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.
ABB Inc, a global grid equipments and automation technologies giant, Tuesday stressed its confidence on China's economic growth and market outlook, as they are continuously bolstered by industry upgrade, energy efficiency, automation applications, alongside with huge infrastructure programs.
Ulrich Spiesshofer, chief executive of ABB, said in a group interview in London that China is a very important market to ABB, as well as a significantly important platform for ABB to take the company to the next level.
Though China's economic growth is expected to decelerate in the future compared to its past 35-year performance, the country's ambitious blueprint on industry upgrade, energy efficiency , automation application, alongside with huge infrastructure programs are still able to boost its economic outlook and the rosy picture for the industries concerned, said Spiesshofer.
"We are very optimistic on China's long-term development in infrastructure programs," he said.
Spiesshofer also elaborated its understanding on China's "new normal" pattern of economic growth.
He said China has to tackle with the environmental pollution problems from economic growth, and this could happen in two ways, one is to cut down the energy consumption per unit of gross domestic product, the other one is to create environmental friendly technologies.
Spiesshofer added that ABB will collaborate with Chinese government for their action on anti-trust, a process that could incubate and optimize the competitive market environment,
On the same day at its annual Capital Market Day in London, Spiesshofer announced a surprising four billion U.S. dollars share buyback plan after the stock's dismal performance over the past year.
ABB also outlined the new long-term targets for the company, with plan to increase operational earnings per share by 10 to 15 percent on a compound annual basis from 2015 to 2020. And the like-for-like sales is expected to grow by four to seven percent per year over the same period.
On Friday last week, however, the world's largest power-grid maker announced a strategic collaboration with China's BYD Co., Ltd. to jointly develop new solutions for energy storage building.
The Switzerland-based ABB Group of companies operate in around 100 countries and employ about 145,000 people.
A record 100 Chinese corporations made the Fortune Global 500 list this year, including 91 companies from the Chinese mainland.
The list shows that Chinese companies are rising in international stature. However, according to a report from the China Business News this week, 16 of the Chinese mainland companies on the list ran in the red in 2013. By comparison, there were only four US companies on the list that ran at a deficit.
These companies won high positions on the list based on their total assets and average revenues, but they lagged behind other companies in terms of profit.
For example, the 95 companies based on the Chinese mainland and in Hong Kong earned an average profit of $3.22 billion over the past fiscal year, below the average of $3.91 billion for all the companies on the list, according to media reports.
Chinese mainland companies also employed more workers to earn their profits. The Chinese mainland companies on the list had 190,000 employees on average, well above the average of 130,000 workers for all the companies on the list.
It is obvious that there are huge gaps in efficiency between mainland companies and their international competitors. To catch up, mainland companies should not only concentrate on expanding their size, but also focus on boosting their competitiveness.
Among the companies on the Fortune Global 500, there were 16 from the mainland that had a total deficit of 37.7 billion yuan ($6.11 billion) in 2013. Most of these companies are in industries suffering from overcapacity, such as coal and steel. They include Ansteel Group, Aluminum Corp of China and Kailuan Group. All 16 companies used to be industrial powerhouses, but overcapacity problems in their industries have taken a toll.
The central government has taken note of the overcapacity problems. It has issued calls for companies in these industries to upgrade to more advanced technology to improve productivity and reduce carbon emissions.
During this period of adjustment, many companies have sought to boost their productivity through mergers and acquisitions, which has left many of them heavily in debt, according to a report in June by China Chengxin?International?Credit?Rating?Co.
The report also mentioned that many State-owned enterprises (SOEs) have trouble controlling costs.
Indeed, most of the Chinese companies made the Fortune Global 500 list simply because of their size, which was the result of the aforementioned mergers and asset restructuring.
For instance, Ansteel Group was born of the merger of Anshan Iron and Steel Group Corp and Panzhihua Iron and Steel Group Corp in 2010. Hebei Iron and Steel Group was the result of the merger of Tangshan Iron and Steel Group Corp and Handan Iron and Steel Group Corp in 2008.
It is easy to build a giant company through mergers and acquisitions, but without long-term planning, the combined company is likely to face a host of problems, particularly in industries rife with spare capacity.
For instance, Hebei Iron and Steel Group has made the Fortune Global 500 list for six straight years. The company produced as much as 42.8 million tons of crude steel in 2013, the most of any company in China. Still, the company reported a net loss of $138 million last year. Scale doesn't necessarily translate into profit. A company has to hone a competitive edge.
Losses haven't been limited to companies in industries struggling with overcapacity. Three other mainland firms also reported losses recently, including COSCO Group and China National Chemical Corp.
COSCO reported a deficit of nearly 2.28 billion yuan in the first half of this year due in part to the sluggish international shipping market.
It should also be noted that the Beijing-based oil giant Sinopec Ltd became the first Chinese company to break into the Fortune Global 500's top three, trailing US retailer Wal-Mart Stores Inc and Royal Dutch Shell.
China National Petroleum Corp and State Grid Corporation of China also made the top 10. But they are SOEs in industries monopolized by the State.
These companies on the list highlight China's growing economic strength. However, they still need to prove they can be profitable in a competitive market.
Internet-based services will make credit more accessible: BCG
The rise of Internet-based finance in the Chinese mainland is set to catapult the average household's investment readiness and credit accessibility of small businesses in the coming years, management consultancy Boston Consulting Group (BCG) said in a report released on Thursday.
Currently, the demand of the vast majority of households in the Chinese mainland for low-cost, more efficient financial services are unmet, which, coupled with the advancement in technology and the Chinese government's support for financial innovation, serve to drive growth in online finance in the market, Tang Tjun, Hong Kong-based senior partner and manager director at BCG, told a news conference in Beijing on Thursday while releasing the report.
In 2013, mainland households with investable assets below $100,000 accounted for 94 percent of the mainland's total number of households, far above the ratios in developed markets which generally stand below 50 percent, data from BCG showed, indicating unaddressed demand for more affordable and accessible investment conduits.
With sustained growth momentum expected in Internet-based financial services, investment readiness of normal households will grow substantially over the next few years, according to the BCG report.
The consulting group estimates that by 2020, the number of mainlanders purchasing fund-based wealth management products as a percentage of the total population will rise to 25-30 percent from a mere 3 percent in 2012.
For small and micro-sized enterprises and individually owned businesses in the country, the emergence of online financing will also help meet their credit demand that has long been marginalized. As a result, the number of small and micro-sized enterprises receiving credit will surge to 30-40 percent of the total by 2020 compared to 11 percent in 2013, the BCG report predicted.
As for emerging areas in online finance, particularly peer-to-peer (P2P) lending which involves tremendous risks, differential business models that target specific financing needs must be sought for survival in the face of uncertain prospects, David He, principal for the consulting firm in Beijing, said at the news conference.
In a sign of prevailing risks for P2P lending in the country, 11.3 percent of more than 1,100 P2P platforms in the country have been shut down or fled with clients' money by July, said a report released in late August by rong360.com, a Beijing-based online private lending search service provider.
While the country has yet to lay down detailed rules for the regulation of the fast-growing P2P arena, tougher policies are expected to be in the pipeline to rein in the risks of unrecoverable loans, Feng Lin, a senior analyst at Hangzhou-based China E-Commerce Research Center, told the Global Times on Thursday.
Possible rules could include putting a licensing system in place to filter out the unqualified players and setting reserve requirements for P2P platform operators, Feng suggested, noting a coordination between different government bodies such as the People's Bank of China (PBC), the country's central bank, and the China Banking Regulatory Commission (CBRC) is also essential in the oversight of the emerging online finance trend.
A registration mechanism with transparent disclosure of investors and intermediary service providers, namely operators of P2P platforms, also needs to be created, He Bo, an analyst at Shanghai-based fund consultancy Howbuy, told the Global Times on Thursday.
Detailed regulations specifically designed for the P2P sector may come out as early as the end of the year, according to recent Chinese media reports which are yet to be officially confirmed by either PBC or CBRC.
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