Category: News of China


Permalink 09:26:45 am, by dacare, 1274 words, 29 views   English (US)
Categories: News of China

Major carriers turn to Internet innovation

People check out their mobile phones in front of China Telecom's billboard in Beijing.

Telecom's Shanghai center is starting to produce online businesses while its rivals roll out new plans to boost shrinking revenue

Liang Duguo always knew he could return to his old job when he first launched Shanghai Yi Xing Information Technology Co Ltd in 2013.

The 47-year-old was a senior product manager at China Telecom Corp Ltd, the country's third-largest carrier by the number of subscribers with 194 million customers.

But the chance to branch out on his own and turn an entrepreneurial dream into reality proved too alluring. He was also cushioned by the promise that he could go back to his old position at the State-owned telecom giant if his venture failed.

"They said I could return and take up a position at the same level," Liang, who had spent 20 years at China Telecom, said. "That special policy gave me the courage to think about operating my own business."

So far, his decision to set up Shanghai Yi Xing has proved successful. The company offers real-time traffic information to firms specializing in mapping and navigational services, as well as government agencies, by using mobile signals generated by China Telecom customers, without compromising personal data.

"We raised about 10 million yuan ($1.56 million) from investors earlier this year and now we are serving several enterprises," Liang said, without disclosing further detailed information. "We are quite optimistic about our business."

But he could not have achieved this without the help of China Telecom.

During the past three years, Liang has been just one of up to 5,000 employees at the behemoth that have taken advantage of this "safety net" to roll out their own businesses or join startup teams.

By cultivating a pool of online-savvy people, the company hopes to create new revenue streams.

The first steps were taken in 2012 when China Telecom unveiled a 10,000-square-meter "innovation center" in Shanghai, the first of its kind among SOEs.

This has allowed employees to work on new projects until they grow into independent companies. If they fail, they can return to their old jobs.

In addition to the normal startup services such as office space, financial incentives and mentoring classes, the group's staff can also access telecommunication network resources, tap into the technology support system and marketing network operations.

A fund of up to 200 million yuan has been put aside to invest in these startups.

"We are sparing no efforts to learn from Internet companies about how to inspire innovation," Li Anmin, general manager of the innovation business department at China Telecom, said.

With a 450,000 workforce, China Telecom also has the luxury of numbers on its side. But there are other down-to-earth business reasons behind the decision.

As the country's "big three" carriers struggle with declining revenue from text messaging and voice calls, they are coming up with new ways to push growth.

One solution has been to awaken the entrepreneurial spirit in employees, illustrated by China Telecom's policy.

"Rising competition from Internet firms that offer instant messaging services has eaten into the revenue of text messaging and voice calls," Xiang Ligang, an independent telecom analyst and founder of the industry website, said.

"These were two major revenue sources, so the telecom companies are now looking at other ways to make money by encouraging innovation."

Overhauling the existing business model had to happen, according to Xi Guohua, former chairman at China Mobile Ltd, the largest telecom carrier in China with 823 million subscribers.

He said in August that revenue from text messaging and voice calls had been declining at an annual rate of between 15 and 20 percent in the past several years.

Although the figures were slightly better in the first nine months of 2015, China Mobile still reported that "voice call duration" shrank by 1.2 percent and text messaging declined by 6.4 percent.

It was a similar story at China Telecom and China Unicom (Hong Kong) Ltd.

Naturally, the big three players have been moving into other areas to stem the tide, including what is known as Internet-enabled services, which involve online music streaming and gaming.

Last month, China Unicom announced it would invest 3.3 billion yuan into a 110,000-square-meter innovation center in Guangzhou, Guangdong province. The aim is to help nurture Internet-enabled companies. "We will offer storage services, big data analysis, marketing and channel resources as well as financial investment," Li Han, who is in charge of the Internet business at China Unicom's Guangdong branch, said.

China Mobile is also moving in the same direction. In May, it established a 2.55 billion yuan fund with State Development and Investment Corp and a fund management firm. The new company will invest in rapidly growing or mature mobile Internet businesses. China Mobile has pumped 1.5 billion yuan into the venture.

"Telecom operators are investing in startups because they need to innovate," Xiang at said. "They hope to do that by funding enterprises in this mobile era."

China Mobile is also refining its existing operation. Earlier this month, it set up an Internet division, literally translated as China Mobile Internet Co.

The plan appears to involve integrating the company's nine Internet business centers across China, which are involved in gaming, music streaming and online reading material.

Analysts are not convinced if this is the right road to take.

"The new branch is a baby born late," Fu Liang, a longtime independent telecom expert, said, adding that China Mobile announced as early as 2012 that it would set up a special Internet unit.

"In fact, China Mobile missed a golden opportunity back then to promote a mobile Internet business. But it still has a chance to rectify that," he added.

"In the past, its Internet centers were run separately. Now the new branch will coordinate this operation."

Yet it is uncertain whether telecom carriers will be able to compete with leading Internet companies when it comes to specialized content.

"A better way is for Internet companies to work with carriers by setting up premium services for customers," Gene Cao, a senior analyst at consultancy Forrester Research Inc, said.

"They would pay, say a 15 yuan membership fee, to enjoy free data traffic, while listening to songs which are unavailable to normal users."

"The combination will enhance the appeal of premium services to customers. In this way, Internet companies can boost their revenues by offering more value-added services, and telecom carriers can also increase data traffic," Cao added.

Fu is in total agreement. The strength of the big three carriers is their sprawling infrastructure network and massive customer base.

"They are equipped with resources, which will give them a larger say in partnerships with Internet companies," he said.

In September last year, China Mobile reported that it had 823 million customers. In comparison, Tencent Holdings Ltd's WeChat, the most popular instant messaging platform in China, had just 650 million users.

But turning those strengths into lucrative revenue streams will not be easy. "The lack of Internet talent at SOEs' corporate governance structure is a bottleneck to growth," Fu said.

Still, progress is being made. China Telecom, for example, has shaken up its management structure for its Shanghai "innovation center".

As of November, the carrier had invested 50 million yuan in startups and 162 related projects. Four of them?the one set up by Liang Duguo, Shanghai Changshi Network Technology Co Ltd, and Shanghai Zewei Information Technology Co Ltd?have received funding from venture capital firms.

"The innovation business is the fastest-growing department at China Telecom, with an annual growth rate of 50 percent," Li Anmin, who is in charge of the division, said. "We also plan to establish 10 more incubators across China and open the innovation ecosystem to all startups."

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Permalink 10:57:45 am, by dacare, 157 words, 245 views   English (US)
Categories: News of China

Baidu partners with China CITIC Bank in direct banking business

China CITIC Bank Corp Ltd confirmed Tuesday that it will collaborate with China's biggest online search engine, Baidu Inc, to build a direct banking business.

China CITIC Bank said it will hold a press conference in Beijing on Wednesday to officially cement the strategic partnership. Beijing-based Baidu said it will participate Wednesday's event with China CITIC Bank but refused to reveal details about the two's cooperation.

Through a working relationship with China CITIC Bank, Baidu is expected to finally enter China's nascent private banking sector. Baidu's rivals- Alibaba Group Holding Ltd and Tencent Holdings Ltd-have already successfully gained private banking licenses by forming similar alliances with different partners.

Baidu hasn't gained a private banking license, but analysts say that in China, to get involved in the direct banking business, which is a bank without any branch network that offers its services remotely via online banking and telephone banking, it's not required to have a private banking license.

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Permalink 09:28:02 am, by dacare, 415 words, 83 views   English (US)
Categories: News of China

Private firms lead in innovation and job creation, says report

China's top 500 private companies have made significant contributions in fostering innovation, creating jobs and tax contributions, a new report said on Monday.

The report, published by the China Federation of Private Enterprises, an industry association, and the China Academy of Management Science, a government think tank, ranked Legend Holdings Corp, the largest shareholder in personal-computer maker Lenovo Group Ltd, as the leading private enterprise in China with operating revenues of 289.5 billion yuan ($45 billion). It was followed by telecom giants Huawei Technologies Co Ltd and retail giant Suning Commerce Group Co Ltd with revenues of 288.2 billion yuan and 282.9 billion yuan, respectively.

Private firms have made an increasingly larger contribution to the economy and made more efforts in innovation, investment and international competitiveness, in addition to job creation and tax contributions, the report said.

Sectors like big data, cloud computing, biology and new materials have tremendous growth potential due to the new trade initiatives like the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Overall, manufacturing enterprises are still better off than others in terms of growth potential. Sectors like electrical machinery, construction and nonferrous metal metallurgy have done reasonably well, the report said.

Breaking down the numbers, there were 33 nonferrous metal metallurgy companies and 38 iron and steel enterprises in the list. Shandong Weiqiao Pioneering Group Co Ltd, a super-large enterprise that focuses on textiles, garments and dying services as well as thermoelectricity and aluminum, was ranked fourth.

Private enterprises also made further inroads into overseas markets and increased their investments, due to the new opportunities from the Belt and Road Initiative. This year, about 500 companies achieved revenues of $316.7 billion through overseas operations, up 48 percent from a year earlier.

Companies in eastern China accounted for 61 percent of the country's private enterprises, with Zhejiang and Jiangsu provinces taking the most spots. But, companies in central and western regions are catching up, and added 23 companies to the list from last year.

Sun Lijian, vice-dean of the school of economics at Fudan University in Shanghai, said: "Most of the enterprises made it to the list with their own independent innovation. They braced for competition in the marketplace instead of growing on the support of encouraging policies.

"Some leading private companies such as Huawei, and foreign companies such as Samsung Electronics Co Ltd, established leading positions in their sectors by specializing and diversifying their products."

The government should help break the monopolies, open up the market and encourage competition to let private enterprises speed up innovation, Sun said.

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Permalink 09:15:18 am, by dacare, 148 words, 76 views   English (US)
Categories: News of China

Chinese entrepreneurs less satisfied about business situations

Chinese entrepreneurs are feeling the pressure from economic slowdown and are less content with their current business situations than previous years, a latest survey showed.

Business owners that are "very satisfied" or "relatively satisfied" about current situations accounted for 28.3 percent of the total surveyed owners, down 6.5 percentage points from a year earlier, according to a survey of more than 2,500 companies by the China Entrepreneurs Survey System.

A third of surveyed business owners said they were not satisfied about the business situations at present.

The average score of their level of satisfaction was 2.9, with 5 being the highest, the survey showed. The figure was lower than those for the previous two years.

More entrepreneurs have a negative view on the current macroeconomic conditions, showing dropping confidence as the economy slows.

China's economy expanded by 6.9 percent year on year in the third quarter of 2015, the lowest quarterly growth in six years.

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Permalink 09:51:29 am, by dacare, 197 words, 217 views   English (US)
Categories: News of China

Lenovo launches new tablet-laptop hybrids to revive PC market

The world's largest PC maker Lenovo launched two convertible laptops and a tablet under its Yoga line on Monday to resuscitate demand for personal computer amid growing penetration of mobile devices.

Launched in 2012, Lenovo's Yoga line of laptops were designed to work both as PC and tablet as the growing popularity of smartphones and tablets have contributed to a slowdown in PC sales.

Monday's release includes two laptops with keyboard that can be either folded or detached and a Yoga tablet.

Lenovo's CEO Yang Yuanqing said on Monday that the PC market, valued at 200 billion U.S. dollars, still has potential for growth as some of its essential features cannot be replaced by tablets and smartphones.

"I'm still optimistic about the PC market," said Yang, "there is still a lot of investment going into improving the PC's user experience and to stay relevant, manufacturers need to be committed to innovation."

Yang said though Lenovo is already the world's largest PC maker, it still wants to grow its market share.

Lenovo retains its spot as the world's third largest tablet maker with a global market share of 6.3 percent in the third quarter this year, data from IDC shows.

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Permalink 12:39:11 pm, by dacare, 234 words, 97 views   English (US)
Categories: News of China

Alibaba could be planning Hong Kong media raid

Alibaba's founder Jack Ma. Alibaba may be set to make a major foray into the media and entertainment industries.

Alibaba may be set to make a major foray into the media and entertainment industries.

After announcing on Friday it was taking over China's top online video provider in a cash deal, rumors surfaced over the weekend that the mainland-based company is "in discussions" to invest in Hong Kong-based SMCP Group Ltd, which publishes the English-language newspaper South China Morning Post.

On Sunday, a spokesman for Alibaba told China Daily the company does not comment on market rumors. The communications department at SCMP Group did not respond to an inquiry.

The rumor surfaced after SMCP announced on Friday that Wang Xiangwei, the newspaper's editor-in-chief, was stepping down and Tammy Tam, Wang's No 2 since 2012, would take over from Jan 1.

Meanwhile, Shanghai-based mobile news app The Paper reported that Alibaba is in talks to take a stake in Sina Corp, which runs online news portal and Weibo, the Chinese equivalent of Twitter.

Industry observers said that since June, Alibaba has poured billions of dollars into media organizations, including online video giant Youku Tudou Inc.

Tian Hou, an analyst at TH Capital in Beijing, said Alibaba's media expansion is "very likely". Huang Guofeng, an analyst at the Internet consultancy Analysys International in Beijing, said Alibaba may have a "big vision to enter people's living rooms".

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