LightInTheBox

China Business Briefs 7/1/14

ECONOMY

Rural transformation underpins Chinese economy[1]- Chinadaily.com.cn China has long been a large agricultural nation, therefore the work concerning agriculture, countryside and farmers (the three rural issues) have always been the top priority of the Chinese government. The Central Rural Work Conference provided the first opportunity for the country’s new government to make plans for the three rural issues.

Besides ensuring domestic production of grain, the conference also made decisions about the position of agriculture, safety of farm produce, land rights, development of rural areas and raising farmers’ income.

Analysis: Cash crunch signals policy dilemma for China’s reformist central bank | Reuters China’s central bank looks set to risk another cash crunch at the end of January, barely a month after the last market squeeze, as policymakers press ahead with a crackdown on shadow financing and other risky bank lending.

Periodic cash squeezes as banks scramble for fresh funds highlight the policy dilemma the PBOC faces in 2014, as it pushes financial reforms to help rebalance the world’s second biggest economy away from the investment- and exports-led model that powered its rapid rise.

China’s Cabinet Drafts Shadow-Banking Plan – WSJ.com The plan, which was distributed to regulators by the State Council on Dec. 10 and hasn’t yet been made public, sets out to limit the growth in loans created outside formal channels for bank lending, according to a copy of the document reviewed by The Wall Street Journal. The framework calls for stronger oversight of such informal lending by the central bank and other regulators.

The plan falls short of launching a full-blown crackdown on the sector, suggesting the leadership’s preference for maintaining a key source of credit for the economy but one that has contributed to industrial overcapacity and high debt levels at local governments.

China’s reforms: The pain begins – Craig Stephen’s This Week in China – MarketWatch Despite 2014 beginning with some disappointing data as HSBC’s China services index slumped to 50.9 for December, it looks like authorities will be applying tough-love austerity rather than the usual pump-priming response.

Ashmore becomes first to gain access to invest directly in China – FT.com China has taken a significant step towards opening its multitrillion-dollar capital markets to the outside world by giving a western asset management group freedom to invest in its domestic stocks and bonds.

Ashmore Group has become the first group outside Hong Kong to announce it has been granted a licence to invest directly in China’s $3.4tn domestic equity market, which is quoted in renminbi and known as the A-share market, and its $4.7tn bond market.

Few Specifics Mean China Banks Could Stay in the Shadows – China Real Time Report – WSJ But equally important was what the State Council didn’t say: It made no mention of trying to sharply ratchet down China’s debt which since 2008, has grown to 216% of GDP from 128% and could climb to 271% by 2017 if not corrected, according to Fitch Ratings. Indeed, the framework regulation goes out of its way to call shadow banking is an “inevitable” result of financial innovation and has played an “active” role in serving the economy and broadening the investment channels for Chinese individuals.

Major Corruption Prosecutions up in 2013-Caijing China’s procuratorial authorities investigated 27,236 embezzlement and bribery cases between January and November last year, sentencing 36,907 people, the Supreme People’s Procuratorate said in a statement on Sunday.

Of those cases, 80 percent were considered major or important, which the top procuratorate defines as embezzlement and bribery cases involving more than 50,000 yuan ($8,270) or earmarking public funds over 100,000 yuan.

Sales of luxury goods decline substantially in China|Markets|Business|WantChinaTimes.com Luxury goods sales in China have dropped significantly after rapid growth over the past few years, with some noted fashion brands closing some of their stores in the country, according to Guangzhou’s 21st Century Business Herald.

According to Bain & Company statistics, luxury goods sales in mainland China slowed down in 2013 to a 2% growth rate, compared with the 7% annualized increase in 2012 and 30% in 2011. The consulting firm projected that the downtrend would continue in 2014.

Coking coal prices continue to work in steelmakers’ favour | Business Standard China, which remains relentless in raising steel production even while phasing out high-cost capacity, has to put greater reliance on imports of iron ore, since domestic supply is falling short of requirements of its steel mills. Production cost in many of the mines in China being double that in Australia and Brazil, the country is better off by importing than raising local production.

China destroys ivory stockpile in ‘significant symbolic step towards saving Africa’s elephants’ – Telegraph More than six metric tons of tusks, ivory ornaments and carvings were fed into   crushing machines by forestry and customs officials in southern Guangdong province, where much of China‘s ivory trade is focused.

Much of the ivory on the market in China is legal – bought from African governments selling off their stockpiles of seized tusks in 2008. But the continued demand also drives a trade in illicit ivory “laundered” with fake provenance certificates.

China adjusts measures in Shanghai FTZ – Xinhua | English.news.cn The State Council, or Cabinet, said in a statement that it decided to temporarily adjust measures in an effort to reform the country’s foreign investment management and open the service sector wider to overseas investors.

The government will also relax controls over foreign investment in fields covering international shipping, credit investigation, performance brokerage, entertainment, training and telecommunications within the zone.

Law cuts into guides’ earnings – Business – Chinadaily.com.cn The law took effect on Oct 1 and bans forced shopping during trips. Three months later, many tour guides are looking for new jobs, since much of their income came from the commissions they earned by herding tourists into shops.

Dell looks at China as source of innovation[1]- Chinadaily.com.cn Chinadaily.com.cn interviewed Amit Midha (President, Dell Asia Pacific and Japan Region) on Dec 19, 2013, in Xiamen, Fujian province. Midha talked about Dell’s strategy.

P2P firms in China dropping like flies|Markets|Business|WantChinaTimes.com The total transaction value of major P2P platforms in China reached 49 billion yuan (US$8.1 billion) in 2013, with an average interest rate reaching 23.24%, according to the report. Seventy four platforms had difficulty meeting the demand from cash withdrawals, mostly in the fourth quarter. The situation is gravest in Zhejiang province, where 17 P2P firms bit the dust in 2013, followed by Guangdong with 11 and Jiangsu with nine. December casualties fell to 10, compared with 30 in November and 18 in October.

China suspends ban on foreign video game console sales China’s State Council said it has temporarily lifted a ban on selling foreign video game consoles, paving the way for firms like Sony Corp, Microsoft Corp and Nintendo Co Ltd to enter a nearly $14 billion market.

The suspension of the 14-year-old ban permits “foreign-invested enterprises” to make games consoles within Shanghai’s free trade zone and sell them in China after inspection by cultural departments, the government said in a statement posted on its website on Monday.

China’s online video viewers watch for 5.7 billion hours every month (INFOGRAPHIC) This new infographic, put together by the Go-Globe team, shows just what a massive business it is. China now has 450 million online video viewers who collectively spend 5.7 billion hours per month watching stuff. There will be an estimated 700 million viewers by 2016. 76.3 percent of surveyed users say they prefer online videos over China’s very dour and propaganda-filled state television.

McKinsey Greater China – What might happen in China in 2014? It’s 2014, and Gordon Orr is back with his annual predictions for the coming year in China. In this podcast, he discusses some of his prognostications with Nick Leung and Guangyu Li. Gordon is a Director based in Shanghai. Guangyu is a Partner there. Nick is the Managing Partner of McKinsey’s Greater China Practice.

Cheap cash and speculation has never been tougher | China Economic Review Shadow bankers are no match for the central bank when it comes to throwing China’s financial system into a panic. Back-alley lenders have handed out a mere US$4 trillion in cash at exorbitant interest rates. No surprises here. The People’s Bank of China (PBOC), on the other hand, managed to send shock waves through the banking system and push markets into turmoil twice last year.

China 2013: A Year in Review with Shaun Rein | China Briefing News This week, China Briefing is featuring a series of specially-commissioned articles and interviews from prominent China-based writers regarding their thoughts on the key developments in the country during 2013, and what lies ahead in 2014. Today’s interview features Shaun Rein, author of “The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World” and managing director of the China Market Research Group.

Taiwan Rejects Bitcoin ATMs – China Real Time Report – WSJ The island’s financial regulator said Monday that physical teller machines for the virtual currency “will not appear” here, after Las Vegas-based RoboCoin, which makes bitcoin ATMs, reportedly said it had chosen Taiwan and Hong Kong as its first spots to expand in Asia.

China Auto Industry News | Chinese Manufacturers Rushing to Brazil | China Car Times – China Auto News Rapidly developing markets in South America, led by Brazil, are shaping up to be the new focus of investment in the future.

China Private Equity, M&A & Capital Markets, from China First Capital Think it’s easy to be a private equity boss in China, to keep your job and keep your LPs happy? It’s anything but.

COMPANIES

Report Says Death Of China Railway President May Be Linked To Anti-Corruption Campaign – Forbes The 21st Century Business Herald, citing anonymous sources working in China’s railway sector, said Bai’s death may be related to the ongoing anticorruption campaign that led to the downfall of Liu Zhijun, China’s former railway minister who was given a suspended death sentence in July for abuse of power and taking bribes. Under Liu’s tenure, China’s railway builders were mired in debt, waste and embezzlement. China Railway Construction Corp.Ltd., the country’s second largest infrastructure contractor, spent 837 million RMB ($135 million)on hospitality in 2012. A year earlier, the National Audit Office found officials embezzled 187 million RMB ($28 million) from just the Beijing-to-Shanghai portion of the high-speed railway project.

China Railway reassures after president’s death – BUSINESS – Globaltimes.cn China Railway Group Limited said Monday that the company’s debts and risks are under control, after its president committed suicide over the weekend allegedly because of the firm’s high debts, China News Service reported Monday.

The company had debt of 408 billion yuan ($67.41 billion), and assets worth 503 billion yuan by the end of September 2013, according to the company’s third-quarter earnings report.

China Mobile Probes, Unicom Meddles [China Mobile Ltd. (ADR), China Unicom (Hong Kong) Limited (ADR), China Telecom Corporation Limited (ADR)] – Seeking Alpha We’re just a week into the New Year, and already new signs of political shenanigans at the nation’s 2 leading wireless telcos, China Mobile (HKEx: 941; NYSE: CHL) and China Unicom (HKEx: 762; NYSE: CHU), are hinting at turbulence ahead as Beijing tries to liberalize the state-dominated telecoms services sector. Media are reporting that China Mobile has launched an internal probe into a botched initiative in Hong Kong, which looks to me like an extension of Beijing’s fast-expanding series of anti-corruption probes at major state-owned firms. In the meantime, media are reporting separately that a top Unicom executive has left the company to join one of the nation’s newly licensed virtual network operators (VNO), in a deal that looks aimed at undermining Beijing’s plans to inject new competition into the telecoms services sector.

Alipay apologizes for leak of personal info – Business – Chinadaily.com.cn The leak of information via the country’s largest third-party payment platform has sparked a public outcry over transaction security at a time when the Internet is soaring as a major shopping avenue

“The leaked data revealed only transaction information before 2010. They excluded sensitive information such as usernames or passwords, which were ciphered through a sophisticated method that is not available to anyone,” according to a statement by Alipay on Sunday.

Luring Beyonce Fashion Fans Spurs LightInTheBox Rally – Bloomberg LightInTheBox Holding Co. (LITB), a Chinese online retailer, surged 20 percent New York after saying it bought Seattle-based Ador Inc., a website that sells clothes and accessories similar to those worn by celebrities from Beyonce Knowles to Taylor Swift.

Telecom Deal by China’s ZTE, Huawei in Ethiopia Faces Criticism – WSJ.com The Ethiopian network’s glitches underline the broader troubles that sometimes face poorer nations as they borrow heavily to invest in telecommunications, roads, utilities and other infrastructure to help lift them out of poverty.

China’s financial firepower helps its firms win many of these contracts. But in agreeing to such deals, some governments appear to have flouted rules meant to foster sound public investment. When countries sidestep such rules, say experts at institutions such as the World Bank, big projects often cost more and are more likely to be poorly executed.

Ford Blows Past Toyota and Honda in China (F, TM) Ford China sold 935,813 vehicles last year, the company said in a statement. That was more than Toyota (NYSE: TM) and Honda (NYSE: HMC) , though it’s still a long way from the more than 3 million sold by the twin titans of China’s auto market, General Motors (NYSE: GM) and Volkswagen (NASDAQOTH: VLKAY) .

Was Tencent’s Unverified Non-Competition Agreement Illegal? | Bridge IP Law Commentary Abstract: many of Tencent’s non-competition contracts being reported online are false due to invalidity. If the contracts were true, one might wonder the intelligence and morality of Tencent’s managers and officers. These agreements are arrogant, domineering, selfish and ignorant of relevant laws. It is hard to imagine how these contracts could come from a listed company with billions of dollars. Additionally, Tencent could possibly pay large amounts of compensation to departing employees in order to fully comply with the relevant laws.

Buffett-Backed BYD Says Chinese Cars to Debut in U.S. – Bloomberg BYD plans to introduce about four models for its U.S. debut at the end of 2015, said Stella Li, the senior vice president in charge of the company’s U.S. business, in an interview last week in Shenzhen, China. Though BYD wasn’t ready when it earlier sought to enter the U.S. car market in 2010, the company is more prepared this time, she said.

Ctrip Reportedly Invests Over $100 Million in Overseas Travel Platform ToursForFun Chinese online travel giant Ctrip reportedly invested more than $100 million in overseas tourism service ToursForFun (report in Chinese). According to official website of ToursForFun, the company will become part of Ctrip’s North American branch, which was set up in last November.

Founded in 2006, ToursForFun is a thriving online travel supplier dedicated to providing online purchasing experience for all travel needs. It is focused on overseas tours and vacation packages in North America, Europe, Asia, Australia & New Zealand, and South & Central America.

Former Google China Head John Liu Joins Qihoo 360 John Liu, former vice president at Google Inc. and head of Google China, has joined Qihoo 360 as Chief Business Officer.

Dr. Liu left Google China in July 2013 after six-year stay there. He was the successor to the former Google China chief Kaifu Lee, founder of VC firm Innovation Works.

China Greenland to Invest $2 Billion in London Developments – Bloomberg The state-owned company, which is investing in the U.K. for the first time, will sign an agreement with Minerva Ltd. today to acquire the Ram Brewery site in Wandsworth in southwest London, the two firms said in an e-mailed statement. The completed development will be valued at 600 million pounds, according to the statement. The purchase price wasn’t disclosed.

Schindler Holding Ltd : Press release: Schindler to equip China’s tallest building | 4-Traders Schindler China, the Chinese division of the Schindler Group, has been awarded a major contract for a 115-story megatall skyscraper currently under construction in Shenzhen, Guangdong province.

When complete, Shenzhen’s Ping An Finance Center will include office and retail space and stand 660 meters high, making it the tallest building in China. The structure will feature Schindler’s 7000 high-rise series elevators and Schindler’s cutting-edge PORT transit management technology.

DailyNews Online Edition – Passers-by bother bridge builders CONSTRUCTION of the 680- metre Kigamboni Bridge has been extended to July 2015 following a number of unforeseen challenges that afflict the project.

The project, which is financed by the National Social Security Fund (NSSF), is carried out by the China Major Bridge Engineering Company and China Railway Jiangchang Engineering (Tanzania) Limited as well as Arab Consulting Engineers.

AMEC plc : AMEC to hire 150 for China contract | 4-Traders ENGINEERING company AMEC estimates it will need to hire another 150 workers after being appointed by China’s state-owned CNOOC to provide services for its substantial North Sea oil and gas interests.

The firm has been hired by Nexen Petroleum UK, which has been a subsidiary of CNOOC since the $15 billion (pound(s)9.1bn) acquisition of its Canadian parent in February.

10 Online Tourism Startups You Should Not Miss Chinese startup database ITjuzi recently released the newest round-up of online tourism services. In ITjuzi’s database, there are overall 337 startups fall into this vertical category, while 41 companies or 12.2% of the total have secured capital injections in the past year. Please read the Chinese report here.

Let’s take a look at the 10 must-visit tourism sites recommended by the database:

Chexim plans to issue up to 4 bln yuan dim sum bonds – Yahoo Finance The Export-Import Bank of China (Chexim) plans to issue up to 4 billion yuan ($660.99 million) of dim sum bonds in Hong Kong to institutional investors, kicking off a strong offshore yuan bond pipeline expected this year.

Uganda reviewing nine applications for oil production licences – Yahoo Finance UK In September last year Uganda awarded the first production licence to China’s CNOOC (HKSE: 0883.HKnews) for the Kingfisher (LSE: KGF.Lnews) discovery, which contains an estimated 635 million barrels of crude reserves, of which 196 million are recoverable. CNOOC plans to spend $2 billion to develop the field over a four-year period.

CHINA TELECOM to focus its efforts in five areas this YEAR | 4-Traders The first one would be assuring it to change the way it serves customers and expand fundamental services.

4G commercialisation would be accelerated by the company and it would toughen 4G and 3G and broadband service integration.

Deutsche Bank Initiates Coverage on China Life Insurance (LFC) | WKRB News Analysts at Deutsche Bank assumed coverage on shares of China Life Insurance (NYSE:LFC) in a research report issued to clients and investors on Monday, TheFlyOnTheWall.com reports. The firm set a “hold” rating on the stock.

China Mobile Ltd. : VWO, BZQ: Big ETF Outflows | 4-Traders Looking at units outstanding versus one week prior within the universe of ETFs covered at ETF Channel, the biggest outflow was seen in the Vanguard FTSE Emerging Markets ETF (VWO), where 9.2 million units were destroyed, or a 0.8% decrease week over week. Among the largest underlying components of VWO, in morning trading today China Mobile (CHL) is down about 0.3%.

Jeep Cherokee Pricing Revealed For China – $61,000USD to $76,000USD | China Car Times – China Auto News Jeep’s pricing for the New Cherokee was revealed earlier today, the base 2.4L model starts at 375,900RMB and rises to 459,900RMB for the top of the line 2.4L model, the flagship 3.2L pricing hasn’t yet been announced but it is expected to be in the 500,000RMB and rising area.

Posted from Diigo.

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China Business Briefs 4/1/14

ECONOMY

China’s credit spiral | FT Alphaville **Good read** Just when you think there’s nothing left to say about China’s debt dilemma up pop some more pieces to greet the new year. Two of the most recent saw Soros on the self-contradiction in Chinese policy boat saying that “restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years” and Patrick Chovanec providing a touch more detail about what all that messy debt actually means:

China is No. 1 risk for world economy: George Soros – The Tell – MarketWatch The People’s Bank of China moved to rein in debt in 2012, but then the world’s No. 2 economy experienced “real distress,” Soros writes. So China’s Communist Party reasserted its supremacy, ordering steelmakers to restart their furnaces and bankers to ease credit.

China’s economy turned around, and party leaders also announced major reforms in November. “These developments are largely responsible for the recent improvement in the global outlook,” Soros says.

China may raise Iran oil imports with new contract: sources – Tehran Times Industry sources say Chinese state-trader Zhuhai Zhenrong Corp, which was sanctioned by Washington in early 2012 for supplying gasoline to Iran, is in talks with the National Iranian Oil Company (NIOC) for a new contract for condensate.

Zhenrong, an affiliate of China’s defense authorities in the 1990s, acts largely as an import agent for China Petroleum and Chemical Corp, or Sinopec, whose refineries process Iranian crude.

Investors clamoring for high-yield funds in China|Finance|Business|WantChinaTimes.com **Ponzi** Financial products touted as highly profitable and risk-free, which were launched by internet giants and fund management firms, have soared in popularity recently.

Five hundred million yuan’s worth (US$83 million) of money management products called “Tianjin” unveiled by Chinese internet company NetEase were sold within an hour on Dec. 25. The product promised yields of 11%.

Policymakers can’t turn blind eye to debt dangers – BUSINESS – Globaltimes.cn **Global Times shifts blame to “alarmist” reports, no doubt from foreign media** Though the results of these two previous audits also suggested that China’s debt risk is manageable, their lack of granularity only created new worries and concerns. Fear of the unknown led many investors and think tanks to adopt increasingly alarmist views concerning the country’s debt risk. By the beginning of 2013, many even believed that a Chinese financial crisis was imminent. At the very least, the local credit situation was acknowledged as untenable and counterproductive to the financial health of China.

China pledges further support for solar industry | Reuters China pledged further support for its ailing solar power industry on Saturday as the government seeks to revive a sector struggling with overcapacity and falling prices.

The State Council, China’s cabinet, said in July that the country aimed to more than quadruple solar power generating capacity to 35 gigawatts by 2015 in an apparent bid to ease a glut in the domestic solar power industry.

China set to overtake US as world’s biggest goods trader |Economy |chinadaily.com.cn The value of trade in China’s goods in 2013 is set to exceed that of the United States, making the world’s second-largest economy the world’s top trader for the first time, certainly in modern times.

“Judging from the current statistics, there is a very high possibility that the value of China’s goods trade will have exceeded the US in 2013,” said Wang Haifeng, a researcher with the Institute for International Economic Research at the National Development and Reform Commission.

IPO rules overhauled for PE and VC firms — China Daily Article | China Private Equity Chinese PE and VC companies used to evaluate the companies by the standards of the China Securities Regulatory Commission for quicker IPOs, but now the market will play a more important role, said Peter Fuhrman, chairman, founder and chief executive officer at China First Capital.

“Under the new IPO system, the share pricing of an IPO company is decided by its strength and competitiveness, so investors will choose companies with real potential to invest in and provide them with the resources of strategy, management and market development to make their own return the best,” said Fuhrman *.

Panel to push financial reform in FTZ |Economy |chinadaily.com.cn Financial reform in the China (Shanghai) Pilot Free Trade Zone will shift into higher gear and detailed policies may be issued by the end of next month, following the establishment of a high-level panel.

The special group has been established to coordinate and advance the affairs of financial reform in the 28 sq km test zone, China Business News reported, citing an unidentified source connected to the financial authorities in Shanghai.

Currency tax under consideration: SAFE |Economy |chinadaily.com.cn Yi Gang, head of the State Administration of Foreign Exchange, made the comments in an article in the Communist Party journal Qiushi.

Yi wrote that a Tobin tax, a tax on all spot foreign currency transactions that’s named after Nobel economist James Tobin, should be “studied in depth”.

China Signs over CNY1 Tln Currency Swap Agreements in 2013-Caijing China’s central bank signed CNY1.16trillion currency swap agreements with eight countries in 2013 to promote bilateral trade and investment in a broader area, according to Great Wisdom, a Shanghai-based financial information provider.

The eight countries or regions include Singapore, Brazil, England, Hungary, Albania, Iceland, Indonesia and Europe.

As a supplement to the country’s RMB going-out policy, the People’s Bank of China (PBoC) has reached currency swap agreements totaling CNY2.5 trillion with 23 foreign central banks since 2008.

China Moves to Tighten Rare-Earths Control, Pave Way for Consolidation – WSJ.com China is moving to tighten control over its far-flung rare-earths industry, paving the way for state-backed mining giants to acquire smaller producers and carry out Beijing’s consolidation mandate.

The central government faces increased urgency to corral an unruly industry. Beijing is under pressure from the World Trade Organization to give up its rare-earths export quota, a key tool for influencing global prices.

A Look Back at China Tech Market in 2013 2013 is quite a year for China tech industry. TechNode reporters produced a series of articles about China tech market in the past year. Here are what we believe you should know about.

Public holidays in China | McKinsey China **Would be** It would be a further sign of a maturing of the Chinese economy and of growth in services industries, which lend themselves to more flexible vacation schedules, if the government shifted its focus from mandating public holidays towards increasing the mandatory minimum vacation dates that employers must provide, and then spend its time ensuring that regulations are adhered to. For manufacturing enterprises, there could be a shift towards the model previously used in Europe of staggering some of the vacation periods, with companies in one region having mandated vacation periods that do not overlap with those in an adjacent region or city.

Hangzhou to invest US$1.7bn in Qiandao lake water diversion project|Markets|Business|WantChinaTimes.com Hangzhou plans to start the construction of a reservoir off Qiandao lake in 2014 and finish 60% of the 10 billion yuan (US$1.7 billion) investment in three years, which will deliver drinking water to residents of Hangzhou after the construction is complete, according to Zhou Dingyan, the head of the city’s Forest and Water Bureau, said.

Local authorities have been unable to discover the reason behind the “strange taste in the tap water,” reported four times since March 2013. A Hangzhou government official pointed out that Hangzhou’s ability to handle polluted drinking water is inadequate because a safe water supply network has yet to be established.

COMPANIES

Alibaba investment fund China’s largest|Finance|Business|WantChinaTimes.com An investment fund backed by China’s e-commerce giant Alibaba has become the country’s largest, with the business model built around its third-party payment service Alipay being seen as an incredible success, the Shanghai-based China Business News reports.

The size of the currency fund Tianhong Zenglibao reached 185.3 billion yuan (US$30.62 billion) at the end of 2013, making it the largest in China and making Tianhong Asset Management the second largest fund company in the country.

Tech in China 2013: High Hopes of Disrupting Domestic Financial Market Yuebao is a mutual fund tailored to Alipay users. Launched in mid-2013, 43.03 million Alipay users adopted it in half a year since its launch. A total of RMB185.3 billion ($30 bn), an average of RMB 4307 ($700)  per user account, were transferred into Yuebao that generated RMB1.70 billion in total return in half a year, disclosed Alipay, the online payments service of Alibaba Group.

Tech in China 2013: The Call from Overseas We discussed on why increasingly more Chinese tech companies test the water of overseas markets. In 2013, they must feel more encouraging as there were several more successful cases. Sungy Mobile, an Android launcher and app developer with 70% users from overseas, went public on the NASDAQ. Another Chinese company that launched IPO in the US in 2013, online retailer LightIntheBox, has a majority of orders from outside China. IGG, an online gaming company that went public in Hong Kong, isn’t known as a Chinese company in many markets. Keyboard app TouchPal announced 100 million users, most being overseas.

Wal-Mart’s Reputation Takes a Hit From China Donkey Meat Scandal (WMT) **WalMart in China is still poor. Logistics problems inhibit quality supermarket sector** For a country in which food quality is already suspect, it’s probably not much of a surprise that China is suffering though yet another bout of tainted goods. The fact that it involves Wal-Mart (NYSE: WMT  ) , however, which takes care to preserve its reputation as a quality retailer, could jeopardize the company’s expansion plans the

Is Apple’s China Mobile Deal a Dud? (AAPL, CHL) There are several reasons low pre-order estimates do not necessarily imply weak sales when the iPhone becomes available at China Mobile later this month. If Apple investors are patient, they are likely to be rewarded with substantial share appreciation this year and beyond as Apple starts to exploit this big opportunity.

Why Ctrip.com International, Ltd., Arch Coal Inc., and Inovio Pharmaceuticals Inc Tumbled Today (ACI, CTRP, INO, PCLN) Ctrip dropped 8% as a Bloomberg report detailed the heightened competition that the online travel company could see in the near future. With companies like newly public Qunar Cayman Islands saying that it saw record levels for bookings of air travel in late 2013, Ctrip is suddenly facing threats not just on the hotel side of its business, but also on airline ticketing. Yet, Ctrip still has its size advantage to use, and U.S. giant Priceline.com (NASDAQ: PCLN  ) has demonstrated the value of using its size to create other competitive advantages it has used to send its shares soaring.

Murdoch’s Fox Sells Star China Stake to Management Group – Bloomberg **China beats Murdoch. Not sure how to feel about that one…** China Media Capital and the management team of Star China, owner of three 24-hour Mandarin-language TV networks, are buying Fox’s 47 percent stake in the venture, the companies said yesterday in a statement. Terms weren’t disclosed.

China Shows Off Its Helicopters – China Real Time Report – WSJ But the biggest recent China helicopter story got less coverage: the maiden flight of a domestically designed medium-lift craft analysts are calling the Z-20, which lifted off from an unidentified snowy military base in the northeast late last month.

James Hardy, Asia-Pacific editor at IHS Jane’s Defence Weekly, said the Z-20 project appears to mark a particularly important advancement, both in terms of its domestic development and the type of lift it will provide.  “It fills a real gap,” said Mr. Hardy.

China Probes Vaccine Makers Amid Heightened Scrutiny – China Real Time Report – WSJ China’s food and drug regulators are coming down on the country’s largest makers of the hepatitis B vaccine, even after clearing the manufacturers as a potential cause of nine infant deaths.

The country’s food and drug watchdog halted vaccine production at Beijing Tiantan Biological Products Corp.600161.SH +6.59% , Shenzhen Kangtai Biological Products Co. and Dalian Hissen Bio-Pharm, citing a failure to meet new production quality, according to the official Xinhua News Agency. It didn’t elaborate on which quality requirements were unmet.

Who are Xiaomi’s 30 million MIUI users? (INFOGRAPHIC) Chinese phone-maker Xiaomi recently released an infographic covering some data points for MIUI, the company’s Android skin and ecosystem that comes pre-installed on all of its handsets.

Apple Inc. (AAPL): Impact On Apple If 2% – 4% Of China Mobile Customers Buy An iPhone – Seeking Alpha Conservative estimates for the amount of China Mobile (CHL) customers to buy an iPhone are approximately 2% for 2014. With the total China Mobile customer count at about 763 million as of the end of November 2013, this equates to approximately 15 million in iPhone sales. With the average price of an iPhone in China, currently at $525, Apple (AAPL) stands to gain about $7.9 billion in additional revenue from China Mobile in 2014.

Moody’s rates ICBC (Argentina)’s senior note issuance Moody’s Latin America assigned today a Ba3 global local currency debt  rating to ICBC (Argentina) S.A.’s (ICBC) expected issuance  of up to ARS 300 million, which will be due in 18 months under the  bank’s $250 million medium-term note program. At  the same time, Moody’s Latin America assigned a Aaa.ar national  scale local currency debt rating to the expected issuance.

Huawei Technology Co Ltd : Joint Project by Huawei and China Mobile Gets DatacenterDynamics Greater China 2013 Green Data Center Award | 4-Traders Huawei, a global information and communications technology (ICT) solutions provider, and China Mobile, a telecommunications service provider, jointly announced that the China Mobile – Huawei Warehouse IDC project, a collaboration between Huawei and a subsidiary of China Mobile, Heilongjiang Mobile, has won the DatacenterDynamics Greater China 2013 Award in the Green Data Center Category.

Singapore’s OCBC in exclusive talks to buy Wing Hang Bank – sources | 4-Traders Singapore’s Oversea-Chinese Banking Corp (OCBC) has begun exclusive talks to buy Hong Kong’s Wing Hang Bank in a deal that would value the family-run lender at about $5.3 billion, two people familiar with the matter told Reuters.

Reuters previously reported that the sale process had attracted interest from suitors including Agricultural Bank of China, Australia and New Zealand Banking Group and Singapore’s United Overseas Bank. But Wing Hang’s high price expectations prompted many to drop out of the auction.

BRIEF-ICBC says 65.69 pct of convertible bonds not converted into A-shares, appoints new senior exec VP | Reuters Industrial and Commercial Bank of China Ltd (ICBC)

* Says 65.69 percent of convertible bonds issued in August 2010 has not been converted into A-shares as of end-2013

* Says received regulatory approval to appoint Wang Jingdong as senior executive vice president

Posted from Diigo.

China Business Briefs 22/12/13

ECONOMY

China’s economy: The PBOC’s rough playground | The Economist As I mentioned in a previous post, China’s central bank has the power to keep interbank rates steady if it puts its mind to it. So, as Ting Lu of Merrill Lynch points out, any analysis of this week’s interbank strife has to answer two questions: First, why is liquidity tight? And second, why hasn’t the PBOC done enough to ease it?

Q&A: Cash crunch in China – FT.com **Good primer** At the end of Friday China’s central bank, the People’s Bank of China, responded to rising money market rates by announcing it had injected more liquidity into the system. But will that injection be enough to calm fears that China is set for a new cash crunch?

Worst Cash Crunch Since June Drives Chinese ADRs Slump – Bloomberg The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. dropped 0.2 percent to 103.75 yesterday for a weekly slide of 1.6 percent. The gauge’s two-week slump was the longest losing stretch in six months. Macau casino operator Melco Crown Entertainment Ltd. (MPEL) fell for a second day, trading at the widest discount to its Hong Kong stock in a month. NQ Mobile Inc. (NQ) dropped for a fourth week while LightInTheBox Holding Co. slid the most in a week.

Smartphone companies place bet on sports marketing |Companies |chinadaily.com.cn **This will also probably mean more hugely-overpriced friendlies in Beijing, Shanghai etc** As Huawei, Lenovo and ZTE Corp managed to become top-5 mobile phone vendors globally and now aspire to climb the pricing ladder and attract high-end users, they’re starting to build up their branding by using the power of sports stars.

Shenzhen-based Huawei, which has been paying more attention to the smartphone business in recent years, recently signed a sponsorship agreement with Italian football club AC Milan. The three-year deal allows Huawei to use AC Milan’s logo and images of its players for phone promotion activities.

Yuan to appreciate moderately in 2014 |Markets |chinadaily.com.cn **You don’t hear US Congress complaining about currency manipulation any more, amiright?** Deutsche Bank strategists forecast that the yuan will appreciate versus the US dollar by roughly 2-3 percent in 2014, and that renminbi cross-border trade settlement will increase by roughly 50 percent to 6 trillion yuan ($983 billion), or approximately 20 percent of China’s global trade volume.

“Looking to 2014, we expect yuan to continue to appreciate moderately, with the yuan/US dollar bilateral rate expected to rise to the level of 6,” said Zhu Haibin, China economist at J.P. Morgan,

Five Predictions: China’s Business Environment in 2014 – Silicon Hutong **Compare with Evan Osnos’ “ten stories to watch”** Futurism is alchemy in the best of circumstances, and nowhere more so than in the case of China. Nonetheless, if we extrapolate from current events, it appears that China has embarked on a course of commercial nationalism, if not outright mercantilism.

In the spirit of the season, then, we offer our five predictions for 2014:

China faces tough task to resolve housing deadlock |Industries |chinadaily.com.cn “The policy message indicated by authorities recently will bring profound changes to the real estate sector. We expect more targeted reform measures to fix the defects of previous policies,” said Chen Guoqiang, deputy head of the China Real Estate Society.

Processes that allow the market to play a major role are expected to be formed to replace administrative measures currently in place.

Hair-raising rabbit clip hits China’s fur trade |Industries |chinadaily.com.cn The bottom has fallen out of the market for Chinese rabbit fur since a video of fur harvesting appeared online, despite claims that the abuse was an extreme case.

The clip of a farmer ripping fur from an live rabbit precipitated a torrent of public outrage. Many fashion brands, including Calvin Klein, Topshop and H&M, have since refused to use rabbit fur from China in their designs, leaving the Chinese rabbit industry with a tremendous reduction in orders.

Cathay puts in US$7.5b order for Boeing jets | South China Morning Post Chief executive John Slosar has been pushing to retire the airline’s older 747-400 fleet and replace it with more fuel-efficient and modern aircraft as it competes with Emirates for the lucrative business traveller market.

China vs. Japan: Will Boeing’s New Submarine-Destroying Jet Get Battle Tested? (BA) **Is this article literally looking forward to miitary conflict just so we can see quality of Boeing’s hardware? Very bad taste** Japan and China are anything but friendly, but tensions escalated further following China’s recent declaration of a maritime air defense zone over the East China Sea. This move also increased tensions between China and the U.S., and Defense Secretary Chuck Hagel said the U.S. military wont adhere to the guidelines of the Chinese-described air-defense zone.

While this situation isn’t the best news, it has provided Boeing (NYSE: BA) with the opportunity to show off its new submarine-hunting P-8A Poseidon aircraft. Here’s what you need to know.

Ex-ICBC Credit Suisse duo readies China hedge fund as reforms lure investors | GlobalPost Two former portfolio managers of ICBC Credit Suisse Asset Management (International) have started their own hedge fund to invest in China in a sign that Beijing’s bold new reform agenda is drawing investors.

Genesis Capital Investment, founded by Kang Hao, the former head of investment for ICBC Credit Suisse Hong Kong and portfolio manager Jimmy Weng, will start trading by end of this month and aims to raise about $100 million next year.

Posted from Diigo.

China Financial Results 19/11/13 – LightInTheBox, Qunar, Trina Solar, Xueda Education, China Housing & Land, China Digital TV, China Xinyia Fashion

LightInTheBox Holding Co., Ltd. Reports Third Quarter 2013 Financial Results

  • Net revenues were $68.1 million, an increase of 33.4% from $51.1 million in the same quarter of 2012, primarily driven by an increase of 74.7% in total number of customers served in the third quarter of 2013.
  • Gross margin increased by 160 basis points to 43.9% from 42.3% in the same  quarter of 2012.
  • Adjusted operating loss (non-GAAP) was $2.5 million, compared to an  adjusted operating income of $0.4 million in the same quarter of 2012.
  • Net loss was $2.4 million, compared to a net loss of $1.0 million in the same quarter of 2012.
  • Adjusted net loss (non-GAAP) was $1.9 million, compared to an adjusted net loss of $0.2 million in the same quarter of 2012.
  • Revenue attributed to repeat customers increased 92.0% to $23.8 million from the same quarter of 2012.

Qunar Reports Unaudited Third Quarter 2013 Financial Results

  • Total revenues for the third quarter of 2013 were RMB241.1million (US$39.4  million), an increase of 57.5% year-on-year.
  • Mobile revenues for the third quarter of 2013 were RMB35.3 million (US$5.8 million), an increase of 386.0% year-on-year, representing 14.6% of total  revenues.
  • Total number of web and mobile users for the 12-month period ended  September 30, 2013 was 218.2 million and 46.7 million, compared to 173.8  million and 16.1 million, respectively, in the 12-month period ended  September 30, 2012.
  • Gross profit for the third quarter of 2013 was RMB191.4 million (US$31.3 million), an increase of 50.5% year-on-year and 39.0% quarter-on-quarter.
  • Operating loss for the third quarter of 2013 was RMB36.4 million (US$5.9 million), compared to RMB8.1 million in the corresponding period of 2012 and RMB29.7 million in the second quarter of 2013.

Trina Solar Announces Third Quarter 2013 Results

  • Net revenues were $548.4 million, an increase of 24.4% from the second  quarter of 2013
  • Gross profit was $83.4 million, an increase of 62.9% from the second  quarter of 2013
  • Gross margin was 15.2%, compared to 11.6% in the second quarter of 2013
  • Operating income was $6.0 million, compared to an operating loss of $23.9 million in the second quarter of 2013
  • Operating margin was 1.1%, compared to negative 5.4% in the second quarter  of 2013
  • Net income was $9.9 million, compared to a net loss of $33.7 million in  the second quarter of 2013
  • Earnings per fully diluted American Depositary Share (“ADS” and each ADS represents 50 of the Company’s ordinary shares) was $0.14, compared to loss per fully diluted ADS of $0.47 in the second quarter of 2013

Xueda Education Group Reports Third Quarter 2013 Financial Results

  • Total net revenues increased 14.2% to $79.4 million from $69.5 million.
  • Gross profit increased 74.3% to $23.2 million from $13.3 million.
  • Gross margin increased 1,000 basis points to 29.2% from 19.2%.
  • Net income attributable to Xueda Education Group increased to $1.2 million  from -$3.6 million.
  • Diluted net income attributable to Xueda Education Group per American  Depositary Share (“ADS”) was $0.02, compared to -$0.05.
  • Non-GAAP diluted net income attributable to Xueda Education Group per ADS was $0.04, compared to -$0.05.

China Housing & Land Development Inc. Announces Third Quarter 2013 Financial Results

  • Total revenue in the third quarter of 2013 was $24.8 million compared to  $57.8 million in the second quarter of 2013 and $28.7 million in the third  quarter of 2012.
  • Gross profit decreased to $4.9 million in the third quarter of 2013 compared to $17.6 million in the second quarter of 2013 and $6.5 million in the third quarter of 2012. Third quarter 2013 gross margin was 19.8%,  compared with 30.4% in the second quarter of 2013 and 22.5% in the third quarter of 2012.
  • Operating loss was $0.7 million in the third quarter of 2013 compared to operating income of $8.5 million in the second quarter of 2013, and operating income of $2.5 million in the third quarter of 2012.
  • Net loss attributable to the Company in the third quarter of 2013 was $0.8 million, or $0.02 per diluted share, compared to net income of $5.9 million, or $0.17 per diluted share, in the second quarter of 2013 and $1.6 million, or $0.04 per diluted share, in the third quarter of 2012.

China Xiniya Fashion Limited Reports 2013 Third Quarter Financial Results

  • Revenue during the third quarter of 2013 decreased 6.7% to RMB389.8 million, from RMB417.9 million in the third quarter of 2012; within the prior guidance range of (7)% to (2)%.
  • Gross margin was 29.7% in the third quarter of 2013 as compared to 34.5% in the third quarter of 2012.
  • Profit before taxation during the third quarter of 2013 decreased 88.4% to RMB8.7 million, from RMB74.8 million in the third quarter of 2012.
  • Net profit in the third quarter of 2013 decreased 89.4% to RMB6.0 million, from RMB56.4 million in the third quarter of 2012.
  • Earnings per ADS were $0.02 in the third quarter of 2013 as compared to $0.16 per ADS in the third quarter of 2012; within the prior guidance  range of $0.01 to $0.06 per ADS.
  • Xiniya’s network of authorized retailers had a net reduction of 23 retail outlets in the third quarter of 2013; consisting of 78 new retail outlets opened and 101 retail outlets closed. As of September 30, 2013 the total  number of authorized retail outlets was 1,635.

China Digital TV Announces Unaudited Third Quarter 2013 Results

  • Net revenues in the third quarter of 2013 were US$23.1 million, representing a 13.5% increase from the same period in 2012 and a 26.9% increase from the second quarter of 2013.
  • China Digital TV shipped approximately 4.76 million smart cards in the third quarter of 2013, compared to 3.84 million in the same period in 2012 and 3.58 million in the second quarter of 2013.
  • Gross margin in the third quarter of 2013 was 74.0%, compared to 75.8% in the same period in 2012 and 76.7% in the second quarter of 2013.
  • Diluted earnings per American depositary share (one ADS representing one ordinary share), or ADS, in the third quarter of 2013 were US$0.08, compared to net loss US$0.19 in the same period in 2012.

China Business Briefs 20/11/13

China’s central bank will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading limit, Governor Zhou Xiaochuan said, without giving a timeframe.

The daily range will be widened in an “orderly way” as China seeks to enhance the currency’s two-way flexibility, Zhou wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. The nation will phase out investment caps for both domestic and foreign investors, he added. A ceiling on deposit rates offered by local banks will be gradually removed as well, PBOC Deputy Governor Yi Gang wrote in the book.

China’s National Bureau of Statistics (NBS) plans to revise the current system of measuring the national economy in line with latest international standards, an NBS official said.

The new system will reckon spending on research and development as a form of fixed capital and calculate it into gross domestic product (GDP), NBS vice head Xu Xianchun said in an interview which was available at http://www.xinhuanet.com on Monday.

The ruling party has promised to turn the nation’s current approval-based  system of initial public offerings into a “registration-based” one which is  expected to end a year-long moratorium in the IPO market.

The surprising move will return power to the market as well as investors,  Xiao said Tuesday in a keynote speech at the Caijing Annual Conference 2014.

China’s service trade grew 13.4 percent year on year in the first nine months of 2013 to reach 390.5 billion US dollars, official data showed on Tuesday.According to the Ministry of Commerce, service exports rose 6.8 percent from the same period last year to 146.4 billion dollars, while imports surged 17.8 percent to 244.1 billion dollars.

China’s foreign direct investment in October went up 1.2 percent from a year earlier to $8.4 billion, the Ministry of Commerce said Tuesday.
The first 10 months of this year saw FDI inflow rise 5.8 percent year-on-year to $97 billion, the ministry said. But the number of new enterprises established by foreign investment declined 9.2 percent year-on-year to 18,184.
The GDP of Binhai New Area, a new growth hotspot near the Bohai Bay in north China, is expected to exceed 800 billion yuan (130 billion U.S. dollars) in 2013, a local official said Monday.
Rather than cutting them down to size, as liberals had hoped, President Xi Jinping instead enshrined their position at the commanding heights of the Chinese economy. The “public sector remains the important pillar of the economy”, the Communist party said in its statement published following last week’s plenum.
But that language is deceptive. Reforms in train in China amount to a significant, albeit indirect, challenge to state companies across a range of industries, chipping away at their privileges. The government does not want to eliminate them. Instead, it wants to make them more efficient and more profit-focused – in short, more like private companies.

So far, secondary market activity in Asia has been more of a gradual flow than a wave of deals. But the changing macroeconomic conditions are increasing pressure on GPs – and that could result in more opportunities, particularly in China. Asia’s largest and most attractive market is losing some of its shine, thanks to a sustained slowdown in annual GDP growth and a frozen IPO market that has left GPs holding assets that they need to exit.

“If you could do [secondaries] at this moment – wow,” says Peter Fuhrman, chairman and chief executive of China First Capital. “In this market, some LPs could sell out for 10 cents on the dollar.”

China’s asset bubble increasingly depends on financing from the shadow  banking system. The carry trade – borrowing dollar loans at low interest rates  offshore and converting the loans into yuan, either disguised as foreign direct  investment or export revenue, for lending at a high interest rate – has become a  significant source of funding in the shadow banking system. The recent surge of  land prices in big cities may be due to it.

The rising share of unstable financing for the country’s asset bubble  threatens a chaotic ending. If the bubble suffers a confidence crash or a  receding tide of liquidity, the unwinding of speculative holdings would be  chaotic, causing a hard landing.

Companies

The acquisition will provide Alibaba access to Umeng’s tools and data. At the moment, the analytics firm supports Android, iOS, and Windows platforms, and is being used in over 180,000 apps by over 60,000 developers. As Alibaba aspires to enhance its mobile portfolio, Umeng’s resources will give the tech giant yet another channel through which it can reach out to developers.
A senior manager of Aluminum Corp of China (Chalco), the country’s largest smelter of the lightweight metal, has become the latest in a series of high-level executives at central government-administered enterprises to be investigated by Beijing.
Vice-president Li Dongguang was under investigation “by relevant authorities for personal reasons”, Chalco said in a statement to Hong Kong’s stock exchange without elaborating. “The investigation has no relation whatsoever to the company,” it said, adding Li had tendered resignation from his post and that the resignation had no noticeable impact on its production.
The reasons for J.P. Morgan’s voluntary exit from the IPO just weeks before the Chinese bank’s expected debut on the Hong Kong Stock Exchange in December weren’t immediately clear. But it comes as the Wall Street bank grapples with several investigations by regulators, including one by the Securities and Exchange Commission and the Justice Department into its hiring of bankers connected to Chinese officials.
VANCOUVER, Nov 19 (Reuters) – China’s Sinopec Corp  is in serious talks on a site for a potential liquefied natural gas (LNG) export terminal in British Columbia, the province’s Minister of Natural Gas Development said on Tuesday.
LightInTheBox Holding Co. (LITB) plunged 23 percent, leading declines among Chinese stocks traded in New York, after the online discount retailer’s sales forecast trailed analyst estimates.

Chinese firms’ addiction to distressed global assets was back in the spotlight last week, with word that car maker Dongfeng Motor is nearing a deal to purchase struggling French automaker Peugeot. This pursuit of a global brand is consistent with Beijing’s call for Chinese firms to go global, and would certainly allow Dongfeng to quickly expand onto the world stage.

But the case marks yet the latest example of a Chinese firm pursuing a global brand fraught with problems, which could quite possibly represent a dead end for Dongfeng if Peugeout is forced to downsize or even close. To avoid such an outcome, Beijing should veto this deal on the grounds that Dongfeng stands to inherit major problems and incur big losses if the partnership goes forward.

In August, Tencent announced that it would out-do rivals Baidu and Qihoo 360 by offering 10 times as much free cloud storage as them. However, the product is so far available only in Chinese. To use it, you have to sign up for a Tencent QQ account and download the latest version of the Tencent Cloud (Weiyun) mobile app. Tencent starts you off with with 1TB of free space, which should be more than enough for most human beings, and increases that number as you fill the space. By contrast, Dropbox offers 2GB of free space and Google Drive offers 15GB. That’s chicken feed to Tencent.

Posted from Diigo.