PetroChina

China Business Briefs 24/4/14
Economy Finance Auto Energy Tech Property Agriculture Retail

Economy

Manufacturing remains weak[1]- Chinadaily.com.cn The preliminary reading was 48.3, compared with 48.0 in March. A reading below 50 indicates a contraction.

Domestic demand improved slightly, as suggested by an increase in new orders. The sub-index reading rose to 47.7 in April from 46.5 in March. Output rebounded to 48.0 from 47.2.

Infrastructure projects set to boost growth – Business – Chinadaily.com.cn China announced 80 major public infrastructure projects on Wednesday to arrest the economy’s slowdown while experimenting with wider access for private and overseas investors.

The projects will cover railway and harbor construction, new infrastructure needed by information technology, major clean energy projects such as hydropower, wind power and photovoltaic power, as well as modernization projects in oil and gas and chemical industries.

China Opens 80 Projects in State-Run Sectors to Investors – Bloomberg The projects are in industries including railways, ports and clean energy, according to a statement posted on the central government’s website yesterday that cited a State Council meeting. The projects are also in information technology, oil and gas pipelines, coal-to-chemicals and petrochemicals, it said.

State-controlled companies including PetroChina Co. (857) and China Petroleum & Chemical Corp. (386) have been leading a drive to find private investors amid a push by Premier Li Keqiang to give markets a bigger role in the allocation of resources. The country’s economy grew 7.4 percent in the first three months of the year, the slowest pace in six quarters.

Weakening RMB affecting dim sum bond market｜Finance｜Business｜WantChinaTimes.com Continued depreciation of the renminbi has made investors more cautious in credit checks of offshore RMB bond issuers as the fear of a market reaction has caused some Chinese companies to turn to dollar bonds to raise cash.

Since mid-February, the Chinese currency has depreciated by nearly 3%, meaning investors snapping up “dim sum bonds,” or RMB-denominated bonds issued outside the Chinese mainland, can no longer speculate on a rising yuan.

China Resources ‘mistress’ business link tracked – FT.com China Resources, the state-owned conglomerate whose chairman was detained last week by anti-corruption investigators, has allocated many of its investment banking deals over the past five years to institutions employing the chairman’s alleged mistress.

From 2009 until 2012, Credit Suisse was one of the most prominent advisers on acquisitions and capital market activity carried out by China Resources and its numerous subsidiaries, according to data from Dealogic financial services information. This period coincides with the employment of Yang Lijuan, who also goes by the name Helen Yang and who is alleged to have been the mistress of the disgraced China Resources chairman Song Lin.

Contrarian Fund Will Seek Opportunities in Suffering Chinese Shares – WSJ.com Value Partners Group Ltd., a money manager based in Hong Kong, plans to open a fund in the third quarter to snap up shares in companies such as coal miners and steelmakers. They have been big decliners since China’s government started making noise about pollution and taking aim at energy-intensive heavy industries.

“They are too severely punished, to the point where it’s worth thinking about deep value buying,” said Cheah Cheng Hye, chairman and co-chief investment officer of Value Partners Group Ltd., which will likely look to raise at least US$50 million for its contrarian fund.

Finance

Chinese firms turn to foreign investors to borrow – MarketWatch Businesses based in mainland China–led by banks, property developers and energy companies–at the end of last year had a total of $169.2 billion of bonds outstanding held by investors outside China, up 60% from the previous year and more than double the amount from 2011, according to a new analysis by Nomura Holdings Inc. Many of the bonds are sold in Hong Kong, a Chinese city that operates under its own laws, and in the Caribbean. Of all the estimated $2 trillion of Chinese corporate bonds outstanding, about 8% is held by foreigners, the Nomura study shows.

Chinese brokerages queue up for next round of IPOs | GlobalPost The China Securities Regulatory Commission published the application prospectuses of 19 firms on its website on Tuesday evening, bringing the total to 65 applicants over the last five days.

One firm, Guotai Junan Securities Co Ltd, has applied for an IPO in Shanghai that could raise nearly 22 billion yuan ($3.5 billion), according to Reuters calculations.

Short-Seller Accuses Chinese Rubber Recycler of Doctoring Financials – WSJ.com Short-seller Glaucus Research Group California LLC on Thursday accused a Taipei-listed Chinese foam-rubber recycler of doctoring its financials.

In a 32-page report, Glaucus said it believes Asia Plastic Recycling Holding Ltd , based in China’s Fujian province, has overstated its net income by around 10 times, citing Chinese government tax records. Glacus also said public-land records show the company paid much less than it reported in acquiring two pieces of land and in expanding a factory since 2011.

Auto

Tesla CEO Pledges to Build Up Support Network in China – WSJ.com Tesla Motors Inc. Chief Executive Elon Musk pledged to enhance the auto maker’s support network in China to help broaden use of the company’s niche electric car, and offered new details about a $5 billion battery factory Tesla plans to build in the U.S.

Speaking in Beijing Tuesday at a ceremony marking the first handover of a Tesla vehicle to a customer in China, Mr. Musk said U.S.-based Tesla is building out hundreds of service centers around China but didn’t offer a time frame for their completion.

Energy

China Ends Environmental Ban on CNPC, Sinopec Refining Projects – Bloomberg Overturning an eight month-old ban, China National Petroleum Corp. and China Petrochemical Corp. can resume applying for clearance from the Ministry of Environmental Protection for new refining and petrochemicals projects, the ministry said today on its website.

CNPC, China’s biggest oil and gas company and parent of PetroChina Co. (857), and Sinopec Group, Asia’s biggest refiner and parent of China Petroleum & Chemical Corp. (386) known as Sinopec, were banned from seeking environmental clearances in September 2013 following a review of their emissions in 2012. The ban effectively prevented the companies from building new refineries and petrochemical facilities.

PetroChina Company Limited Given Average Rating of “Buy” by Brokerages (NYSE:PTR) | WKRB News PetroChina Company Limited (NYSE:PTR) has received an average recommendation of “Buy” from the twelve brokerages that are covering the company, ARN reports. One analyst has rated the stock with a sell recommendation, four have given a hold recommendation and seven have given a buy recommendation to the company. The average twelve-month target price among analysts that have issued a report on the stock in the last year is $102.00.

CNOOC Ltd offers $4bn bonds -Upstreamonline.com The overseas arm of state-run China National Offshore Oil Corporation (CNOOC) is offering $4 billion worth of bonds to help repay loans related to its takeover of Canada’s Nexen last year.

CNOOC Ltd revealed it planned to sell $1.25 billion three-year notes, $2.25 billion 10-year notes and $500 million 30-year notes.

CNOOC Ltd names new Nexen boss -Upstreamonline.com Current executive vice president of CNOOC Ltd Fang Zhi will take over for Kevin Reinhart as Nexen’s chief executive, the company said.

Reinhart, who has worked for Nexen for 20 years, was named interim chief executive in early 2012 following the abrupt departure of former boss Marvin Romanow. Reinhart has held the position since then and oversaw the $15.1 billion sale to CNOOC Ltd, which was finalised in February last year.

Tech

Competition, Subsidies Hit China Mobile Earnings – WSJ.com China Mobile, however, has been dependent on homegrown 3G technology, which is compatible with fewer handsets. To maintain its dominant position, the company plans to double its capital spending to $12 billion this year to build a speedier 4G network. Apple and other major smartphone makers including Samsung Electronics Co., Sony Corp. and HTC Corp. already make phones to support this 4G standard.

China Mobile added 1.34 million 4G users in February, of which about one million were new iPhone users, Chief Executive Li Yue told The Wall Street Journal last month. The company said Tuesday it added 1.45 million 4G users in March, but it didn’t give a breakdown of iPhone users.

Tencent $2.5bn bond sale defies tech sector gloom – FT.com The deal, announced to the Hong Kong stock exchange on Wednesday, is part of the company’s medium-term notes programme established earlier this month, and is split into three-year and five-year tranches. The shorter duration debt offers a yield of just over 2 per cent while the notes maturing in 2019 – the bulk of the deal, at $2bn – pay out 3.4 per cent.

The five-year portion was priced at a spread over US Treasuries of 165 basis points, a new low for the company. It paid a spread of 375 bps in its first US dollar deal in 2011, and 275 bps in 2012.

Alibaba Starts to Sells First Ever Private Brand Hardware Tmall Box for 299 Yuan | TechNode Alibaba starts to sell set-top-box Tmall Box today on its B2C e-commerce site Tmall. This is the first time for the Chinese Internet giant to commercialize private brand hardware, although it has released last year another set-top box Wasu Rainbow together with Wasu Media, one of the several state-authorized content providers.

The product is priced at 299 yuan (around $48), while 10,000 Tmall credits will be distributed to each buyer, who can purchase 100 yuan worth of products on Tmall.

Xiaomi announces expansion into 10 more countries this year This afternoon Xiaomi, China’s fast-growing smartphone maker, held a meetup in Beijing to announce it would enter some new markets and also reveal a new product it had been teasing for the past several weeks.

  • Asia: Malaysia, Indonesia, India, the Philippines, Thailand, Vietnam
  • Europe: Russia, Turkey
  • Latin America: Mexico, Brazil

Uber rolls into Beijing, now in 5 cities across China As is Uber’s usual strategy, the Beijing debut is a quiet ‘soft’ launch ahead of a more high-profile entrance at a later date. Uber gave rides to two Beijing luminaries earlier today – local tech blogger Keso, and Beijing newbie Hugo Barra, the Googler who’s now heading the global push at phone-maker Xiaomi.

New competition coming soon in China 4G, broadband | South China Morning Post Just a day after China Mobile (0941.HK; NYSE: CHL) reported some of its worst results in years, new developments in the telecoms space are showing why the nation’s leading telco will face a rough time for the rest of this year and quite possibly well beyond that. According to the latest media reports, China’s telecoms regulator could issue 4G licenses for the main technology being used by China Mobile’s two rivals as soon as next month, injecting a major shot of competition into the market. The second telecoms news bit comes in broadband, with reports that the nation’s newly formed national cable TV company has formally registered and will start business soon.

Huawei to boost its smartphone brand via new retail, online push | South China Morning Post “There are different ways to build a brand,” said Shao Yang, vice-president of marketing for Huawei’s consumer business group. “We will adopt measures not that new to the market but new to Huawei.”

Shao said the China market will be the focus of the company’s efforts in 2014, mainly because of the launch of 4G networks on the mainland. The company trails only Samsung and Apple as a leading producer of smartphones. It plans to manufacture 80 million smartphones this year, having shipped 52 million units in 2013.

China mobile Zong wins Pakistan’s 3G, 4G spectrum – Xinhua | English.news.cn Pakistan raised 1.1 billion U.S. dollars in its first auction for 3G and 4G mobile phone networks on Wednesday and China Mobile Pakistan, or Zong, emerged the sole winner of Pakistan 4G spectrum license and one of four winners of the country’s 3G spectrum licenses.

Property

China Money Network − CITIC Capital, Sonae Sierra Launch Property Management Joint Venture CITIC Capital Holdings Limited and international shopping center operator Sonae Sierra says they have launched a joint venture to provide management and leasing services to shopping centers in China, according to a company announcement.

Headquartered in Shanghai, the joint venture will focus on adding long-term value to shopping centers in China. It will start by providing property management services to retail projects currently invested by CITIC Capital.

Agriculture

Shanghai Dairy planning independent public listing｜Companies｜Business｜WantChinaTimes.com Shanghai Dairy Group, a subsidiary of Bright Dairy and Foods, plans to go public independently, the subsidiary’s chairperson Shen Weiping told Shanghai-based China Business News, denying rumors about Shanghai Dairy’s capital being invested into the listed Bright Foods stock-trading platform.

Shen also said that Shanghai Dairy had reached an agreement with Nestle to build a milk production line in the Heilongjiang region of northeastern China to supply milk to Nestle’s baby formula brands. The planned investment will be worth several billion yuan, Shen stated.

Posted from Diigo.

 

China Business Briefs 23/4/14
Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Healthcare

Economy

Reform of China’s state-owned sector gains momentum | South China Morning Post **Cross river by feeling the stones, etc** Far from the spotlight, in secretive high-level meetings and company boardrooms, Beijing is drawing up one of the country’s thorniest reforms: an overhaul of China’s hugely inefficient state-owned enterprises (SOEs).

It shapes up as an eclectic mix of pilot projects and initiatives rather than a single blueprint, which makes it hard to judge their progress.

Yet, taken together, they probably mark the beginning of the biggest revamp of China’s state sector since the late 1990s, when Beijing set out to shore up industry before joining the World Trade Organisation.

South China’s Balancing Act Between Raising Wages & Keeping Investors | China Briefing News In South China for example, minimum wages were last increased in Dongguan, Foshan, Zhuhai and Zhongshan on a mandatory basis on May 1st of last year. This year, no announcement has been made, although rumors are the increase is being deferred a few months to August.

There are signals that local governments are now having to strike a balancing act between making companies happy (with no further labor cost raises) and workers demanding higher salaries – which will attract more workers and increase local consumption. In terms of social insurance, although this is compulsory, some local companies have been late in paying their obligations in full.

Chinese Bad-Loan Ratio Rises ‘Significantly,’ Huarong Says (1) – Businessweek China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for the nation’s banking industry, according to the nation’s largest manager of soured debt.

The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co. Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company.

Chinese Shoemakers Are on Strike for Benefits — But Who Will Foot the Bill? – China Real Time Report – WSJ The workers said the Hong Kong-listed company has been making social insurance contributions based on basic wages rather than total actual pay as required by law.

According  to an estimate by a not-for-profit labor support organization, Yue Yuen’s back payments could total more than 100 million-200 million yuan ($16 million-$32 million) depending on how many of the workers are owed for long years of service.

Slower growth poses challenges: AmCham[1]- Chinadaily.com.cn “With slower growth, we see more challenges,” AmCham China Chairman Gregory Gilligan told reporters in Beijing. “That is the reason some American companies are scaling back their investment plans.”

Finance

China Warns of Rising Risks From ‘P2P’ Lending – WSJ.com **Again** “Currently, P2P lending has been growing rapidly. The number of new P2P lending websites and the total of loans they have issued have been rising rapidly,” said Liu Zhangjun, director general of the Office of the Interagency Anti-illegal Fundraising Taskforce, a group that includes bank regulators, police and court officials.

Closer Look: Regulator Takes Hard Look at Jack Ma-Hundsun Deal – **Is Ma starting to overreach?** The securities regulator has been consulting large securities firms and fund companies regarding the proposed acquisition of a leading financial software provider by Jack Ma, the founder and chairman of e-commerce giant Alibaba Group, sources with knowledge of the matter said.

Banks to issue preferred shares this year – Headlines, features, photo and videos from ecns.cn The first batch of Chinese commercial banks may issue preferred shares this year, and investors will ask for a higher dividend rate while putting up with more uncertainties, experts said.

Preferred shares pay fixed dividends and enjoy priority over common stock in the event of bankruptcy. They typically do not trade on the open market, carry no voting rights and do not dilute net profits attributable to shareholders.

“The pace of Agricultural Bank of China and Bank of China is faster, and they probably will issue preferred shares this year,” said an insider at one of the four major State-owned commercial banks.

China may let banks default when deposit insurance begins – SFGate Authorities may tolerate failures of smaller banks once depositor safeguards are in place, Kwong Li, Chief Executive Officer of China Lianhe Credit Rating Co. said. Among lender bonds rated at or below AA, the extra yield investors demand to hold the 2022 securities of China Bohai Bank Co. in the northern city of Tianjin surged to an 11-month high of 245 basis points on Thursday. The premium on the notes due 2019 of Harbin Bank Co., a lender near China’s border with Russia, has jumped 51 basis points in the past year to 225.

DZHNews.com- Breaking China Biz News, Financial Updates, Corporate News Wang Yongli, vice president of Bank of China Ltd. (BOC, 601988.SH) quitted his job last week, following reports that he was under investigation by the Communist Party of China’s (CPC) discipline department.

Wang’s resignation came after he had reportedly been investigated by the CPC’s Central Commission for Discipline Inspection (CCDI).

Forex controls and VIEs | China Accounting Blog | Paul Gillis Chukong Holdings Limited filed on last Friday with the SEC for a U.S. IPO. Chukong is an online game company so it uses the variable interest entity (VIE) structure despite a specific MIIT prohibition against using VIEs for game companies. The company also faces a lawsuit alleging they ripped off their game Fishing Joy from an arcade game, report that they have not been paying required employee benefits, never bothered to register their stock option plan, and have an auditor facing suspension by the SEC, but based on past history investors ignore such matters.

Beijing mulls bond sales by local gov’ts｜Finance｜Business｜WantChinaTimes.com Money raised by the bond sales could be used to partly finance construction projects that have been included in the provincial-level governments’ general public budget plans, it said.

No other forms of debt raising by local governments and their subordinate organs would be allowed under the draft revision. Furthermore, local governments and their subordinate departments should not provide debt guarantees for any institutions or individuals, under the proposals.

WH Group Said to Mull Cutting $5.3 Billion IPO in Half on Demand – Bloomberg The company may sell new shares equivalent to 10 percent of its enlarged market capital, about half of what it previously planned, the people said yesterday, asking not to be identified as the information is private. Existing investors including Goldman Sachs Group Inc. (GS) may also refrain from selling stock as part of the IPO, the people said.

At $5.3 billion, the WH Group IPO would have been Hong Kong’s biggest since October 2010, when AIA Group (1299) Ltd. raised $20 billion, according to data compiled by Bloomberg. The company struggled to attract investors even after hiring 28 underwriters, the most ever for an IPO in the city.

Wanda Cinema Line Plans CNY2 Billion IPO in Shenzhen — Update – WSJ.com China’s biggest cinema operator in terms of box office revenue plans to sell up to 60 million yuan-denominated A shares to fund the opening of new cinemas and to supplement working capital, according to a preliminary prospectus posted late Monday by the China Securities Regulatory Commission.

The planned listing comes as China pushes to generate economic growth more through domestic spending and less through state-backed investment. The film industry, part of the so-called “cultural industry” that Beijing wants to build up, has in recent years grown rapidly with box office revenue rising by about 30% a year.

Huarong Q1 profits up by 75% – Business – Chinadaily.com.cn Huarong, one of four asset management companies the government set up in 1999 to absorb toxic assets held by China’s four biggest banks, said total assets and net assets were 432.9 billion yuan and 56.7 billion yuan, respectively, at the end of March.

Profits nose dive for Chinese rare earth miner｜Markets｜Business｜WantChinaTimes.com The company made 1.6 million yuan (US$261,300) in net profits from the start of January to the end of March, diving by 94.1% year on year, according to a financial report released on Monday.

The miner’s business revenue also declined by 98.5% to reach 3.3 million yuan (US$529,100) in the first three months. The financial results came after a 20.5% decline in net profits and a 57.6% drop in business revenue in 2013.

Auto

GM to battle VW in China with $12 billion investment and new plants | Reuters GM expects its China sales to expand 8-10 percent this year, in line with the overall growth of the Chinese market, where foreign firms, such as Volkswagen AG, and domestic players like SAIC Motor Corp vie for more market share.

“We are investing wisely and accelerating our vehicle development and manufacturing to keep pace with market demand. In total we are investing $12 billion between 2014 and 2017,” Matt Tsien, president of GM China, said at the Auto China show in Beijing.

Chinese Nissan Leaf goes on sale in September as Venucia e30 The upcoming Chinese version of the Nissan Leaf, the Venucia e30, was not the highlight of the Dongfeng Nissan stand at this year’s Beijing Motor Show. That honor goes to the R30, a compact car with “segment-competitive fuel economy” and a starting price of under RMB 50,000 ($8,033 US). But that doesn’t mean Dongfeng didn’t make some news about the debut of the world’s most popular electric vehicle in the world’s most populous country.

Infrastructure

China Province to Spend $3.35 Billion on Water Projects – Bloomberg A northeastern Chinese province is planning to invest 20.9 billion yuan ($3.35 billion) this year on water-conservation projects as the world’s most-populous nation tries to ensure residential and industrial supplies.

The works in Heilongjiang province, which borders Russia, will highlight agricultural irrigation and drainage, improved flood protection and preserving water resources, the official Xinhua News Agency reported today, citing a provincial government work meeting.

Sany digs deep to lay foundation in Africa[1]- Chinadaily.com.cn However, Xiao Jiang, general manager of subsidiary Sany Southern Africa (Pty) Ltd, said that while Africa has tantalizing potential as a market, any Chinese company contemplating taking advantage of that potential needs to take a long-term view.

“If all you do is scramble for market share by offering the lowest price and don’t care about related services, it’s only a matter of time before your operations fold,” Xiao said.

Energy

CNOOC Limited Announces Key Operational Statistics of Q1 | The Jakarta Post – PR Newswire In the first quarter, the Company achieved a total net production of 108.1 million barrels of oil equivalent (“BOE”), representing 15.5% increase year over year (YoY).

In the first quarter, the unaudited oil and gas sales revenue of the Company reached approximately RMB59.15 billion, representing an increase of 6.9% YoY, mainly due to the increase of oil and gas production. During the period, the Company’s average realized gas price was US$6.33 per thousand cubic feet, representing an increase of 9.3% YoY while the Company’s average realized oil price was US$104.63 per barrel.

PetroChina hikes 2015 shale gas output target to 2.6 bil cu m: report – Natural Gas | Platts News Article & Story State-owned PetroChina has hiked its shale gas production target significantly and now expects to produce 2.6 billion cubic meters/year next year, a senior executive was reported as saying Monday.

This is an increase from an earlier target of 1.5 billion cu m/year made in August last year.

China Petroleum and Chemical’s Underperform Rating Reaffirmed at Zacks (SNP) – Mideast Time Zacks’ analyst wrote, “We are maintaining our recommendation on Sinopec at Underperform, ahead of first quarter results. During 2013, the company witnessed a sharp drop in crude oil prices, which dragged down the Exploration and Production (E&P) segment’s operating profit by 21.8% year over year. However, increases in the price of international crude oil amid government caps on fuel prices prevented the company from fully passing on the spiraling costs to consumers. We believe that Sinopec’s matured domestic oil fields and associated rising costs will continue to be an overhang on its operations as natural declines become pricier to counterbalance. In view of these factors, we see no positive catalyst in the near term.”

Exclusive – Nigeria favours local firms in $40 billion oil contract awards – Yahoo Singapore Finance A number of other former winners were also absent from the 2014/2015 list, which will take effect from June. China’s Unipec, the trading arm of top Asian refiner Sinopec Corp , as well as Azeri state oil company Socar, were former contract holders and did not feature on the new list.

China Hydroelectric Corporation Announces Results for the Fourth Quarter and Full Year 2013: PR Newswire Business News – MSN Money China Hydroelectric Corporation (NYSE: CHC, CHCWS) (“China Hydroelectric” or “the Company”), an owner, developer, and operator of small hydroelectric power projects in the People’s Republic of China, today announced its unaudited financial results for the fourth quarter and twelve months ended December 31, 2013.

For the fourth quarter of 2013, revenues from continuing operations (net of value-added tax) declined by 18.5% year over year to $10.1 million, due to a 16.6% decline in electricity sold. We recorded a net loss attributable to China Hydroelectric shareholders from continuing operations of $5.1 million for the fourth quarter of 2013, compared to a $9.2 million loss for the same period of 2012. This improvement is partially attributable to a $2.9 million decrease in general and administrative expenses.

Telecoms

China Mobile Profit Declines as Costs Rise With IPhone Release – Bloomberg China Mobile Ltd. (941), the world’s largest phone company by users, posted its third straight drop in quarterly profit as expenses for subsidizing Apple Inc. (AAPL)’s iPhone and building networks increased.

Net income fell 9.4 percent to about 25.24 billion yuan ($4 billion) in the first quarter, the Beijing-based company reported yesterday. Profit was expected to be 27 billion yuan, based on the median of five analysts’ estimates compiled by Bloomberg News.

China Unicom Q1 Earnings Soar on 3G Adoption – April 22, 2014 – Zacks.com China Unicom Hong Kong Limited, China’s second largest mobile operator, announced results for first-quarter 2014 with adjusted net income of RMB 3.302 billion ($539.5 million) that surged 73.8% year over year on strong revenue growth and higher adoption of the 3G plan. Earnings per share soared 75% year over year to RMB 0.14 (2 cents).

Total revenue (excluding deferred fixed-line upfront connection fee) climbed 8.3% year over year to RMB 76.5 billion ($12.5 billion) in the first quarter. Telecommunication service revenues, comprising roughly 81% of total revenue, were RMB 63.80 billion ($10.4 billion), up 11.8% year over year.

Property

Xi’s Squeeze Leaves China’s Heartland Missing Boom – Bloomberg “Cities in China are facing some serious real estate bubbles, and the bubbles in third-, fourth-tier cities have the risks of total collapse,” said Tao Ran, director of the China Center for Public Economics and Governance at Renmin University in Beijing, in a phone interview on March 31. “The central government and banks tightened credit in the property market because they realized the risks.”

Liu said three years ago he could get loans from China Construction Bank Corp. (939) and Agricultural Bank of China Ltd. for half the value of the land at about 6 percent to 7 percent interest. Now he’s forced to rely on “friends with connections” and pay rates of about 20 percent.

Closer Look: Why Gov’t Is Eager to Renovate Shantytowns – Premier Li Keqiang said in a recent work report that the government plans to start building 7 million low-income housing units this year, 340,000 more than the number built last year. But the number to be completed is 4.8 million, 640,000 units less than in 2013.

A rough estimate based on the data from Li’s report shows investment in affordable housing for this year will be around 1.2 trillion yuan, similar to last year’s level. In 2013, 1.12 trillion yuan was spent to build affordable housing, equivalent to 13 percent of the year’s total real estate investment, and 2 percent of GDP.

Travel

Shandong Airlines orders 50 Boeing aircraft for US$4.6 billion | South China Morning Post The company signed a deal to purchase 16 Boeing 737-800s and 34 Boeing 737 MAX planes, a statement said, in a drive to grow its fleet for business expansion in the future.

China’s commercial airline industry is dominated by the “Big Three” – flag carrier Air China, China Eastern Airlines and China Southern Airlines – but a move towards greater competition has seen the growth of smaller players in the market.

Tech

China Money Network − Baidu Likely To Report Better-Than-Expected Earnings Baidu, Inc. will report first quarter results on April 24th after the market close. We believe its results are highly likely to come in better than consensus expectations, mainly driven by its mobile business and other non-traditional search businesses such as online video.

In the mobile area, the number of downloads for both Baidu app stores and Baidu’s apps showed significant growth based on our proprietary data.

Ban on Video Game Consoles Tentatively Lifted in the Shanghai FTZ | China Briefing News **Nuts, when you think about it** On Monday this week, details were announced regarding the lifting of China’s 14-year ban on video game consoles, set to begin as a pilot program in the Shanghai Free Trade Zone (FTZ). The lifting of the ban is poised to fundamentally alter China’s lucrative video gaming market, which is currently dominated by PC and mobile games, as the giants of console gaming compete over the world’s 3rd largest video game market in terms of revenue (valued at 123 billion yuan).

Qingguo Jizhang, WeChat-based Daily Expenses Tracking App | TechNode Qingguo Jizhang is one of those expense tracking apps that hopes to make your life easier through their outstanding value proposition – using audio recording function to track your expenses.

By tapping on the WeChat platform and its audio message capability, Qingguo Jizhang wants to make expense tracking easily accessible, hassle-free and most importantly, cultivate a habit of managing your finances on a daily basis.

Alibaba’s chat app has turned its focus away from messaging **”Me too! Me too!”** How is the new Laiwang different from the old app? For starters, let’s take a look at the design. A screenshot of the original Laiwang ought to show up as a picture under the Chinese-English dictionary entry for the word “uninspired.” Its app icon featured a speech bubble enclosed in a kelly green backdrop. Look familiar? Laiwang’s user interface, meanwhile, closely mimicked that of the original WeChat interface, before Tencent placed public accounts on separate pages from ordinary contacts pages.

Now, the updated Laiwang is drenched in sour-candy yellow as it sports a new lemon theme. It even has a new mascot of sorts – anthropomorphic lemons.

Days after promising to go legit, police in China raid offices of notorious video piracy app Police in the southern Chinese city of Shenzhen performed a raid this morning on the offices of one of China’s most notorious video piracy apps. The raid on Kuaibo, makers of the QVOD app for streaming films and TV shows, comes less than a week after the company promised to remove pirated content – which can be streamed or downloaded – from QVOD.

Late last year, QVOD (pictured below) and a mobile app made by search engine Baidu were the targets of a $50 million legal challenge by legitimate video streaming sites in China.

China Money Network − China Everbright Supports Management Buyout Of iSoftStone Beijing-based Chinese IT services provider iSoftStone Holdings Limited says it has entered into a definitive agreement, in which its chairman and CEO Liu Tianwen, together with China Everbright Investment Management Limited, will take the company private, according to a company announcement.

Agriculture

Millions of China’s Farmers Now Buy Climate-Change Insurance – Scientific American Li is one of hundreds of millions of Chinese farmers who are now using insurance as a tool to hedge against the risks of climate change. China is the world’s second-largest agricultural insurance market after the United States by premium income, and it is scrambling to spread the use of climate-related insurance into other sectors.

Chinese policymakers in recent years have already persuaded hundreds of millions of farmers there to buy agricultural insurance, forming a capability of covering losses worth 1.4 trillion yuan ($225 billion) in 2013. Climate risks are known as the biggest danger for losses in agriculture.

Healthcare

Fosun-TPG Group Agrees to Buy Chindex With Sweetened Bid – Bloomberg **Wonder how this will affect expat media – United Family Hospitals are one of their biggest advertisers** Shanghai Fosun Pharmaceutical Group Co. (2196) and its partners agreed to acquire hospital operator Chindex International Inc. (CHDX) for about $433 million, after raising their offer to counter another bidder.

The group comprising Fosun Pharma, TPG Capital and Roberta Lipson, Chindex’s chief executive officer, boosted its offer for the hospital operator to $24 a share from $19.50, the Chinese drugmaker said yesterday. Chindex, based in Bethesda, Maryland, signed an amended agreement with the group after another bidder, who earlier offered $23 a share, declined to bid further, Chindex said in a separate statement

Posted from Diigo.

China Business Briefs 21/4/14
Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Retail

Economy

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

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

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

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

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

Finance

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

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

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

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

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

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

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

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

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

Auto

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

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

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

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

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

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

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

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

Infrastructure

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

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

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

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

Energy

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

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

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

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

Telecoms

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

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

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

Property

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

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

Travel

Tech

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

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

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

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

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

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

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

Agriculture

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

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

Retail

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

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

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

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

Posted from Diigo.

China Business Briefs 19/4/14
Economy Finance Auto Infrastructure Energy Mining Property Travel Tech Healthcare Retail

Economy

Yuan Depreciation Is Deeper Than You Think – China Real Time Report – WSJ But guess what? The yuan depreciation this year is probably steeper than you think.

Since the beginning of the year, the yuan has depreciated 2.8% against the dollar– a number that’s been widely used. But that’s in “nominal” terms, meaning the number doesn’t account for the different levels of inflation in the U.S. and China. When factoring in inflation, calculates Brookings Institution researcher Karim Foda, the yuan has actually fallen 3.2% over the same time period.

Yu’e Bao Finds ‘Leftover Treasure’ in Deposits – China Real Time Report – WSJ Much of Yu’e Bao’s popularity has come from its ability to give customers the convenience of a demand deposit—meaning they can withdraw their funds whenever they like—but with returns well above what a bank could offer. It recently advertised an annualized yield of 5.25%, but that level has on occasion spiked above 7% since the fund was set up June. By contrast, banks offer 3.3% for a one-year fixed deposit and close to nothing on savings deposits.

But those favorable numbers might not last long: On Tuesday Caijing magazine cited a vice president at Yu’e Bao as saying in future he expects the fund’s return to continue to decline, to a point where it’s largely in line with the fixed deposit rate.

China Officials Fibbed To Depositors To Stop Bank Runs In China, “protected by law” has a much different meaning, however.  Ordinary citizens take the phrase to mean that the Chinese government guarantees bank deposits.  That is the sense that Wei Guoqiang, mayor of Yancheng, tried to convey to depositors when speaking at the height of the turmoil last week: “Do you know whom the bank is backed by?  It’s the government.”

That statement is not true.  It is not true not just with respect to tiny rural institutions like Sheyang Rural Commercial Bank, which holds 0.01% of the total assets of the Chinese banking system, but it is also not true with respect to the so-called Big Four banks, the pillars of the national banking system.

China Resources chairman in probe as anti-corruption net widens – FT.com On Wednesday, Mr Song issued a strong rebuttal on China Resources’ website, describing the allegations as “completely false and an ill-intentioned attack that is meant to smear me”.

But on Friday, China Resources said Qiao Shibo, its general manager, had taken over Mr Song’s responsibilities at the company while Mr Song was being investigated for corruption.

China’s plan for iron ore giants hits snag | South China Morning Post Beijing wants Anshan Iron & Steel, a steelmaker with its own iron ore mines, and the Metallurgical Mines’ Association of China to lead the plan. A draft is expected by the end of the year to be submitted to the State Council for approval.

However, combined production would at best amount to only a third of total demand, making a target to cut imports to below half of the country’s requirement within 10 years look impossible and suggesting big global miners may have to ship even more.

Sitting on a lot of copper | China Economic Review Did China really use its political clout to delay a mining megamerger that could fix global commodity prices? Yes, but for its own interests. Beijing’s condition for allowing the merger that formed Glencore Xstrata (GLEN.LON, 0805.HKG) was the sale of Peru’s La Bambas mine to a Chinese consortium made up of state investment and mining companies.

Finance

Land sale revenue rise ‘unsustainable'[1]- Chinadaily.com.cn Land sale revenue rose 40.3 percent year-on-year to 1.08 trillion yuan ($174 billion) during the first quarter, said Finance Minister Luo Jiwei.

By comparison, fiscal revenue only grew 9.3 percent nationwide to 3.5 trillion yuan – and that figure excludes land sales, which are now equivalent to 55.4 percent of the public fiscal revenue of local governments. Land sale revenue for all of 2013 grew 44.6 percent.

China Rate Swap Posts Biggest Weekly Drop Since June on Easing – Bloomberg The one-year rate swap, the fixed payment needed to receive the floating seven-day repurchase rate, dropped 43 basis points this week to 3.77 percent as of 4:52 p.m. in Shanghai, according to data compiled by Bloomberg. It fell six basis points today following a 22 basis point slide yesterday that was the biggest decline since June 21, when the central bank used targeted injections of funds to alleviate a record cash crunch.

P2P Lenders Heading into Dangerous Waters, Critics Say – Most P2P companies also promise to repay lenders their investment when a borrower defaults on a loan, either with money out of their own pocket or through cooperation with a guarantee firm.

Critics have argued that this is why a P2P website should be regulated as strictly as a financial institution rather than as the information providers they started out as. Without proper supervision, they say, P2P companies could use investor money to repay old loans, basically building Ponzi schemes.

Private banking opportunities draw increased foreign interest – Headlines, features, photo and videos from ecns.cn For private banks, China is a market with a vast number of potential clients. As of 2013, there were more than 1 million individuals in the nation with assets available for investment exceeding 10 million yuan ($1.6 million) each, the China Merchants-Bain survey showed. But those individuals have had few private-banking options so far.

For foreign banks, private banking mostly refers to managing personal wealth. But according to Dai Xiaohong, managing director of Standard Chartered Plc’s private banking operations in China, nearly 60 percent of their clients are entrepreneurs, most of whom don’t separate their business and personal wealth.

Third-party payment sector rules issued – Headlines, features, photo and videos from ecns.cn The new regulation features detailed rules on user information protection, user identity verification and the transaction amount during third-party payments, in a bid to reduce security risks.

The regulation made clear that commercial banks should set up transfer amount caps in accordance with the clients’ risk tolerance ability. Some analysts consider the rule as an endorsement of the commercial banks’ earlier decision to set stricter caps on quick transfers via Alipay.

Fed up Chinese retail investors exit losing markets | South China Morning Post **No wonder – see the annual performance of the top 20 stocks** More than 7 million mainland retail investors have exited the stock market since 2010, with many complaining about inefficient regulations and poor earnings by listed firms. Analysts said big funds would take advantage of the crisis of confidence to “buy low” as some shares were undervalued.

A total of 70.9 million retail investors now hold shares in their brokerage accounts, compared to 78.3 million in 2010, Guangzhou Daily reported yesterday, citing figures by data provider iFind. Mainland individual investors have been seen chasing market rallies rather than finding good bargains when the market is languishing.

China’s commodity demand tied to risky credit deals | South China Morning Post While it has been known for some time that copper imports were often used as collateral in order to get financing outside of the traditional banking channels, this year has seen iron ore, soya beans and now gold added to the list.

So far the apparently increasing use of commodities to access lines of credit hasn’t had as much impact on markets as might be expected.

But surely the risks must be mounting as it becomes clearer that significant parts of China’s commodity demand is tied to increasingly risky credit deals, many of them in property, a market that analysts believe is at risk of a sharp correction.

Taiwan Regulator Penalizes Bank Over Derivatives Sales – WSJ.com The Financial Supervisory Commission declined to name the lender, but its chairman, Tseng Ming-Chung, said during a legislative hearing Thursday that the bank was “mercenary” by misleading clients into overinvesting in these products and raking in high commissions.

Over the past two years, sales of such products have surged and brought in additional income for buyers as the yuan rose. Taiwanese companies were big buyers because of their close links with China, but the unexpected slide this year in the Chinese currency has turned many of the contracts into heavy paper losses for holders.

Auto

China Automotive Starter Market 2014-2017 Research Report — DALLAS, April 18, 2014 /PRNewswire/ —  In 2013, China’s auto market achieved more-than-expected growth, of which, the production rose 14.82% YoY to 22.13 million and sales volume climbed 13.94% YoY to 21.99 million. Automotive starter as an integral part of the car witnessed accompanying growth in OEM market size, reaching 22.13 million. On the other hand, after-sales repair & replacement constitutes another big market for automotive starter requirements. With the swelling base of Chinese car ownership, starter replacement market still shows a growing trend. By 2013, aftermarket size has amounted to 1.2604 million sets, presenting a year-on-year increase of 12.0%.

Volkswagen mulls expansion of China plant – The Wall Street Journal – MarketWatch The expansion of the Foshan plant would help Audi add the production capacity it needs to boost sales in China of its upmarket sedans and SUVs over the next few years.

Audi, the leading luxury car brand in China, sold 491,989 cars in China last year, including sales in Hong Kong, up 21% from 2012. In the first three months of this year, Audi sold 124,520 cars in China, up 21%.

Infrastructure

allAfrica.com: Zimbabwe: ZPC Deal Hangs in Balance ZIMBABWE Power Company may re-tender bids for Hwange Thermal Power Station expansion, nearly a year after naming China Machinery Engineering Company as the winning bidder of the multi-million dollar project, sources said.

Alternatively, Sino Hydro, which won the tender to expand Kariba Hydro Power Station, may be considered as it could take time to re-start the whole process.

Energy

Chinese state energy firm ups shale gas spend to £950m | World news | The Guardian Chinese state energy group PetroChina plans to spend more than 10bn yuan (£950m) on shale gas fracking this year as domestic competition heats up after rival Sinopec announced a commercial find.

Faced with high drilling costs and the complexity of tapping shale gas, China has struggled to revolutionise its energy supplies. But now the country wants to unlock what could be the world’s largest shale gas reserves by emulating the success of the US shale boom.

Athabasca triggers oilsands sale to PetroChina Athabasca Oil Corp. says it is selling its 40 per cent stake in the proposed 250,000-barrel-per-day Dover oilsands project to partner PetroChina for $1.32 billion.

The much-anticipated sale, conditional on final regulatory approval of the project, will give the Chinese national oil company its second 100 per cent owned thermal oilsands project in northeastern Alberta.

Candu Energy changes tack in China, seeks construction partnerships – The Globe and Mail When SNC-Lavalin Group Inc. bought Candu Energy Inc. for $15-million, it took private an asset that had, over 60 years, sucked $21-billion from Ottawa.

Just three years later, SNC is pinning hopes for future billions on another government, this time in Beijing. With a long-standing effort to sell new reactors to China yet to produce any fruit, Candu is now seeking to link hands with state-owned Chinese firms to build new reactors abroad, an ambition that has eluded the Canadian nuclear industry for many years.

Mining

China’s Zhongjin Gold profits plunge – BUSINESS – Globaltimes.cn Net profits at Zhongjin Gold Corporation Ltd., China’s leading gold producer, plummeted more than 72.32 percent in 2013 from the previous year, the company announced on Friday.

The company’s net profits tumbled to 431.1 million yuan (70 million US dollars) last year.

Beijing appeals to WTO against rare earth ruling｜Policy｜Business｜WantChinaTimes.com The appeal will be lodged Thursday, Ministry of Commerce spokesman Shen Danyang said.

No matter the result, China will stick to its policy objective to protect resources and the environment, and will continue to boost management of resource industries following the WTO rules, said Shen.

Property

China new-home prices slow gains in March – MarketWatch Average new home prices in 70 cities rose 7.32% year over year in March, according to calculations by The Wall Street Journal based on data released Friday by the National Bureau of Statistics. Prices rose 0.22% month over month compared with 0.27% in February.

The year-over-year rise in February was 8.19% and 8.98% in January. Until then price rises accelerated every month for the past year. In December the average price rise was 9.17% and 9.10% in November.

Chinese Real Estate Service Leju Debuts on NYSE Thursday | TechNode Leju (NYSE:LEJU), once a wholly-owned subsidiary of real estate service E-House (NYSE:EJ) and former property channel of Sina, got listed on the New York Stock Exchange for overall $100 million of funding this Thursday, the same day of Sina Weio’s debut on Nasdaq Capital Market. The company has filed for an US IPO this March.

Leju sought to raise as much as $194 million by selling 17.70 million shares for $10-$12 each, but only saw demand through underwriters for 11.50 million shares at the low end of the offer at $10 apiece.

Travel

Cruise lines push throttle on China expansion plans – Business – Chinadaily.com.cn The 4,180-passenger Quantum of the Seas, Royal Caribbean’s newest ship, will move its home port to Shanghai in May 2015, the Miami, United States-based company said at a news conference in Shanghai. The ship will sail three- to eight-night voyages year-round from Shanghai to Japan and South Korea, following its maiden season, which will launch in November from the US to the Bahamas and the Caribbean.

“People in China have grown to expect the best the world has to offer, and Quantum of the Seas meets that standard like no other ship,” said Adam Goldstein, president and COO of Royal Caribbean Cruises Ltd.

In-Depth Research and Forecast of China Shield Tunnel Boring Machine Market — DUBLIN, April 16, 2014 /PR Newswire UK/ — Research and Markets (http://www.researchandmarkets.com/research/7mbvg9/indepth_research) has announced the addition of the “In-Depth Research and Forecast of China Shield Tunnel Boring Machine Market” report to their offering.

Shield tunnel boring machine is a kind of specialized engineering machinery for tunneling. Currently it is widely used in the construction of subway, railway, road and hydropower projects. With the trend of three-dimensional cities and pipelines buried underground, output of China’s shield tunnel boring machines reached to 141 units in 2012, with sales revenue harvesting CNY 7.045 billion.

Tech

Linked to prostitution, China’s favorite flirty chat app slammed by state media Momo is China’s top chat-and-flirt app, sort of like Skout, for connecting with people in your area. It’s hugely popular, too. Earlier this year Momo reached 100 million registered users.

But China’s state news agency, Xinhua, is not too pleased with some of the shenanigans on Momo. In an editorial yesterday (in Chinese), Xinhua described the “hormone-filled” app as being a hotbed of prostitution. Xinhua’s reporters fired up the app and were shocked – shocked – to find that a number of the nearby women in the app were actually sex workers.

Alibaba’s Alipay payment service inks deal with Rakuten According to an official statement from Rakuten, 250 shops on Rakuten Global Market will open up transactions with Alipay, though the company intends to increase that number gradually. Currently, 10,000 of Rakuten’s 42,000 domestic vendors sell goods internationally on Rakuten Global Market.

Healthcare

China Money Network − Carlyle, Primavera Capital Offer Higher Bid For Chindex Go-Private Deal Washington, D.C.-based global private equity firm The Carlyle Group is the bidder who has offered a higher price to privatize NASDAQ-listed Chinese hospital operator Chindex International, Inc., according to Chinese media reports.

Primavera Capital, a Chinese private equity firm founded by former chairman of Greater China at Goldman Sachs Fred Hu, is also considering making a competing bid, says the report.

Retail

McDonald’s to give China restaurants a makeover – MarketWatch The Oak Brook, Ill., company is overhauling a number of its China-based stores in places like Beijing, Shanghai and Guangzhou using a local designer, according to a company statement. It is also launching a new advertising campaign that focuses on Chinese aspirations and recruiting more locals to run its franchises in China. McDonald’s will also feature basketball star LeBron James in China-focused commercials later this year, the statement said.

Posted from Diigo.

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.

 

Posted from Diigo.

China Business Briefs 16/4/14

There won’t be a posting of the business briefs tomorrow, as I am flying to Beijing (in about three hours) for a two week visit. I will try to keep on posting once there, but visits and reunions may take precedence.

I am looking forward to seeing Iain Shaw and co, former staff of the Beijinger (and former colleagues of mine) who are starting up The Cleaver Quarterly, a magazine on Chinese food around the world. Check out their kickstarter thing here if you’re interested.

Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Retail Healthcare

Economy

China’s first quarter GDP grows 7.4% – Business – Chinadaily.com.cn China’s economy grew 7.4 percent year on year in the first quarter of 2014, the National Bureau of Statistics (NBS) revealed on Wednesday.

The NBS said that preliminary data showed the nation’s gross domestic product (GDP) reached 12.8213 trillion yuan ($2.08 trillion) in the first quarter.

The figures suggest growth in the world’s second-largest economy in the beginning of year 2014 was stable and that the economy was generally in good health, as Chinese authorities promoted reforms, innovation, restructuring and improvement of people’s well-being, according to the NBS.

Chinese incomes continue surging in Q1 – BUSINESS – Globaltimes.cn The average per capita disposable income rose 11.1 percent year on year to 5,562 yuan (908.82 US dollars) in the first quarter. Deducting inflation, the actual growth was 8.6 percent, according to the NBS.

The income gap between urban and rural residents narrowed with the actual income growth in rural China 2.9 percentage points higher than that in its urban areas in the first quarter, according to the NBS.

China’s Economic Growth Slows to Six-Quarter Low After Credit Reined In – Businessweek China’s expansion moderated to the weakest pace in six quarters and property construction plunged, testing leaders’ commitment to keep reining in credit as risks mount of a deeper slowdown.

Gross domestic product rose 7.4 percent in the January-to-March period from a year earlier, the statistics bureau said today in Beijing, compared with the 7.3 percent median estimate in a Bloomberg News survey of analysts. Industrial production and fixed-asset investment trailed projections.

China’s expansion slows as property construction falls | Money | The Malay Mail Online Gross domestic product rose 7.4 per cent in the January-to- March period from a year earlier, the statistics bureau said today in Beijing, compared with the 7.3 per cent median estimate in a Bloomberg News survey of analysts. Industrial production and fixed-asset investment trailed projections.

The weakest first-quarter property-investment growth since 2009 signals credit is tight and demand is faltering, adding to economic and default dangers as Premier Li Keqiang grapples with risks from shadow banking and local-government debt. A deeper slowdown would put pressure on leaders to expand stimulus or limit the pace of changes intended to give market forces a bigger role in the world’s second-largest economy.

Chinese Police Confront Trust Investors Demanding Repayment – Bloomberg Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high-yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. (939) branch.

People wearing white masks with the words “despicable bank” and “pay back our money” were among at least 30 investors facing special-forces officers in dark uniforms in Taiyuan city, about 521 kilometers (324 miles) southwest of Beijing. The nation’s second-largest bank is the custodian of the Songhuajiang River No. 77 trust, which missed six payments as of last month, according to the Economic Observer.

Electricity, Steel Hint at Economic Uptick in China – China Real Time Report – WSJ Official data shows China’s economy in the first quarter grew at its slowest pace in 18 months, but two proxies point to some resilience.

Electricity output—an indicator favored by Premier Li Keqiang over gross domestic product—and crude steel production grew faster in March than in the preceding two months. In addition, steel output in March hit a record high, the National Bureau of Statistics said.

China’s slowing growth potential minefield for leaders – The Globe and Mail Slowing growth presents a potential minefield for Chinese leadership, whose chief concern is maintaining a rising standard of living for its own people. To that end, officials have sought to discount the value of GDP as a measure of well-being, instead deliberately underscoring other statistics. “Maybe a more important thing to look at is employment and income,” said Mr. Sheng. And those numbers still look good. The first quarter saw 3.74-million urban jobs created, slightly more than the year before. Rural income is up 10.1 per cent, while urban salaries swelled 7.2 per cent. At the same time, consumer price index growth of 2.3 per cent has allowed many of those gains to flow in to consumer pockets, rather than back into groceries.

Slowdown curbs Q1 lending activity – Headlines, features, photo and videos from ecns.cn Money supply growth decelerated further in March amid a reform-induced economic slowdown, according to figures released on Tuesday by the People’s Bank of China.

The central bank said that the expansion of M2, a broad measure of money supply, slowed to 12.1 percent year-on-year from 13.3 percent in February. The market consensus was for an increase of 13 percent.

Slower deposit growth, which limits banks’ ability to lend, was a factor. Yuan deposit growth fell to 11.4 percent year-on-year in March from 12.5 percent in February.

Higher-value exporters survive turmoil in market[1]- Chinadaily.com.cn Higher-value Chinese exporters are more immune than low-cost manufacturers in the face of market turmoil from such things as weak demand, exchange-rate fluctuations and rising costs, said exhibitors at the Canton Fair that opened on Tuesday.

China not Currency Manipulator: US Treasury-Caijing “China’s currency yuan, or renminbi (RMB) appreciated on a trade-weighted basis in 2013 but not as fast or by as much as is needed,” the US Treasury said  in the latest semi-annual Report to Congress on International Economic and  Exchange Rate Policies.

According to the report, the yuan appreciated by 2.9 percent against the US  dollar in 2013, and China’s current account surplus declined to 2.1 percent of  gross domestic product (GDP) in 2013, down from 2.3 percent of GDP in 2012 and  from a peak of over 10 percent in 2007.

Yangtze River Delta becomes epicentre for China credit risk | South China Morning Post Suzhou, an ancient city in Jiangsu province 100 kilometres west of Shanghai, lives in legend as one of China’s most beautiful, famous for its elegant gardens and charming canals.

More recently, it became an industrial powerhouse, sitting at the heart of the Yangtze River Delta region that, along with the Pearl River Delta in Guangdong, drove the mainland’s economic boom.

Now it is ground zero for a painful corporate deleveraging that has tacit government approval. A third of all loan delinquencies come from the region, and credit is getting harder to come by.

Finance

Citic Pacific to Pay $36B for Parent’s China Assets – Bloomberg The steelmaker and property developer will pay 49.9 billion yuan in cash and issue almost 16.6 billion shares at HK$13.48 each, according to a Hong Kong exchange filing today. Citic Group Corp. will hold 75 percent of Citic Pacific following the transaction and a share sale by the Hong Kong company, it said.

The transaction comes as Chinese President Xi Jinping advocates the most sweeping changes since Deng Xiaoping’s liberalization in 1978, including loosening yuan trading and allowing more private investments in state businesses. The deal gives Citic Pacific a stake in China’s largest brokerage, as well as banking, energy and infrastructure assets.

China Money Network − S&P Downgrades Fosun International’s Credit Rating Shanghai-headquartered Chinese privately owned conglomerate Fosun International Ltd. has been downgraded by Standard & Poor’s Ratings Services because of the company’s increasing leverage level as a result of its acquisitions, according to a notice issued by S&P.

Fosun’s long-term corporate credit rating is downgraded to BB from BB+ with stable outlook.

BRIEF-Ping An Insurance’s Jan-Mar premium income totalled 108 bln yuan | Reuters Ping An Insurance Group Co of China Ltd

* Says January-March premium income totalled 108 billion yuan ($17.37 billion)

Source text in Chinese: link.reuters.com/tan58v

BRIEF-China Life Insurance’s Jan-Mar premium income totalled about 132.2 bln yuan | Reuters China Life Insurance Co Ltd

* Says January-March premium income totalled about 132.2 billion yuan ($21.25 billion)

Source text in Chinese: link.reuters.com/tet58v

Auto

Volvo likely to become China’s next official car brand: report｜Companies｜Business｜WantChinaTimes.com **I wonder what % of Audi’s revenues come from China** China’s president Xi Jinping, who visited the Chinese-owned Volvo car plant in Ghent, Belgium on April 1 during his European trip, seems to have become the best spokesman for the automobile brand after a photo of him and the Volvo XC60 model was published. Volvo could likely become the new choice for official cars in China, according to the Guangzhou-based Time Weekly.

Infrastructure

SOE accounting puzzle blurs frugality drive – Headlines, features, photo and videos from ecns.cn **Article repeated from Xinhua – evidently CRCC’s arse is being kicked** Many Chinese state-owned enterprises(SOEs) that were under fire last year for exorbitant “reception” fees hid the item in their latest financial results, renewing public concerns over their sincerity to cut extravagance.

China Railway Construction Corporation Ltd. (CRCC), one of the country’s largest construction companies, spent 837.5 million yuan (135.1 million U.S. dollars) on receptions in 2012. The company was punished following public outrage over the alleged abuse of state assets.

In its 2013 financial report released in late March, CRCC canceled the item called “receptions” in its accounting statement. Meanwhile, the item named “management fees,” which included the sub-item “receptions” in the 2012 report, surged by nearly 2.2 billion yuan last year.

World’s longest plateau rail tunnel completed – People’s Daily Online The Xinguanjiao Tunnel, the world’s longest plateau rail tunnel on the Qinghai-Tibet Railway, was completed on Tuesday, local authorities said.

Spanning 32.645 km, the tunnel was finished on Tuesday afternoon, making it the longest rail tunnel in China, according to Zhi Changying, an official with the China Railway Tunnel Co. Ltd. (CRTC), a partner in the project.

Sierra Leone Sports: Bo stadium handed over to Salone « Awoko Newspaper Renowned Chinese company, Xinjiang Beixin construction and Engineering Group Company Limited on Friday April 11th handed over the four thousand seater stadium to government through the Ministry of Sports.

Before the handing over ceremony, one of the Engineers Tai Xie who also doubles as interpreter told Newday that they started the construction of the Stadium on the 25th of December 2008 and they finished the project on 25th December 2013 spanning over a five year period.

Energy

China Natural Gas Output Rises in March to Highest in Two Years – BloombergNatural gas output in the world’s largest energy consumer rose 7.6 percent to 11 billion cubic meters last month, data from the National Bureau of Statistics in Beijing show today. That’s the highest since March 2012. NBS didn’t release output figures for January 2013 because the data was distorted by the Lunar New Year holiday.

The Chinese government sees expanding gas supply as a way to curb air pollution that has frequently exceeded limits recommended by the World Health Organization. The National Energy Administration said in its work plan in January that gas output is forecast to rise 12 percent from a year earlier to 131 billion cubic meters this year.

China State Grid Considers Dollar Issue Amid State-Giant Sales – Bloomberg State Grid Corp. of China, the nation’s largest power distributor, is considering a dollar-denominated bond offering following sales from other government-backed giants.

The company will meet investors in the U.S. and Asia from April 21, according to a person familiar with the matter, who asked not to be identified because the details are private. China Petrochemical Corp., known as Sinopec Group and parent of Asia’s largest oil refiner, raised $5 billion selling securities April 2 in Asia’s biggest dollar bond offering in a decade.

China builds up nuclear power grid – Business – Chinadaily.com.cn “China will install another 800 gigawatts of capacity for nuclear power, about 70 percent of which will use our technology for steam turbines and other key components,” Chen Chaoming, vice-president of Nuclear China-Alstom Thermal, told reporters in Beijing during the 13th edition of Nuclear Industry China, organized by the Chinese Nuclear Society.

“Despite the post-Fukushima delays,” he said, referring to the Japanese disaster of three years ago, “China’s nuclear market has a huge potential for growth. Basically, it is because China’s nuclear industry is still at a nascent stage. Power generated by nuclear plants accounts for less than 2 percent,” he said.

PetroChina Company Ltd.: Notice of Annual General Meeting for the year 2013 NOTICE IS HEREBY GIVEN that an annual general meeting of PetroChina Company Limited (the “Company”) for the year 2013 (the “Annual General Meeting”) will be held at 9 a.m. on 22 May 2014 at Beijing Oriental Bay International Hotel, 26 Anwai Xibinhe Road, Dongcheng District, Beijing.

PLN teams up with Chinese firms on marine project | The Jakarta Post State owned electricity company PT PLN has teamed up with three Chinese companies — Technology Intern Shijiazhuang Enric Gas Equipment Co. Ltd, Ocean Engineering Design & Research Institute of CIMC and PT Enviromate Technology International Cui Li — to develop marine transportation of compressed natural gas (CNG) in Indonesia.

The marine CNG transportation project, which will transport CNG from Gresik, East Java to Lombok, West Nusa Tenggara, via a CNG vessel, is the first project of its kind in the world.

Telecoms

Huawei world’s top communications equipment supplier in 2013｜Companies｜Business｜WantChinaTimes.com Drawing from China’s huge mobile communications market, Huawei became the world’s largest communications equipment supplier in 2013, overtaking Ericsson, according to the Chinese-language CBN Weekly.

The company raked in net profits of US$3.47 billion on sales of US$39.5 billion in 2013, compared with US$1.9 billion and US$35.3 billion for Ericsson. Cisco was third.

Property

China First-Quarter Home Sales Post Decline on Tight Credit – Bloomberg The value of homes sold fell 7.7 percent to 1.1 trillion yuan ($177 billion) in the three months to March from the same period a year ago, the National Bureau of Statistics said today. The last time home value sales dropped in the first quarter was in 2012. New property construction declined to 291 million square meters (3.1 billion square feet) in the quarter.

Is glut developing in retail building sector?[1]- Chinadaily.com.cn Despite a rapid growth in retail sales, less-experienced developers could soon be learning a hard lesson from a market with a supply glut, says a retail property trend report released by Cushman & Wakefield, the world’s largest privately held real estate services company.

The report forecast that the new supply of commercial properties in 30 cities that it monitors will total 75 million square meters, and a peak of new supply with more than 20 million sq m will flood the market this year.

Hoping for Price Rises? Here’s the Harsh Reality, CCTV Tells Home Buyers – China Real Time Report – WSJ China’s latest message about the property market is simple and aimed at the man on the street: The home you’ve bought isn’t a one-way bet. Deal with it.

That message has been pumped out through China’s state broadcaster as part of Beijing’s efforts to curb people’s enthusiasm for homes as an investment tool. Such appetite for property has driven economic growth, but also led to imbalances in the country’s economy and social tension.

Hebei Hopes to Turn Cities into Satellites by Pushing Them into Beijing’s Orbit – The housing market in Baoding heated up after media reports that provincial officials in Hebei want to develop some cities into satellites of Beijing, and Baoding might host some central government offices.

A Hebei official has said the idea is still just that, and that the central government has not approved anything.

However, the plan shows the province is enthusiastic about developing its economy, and has identified problems in the capital – overcrowding, heavy traffic and terrible air pollution – as problems it could use to its advantage.

Travel

WeChat Adds Air Ticket Booking Service | TechNode WeChat’s m-commerce offerings has added flight booking service that is provided by LV.com (formerly 17u.cn), a Chinese online travel service Tencent has a stake in. Payments, of course, are supported by WeChat Payment.

Firms decline to comment on merger rumors – BUSINESS – Globaltimes.cn Ctrip.com International and Qunar.com Inc, two Chinese NASDAQ-listed online travel service providers, both declined to comment Tuesday on market rumors that they will merge in a deal that would create an online travel service giant with a market capitalization of over $10 billion.

The rumors, as reported by China Business Journal over the weekend, claimed that search engine giant Baidu Inc, the majority shareholder in Qunar, will swap its shares in Qunar for Ctrip shares, resulting in Baidu taking a controlling stake in Ctrip.

Sikorsky Helicopter Receives Chinese Nod – Analyst Blog – NASDAQ.com **UK political buffs may remember Sikorsky from the Westland affair** Sikorsky Aircraft Corp., a unit of  United Technologies Corp. (UTX), declared that its S-76D aircraft has received China’s  certification, jumpstarting its delivery to Chinese customers.

The Civil Aviation Administration of China (CAAC) issued a validation type certificate for the helicopters, which will  support expansion of Sikorsky’s operations in a potentially  profitable market and strengthen its foothold in the Chinese market.

Tech

Alibaba Plans Hong Kong-Style Fee as Carrot for IPO Banks – Businessweek Alibaba Group Holding Ltd. is planning to award about one-third of the fees for its initial public offering in the form of incentive bonuses to coax better performance from underwriters, people with knowledge of the matter said.

China’s largest e-commerce company plans to pay at least 1.1 percent of the total IPO proceeds in fees, two people said, asking not to be identified discussing private information. Estimates of Alibaba’s valuation suggest the company could raise as much as $18 billion in the sale, making the potential fee pool almost $200 million. While the e-commerce giant is preparing for an IPO in New York, performance incentives are common in Hong Kong and have been used by companies including Agricultural Bank of China Ltd.

China’s Alibaba sees profit double ahead of long-awaited IPO As the tech world awaits Alibaba’s US IPO, here are some new financial figures to chew on. The Chinese ecommerce juggernaut pulled in US$3.06 billion in revenue in Q4 2014, which is up 66 percent on the same period a year before. Alibaba’s Q4 net income hit $1.36 billion in net income in Q4, which has more than doubled (up 110 percent) from the previous year.

Alibaba’s Q4 numbers were boosted by the popularity of China’s equivalent of Cyber Monday, which happens every November 11. On that day, Alibaba’s Tmall and Taobao marketplaces saw $5.7 billion spent by shoppers in just 24 hours.

Baidu enters China’s mobile payments war with Baidu Wallet Baidu (NASDAQ:BIDU), the Chinese tech giant best known for its search engine, announced yesterday it will roll out a new mobile wallet app called Baidu Wallet (baidu qianbao), reports Jinghua.cn (via Techweb).

Like its main rivals from Alibaba (Alipay) and Tencent (Tenpay and WeChat Payments), Baidu Wallet serves as a Swiss army knife for the average Chinese consumer’s finance needs. By binding bank cards to the app, users can transfer money to friends’ accounts, top up their SIM cards, pay for virtual goods in video games, purchase movie tickets, and buy goods from any vendor that accepts Baifubao, Baidu’s third-party payment solution.

Agriculture

Noble Group to sell stake in agriculture unit for US$1.5b – Channel NewsAsia China’s largest grain trader COFCO Corp will buy a 51 per cent stake in Singapore-listed Noble Group Ltd’s agriculture business unit for US$1.5 billion, Noble said on Wednesday.

The two companies plan to form a partnership that will link COFCO’s grain processing and distribution business with Noble Agri’s agricultural unit.

Noble Group Limited – Did it sell the agriculture business at right price – which of the brokers is right? – Yahoo Singapore Finance After failing to spin off its agriculture business in 2011 it has now again plans for an IPO after divesting majority stake to COFCO. The question still remains whether this segment deserves better valuations.

Retail

An Overview of China’s Retail Industry | China Briefing News Underpinned by the steady rise of household income, China’s retail market has become one of the most lucrative and rapidly growing in the world. China is currently the world’s second largest retail market, and Asia’s largest. It is expected to surpass the U.S. to become the world’s largest retail market by 2016. After years of accelerated growth and annual expansion rates of 10 percent or more, China’s growth in 2013 slowed down to 7.7 percent – level with the figure for 2012. This slowdown in growth is consistent with China’s effort to carry out a major overhaul aimed at weaning its economy off its decades-long reliance on heavy industry, export-oriented manufacturing, state-driven investment, as well as investment in infrastructure. Meanwhile, to rebalance the nation’s economy, policymakers are attempting to shift towards a more consumption- and service-driven model, hoping to foster and sustain more productive growth over the next decade and beyond.

Reaching for the red | China Economic Review This is a characteristic trait seen in previous emerging markets like Japan that eventually opened up their palates to other varieties, notes Guilllame Delglise, CEO of Vinexpo, a global wines and spirits exhibition, but it will take time for the same to happen in China.

In an interview during a recent visit to Shanghai, Delglise, who was previously Asia Pacific director for Laurent-Perrier, also told China Economic Review that officials in Beijing are not inclined to serve champagne to their guests, and explained why that might be good for marketers of bubbly as they chase affluent urban youngsters at fancy nightclubs.

Healthcare

China Money Network − TPG, Fosun’s Privatization Target Chindex Receives Higher Takeover Proposal NASDAQ-listed Chindex International, Inc., the operator of high-end United Family hospitals in China, says the company has received a superior take-private proposal from an unspecified financial bidder, according to a company release.

The new bidder is willing to pay $23 per share for all outstanding American Depository Shares (ADS), valuing the company at around $414 million.

Posted from Diigo.

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 6/2/14

Economy   Finance   Auto   Infrastructure   Energy   Telecoms   Property   Tech   Media

Economy

Four reasons the yuan will struggle to gain acceptance | South China Morning Post Yet a look at the economic history books advises caution. Over the past 50 years, other currencies – including the deutschemark, its successor the euro, and the Japanese yen – had been tipped to steal the dollar’s crown.

All failed. And the obstacles the yuan will have to overcome to unseat the dollar are just as formidable as those that defeated the three earlier pretenders.

Intel Economist Sees Pollution Contributing to Slower China Growth – China Real Time Report – WSJ Mr. Thomas predicted slower growth in China, the world’s second-largest economy, in part because of rising concern about air-pollution problems. He said Intel, like many non-Chinese companies, has installed additional air filters in its facilities in China and that many employees use air filters in their homes.

Shenzhen has China’s highest minimum wage｜Markets｜Business｜WantChinaTimes.com The Shenzhen city government announced that the city’s minimum wage has been raised from US$213 to US$241 a month, which has made it the city with the most expensive labor in China. The minimum wage in the city in 1992 was US$39.

In 2013, Shanghai had the largest minimum wage, followed by Shenzhen and Guangdong. In addition to Shenzhen, the growth for the minimum wage in Xinjiang was 31%, 29.8% in Jiangsu, 19.2% in Guangdong, 11.7% in Shanghai and 11.1% in Beijing.

What’s Driving China’s New Economy? Three months after the conclusion of China’s Third Plenum, the state seems to be fulfilling every prophecy set out by economists. These meetings, used by Chinese political leadership to set policy goals and the general direction of the country, seem to show that the state may be giving up its usual stance on intervening in the market for something a little more hands-off. This move is still in its infancy, but in an economy expected to be the world’s strongest by 2020, the move seems to be one a long time in coming.

Although China’s slowing economy has been compared to a near-apocalyptic sign of failing markets, indications show the slow to be a forced suppression of an economy that had been bubbling in the early 2000s. This bubble is now being deflated, says Professor Yiping Huang, by Premier Li Keqiang’s government who seeks less market volatility. In an economic view that has been dubbed “Likonomics,” the Chinese premier calls for the establishment of a market built on no stimulus, deleveraging of current assets, and structural reform.

GlaxoSmithKline hails drug pipeline after 2013’s China scandal The pharmaceutical giant unveiled its drugs pipeline as it revealed that turnover rose 1% to £26.5bn in 2013, while pre-tax profits inched up by 0.7% to £6.6bn. Sales continued to slide in its scandal-hit China division, but the pace of decline slowed down: drug and vaccine sales were down 18% in the final quarter of 2013, compared with a 61% drop in the previous quarter.

Chinese authorities have accused GSK of being a “criminal godfather”, running a £320m slush fund to bribe doctors and hospital officials with cash payments and visits to prostitutes, in order to sell its products.

Finance

Big Four’s Chinese Affiliates May Mull Workarounds – China Real Time Report – WSJ The Big Four’s Hong Kong affiliates aren’t affected by the ruling, and if they were to temporarily take over some of the Chinese affiliates’ work, it might minimize the disruptions the suspension would cause for the Chinese firms’ clients, some observers believe.

But others say a switch would be unfeasible as the Chinese firms’ reason for refusing to give the SEC the documents it wanted – they said Chinese laws on state secrecy prevented them from turning over the documents – could also apply in certain cases to the Hong Kong firms if they took over the work. That could leave the Hong Kong firms similarly unable to comply, and potentially subject to U.S. sanctions.

Singapore Bank Expands China Presence; OCBC Buys Ningbo Bank Shares – WSJ.com A week after announcing that it was in exclusive negotiations to buy Hong Kong’s Wing Hang Bank Ltd., OCBC said Tuesday that it has agreed to buy up to 207.5 million new ordinary shares in Bank of Ningbo, which is undertaking a private placement of shares to current substantial shareholders. The 383 million-Singapore-dollar (US$303 million) investment will raise the Singaporean bank’s stake in the Chinese lender to 20% from 15.35%.

Westpac to launch derivatives business in China – MarketWatch Westpac Banking Corp. (WBC.AU) plans to launch a new derivatives business in China, tapping into increased capital flows after Australia and China agreed to allow each other’s currencies to be directly converted last year.

The Sydney-based bank said Thursday it has been granted a general derivatives license by the China Banking Regulatory Commission. It will offer derivatives trading from its branches in Shanghai and Beijing, where it has already built up its dealing rooms in the past year to support yuan trade.

Bank of China International hires Ex-Goldman metals chief – Yahoo Singapore Finance Bank of China International (BOCI) has recruited former Goldman Sachs (GS.N) metals trading chief as an adviser to help it expand its commodities business.

BOCI’s appointment of Stephen Branton-Speak as an adviser is one of the highest profile metals industry hires by a Chinese bank since Hong Kong Exchanges & Clearing Ltd bought the London Metal Exchange (LME) for $2.2 billion in 2012.

Auto

Aston Martin recalls 75% of the cars it has built since 2008 – FT.com The British supercar manufacturer is recalling almost 18,000 cars – 75 per cent of the cars it built since 2008 – after discovering a Chinese supplier used fake materials in its cars’ accelerator pedals.

Infrastructure

Rail will cost more than Sh1.3trn – PIC | The Star The committee also found out the railway line awarded to China Roads and Bridges Corporation will be constructed in line with the Chinese specifications.

While appearing before the committee on Monday, former Transport Minister Chirau Mwakwere told the committee that CRBC is a credible firm having constructed the 1,390km Shanghai- Beijing railway.

But the committee has information that CRBC was just a sub-contractor in the project and that various audits carried out in China had raised serious audit queries against the firm.

Sierra Leone News: Amb. Zhao visits Hydro & Regent Grafton Rd Construction sites « Awoko Newspaper Chinese Ambassador Zhao Yanbo less than a month after taking office as the new Chinese Ambassador to Sierra Leone has made a visit to the Hydro construction at Charlotte and the Regent  Grafton Road sites.

Energy

Moving Average Crossover: Great News for CNOOC Limited (CEO)? – Tale of the Tape – NASDAQ.com CNOOC Limited (CEO) could be a stock to avoid from a technical perspective, as the  firm is seeing unfavorable trends on the moving average crossover  front. Recently, the 50 Day Moving Average for CEO broke out  below the 200 Day Simple Moving Average, suggesting short-term bearishness.

This has already started to take place, as the stock has moved  lower by 15.8% in the past four weeks. Plus, the company  currently has a Zacks Rank #4 (Sell) meaning that now could  definitely be the time to get out of this potentially in-trouble  stock.

Ethiopia: How Foreign Oil Companies Annihilated the Lives of Ordinary African Population in Ogaden Region February 13, 2013, China’s oil and gas producer of Petro-trans negotiated with Somaliland’s officials for the possibility to extend Berbera  port’s container and mineral export services to help China’s grasping  ways to profit Ogaden gas and oil financially but has scrapped plans to  build a liquefied natural gas facility. Now China’s GCL Poly Petroleum signed  a Memorandum of Understanding (MoU) on Wednesday January 8, 2014, with  the government of Djibouti that will allow the company to construct two  pipe lines stretching from Ethiopia to Djibouti.

Regional commentators believe that China is good for Africa leaders  but it’s bad for Africans as long as human rights concerned. And it uses  the key president’s issue to penetrating, like the European colonial  times, more or less. Sad and angry Somali people in Ogaden say, every  coming year it is Dhina’s day-dreaming to produce oil and gas from Ogaden region and Ethiopia’s nightmare of being an oil-industry nation, dreams likely to be a needle in a haystack.

China’s Oil Pipeline Through Myanmar Brings Energy—and Resentment – Businessweek Until recently, 80 percent of China’s oil and gas imports were transported by ship through a narrow waterway separating Indonesia and Malaysia, known as the Strait of Malacca. The possibility that hostile forces could one day block that crucial passageway and starve the country of energy has long made China’s leaders nervous.

Petrochina’s Neutral Rating Reaffirmed at Zacks (PTR) | Ticker Report Zacks reiterated their neutral rating on shares of Petrochina (NYSE:PTR) in a research report sent to investors on Tuesday morning, AnalystRatings.Net reports. The firm currently has a $102.00 price target on the stock.

Maintenance at UK’s Buzzard oilfield set for Q2 and Q3 -Suncor – Yahoo Finance UK Britain’s biggest oilfield Buzzard will undergo routine, planned maintenance in the second and third quarters of 2014, Suncor, which owns a 29.9 percent stake in the field, said.

Nexen (KSE: 005720.KS – news), Buzzard’s operator and a unit of Chinese state company CNOOC (HKSE: 0883.HK – news) , has said that it aims to improve Buzzard’s reliability in 2014.

Telecoms

WeChat’s money gifting scheme lures 5 million Chinese users Last week WeChat, the popular Chinese messaging app, launched a feature letting users based in China gift money to friends and family.

The feature went viral in China, and yesterday parent company Tencent disclosed to Chinese media that during the first two days of Spring festival, over five million users participated in the scheme, exchanging over 20 million envelopes. At its apex, over 585,000 people sent over 121,000 red envelopes within a five-minute stretch.

Probe against Huawei over hacking of BSNL network – The Hindu The Centre told Parliament on Wednesday that an inter-ministerial team had been formed to investigate the hacking of the Bharat Sanchar Nigam Ltd. network in Andhra Pradesh allegedly by the Chinese telecom equipment-maker Huawei.

In probably the first case of its kind, the Centre is investigating corporate rivalry between Huawei and another Chinese company, ZTE, which has bagged the BSNL’s network-expansion project, including in Rajahmundry, that led to the alleged hacking.

Property

China’s housing market is looking ugly, which is scary for its financial system – Quartz Sales have “showed a sharp decline” (paywall) in January, compared to Dec. 2013, according to China Confidential, a Financial Times research outfit, even when controlling for softness due to the Chinese New Year holiday. Official data show prices still high in December (the last month for which data were available), but those will likely be dragged down in the coming months.

Housing investment is a big engine of China’s economy. And though slower growth could help end China’s dangerous reliance on credit-backed investment, an abrupt slowdown will freak out global markets and throttle commodity prices.

Chinese government foundation teams up with investors in Hong Kong and Dubai to build resorts catering to elderly | South China Morning Post China Ageing Development Foundation, a fund under the Ministry of Civil Affairs, has formed an alliance with investors in Hong Kong and in Dubai for an aggressive plan to build 12 upmarket retirement and health resorts on the mainland and overseas to tap the country’s rapidly greying population.

“Population ageing in China is expected to lead to a burgeoning demand for aged-care services over the next 40 years. It is now recognised that the ageing of China’s population will have far reaching implications for society, for the economy and for the ability of the government to meet the expectations of the community,” the consortium said in a written reply to questions from the South China Morning Post.

Tech

China’s Top Revenue-generating Mobile Apps of 2013 App ranking and analytics service App Annie released top trends of 2013 on iOS and Google Play. For Google Play isn’t widely accessible in mainland China and the majority of Chinese users download Android apps through dozens of other stores, the revenues in China market recorded by App Annie are mainly from iOS platform. What’s interesting is the most revenue-generating non-game categories include dating, messaging, navigation, among others.

Glu Mobile: Better Play Than Zynga [Apple Inc., Zynga Inc] – Seeking Alpha Following the announcement of Apple’s (AAPL) deal with China Mobile (CHL), the mobile gaming stock most likely to benefit, in my opinion, from a double-whammy of an additional 24 million iPhones held in the hands of gamers in China, of which, whose spending on gaming apps soared 247% (y-o-y) in 2013 is: Glu Mobile (GLUU).

I also expect Glu Mobile could reach $9 in 2015, but, first, the lead-up to my analysis.

Media

This Movie Beat Iron Man 3 in Chinese IMAX Corporation Theaters (DIS, IMAX) But that young record fell this week. That’s right — not even Iron Man’s robotic power could hold back the magical armies of the Middle Kingdom this time. Chinese kung fu production The Monkey King just laughed at Iron Man‘s $1.5 million first-day sales, on its way to a $1.8 million opening day in IMAX theaters.

So IMAX is finding new ways to grow in the crucial Chinese market. Furthermore, the company should be able to apply the lessons learned here in other important markets, accelerating revenue growth in places like Latin America and major European markets.

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 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