive desktop 3D printers, while South Korean conglomerates are widely using the technology.

After decades of development, 3D printing has emerged as a viable and affordable technology, increasingly used by both the private and public sector. While problems remain, it could eventually revolutionize the manufacturing sector that many countries in Asia depend on for economic growth.

"3D printing has been around since the 1980s and has been expanding into mass production and specialized manufacturing since then," says Maria Smith, head of law firm Baker & McKenzie's trademarks practice in Hong Kong.

"The business is growing rapidly. In 2013, the (global) market size was estimated at $2.5 billion. It is projected to reach $16.2 billion by 2018."

3D printing, also known as additive manufacturing, has already been used to produce cars, buildings, guns and even artificial body parts.

"In the medical field, Chinese scientists have gone a step further, using live tissue to create organs and print ears, livers and kidneys," adds Smith.

As it becomes increasingly accessible and affordable to consumers, the technology is making it possible for products to quickly reach the market with less labor-intensive production required.

But these benefits are also a cause for concern. As 3D printing allows for the quick and easy copying of products, it is, in turn, presenting fresh challenges for regulators that have yet to adapt to the technology and for companies seeking to protect their intellectual property rights.

Once prohibitively expensive, the technology that makes 3D printing possible has evolved substantially.

Hewlett-Packard in October introduced a 3D printing technology 10 times faster and 10 times more precise than existing technologies. The Multi Jet Fusion 3D printer is set to launch in 2016.

In November, General Electric announced its plans to invest $32 million in developing an additive manufacturing facility in the United States?a factory that operates using 3D printers.

In Asia, XYZprinting, a company backed by Taiwan's electronic manufacturing conglomerate Kinpo Group, launched the world's first allin-one 3D printer with built-in scanner.

The da Vinci 1.0 AiO, weighing around 20 kilograms and resembling a large microwave, is available to buy for $799 through e-commerce websites including Newegg.com and Amazon.

A 3D printer introduced in late 2014 and developed by China Aerospace Science and Industry Corp is due to be mass-produced and available later this year.

Li & Fung, a Hong Kong-based consumer goods design, logistics and distribution company, has in recent years run a series of 3D printing initiatives. In 2013, it carried out Asia's first in-store 3D printing retail experience at a Toys R Us outlet in Hong Kong. Li& Fung has also explored the possibility of teaming up with other companies like Samsung Electronics Co to drive the technology further.

"With nearly 30 years of development, 3D printing technology is already quite mature," says Luo Jun, secretary-general of the World 3D Printing Technology Industry Alliance.

"It has been widely used for design in creative industries and printing teeth or bones in the biomedical field," adds Luo, who is also executive-president of the China 3D Printing Technology Industry Alliance. "Manufacturing and the aerospace industry use it to print complex moldings and components, or customized buildings."

Paul Shao, CEO of Trustworthy (Beijing) Technology, a 3D printer company that distributes systems developed by brands including 3Shape and Roland, says the region is quickly finding its way with 3D technology.

"In Asia, the markets in Japan, China and South Korea are more mature in terms of 3D printing, but we can see many regions like Southeast Asia and central Asia are joining the game in trading and applications," Shao says.

A country's 3D printing capacity is closely linked with its competitiveness in traditional manufacturing, he adds.

"Compared with the US, Europe and Japan, China is still at an infant stage in terms of innovative design, precision processing and economic power. We have much space to grow in many key technology areas such as laser and materials. But we are getting closer and closer," says Shao.

The evolution of supply chains is also driving the development of 3D printing. More brands are using just-in-time supply chains that make good use of the technology, getting products manufactured more quickly and into the hands of consumers.

In other regional markets, many of which rely on labor-intensive manufacturing for economic growth, the technology is less mature. Examples are Thailand and Malaysia, two middle-income countries moving up the value chain.

Thailand imports all of its 3D printers from the US, Canada or Germany because it lacks the technology to make its own, despite being a prodigious supplier of microchips.

But as Luo points out, the use of 3D technology in the region is likely to gather more pace.

"3D printing technology has been growing fast in China with more than 100 companies involved in industry, biomedicine, creative (industries), architecture, materials and software. China's 3D printing market has seen more than 40 percent growth for two consecutive years," says Luo.

China's Ministry of Science and Technology has included 3D printing technology in the National High-Tech Research and Development Program, which sponsors research in key high-technology fields. The Ministry of Industry and Information Technology, or MIIT, is accelerating the process to launch support policies.

"The Ministry of Education is planning to bring 3D printers into schools," Luo adds.

In September, MIIT announced it was working on a plan to promote the industry.

"We will see greater usage of 3D printing with increased affordability encouraged through government initiatives," says Andy Leck, managing principal and head of the IP practice at Wong & Leow, a member firm of Baker & McKenzie in Singapore.

"Key examples of these initiatives include the Singapore government's Productivity and Innovation Credit scheme and the investment of $500 million over five years as part of the government's Future of Manufacturing program," he says.

All this attention, however, may be creating a bubble. After a boom in raising capital through 2013, many 3D printer manufacturers have performed badly, particularly in terms of their stock price.

The share prices of some major 3D printer producers have dropped significantly over the past year. US-based ExOne fell from $66 in January to $21 in November, Stratasys slid from $134 to $105 and 3D Systems plunged from $96 to $36. In the same period, Germany's Voxeljet dropped from $47 to $12.

A number of linked companies listed in China's A-share market, such as those involved in robotics, have not performed well, either.

One exception is Guangdong-based polymer materials company Silver Age, which saw its value grow from 6.16 billion yuan ($994 million) in January to 17.45 billion yuan in November.

And if IP issues and fears of a bubble are not enough of a concern, the industry in Asia still faces a couple of other challenges including the high cost of materials and a dependence on imports. Another hurdle is the lack of a mature business model for companies in the sector.

China's mobile healthcare market is expected to see fast growth and hit 12.5 billion yuan ($2 billion) by 2017, according to a report released by China Medical Pharmaceutical Material Association at a press conference on Wednesday.

According to the 2014 China Medical Internet Development Report released by the CMPMA, there are more than 2,000 mobile healthcare applications in China.

The report states that the market in China will expand by 400 percent when compared to 2013 when the market was at about 2.36 billion yuan.

The dramatic growth of the mobile healthcare market can be largely attributed to the fast development of China's mobile internet, said Long Yan, deputy president of CMPMA at the conference.

As of 2014, the number of China's internet users through cell phones was 527 million.

While the market has grown, Long said a number of healthcare apps were pulled from app stores over the past year due to poor performance and user retention.

Companies are required to integrate the online apps with offline services and products to cater to the developing trend of the mobile healthcare industry, added Long.

China's largest shopping website, Taobao.com, gave an official response to a controversial quality inspection report by the country's commerce regulator on Wednesday.

The online store will file a complaint to the State Administration for Industry and Commerce (SAIC) based on accusations of a senior official's improper supervision, according to an announcement on Taobao's Sina Weibo account.

"Director Liu Hongliang followed improper procedures and his legal assessment was emotional," Taobao said, "He reached a conclusion that was not objective, bringing a negative effect on Taobao and e-commerce businesses."

"We welcome any supervision that is fair but oppose nonfeasance and random or malicious official actions," the post said.

The move is the latest salvo between Taobao, the most profitable branch of e-commerce giant Alibaba Group, and the SAIC since the latter published a quality inspection report on Jan. 23 that gave Taobao the lowest rank in terms of certified product rate.

FAIR OR NOT?

At the core of the quarrel is the question of whether or not Taobao was fairly treated.

The SAIC's sample test showed that only 37.25 percent of surveyed commodities sold on the website were authentic, lower than a 58.7-percent average of major online shopping platforms. Taobao's major rival, JD.com saw its rating at 90 percent.

Taobao fired back on Tuesday and said it was unfairly treated.

It claimed the inspection was flawed in logic and contradicted previous data, pointing out the authority only made a sample of 51 items which cannot represent the enormous trade volume on the platform.

The SAIC's survey had a 20-item sample for JD.com, a 10-item sample for Yhd.com and only a 1-item sample for Zol.com.

Tuesday's post was deleted shortly after but still stirred heated public debates with majority opinions in favor of the company.

Shi Yuzhu, a celebrity and board chairman of Giant Interactive Group, said the sample was too small compared to the website's 1 billion commodity categories (as Taobao claimed). "The sample was a little pale if statistically speaking," He said.

Responding to the claims, an SAIC official Yang Hongfeng said the survey just aimed to evaluate market risks and warn against illegal activities and no e-commerce firms were targeted.

Yang said the survey was conducted by a third party to look for problems instead of showing how poor the product quality was in online shopping, and the results should not be over-interpreted.

On Tuesday, another SAIC official, Yu Fachang said strengthening supervising efforts in online market is their legal duty and related officials have conducted activities in line with the law.

FAKE OR NOT?

An anonymous government official in east China's Zhejiang Province, where Alibaba's headquarter is located, said Taobao, while refuting the survey, avoided the question that if there were fakes on its platform and the responsibility it should take.

Yang said Alibaba has not paid enough attention to illegal operations on its platform and with no effective measures to tackle the problems, which triggered a honesty crisis for the group and brought a negative effect to the sector.

On Wednesday, the SAIC published a white paper regarding Alibaba, which listed five problems in the company's shopping platform including loose access requirement, slack inspection of commodity information, chaotic management of sales and a defective credit rating system.

Taobao.com, having grown to the most popular online shopping platform in China, allowed influx of fake commodities and illegal transactions, the white paper said.

The white paper was compiled based on a closed-door symposium of the SAIC and Alibaba in July, 2014. The meeting was chaired by Liu and no information was released at that time to avoid a negative impact on the group's IPO.

Taobao's announcement did not deny there were counterfeits traded via its platform but said the website was also a victim and would not shirk the responsibility of removing fake goods.

Alibaba's chairman, Ma Yun described fakes as long-existing viruses that have always plagued economic development.

AT LEAST ONE THING AGREED

Although the SAIC and Alibaba still remain locked in debate over the certified product rate, both sides agree on tough action against counterfeits.

Ma promised the group would mobilize all the resources to help address the problem and called for combined efforts from society instead of unbacked accusations.

Taobao announced on Wednesday that it would initiate a "special operation battalion" comprised of 300 specialists to cooperate with officials to crack down on fake goods.

Yu said the administration will continue to act hard against illegal activities to safeguard online market order and consumer interests.

Jin Zhanming, economics professor of Tsinghua University, said a sound interplay should form between producers, online platforms and regulators with all sides having responsibilities to safeguard market order.

Global telecom manufacturing giant Ericsson remained resilient despite large patches of economic slowdown around the globe, by reporting a solid $1.68 billion in net income last year.

The company, together with China's Huawei, is a major supplier of fast mobile broadband that facilitates a blossom of new mobile business – online commerce, online social community and a flurry of other models.

Ericsson is also a major vendor contributing to 3G and 4G infrastructure build-up in China, supplying equipment and technology to China Mobile, China Unicom and China Telecom.

Ericsson's sales were strong in Asia, the Middle East and Europe, but it said business in North America will remain sluggish with telecom operators there saving cash for more spectrum auctions later. Ericsson has anticipated the North American mobile broadband business to remain slow in the short-term.

"We will continue to proactively identify efficiency opportunities. Ericsson's cost and efficiency program, with the ambition to achieve savings of approximately 9 billion SEK, with full effect during 2017, is progressing well," said Hans Vestberg, president and CEO of Ericsson.

Last year, Ericsson made an end to its traditional chipset-making business, after terminating a handset joint venture with Sony in 2009.

Total sales of Ericsson hit 228 billion SEK ($35 billion), flat with the year earlier, adjusted for comparable units and currency factors.

Telecom services showed stable growth driven by managed services and systems integration sales. In Q4 2014 alone, Ericsson signed 17 new managed services contracts with a variety of major operators.

In 2015, Ericsson is said to continue its progress on the Networked Society strategy, focusing on market growth agenda, industrial transformation and corporate profitability.

"In line with our strategy, we have invested into our targeted areas -- IP networks, cloud, TV & media, industry & society and OSS & BSS. Sales in targeted areas showed a growth of more than 10 percent in 2014, " said Hans Vestberg.