Recruiting in China

SOEs lag behind private firms in terms of creativity

Shenzhen Huawei Investment & Holding Co, the parent of technology giant Huawei, unseated e-commerce giant Alibaba Group as the top innovative domestic company in the Chinese mainland, according to the findings of an annual survey released on Tuesday by global consulting firm Strategy&.

Tencent Holdings, the third most innovative domestic company on last year's ranking, moved up one spot on the 2014 list, while Alibaba was ranked No.3 this year, ceding its innovation crown to last year's runner-up, according to a report based on the survey.

Nearly 400 executives from both Chinese and foreign companies joined the survey, which was conducted this spring and summer.

"Huawei is probably seen as the Chinese company which most embodies innovation - not just in [the mainland] but also globally," Steven Veldhoen, a Beijing-based partner at the consulting firm, told the Global Times after the release of the survey, referring to the rankings based on the input of business executives.

Smartphone vendors Beijing Xiaomi Technology Co, Meizu Technology Co, and electric-car maker BYD Co are new to the list of domestic innovators, among which, eight of the top 10 firms are in the high-tech or Internet arena, the report said, attributing the phenomenon in part to the highly open and intensely competitive nature of the sectors in the mainland market.

Chinese companies, particularly those expanding overseas, are increasingly turning to innovation as a significant driver of business growth.

The survey found that innovation is the first priority for 42 percent of domestic companies, compared to 21 percent of multinational firms.

In a sign that domestic companies are gaining traction in innovation, 65 percent of multinational respondents said that their companies are confronted with Chinese competitors that are just as or even more innovative, the survey results showed.

China is attaching greater importance to innovation in its reform-bound economy.

Speaking at the opening ceremony of the Summer Davos Forum in Tianjin on September 10, Premier Li Keqiang said the Chinese economy has maintained steady and sound growth in recent years, owing to reform and innovation.

"China's innovation involves not only technology but more of institution, management and growth models," said the premier, pledging stepped-up reforms to remove restraints on innovation by individuals and companies.

The survey also revealed concerns over the lack of innovation in the country's State sector.

"State-owned enterprises (SOEs) are, on the whole, seen as lacking impetus in innovating their products and services," Wang Jun, a research fellow at the China Center for International Economic Exchanges, a Beijing-based think tank, told the Global Times on Tuesday.

The monopoly positions of most SOEs dampen their zeal for innovation to achieve higher earnings, Wang said, noting that an ineffective incentive mechanism for innovation for SOE management also works as a drag on innovation in the State sector.

But with the deepening of SOE reform, which includes launch of pilot programs on mixed ownership, the level of innovation in SOEs is expected to rise, he believes.

A separate list that names the top 10 innovative foreign companies in the mainland market was also announced on Tuesday, placing Apple Inc, Samsung Electronics and Volkswagen Group China among the top three.

It is hardly a surprise that Apple tops the list, given "the ubiquity of Apple products and services, and its imitators," remarked Veldhoen.

China's leading search service provider Baidu Inc signed a strategic partnership agreement with China Guangfa Bank on Monday to provide better services to bank customers.

Under the deal, Baidu will use its advantage in big data and location-based service to support China Guangfa Bank to offer more tailor-made and smarter services to customers.

Beijing-based Baidu will use big data technology to carefully evaluate people's individual needs in wealth management products so as to help the bank better serve its customers in the increasingly digital era.

Baidu will also use its deep knowledge in location-based service to help the bank to select good locations to expand its brick-and-mortar network.

The remaking of China's manufacturing sector hinges on production with a higher degree of automation and artificial intelligence, experts said at a two-day manufacturing forum ended Saturday.

China's factory sector needs to undergo a gradual process of shifting away from its extensive reliance on labor, Luo Jun, CEO of the Asian Manufacturing Association, said on Friday at the Seventh Annual Conference of Asian Manufacturing Forum held in Weifang, East China's Shandong Province, as he advocated the modeling of Germany's implementation of "Industry 4.0."

The term Industry 4.0, first introduced at Hanover Fair in 2011, has since become the cornerstone of Germany's industrial strategy pushing for computerization of traditional industries including manufacturing.

With the application of new technologies in manufacturing, the Chinese economy will experience a new round of restructuring and recovery, Luo believes.

His comments mirror rising concerns over China's vast manufacturing sector, with recent data revealing worrisome prospects.

The official Purchasing Managers' Index (PMI), covering mainly big State-owned enterprises, edged down to 51.1 for August from 51.7 the month before, while the HSBC PMI, focusing on smaller private enterprises, shrank to a three-month low of 50.2 in August.

Experts also downplayed concerns about the replacement of manpower by automation and robots in the world's most populous country.

Speaking in an interview with the Global Times during the forum on Friday, Bernhard Thies, chairman of the Board of Directors of the DKE, the official German expertise center for electro-technical standardization, also said the application of automation and artificial intelligence that will be seen in China's industry sector will not cause big job losses.

A robotized factory sector expected in the future may weigh on the unemployment rate during a specific period of time, but it is unlikely to be a cause of sustained unemployment as new ideas and professions would be created to tackle job losses due to the prevalence of automation, according to Thies.

"I don't think it could really be a problem, because for the time being I believe that these new trends will still be [happening in] niche industries," Bernardo Calzadilla-Sarmiento, director of Trade Capacity Building Branch at the United Nations Industrial Development Organization, told the Global Times in an interview Friday, trying to allay fears of the predominance of machine over man.

But he noted that in the meantime the government should be responsible for designing policies and measures that would foster job-creating activities as well as sustainable and inclusive development of the factory sector.

Business continued to improve for small and medium-sized exporters in the Pearl River Delta in August, lifted by increased overseas demand and government policies to support foreign trade, a report said on Tuesday.

Shenzhen Onetouch Business Service Co, a subsidiary of Alibaba Group Holding Ltd, found that exporters' confidence was positive in August.

The trade climate index stood at 102.65, with many Delta exporters reporting increased orders.

"The situation will continue to improve in the months ahead because overseas demand for Chinese goods increases at the end of each year," said Xiao Feng, deputy general manager of Shenzhen Onetouch.

Rising orders in the past two months and stable production, labor and exchange-rate conditions helped exporters make more profits, according to Xiao.

Xiao said that government trade-boosting incentives had proven effective.

"In particular, new business models such as cross-border e-commerce and comprehensive foreign trade services have helped exporters gain more orders," Xiao said.

The nation's total trade increased 4 percent year-on-year to $367.09 billion in August, according to the Ministry of Commerce.

Exports to major markets including the United States, European Union and the Association of Southeast Asian Nations increased by 11.3 percent, 12.8 percent and 12.7 percent, respectively.

"The increased value of foreign trade in the past two months was mainly due to implementation of a series of government policies to support the stable growth of foreign trade," said Shen Danyang, a spokesman for the Ministry of Commerce.

The trade increase in August followed a surge of 14.5 percent in July.

According to Shen, export procedures have been streamlined and export rebates have been improved.

"We have also introduced measures to help companies tackle financing difficulties, with credit and insurance institutes providing financial services for about 25,000 small and medium-sized enterprises," Shen said at a press conference on Tuesday.

He said that cross-border e-commerce and comprehensive trade service business have had strong government support.

"But we are not sure that China's foreign trade can maintain this momentum ... as many uncertainties remain in the global and domestic markets and some companies face difficulties in exporting," Shen said.

Alibaba's impending IPO is one of the most talked-about stories in the world. Here is a selection of quotes from international and Chinese media.

"...at the valuation currently being discussed, Alibaba would be more expensive than more-established and better-known companies such as Google Inc. or eBay Inc."

Alibaba IPO: a big deal, and, backers argue, a real steal

-- Wall Street Journal, on Sep 12

"The most critical task Alibaba faces: Reaching the 500 million Chinese consumers who shop, chat, play games and basically run their entire digital lives on smartphones."

Alibaba IPO: Jack Ma's scrappy start-up takes on US

-- USA Today, on Sep 12

"For Alibaba, it was part of a continuing effort to make the instant gratification of global e-commerce accessible to China's expanding middle class. If the biggest Internet company in the world's most populous nation succeeds, it will make everything from culinary delicacies to flashy luxury goods available with a few keystrokes.

The degree to which Alibaba can deliver on this promise will help determine how much the company is ultimately worth and to what extent it can open up the enormous Chinese market to both global retailers and small businesses in search of growth."

Alibaba is bringing luxury, fast, to China's middle class

-- New York Times, on Sep 11

"As so is told by many brokerages, there's always chance for [Chinese] retail investors to grab a bite of Alibaba's IPO. To secure this opportunity, one has to be well-loaded and have some luck.

If you want to be Alibaba's shareholder, most of brokerages will require $1 million as liquid asset in your account and a minimum subscription of $400,000. Still, no guarantee for a successful allocation."

How could retail investors grab a bite of Alibaba shares

-- Caixin, on Sep 12

"Though Chinese consumers have driven Alibaba's financial success, they'll largely be left out of the company's stock offering."

Chinese gripe at being left out of Alibaba's $21 billion IPO

-- Bloomberg, Sep 15

"Alibaba is a 'hybrid' under the context of globalization. It reveals the financial development in China and its immeasurable potentials, while at the same time exposes shortcomings of Chinese venture capitals and difficulties for companies to seek domestic financing. Alibaba is a real 'multinational' company in the internet age. It has been seeking best opportunities globally and grown into 'first of the world'."

-- Global Times, May 8

U.S. appliance-maker Whirlpool Corporation received approval from the China Securities Regulatory Commission to acquire a 51 percent stake in the Shanghai-listed Hefei Rongshida Sanyo Electric Co. Ltd (Hefei Sanyo), according to a Hefei Sanyo statement released on Monday night.

It is the final approval required for the acquisition process.

The transaction will cost Whirlpool 3.382 billion yuan (550 million U.S. dollars), according to the statement.

China will become the world's largest white goods market and is the focus of Whirlpool's global layout. The acquisition will combine Whirlpool's technologies with Hefei Sanyo's local market expertise to grow its market share, according to the statement.

Michigan-based Whirlpool, with an annual sales revenues of more than 18 billion U.S. dollars, entered into the Chinese market in 1994 but has lagged behind local brands like Haier.