China Business Briefs 21/4/14

Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Retail

Economy

Bank Defaults Seen as Dark Side of Deposit Vows: China Credit – Bloomberg Authorities may tolerate failures of smaller banks once depositor safeguards are in place, Kwong Li, chief executive officer of China Lianhe Credit Rating Co. said. Among lender bonds rated at or below AA, the extra yield investors demand to hold the 2022 securities of China Bohai Bank Co. in the northern city of Tianjin surged to an 11-month high of 245 basis points on April 17. The premium on the notes due 2019 of Harbin Bank Co., a lender near China’s border with Russia, has jumped 41 basis points in the past year to 217.

China allows gold imports via Beijing, sources say, amid reserves buying talk | Reuters China has begun allowing gold imports through its capital Beijing, sources familiar with the matter said, in a move that would help keep purchases by the world’s top bullion buyer discreet at a time when it might be boosting official reserves.

The opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong’s pole position in China’s gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying.

China streamlines tax break procedures for SMEs – Business – Chinadaily.com.cn The State Administration of Taxation (SAT) said in a statement that small firms with annual taxable income under 100,000 yuan (about $16,000) may have their business income tax halved without approvals.

On April 8, Chinese authorities rolled out the taxbreak, which is valid from Jan 1 this year until the end of 2016, shortly after a cabinet executive meeting, at which the government announced an economic package to address downward pressure.

Finance

China Unveils Slate of 28 Companies Planning IPOs – WSJ.com Beijing ended a 14-month-long moratorium on initial public offerings in January, allowing 48 companies to be listed in the first two months of this year. However, the new issues halted abruptly in March, when authorities stopped granting approvals because of loopholes in new IPO rules and lackluster market conditions.

But late Friday night, the China Securities Regulatory Commission announced a list of 28 companies that have disclosed their IPO plans. The “preliminary disclosure” of IPO plans, which includes the size of fundraising and intended use of proceeds, typically suggests the regulator is close to the final stage of issuing approvals.

Commercial banks need to diversify business – BUSINESS – Globaltimes.cn China’s commercial banks should diversify beyond traditional banking, Yi Gang, deputy governor of the People’s Bank of China (PBC), the country’s central bank, said over the weekend.

Instead of competing on better services for local residents and small and medium-sized enterprises, many city commercial banks are vying with each other in expanding their retail footprint, according to Yi, who cautioned the country’s commercial banks have yet to develop specific services targeting the fields of real estate, automobile, bills or credit cards.

First Shanghai Stock Designated for Delisting in 7 Years Plunges – Bloomberg Shares of the oil-shipping company, which has posted four consecutive annual losses, fell 9.8 percent to 1.47 yuan as of 9:40 a.m., compared with a 0.3 percent decline for China’s benchmark Shanghai Composite Index. (SHCOMP) The stock, which had been suspended for a year until today, will move to an over-the-counter board for small- and medium-size enterprises after 30 trading days, according to the company.

China firm plans $1 billion distressed asset fund for foreigners | Reuters A unit of one of China’s biggest bad-debt banks plans to woo foreign investors with a $1 billion fund for soured property loans and distressed real-estate assets, reopening the sector to outsiders after a failed attempt last decade.

That the fund is being launched just as growth in the world’s second-largest economy has slowed to an 18-month low and the housing market is losing strength is no coincidence.

Agricultural Bank of China launches ‘Pretty Mom’ credit card – Economic Times A Chinese bank has launched a new ‘Pretty Mom’ credit card targeting young mothers, a growing group in the world’s most populous country known for their love of shopping and their greater say in the family budget.

The cards – issued by Agricultural Bank of China (ABC) – focus on the needs of new mothers with children up to the age of six by offering discounts on major baby productbrands and early education institutions.

Auto

HEARD ON THE STREET: China’s Geely Shouldn’t Drive Solo – WSJ.com Geely isn’t without foreign expertise: Its parent company bought Volvo in 2010. Yet the benefits of this are out of reach for Geely’s shareholders. Volvo sales are up 25% this year in China, all of which goes to the parent. Geely and Volvo opened a joint research center last year and are working on a new subcompact, but results will take time.

Geely’s shares are down 24% this year. Even so, they are no bargain. Geely earns nearly a quarter of its operating profit from government subsidies and capitalizes a chunk of research-and-development spending. Strip out these elements, and the stock trades at 14.3 times core earnings, according to estimates from Sanford C. Bernstein.

Brilliance China Automotive Holdings, which builds higher-margin premium cars with BMW, fetches only 12.2 times. Investors should be skeptical as long as Geely drives solo.

Chinese Car Makers Struggle to Lure Buyers – WSJ.com Chinese brands are struggling to win Chinese consumers, a trend that appears to have accelerated in the first quarter. Geely’s Hong Kong-listed unit reported sales of 89,607 vehicles, down about 37%. Warren Buffett -backed BYD Co. sold 103,500 cars in China in the first quarter, a drop of about 28% from the same period the previous year. Chery Automobile Co. reported a 25% fall to 109,000 vehicles.

Poor quality, uninspiring marketing and an inefficient industry structure lie at the heart of Chinese auto makers’ woes. Compounding these problems, foreign car makers and their Chinese joint-venture partners are increasingly looking to produce low-cost cars as they anticipate a boom in demand as hundreds of millions of rural Chinese move to cities to seek jobs, housing and cars. Foreign car makers are required to operate in China through joint ventures with Chinese auto makers.

China set to replace U.S. as Volvo’s biggest market this year – Yahoo Singapore Finance China is set to surpass the United States to become Volvo Car Group’s biggest market in 2014 with sales of at least 80,000 cars in the world’s largest auto market.

Its car sales target for 2014 is around a third higher than the 61,146 cars sold in 2013, while sales in the United States in 2014 are expected to increase only in line with the broader market, it said in a statement on Sunday.

Daimler/BYD Joint Venture Unveil Plans for All-Electric Car for China – WSJ.com The new electric car, called the Denza, is entitled to subsidies from both the central and local governments in China, Daimler officials said. The car was developed by Shenzen BYD Daimler New Technology Co. Ltd, the Daimler-BYD joint venture that was formed in 2010. The five-seater Denza is expected to go on sale in China in September, and is priced at 369,000 renminbi, or about $60,000. With government subsidies, Daimler said the price for the consumer could be reduced by 120,000 renminbi.

Infrastructure

Construction at Karuma hydro power project starts THE Karuma hydro-power project, worth about Sh.4.3 trillion ($1.7billion) has commenced with the construction of two big underground access tunnels and access roads at the site.

The eight month old construction of the 600 megawatts dam was commissioned by President Yoweri Museveni in August 2013, who said 85% of the funding will be procured by Sinohydro Corporation Ltd, a Chinese firm with a soft loan from Exim bank and the  Uganda government will cater for the 15%.

Merapoh, China Energy JV to revive Zipy | theSundaily The agreement will see state-owned China Energy emerging as a majority shareholder with a 70% equity interest in Merapoh and an investment of almost RM70 billion by China Energy, which will enable Merapoh to proceed with its projects and plans.

According to a media advisory issued by Merapoh last Friday, the most immediate project that Merapoh intends to proceed with is the creation of Malaysia’s biggest oil refinery complex to be built in Kedah.

Energy

China Is Quietly Profiting From the Russia-Ukraine Standoff: Here’s How Much to the chagrin of the United States, China has the innate ability to negotiate major energy deals in the midst of conflict. PetroChina’s (NYSE: PTR) state-run parent company, China National Petroleum, or CNPC, was the first oil company to secure a contract in the Iraqi oil fields following the fall of Saddam Hussein, and today both it and CNOOC (NYSE: CEO) are two of the most active oil comapnies there. With Russia and the West at a standstill over the recent events in Ukraine, it appears that CNPC is about to seal another energy coup. Let’s look at this deal and what it means for the future of energy around the world.

Nuclear plants to get the nod[1]- Chinadaily.com.cn China is quickening its approvals for nuclear energy and will launch projects in coastal areas to ensure energy security and economic growth, according to the State Energy Commission.

In a statement released on Sunday, the commission said it discussed strategic problems in the development of the energy resources industry as well as some major projects.

The latest approvals of nuclear plants and other energy projects are part of the government’s plan to push economic growth with minimal measures.

Telecoms

Merging cloud, big data and smart cities – Headlines, features, photo and videos from ecns.cnTian, founder and chairman of China Broadband Capital Partners LP, is probably the best-known venture capitalist in the country and one of the first players in China’s big data business.

“Data is the most valuable asset in the 21st century. We can build a long industry chain based on data-related businesses such as analytics, information security and statistics exchange,” Tian said during the opening of the Shenzhen data center on March 30, which was built in less than six months.

Chinese Mobile Gaming Company Chukong Files for US IPO to Raise USD150 million | TechNode The company, according to SEC filing, positions itself as a mobile content platform and development service provider, but it’s more known as a mobile game developer and, more recently, mobile game development service provider. In 2013, 98.5% of its total revenues were from mobile gaming and the rest, 1.5%, was from advertising — it runs a mobile advertising platform PunchBox.

Property

New York Real-Estate Agent Scores $13 Million Deal on WeChat – China Real Time Report – WSJ Last month, Yue (Emma) Hao, a New York-based agent at real-estate brokerage Douglas Elliman, received an unsolicited message on WeChat from a Chinese entrepreneur who wanted to know more about a residential building in Manhattan associated with the crystal brand Baccarat. Ms. Hao, who is from Beijing, realized the person was talking about the Baccarat Residences, a 50-story glass condo tower under construction across from New York’s Museum of Modern Art. The building, which is expected to open later this year, will have 61 units priced from about $3 million to about $60 million.

Ms. Hao left a message with the person on WeChat, telling her she’d inquire. After visiting the Baccarat’s sales center, she sent the Chinese entrepreneur, whom she declined to name, pictures of what the condos would look like and the neighborhood’s amenities. The next day, after speaking with the woman by phone, Ms. Hao hammered out the deal: a $10.25 million three-bedroom apartment on the 39th floor and a one-bedroom unit on the 21st floor for about $3 million.

Travel

Tech

Apple’s App Store China revenue jumps 70% after China Mobile deal – Silicon Valley Business Journal Apple iOS revenue from China increased 70 percent this quarter, according to a report from apps analytics firm App Annie. The index also found that the games, travel and social networking categories led the strong app download numbers.

China Money Network − Why Do We Still Like The Chinese Technology Sector? Governments around the world are slowly shifting away from austerity and, comprising 20% of spend in technology, are expected to be a contributor of overall demand for technology related goods and services.

The sector also has good exposure to the emerging markets where demand growth is structurally strong. In the case of the smart- phone market, penetration rates in Asia are a fraction of that in the U.S. and are likely to increase over time as people become wealthier.

Lastly, the technology sector is not expensive relative to its own history and in certain markets, such as the U.S., is trading at a discount to the local market indices.

China Money Network − Counting Jack Ma’s $5B Shopping Spree In 2014 As you will see from the list below, most deals are led by Alibaba Group. Even though he stepped down as CEO last May, Jack Ma continues to shape the company’s business strategy. Not to mention he still holds 7.4% of the e-commerce giant.

Travel and Expense Management Solution Baoku Announces Nearly $10 Mn of Series A Funding | TechNode Kubao, Chinese business travel & expense management solution provider, recently confirmed on its microblog that the startup raised nearly $10 million of Series A funding from CBC and AsiaInfo Linkage without disclosing the detailed amount of the financing.

Founded in 2007, the Beijing-based SAAS startup builds web-based corporate travel management systems that ensure policy and regulatory compliance, sales platforms for airlines and traveling agencies, as well analytics systems.

Agriculture

China to maintain high grain output in 2014-2023 – Business – Chinadaily.com.cn Xu Shiwei, director of the Agriculture Information Institute under the CAAS, said that the output of China’s three main grain crops — rice, wheat and corn — will achieve a high rate of self-sufficiency during the next decade.

Imports for meat and dairy products will see rising growth, while slower growth will be seen in soybean imports, and cooking oil imports will decline, Xu said.

Retail

Can KFC Win Back China? Any investor savvy to Chinese growth stories knows about Yum! Brands’ (NYSE: YUM) KFC. Since opening its first shop in 1987, KFC has reigned as the chicken king in China. Already operating more than 6,000 Chinese stores, KFC’s future growth will be harder to attain. KFC has also lost favor with Chinese consumers in the face of greater Western competition and health scares.

Let’s look back at how KFC won China the first time, and see whether or not the chain can do so again.

China Focus: Chinese manufacturers not counting on yuan depreciation for profits – Xinhua English.news.cn“Regardless of depreciation or appreciation, the impact on us would be complex,” said Sun Shubao, a senior executive of Haier Group, one of China’s leading home appliance firms with 24 factories worldwide.

“The yuan’s depreciation will not boost our exports as people assume,” Sun said.

Posted from Diigo.

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