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China Business Briefs 18/4/14

Good to be back in Beijing.

Economy Finance Auto Energy Telecoms Property Tech Agriculture Retail

Economy

Closer Look: Signs China’s Economy Transforming Linger behind Latest GDP Figure – What is worth more attention than the growth rate is a change in the economy that other NBS data reflect. In 2013, the tertiary sector’s contribution to total economic output exceeded that of secondary sector for the first time in modern Chinese history.

The latest results showed that services pulled ahead of production and construction even more, with the former accounting for 49 percent of total economic output in the first quarter. Last year tertiary sector’s share of GDP was 46.1 percent.

Many Chinese firms looking overseas: Poll[1]- Chinadaily.com.cn Approximately 60 percent of leading Chinese companies plan to move research and development centers and/or production overseas in the next five years, a study by Strategy& (formerly Booz &Co) and the World Economic Forum said on Wednesday.

That figure roughly doubles the number of Chinese companies that are currently sending these functions abroad, according to the study.

Anti-Dumping The U.S. Trade Representative (“USTR”) announced last week that China, in a follow-up to its December 3, 2013 request for World Trade Organization (“WTO”) consultations, has asked for a dispute settlement panel concerning certain U.S antidumping methodologies. The USTR requests public comments on the issues identified by China in its panel request.

Beijing must stay the course despite the slowdown | China Economic Review If expectations are low, beating them doesn’t mean much. China’s GDP grew by 7.4% year-on-year in the first quarter of 2014, a notch above the market consensus of 7.3%.

But after three months of mainly gloomy economic data, analysts weren’t betting on a powerful punch in overall growth figures. The stats from March alone give reason to believe that China has yet to rebound from a tough start to the year. As for giving the economy a gentle fiscal nudge, Beijing has likely said all it intends to on that matter with some targeted measures in recent weeks. China Economic Review thinks that’s just fine as long as economic reform keeps abreast.

Internationalizing Your China WFOE | China Briefing News In the rush to get into China over the past decade, many foreign investors established WFOEs – either as trading and services companies, or as manufacturing entities in their own right. For many, this is a policy that has worked very well – the legal and regulatory structures are well defined and understood. Today though, as foreign investors start to eye other markets in Asia, the China WFOE is starting to prove awkward as a base from which to launch into Asia. There are a number of reasons for this:

China Resources Chairman Song Lin Faces Probe After Media Charge – Bloomberg Song Lin, whose company is the parent of five Hong Kong-listed units, is being probed for “suspected disciplinary violations,” the Chinese Communist Party’s Central Commission for Discipline Inspection said in a statement yesterday on its website using language that signals a corruption probe.

His company controls China Resources Power Holdings Co., which was accused last year of paying too much for three coal mines in Shanxi province in 2010. The probe is a signal that the Communist Party is intensifying a campaign to root out the corruption that President Xi Jinping has said threatens its six-decade hold on power. Party leaders have promised to target both “tigers and flies,” or cadres up and down the power ladder, over graft.

Bet the Farm, Or Settle for Table Scraps? In this intriguing essay, Shanghai-based consultant Kaiser suggests that for foreign companies, the glory days are over, and the only two strategies left are to either fight for one of the top two positions in your industry (against what might be brutal competition) or accept that your market in China will be modest, picking up what others cannot.

I really enjoyed the essay, because I like contrarian thinking on business in China. But I have a couple of problems right out of the gate.

McKinsey Greater China – Even Chinese SOEs Are Getting Media Savvy **Their websites still suck though** I recall state-owned insurance company announcements as being completely dire in the past. A large semi-lit room, partly filled. Executives sitting at a desk reading a script they didn’t care about to an audience who didn’t really want to be there other than for the drinks available at the end. And always running late.

The new version involved floor to ceiling LCD screens, which projected what was on the screen of the sales agent’s iPad on the stage as she demonstrated an actual sale in real time during the event. The speeches were concise, on time, and delivered with enthusiasm. The back of the room had further iPads so that the journalists could try (and film themselves doing so) the apps.

Disillusioned office workers: China’s losers | The Economist But Mr Zhu considers himself a loser, not a winner. He earns 4,000 yuan ($650) a month after tax and says he feels like a faceless drone at work. He eats at the office canteen and goes home at night to a rented, 20-square-metre (215-square-foot) room in a shared flat, where he plays online games. He does not have a girlfriend or any prospect of finding one. “Lack of confidence”, he explains when asked why not. Like millions of others, he mockingly calls himself, in evocative modern street slang, a diaosi, the term for a loser that literally translates as “male pubic hair”. Figuratively it is a declaration of powerlessness in an economy where it is getting harder for the regular guy to succeed. Calling himself by this derisive nickname is a way of crying out, “like Gandhi”, says Mr Zhu, only partly in jest. “It is a quiet form of protest.”

Finance

How liquidity evaporates from China | South China Morning Post The difficulty of accurately calculating the mainland’s liquidity results from the unknown size of the shadow banking system in which non-banks borrow, lend and invest like a real bank but at market rates and outside the official regulated system. This market is calculated variously as 70 per cent of the mainland’s GDP, or 20 per cent of all credit.

But in reality, no one knows – except that it is significant. This black market has developed to allow market-based funding of smaller enterprises and individuals. It appears strange to have such a tightly regulated banking environment on the mainland when you can game the system so readily.

HEARD ON THE STREET: China’s Citic and the State Share Shuffle – WSJ.com Citic Group, a sprawling state conglomerate, laid out a more ambitious plan last month, with more details unveiled this week. The company will inject its entire $36 billion of assets—including businesses in finance, steel, publishing and more—into Citic Pacific, a Hong Kong-listed unit.

The listed company will pay mainly by issuing shares to the parent, but at a 6.5% premium to where they were trading before the announcement. The new assets will boost return on equity to 13% from 9%, partly because the old listed unit was weighed down by a struggling Australian iron-ore mine.

China eases M&A rules for insurers | Reuters China’s decision to partially relax mergers and acquisition rules in the insurance industry could see global insurance firms expand their footprint in the $288 billion market.

Beijing would allow insurers, including Chinese-based units of foreign insurance firms, to buy stakes in more than one peer that competes in the same market segment, according to a statement on the China Insurance Regulatory Commission’s (CIRC) website and dated last Friday.

RPT-Fitch Affirms Noble Group’s Guaranteed Bonds at ‘AAA(tha)’ | Reuters Fitch Ratings (Thailand) Limited has  affirmed Noble Group Limited’s (Noble; BBB-/Stable) THB2.85bn guaranteed bonds  due 2016 at National Long-Term ‘AAA(tha)’. The bonds, which are guaranteed by  Credit Guarantee and Investment Facility (CGIF), have a Stable Outlook.

Chinese banks are passing the buck | Business Spectator Outstanding non-performing loans soared 19.5 per cent in 2013 from 390 billion yuan ($67 billion) to 467 billion yuan, according to data disclosed by 12 major listed Chinese banks. During the same period, these 12 Chinese banks either transferred or wrote off 102 billion yuan worth of loans, an increase of 206 per cent compared to the same period last year, according to Caixin.

The outstanding non-performing loans of the big five major Chinese banks — the Industrial and Commercial bank of China, Agricultural Bank of China, Bank of China and the Construction Bank of China and Communication Bank of China — increased 16.1 per cent in 2013.

RPT-Fitch Affirms China Life at IFS ‘A+’; Outlook Stable | Reuters Fitch Ratings has affirmed China Life Insurance Company Limited’s (China Life) Insurer Financial Strength (IFS) Rating at ‘A+’.  The Outlook is Stable.

China to Cut Reserve Ratio for Some Rural Banks -Caijing Chinese Premier Li Keqiang Wednesday said reserve requirements would be relaxed for qualifying rural banks in a sign that more loosening policies are likely on the way.

The People’s Bank of China (PBoC) sets different reserve requirements for banks, depending in part on the size of their loan business. The ratio stands at 20 percent for China’s biggest banks, around 16 percent for smaller, rural banks.

Auto

Jaguar Land Rover to recall vehicles in China – Business – Chinadaily.com.cn Jaguar Land Rover Automotive Trading (Shanghai) will recall 1,923 vehicles mainly due to problems with their warning lights, China’s quality watchdog announced on Thursday.

The recall, from April 17, covers 1,909 imported 2014-edition Range Rover vehicles in the Chinese mainland, which were produced from May 7 to Oct. 10, 2013, said the General Administration of Quality Supervision, Inspection and Quarantine.

5.12 Million China Commercial Vehicle Industry Growth in 2017 Forecasts a Research Report | SYS-CON MEDIA According to China Commercial Vehicle Industry Report, 2014-2017 sales volume of China’s commercial vehicles is estimated to register a CAGR of 6% in 2014-2017, and will reach 5.12 million in 2017. The development of the commercial vehicle industry is closely related to the macro economy. In 2013, the growth rate of China’s GDP fell to 7.7%, while commercial vehicle market experienced slow growth at the same time, with output and sales volume increasing by 7.6% and 6.4%, respectively.

Chinese auto brands limp into Beijing show – SFGate **This is not in the Five-Year Plan!** Facing intense competition from General Motors, Volkswagen and other global rivals, local brands such as Chery, Geely and SUV maker Great Wall have suffered shrinking sales and market share this year while China’s overall auto market has grown. That is a blow to Chinese leaders who have made it a national priority to catch up with neighboring Japan and South Korea by creating globally competitive automakers.

Ford to Start Selling Luxury Lincoln Cars in China Lincoln is a late comer to China’s luxury car market, but Robert Parker, president of Lincoln China, said the brand is being introduced here after thorough research.

At Lincoln dealerships, Chinese customers will be greeted with a waterfall, considered auspicious, and their new Lincoln car will have a custom fragrance pleasing to Chinese noses, Parker said.

Energy

China Shenhua Energy Company Limited (HKG:1088) More Than a Coal Company Morningstar analyst Zhao Hu says investors would be wise not to look at China Shenhua Energy Company Limited (HKG:1088) as only a coal story. Even if coal continues to underperform, Hu says China Shenhua’s other businesses will offset the negative impact.

China Shenhua is a little bit different than the other pure-play coal companies we cover primarily because of its vertical integration strategy,” Hu says. “The company recognized the coal sector’s volatility and was able to expand upward and downward into different sectors that include railway transportation, power generation as well as some shipping and port operations.”

CNOOC Limited Filed 2013 Annual Report on Form 20-F – Yahoo Finance CNOOC Limited (the “Company”, NYSE: CEO, SEHK: 00883, TSX: CNU) announced today it has filed with the United States Securities and Exchange Commission (“SEC”) its 2013 annual report on Form 20-F (“annual report”) that included audited financial statements for the year ended December 31, 2013.

The annual report is available on the Company’s website at www.cnoocltd.com as well as SEC′s website at www.sec.gov.

Sinopec Wins Dismissal Of $5B False Imprisonment Suit – Law360 A California federal judge on Tuesday tossed a Chinese foreign national’s $5.17 billion suit alleging China Petroleum & Chemical Corp., known as Sinopec Corp., colluded with the Chinese government to falsely imprison him, ruling the court did not have jurisdiction over the claims.
U.S. District Judge Beverley Reid O’Connell granted Sinopec’s motion to dismiss the July suit, which accused Sinopec officials of interrogating, threatening and ultimately having Tiangang Sun imprisoned for five years after he sued the company in China for breaching a pipeline contract

Your Industry News – Three International wind power exhibitions to take place in Shanghai in July 2014 **Would hope there is a major Scottish presence at these events. Wind power getting important there as oil declines** The Offshore Wind China Conference & Exhibition, the Wind Farm O&M China Conference & Exhibition and Distributed Generation China will take place concurrently at Shanghai Mart in Shanghai on 2-4 July 2014.

China Money Network − Yingli, Shanghai Sailing To Jointly Launch $160M Renewable Energy Fund New York Stock Exchange-listed Chinese solar panel producer Yingli Green Energy Holding Company Ltd. says that it has signed an agreement with Shanghai Sailing Capital Management to jointly form a renewable energy fund in Shanghai to invest in downstream solar energy projects in China, according to a company announcement.

The joint fund will have an initial size of approximately RMB1 billion ($160 million). Yingli China will commit around 51% of the total capital in several installments through its wholly owned affiliate in China.

PetroChina to Expand Installation of Honeywell Technologies to 30 Plants | Control Engineering Asia PetroChina Company Limited will expand its use of Honeywell advanced information management and process modeling software tools to 17 additional refining and petrochemical sites across China, to help meet the country’s growing demand for chemicals and transportation fuels. PetroChina currently uses Honeywell’s information solutions at 13 locations.

Telecoms

Alibaba unit to offer mobile phone service in China from June – Livemint The service will include voice and third-generation data packages on network capacity leased from all three state-owned carriers, according to Alizila, a website run by Alibaba. The packages will be sold through Alibaba’s Taobao and Tmall sites and can be paid for with Alipay, the company’s e-payment affiliate.

Alibaba, Tencent take rivalry to mobile network services | South China Morning Post Alibaba, the mainland’s biggest e-commerce service provider, said yesterday that it would launch 3G data and voice services in June through subsidiary HiChina, one of 19 companies licensed to operate as a mobile virtual network operator in the country.

The announcement, made through the Alizila website of Hangzhou-based Alibaba, followed reports earlier this month that online retail platform operator JD.com in which Tencent is a major shareholder, would launch its own mobile virtual network operator service next month.

ZTE Q1 profit grows – BUSINESS – Globaltimes.cn ZTE Corp, China’s second-biggest telecommunications equipment maker, said first-quarter profit matched its estimate after benefiting from the country’s introduction of 4G networks.

Net profit rose 204 percent to 622.2 million yuan ($100.01 million) from January to March, compared with an estimated range of 425 million yuan to 637 million yuan, the Shenzhen-based company said on Thursday.

China Unicom profits rise – BUSINESS – Globaltimes.cn China Unicom (Hong Kong) Ltd, the country’s second-biggest mobile carrier by subscribers, posted a 74 percent rise in first quarter net profits, beating estimates, as an increase in data usage offset a slowdown in subscriber growth.
China Unicom said on Thursday net profit from January to March was 3.3 billion yuan, higher than the 1.9 billion yuan in the same period one year ago.

Yahoo Still Set to Get Value From Alibaba After IPO – Bloomberg That’s because Yahoo, which owns about 24 percent of Alibaba, will still have a sizable chunk of the Chinese e-commerce company after it goes public as soon as this year. The Web portal is set to sell about 40 percent of its Alibaba stake in the initial public offering, leaving it with the majority of its holding. Yahoo can hang onto that piece indefinitely if it chooses.

Investors who had bought into Yahoo as a proxy for privately held Alibaba thus may not be tempted to dump the Web company’s shares — at least not right away. For Chief Executive Officer Marissa Mayer, who has relied on Yahoo’s Alibaba stake to boost the company’s share price, that may buy just enough time to accelerate a nascent sales rebound.

Xiaomi looks to steal thunder from OnePlus with launch of mysterious new gadget on same day, April 23 The mysterious device is set to launch on the same day as the OnePlus One, the new brand’s first ever phone. We doubt Xiaomi’s timing is unintentional as the OnePlus One phone is designed to compete with Xiaomi’s flagship phone, the Mi3.

Coolpad obtains fresh funds for 4G smartphone expansion | South China Morning Post Coolpad Group, the third-biggest smartphone supplier on the mainland, is poised to boost its 4G mobile phone development plans and global expansion with new financing worth as much as US$175 million.

Shenzhen-based Coolpad, formerly known as China Wireless Technologies, obtained yesterday a US$107 million, three-year loan facility through a syndicate of mostly Taiwanese banks, according to the firm’s filing with the Hong Kong stock exchange.

Property

Towers where no lights burn at heart of China’s puzzle – FT.com The main reason for the slowdown is a slump in fixed asset investment, the biggest driver of the Chinese economy.

The slide was largely owing to declining real estate investment, which also experienced its weakest growth in more than a decade. The situation is certain to get worse in the coming months as new housing floor space under construction contracted 27.2 per cent in the first quarter.

Why China Needs to Let More Companies Go Bankrupt – China Real Time Report – WSJ China needs to let more companies go bust.

That was the message from several executives at a real-estate conference in Shanghai on Thursday, as the latest string of loan defaults among real-estate developers and a small construction firm have some people talking about bankruptcy more freely.

Tech

China Money Network − Sina’s Weibo Downsized IPO By 21% To $286M Chinese social networking platform Weibo Corporation has raised $286 million by offering 16.8 million American Depository Shares (ADR) at $17 per share. The size of its IPO is 21% smaller than its initial target of of $380 million, according to an announcement.

Weibo gains 5% in Nasdaq trading debut – MarketWatch **I wouldn’t put money on Weibo** Shares in Weibo Corp were last up 5% on Thursday in their trading debut on the Nasdaq after initially dropping. Late Wednesday, the Chinese social-media company raised $286 million by offering 16.8 million U.S.-listed shares at $17, according to Renaissance Capital. That $17 price was at the low end of an expected range of $17 to $19.

As Weibo launches IPO, here are all the facts and stats you need to know In less than an hour, China’s top Twitter-esque social network, Sina Weibo (NASDAQ:WB), will launch its long-awaited IPO. As that happens, let’s look at all the facts and stats you need to know about Weibo.

Chinese graduates deepen hi-tech inroads | South China Morning Post The Chinese for more than a decade have been potent rivals to American and European manufacturers. Now, China is giving Westerners something new to worry about: a generation of workers able to compete in higher-technology endeavours. The aim is to develop service industries and shift from producing simple exports – often assembled from parts made elsewhere – to making a larger share of more sophisticated products.

Agriculture

China Says Nearly One-Fifth of Its Arable Land Is Polluted – WSJ.com **But doesn’t say what constitutes “polluted” or “highly polluted”** Nearly one-fifth of China’s arable land is polluted, China’s environmental ministry said. The new report confirms the worst fears of environmentalists and researchers about the effects of decades of rapid industrialization on the country’s soil.

The release of the report Wednesday shed unexpected light on the scale of China’s environmental problem. Environmental authorities had previously declined to disclose national soil pollution data, calling it a “state secret.”

Retail

China backs away from price controls on basic drugs | Reuters **Healthcare in China is FUBAR** China has backtracked on its policy of capping retail prices on medicines and will allow pharmaceutical companies to set prices for some drugs, after criticism that controls had caused a drug drought that derailed treatment for millions of patients.

Beijing has been struggling with rising healthcare costs, violent conflicts between patients and doctors and medicine safety issues, and President Xi Jinping has said providing affordable, accessible healthcare is a government priority.

Gap sees China sales tripling to $1b in three years – Business – Chinadaily.com.cn The push comes as Gap Inc tries to become less reliant on North America, where it generates 84 percent of its sales. North American sales have cooled of late at Gap Inc’s three major brands, which also include Banana Republic.

 

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China Stock Watch 15/4/14

Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Retail

Economy

China Business Leaders Hedge Bets on Xi Jinping – WSJ.com Without the support of entrepreneurs to drive innovation and create jobs Mr. Xi’s reforms will falter. He needs them to help shake up complacent state monopolies in areas like energy, banking and telecommunications, just as they’ve revolutionized the retail sector through e-commerce.

Right now, though, they’re on the fence. That’s the message coming from the business elites who gather in this southern resort each year at the Boao Forum for Asia.

China forex reserves hit 3.95 trln US dollars – BUSINESS – Globaltimes.cn The People’s Bank of China (PBOC) said on Tuesday that China’s foreign exchange reserves hit 3.95 trillion US dollars at the end of March.

The figure was 130 billion US dollars more than that at the end of 2013, according to the bank

Shanghai zone in search of identity[1]- Chinadaily.com.cn The central government has pinned its hopes on the Shanghai FTZ to test policies for national financial reform and to better prepare China for regional free-trade frameworks, such as the Trans-Pacific Partnership.

Party chief Xi Jinping and Premier Li Keqiang have reiterated on different occasions that Shanghai should try out practices that will further the nation’s integration into global trade.

But the Shanghai government has been taking a wait-and-see attitude.

China new bank loans rise to 1.05 trillion yuan – MarketWatch China’s banks stepped up their lending in March, just as Beijing tried to hold the line on its shadow-banking sector amid fears of growing financial risk.

The country’s financial institutions issued 1.05 trillion yuan ($168.8 billion) in new yuan loans in March–up from 644.5 billion yuan in February and slightly above the 1 trillion yuan forecast of economists polled by The Wall Street Journal, data from the central bank showed Tuesday.

Why Chinese Stimulus May Not Be a Good Thing This, coupled with more conservative growth expectations (currently set at 7.5% growth versys last year’s 7.7% expectation), has some economists fearing that China will suffer a wave of credit defaults similar to the Lehman Brothers meltdown several years ago in the U.S. Several economists even contend that it’s time for China to reverse its anti-stimulus policies and save its economic gains by propping up ailing industries.

This may be something of an overreaction. China’s economy is still strong and has a few things going for it that most people are overlooking.

Harbin seeks to promote economic ties with Russia – Business – Chinadaily.com.cn The province, sharing a 2,981-km-long border with Russia, should not rest on its laurels with the already prosperous border trade, said Lu Hao, governor of Heilongjiang province.

Lu stressed that Heilongjiang should take advantage of Harbin’s Russia-friendly environment and its ability to further boost ties with the country.

Finance

Where Are the Big Five Headed? — Beijing Review However, there has been a slowdown in profit growth in all but one of the Big Five. ICBC, the world’s biggest bank in assets, registered 263 billion yuan ($42 billion) in net profits in 2013, up 10.2 percent from 2012. But this growth rate is much lower than the 14.5 percent in 2012. BOCOM saw the sharpest decline in profit growth, from 15.05 percent in 2012 to 6.73 percent in 2013.

A research report from Deloitte predicted that Chinese banks may have entered an era featuring single-digit profit increases.

China Rate Swap Slides to One-Month Low as New Lending Declines – Bloomberg The one-year rate swap, the fixed payment needed to receive the floating seven-day repurchase rate, fell seven basis points, or 0.07 percentage point, to 4.05 percent as of 1:01 p.m. in Shanghai, according to data compiled by Bloomberg. It reached 4.04 percent, the lowest level since March 14.

Rules on Chinese trust firms tightened | South China Morning Post Trust companies are non-bank lenders that raise funds by selling high-yielding investments known as wealth management products and use the proceeds to fund loans to risky borrowers such as property developers, local governments and others to whom banks are reluctant to lend.

The new rules from the China Banking Regulatory Commission aim to reduce liquidity risks associated with off-balance-sheet WMPs by forbidding trusts from operating so-called fund pools that enable them to fund cash payouts on maturing products with the proceeds from new WMP sales.

China Money Network − Shunwei Capital Targets $525M For Two New Funds Founded in 2011 by Tuck Lye Koh, Shunwei is a China-focused venture capital firm primarily focused on early to mid-stage start-ups in China’s Internet and technology industry.

The firm currently runs one fund with over $200 million, according to its LinkedIn profile.

Two-way through train better for mainland investors, brokers | South China Morning Post The through train is back on, and this time not filled with passengers on their way to financial ruin.

The Shanghai-Hong Kong Stock Connect scheme, due to begin in October, is a two-way stock trading programme designed to keep a good portion of the benefits on the mainland. Hong Kong stockbrokers are already griping that Shanghai will get the bulk of the glory and commissions.

Auto

Peugeot Sets Out Recovery Plan: ‘Back in the Race’ – WSJ.com Dongfeng Motor and the French state are each contributing €800 million as part of a planned €3 billion capital increase aimed at helping the company develop its sales and presence in China and southeast Asia. Peugeot said it also plans to target new growth markets in Africa and the Mediterranean basin. However, a shorter-term priority has been set to make its loss-making operations in Russia and Latin America profitable by 2016.

African success revs for auto firm – Headlines, features, photo and videos from ecns.cn The brand FAW may not ring a bell with most people outside China, but it certainly strikes a chord on South African roads.

China’s oldest vehicle manufacturer has been carving an indelible impression in South Africa since 1994 with its range of affordable heavy-duty trucks and other commercial vehicles. Next, if things go according to plan, it will start making passenger vehicles in Port Elizabeth on South Africa’s southern coast.

Infrastructure

New railway tour route to link China, six countries – Headlines, features, photo and videos from ecns.cn A railway tour route that connects China with six countries in Asia and Europe will open in July, local media reported Monday.

The tour, which costs 32,000 yuan ($5,148) per person, will take tourists to historical and natural scenic spots in Turkey, Bulgaria, Romania, Hungary, Austria and the Czech Republic, according to a report in the Metro Express.

Analysis and Forecast of China AFC (Automatic Fare Collection System) Industry,… — DUBLIN, April 14, 2014 /PR Newswire UK/ — With the acceleration of subway and high-speed rail investment and construction in China, China’s Automatic Fare Collection equipment market also ushers in a new round of rapid growth during 2011 to 2020. By 2015, the operating mileage of China’s rail transit will reach more than 3,000 km and will reach 6,000 km by 2020, which will need the investment amount of about CNY 3 trillion to CNY 4 trillion. In 2013, the market scale of AFC will reach CNY 4.2 billion and it will achieve CNY 6 billion by 2017, among which, the urban rail transit AFC application will be CNY 3.5 billion and the high-speed rail field will be CNY 2.5 billion. The market prospect is broad.

Firm wins part of lucrative roads upgrade project – Fiji Times Online THE first contract for work on the Nadi and Suva roads upgrading project has been awarded to China Railway 5th.

Energy

CNPC Pushes ahead with Controversial Sichuan Refinery Project – The project’s troubles started in 2008, when a large earthquake struck Sichuan. Later that year, a series of protests halted production.

The facility was back in the headlines this year because of a corruption probe. The Communist Party’s anti-graft watchdog accused Li Dongsheng, the former general manager of the Pengzhou facility, of illegal bidding related to the project.

China Inc joins the big league in oil and gas services | Reuters Global oil companies are increasingly turning to China for services and equipment, attracted by lower costs and a newly acquired expertise that is challenging more established rivals.

State-run and privately controlled Chinese rig makers, oil and gas services and engineering firms are showing up in the supply chain everywhere from the Middle East, the North Sea and North America to frontier areas like Mozambique.

CNPC and affiliate employees probed on graft allegations|Politics|chinadaily.com.cn At least 45 people related to China National Petroleum Corp, the country’s largest oil and gas producer and supplier, have been investigated over graft allegations from last year until this month, Beijing Times reported.

Among them, 21 are current or former managers of CNPC, and the other 24 are not company employees but have business with the company, the report said.

PetroChina Company Limited Upgraded by Credit Suisse to “Neutral” (PTR) | Zolmax PetroChina Company Limited (NYSE:PTR) was upgraded by research analysts at Credit Suisse from an “underperform” rating to a “neutral” rating in a report released on Monday, Stock Ratings Network reports.

Shares of PetroChina Company Limited (NYSE:PTR) opened at 114.22 on Monday. PetroChina Company Limited has a one year low of $94.75 and a one year high of $132.19. The stock has a 50-day moving average of $105.7 and a 200-day moving average of $108.8. The company has a market cap of $209.0 billion and a price-to-earnings ratio of 10.11.

Tesla’s charge into China may get Sinopec boost – The Technology Chronicles Billionaire CEO Elon Musk reportedly is visiting the world’s most populous country this month to talk to China Petroleum & Chemical Corp., or Sinopec, about building charging units in Sinopec gas stations, Chinese media reported Monday. Sinopec, one of the country’s largest refiners, would first offer charging stations in Beijing.

Sunshine Oilsands seeking new equity issue to restart construction at stalled West Ells project | Financial Post Sunshine Oilsands Ltd., the Alberta oil sands startup backed by Chinese state-owned enterprises (SOEs), will ask shareholders in a special meeting in Hong Kong Tuesday for permission to issue more equity so it can restart construction of its stalled West Ells project.

Site approval for Chinese AP1000 plant The Xudabao site in China’s Liaoning province has been approved for the construction of the first two of six AP1000 units planned there.

The site of the proposed Xudabao nuclear power plant is in Xingcheng City on the island of Hulu, in the northeast of the coastal province of Liaoning. While the initial phase of the project will comprise two AP1000s, a further four such units are planned for the site.

Property

Housing Trouble Grows in China – WSJ.com Economists have worried for years that China is setting itself up for a housing-market bust. In big international cities like Beijing and Shanghai, prices continue to rise. But evidence is mounting that in dozens of third- and fourth-tier Chinese cities rarely visited by foreigners, overbuilding is out of control and a major property-market slowdown is now under way.

Chinese land price growth slows – Xinhua | English.news.cn The average price of land in 105 monitored Chinese cities stood at 3,412 yuan (554 U.S. dollars) per square meter in the first quarter of 2014, up 1.89 percent from the previous quarter, a report said on Tuesday.

The price growth saw a decrease of 0.17 percentage points from the previous quarter. It also marked a first cutback after land price growth expanded for seven consecutive quarters, according to the report released by the China Land Surveying and Planning Institute.

Travel

Rise of China’s budget airlines – news – travel | Stuff.co.nz China’s first low-cost airline has been profitable since 2006, its first full year of operation, but the budget aviation market is about to get a lot more competitive as the government moves to promote low-cost travel to meet a surge in demand from an increasingly wealthier population.

Over the last 18 months, Spring has been joined by two new competitors. China’s big state-backed carriers are also looking at launching budget carriers, a strategy industry executives say would be an additional boon to plane makers Airbus Group and Boeing.

China Money Network − Hony-Backed NetJets Plans Mid-Year Launch Of China Service Global private aviation firm NetJets Inc. says that it is preparing to begin its China business once government approval is finalized, according to a company announcement.

NetJets, a Berkshire Hathaway company, is hiring employees in China, partnering with vendors and positioning aircraft to the Chinese market. It expects government certification to be granted mid-year in 2014.

Tech

Tiny Chinese startup gets $29 million in funding to emulate Xiaomi, build a smartphone Chinese software maker Smartisan has secured RMB 150 million (US$24 million) in funding to help the small, largely unknown startup launch a smartphone.

The funding hasn’t been confirmed or detailed yet, notes 36Kr, but Smartisan’s Luo Yonghao stated publicly on his Sina Weibo account that its first ever phone will be unveiled on May 20. There’s no word yet on the hardware, but it’ll cost around RMB 3,000 (US$487).

P2P Lending Service Ppdai Gets Millions of Dollars Series B Funding for Risk Control | TechNode Chinese P2P lending service Ppdai recently announced that it has raised millions of dollars in Series B financing led by LightSpeed China Partners, Noah Private Wealth Management and existing investor Sequoia Capital. The company has received $25 million of Series A funding from Sequoia Capital in last December. The capital raised this time will be used in the credit system and team construction.

Will Intel’s China Push Pay Off? (INTC) In a declining PC market, Intel (NASDAQ: INTC) needs to increase its tablet processor market share, and it’s looking at China to make it happen. That’s why the company hosted its Developer Forum in Shenzhen, China, this year, and is spending $100 million on an innovation fund in the country.

But despite Intel’s efforts to do business with Chinese tablet vendors, it is facing fierce competition from both small chipmakers in China that use ARM Holdings‘ (NASDAQ: ARMH) chip designs.

LinkedIn’s obstacle in China isn’t censorship, it’s culture One Chinese audience member at the forum posed a particularly insightful question to Shen: In a society where people guard their close connections and often keep their professional contacts a secret, how will LinkedIn get users to open up and share their professional network with the world?

China and “Datathermal Energy” China is a natural place for the development of data-thermal energy. The country is early enough in the cycle of development for data centers to start designing its largest server farms to capture and channel heat efficiently. And scale will not be an issue in China. Leaving out government-run data centers entirely, some commercial data centers, like one 6.3 million square-foot beast under construction in Langfang just outside of Beijing, will have more floor space than the Pentagon.

Agriculture

Two Chinese executives awarded $600m for US pork deal | Business | theguardian.com Two executives at the Chinese company that bought the US firm Smithfield Foods, the world’s biggest pork producer, last September have been awarded more than $600m (£360m) of shares for their part in the $4.9bn deal.

WH Group and some of its shareholders launched an initial public offering for up to $5.3bn in Hong Kong last week, the second biggest ever listing by a food and beverage company.

Chinese pork giant plans IPO | Business Spectator China’s WH Group said late on Monday it was selling 3.65 million shares priced at between 8 and 11.25 Hong Kong dollars ($A1.10 -$A1.55).

That would raise between $US4.1 billion and $US5.3 billion for WH Group, formerly known as Shuanghui International Holdings.

Retail

Sanpower House Of Fraser purchase ‘shows ambition'[1]- Chinadaily.com.cn Once again a world-famous brand has been surprisingly snapped up by a relatively unknown Chinese company. This time it is Nanjing-based Sanpower Group which launched a successful 450 million ($750.47 million) takeover of House of Fraser, one of Britain’s best-known retail store brands.

Nippon Paint tops C-BPI polls for second consecutive year – BUSINESS – Globaltimes.cn The China-Brand Power Index (C-BPI) is the most trusted brand-evaluating system used by consumers and companies. The China Brand Research Center conducted its 2014 C-BPI survey covering 30 cities nationwide to examine brand awareness and loyalty among 13,500 people aged from 15 to 60. Covering 170 sectors, a total of 7,600 mainstream brands were included in the evaluation. In the “household goods” category, Nippon Paint China topped other companies in the “interior paint” and “wood coatings” categories.

Posted from Diigo.

China Business Briefs 4/2/14

Economy   Finance   Auto   Infrastructure   Energy   Telecoms   Property   Travel   Tech   Agriculture

Economy

Chinese factories act to keep staff in saddle in Year of the Horse – FT.com Many factories across the Pearl River Delta, the manufacturing workshop of the world in Guangdong, are trying to find ways to keep workers. This has become more important as demographic changes – particularly the one-child policy and a government push to create jobs inland – have made staffing harder.

But the world’s factories cannot simply rely on outings, returning bonuses and lucky draws. What workers really want is better pay and benefits, says Geoff Crothall of China Labour Bulletin. While wages in Guangdong have posted double-digit rises in recent years, the minimum wage in Shenzhen – the highest in China – is still only about $300.

Why Did One Of The World’s Largest Generic Drug Makers Exit China? – Forbes The broader questions that Actavis’ CEO pointed towards as a rationale for the company’s exit from China are not wrong.  Surveys conducted by various American and European business groups in China all point towards worrying trends which suggest China is becoming fundamentally less hospitable to foreigners than in years past.  Favoritism towards domestic companies by government purchasing is nothing unique to China, unless you consider that China’s 144,500 State Owned Enterprises (SOE) represent 35% of the country’s industrial revenue (a percentage many economists believe greatly under-represents the economic impact of SOEs). Add to the SOE’s position the role of the Chinese government as purchaser of great amounts of pharmaceuticals and medical devices, and you can see what the comments of Actavis’ CEO ring true to many.

Bilateral China / US Investment ‐ Is 2014 the Year? | The National Law Review Times are changing, however. There has been a rapid increase in the amount and rate of investment by Chinese companies in the United States in the last three years. At the end of the second quarter of 2013, the United States with cumulative investment from China of $57.8 billion ranked only behind Australia with $59.2 billion.2 With the September 2013 closing of the Shuanghui International acquisition of pork producer, Smithfield, for $7.1 billion and several large real estate investments, the United States took the lead as the preferred destination for China investment.3 Included within the United States numbers during the first nine months of the year is $12.2 billion invested in 55 Greenfield projects and acquisitions in the United States.4

The Great Debtscape In short, over the past five years China has rectified one of its famous “imbalances” — excessive reliance on external demand — and made a good start on fixing the other (excessive reliance on investment spending). But a growing chorus of observers views China’s economic future with trepidation. In mid-January, Ray Dalio, who runs Bridgewater Associates, the world’s biggest hedge fund, declared that China was a bubble. And earlier that month, Patrick Chovanec, a well-known China bear, warned that “China’s leaders are riding a runaway train that they don’t quite know how to stop.”

China Demand Still Buoys Global Producers – WSJ.com From southern Africa to southern Asia, investors have soured on many commodity-rich emerging markets boosted in the past by China’s ravenous appetite for what is grown from the soil or extracted from the mines. But so far, a slowing China hasn’t hurt its suppliers much.

That is because massive Chinese demand hasn’t significantly weakened and many emerging economies now have their own consumers to help pick up any slack. The global market jitters, economists and executives say, reflect less an actual falloff in China’s appetite and more a bet that China’s growth will continue to taper off.

Finance

Judge’s Ruling On Accounting Firms In China Touches on Hong Kong Units – WSJ.com But in a potential broadening of the issue at hand, the ruling by SEC Administrative Law Judge Cameron Elliot also spotlighted another practice of note in the auditing of Chinese companies that trade on U.S. markets. In some instances, a Hong Kong unit of a Big Four auditor acts as the company’s official auditor, but the bulk of the audit work is outsourced to the same firm’s affiliate in mainland China.

That could raise issues under U.S. auditing rules, which suggest that an audit firm should do a “material” amount of the work to be entitled to serve as a company’s principal auditor and sign the audit opinion.

Guess which bank has the most valuable brand While the value of bank brands in Russia, India and Brazil fell, China continued to perform strongly. The value of the lenders’ brands there rose by $19 billion during the year, and there are now three Chinese banks ranked in the top 10 — Industrial and Commercial Bank of China (ICBC), China Construction Bank and the Agricultural Bank of China.

Asia Markets live blog: Shares falling on U.S. cue – The Tell – MarketWatch China might soon loosen its tight grip on its banking sector. The official Xinhua News Agency reported Monday that it’s an inevitable choice for China’s financial reform to allow banks to fail.

It quoted Yan Qingmin, vice chairman of the China Banking Regulatory Commission, as saying that the government would let market force play a larger role in the banking system and allow commercial banks to “go out of market” if they turn insolvent.

This Chinese online retailer’s IPO documents could be a bit too candid – Quartz The prospectus for Chinese online retailer JD.com’s planned $1.5 billion US public offering, filed recently with the Securities and Exchange Commission, offers up a warts-and-all look at the risks of investing in a Chinese internet company. And there are a lot of warts—over 40 pages worth—listed in the “risk factors” section, including:

We don’t really know what we’re doing in some businesses. The company recently expanded into internet finance, providing supply-chain financing to supplier and loans to customers. “We have limited experience in operating an internet finance business,” the prospectus admits.

SEC Ruling May Be a Death Knell for Chinese Stocks Woes for Chinese tech stocks are significant. The argument goes that as long as Chinese authorities outright ban Chinese companies from submitting required information to the SEC, such audits are not acceptable. So far Chinese companies have circumvented such requirement by submitting audits conducted by the big four auditor firms’ Chinese affiliates. But again, the SEC said those audits done in China, even by the big four auditors’ affiliates, are not good.

And this raises an interesting issue. Major Chinese companies, as well as smaller ones, are in jeopardy meeting the deadline to submit quarterly and annual reports on time.

SEC, Deloitte, Longtop case resolution raises hopes for solving US audit ban – Governance – The Corporate Treasurer The SEC has dropped its case against Deloitte’s China arm and Longtop Financial Technologies, pointing the way through a broader audit ban crisis.

US houses to boost funds on offer in Hong Kong to tap opportunities in China | South China Morning Post Two US fund houses, Principal Global Investors and Franklin Templeton, have unveiled plans to add to their Hong Kong-domiciled offerings in order to tap into mainland China opportunities under a soon-to-be signed mutual recognition scheme.

Bitcoin Exchange BTC China Resumes RMB-Based Deposits | China Briefing News Bobby Lee, CEO of the Bitcoin exchange BTC China, has announced that customers are once again able to purchase Bitcoin by depositing RMB directly into the company’s corporate bank account.

The decision by BTC China comes after the exchange stopped accepting RMB deposits in response to a Dec. 5 memo from the People’s Bank of China warning national financial institutions not to trade in Bitcoin.

Auto

China’s carmakers have yet to make their marque – FT.com Dongfeng, one of China’s “Big Three” car groups alongside Shanghai Auto and First Auto Works, has more joint ventures with international car groups than any of its domestic peers. Including Korean partner Hyundai, it currently operates four joint ventures and signed a fifth partnership agreement in December with Renault. The Wuhan-based company is also poised to take a 14 per cent stake in Peugeot as part of €3bn capital raising.

Dongfeng’s four joint ventures account for more than 90 per cent of the group’s annual passenger car sales, dwarfing those of its own Aeolus brand. It is an imbalance shared by all of China’s state-owned car companies and helps explain why the country that boasts the world’s biggest car market has, unlike Japan and Korea before it, thus far failed to produce a national champion of its own that can compete globally.

Beijing licence plates fetch twice the price of the car on black market | South China Morning Post Beijing’s clampdown on new car registrations is creating a scramble for licence plates and fuelling a boom on the black market, where prices have soared as high as US$33,000, almost double the price of China’s best-selling car, the Ford Focus.

This year, Beijing will cut the allocation of new number plates by 40 per cent to 150,000, meaning only one in 150 will get a plate.

As China’s Auto Sales Surge, Lunar New Year Travelers Opt for Road Trips – WSJ.com A long car ride home can sound appealing to the alternative. China’s top economic planning body estimates that during the 40-day period around the holiday Chinese will take 3.62 billion rides on trains, planes, buses and ships. China’s rails are carrying an average of 6.8 million passengers each day, according to transport ministry officials.

Many hitting the road are carpoolers. According to 58.com Inc., a U.S.-listed Chinese online marketplace, the number of posters looking for or offering Lunar New Year rides is four times the amount a year ago.

Infrastructure

Giant pipeline brings unaffordable water to China’s north|Policy|Business|WantChinaTimes.com The eastern route of China’s South-North Water Diversion project officially began drawing and diverting water last November and December from the Yangtze River to 71 counties, cities and areas in Jiangsu, Shandong and Anhui provinces. The much-needed water comes, however, at a price many local officials find difficult to swallow.

Even though water prices have yet to be finalized, the preliminary estimate for the high fees has drawn negative comments from officials in Jiangsu and Shandong.

Energy

China imports more natural gas in 2013 – BUSINESS – Globaltimes.cn China saw its aggregate volume of natural gas imported from overseas jump 25 percent year on year in 2013, approaching one-third of its apparent consumption, a new report has showed.

The country imported 53 billion cubic meters of natural gas last year, 31.6 percent of its domestic gas output plus imported volume, according to a report released by an economic and technological academy under China National Petroleum Corporation, the country’s state-owned oil giant.

China’s Xinjiang sizzles with green energy – Xinhua | English.news.cn Xinjiang Uygur Autonomous Region, a major power supplier in China, has accelerated the development of green energy as it recorded higher installed capacity in 2013.

Statistics with the Xinjiang branch of the State Grid Corporation of China (SGCC) showed that by 2013, the combined installed capacity of wind power, hydropower and solar power stations exceeded 1,368 million KW, accounting for about one third of all installed capacity in Xinjiang.

Singapore Refining Co to invest over $500 mln in gasoline, power units – Yahoo Finance Singapore Refining Co (SRC) said on Tuesday it will invest more than $500 million to build gasoline and power generation units at its refinery on Jurong Island.

SRC operates a 290,000 barrels per day refinery and it is a 50:50 joint venture between Chevron Corp and Singapore Petroleum Co, a wholly owned subsidiary of PetroChina International Co.

Why Is China Buying So Much Methanol? In March 2013, IHS Chemical found that the demand for methanol was growing faster in China than any other part of the world — the country increased consumption 23% from 2010 to 2012 and is expected to consume half the world’s production of methanol this year, which is about 32 million tons. By contrast, the United States currently consumes about 6.5 million tons. IHS Chemical expects the demand for methanol in China alone to triple by 2022.

So, what’s fueling China’s interest in methanol?

Telecoms

4.8 million WeChat Users Participated in the Lucky Money Game on Chinese New Year Eve 4.82 million WeChat users took part in the Lucky Money game on 2014 Chinese New Year eve, as disclosed by WeChat’s parent company Tencent. Launched several days before, the feature that adds gamification elements to giving and receiving digital Lucky Money became an immediate hit among WeChat users. Kingsoft even developed a plugin that automatically harvests lucky money for WeChat users.

Property

Tight availability of funds drives Chinese developers abroad to raise cash | South China Morning Post Driven by concern about the availability of funds, more than a dozen mainland developers, including China Overseas Land & Investment, Dalian Wanda, Guangzhou R&F and Greenland, raised more than 50 billion yuan (HK$63.5 billion) offshore in the first month of the year.

Home-buy hopefuls run into banks feeling the pinch – The Standard State-owned banks including Industrial and Commercial Bank of China (1398), China Construction Bank (0939), Agricultural Bank of China (1288), and Bank of China (3988) are reluctant to provide discounts to boost mortgage businesses.

China Guangfa Bank, Ping An Bank and China Minsheng Banking (1988) are tightening as well.

Travel

Ireland goes the extra mile for Chinese visitors | South China Morning Post UnionPay card machines aren’t the only reason mainland Chinese tourist flock to Dublin. Firstly, Ireland eased its visa restrictions last year, after the UK tightened theirs, chuckle, chuckle. The RMB has appreciated 40 per cent in recent years over the euro, which means China’s new travelling middle class gets far more bang for their buck in euroland. Ireland’s high sales taxes and VAT can be claimed back at the airport, reducing real prices even further. You also get the latest lines of European branded products, so they can stock up on their favourite Hermes, Chanel, Louis Vuitton, Burberry and Ireland’s own Waterford Crystal, also popular with Chinese customers.

Tech

Lenovo Slumps on Analyst Downgrades After Buying Spree – Bloomberg Lenovo Group Ltd. (992), which announced $5 billion of deals last month to bolster its server and smartphone businesses, plunged the most in five years in Hong Kong after the stock was downgraded by at least five brokerages.

Lenovo fell 16 percent to HK$8.41 at the close of trade, cutting $2.2 billion from its market value in the biggest decline since January 2009. The world’s biggest maker of personal computers was cut at UBS AG (UBSN), Morgan Stanley (MS), Jefferies Group LLC, JI-Asia Research Ltd. and Kim Eng Securities Ltd., according to data compiled by Bloomberg.

Lenovo said to turn to security insiders for deal approval – DailyHerald.com Lenovo Group Ltd. has turned to national security insiders to win U.S. approval to buy Google Inc.’s Motorola Mobility phone unit, which is based in Libertyville, and International Business Machines Corp.’s low-end server business, people familiar with the two deals said.

The world’s largest personal-computer maker hired attorneys at Steptoe & Johnson LLP who held positions at the Central Intelligence Agency and the Homeland Security Department to guide its Motorola review through a key interagency panel, one of the people said. Covington & Burling LLP partners David Fagan and Mark Plotkin are representing Lenovo in the IBM server deal, according to another person familiar with the matter.

VyprVPN enters Great Firewall-evading VPN market Now a new contender has entered the fray, boasting greater security and privacy than all its competitors. VyprVPN uses a new proprietary protocol called Chameleon, developed by Switzerland-based Golden Frog. Chameleon “scrambles OpenVPN packet metadata to ensure it’s not recognizable via deep packet inspection” and is specifically “designed to mask Internet traffic to defeat VPN blocking in restrictive environments like China.”

Agriculture

China cancels deal to buy Thai rice due to graft probe: Thai minister | Reuters China has canceled a deal to buy 1.2 million tonnes of Thai rice after Thailand’s anti-corruption agency launched investigations into a state rice-buying scheme, the Thai commerce minister said on Tuesday.

“China lacks confidence to do business with us after the National Anti-Corruption Commission started investigations into the transparency of rice deals between Thailand and China,” Niwatthamrong Bunsongphaisan told reporters.

Posted from Diigo.

China Business Briefs 1/2/14

I am experimenting with dividing the day’s links by business area. Any feedback on this will be gratefully received.

Economy   Finance   Auto   Infrastructure   Energy   Telecoms   Travel   Property   Tech   Food

Economy

China factory output slows in January – FT.com The gauge dropped from 50.5 in December to 49.5 in January, a slight downward revision from the 49.6 reported in the “flash” PMI last week. A figure above 50 indicates expansion. The January figure marks the first contraction in the sector for six months.

China Manufacturing Gauge Falls to Six-Month Low – Bloomberg The Purchasing ManagersIndex (EC11CHPM) was at 50.5, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That matched the 50.5 median estimate of analysts surveyed by Bloomberg News and compared with December’s 51 reading. Numbers above 50 signal expansion.

Many Local Gov’ts Aim for Lower GDP Growth This Year – Most of the local governments that have announced their GDP targets for this year aimed lower than they did in 2013, citing the need to rebalance the economy and improve the quality of growth. Many missed their growth targets last year.

The announcements were made after the governments of 28 provinces, municipalities and autonomous regions held their annual lianghui, or meetings of the provincial legislature and political advisory body, in January. The provinces of Anhui, Hunan and Hainan have not yet held the meetings.

China’s loan sharks circle in murky shadow bank waters – Yahoo Singapore Finance China’s crackdown on risky lending has driven borrowers into an even darker place in their search for capital – underground banking.

The domain of loan sharks, underground lending is the least regulated area of China’s shadow banking, or non-banking, sector and for some it is seen as the biggest risk to China’s financial stability.

Why China’s Factories Will Automate – Silicon Hutong In the coming decades, China will go from being “THE factory floor” to “A factory floor.” Many things will force that change – a shrinking pool of workers, growing local opportunities in services, tightening environmental regulations, and more expensive energy. The economics, in short, will change, and so must industrial China.

Chinese prefer buying German, British companies: study – Xinhua | English.news.cn Germany and Britain are by far the most popular investment destinations of Chinese investors, a study showed on Friday.

According to the study of the economic consultancy Ernst & Young published Friday in Dusseldorf, Chinese investors have made 25 acquisitions in 2013 in Germany and Britain respectively.

Finance

Economic danger lurks in China’s shadow banks – FT.com Hence China’s uncomfortable predicament. Because the government was unwilling to see Credit Equals Gold No. 1 collapse, fears of an imminent economic meltdown are overblown. But for precisely the same reason China’s debt powder keg is only getting more tightly packed.

Distrust of China’s Trusts – WSJ.com It would be a mistake for Beijing to overreact now by simply clamping down on trusts, which perform some useful functions. The best prudential regulation is not about blanket bans on particular products, but rather looking for signs of dysfunction and getting ahead of the problem. The explosion of trust products suggests that the Chinese financial system needs new conduits for capital outside the banks. The challenge is to make sure that they are transparent, well regulated and free of any expectation of government bailouts.

Rating agencies criticise China’s bailout of failed $500m trust – FT.com Global rating agencies – often among the more sanguine voices on China – have warned that this week’s bailout of a soured $500m trust loan was a wasted chance to address rising moral hazard in the country’s shadow banking sector.

“By bailing out investors in this particular instance, the authorities are perpetuating moral hazard within the Chinese financial system – and this risk may in fact have become a whole lot bigger,” wrote Jonathan Cornish, an analyst at Fitch, in a research report. “We think the authorities have missed a chance of putting a clear marker in the sand that non-bank products would certainly not be supported.”

China’s top lender ICBC to add Peru to expanding Latin America operations China’s ICBC, the country’s top lender, will start operating in Peru next week as part of a bid to finance local exporters while expanding its operations in South America, the Lima stock exchange said on Wednesday.

Industrial and Commercial Bank of China, one of the largest banks in the world in terms of assets, secured a license to operate in Peru last year and will start lending to Peruvian companies – particularly exporters – as of Feb. 6, the exchange said in a statement.

Audit in their hands: what China can tell us about rotation – 30 Jan 2014 – Accountancy Age TRADE with China makes headlines. But along with trade has come mounting pressure on audit in the country everyone wants to do business with. Last year saw the results from the first wave of companies forced to rotate their auditors in what is an important step for Chinese corporate integrity.

The move has been closely watched and the first tentative conclusions are already being drawn from what many see an experiment in the management of audit provision. What will it do to the concentration of high-profile audits in the hands of the Big Four? How will it affect the price of audit? And what can the rest of the world learn from the experience?

Standard sells stake in London business to ICBC | Financial Services | BDlive STANDARD Bank has sold its controlling stake in its London-based global markets business to the Industrial and Commercial Bank of China (ICBC) as part of its strategy to focus on its African operations.

Africa’s largest banker announced on Wednesday it had sold 60% of the ordinary share capital of its London-based Standard Bank plc.

China’s banks: fighting back against online upstarts | beyondbrics Whether such yields from the money market funds are sustainable is open to question – and security is still a concern for some. Nonetheless, the traditional national banks have been forced to address the challenge, adding pressure to their share prices despite their still-strong earnings.

Shares of 12 banks out of 16 A-share listed Chinese banks have fallen below their net asset value per share. Jiang Jian Qing, chairman of ICBC argued at Davos that it was caused by China-bashing stories about non-performing loans and shadow banking rather than healthy fundamentals.

ICBC and Standard Bank: Limited partnership | The Economist Yet the match—the biggest foreign investment by a Chinese firm at the time—has not quite lived up to expectations. Revenues that could clearly be credited to it seemed slow in coming; then Standard Bank gave up looking for them. In spite of the growing Chinese presence in Africa, Standard Bank never secured the fees and bragging rights that arranging a Chinese takeover of an African firm or a big infrastructure investment would have brought.

China Money Network − Banyan Capital Completes First China Venture Fund Of $206M China-focused venture firm Banyan Capital has completed final closing of its first venture capital fund, Banyan Partners Fund I, on January 8 raising a total of $206 million, according to a company announcement.

The fund had two months of marketing period, and attracted over 40 investors from the world including entrepreneurs, family offices, fund-of-funds, foundations and other institutional investors from greater China and the U.S.

China Money Network − JD.com Files For $1.5B US IPO Beijing-headquartered Chinese e-commerce operator JD.com, Inc. has filed for a U.S. initial public offering, according to a filing with the U.S. securities regulator.

JD.com plans to raise up to $1.5 billion, and has not decided which stock exchange it will list.

Auto

Ford Recalls Edge SUVs in China – January 31, 2014 – Zacks.com Ford Motor Co. has decided to recall 13,493 Edge SUVs in China to repair faulty fuel systems, according to Reuters. Inferior quality of the fuel pulsation damper used in the vehicles might crack and lead to fuel leakage. This may eventually lead to fire.

Discounts yield rebound for foreign car sales – Business – Chinadaily.com.cn Vehicle imports grew 7.3 percent to 1.17 million last year, with a strong rebound in the fourth quarter helping make up for a decline in the first half, China Automobile Trading Co Ltd said.

That was the first contraction since 2006, when China implemented its World Trade Organization commitment to lower the import tariff for vehicles to 25 percent.

SGMW honor Autoliv China with supplier of the year Award – MarketWatch At SGMW’s 2013 supplier conference and award ceremony held on in Guilin China, Mr. Shen Yang President of SGMW presented Autoliv China with the “Excellent supplier award”. This is Autoliv China’s third consecutive year to be named by SGMW following “the best quality award” in 2011 and “the best platform award” in 2012.

Infrastructure

allAfrica.com: Africa: Tanzania Becoming the New Chinese Province in Africa “Compared to the West, on my opinion, the Chinese are the best investors, we are quite sure the projects will succeed as there will be no politicizing,” he adds.

Energy

BP shelves China refinery plan as fuel demand slows BP is dropping plans to invest in a refinery in China, three sources with direct knowledge said, the fourth refining project in recent months to fall foul of a slowdown in growth in the world’s second-largest economy.

China’s fuel consumption rose at the slowest clip in more than 20 years in 2013, ending a decade of rapid demand growth that drove global oil prices to over $100 a barrel and made gaining access to China’s restricted retail market a mouth-watering prospect for international oil firms.

Sinopec to co-operate in Hong Kong graft probe | South China Morning Post China Petroleum and Chemical Corporation, also known as Sinopec, has said it is co-operating with Hong Kong authorities in an anti-graft probe, media reports said.

The state-owned company would not tolerate any illegal or corrupt conduct, it said in a statement made through a public relations agency to Bloomberg News. It added that operations were not affected and it considered the inquiries to relate to the “individual conduct” of unspecified staff, according to the statement.

China sets new world record for solar installations | Jennifer Duggan | Environment | theguardian.com China installed a record 12GW of solar power in 2013, doubling its rate of solar installations, according to preliminary figures. This is more than has ever been installed by any country in a single year and means that China installed three times more solar energy in 2013 than the total UK solar capacity.

China’s first direct coal liquefaction line produces 866,000 tonnes – Xinhua | English.news.cn China’s first direct coal-to-oil project, operated by the country’s leading coal producer, Shenhua Group, produced 866,000 tonnes of oil products last year.

The direct coal liquefaction line is located in Ejin Horo Banner, Ordos City in northern Inner Mongolia Autonomous Region. It produces 3,000 tonnes of oil products with consumption of nearly 10,000 tonnes of coal per day, said Shenhua Coal Liquefaction and Chemical Co., Ltd.

Chinese firms introducing new forms of energy into Ethiopia – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns HydroChina is representative of the Chinese infrastructure enterprises that are building roads, bridges and housing in Ethiopia, catering to the country’s construction boom.

They didn’t stride into the promising but remote market alone; instead, they tapped into Ethiopia through Chinese government foreign aid projects.

China Resources Seeks Lenders for HK$6.4 Billion Syndicated Loan – Bloomberg China Resources Power Holdings Co. (836) is seeking bank commitments for a HK$6.4 billion ($824 million) syndicated loan after hiring banks to arrange the deal, according to two people familiar with the matter.

The state-owned power generator will use the five-year facility to refinance debt and for general purposes, the people said, asking not to be identified because the details are private. It’s asking lenders to commit by Feb. 21, they said.

Telecoms

There really has been a mass exodus of Sina Weibo users With over 60 million daily active users as of November (though some of those could be ghost accounts), Sina Weibo doesn’t appear to be dead just yet. And when the company reports staggering numbers of tweets during Spring Festival or New Year’s Eve, one is reminded that it’s still a powerful player in Chinese social media. But at the very least, Sina Weibo’s heydey of scandals uncovered and corruption exposed appears to be grinding to a halt.

Travel

Outlook bright for low-cost carriers in China|WantChinaTimes.com Chinese budget carrier Spring Airlines saw stellar annual results in 2013, with regulators approving an application for the company to set up a low cost carrier (LCC), signaling a different stage in China’s aviation sector, the Beijing-based Securities Daily reports.

The future of China’s LCC market seems to be bright after the Civil Aviation Administration of China (CAAC) recently approved two applications to set up new carriers, including an LCC to be based in Guangzhou.

Property

Keeping the lid on housing prices – Business – Chinadaily.com.cn Nobel laureate and Yale University professor Robert Shiller was one of the first global economists to talk about the runaway risks in China’s spiraling property prices, a matter that has been of considerable interest in China recently.Shiller, well known for his insights on global asset prices and extended research work on behavioral finance, macroeconomics and real estate, had during a visit to China mentioned that property prices were moving at a “dangerously high” pace. That comment, highly controversial back then, seems even more controversial now, given that real estate prices across most of China have increased by more than 50 percent, and by more than 100 percent in a few high-profile markets.Travel

Tech

Lenovo CEO Reshapes Chinese PC Maker With Deal Spree – Bloomberg In the span of a week, the chief executive officer of China’s Lenovo Group Ltd. (992) cut the two biggest deals in his company’s history. He’s spending a combined $5 billion to buy Google Inc. (GOOG)’s Motorola mobile-phone business and International Business Machines Corp. (IBM)’s low-end server business.

How Lenovo Built a Chinese Tech Giant – WSJ.com China’s Lenovo Group Ltd., once known as Legend, grew from a tiny government-funded venture in the 1980s to a global powerhouse that last year became the No. 1 personal-computer maker in the world.

With its proposed $2.91 billion purchase of Google Inc.’s unprofitable Motorola Mobility handset business, Lenovo is making a risky bet it can replicate that success in smartphones.

3 Reasons Lenovo’s Purchase of Motorola Will Succeed Where Google Failed (LNVGY) There are doubts regarding Lenovo’s ability to revive the Motorola brand, which at its peak (2006) accounted for 22% of the mobile phone market, but I truly believe that Lenovo will do a much better job than Google at rebuilding the fallen brand’s reputation in the mobile marketplace.

Let’s take a look at the three top reasons:

Lenovo’s Purchase of Motorola an Exercise in Buying Brands | China Briefing News Amongst all the recent hype of Chinese outbound investment going to the United States comes the news that Lenovo have purchased Motorola from Google for US$2.9 billion. I’m not a great believer in the stories of Chinese manufacturers heading in droves to buy up struggling American or European businesses – China has emerging Asia right on its doorstep and is investing heavily in these countries both for sound business and political incentives. I wouldn’t be expecting Motorola’s plants in the States to be undergoing mass transformation and expansion anytime soon.

In fact, what we are really seeing is a well planned out, but longer term strategy, consistent with emerging Asian entrepreneurs as a whole: the buying of brands that the West no longer knows what to do with, and the re-positioning of them for the Asian – not Western – markets.

Food

New Zealand’s exports to China soar 45 per cent on demand for dairy | South China Morning Post Figures released on Friday by Statistics New Zealand show that China surpassed Australia for the first time on an annual basis as New Zealand’s top export market.

In 2013, China imported US$8.1 billion worth of New Zealand goods, up from US$5.6 billion the previous year. About 40 per cent of those imports were of milk powder.

France’s truffle farmers aim to stop inferior Chinese fungi getting a sniff | World news | theguardian.com When is a black truffle not a €1,000-a-kilo rare French fungus? When it fails the smell test.

In their battle to see off competition from pale and cheap Chinese imitations, French trufficulteurs (truffle cultivators, as they like to be known), have enlisted the help of scientists.

China Overtakes France, Italy as World’s Biggest Red Wine Consumer – China Real Time Report – WSJ The country, including the wine hub of Hong Kong, consumed 155 million nine-liter cases (1.87 billion bottles) of red wine in 2013, according to new research released this week. The report was commissioned by Vinexpo, a Bordeaux-based wine industry conference, and conducted by the International Wine & Spirit Research, an independent research firm for the liquor trade.

The total marks a 136% increase from five years ago and surpasses France’s 150 million cases and Italy’s 141 million cases of red wine consumed in the same year. What’s more, red wine consumption in China almost tripled between 2007 and 2013, while it decreased 18% in France and 5.8% in Italy.<

Posted from Diigo.

China Stock Watch 29/1/14

Another day of mostly moderate rises on the back of relief after the non-default – or, more precisely, that default that was paid up for by various institutions, governmental and otherwise. Only two stocks fell on the day: PetroChina fell 0.13% to RMB7.55, while Noble Group lost 0.52% to SG$0.965. China Telecom did best on the day, rising 1.97% to HK$3.63. Close behind was ICBC, up 1.47% to RMB3.44 (as investors breathed a sigh of relief).

The aversion of a default, of course, does not solve any of the problems surrounding the shadow banking industry and the subsequent likely defaults ahead. It speaks of a particular, and deserved, nervousness around the quality of the financial infrastructure in China. The unwillingness to allow, or come to terms with, zombie loans and zombie institutions, to embrace “creative destruction”, is all too reminiscent of the Japanese bubble experience. The relief of the markets may be genuine, but it is also artificially-induced, delaying the reckoning at risk of further infection.

The Shanghai Composite rose to 2,049.91, gaining 11.40 points (+0.56%)

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.5 +0.01 (0.22%) 524,543.91M 7.03 4.05 CN¥0.62 7.32
PetroChina 7.55 -0.01 (-0.13%) 1.38B 9.5 7.08 CN¥0.68 11.17
ICBC 3.44 +0.05 (1.47%) 1.21B 4.53 3.33 CN¥0.74 4.68
China Construction Bank 3.96 +0.03 (0.76%) 990,043.48M 5.19 3.8 CN¥0.85 4.68
Agricultural Bank 2.4 +0.03 (1.27%) 779,505.91M 3.28 2.35 CN¥0.50 4.78
Bank of China 2.52 +0.03 (1.20%) 703,998.67M 3.26 2.45 CN¥0.53 4.75
China Mobile 74.35* 0.00 (0.00%) 1.49B 89.2 74.25 HK$8.21 9.05
Noble Group 0.965 -0.005 (-0.52%) 6,395.13M 1.27 0.785 SGD0.04 26.39
China State Construction 3.04 +0.01 (0.33%) 91,200.00M 4.18 2.9 CN¥0.62 4.94
CNOOC 12.24* +0.08 (0.66%) 546,484.85M 16.52 12.04 HK$1.90 6.45
China Railway Construction 4.16 +0.02 (0.48%) 51,324.17M 6.25 3.95 CN¥0.84 4.94
China Railway Group 2.45 +0.01 (0.41%) 52,184.76M 3.36 2.3 CN¥0.44 5.59
SAIC Motor 13.09 0.00 (0.00%) 144,324.67M 19 11.83 CN¥2.05 6.38
China Life Insurance 13.89 +0.07 (0.51%) 392,596.76M 22 12.88 CN¥0.97 14.37
Dongfeng Motor 11.76* +0.06 (0.51%) 101,325.57M 13.28 9.48 HK$1.38 8.53
China Shenhua 14.06 +0.03 (0.21%) 279,648.07M 25.28 13.97 CN¥2.25 6.25
Ping An Insurance 39.27 +0.11 (0.28%) 310,866.90M 53.27 31.69 CN¥3.45 11.39
China Telecom 3.63* +0.07 (1.97%) 293,784.51M 4.32 3.48 HK$0.26 14.02
China Communications Construction 3.85 +0.02 (0.52%) 62,272.73M 5.79 3.74 CN¥0.81 4.76
Bank of Communications 3.8 0.00 (0.00%) 282,198.36M 5.68 3.65 CN¥0.84 4.51

China Business Briefs 28/1/14

Sorry about the lack of posts yesterday. Beijing seems to hit my immune system with frequent minor ailments. All a bit wearisome.

ECONOMY

China Credit Trust Says It Reached Pact on Troubled Product – Bloomberg China Credit Trust Co. said it reached an agreement to restructure a high-yield product that sparked concern over the health of the nation’s $1.67 trillion trust industry and contributed to a global selloff in emerging-market assets.

The agreement includes a potential investment in the 3 billion-yuan ($496 million) product, Beijing-based China Credit Trust said on its website today, four days before payment is due. The two-line statement didn’t identify the source of funds, or say whether investors would get their money back.

China shadow bank says reached pact to avoid default – Yahoo Singapore Finance In a notification to investors, obtained by Reuters, the trust firm declared that an accord had been reached and advised investors to contact client managers, but the document, did not say how or when investors would be repaid.

Citing an unnamed investor in the trust product, Caixin, a respected financial magazine, reported on Monday that the agreement allows investors to recover their invested principal, but not the final interest payment originally promised.

China Trust Default Avoided…What Comes Next? – Forbes A default of the “Credit Equals Gold #1” trust product has been avoided. What happens in the coming months will either push China closer towards a financial crisis or help it gradually step back from the edge.

Heard on the Street: China’s Default That Wasn’t – WSJ.com Like clockwork, a mysterious third party has sprung to the rescue, allowing China Credit Trust to repay the principal on high-yield investment products tied to a struggling coal miner. Savers will miss some interest payments and get a lower effective yield, but otherwise escape unharmed. So does the reputation of Industrial and Commercial Bank of China, the country’s largest commercial lender, which sold the trust products to clients.

The hand of the state seems to be at work. Officials in the miner’s home province were actively involved in coming up with a solution, The Wall Street Journal reported. The bailout involves the third-party investor taking an equity stake in the coal company, which came only after the company suddenly gained approval to restart a closed mine.

China’s top diplomat wants free-trade deal with Europe | Reuters Beijing’s top diplomat called on Monday for China and the European Union to consider a multi-billion-dollar free-trade deal, a once unthinkable step that shows a big improvement in relations between two of the world’s largest markets.

“There are bright prospects for China-EU business cooperation,” Chinese State Councillor Yang Jiechi told reporters after meeting EU foreign policy chief Catherine Ashton ahead a visit to Brussels by President Xi Jinping in March.

China Trade Puzzle Revived as Hong Kong Data Diverge – Bloomberg China’s trade numbers, distorted by fake exports (HKETEXPC) last year, are set to come under renewed scrutiny after a discrepancy between Hong Kong and Chinese figures for bilateral trade widened to the largest in eight months.

Hong Kong’s December imports from China fell 1.9 percent from a year earlier to HK$176 billion ($22.7 billion), the city’s statistics department said yesterday. That compares with $38.5 billion in exports to Hong Kong reported earlier this month by China’s customs administration, up 2.3 percent, based on data compiled by Bloomberg.

China Property New Loans Hit $380Bln in 2013, Accounting 1/3 of Total-Caijing China’’s property sector attracted 2.34 trillion yuan (about $384 billion) of new loans in the past year, representing nearly a third of the total from the banking institutions, a central bank report showed.

Outstanding yuan-denominated lending to the property sector from both Chinese and foreign financial institutions to the property sector rose 19.1 percent year-on-year to 14.61 trillion yuan by the end of 2013, the People’s Bank of China said.

Total loans outstanding at commercial banks amounted to 71.9 trillion yuan at the end of December, up 14.1 percent year-on-year and compared with a growth rate of 15.0 percent in the previous year.

Currencies and banks: the two big questions about China | The A-List But in the financial world the Chinese remain a little more hesitant. Two big issues kept recurring, one international, the other domestic:

-will the renminbi soon rival the dollar as a global reserve currency?

-is the rapid growth of shadow banking an accident waiting to happen?

China’s debt-fuelled boom is in danger of turning to bust – FT.com Debate rages over how this tale will end. Most analysts believe that the Chinese economy will once again expand by more than 7 per cent this year, despite ballooning private sector debts. But the pessimistic minority has history on its side. Only five developing countries have had a credit boom nearly as big as China’s. All of them went on to suffer a credit crisis and a major economic slowdown.

Banks see slower growth in assets – Frontpage – BUSINESS – Globaltimes.cn Assets of the banking industry ­totaled 148 trillion yuan ($24 trillion) by the end of 2013, up 12.8 percent from a year earlier, according to data released Sunday by the China Banking Regulatory Commission (CBRC). The growth rate was the lowest since 2003, when the CBRC first started revealing such data.

Banking assets mainly refer to ­financial institutions’ lending assets. Meanwhile, total liabilities reached 137.9 trillion yuan.

Beijing says US should stop new dumping probe on solar cells | South China Morning Post China’s commerce ministry called on the United States on Sunday to stop anti-dumping investigations into imports of solar power products from China, expressing “serious concern” and vowing to defend its producers.

“The Chinese side expresses serious concern,” the commerce ministry said in a statement on its website. “China urges the United States again to carefully handle the current … investigations, be prudent in taking measures and terminate the investigation proceedings.”

Life Insurance in China, Key Trends and Opportunities to 2017 – PR Newswire – The Sacramento Bee The report provides in depth market analysis, information and insights into the Chinese life insurance segment, including: • Benchmarking analysis of the BRICS (Brazil, Russia, India, China and South Africa) countries • The Chinese life insurance segment’s growth prospects by life insurance categories and customer segments • The various distribution channels in the Chinese life insurance segment • The competitive landscape in the Chinese life insurance segment • A description of the life reinsurance segment in China • Detailed analysis of the regulatory framework in China

Oil Companies Using New Logic in Their Overseas Acquisitions – Among mergers and acquisitions of global upstream oil and gas assets over the past few years, one trend has seen European and American companies selling while national oil companies in China and Russia have been buying.

“In 2013, global M&A transactions of upstream oil and gas assets were the lowest since 2008,” said a January report by IHS, an energy consultancy. The report said that from 2010 to 2012, global M&A transactions of upstream assets totaled US$ 600 billion, with 2012 the highest in a decade, at US$ 250 billion. But this fell to US$ 136 billion in 2013.

Capital’s Expensive Plan to Fight Air Pollution Misguided, Expert Says – However, Tao Guangyuan, executive director of the Sino-German Renewable Energy Cooperation Center, said that while the sum shows determination, the government’s approach might be unnecessarily costly. (The center is supported by the governments of China and Germany.)

Much of the 760 billion yuan will go toward converting coal-burning power plants into ones that burn natural gas. Tao says the government will need to invest heavily in equipment and production facilities, but doing this will also create a long-term financial burden because gas is more expensive than coal.

Selling products and Services into China The big issue today is not so much how to make product in China, but how to sell product and services to China, be that within China or from outside China. Needless to say, the “within China” part is where the complicated legal regulations and hence the tensions can arise.

China’s guarantee companies face survival problems amid slowing economy|WantChinaTimes.com Since the second half of 2011, the government’s four trillion stimulus policy began to ebb, followed with a tightening monetary policy and the implementation of macro-economic control. Bad debt from soft government funds exploded from small and medium-sized enterprises, leading to rising pressure on guarantee companies.

Reforms to fuel Shanghai’s growth in 2014 – Xinhua | English.news.cn Economists believe the city’s financial sector is going to grow even more this year, while Shanghai Mayor Yang Xiong estimates the city economy will grow by 7.5 percent. A series of reforms in the landmark Shanghai Free Trade Zone, including changes to capital accounts and interest rates, are expected to add new sources of growth to the financial sector.

Talent returns to China, but progress slow – Business – Chinadaily.com.cn A report on returned overseas talent compiled by Wang found that more than 270,000 people came back in 2012, an increase of 46 percent over 2011, adding that rapid economic development in China is one of the major attractions.

Of those who returned, more than 30 percent took jobs or started a business in areas such as new materials, energy, biotechnology and electronic information.

8.8% salary hikes expected for 2014 – Chinadaily.com.cn Salary increases are expected to hit 8.8 percent in 2014, a slight rise on the 8.6 percent for 2013, according to a survey issued by 51job.com, a human resources service provider.

It found that the highest salary increases occurred in the financial sector, reaching 10.4 percent, followed by real estate (10.1 percent), high tech (9.9 percent) and bio-pharmaceuticals (9.2 percent).

Li reaffirms commitment to social welfare system[1]- Chinadaily.com.cn During his visit, the premier highlighted the importance of social relief work and urged the governments to do a better job in providing basic welfare to disadvantaged people.

“The government has to tighten up the network of social security. A welfare system must be in place for the poor to fall back on if they encounter difficulties,” he said. “Otherwise, these disadvantaged people can easily impact the bottom line of society.”

Hong Kong export growth misses forecast | South China Morning Post The growth, which lagged economists’ forecasts of a rise of 4 to 5 per cent, underscored a weak economic recovery in the United States and disappointing demand in Europe in the wake of the 2008 global financial crisis, they said.

However, some economists expected better prospects this year on the back of recent strength in the US recovery while Europe’s turmoil hit its bottom.

China probes death of official who liquored up at lavish banquet | Reuters **”negative social impact” is my new favourite euphemism** The Central Commission for Discipline Inspection is investigating Chen Ruixi, deputy mayor of the small city of Sanming in coastal Fujian province, who attended the banquet, as well as his colleagues.

One official died suddenly after the feast, held at the canteen of a private company, the agency said, adding that the event had made a “negative social impact”.

COMPANIES

Citic’s bad loan writeoff a sign of strain in China’s mid-sized banks | South China Morning Post China Citic Bank’s shareholders have agreed for the bank to more than double bad-loan writeoffs for last year, the latest sign of how much China’s economic slowdown is costing the country’s mid-sized banks.

At a meeting in Beijing yesterday, shareholders signed off as expected on management’s plan to write off 5.2 billion yuan (HK$6.6 billion) in non-performing assets, Citic said in a Hong Kong stock exchange filing. The bank originally budgeted for two billion yuan in writeoffs.

Lenovo expands into internet service marketWantChinaTimes.com The Lenovo Group, one of the world’s largest PC suppliers, is placing putting more emphasis on catering to internet services in a bid to become more competitive, reports Shanghai-based First Financial Daily.

Instead of focusing on only hardware production, the company is shifting towards an operational style that will also values software capabilities and offering customized internet services.

Mobile Tourism Service Yikuaiqu Nets Millions of Dollars in Series A Financing Yikuaiqu, a tourism app, announced that it has raised millions of dollars in Series A financing led by Shenzhen Hight-tech Investment and followed by Shenzhen Capital Group, etc. The company has secured millions of yuan of angel investment in 2012. The capital will be used in research and development of its travel applications for scenic spots, said Liang Jiankun, CTO of the company.

Suning Commerce Fully Acquires Group-purchasing Site Manzuo with Nearly 10 Million Dollars Suning Commerce (SZ:002024) announced that it fully acquired group-buying site Manzuo for nearly $10 million (source in Chinese), continuing its expansion into Internet industry after becoming the largest shareholder of peer-to-peer video streaming service PPTV last year.

In addition to maintaining independent operation, Manzuo will also take over the group-buying and travelling businesses under Suning. Feng Xiaohai, founder of Manzuo, will be named as the head of Suning’s local life sector. The acquisition procedure will be completed by the end of this March.

Alibaba unveils its three games for Laiwang and Taobao The games are available on two of Alibaba’s mobile apps. Users who update Laiwang, Alibaba’s social messaging app, to the new 4.5 version, will notice a new tab under the “Explore” page with a castle icon. Pressing the tab takes users to the app’s new game center, which currently features two titles.

Not unexpectedly, all three titles fit firmly in the “casual” genre, which have proven to be popular among game developers looking to reach broad audiences, and social networks looking to keep up user retention. Of the games on Laiwang, “Pa Pa Pa” bears a resemblence to Line’s Bubble Pop, while “Po Po Po” recalls Simon. Taobao’s “Crazy Toy,” meanwhile, has many of the trappings of King’s Candy Crush Saga.

China Mobile Ltd. (ADR) (CHL): China Mobile Shakes Up Fixed-Line Broadband – Seeking Alpha A welcome development looks set to shake up China’s fixed-line broadband sector this year, with word that leading wireless carrier China Mobile (HKEx: 941; NYSE: CHL) is offering aggressive pricing after receiving a license to offer fixed-line service late last year.

After-school Tutoring Service TAL Education Injects 150 Million Yuan in Childcare Portal Babytree TAL Education (NYSE:XRS), a K-12 after-school tutoring services provider formerly known as Xueersi, announced today it will inject 150 million yuan ($24.79 million) of strategic investment in childcare portal Babytree. Babytree has secured a combined $20 million of investments in previous rounds.

The acquisition of Babytree will help TAL to include pre-school children into its target customers. TAL has acquired education site Kaoyan.com for 50 million yuan last year.

Flying the flag for Chinese cars – Xinhua | English.news.cn Chinese carmaker Hong Qi, or Red Flag, is pressing to have its brand move into the mainstream here in China after years of supplying vehicles to the Chinese government.

Six months ago, Red Flag opened this showroom in Beijing’s exclusive Jinbaojie Street, which makes them almost neighbours with other top name carmakers such as Ferrari and Maserati. So what makes Red Flag Sales Manager Wang Rui Chao believe customers will come to his showroom and not theirs?

Drilling services provider COSL expects deep-water revenue boost | South China Morning Post China Oilfield Services (COSL), the mainland’s dominant provider of offshore drilling services, expects more work and a greater contribution from more capital-intensive deep-water jobs will lift revenues this year.

However, the company warned that the subdued outlook for oil prices will constrain the upside for drilling rates.

China’s Tencent WeChat App Targets U.S. Users – China Real Time Report – WSJ The fast-growing smartphone messaging application is now trying to expand in the U.S. market with a newly launched promotional campaign.

According to WeChat’s Chinese website, here’s how the new promotion works: Tencent is asking people who hold Google accounts to connect their accounts with WeChat, so they can invite their Google contacts to join WeChat. People can win a $25 Restaurant.com gift card from Tencent by getting five of their Google contacts to join WeChat.

Tencent Fully Acquires Map Service Linktech Navi with 60 Million Yuan Chinese Internet giant Tencent continues its acquisition spree this year by pouring 60 million yuan ($9.92 million) of funding in Beijing-based mapping service Linktech Navi for a 100% stake in the company (source in Chinese).

Founded in 2001, Linktech Navi is accredited with the state Grade-A qualification on surveying and mapping. The company’s main businesses are digital maps, navigation system, GPS vehicle monitoring solution, LBS application solution, etc. Linktech Navi’s customers include automobile manufacturers, like Chery, Shac, and Hawtai Motor, navigation services, telecos, among others.

Closer Look: Developers Build Banking Ties with Stake Purchases – Hong Kong-listed Evergrande Real Estate Group expanded into banking by acquiring a 4.5 percent stake in Beijing-based Huaxia Bank for 3.3 billion yuan last week.

A source close to the property developer said the purchase is a strategic investment. Huaxia has a strong balance sheet that can improve Evergrande’s financials. It may help Evergrande finance at a lower cost, he said.

BRIEF-China Life Insurance expects 2013 net profit up 120 pct on investment gains | Reuters China Life Insurance Co Ltd

* Says expects 2013 net profit up 120 percent y/y versus net profit of 11.1 billion yuan ($1.8 billion) previous year

Source text in Chinese: link.reuters.com/wac46v

BRIEF-Ping An Insurance 2013 premium income totalled 268.7 bln yuan | Reuters Ping An Insurance Group Co of China Ltd

* Says 2013 premium income totalled 268.7 billion yuan ($44.4 billion)

Source text in Chinese: link.reuters.com/seb95v

allAfrica.com: Ethiopia: Halfway Point Reached in Inner-City Rail Project (Page 1 of 2) While China Railway Group Limited (CREG) won the contract for the construction of the lines, it was the Metal & Engineering Corporation (MetEC) that was charged with supplying the tracks and the trains to transport passengers. Once complete, the tracks will be of standard size (1.435m wide) double track for the whole route.

LNG import: SSGC, ECC likely to award $1.4b contract today – The Express Tribune EVTL had submitted the offer for LNG services in partnership with China Harbour Engineering Company, a subsidiary of China Communications Construction Company, which has been blacklisted by the World Bank until January 2017.

However, the government cleared the company, saying that the project was not being funded by the World Bank, therefore, EVTL could not be disqualified. However, “a question arises why such clause was made part of the tender when it could not be implemented,” an official asked.

SKAI Holdings secures AED737.6m (USD201m) of financing from China’s ICBC for its Viceroy Dubai Palm Jumeirah projectReal Estate – Zawya SKAI Holdings, the Dubai-based real estate investment company, today announced it has secured AED737.6m (US$201m) of financing for its AED3.75bn Viceroy Dubai Palm Jumeirah, ensuring the project is fully funded.

The financing agreement, which further reaffirms SKAI Holdings commitment to the UAE’s hospitality sector, was arranged by the Industrial and Commercial Bank of China (ICBC), China’s largest bank, marking its first project financing deal for a hospitality project in the Middle East.

BRIEF-China’s Jiugui Liquor says police investigating theft, financial impact uncertain | Reuters China’s Jiugui Liquor Co Ltd

* Says police investigating 100 million yuan ($16.53 million)stolen from its account with Agricultural Bank of China’s Hangzhou Branch, financial impact of the theft still uncertain

Chinese Pork Supplier WH Group Said to Apply for $6b IPO – Bloomberg WH Group Ltd., the Chinese company that bought the world’s biggest pork supplier last year, applied to the Hong Kong stock exchange for an initial public offering, said two people with knowledge of the matter.

The company plans to seek as much as $6 billion from the offering in the first half, the people said yesterday, asking not to be identified as the information is private. WH Group changed its name from Shuanghui International Holdings Ltd. this month.

The WSJ Weekend Interview with Erik Prince: Out of Blackwater and Into China – WSJ.com Now, sitting in a boardroom above Hong Kong’s Victoria Harbour, he explains his newest title, acquired this month: chairman of Frontier Services Group, an Africa-focused security and logistics company with intimate ties to China’s largest state-owned conglomerate, Citic Group. Beijing has titanic ambitions to tap Africa’s resources—including $1 trillion in planned spending on roads, railways and airports by 2025—and Mr. Prince wants in.

Nicaragua canal fast-tracked with Chinese boost The Chinese company, HK Nicaragua Canal Development Investment Co. Ltd., is working with the Nicaraguan government on a massive canal project experts say could take 11 years to finish, cost $40 billion and require digging about 130 miles (200 kilometers) of waterway.

Just as the Panama Canal was a projection of growing U.S. power at the start of the 20th century, the Nicaragua project already reflects China’s influence and financial clout around the world. Another Hong Kong-based company has been operating port facilities on both ends of the Panama Canal.

ICBC Chief: China’s Shadow Banking Overblown – TheStreet Viewers of China’s state-run television Saturday heard the head of the Industrial and Commercial Bank of China say shadow-banking problems in the country have been overblown and “distorted.”

ICBC Chairman Jiang Jianqing, interviewed by CCTV television at the World Economic Forum in Davos, Switzerland, said “society has over-exaggerated and completely distorted the severity of shadow banking” in China.

I did not disown rail deal – AG | The Star Githu further discounted claims that his office’s endorsement of the commercial agreement signed between Kenya Railways and the China Road Corporation was also an approval of the tendering process. He said the SGR the logic of the financing agreement had “the making of a closed tender”.

Posted from Diigo.

China Business Briefs 25/1/14

ECONOMY

Big Four firms, China in talks over corporate audit impasse: KPMG | Reuters In the midst of a U.S.-China quarrel over corporate auditing, the global chairman of audit giant KPMG said on Friday that a “constructive dialogue” was under way to defuse the dispute, which led days ago to U.S. sanctions against the Chinese arms of the world’s largest accounting firms

“We are in dialogue with the Ministry of Finance in China on the matter,” KPMG KPMG.UL Chairman Michael Andrew told the Reuters Global Markets Forum, an online community, in Davos, Switzerland, during the World Economic Forum meetings.

What’s Next for Big Four Audit Firms in China? – China Real Time Report – WSJ Still, despite the expected delay, accounting experts said the ruling was another step down the road toward a final reckoning with a broader, fundamental dispute: The U.S. wants to regulate and investigate China-based companies that trade on U.S. markets, but China has put up roadblocks to those efforts, especially with regard to the China-based audit firms that those companies use, including affiliates of the Big Four – PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG and Ernst & Young.

Local govts start releasing audit results[1]- Chinadaily.com.cn China has increased the transparency of its massive local government debt by allowing local governments to release independent reports on their liabilities, a move that analysts said showed Beijing‘s increasing seriousness in dealing with the issue.

As of late Thursday, several provincial-level governments had released audit reports, including Guangdong, Guangxi, Ningxia Hui autonumous region, Beijing, Jilin and Zhejiang.

The mystery of China’s fading inflation, explained – Quartz Where economists disagree is on what a slowing inflation rate does say about China’s money supply. Slate’s Matthew Yglesias argued that something “people are missing about the China slowdown is that monetary policy keeps getting tighter.” Patrick Chovanec, an economist at Silvercrest Asset Management, takes the opposite position. ”Every time the CPI rate looks moderate, people say [China has] more room for monetary easing to boost the economy,” he tells Quartz. “[But] monetary policy is already horrendously loose in China.” Michael Pettis, a finance professor at Peking University, concurs: CPI “is not the appropriate measure by which to gauge domestic monetary conditions.”

China Bank Regulator Said to Issue Alert on Coal Loans – Bloomberg China’s banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry, said two people with knowledge of the matter, signaling government concern about possible defaults.

The China Banking Regulatory Commission also told its local branches to closely monitor risks from trust and wealth-management products, said the people, who asked not to be identified as the matter isn’t public. The commission issues such alerts for matters that it judges may pose significant risks to banks, the people said.

China Trust Products Gone Awry Evoke Soros Crisis Echoes – Bloomberg The story of how a 3 billion-yuan ($496 million) Chinese trust investment wound up on the brink of default shows what billionaire investor George Soros has called the “eerie resemblances” between the 2008 global financial crisis and the nation’s debt market.

Banks in Asia need to go digital to keep customers says McKinseyWantChinaTimes.com The number of digital banking consumers in Asia will reach 1.7 billion by 2020, with China, India, and ASEAN seeing the biggest gains, said a new report by global management consultants McKinsey & Company.

The report showed that in China, the number of digital banking consumers will leap from 380 million in 2012 to 900 million in 2020.

China ‘can weather QE challenge’ – Chinadaily.com.cn Although the United States’ tapering of quantitative easing this year will pose a “significant challenge”, China is capable of withstanding the change, according to a Chinese financial official.

Guan Tao, the State Administration of Foreign Exchange official in charge of balance of payments, said the ending of quantitative easing would even be seen as a good thing.

Infographic: China Tech 2013 Year in Review Infographic: China Tech 2013 Year in Review

China to tackle film fraud following hidden box office returns | Film | theguardian.com China‘s media regulator is to bring in a series of measures to tackle fraud in cinemas, as film revenues there could have been hugely underestimated.

Illegal software is used to report cinema takings that are lower than the actual figure, to avoid paying film tax and fees to distributors, Variety reports. Meanwhile tickets are sold for one film and then a ticket for another written out by hand, so that cinemas meet quotas set for certain films – and deprive others of revenue.

China joins Davos drive to cut green trade barriers – FT.com China has joined the US, EU and Japan in a new push to lower tariffs and other trade barriers on the $1tn global annual market in green goods.

The move is intended to end a deadlock within the World Trade Organisation, where efforts to secure a deal on green goods have been caught up in the stalemate around the 12-year-old Doha round of negotiations.

Scottish cloth exports to China set for record high – FT.com Estimates from HM Revenue & Customs indicate that exports of textiles from Scotland to China are about to hit a record high, after sales in the first nine months in 2013 reached nearly £9.7m – outstripping the total for the previous year. Scotland sells more than two and a half times more textiles to China than it did a decade ago.

Another Look at China’s GDP Numbers – China Real Time Report – WSJ Did Thursday’s surprise fall in one of China’s purchasing manager indexes give you pause about the pace of Chinese economic growth? Some indices had already said that China’s economy was doing worse than advertised.

China Money Network − Private Equity Investors Pile Onto China’s Environmental Sector In 2013, private equity firms poured over $1.2 billion in companies related to the environment industry in China, accounting for 8.3% of the year’s total transaction volume, the highest percentage recorded for this sector, according to Asia Private Equity Review.

Building a Chinese floor under the market | China Economic Review Russian firm Uralkali OAO (URALL.LON, URKA.MCX) this week concluded a deal to sell 700,000 tons of potash, a compound most commonly used as a fertilizer, to Chinese National Agricultural Means of Production Group at US$305 a ton, 25% lower that the price it could have got under an existing deal with Belarus. Despite the lower price, the deal is a good one for analysts as it allows Uralkali to strengthen its position in the world’s largest potash market. The China price sets a floor for the global market,” said Elena Sakhnova, an equity analyst for VTB Capital.

China OKs nitrous dioxide carbon offsets | Business Spectator China will allow big emitters to use offset credits from nitrous dioxide (N2O) destruction to meet domestic climate targets, giving its nod to a type of project that has been banned in other carbon markets.

The National Development and Reform Commission (NDRC) published on Wednesday a list of more than 120 new types of projects eligible to earn carbon credits that can be sold to power generators and manufacturers facing emission caps under China’s fledgling carbon markets.

As Internet TV Grows Popular, Regulator Mulls Show of Force – Internet companies have shown they are ambitious about exploring the growing market, one that also involves appliance manufacturers, telecom operators and broadcasting companies. However, behind the excitement are some uncertainties because regulators are mulling gradually tightening controls.

In mid-December, the State Administration of Press, Publication, Radio, Film and Television, the country’s media watchdog, held a symposium on IPTV oversight with representatives from various industry players.

Record crude oil imports to China from Kazakhstan in 2013WantChinaTimes.com Oil imports hit a record high of 11.9 million tonnes in 2013 through the China-Kazakhstan Pipeline, up 14.1% year-on-year, according to the regional government.

COMPANIES

E-Investing Spurs Banks to Raise Interest Rates for Deposits Many big banks in the country have moved to offer the highest possible interest rates for deposits despite the central bank’s advice they not do this.

The lenders had to act because they were losing customers fast to the emerging league of high-yield money market funds offered by Internet companies such as Alibaba Group and Tencent Holdings, an executive at a large bank said.

China’s Wang Plans Up to $5 Billion Investment in U.K. Projects – Bloomberg Dalian Wanda Group, the property company owned by Chinese billionaire Wang Jianlin, plans to invest as much as 3 billion pounds ($5 billion) in U.K. developments after a meeting with British Prime Minister David Cameron aimed at bolstering trade.

Wang and Cameron announced the investment in Davos, Switzerland, according to a statement today. The main part of the 2 billion-pound to 3 billion-pound venture will be a cultural and travel development. The Chinese company didn’t provide details of the project.

Lenovo Agrees to Buy IBM’s Low-End Server Unit for US$ 2.3 Bln – Lenovo Group Ltd. is counting on a US$2.3 billion deal for International Business Machine Corp.’s (IBM) low-end server unit to generate US$ 5 billion in revenue every year, says Yang Yuanqing, CEO and chairman of the world’s second largest maker of personal computers.

Deutsche bank starts talks to sell gold fixing seat – sources – Yahoo Singapore Finance Deutsche Bank is talking with prospective buyers about selling its place in the global gold and silver price setting process, known as the “fix”, sources familiar with the situation said on Friday.

Bank of China (BoC) and Industrial and Commercial Bank of China (ICBC) have both already become members of the LBMA. ICBC is also about to complete the acquisition of the London commodity arm of Standard Bank (SBKJ.J), another member of the London Bullion Market Association.

KKR, BlackRock, funds in talks to buy stake in China Huarong: sources | Reuters KKR & Co and BlackRock Inc are among leading global investors in talks to buy a stake in China Huarong Asset Management Co Ltd as the bad debt manager seeks to raise more than $2 billion, people familiar with the matter told Reuters.

As China’s economy slows, a wave of loans is expected to turn sour. That will boost prospects for Huarong and the three other asset managers set up by the Chinese government in 1999 to remove an estimated 1.4 trillion yuan ($230 billion) worth of bad loans from the country’s top four state lenders.

Carmaker plans $2b Hong Kong IPO – BUSINESS – Globaltimes.cn Chinese carmaker BAIC Motor, part-owned by Daimler AG, plans to raise up to $2 billion in a Hong Kong initial public offering, hoisting its target as China’s auto industry purrs to solid growth.

Fueling BAIC Motor’s ambitions, the world’s biggest auto market is moving toward a second year of double-digit sales increases.

First Nations, Oil Industry Trade Business Cards Instead of Barbs – Canada Real Time – WSJ One of the issues looming largest is PetroChina Co. affiliate Brion Energy Corp.’s plans to expand production near an area the Fort McKay First Nation considers sacred. The development remains in limbo after a court ruling last fall paved the way for an appeal of the Alberta Energy Regulator’s approval of the controversial project.

Uganda set to sign pact with Tullow to allow for oil production – Yahoo Finance UK In a speech at a private function for Tullow late on Thursday and seen by Reuters on Friday, energy minister Irene Muloni said the government would shortly sign the memorandum of understanding (MoU) with Tullow and its partners, France’s Total and China’s CNOOC.

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