China Business Briefs 1/2/14

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

Economy   Finance   Auto   Infrastructure   Energy   Telecoms   Travel   Property   Tech   Food

Economy

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

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

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

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

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

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

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

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

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

Finance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Auto

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

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

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

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

Infrastructure

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

Energy

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

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

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

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

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

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

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

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

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

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

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

Telecoms

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

Travel

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

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

Property

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

Tech

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

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

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

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

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

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

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

Food

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

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

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

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

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

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

Posted from Diigo.

China Business Briefs 29/1/14

I will be travelling over the next two days and might be unable to blog during that time. My visit to Beijing has generally been very pleasant. Will be back in three months.

ECONOMY

China’s retail investors are leading grassroots financial reform | China Economic Review Grassroots movements bring to mind angry petitioners on the streets or the little man fighting against the big, ugly institution. It doesn’t conjure images of investors handing over their cash to bankers, who then pile that money into real estate or coal projects.

But in China, a grassroots financial movement fomenting off the balance sheet involves just that. And in some ways, it too is the story of a marginalized group of people, depositors, pushing back against an almighty, unmovable force, the People’s Bank of China (PBOC).

Micro-credit firms lent RMB227bn last year: People’s Bank｜WantChinaTimes.com China had 7,839 micro-credit firms by the end of last year, which made 227 billion yuan (US$37 billion) in new loans, according to the People’s Bank of China, the country’s central bank.

The total loan balance reached 819.1 billion yuan (US$135.4 billion), according to central bank figures.

China trust deal raises thorny questions – FT.com The last-minute rescue raises a thorny question for the future of the Chinese economy. Has the deal confirmed the widespread belief that the government will do whatever it can to stave off trouble, hence fuelling more risk-taking? Or has the near-default taught investors that high yields come with high risks?

China’s Rescue of Troubled Trust May Stoke Risk-Taking – Bloomberg China’s eleventh-hour rescue of wealthy investors in a high-yield trust threatens to drive more money into the nation’s $6 trillion shadow-banking industry, undermining regulators’ efforts to deter excessive risk-taking.

Industrial & Commercial Bank of China Ltd., the nation’s largest lender, yesterday told customers who had invested in the 3 billion-yuan ($496 million) trust product that they can sell their rights to unidentified buyers to recoup the principal. Some clients plan to visit ICBC branches to demand more interest ahead of tomorrow’s 5 p.m. deadline for accepting the offer, according to Du Ronghai, a Guangzhou-based investor.

China Industrial Profit Growth Further Declines in December: NBS-Caijing Total profits of China’s industrial companies rose 6 percent year-on-year to  CNY942.53 in December, compared with a growth of 9.7 percent a month ago and 17.3 percent a year earlier.

For the full year of 2013, industrial profit rose 12.2 percent year-on-year  to CNY 6.28 trillion, compared with a growth of 5.3 percent in the previous  year.

China’s ‘invisible man’ quits forex role – FT.com Zhu Changhong had been the chief investment officer for the State Administration of Foreign Exchange, the agency that manages China’s $3.8tn mountain of foreign exchange reserves. He left a starring role at Pimco, the world’s largest bond house, to join SAFE in late 2009 and is now expected to return to the private sector, according to two people familiar with his decision.

Trained as a physicist, Mr Zhu earned the “invisible” moniker for his extreme reluctance to make public appearances. He has never given any media interviews, and the only photos of him online are a grainy picture from his student days and an unidentified shot from the time of his return to China.

China yuan weakens to 6.1073 against USD Wednesday – Xinhua | English.news.cn The Chinese currency Renminbi, or the yuan, weakens 20 basis points to 6.1073 against the U.S. dollar on Wednesday, according to the China Foreign Exchange Trading System.

China Further Eases Foreign Exchange Control over Capital Accounts | China Briefing News The State Administration of Foreign Exchange (SAFE) of China promulgated a circular on January 24 to improve and further ease the administrative control over capital account foreign exchange items (Huifa [2014] No.2, hereinafter referred to as “Circular 2”). Circular 2 will enter in to effect on February 10.

The approval procedure for profit repatriation will be simplified and banks will no longer review any transaction documents if the remittance amount is under US$50,000. For remittance of profit over US$50,000, banks in principle do not need to review the audit report and capital verification report; however, they will still check the board resolution on profit distribution and the original tax record-filing documents to verify the authenticity of the transaction.

The Misfortunes of the Big Four in China Overall, the judge’s 112-page ruling on the audit work of the Big Four in China makes for interesting, and at times damning, reading. You can click here to access it.The judge’s decision should probably be required reading for anyone working in Chinese private equity and capital markets transactions with Chinese companies. Investments in Chinese companies worth many tens of billions of dollars rely, at least to some extent, on the accuracy and reliability of Big Four audits. That audit bedrock looks shakier now than it did a week ago.

H7N9 bird flu: Chinese provinces halt live poultry trade | World news | theguardian.com Authorities in eastern China have banned live poultry sales after an increase in the number of people infected with the H7N9 strain of bird flu, state media has reported as the busy Chinese new year travel period gets under way.

So far this year H7N9 has killed 19 people in China and infected 96, according to the official Xinhua news agency, which cited the Chinese Centre for Disease Control and Prevention.

Chinese firms dominate Arab Health Congress 2014｜WantChinaTimes.com Chinese companies are the biggest participant in the ongoing Arab Health Congress 2014, the largest health fair in the Middle East and North Africa that started in Dubai on Monday.

Among the 3,900 companies participating in the four-day congress, 510 are from mainland China, 29 are from Hong Kong, while 107 are from Taiwan.

China ends 2013 with a total of 417 million 3G subscribers China’s grand total on 3G at the end of 2013 is a whopping 417.3 million, up from 233.5 million in December 2012; that’s a 78.7 percent rise. Check out the growth from 2010 to the most recent number:

Beijing Urges Steelmakers to Pursue Overseas Iron-Ore Assets – WSJ.com China is urging its steel companies to buy more iron-ore assets abroad amid signs that many have been losing their appetite for such investments.

The National Development and Reform Commission this week said Chinese steelmakers should keep building up stakes in global iron-ore assets in the interests of China’s strategic security and “speaking rights,” or influence, in global trade. China’s ore imports rose 10% last year to a record 819 million metric tons, according to customs data.

Chart Of The Day: How China’s Stunning $15 Trillion In New Liquidity Blew Bernanke’s QE Out Of The Water | Zero Hedge You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion – some two and a half times the GDP of China!

UK embraces Chinese investment Chinese interest appears to lie in the future of high speed rail in the UK. China currently has the world’s largest and fastest growing high speed rail network of its own, boasting nearly 6000 miles of track, and may now be turning its attention to the UK’s own aging and oversubscribed railway network. Although Chinese investors will not be placing any direct financing into the construction phase of the new £50bn ‘HS2’ line, Chinese bidding for the concession to operate the new railway or invest in schemes around the route and its stations seems likely. Chinese Premier Li Keqiang noted, following talks with Mr Cameron, that “The two sides have agreed to push for a breakthrough and progress in co-operation in the areas of nuclear power and high speed railway.”

Norway’s sovereign fund halves coal exposure | Reuters Norway’s $817 billion sovereign wealth fund, the world’s largest, has halved its exposure to coal producers, with most of its remaining interest in the sector in Chinese companies, its chief executive said on Tuesday.

COMPANIES

Citic Group Unit May Invest in Trust Product, Morning Post Says – Bloomberg A unit of Citic Group Corp., a Chinese state-backed conglomerate, may take part in bailing out investors in a troubled 3 billion-yuan ($496 million) trust product, Oriental Morning Post reported.

The transaction is under way, the newspaper reported yesterday, citing a person close to Industrial & Commercial Bank of China Ltd. (601398) The person declined to give the name of the unit or the amount it plans to invest, according to the report.

China’s Tencent WeChat App Launches Electronic Hongbao – China Real Time Report – WSJ When China celebrates the Lunar New Year on Friday, millions of red envelopes stuffed with cash are expected to change hands among families, friends and colleagues. But this year, there’s a new spin on this old tradition, with the gift-giving happening right on people’s smartphones.

On Tuesday, Wechat, the social networking and messaging app from Chinese Internet giant Tencent Holdings, launched a new feature that allows users to send these envelopes of money to each other electronically. Givers must first link the app to their bank accounts, then they can send specified amounts of money to their Wechat contacts through a personal message or to put the cash up for grabs in chat rooms full of friends. Receivers can transfer the funds back into their own bank accounts. (This reporter successfully grabbed three this morning.)

Alibaba Posts Profit on Demand Ahead of Potential IPO – Bloomberg Net income attributable to ordinary shareholders was $792 million in the three months ended September, up from a loss of $246 million a year earlier, according to a presentation from Yahoo! Inc. (YHOO), which owns a 24 percent stake in China’s largest e-commerce company. Revenue rose 51 percent to $1.78 billion.

Weibo’s value shrinks by US$500m after market report｜WantChinaTimes.com The stock price of Sina Weibo, China’s equivalent of Twitter, fell by 11.32% from US$84.60 on Jan. 15 to US$75.02 on Jan. 17, which was a result of a recent Chinese report, according to Beijing’s Economic Observer.

The China Internet Network Information Center (CNNIC) released a report on Jan. 16 in which it said that the number of Weibo users had dropped by 9.2%, or 27.83 million last year. The market misinterpreted the Weibo or microblog users mentioned in the report as Sina Weibo users, as a result of which Sina Weibo’s market value shrunk by US$500 billion after the report’s release.

PetroChina: Discounted Growth Play With Significant Upside – Seeking Alpha PetroChina (PTR), China’s only super major, has a history of strong financial growth and is well positioned to take advantage of China’s growing demand for diversified energy sources. Currently trading at only 9.3x earnings, the PTR stock looks like the rare gem that offers growth at a value price.

Wal-Mart to upgrade China vendor compliance after state TV criticism | Reuters U.S. retailer Wal-Mart Stores Inc (WMT.N) said on Wednesday it will upgrade its vendor compliance process in China, requiring more documentation and making use of a computer-based system to help suppliers manage associated paperwork.

The announcement came after state-owned China Central Television (CCTV) criticized the world’s No. 1 retailer for circumventing its quality control process and fast-tracking some products with higher profit margins.

Shipping lines shed assets to offset poor performance – Business – Chinadaily.com.cn China Shipping Container Lines Co, a main subsidiary of State-owned China Shipping (Group) Co, has forecast a net loss of 2.63 billion yuan ($435 million) for 2013, as the company underwent a shrinking global shipping market, aggravated by the challenges of overcapacity and international competition.

To avoid financial loss, CSCL began to sell its quality assets in the second half of 2013. However, the company only managed to complete a 49 percent share sales of Lianyungang New Oriental International Container Wharf with Singapore’s port operator PSA International Pte Ltd within the year, gaining 260 million yuan in sales profit.

Huawei, Lenovo poised to close gap with smartphone leaders | South China Morning Post Huawei Technologies and Lenovo are expected to intensify competition in the global smartphone market after both companies recorded strong unit shipment growth last year.

Data released yesterday by technology research firm IDC showed the two Chinese technology giants captured a combined 9.4 per cent market share last year, when total industry shipments topped 1 billion units for the first time.

Why Baidu Acquired Renren’s Group-Buying Site By acquiring the remaining shares in Nuomi, Baidu actually does something rare, as the company is well-known for buying only controlling stakes. At the same time, by selling all of its stake in Nuomi, Renren –which has been largely overtaken by Sina‘s Weibo and Tencent‘s WeChat in the past two years– may be trying to make its portfolio of services more compact. The social network company may focus more on improving user and monetization metrics of its promising game business, rather than releasing new services.

Hong Kong Property Tycoons Settle Family Feud – China Real Time Report – WSJ A yearslong feud involving the family behind one of the world’s biggest property empires appears to have come to a happy ending, with a deal reached to equally divide family-owned shares in Sun Hung Kai Properties Ltd. to the three Kwok brothers and their families.

The agreement in essence restores eldest brother Walter Kwok as a beneficiary of the family trust that controls the property company, commanding a market capitalization of 260 billion Hong Kong dollars (US$33.5 billion).

CICC, Qianhai Financial Plan $3.3B Joint Cross-Border Fund Beijing-based China International Capital Corporation (CICC) has signed a memorandum of understanding with Qianhai Financial Holdings, a wholly-owned subsidiary of the Administrative Bureau of Qianhai Economic Zone in Shenzhen, to establish a joint development fund, according to an announcement.

The CICC Qianhai Development Fund will target to raise a total of RMB20 billion ($3.3 billion). It plans to complete first closing of RMB5 billion ($833 million) before June 30 this year.

Toyota Supplier Sees China Sales Doubling on Orders From VW, GM – Bloomberg Tsubakimoto Chain Co. (6371), a Toyota Motor Corp. (7203) supplier, forecasts China auto parts sales to more than double in four years as carmakers including Volkswagen AG and General Motors Co. raise orders to diversify supply chains.

The maker of transmission chains and gears expects sales to jump to more than 12 billion yen ($117 million) by March 2018, Toru Fujiwara, managing executive officer, said in a Jan. 27 interview. The board has approved plans for a new plant in China as early as this year, he said.

China Money Network − KPCB-Backed Chinese Group-Buying Site ManZuo.com Sold To Suning Nanjing based Chinese home appliance retailer Suning Commerce Group Co. says it has acquired Chinese group-buying site ManZuo.com for around $10 million, according to media reports.

Kingsoft to Take Security Software Business KIS and List it on U.S. Market Kingsoft Corporation (SEHK: 3888), a leading applications and entertainment software developer in China, announced today that it planned to spin off security software business and list the sector on NASDAQ or New York stock exchange. Kingsoft has filed to Hong Kong Stock Exchange for the spin-off.

Kingsoft’s security software business is operated by Kingsoft Internet Software Holdings Limited (KIS), also known as Kingsoft Network in China. The company is principally engaged in development and operation of security software and web browser Liebao, as well as cross-platform value-added services and online advertising.

Noble Group Limited (via noodls) / NOTIFICATION ON SUBSIDIARY Noble Group Limited (the “Company”) wishes to announce that on 23 January 2014, the Company’s wholly-owned subsidiary, Noble Clean Fuels Limited (“NCFL”), has subscribed for a 51% shareholding interest in Watt Power Limited (“WPL”), a company incorporated in the United Kingdom.

Moody’s assigns A1 to China Shipping Overseas Finance 2013 Limited’s bonds Moody’s Investors Service has assigned a definitive A1 rating to the credit enhanced bonds issued by China Shipping Overseas Finance 2013 Limited (unrated).

The bonds are supported by an irrevocable standby letter of credit from  the Bank of China Limited (BOC, A1/P-1/D, stable),  Macau Branch.

RPT-UPDATE 2-Shaanxi Coal debut hit by volatility in China’s reopened IPO market | Reuters Shares of Shaanxi Coal Industry Co Ltd jumped in their Shanghai debut but came off earlier stratospheric highs in a roller coaster day as China’s newly reopened initial public offering market drew out aggressive punters.

Shaanxi Coal, which raised $660 million in the biggest mainland China listing since 2012, had soared by its daily limit of 44 percent in early trade. That triggered a suspension until five minutes before the market’s close and prompted an announcement from the exchange that it had taken measures against two retail investors who had driven the price up aggressively.

KWM advises Agricultural Development Bank of China on RMB bonds issuance | Firm News | The Lawyer King & Wood Mallesons (KWM) has advised the Agricultural Development Bank of China (ADBC) on the successful issuance of RMB bonds worth ¥3bn (£300m) and getting listed on the Hong Kong Stock Exchange.

The bonds are issued to institutional investors with terms of two years and three years respectively at the interest rate of 3.08 per cent and 3.28 per cent per annum.

Posted from Diigo.

China Business Briefs 19/1/14

Apologies for the brief hiatus. In the same way that you get your shots before travelling to some countries, you really ought to sort out your internet connections before you travel to China.

ECONOMY

ICBC Won’t Repay Troubled China Trust Product, Official Says – Bloomberg Industrial & Commercial Bank of China Ltd. is rejecting calls to bail out a troubled 3 billion-yuan ($495 million) trust product, a bank official with knowledge of the matter said, stoking concern that the nation’s first default on such high-yield investments may be looming.

ICBC, which distributed the product sold by a trust company to raise funds for Shanxi Zhenfu Energy Group, won’t assume primary responsibility after the coal miner collapsed, according to the executive, who asked not be identified while negotiations continue. China’s largest bank may be forced to repay investors, most of whom were Beijing-based ICBC’s own private banking clients, Guangzhou Daily reported yesterday.

China Shadow Lender Makes Plans to Recoup Loan – WSJ.com A standoff is brewing in China, as an asset management firm that had used the country’s largest bank as its agent seeks avoid setting a loss-making precedent among shadow lenders in connection with a loan-gone-bad made to a coal miner.

China Credit Trust Co., the shadow lender—a term used to describe nonbank lenders in China—raised 3 billion yuan ($495 million) from customers of state-controlled Industrial & Commercial Bank of China Ltd. and lent it to a little-known coal-mine operator in northern China’s Shanxi province, Wang Pingyan. The farmer-turned-entrepreneur, whose financial problems first came to light in 2012, has been detained by authorities and couldn’t be reached for comment.

Troubled shadow bank product tests no-default policy in China | South China Morning Post A high-yielding investment product based on a loan to an indebted coal company is offering the latest test of Beijing’s willingness to permit defaults in the mainland’s shadow banking system.

If the product, which is scheduled to mature on January 31, fails to pay out as promised, it could shatter the widespread assumption that even risky investments carry implicit guarantees from the government and state-owned banks.

UK’s drive to be offshore hub for Chinese currency gains pace – Yahoo Singapore Finance China decided late last year to give UK investors the right to buy up to 80 billion yuan (7.90 billion pounds) of mainland stocks, bonds, funds and money market instruments directly using its currency, making Britain the first country outside Asia with such status.

Last week, the state-controlled Bank of China also sold a 2.5 billion yuan ($413 million) bond in London, the biggest issued in the currency – which is also known as the renminbi (RMB) – so far in the British capital.

Inland provinces in China see boost in foreign trade｜Markets｜Business｜WantChinaTimes.com A total of six inland provinces — Henan, Anhui, Yunan, Shaanxi, Gansu and Guizhou — along with the municipality of Chongqing posted an over 15% growth in foreign trade during 2013. In comparison, the contribution of foreign trade in seven coastal provinces or municipalities dropped 0.9% to 79%, according to China’s General Administration of Customs.

Bank profit growth could miss 10-pct target: analysts – Xinhua | English.news.cn China’s listed banks may see profit growth under 10 percent this year as financial reform and Internet businesses take their toll on the sector.

Chief economist at the Bank of Communications Lian Ping forecast net profit growth for listed banks at around 8.3 percent this year, a notable retreat from the double-digit era, according to China Securities Journal. China Merchants Securities analyst Luo Yi put the figure at 9.4 percent.

China decries U.S. spending bill | Reuters China’s Commerce Ministry has condemned a $1.1-trillion spending bill passed by the U.S. Congress last week over clauses that limit technological purchases from the Asian giant, saying they clash with the principles of fair trade.

In a weekend statement, China’s Commerce Ministry said the move “went against the principles of fair trade” as it sought to curb purchases of Chinese technology and export of satellites and parts to China.

Investment pact ‘means better market access’ – Chinadaily.com.cn China and the European Union will open negotiations next week on a bilateral investment agreement, EU Ambassador Markus Ederer told a news conference on Friday in Beijing.

Even amid weak global economic conditions in recent years, EU-China trade has grown steadily. Bilateral trade expanded 2.1 percent last year to $559.06 billion, according to China’s Ministry of Commerce.

PBOC sets sights on ‘zombie’ financing vehicles[1]- Chinadaily.com.cn The People’s Bank of China has reiterated its resolve to root out “zombie” local government financing vehicles this year and ensure that urbanization funding moves through standard market channels.

The central bank said in an online statement on Thursday that it will “exhaustively clean up” local government financing vehicles that “have poor credit, ambiguous functions and unsustainable financial conditions”.

China Home Prices Advance as Guangzhou, Shenzhen Jump 20% – Bloomberg New-home prices in China’s cities defined by the government as first tier rose more than 15 percent last month, led by Guangzhou and Shenzhen in the south, as local property curbs failed to deter buyers.

Prices climbed 20 percent in Guangzhou and Shenzhen from a year earlier, and jumped 18 percent in Shanghai and 16 percent in Beijing. They increased in 69 of the 70 cities tracked by the government, the National Bureau of Statistics said in a statement today.

Chinese Property Prices Rose in December – WSJ.com New-home prices in major Chinese cities in December were up 9.2% from a year earlier, but month-to-month figures suggest Beijing’s efforts to cool the market are continuing to have an impact.

Prices in December were up from a year earlier in 65 of the 70 cities surveyed by the government, according to data released on Saturday. At 9.2%, the average price increase marked an acceleration from November’s 9.1%, according to Wall Street Journal calculations.

Austerity drive crimps gift-giving by China’s rich – FT.com The Hurun Report, chronicle of all things wealthy in China, said in its 2014 Luxury Consumers Survey that 25 per cent fewer people plan to give a gift over Rmb5,000 ($826) at Chinese New Year – in two weeks’ time – than last year. Overall, their average luxury spending fell by 15 per cent, from Rmb1.77m last year to Rmb1.5m this year, “possibly due to the impact of anti-corruption initiatives and a slowdown in the economy”, Hurun said.

The Rise of China’s Innovation Machine – WSJ.com Chinese companies still face a perception problem among consumers in many parts of the world that their products aren’t as high-quality or reliable as others. Some foreign competitors have alleged that Beijing gives unfair advantages through subsidies, cheap financing and control over the currency market.

But, many executives at Chinese and Western companies contend, China’s technology sector is reaching a critical mass of expertise, talent and financial firepower that could realign the power structure of the global technology industry in the years ahead.

Private Chinese Companies Struggle to Invest in America, Expert Says – In 2012, direct investment made by private Chinese firms for the first time outpaced that by their state-owned counterparts in terms of value. In 2013, total investment by private firms into the U.S. again increased by US$ 5 billion to about US$ 9 billion.

Despite the surge, a large number of private Chinese firms are seeing their attempts to tap the U.S. market fail. Data from the SoZo Group, a Hong Kong company that provided investment expertise to businesses in China, shows that 90 percent of Chinese private enterprises’ attempts at setting up manufacturing in the United States or Europe fail.

Guangdong Tells Certain SOEs to Turn over More of Their Profits – The figure is significantly more than the previous level of 10 percent, but is still lower than the 30 percent target a recent meeting of the Communist Party’s 18th Central Committee called for reaching by 2030.

Wholly state-owned companies in the southern province of Guangdong will turn over 15 percent of their profits to the government this year, a report the provincial finance department submitted to the local people’s congress says.

China Private Equity, M&A & Capital Markets, from China First Capital The long dark eclipse is over. The sun is shining again on China’s capital markets and private equity industry. That’s good news in itself, but is also especially important to the overall Chinese economy. For the last two years, investment flows into private sector companies have dropped precipitously, as IPOs disappeared and private equity firms went into hibernation. Rebalancing China’s economy away from exports and government investment will take cash. Lots of it. Expect significant progress this year as China’s private sector raises record capital and China’s state-owned enterprises (SOEs) gradually transform into more competitive, profit-maximizing businesses.

The Future of the Accounting and Legal Professions in China | China Briefing News The accounting profession in China and, more generally, Asia, will undergo dramatic changes over the next decade as competition intensifies and business complexity increases, according to the Intuit 2013 Future of Accounting Report. More accounting or tax-related products and services will enter the market as banks, financial services companies, software and Internet firms, and even governmental bodies, innovate and develop new offerings.

CSRC Launches Inspections Linked to Pricing of New Shares – The China Securities Regulatory Commission (CSRC) said on January 15 it has sent out teams to inspect underwriters and financial institutions involved in pricing new shares that were about to hit the A-share market.

The inspections target 13 IPO underwriters for 13 issuing companies and 44 financial institutions that took part in the price inquiries. They will be examined for compliance with regulations, the CSRC said, suggesting as usual that it will check whether they inflated the new shares’ offering price.

FDI in China Springs Back by 5.25 Percent in 2013 | China Briefing News Total foreign direct investment (FDI) in China rose by 5.25 percent in 2013 after the decline which was witnessed in 2012. China’s Ministry of Commerce (MOFCOM) recently disclosed this information during a routine press conference on January 16.

COMPANIES

49 million Alipay Users Have Contributed to Mutual Fund Yuebao. WeChat Adds A Me-too One. When WeChat stealthily launched a Yuebao clone, named Licaibao (means a powerful tool for financial management) a couple of days ago, Alipay announced that 49 million Alipay users had contributed 250 billion yuan (roughly $41 bn) to the mutual fund Yuebao as of January 15.

Chinese microblog use fell 9% in 2013, government says – WSJ.com The report doesn’t specify how the data about user numbers were collected or which microblogs the data references. Internet giants Sina Corp. and Tencent Holdings Ltd. operate China’s two largest microblog services. Sina said in November in its most recent earnings report that daily active users grew 11.2% to 60.2 million in the third quarter from the second. Tencent didn’t release third-quarter figures for its weibo users.

Making money from WeChat: Nice little earner | The Economist IT IS hard to make money peddling social media anywhere. During their first few years in business, Facebook and Twitter lost pots of money. Yet somehow Tencent, an innovative Chinese firm that released the WeChat app in 2011, seems to have cracked the code. Alicia Yap of Barclays, an investment bank, forecasts that WeChat will earn some 6.8 billion yuan ($1.1 billion) this year and 9.6 billion yuan next year. The reasons for optimism include clever integration of the app with other money-making services and spectacular growth in users at home and, unusually for a Chinese app, abroad.

Baidu Releases Wireless Music Box Priced at $16 After releasing several smart devices last year, Baidu continues its forays into hardware industry by releasing a wireless music box to enrich its smart gadget lineup. The first batch of 20,000 sets is on sale at online retailer JD with a price tag of 99 yuan ($16.35) .

Tencent’s 10TB of free cloud storage is hands down the best Welcome to Tencent’s Weiyun. In July 2012, the Chinese web giant released its cloud service with a whopping 10TB of free storage, and it now reports 300 million registered users. This week, Tencent released an update that dramatically improved the interface and features. Only a Chinese version is available for now, but Tencent (HKG:0700) plans to launch an English-language version sometime this year.

China’s Tencent latest online platform to launch fund product | Reuters China’s Tencent Holdings Ltd  quietly rolled out its first financial services product for its mobile messaging app WeChat on Thursday to compete against similar offerings from rivals Alibaba Group Holding Ltd and Baidu Inc.

Tencent teamed up with China’s Huaxia Bank Co to offer the product via its three year-old WeChat messaging app, which boasts 272 million global monthly active users. The service was released on a limited basis and is not available to all users.

Peugeot Board to Discuss Possible Investment – WSJ.com The board of loss-making car maker PSA Peugeot Citroën is set to meet Sunday to discuss a possible investment from the French government and China’s Dongfeng Motor Co., as well as from the Peugeot family, people with direct knowledge of the matter said Friday.

Worker error, corrosion caused Nov. pipeline blast, Sinopec says – UPI.com Chinese energy company Sinopec published a statement on a fatal November oil pipeline explosion, blaming worker error and corrosion for the accident.

“After the leakage, rescue workers used hydraulic hammer[s] to break the concrete trench cover slab, and sparks ignited the vapor in the trench and caused an explosion,” Sinopec said in a statement Monday.

Sinopec said it did not take full responsibility for safety at the site while provincial officials didn’t identify the risks properly.

Sina Weibo Loses More Users to Tencent’s WeChat -Caijing Sina Weibo, the once most popular social networking site in China, is losing large number of users last year to WeChat, an instant messaging app where Chinese people are spending more time every day.

The total number of Weibo users dropped 27.83 million from a year ago to 281 million by the end of 2013, a report released by the China Internet Network Information Center (CNNIC) on Thursday showed.

Challenges ahead for Zhou Jiping at the helm of CNPC｜WantChinaTimes.com Zhou Jiping has assumed the chairmanship of China National Petroleum Corporation (CNPC), taking on the formidable mission of revitalizing the state enterprise’s operations, in the wake of the 180 billion yuan (US$29.8 billion) market value plunge in 2013.

The company’s share price closed at 7.71 yuan (US$1.27) on Dec. 31, 2013, down 11.68% from 9.04 yuan (US$1.49) a year earlier and a far cry from its peak level of 48.62 yuan (US$8.04) in 2007. In addition to the share-price drop, the company was inflicted by a litany of woes in 2013, including the ousting of many executives, heavy fines for violation of environmental regulations, and an outbreak of security incidents.

Apple’s China Data Seems Suspicious (AAPL, GOOG) Apple (NASDAQ: AAPL) CEO Tim Cook, in a recent interview with The Wall Street Journal, claimed that Apple’s iOS devices account for 57% of all mobile Internet browsing in China.

Cook didn’t give a source for his data — it’s likely that he’s relying on internal Apple metrics of some sort. At any rate, I find that figure is a bit hard to believe. Google‘s (NASDAQ: GOOG) Android has taken China by storm in recent quarters, as Samsung, Xiaomi, and other Android handset makers dominate the Chinese market.

Itemized online transactions reveal China spent massively in 2013｜Markets｜Business｜WantChinaTimes.com Alipay released the 2013 National Shopping Records on Monday, saying the annual average per capita expenditure of its users exceeded 10,000 yuan (US$1,653) for the first time, including consumption in online shopping, money transfers, debt repayments and fee payments.

Ping An Launches Trial of App to Provide Wealth Management Services – The service is called Yi Qianbao, meaning One Wallet. It is open to only Ping An employees and a small group of select customers for now, the insurer said on January 16.

Users can now transfer money between bank accounts and chat with each other. The app has other functions, such as one that allows people to split bills conveniently, the company said.

Gov’t-Backed Consolidation of Hebei Steel Industry Melts Away – In 2010, the government of the central province of Hebei, which produces about one-quarter of the country’s steel, arranged a consolidation of Hebei Iron & Steel, the country’s largest steelmaker, and 12 private firms in the hopes of boosting competitiveness and better regulating the industry.

There are two main reasons for the break-up, said an executive at Hebei Iron & Steel who did not want to be named. Hebei Iron & Steel wants to focus on managing its assets and the private companies no longer want to remain part of the group.

A China Hand Loses Touch – In 2006, familiarity with Chinese business culture apparently helped Palmer cut an iron ore mine deal with CITIC Pacific, a Hong Kong-listed subsidiary of one of the country’s biggest state-run investment conglomerates.

Since then, however, Palmer and CITIC Pacific executives have battled bitterly over the contract they signed for the magnetite ore operation in Western Australia’s Pilbara region. Their legal disputes have grown increasingly complicated, to the point where other Chinese executives have apparently discussed pulling their companies out of Australia.

China-focused Boyu Capital raises $1.5 bln for 2nd buyout fund-sources – Yahoo Finance China-focused private equity firm Boyu Capital, whose partners include former TPG Capital executive Mary Ma and the grandson of former Chinese president Jiang Zemin, has raised $1.5 billion for its second buyout fund, according to people with knowledge of the matter.

Boyu, which was established in 2010, is an investor in e-commerce giant Alibaba Group Holding Ltd and debt manager China Cinda Asset Management Co Ltd. Cinda has risen 48.5 percent since listing in December, while China’s biggest e-commerce company Alibaba is widely expected to launch an IPO this year.

Construction of the Yaoundé-Nsimalen highway takes shape – Business in Cameroon The Cameroon government has just hired the Studi International, Cenor and ECTA BTP technical study firms to oversee the construction of the Yaoundé-Nsimalen highway’s “rural” section that runs some 10.6 km for 2 billion FCfa.

The roadwork initially scheduled for early 2013 will now be completed in thirty-six months by the Chinese company, China Communications construction Company Ltd for 36.7 billion FCfa.

Business Newswires : euronews : the latest international news as video on demand Chinese carmaker BAIC Motor, part-owned by Daimler AG , plans to raise up to $2 billion in a Hong Kong initial public offering, hoisting its target as China’s auto industry purrs to solid growth.

Fueling BAIC Motor’s ambitions, the world’s biggest auto market is moving toward a second year of double-digit sales increases. A year ago, in the early planning stages, BAIC Motor’s target was closer to $1 billion.

China’s Jingdong Said to Plan $2 Billion IPO for Second Half (1) – Businessweek Beijing Jingdong Trading Co., the Chinese online retailer backed by Saudi Prince Alwaleed bin Talal, plans to raise about $2 billion in an initial public offering in the second half, three people with knowledge of the matter said.

The Beijing-based company is working with Bank of America Corp. and UBS AG, said the people, who asked not to be identified because the details are private. Jingdong is leaning toward a U.S. listing, although Hong Kong is another potential IPO destination, they said.

30,000 houses from China, and a big earthquake – In Focus – Jamaica Gleaner – Sunday | January 19, 2014 The Chinese company, Gao Zhen Real Estate and Development Company Ltd, is either stupid or knows something which Chairman Douglas and the NHT do not. They are proposing delivering around 6,000 units per year of low-income, high-quality housing solutions while creating sustainable employment for some 1,500 skilled and unskilled Jamaicans.

Your Oil and Gas News – CNOOC Limited – Liuhua 19-5 gas field starts production Liuhua 19-5 is located in the Pearl River Mouth Basin of the South China Sea with an average water depth of about 185 meters. This project was designed to share the existing producing facility of Panyu 30-1 gas field, and two new producing wells were drilled. Liuhua 19-5 is expected to hit its peak production of 29 million cubic feet per day in year 2014.

See how Noble Group earnings could rebound in 2014 | Singapore Business Review The earnings outlook for Noble Group is looking brighter as prices and crush margins may soon see a resurgence, according to Barclays Research.

Noble Group may see its agricultural business margins recover as well as revive its volume growth, which will help the company post better earnings this year.

ICBC to Sell CNY100bn Certificates of Deposit in 2014 | 4-Traders Industrial and Commercial Bank of China announces that it plans to issue CNY 100 billion certificates of deposit in 2014 after ten Chinese banks completed the first round of such issuances at last year end.

China’s CNPC foreign equity oil, gas output up 12.9% in 2013 – MSN Malaysia News China National Petroleum Corporation (CNPC) recorded a 12.9% increase in its overseas equity oil and gas production last year, state media and the company said today, a growth pace rapidly accelerating from the previous year.

CNPC, parent of PetroChina Co Ltd, said its equity share of oil and gas output outside China in 2013 amounted to 59.2 million tonnes of oil equivalent or about 1.18 million barrels per day (bpd).

Sinopec Engineering Entered Into RMB18.67 Billion Contract Providing One-stop EPC Servi… | 4-Traders SINOPEC Engineering (Group) Co., Ltd. (“SEG” or “the Company”, together with its subsidiaries known as the “Group”) (stock code: 2386.HK) announced that the Company and Zhong Tian He Chuang Energy Corporation Limited today entered into an EPC contract for the development of a new coal chemical project (the “Project”) in Uxin Banner, Ordos, Inner Mongolia.

Posted from Diigo.

China Business Briefs 8/1/14

ECONOMY

PBOC Shows Strong Hand on China’s Shadow Banks – WSJ.com China’s move to step up regulation of its shadow-banking system highlights the weakness of its financial regulators, which have failed to slow the country’s lending boom even as top government officials raised concerns.

The lack of strong action by China’s securities and banking watchdogs to limit the growth of lending outside traditional banks contrasts with aggressive moves by the country’s central bank, which has emerged as the main bulwark against shadow banking.

Beijing’s assault on property developers threatens global economy – FT.com Last week, China Central Television doubled down on its attacks on real estate companies for owing billions in unpaid land taxes, training its guns on no less a target than the country’s biggest listed developer, Vanke. The report marked the second time in little more than a month that the broadcaster had made these accusations. Developers have denied them both times.

What might seem like an obscure tussle between CCTV and the property companies could turn out to be one of the most serious risks facing the global economy this year.

China to try to make local, national GDP stats match amid skepticism | Reuters The difference between gross domestic product reported in aggregate by China’s 31 provinces in 2011 and the national level, for instance, showed a huge discrepancy, roughly equivalent to the GDP of Turkey.

“We will promote statistical reform and innovation this year to actively and steadily push forward unified accounting for regional GDP,” said Ma Jiantang, head of the National Bureau of Statistics.

Convertibles perk up China’s limp markets – FT.com Chinese groups turned to convertible bonds in near record numbers last year as it became the most reliable way to issue a large chunk of equity – and so support growth – for companies that are already listed.

The market is dominated by domestic investors, but foreigners are becoming more active as corporate interest in using this financing tool means companies are prepared to offer convertible bonds at cheap premiums. The bonds allow issuers to offer debt that pays investors a low monthly coupon and gives them the option to convert the security into the issuer’s stock if it climbs to a preset premium over the bond’s tenure.

Hiring demand hits five-year low – Business – Chinadaily.com.cn About 45 percent of 1,000 employers, who were polled said they will increase the head count at their companies in the first quarter of the year, down 9.7 percentage points from the previous quarter. Some 44 percent of surveyed employers are expecting to keep staffing steady in the next three months, up 7.6 percentage points from a quarter earlier, while more than 10 percent of employers intend to cut their workforce in the next quarter, up 2.1 percentage points.

Crisis Risk Flagged by Haitong as Debt Snowballs: China Credit – Bloomberg Liabilities at non-financial companies may rise to more than 150 percent of gross domestic product in 2014, raising default risks, according to Haitong Securities Co. The ratio of 139 percent at the end of 2012 was already the highest among the world’s 10 biggest economies, according to the most recent data. That compares with 108 percent in France, 103 percent in Japan and 78 percent in the U.S., figures from the Bank for International Settlements and the World Bank show.

Regulators Push Banks, Giant SOEs to Buy Back Stocks: Paper-Caijing Chinese authorities have expressed hopes that major companies with shares below their net asset value, or NAV, should buy back stocks on the stock exchange, reported by the Shanghai Securities News.

The “advice”, delivered at a meeting gathering officials largely from banks and large SOEs, came at a time when Chinese stocks extend their dramatic 2013 falls into 2014. A liquidity squeeze in June and again in December had hit China’s stock market, making it one of the world’s worst performing in 2013.

Three Priorities Identified for Marketization of Financial Resources -Caijing Financial resources are an integral part of capital factors, and achieving the market-oriented configuration of financial resources is an important element of perfecting the socialist market economic system. Overall, China’s economic development has an advantage in that the savings rate is relatively high, so if financial resources can be effectively mobilized and efficiently utilized, it can strongly support the sustained, healthy development of the country.

In the process of promoting market-oriented reforms of financial resources, we should pay special attention to the following three areas:

Is China About to Let the Yuan Rise? Don’t Hold Your Breath – China Real Time Report – WSJ China’s central bankers are beginning to think the country’s huge pile of reserves – which is still growing as authorities intervene to keep the yuan from rising too fast– is excessive. Curbing its growth could even help the economy’s transition from an export-led model to one based on domestic consumption.

China’s World: Beijing Should Scrap the GDP Target – WSJ.com An alarming surge in local government debt reflects China’s obsession with gross domestic product growth, which encourages officials at every layer of the bureaucracy to borrow and spend, often recklessly.

Rural houses to be covered by system – Business – Chinadaily.com.cn China will establish a unified real estate information database where urban and rural housing will be registered, the 21st Century Business Herald reported on Wednesday.

Analysts said this means that houses in rural areas, now under collective-ownership, could be granted property right certificates, paving the way for selling.

PBOC Should Be More Flexible in Managing Liquidity – BoCom – WSJ.com China’s central bank should be more flexible in managing liquidity this year as it presses ahead with market-based interest rate reforms, Bank of Communications Co. (3328.HK, 601328.SH) chief economist Lian Ping said Wednesday.

“It’s better to push forward interest rate liberalization when liquidity conditions are relatively loose,” Mr. Lian said at a news briefing to release the bank’s research reports for 2014.

China Adds Nearly CNY400Bn Outstanding Funds for Forex in Nov. -Caijing November’s new outstanding funds for forex were at  CNY399.3billion($66billion), according to the People’s Bank of China (PBoC),  slightly down from the precious month when the figure hit over 441.6billion, the  second highest seen in 2013, but remained at a relatively high level. China  added a staggering CNY 683.7billion last January.

China’s Credit Hole Seen Limiting 2014 Growth Prospects – Bloomberg China’s new credit probably fell by a record in the second half amid a crackdown on speculative lending, limiting prospects for economic expansion this year as policy makers focus on controlling financial risks.

The broadest measure, aggregate financing, was 7.1 trillion yuan ($1.2 trillion) based on published figures plus economists’ median estimate for December data due in coming days. That would be about 931 billion yuan less than in July-to-December 2012, the largest drop in figures going back to 2002.

The Guardian blocked by China’s Great Firewall The move comes as a bit of a surprise since both the Wall Street Journal‘s and Reuters’ Chinese-language sites were just unblocked on Monday. Those sites took a two-month involuntary hiatus from the Chinese internet after they published stories about the shady connection between former premier Wen Jiabao and American bank JP Morgan Chase

CCP Face Boycott Over Threats To Slash Salaries – New Tang Dynasty Television (NTD TV) The Central Committee of the Chinese Communist Party(CCP)have been threatened with boycott if they lower the salaries of the Senior Executives of State-Owned Enterprises. – SOE’s. More than 30 State-Owned Enterprises (SOE) oppose the measure and more than 170 executives threaten to resign. Private entrepreneurs pointed out that SOE Senior Executives are not only Government Officials but also managers with high pay and no risk. It’s a good thing if they are willing to resign. They can go to the open job market to find out what their real value is.

Protecting Your IP from China The bottom line for protecting your IP from China: do what you can on both the legal side and the non-legal side to protect your IP from China.  It’s tough out there and the more “weapons” you employ, the better your chances.

Growing number of machinery firms hire Chinese executives｜Markets｜Business｜WantChinaTimes.co A growing number of multinational machinery companies in China are appointing Chinese executives after losing their market share to Japanese and South Korean rivals, reports the Chinese-language Global Entrepreneur magazine.

What I learned in my first year as an angel investor in Greater China I’m no stranger to tech companies, investing or China, but being in charge of a massive region including China, Taiwan, and Hong Kong and having to dig deep for quality early stage investments. I’ve also done fundraising and participated in and organized numerous community events which were, to say the least, challenging. Here are some of my key learnings:

IamA nanny for a super-rich family in China AMA! : IAmA IamA nanny for a super-rich family in China AMA!

Solar firms face ‘total eclipse’ in the US – Chinadaily.com.cn Chinese solar companies will be “entirely blocked” from the United States market if that nation’s government imposes new duties on solar cell products made in the Chinese mainland and Taiwan, experts have warned.

“It will keep all the Chinese companies out of the US market if new duties are imposed, in addition to the already unfair trade environment,” said Sun Guangbin, secretary-general for solar energy and photovoltaic products at the China Chamber of Commerce of Machinery and Electronic Products.

China 2013: A Year in Review by Stan Abrams | China Briefing News So what was the big IP case of 2013? Arguably it was the alleged infringement of copyrights held by Dutch artist Florentijn Hofman, creator of the giant inflatable yellow duck that graced harbors, lakes and rivers all over China earlier this year. This copyright issue, which never quite escalated to an actual legal dispute, generated a lot of talk but then fizzled out like air escaping a . . . well, a giant inflatable yellow duck.

Trust Companies, Wealth Managers Banned from Investing Pooled Money – Trust companies and wealth management plans cannot pool investor money to make investments, the China Banking Regulatory Commission (CBRC) said on January 6, indicating renewed efforts at reining in the shadow banking system.

Trust companies and wealth managers cannot maintain a “capital pool,” which typically forms when funds collected from investors of different trust products or wealth management plans are kept together to provide capital for investments or covering the repayment of maturing debt, the CBRC said in a meeting that sets priorities for this year’s regulatory work.

China Gold Congress and Expo | China Economic Review Hosted by the China Gold Association and organized by the China International Mining Cooperation Committee and the Capital Exhibition and Conference Corporation, the Congress will be held at the Beijing International Convention Center on September 10-12, 2014.

Global and China Cobalt Industry Report, 2013 – 2016 | Jan 7, 2014 China lacks of cobalt ore resources, with the total proven reserves of cobalt approximating 80,000 tons, accounting for just 1% of global total, and the vast majority of proven resources are associated ore, whereas independent mineralized cobalt ore occupies only 4.7 % of the reserves in China.

COMPANIES

Shaanxi Coal $1.6 Billion China IPO to Be Biggest in 2 Years – Bloomberg Shaanxi Coal Industry Co. plans to raise 9.83 billion yuan ($1.6 billion) in an initial public offering, set to be China’s biggest IPO in more than two years.

The company will sell 1 billion A-shares on the Shanghai Stock Exchange on Jan. 17 and proceeds will be used to fund projects worth 18.3 billion yuan, according to a statement from the Xi’an, Shaanxi province-based company to the exchange today.

Shanxi Coal Industry nearly halves IPO size – MarketWatch The Shanxi province-based coal miner said it plans to sell 1 billion new shares, half of a target previously announced in 2011, when it first revealed plans for an IPO. The current fund-raising target is 57% of the CNY17.3 billion previous target.

Ping An Bank boosts capital with $2.4 billion private share sale – Yahoo Singapore Finance China’s Ping An Bank Co Ltd has raised 14.73 billion yuan ($2.43 billion) by selling stock to its main shareholder, becoming the latest lender to raise funds to meet new banking standards and to absorb an expected rise in bad loans.

Through the sale, Ping An Insurance Group (HKG:2318) raised its stake in the bank to 59 percent from 52 percent, the two firms said in exchange filings late Tuesday.

Rebuffed by New York Times, Chinese Millionaire Chen Guangbiao Remains Undaunted – China Real Time Report – WSJ Chen Guangbiao said Tuesday that a New York Times Co. executive sent him a memo rejecting his request to meet this week to discuss an investment. A recycling magnate known for combining philanthropy and theatrics, Mr. Chen said he would settle for visiting Manhattan newsstands to improve his understanding of the U.S. media landscape.

Great Wall Sells 750,000 Vehicles in 2013, Sales Up But Growth Rate Slowing | China Car Times – China Auto News Great Wall sold an impressive 754,000 vehicles over the course of 2013, an increase of 21% over 2012. SUV sales accounted for 417,400 units, an increase of 48.47%, sedan sales reached 210,000 units showing a minor increase of 2% whilst pick up sales dropped by 8% to 210,000 units.

L’Oréal joins Revlon in pullback from China market – FT.com French cosmetics group L’Oréal has halted sales of Garnier beauty products in China to focus on other brands, a week after US rival Revlon said it would pull out from the slowing China market.

The company will concentrate on its L’Oréal Paris and Maybelline New York product lines, a China-based spokeswoman said in an email to Reuters on Wednesday. Those brands have been performing more strongly in China.

Chinese Gaming Companies Top Forbes China’s Most Promising Small Businesses List for 2014 Forbes China just released the mainland China’s most promising small businesses list for 2014. Boyaa Interactive International and Shanghai Kingnet Technology Co., both being gaming companies, top the most promising listed and privately held small businesses, respectively.

Alibaba reveals plans go into mobile games Chinese e-commerce giant Alibaba spent much of 2013 entering seemingly every sector in the mobile internet space it wasn’t already active in, but one area remained untouched – games. That has historically always been the domain of rival Tencent (HKG: 0700), among other players like Netease.

This morning, however, that’s changed, as Alibaba announced it will begin developing a platform for mobile games.

General Electric Plans Acquisition and Chinese Automakers Eye U.S. Market Despite recent recalls of more than 1.5 million Buick Excelle and Chevrolet Sail units in China, Buick sales in China increased 15.7% in 2013 to finish with nearly 810,000 units sold for an all-time high. In similar fashion, Chevrolet also set a record with an increase of 8.5% in 2013, to slightly more than 650,000 units.

China Telecom Cuts IPhone Price Ahead of China Mobile Release – Bloomberg China Telecom is offering a combination of price reductions and gift packages that together amount to an 800 yuan ($132) off the list price of 5,288 yuan for a 16 gigabyte iPhone 5s, according to promotional material at the carrier’s Beijing retail locations today.

Chow Tai Fook’s Q3 revenue rises by 26% – BUSINESS – Globaltimes.cn Sales in the Chinese mainland rose 34 percent and sales in Hong Kong and Macao rose 18 percent in the three months ended December 31, Chow Tai Fook said in a statement to the Hong Kong Stock Exchange. Gold products remained its top bestsellers, accounting for 57 percent of total revenue.

China Oilfield to Raise $759 Million in Share Placement – Bloomberg The company will sell 276.3 million Hong Kong-listed shares at HK$21.30 each, a 7 percent discount to yesterday’s closing price, according to a Jan. 7 filing with the city’s stock exchange. Units of China International Capital Corp., Credit Suisse Group AG (CSGN), JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. and Morgan Stanley (MS) are the placing agents, China Overseas said.

Sony to Nintendo Mull China’s Console Market as Ban Lifted – Bloomberg “China mainland is an attractive market,” said Satoshi Nakajima, a Tokyo-based spokesman for Sony’s game unit, which sold 2.1 million of its PlayStation 4 units as of early December since it went on sale Nov. 15. “We will seek to expand when there is an opportunity.”

Kyoto, Japan-based Nintendo is studying what it can do in the Shanghai free-trade zone, according to Yasuhiro Minagawa, a company spokesman. He declined to elaborate.

Cloud Service Provider QingCloud Raised $20 million in Series B for Global Expansion Chinese Cloud service provider QingCloud today announced completion of $20 million funding in Series B. The round is led by Lightspeed China Partners and joined by Matrix Partners China and existing investor BlueRun Ventures.

Alibaba’s payment affiliate teams up with Sina – MarketWatch Alibaba Group Holding Ltd.’s online payment affiliate has struck a deal with Sina Corp. to launch an online payment service as competition rises between the e-commerce giant and rival Tencent Holdings Ltd. (0700.HK).

The affiliate, called Alipay, said on its official microblog account that the new service allows users of Sina’s Weibo microblog service to make online and offline payments through their Alipay accounts.

Apple Opens Store on Alibaba’s Tmall – Digits – WSJ Tmall, launched in 2008, is a shopping website that hosts more than 70,000 merchants, including global brands like Nike Inc.NKE +0.63% and Gap Inc.GPS +1.20% Apple’s new Tmall storefront has a design similar to its own Chinese online store.

An Alibaba spokeswoman confirmed that the Tmall page is indeed Apple’s and that it opened recently, but declined to comment further. An Apple spokeswoman wasn’t immediately available for comment.

China Communications Int’l Buys in Zhenhua Heavy Industries | 4-Traders Shanghai Zhenhua Heavy Industries announces that Zhenhua Engineering plans to sell 749,677,500 B-shares held in the company to China mmunications International, which represent 17.08% of capital stock.

Starbucks Introduces Gift Cards in China|PaymentsSource The deployment in China comes as Starbucks broadens its use of gift cards and rewards, in the U.S. and other markets. A significant part of the company’s card volume has migrated to the mobile channel; 11% of the company’s sales in the U.S. and Canada are made through its mobile app.

Yosen Group Honored ‘2013 China Telecom’s Highest Potential Award’ – BWWGeeksWorld China Telecom hosted its 2013 Annual Appreciation Gala last month in Hangzhou, China, where Yosen is headquartered. It was China Telecom’s largest-scaled, most influential annual gathering in recognition of its collaborative partners. Samsung, Huawei, among many other well-known names in the industry, attended the meeting.

Posted from Diigo.

China Business Briefs 6/1/14

ECONOMY

China draws up new rules to curb shadow banking risks – FT.com The draft regulations, a copy of which was obtained by the Financial Times, mark an attempt by the government to better co-ordinate regulation of the country’s shadow banks, but also indicate a more permissive official stance than many observers had anticipated.

China approves pilot plan to set up 3-5 private banks | Reuters China has approved a pilot scheme allowing the setting up of three to five private banks, the regulator said on Monday, in a step to boost financial support for cash-starved smaller firm

Chinese leaders have pledged to open up the banking sector, now dominated by big state-owned lenders, to private investors to help boost competition and increase lending to small firms, who are often neglected by the big banks.

Diverse ownership to boost SOE reforms – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns Ding Yifan, deputy director of the Institute of World Development under the State Council’s Development Research Center, said a communique, issued after a key meeting of the Communist Party of China (CPC) Central Committee, set diverse ownership as the future development direction.

The move is a result of complaints about SOEs’ low efficiency and them receiving too many favors from government, said Ding in a program on Chinese reforms aired on Sunday on China Xinhua News Agency Network Co. Ltd. (CNC).

The three big listing themes in 2014 | South China Morning Post While Hong Kong’s equity market may have yet to shake off its holiday lethargy, IPO Watch is casting a glance back into 2013 to explore three important issues that may serve as a guide for stock picking among this year’s listing hopefuls. At least one of the trends is likely to emerge as the defining issue of the city’s listing market in 2014.

China to strengthen delisting rules – Business – Chinadaily.com.cn More issues need to be made clearer concerning the legal basis for delisting in such cases, the definition of a major violation, and the approach for delisting, Monday’s Shanghai Securities News quoted Xiao Gang, chairman of the China Securities Regulatory Commission, as saying.

Half of delistings in recent years in China were voluntary due to companies’ strategic restructuring or privatization, according to Xiao. He added that delisting will become a neutral mechanism, under which rule breaking or legal violations will not be tolerated.

China’s “Big Four” Banks Extend New Loans of CNY180B in December-Caijing China’s biggest four banks extended 180 billion yuan of new loans in December, while new deposits attracted by the state-owned banks surged 1.2 trillion yuan in the same month, reported by the Shanghai Securities News.

With money supply well above target, there is a good chance that banks are cautious in extending loans as planned, said Lu Zhengwei, chief economist with Industrial Bank. Chinese banks all together lent 8.4 trillion yuan in the first 11 months of this year, leaving 600 billion for December if they follow strictly of the full year target of 9 trillion yuan.

China Wages Seen Jumping in 2014 Amid Shift to Services: – Bloomberg Lu Ting, a Hong Kong-based economist for Bank of America, said in an e-mail that he sees wage growth of 11 percent this year after an estimated 10.7 percent gain in 2013. JPMorgan Chase & Co. and Mizuho Securities Asia Ltd. analysts said in interviews that they predict 10 percent to 15 percent increases.

China’s ruling Communist Party is pushing for pay increases to retain public support and to accelerate the nation’s shift away from polluting and capital-intensive manufacturing to a more services-driven economy. In minimum-wage increases so far announced for 2014, workers in Shenzhen in Guangdong province get a 13 percent boost and the gain for those in Yangzhou, Jiangsu province, is 15.6 percent.

Govt campaign to ensure migrant workers’ wages – Business – Chinadaily.com.cn The Ministry of Human Resources and Social Security said in a statement that five working teams will be sent to eight provinces including Zhejiang and Hubei to inspect employers’ salary payments to migrant workers as well as local governments’ related supervisory work.

The statement said that the campaign will urge local authorities to take effective measures to ensure migrant workers get paid in full before the Spring Festival, which falls on Jan 31.

Regional Conflicts in the South China Sea Could Rival the Middle East One Day The South China Sea reportedly holds 11 billion barrels of oil and 190 trillion cubic feet of natural gas. That might actually only tell half of the story as the US Geological Survey estimates that as much as 22 billion barrels of oil could lie underneath the seabed. Unfortunately, there’s no clear way to define who “owns” these resources, as China, Vietnam, Malaysia, Taiwan, the Philippines, Indonesia and Brunei all believe some, or all, of these resources belong to them.

This is in fact one reason why nearly a third of all global crude oil passes through the South China Sea each year. The combination of potentially disputed oil underneath the sea, as well as its importance in the global oil trade makes this region a potential future hotbed for conflict. Clearly, peace in the South China Sea is vital to maintain regional stability.

Futures market records major increase |Markets |chinadaily.com.cn Combined trading volumes in the futures market in 2013 jumped to 2.06 billion contracts, 42.15 percent year-on-year growth, the CFA said.

China’s Financial Futures Exchange’s trading volume jumped to 190 million contracts in 2013, an 84.22 percent increase with trading value of 141 trillion yuan, representing an 85.92 percent year-on-year increase.

Rising home prices send China’s ‘Rat Race’ scurrying underground | Reuters That’s pushing more and more newly arrived urbanites underground. Of the estimated 7.7 million migrants living in Beijing, nearly a fifth live either at their workplace or underground, according to state news agency Xinhua. Beijing’s housing authority refuted this statistic, saying in an email to Reuters that a government survey last year found only about 280,000 migrants living in basements and that only a small percentage of Beijing’s basements were being used as dwellings.

Foreign Banks Are Optimistic on China Reform, Ernst & Young Says – Businessweek “With gradual and successive financial reforms taking place in China, foreign banks are optimistic about their future in China,” Ernst & Young said in a statement in Shanghai today after surveying 38 overseas lenders. Respondents expect a “modest improvement” in their performance over the next three years, the New York-based accounting firm said.

Foreign lenders are struggling to expand their market share of less than 2 percent in the world’s second-largest economy, where banking assets more than doubled since 2008 to 147 trillion yuan ($24 trillion) as of Sept. 30. Global banks face government restrictions on adding branches and offering products as local rivals churn out record profits.

China’s domestic and outbound tourism to keep growing in 2014｜Economy｜News｜WantChinaTimes.com The report made a positive prediction for 2014, forecasting that both the number of tourists and their spending will increase. The number of people traveling abroad may reach as high as 114 million, a 16% hike from 2013, and their spending will increase by at least 18%, according to the report. In terms of country-wide travel, the number of domestic tourists is estimated to reach 3.58 billion, while they are forecast to spend 3.2 trillion (US$528.8 billion).

Luxury cigarette prices fall after Beijing ban｜Economy｜News｜WantChinaTimes.com Prices of luxury cigarettes have been slashed in Beijing following the Chinese government’s ban on extravagant official spending, reports the Beijing Youth Daily, the official newspaper of the Communist Youth League in Beijing.

Taobao lures Russian shoppers – Business – Chinadaily.com.cn Russians, especially young people, have increasingly been buying goods from China. Taobao data showed about $2 million worth of goods were sent to Russia in February. The figure doubled in May.

China’s Leaders Move to Rein In Steel Mecca – WSJ.com In the past two months, the local government in Hebei, a province roughly the size of Oklahoma that produces a quarter of China’s steel, has orchestrated a parade of furnace shutdowns. The head of its top steelmaker has resigned. Mills are scrambling to switch to more fuel-efficient material.

Chinese leaders are telling the province that its measures aren’t enough. Spurred in part by severe pollution that drifts from Hebei to next-door Beijing, the central government has set a goal of lopping off nearly a quarter of the province’s steelmaking capacity.

China to open tech niches to foreign investors – MarketWatch China will open information services and data storage services to foreign investment in the free trade zone, according to a notice posted on the website of the Ministry of Industry and Information Technology. Foreign ownership cannot exceed 50%.

Online data processing will be opened to foreign investment, but foreign ownership cannot exceed 55%. So will virtual private networks, though foreign ownership in these will be limited to 50%.

The 2014 Outlook for the People’s Bank of China – China Real Time Report – WSJ China’s central bank needs to get a mix of offense and defense right in 2014. On the offense, People’s Bank of China Gov. Zhou Xiaochuan was brought back for a third term by China’s top leaders, despite Mr. Zhou having reached the bank’s retirement age of 65. Mr. Zhou’s mission: to put in place a reform agenda that stalled under China’s former leaders.

On defense, the PBOC must decide how to slow China’s escalating debt, which has grown so rapidly over the past five years that it reminds Chinese and foreign economists alike of the credit bubbles that eventually burst in the U.S., Europe and other parts of Asia. First, the PBOC must decide what to do. Boost interest rates? More tightly regulate so-called shadow lenders, such as trust companies and informal lenders, which work out complicated deals with the banks to hide risky loans?

China’s growth is a contradiction, but that’s how we like it | China Economic Review China Economic Review has compiled a list of the best predictions for 2014 while also assuring readers that the world will look at China with awe, antipathy, disgust and envy all at once this year.

Private businessmen crimes rise – BUSINESS – Globaltimes.cn Private entrepreneurs were found guilty of, or had allegedly committed three-quarters of 357 publicly reported entrepreneurial crimes in the country over the past year, the results of an annual Chinese entrepreneur crime report showed over the weekend.

China Evaluating Tax on Foreign Exchange & Capital Flows | China Briefing News China’s State Administration of Foreign Exchange (SAFE) – the regulatory body that oversees all movements of capital out of, and into the country has called for an “in depth study” on the potential imposition of a so-called “Tobin Tax” – a tax on all spot conversions of one currency into another. Named after the Nobel Prize winning economist James Tobin, the tax was originally meant to be used for curbing short term round trip excursions into another currency to prevent deliberate destabilization of national currencies being wrought by market traders.  China however seems to be evaluating its use as a means to control currency flows even as the Chinese RMB is being liberalized.

What’s Trust in China Got To Do With Our Success? Integrity and caring build trust in China. We should be doing that with our workers in China, but we should also insure or direct reports and other important positions have that. Trust in China is worth big money. It makes teams go and must come from top leaders.

China IP infringement As China lawyers, we are all too frequently contacted by our clients who need help dealing with IP infringement in China. As a first step, we analyze the situation and propose a course of action.  The following is an amalgamation of memoranda, done so as to convey both what goes on out there and how to deal with it.  Most importantly, however, it is intended to provide a path towards preventing IP infringement through proactive trademark and copyright registrations.

Video: Ice Festival preparations hot up in Harbin, China – Telegraph According to organisers, the festival is one of the largest in the world stretching to 6,458,400 square feet.

COMPANIES

China Railway Group chairman dies – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns The chairman of China Railway Group Ltd Bai Zhongren died at his home Saturday, Securities Times reported Sunday.

The company’s spokesperson has confirmed the information, but said the company’s operations were normal, the report said. The report also said that Bai had been suffering depression for years, without disclosing the reason why he died.

China Railway Group President Bai Zhongren’s Death From An Unspecified Accident Might Be A Suicide: Local Media However, China Business News, a local newspaper, citing unidentified sources, said that the 53-year-old jumped to his death from a fourth-story window at his home, after suffering from depression in recent months due to his company’s mounting debt.

China Railway Shares Plunge After Company President’s Death – Wall Street Journal – WSJ.com The shares of China’s second-largest construction contractor by revenue after China Railway Construction Corp. fell as much as 7.2% in Hong Kong on Monday, then recouped some of the losses, to end 4.1% lower at 3.75 Hong Kong dollars (US$0.48) per share. It was the lowest close since July 15.

China Harbin Bank Seeks to Raise $1 Billion Via Hong Kong IPO – WSJ.com If it gets listing approval from Hong Kong’s stock exchange, Harbin Bank would be the fourth Chinese bank to go public in Hong Kong since a wave of offerings kicked off in November. Chinese banks have been raising money through Hong Kong IPOs as a way of replenishing their capital amid tighter regulatory requirements, and as bad loans increase while the economy slows.

In December, Hong Kong was home to a $3 billion offering by China Everbright Bank, the country’s 11th largest bank by assets, in what was the city’s biggest IPO of 2013. Everbright Bank’s IPO came just weeks after two smaller Chinese banks, Huishang Bank Corp. and Bank of Chongqing, raised about $2 billion in total in November.

In China you can now hail a cab and pay the driver on WeChat That was fast – just days after Chinese tech giant Tencent (HKG:0700) threw some cash into the massive series C funding round for taxi-hailing app Didi Dache, WeChat, Tencent’s behemoth messaging app, has added a feature that lets users hail a taxi on-demand using Didi’s network.

Alibaba and Sina Weibo partner up to bring Weibo Wallet to mobile The introductory splash-screen for the updated Sina Weibo app – now at v4.2 – tells users they can make payments within Weibo for any product that someone shares or links to within the app. It promises that “paying online is just a tap away.” A “Wallet” section now appears in the “Me” area of the Sina Weibo app. However, it’s poorly implemented right now, and there’s no explanation of how to connect this new Weibo Wallet to any e-payment service or bank card.

Oil Tycoon Denies Hu Yaobang’s Family Is Linked to His Business – Oil tycoon Wang Letian says that the family of former Communist Party general secretary Hu Yaobang was not linked to his deals for oilfields.

Wang bought several fields in 2008 in the northwestern province of Shaanxi from state-owned China National Petroleum Corp. (CNPC) via an intermediary, Zhou Bin, the son of a former top leader. Zhou is currently embroiled in a corruption investigation.

Wang said that he paid for the oil fields and buying them through an intermediary was a choice he made only reluctantly because private oil companies had no access to productive reserves.

China Mobile Probes Loss-Making Exit From Hong Kong TV – Bloomberg China Mobile Communications Corp., the parent of the world’s largest phone company, is probing a decision by its Hong Kong unit to exit the territory’s television market at a loss one year after introducing service.

China Mobile is investigating whether the transaction meets its internal guidelines as well as regulations of China’s State-owned Assets Supervision and Administration Commission, the company said in an e-mail today. The sale involved a unit that owned spectrum to broadcast mobile television service in Hong Kong, the company said, without identifying the buyer.

CNOOC to close new energy unit – BUSINESS – Globaltimes.cn China’s third-largest national oil company decided to end one of its renewable energy subsidiaries, according to media reports, as the country’s lackluster new energy market continues to struggle with limited demand and high production costs, analysts said Sunday.

China National Offshore Oil Corp (CNOOC) plans to dissolve its subsidiary CNOOC New Energy Investment Co, a Beijing-based firm which mainly explores and produces several forms of renewable energy including wind power, coal-based clean energy and biomass energy, the Beijing-based Economic Observer newspaper reported Friday.

Dalian Wanda building theme park to rival Shanghai Disney Resort｜WantChinaTimes.com China’s richest man, Wang Jianlin, plans to spend 30 billion yuan (US$5 billion) to build a theme park to rival the Shanghai Disney Resort as he explores possibilities for the future of his property development company, reports the Beijing News.

“I’m targeting Disney. I never have blind faith in foreigners. I will prove that a tourism project built by the Chinese can compete with the so-called famous brands from the United States,” Wang said.

Shenhua Energy Co. Ltd., Energy Corp. of America plan Marcellus wells – Pittsburgh Business Times The biggest coal company in the world, China’s state-owned Shenhua Energy Co. Ltd., is making a big commitment to drilling for natural gas in southwestern Pennsylvania.

Shenhua is making a $90 million investment in a joint venture with Energy Corporation of America to drill for natural gas in Greene County.

SINOPEC Engineering Group Co Ltd : Sinopec plans to build $3.1bn plant | 4-Traders Sinopec Engineering Group said it has entered into a deal to build a $3.1 billion plant in northern China to turn coal into petrochemicals, as China seeks to reduce its reliance on petrochemical imports.

Sinopec Engineering will be responsible for engineering, procurement and construction of the 18.67 billion-yuan project in Inner Mongolia, which it said would be the largest of its kind in the world.

Taking off – BUSINESS – Globaltimes.cn Cathay Pacific Services Ltd, a wholly owned subsidiary of Cathay Pacific Airways, is one of several companies betting on a sharp increase in air freight in coming years.

The company spent HK$5.9 billion ($760 million) in 2013 to build a new cargo terminal at Hong Kong International Airport. It now has the capacity to deal with 2.6 million tons of goods annually, taking the total annual freight capacity at Hong Kong International Airport to 7.4 million tons.

Qunar Jumps on Mobile User Growth as Ctrip Tumbles – Bloomberg Qunar, based in Beijing, rallied 11 percent on Jan. 3 to the highest level since its U.S. debut in November. The Bloomberg China-US Equity Index of the most traded Chinese stocks in New York slid 1.5 percent, capping a 2.5 percent slump last week. Ctrip.com, China’s biggest online travel agency, led declines on the gauge with a 7.9 percent retreat.

In China, Crowd-Funded Concerts Are Catching On With Fans – China Real Time Report – WSJ On a recent weeknight in Beijing, about 800 people gathered at a club in downtown Beijing to watch a performance by pop singer Li Quan and Li Daimo, a singer made popular by the “Voice of China” TV show. At home, several hundred more participants were tuning into the concert live from their computers or smartphones.

The concert was organized by Xiami, a Hangzhou-based online music portal owned by e-commerce giant Alibaba Group, in its first such initiative using crowd-sourced funding via Alibaba’s Taobao online shopping platform.

China,Germany,Japan,United Kingdom : CHINA launches SHANGHAI INSTITUTE OF MARINE INSURANCE | 4-Traders China launches its first marine insurance association called the Shanghai Institute of Marine Insurance.

The association s members include Chinese insurers Ping An Insurance (PAI), People’s Insurance Company of China (PICC) and China Pacific Insurance Company (CPIC).

Foreign companies, including Lloyd’s, Sumitomo Mitsui and Allianz are also members.

Honda says Dec China auto sales up 60 pct y/y | Reuters Honda Motor Co Ltd and its two local joint ventures sold a record 101,465 automobiles in China in December, up 60.4 percent from a year earlier, the Japanese automaker said on Monday.

AMEC plc : Amec Gets 6-Year Nexen Petroleum UK EPC Contract | 4-Traders AMEC PLC, an international engineering and project management company, said Monday it has been appointed by Nexen Petroleum U.K. Ltd., a wholly-owned subsidiary of CNOOC Ltd., to provide engineering, procurement and construction services for their North Sea offshore assets.

Li Ka-shing to spin off Hong Kong electricity distribution unit – FT.com Li Ka-shing’s power generation and supply group will set up the first test of Hong Kong’s equity markets for 2014 when it begins marketing the spin-off of its local electricity distribution business to investors on Monday.

It is the biggest listing in the city since AIA’s $20.5bn sale in 2010 and the largest anywhere in Asia since Japan Airlines’ $8.5bn deal in September 2012, according to Dealogic.

Apple Inc. (NASDAQ:AAPL) Used This Strategy to Win Over China Mobile Ltd. (ADR) (NYSE:CHL) Apple Inc. (NASDAQ:AAPL) employs a tactical marketing strategy that always helps the company to succeed even when it was expected to fail. While entering a new market which presents both challenges and opportunities the company does rush to cut deals with market leaders. Instead, it actually goes for the smaller players.

Minsheng uses aircraft business to expand overseas | South China Morning Post While many of the big names in mainland banking have expanded overseas by opening branches or acquiring foreign assets, China Minsheng Bank has adopted a different approach and is building its brand through aircraft leasing.

Its Minsheng Financial Leasing unit, one of the first five mainland financial leasing companies with a banking background to be approved by the China Banking Regulatory Commission, has recently expanded its private jet leasing to commercial aircraft after setting up Minsheng Commercial Aviation in Hong Kong.

Interview: Innovation key to success of Lenovo – Xinhua | English.news.cn “Lenovo’s innovation lies in its technology, products, business model and cultural management. Its name, which was changed from Legend in 2003, is a combination of ‘legend’ and ‘novo’, a Latin word meaning new,” Yang told Xinhua during an interview.

In 2013, Lenovo ranked first in the PC market taking 17.7 percent of market share worldwide. It is welcoming the post-PC era with 4G technology, Internet development and multiple terminal devices, said Liu.

Firms’ Acquisition Fight Shows How Rules for Overseas Investments Are Changing – A recent acquisition battle between two Chinese companies over a Cayman-registered semiconductor firm has shed light into the China’s changing overseas investment approval system.

Why NEXON’s BNB Failed to Accuse Tencent’s “QQ堂” of Copyright Infringement? | Bridge IP Law Commentary In recent years, there is serious plagiarism in the field of online games. Considering that online game acts as computer software, however, laws protect its “code” other than game mode and method. The case in today’s post will disclose this principle for us.

Posted from Diigo.

China Business Briefs 2/1/14

ECONOMY

China gives local governments go-ahead to roll over debt – FT.com **Had to happen** Faced with a mountain of maturing loans this year, China has given local governments the go-ahead to issue bonds as a way of rolling over their debt to avoid defaults.

The announcement by the National Development and Reform Commission, a top central planning authority, is the most explicit official endorsement of a massive debt refinancing operation that has become unavoidable and is already under way, analysts said.

China to modernize agriculture in new reform bid – Xinhua | English.news.cn **Key being method of financing** A central rural work conference in December set out a series of reform measures aimed at protecting farmland and farmers’ rights, and building a safety net for agricultural financing.

China’s huge population means the task of simply feeding the people remains a high priority. China must rely on itself and pursue a national food security strategy of maintaining agricultural productivity, importing moderately, and employing science and technology, a statement after the conference said.

China Manufacturing Index Falls as Xi Grapples With Growth Risks – Bloomberg **No more 10% growth** Swelling local-government debt, surging property prices in some cities and volatility in money-market rates are risks as Xi embarks on reforms intended to lay the foundations for more sustainable long-term growth. The Chinese economy may have expanded 7.6 percent in 2013, the slowest pace in 14 years, according to a State Council report last week.

“The Chinese leadership has made it clear that they want stable growth this year — neither a sharp fall nor a quick rebound,” said Zhu Haibin, Hong Kong-based chief China economist at JPMorgan Chase & Co. “The central bank will remain neutral in its policy operations.”

Economists React: China’s Manufacturing Sector Runs Into Trouble – China Real Time Report – WSJ All isn’t well with China’s manufacturing industry, long the economy’s major engine. The HSBC China manufacturing purchasing managers’ index, published Thursday, fell to 50.5 in December from 50.8 in November—just a whisker above the 50-mark that separates expansion from contraction. That echoes the signal from the government’s own PMI, released a day earlier, which dropped to 51.0 from 51.4.

Here, economists weigh in on the latest numbers (edited slightly for style and clarity):

China tycoon wants New York Times | South China Morning Post **Expect US consternation and hand-wringing** Jiangsu-based Chen said on Tuesday he had been contemplating buying the media company for more than two years and expected to discuss the matter on Sunday with a “leading shareholder” in New York. “There’s nothing that can’t be bought for the right price,” he said.

With its status, The New York Times is an occasional target among the wealthy. Flamboyant property tycoon Donald Trump had tried to figure out a way to buy the Times early last year, New York magazine reported.

Burgeoning Delivery Industry Grapples with Poisoning Death – **”Begun refusing”…!** Also, in an effort to reduce costs, many chemical companies use courier companies to deliver samples, even of dangerous chemicals. The State Post Bureau, which regulates the postal and delivery industry, issued an emergency notice on December 22 requiring stricter examination of parcels. Major industry players including SF Express, ZTO Express, Yunda Express and YTO Express have tightened controls on parcel reception and begun refusing to accept packages containing chemical products.

But human inspection is highly unreliable. To bring the courier industry up to the level of the aviation industry in scrutinizing packages would require couriers to buy huge quantities of screening equipment. That would be a hard pill to swallow for the industry, which sports profit margins of only about 4 percent.

Chinese iron trade fuels port clash with Mexican drug cartel | Reuters **Great story** The Knights Templar cartel, steadily diversifying into other businesses, became so successful at exporting iron ore to China that the Mexican Navy in November had to move in and take over the port in Lazaro Cardenas, a city that has become one of the gang’s main cash generators.

Mexico’s biggest producer of iron ore, Michoacan state is a magnet for Chinese traders feeding demand for steel in their homeland. But the mines also created an opportunity for criminal gangs, such as the Knights Templar, looking to broaden their revenue base into more legitimate businesses.

Beijing’s land transfer fees hit record high – Xinhua | English.news.cn The red-hot property market in 2013 pushed Beijing’s land transfer fees to a record high of 182.18 billion yuan ($30 billion), 2.8 times that for 2012.

Land prices soared as real estate developers flocked into top-tier cities to compete in developing land, as they remained bullish on the prospect of first-tier cities and bearish on the growth potential of third and fourth-tier cities.

Gen Y’s motto: Show me the money[1]- Chinadaily.com.cn **Taking their lead from the top** In a survey by global human resources firm Hays, by far the most important metric of career success for China’s Generation Y (aged 18 to 30) is creating personal wealth, as 64 percent of the 1,000 young people surveyed listed it as their top priority.

In other surveyed countries, job satisfaction and enjoyment of work were the top priorities. But China’s Generation Y workers are less likely than those in other countries to look for work flexibility — and far more likely to be driven by the potential to earn a bonus.

China’s House Prices up for 19th Straight Month in December: CIA-Caijing Newly built houses in 100 monitored cities were up 0.70 percent in December from the previous month, compared with a monthly increase of 0.68 in November, the CIA said. On a yearly basis, the prices rose for the 13th straight month, expanding by 11.51 percent from the same month a year ago.

The Year of the Horse **Michael Pettis** Whether or not the reforms succeed, analysts who predict that China is about to embark on a decade of 7 percent growth or more will almost certainly be proven wrong. Broadly speaking, either Beijing will successfully implement the reforms over the next two to three years, or political opposition will prevent it from doing so. If Beijing does not succeed, and if China’s growth relies on the same mechanisms that have driven it over the past few years, China’s economy will continue to grow at roughly 7-8 percent annually for perhaps two or three more years. During this time, however, debt levels will surge, and the risk of a financial crisis will ultimately cause growth rates to collapse. If China does not control its surge in debt, in other words, it will probably face either a financial crisis or a decade of economic stagnation well before 2020.

CNPC security incidents due to aging pipelines: report｜Companies｜Business｜WantChinaTimes.com China National Petroleum Corporation (CNPC) — China’s largest oil and gas producer and supplier — has seen seven security incidents over the past four years, including an oil tanker and pipeline explosion, with experts naming problems such as the firm’s aging northeastern crude oil pipeline networks, low degree of automation, and backward communication facilities, reports the Beijing-based Securities Daily.

On Nov. 22, CNPC’s Donghuang oil pipeline exploded after catching fire in Qingdao in eastern China’s Shandong province, killing 62 people and injuring 136. The State Council, the country’s cabinet, swiftly issued an emergency notice, requesting security checks of the whole country’s oil and gas pipelines by the end of March 2014.

Did Chinese dama lose big on gold? |Markets |chinadaily.com.cn The bargain-hunting middle-aged Chinese women known as “dama”, have exerted the influence of the rising Chinese middle class in the gold market this year. As 2013 ends as a bleak year for gold, how do their gold investments look now?

Throughout 2013, the global gold market has risen and fallen in line with expectations that the Federal Reserve would withdraw its quantitative easing (QE) stimulus. Gold has fallen 29 percent in 2013, and is heading for the biggest annual loss in 32 years.

Beijing plans crackdown on illegal sales of rural housing｜Policy｜Business｜WantChinaTimes.com The government intends to tear down illegal units, investigate other violations, and punish those found to be in violation of the law in order to stop all ongoing illegal projects that are being built or sold and stem the increase in the number of new illegal units, an official with the Ministry of Land and Resources stated.

However, the newspaper pointed out that neither the central government’s nor Beijing’s announcement mentioned the already existing rural housing units, which account for 40% of the Chinese capital’s residential units in the market, and up to 50%-70% of such units in Shenzhen.

China to open high speed rail link to North Korean border in 2015 | Reuters China will open a high-speed rail line to the North Korean border next year, state media said on Thursday, in a sign that China remains committed to boosting trade and economic ties with the isolated, nuclear-armed state.

The line, under construction since 2010, will run 207 km (127 miles) from Shenyang to the border city of Dandong, which faces North Korea across the Yalu River, and will shorten the train journey from 3 1/2 hours to one hour, the official Xinhua news agency said.

PBOC’s liquidity injections fell in 2013 |Economy |chinadaily.com.cn The central bank adjusted liquidity levels on China’s money market mostly via the issuance of central bank bills as well as repurchase agreements, known as repos, and reverse repos. Analysts said that it’s becoming clearer that the central bank is taking a more prudent position. The PBOC is urging lenders to avoid shadow-banking activities, cooling some overheated sectors such as real estate, and curbing local governments’ infrastructure programs, analysts added.

China’s Hidden Pension Debt Could Exceed CNY20Trl: Expert-Caijing **Yikes** Zheng Bingwen, director of social security center with the Chinese Academy of Social Sciences, drew the conclusion based on his assumption that China’s pension reserves could only fund the system for a year and a half at the end of 2012.

Zheng said inefficient operation had actually devalued the pension funds, which are already in shortage. Unlike most countries, China parks the majority of its pension funds in banks, where annual returns are typically less than 2 percent, compared with an annual inflation of 2.47 percent in the past 11 years.

Macau 2013 gambling revenue hits $45.2 billion – MarketWatch Gambling revenue in Macau rose 19% last year to 360.7 billion patacas ($45.2 billion) — or around seven times that of the Las Vegas Strip.

The Chinese territory finished the year on a high–earning 33.46 billion patacas in December, a 19% on-year rise and Macau’s second-highest monthly total, according to data from the Gaming Inspection and Coordination Bureau released on Thursday.

In high-speed rail, the world’s loss is China’s gain | China Economic Review **Start with infrastructure, move on to high tech and finance** It seems like just yesterday that foreign companies from Japan, Germany and France crammed into Chinese boardrooms to bid on high-speed rail projects. Yet, today, it’s Chinese state firms that are bidding on – and winning – similar projects abroad, such as the ones secured late last year in Central and Eastern Europe.

The development doesn’t just epitomize the Chinese government’s vigorous “going out” policy, which has pushed state-backed companies and private enterprises alike onto the international stage. The quick turnaround time demonstrates China’s vast exploits after more than 10 years of mandatory technology transfers for many foreign companies wishing to manufacture on the mainland.

What a Bitcoin is really worth in India and China – Outside the Box – MarketWatch Last week, Indian regulators joined the fray. Preferring ominous warnings to outright prohibition, the Reserve Bank of India issued a public advisory on the dangers of Bitcoin. The meaning was clear enough. India’s largest exchange was promptly shut down, and its operator raided by local authorities.

Why the crackdown? The People’s Bank of China explained that Bitcoin isn’t a currency “in the real meaning of the word,” and cited the risk of money laundering. India’s central bank objected to Bitcoin’s volatility and its lack of “backing assets.”

China levies consumption tax on biodiesel, kerosene imports China started levying a consumption tax on imported biodiesel and some types of kerosene from the start of the new year, the customs office said, a move aimed at curbing imports of the fuels that have taken market share from state refiners.

The tax could create a supply gap for diesel in the world’s second largest oil consumer that would force state refiners to scale back exports. That would support Asian processing margins, which have been recently boosted by a refinery outage in Taiwan.

In-depth Research and Development Trend of China Film Market, 2013 – PR Newswire – The Sacramento Bee “In-depth Research and Development Trend of China Film Market, 2013” firstly reviewed the development state of global film industry in 2012; secondly, it conducted in-depth analysis on the policy development and investment economic environment of the film industry; thirdly, it summarized and analyzed the development characteristics of China’s film industry in 2012 and H1 of 2013, at the same time, it also conducted in-depth discussion on industrial major problems as well as competitive landscape; finally, this report carried out professional analysis on the financing environment and development trend of China’s film industry, which can provide you with decision-making reference.

COMPANIES

WeChat to face tougher competition in 2014｜Companies｜Business｜WantChinaTimes.com One of the chief rivals is the Alibaba Group. An employee of the e-commerce business leader told the newspaper that the company was planning to target WeChat in four areas — telecom services, its own IM app Laiwang, vendors on its online platforms, and through the celebrities using the Sina Weibo microblogging service.

Sohu probes source of billionaire Chen Guangbiao’s wealth｜WantChinaTimes.com Citing a report published by the China Business Journal in May 2011, Sohu stated that Chen’s company, Jiangsu Huangpu Recycling Resources, posted losses of around 4.3 million yuan (US$710,000) in 2008 and around 17 million yuan (US$2.8 million) in 2009. However, in a report published by Guangzhou’s Southern Metropolitan Daily, Chen was quoted as saying in 2010 that his company recorded sales of 10.3 billion yuan (US$1.7 billion) and net profit of over 400 million yuan (US$66.1 million).

Weibo users tweet a record 800k posts in 1st minute of 2014 **Sina Weibo seems a bit old-hat now…** The first minute of 2014 brought with it a surge of posts on China’s Twitter-like Sina Weibo. A whopping 808,298 posts surpassed last year’s record of 729,521, according to an official Sina account. It also beats out last year’s Chinese New Year record of 731,102.

Tencent tips in $100 million investment for Chinese taxi app Citic PE is leading the series C funding round with a contribution of $60 million, while tech giant Tencent (HKG: 0700) follows with an investment of $30 million. In May 2013, Tencent gave $15 million in funding to the company.

In addition to the usual horse-race suspense, Chinese taxi-hailing apps also have attracted media attention because on-demand taxi-rides could be the perfect gateway to get China’s smartphone users hooked on online-to-offline payments – a competitive space in the country. If Tencent’s investment sees WeChat integration with Didi Dache, the company will gain easy access to the messaging app’s 270 million monthly active users, and WeChat can get its users in the habit of paying for things using a messaging app.

Wal-Mart recalls donkey meat in China – MarketWatch Wal-Mart Stores Inc. is recalling donkey meat sold at some of its China stores after government tests showed the meat contained the DNA of other animals.

The Bentonville, Ark.-based retailer will provide 50 yuan, or roughly $8.25, compensation to customers who bought the “Five Spice” donkey meat, and it is boosting its own DNA testing for meat products sold in its China stores, a company spokeswoman said Thursday. Authorities in China’s eastern Shandong province announced in late December that the retailer’s product contained fox meat.

Daily Sales of Group Buying Site Meituan Surpass 100 Million Yuan The daily sales of group purchasing site Meituan hit more than 100 million yuan ($16.52 million), according to a Weibo post by Wang Xing, CEO of the company as well as a serial entrepreneur who gave birth to Renren.

Wang previously claimed that Meituan has had a 50% market share of Chinese group buying sector. According to statistics released by Meituan, the company’s sales from film ticket group buying businesses account for around 10% of total domestic box office revenue, while its sales for hotel reservation business account for 70% of the group buying industry.

China Construction Bank Corporation : Boy tears up over 3k yuan cash, bank tapes together in 3 hours | 4-Traders Nobody knows turning your back on a small child can cost you better than a mother in Xi’an, Shaanxi Province, whose child happily ripped up a pile of cash worth 3,585 yuan ($591.88) as she cleaned the house.

A woman surnamed Yang brought in the shredded cash into the local branch of China Construction Bank on December 30, 2013, where five employees spent three hours taping together 39 bills after her four-year-old son ripped up the small fortune, portal hsw.cn reported.

Jiangxi opens private rail line |Industries |chinadaily.com.cn The 3.89-kilometer-long line, approved in 2010, cost 130 million yuan ($21 million) and connects Yugan county’s industrial zone with the Beijing-Kowloon line.

Jiangxi Mingri Group were the main investors. Based in Yugan, the group’s business spans silk products, mineral water and petroleum.

Penang saw the good, bad and ugly | theSundaily Everyone agrees traffic congestion in Penang is bad. What is not agreed is how to go about solving the problem. For some, improving public transport is the way forward but for the state government, a RM6.3 billion package of three road projects and an undersea tunnel is seen as the answer.

Consortium Zenith BUCG Sdn Bhd, a joint-venture between Zenith Construction Sdn Bhd and China Railway Construction Co Ltd, together with Beijing Urban Construction Group, Sri Tinggi Sdn Bhd and Juteras Sdn Bhd, was awarded the projects in October.

Resource Generation Limited (via noodls) / Further funding achieved Resource Generation has signed a binding term sheet for a US$65 million loan facility, with Noble Resources International Pte Ltd, a wholly owned subsidiary of the Noble Group (Noble), which together with existing cash resources will be used for construction of the mine buildings and infrastructure at the Boikarabelo mine.

The loan is on normal commercial terms and is able to be drawn down from 1 January 2014 until 31 December 2015.

Posted from Diigo.

China Business Briefs 17/12/13

 ECONOMY

Coal group’s woes threaten China’s trust industry – FT.com **The coal industry in China is an abomination** Figures presented by the court revealed the extent of the company’s woes, according to the website of the People’s Daily, the official Communist party newspaper. “Liansheng Group’s financial situation is bleak,” it said. “Its debts have nearly reached Rmb30bn and it has already basically lost the ability to repay its debts. Moreover, it faces multiple financial problems, including owing money for taxes, workers’ pensions, project funds, materials and equipment.”

Shoppers dropping department stores |Industries |chinadaily.com.cn **No wonder. They are painfully inefficient** Department stores in China’s big cities likely will face increasing pressure to be profitable in 2014 due to mounting consumer preference for other retail formats, rising rents and a shifting of growth to lower-tier cities, analysts and market insiders said.

A report by Fitch Ratings put China’s department store outlook in 2014 as “negative” despite an anticipated mild acceleration in sales growth, as stiff competition and customers drawn to other sales channels will continue to challenge the sector’s recovery.

China Adds to U.S. Treasury Holdings – WSJ.com China boosted its holdings by $10.7 billion in October to $1.3045 trillion, according to the latest monthly data released by the Treasury Department on Monday. Foreign investors overall added $24.4 billion in U.S government-debt holdings. China primarily bought T-bills due in one year or less, with $8.4 billion added in the month.

UK paid more than £27m in aid to China last year – Telegraph Government officials said UK money went towards schemes to combat climate   change and help boost economic growth.

Podcast: The role financial reform plays in transitioning China’s growth model – People’s Daily Online Timothy Adams is the current President and CEO of the Institute of International Finance (IIF) and a former Undersecretary for International Affairs at the U.S. Department of the Treasury, where he was the George W. Bush administration’s point person on international financial and economic issues. He recently shared with me his perspectives on the role financial reform plays in transitioning China to a better balanced and more sustainable growth model.

The Challenge of the State-Co-opted Enterprise – Silicon Hutong **Difficult for regulators to assess. Which I guess is the point** When we talk about broad categories of Chinese enterprises, we focus on ownership: state-owned enterprises, or those companies owned and guided by the government; private enterprises, or those companies owned by other companies or by individuals; and foreign enterprises, those companies legally or functionally owned by non-Chinese corporations or individuals.

You don’t need to work with this taxonomy for long to discover that it is inadequate. Hybrids abound, and there are a growing number of firms that do not fit neatly into these distinctions.

Govt to relax cross-border yuan rules – BUSINESS – Globaltimes.cn In cross-border yuan direct investment, overseas investors (including those from Hong Kong, Taiwan and Macao) can use yuan obtained legally from overseas to invest in the mainland by setting up companies, increasing investment, or participating in mergers and acquisitions of mainland firms, the statement said.

China’s Pollution Revolution The all-engulfing environmental crisis China faces is not about melting ice and rising temperatures — in fact, it is the unusually cold winter that is driving up energy use and hence pollution. (In China, coal is king, which is why winters are particularly polluted times.) Rather, Chinese citizens are angry about much more pressing and existential needs: to breathe clean air, for example, and to escape cancer and other pollution-related afflictions. Lung cancer rates in China are skyrocketing, and not only due to smoking. Skin cancer, on the other hand, is much less widespread. U.S. rates are over 50 times China’s — melanoma grows far less frequently where the sun is blocked by tiny airborne particles.

First Chinese forest project seeks local carbon cash | Reuters If the government approves the application, Cuifeng will be issued offset credits known as Chinese Certified Emissions Reductions (CCERs) for the carbon cuts it achieves.

Last month, state-owned PetroChina became the first Chinese company to announce it had bought CCERs, paying renewables firm Longyuan 16 yuan ($2.62) a piece for 10,000 credits.

Fall in copper futures ends seven-day rise – BUSINESS – Globaltimes.cn The Shanghai benchmark copper contract for delivery in February declined by 0.78 percent on the Shanghai Futures Exchange (SHFE) Friday compared to Thursday, ending at 51,160 yuan ($8,429.59) per ton.

COMPANIES

China’s PetroChina receives notice from U.S. court on probe into executives | Reuters **Not just officials being taken down. President Xi’s campaign is claiming numerous ‘tigers’** China’s oil giant PetroChina Co Ltd has received a notice from a U.S. court related to a complaint involving its former and current chairmen on suspected violations of U.S. securities regulations.

PetroChina, which with its parent China National Petroleum Corp has been embroiled in a major corruption probe by Chinese authorities, is unaware of amounts related to the complaint, it said in a filing to the Hong Kong and Shanghai stock exchanges on Tuesday.

Kunlun Energy Chairman Resigns as Government Graft Probe Widens – Bloomberg **”Helping”** Wen Qingshan quit with immediate effect as both chairman and director of the company due to personal matters, Kunlun Energy said in a statement to the Hong Kong stock exchange.

Kunlun suspended its shares following a report in China’s Caixin magazine yesterday that Wen is helping in a government graft probe. Wen was taken into custody to assist with an investigation, a person with knowledge of the matter said today, asking not to be identified as he wasn’t authorized to speak publicly about it.

China Everbright Bank Co. Ltd (SHA:601818) ‘Admits’ To 6.5 Billion Yuan Interbank Loan Default **Was this due to conditions then, or a more systemic problem?** China Everbright Bank Co. Ltd. (SHA:601818), the country’s 11th-largest bank by assets, finally admitted that it had defaulted somewhat on 6.5 billion yuan ($1.07 billion) worth of a loan it was due to repay to another bank back in June.

Shortly after the June 5 liquidity squeeze that sent interbank lending rates soaring to as high as 30 percent, media reports started to circle that Everbright failed to repay a loan borrowed from Industrial Bank Co. Ltd. (SHA:601166) on time because of tight liquidity conditions.Huwei

Tencent’s Ma Becomes China’s Second-Richest Man on WeChat Mania – Bloomberg **Two years ago all the attention was on Sina because of its weibo, but it never made money – too much oversight required. WeChat is I think the first world-class Chinese tech product** Ma Huateng, chairman of Asia’s largest Internet company Tencent (700) Holdings Ltd., overtook property tycoon Wang Jianlin to become China’s second-richest man, according to the Bloomberg Billionaires Index.

Ma has a net worth of $12.1 billion, surpassing Wang by $100 million, according to the daily index. Tencent shares have soared 90 percent this year in Hong Kong trading, compared with a 2.5 percent increase in the benchmark Hang Seng Index.

InterDigital execs threatened with arrest in China | Politics and Law – CNET News **Sometimes you shake your head and wonder** To discuss the matter, the NDRC proposed a meeting with InterDigital CEO Bill Merritt on December 18. Merritt replied that he’d be unavailable that day as he’s scheduled to attend a board meeting, reported Reuters. Instead, he suggested sending some of his key executives, and apparently the NDRC didn’t like that suggestion.

In a letter seen by Reuters, InterDigital said the NDRC told its attorney that it would not ensure the safety of any executives sent in place of Merritt and that they could be arrested or detained. So it’s safe to say that those executives won’t be taking that trip to China.

CNOOC Limited (ADR) (CEO): Mexican energy reforms clear final hurdle of state approval – Seeking Alpha Mexico’s sweeping energy reform clears its final major hurdle, as San Luis Potosi becomes the 17th state legislature to give rapid-fire approval to constitutional changes that will allow foreign investment into what has been a 75-year-old state monopoly.

Although the first Mexican opportunities may go to the major independent oil companies in the U.S. and Europe, Chinese groups such as Cnooc (CEO) and Sinopec (SNP) will actively seek opportunities; Mexico’s president plans to visit Beijing in 2014 and his trip may reveal whether Chinese firms are acceptable partners.

UPDATE – Green Dragon Gas to raise up to US$100mln through convertible bond – Proactiveinvestors (UK) Chinese coal bed methane group Green Dragon Gas (LON:GDG) has launched a convertible bond facility of up to US$100mln, with the funds earmarked for its 2014 drilling plan.

The first chunk of US$35mln has been fully subscribed for by GIC Private Limited, the Singapore sovereign wealth fund, and future issues of the bond will be at the discretion of the company.

Fonterra challenged in China’s fast-growing milk powder market | Reuters Milk powder buyers in China are starting to cut their reliance on New Zealand’s Fonterra, opening the way for U.S. and European firms to break the dairy giant’s grip on an infant milk formula market set to double to $25 billion by 2

Chinese drinks maker Want Want has said it plans to reduce imports to diversify its supply chain, and at least two multinational infant formula sellers have either cut supply from Fonterra or plan to diversify supply for the China market, people in the industry told Reuters.

Chinese Fast Food Consumers Continue to Avoid KFC **Reputations can smash very quickly** Chicken continues to be a hard sell for KFC restaurants in China. The good news is that the restaurant’s poultry supply, managed by its owner Yum! Brands (NYSE: YUM) , has been cleared by the Chinese government as being safe to eat.

KFC restaurants in China are still plagued with low sales, as consumers are still in doubt over the safety of their food. To convince consumers that its food is safe, Yum! has taken to social media outlets to promote the safety of its food. The company has also rolled out a mobile app to bring customers back by offering coupons and the option to pay for orders through a mobile device.

allAfrica.com: Tanzania: IFC Gives U.S. $22 Million for New Dar es Salaam Building The International Finance Corporation (IFC), a member of the World Bank Group, has agreed to provide $22 million to a Chinese developer China Railway Jianchang Engineering Co, (CRJE) Estate Ltd.

The company is to construct an energy-efficient commercial building in Tanzania’s commercial capital, Dar es Salaam. Predictions are it will one of most populated cities in 20 years due to the magnet of natural resources.

CEO Crosses Below Key Moving Average Level – Forbes In trading on Monday, shares of CNOOC Ltd. (NYSE: CEO) crossed below their 200 day moving average of $189.67, changing hands as low as $189.55 per share. CNOOC Ltd. shares are currently trading off about 2.3% on the day. The chart below shows the one year performance of CEO shares, versus its 200 day moving average:

Alipay and Tenpay Terminate Payment and Clearing Services for Bitcoin Alipay and Tenpay terminated payment and clearing services for crypto-currencies after the Chinese central bank People’s Bank of China (PBOC) issued a ban which forbids payment companies from doing business with Bitcoin exchanges (report in Chinese).

Sina Weibo Initiates Short Video Strategy with Miaopai as Hit Product, Announces 500 Million Users Miaopai is a Vine-like short video sharing app, which enables users to shoot up to ten seconds of video, and then edit or add frames to the video before sharing to friends. The service, which ensures real-time synching, is embedded in 4.0 version of Sina Weibo.

Tencent Invested in Online Financial Products Provider HOWbuy HOWbuy, a Chinese online financial product provider, announced today that it has secured an undisclosed amount of funding from Chinese Internet Giant Tencent (announcement in Chinese) and existing investor Legend Capital, a Lenovo company. Legend Capital contributed in Series A round in the company in late 2012.

China’s Huawei to sell Honor 3C for less than Xiaomi Hongmi **Competition at lower-end of the market is ruthless** It seems Huawei won’t be content to sit back and let Xiaomi get all the glory for selling low-cost, high-performance smartphones. The Chinese handset maker today announced it will start selling the Honor 3C starting on Christmas day for RMB 798 ($131) – a mere one yuan cheaper than Xiaomi’s budget model, the Hongmi.

China Computer Gaming and Software On December 17, CLB co-blogger Steve Dickinson will be presenting at an IPR Helpdesk/EU SME Centre webinar on China Computer Gaming and Software Development.

UBM Sinoexpo Acquires a Majority Interest in China Vending & Kiosk Show and Shanghai Digital Signage Show from Tiansheng | SYS-CON MEDIA Shanghai UBM Sinoexpo International Exhibition Co Ltd (UBM Sinoexpo), one of UBM Asia’s joint venture companies in China, today announces that it has acquired the China Vending & Kiosk Show, the Shanghai Digital Signage Show, and their co-located shows from Shanghai Tiansheng Exhibition Service Co., Ltd (Tiansheng) in Shanghai and will organise the shows from 2014 onwards.

Taiwan Objects to China Construction Bank Use of ‘Island’ – Bloomberg Taiwan’s market regulator told financial institutions to respect Taiwan’s dignity in marketing materials for cross-strait financial products, after China Construction Bank Corp. (939) referred to Taiwan as an “island.”

Thai group’s China supermarket deal collapses – FT.com The failure of CP’s all-share deal, announced in October and which would have seen it sell 36 supermarkets, also torpedoes a plan by the two companies to take stakes in each other’s businesses and boost their Asian regional expansion.

Shares in CP Lotus fell 4.3 per cent yesterday while those of Chinese supermarket operator Wumart fell 0.2 per cent in Hong Kong, reflecting dashed hopes of a tie-up that was seen as an example of needed money-saving consolidation in China’s increasingly competitive retail market..

RENAULT : Renault, Dongfeng Motor-Vehicle JV to Start in 2016 | 4-Traders Renault expects to sell about 30,000 vehicles in China this year. Motor-vehicle sales in China last year topped 19 million vehicles and could exceed 21 million this year, analysts project.

Renault plans SUVs to buck slowing China growth | 4-Traders Renault plans to harness its Formula One renown and alliance with Nissan to build a 3 percent market share as a latecomer to China, after signing a joint venture deal with Dongfeng Motor Group on Monday.

The French carmaker said it would expand its current vehicle line-up to manufacture near-premium sport utility vehicles (SUV) in 2016 with the Chinese group, which has an existing venture with Nissan. Renault owns 43.4 percent of Nissan Motor Co.

China sovereign fund Huijin completes purchase of bank shares | Reuters **This kind of thing is what makes it harder to assess share performance** Central Huijin Investment Co, which holds Beijing’s investments in state-owned financial firms, finished buying shares of Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China, the four banks said in stock exchange filings on Monday.

ASF Group raises $6.3M for working capital – Proactiveinvestors (AU) ASF’s partners are China Communications Construction Company – third largest construction company in the world, Guangzhou Dredging Co Ltd and China State Construction Engineering Corporation Limited.

 

Posted from Diigo.

China Business Briefs 7/12//13

Bumper edition today after last week’s absence.

ECONOMY

‘Slowing growth ahead’ for property prices |Industries |chinadaily.com.cn **Colour me sceptical. There’s nowhere else for ordinary savers/investors** Average housing prices in 100 major cities monitored by the China Index Academy rose 0.68 percent month-on-month to 10,758 yuan ($1,707) per square meter in November, the 18th consecutive increase since June 2012.

The growth rate, however, was at the lowest level this year, the academy said.

Nation’s steel demand loses its strength[1]|chinadaily.com.cn The growth rate of China’s steel demand will decline from 6.3 percent this year to 3.2 percent in 2014 in the wake of the country’s economic transformation and the government’s efforts to improve the environment.

The nation’s steel consumption next year is estimated at about 715 million metric tons, which represents a 3.2 percent year-on-year growth rate, Li Xinchuang, head of the China Metallurgical Industry Planning and Research Institute, said on Friday.

CSRC to boost IPO reform plan – Chinadaily.com.cn The China Securities Regulatory Commission will launch a support system for the nation’s IPO reform plan and strictly implement a delisting system, the commission said on Friday.

The IPO reform plan, which was released on Nov 30, was widely welcomed by the market, and the CSRC is quickening the pace of the launch of a support system.

“For instance, the Measures for the Administration of Securities Issuance and Underwriting, the IPO Pre-announcement System, and guidance on information disclosure will be released soon after going through related legislative processes,” said Deng Ge, a CSRC spokesman.

China Rongsheng ghost town reflects shipbuilder’s struggle to survive | Reuters (Reuters) – Deserted flats and boarded-up shops in the Yangtze river town of Changqingcun serve as a blunt reminder of the area’s reliance on China Rongsheng Heavy Industries Group, the country’s biggest private shipbuilder.

Like Rongsheng’s shipyards, the area is struggling to survive.

Great Wall of Canadian Energy Keeps Chinese on Outside – Bloomberg **I look forward to China announcing that the Arctic is a vital national interest** Canadian Prime Minister Stephen Harper said developing the world’s third-largest pool of oil reserves is as difficult as building China’s Great Wall. Chinese companies may find themselves outside looking in.

Harper announced a year ago tomorrow that Canada will keep state-owned enterprises from acquiring oil sands businesses — one of the last and biggest steps in an overhaul of foreign-investment review rules that govern takeovers of Canadian companies together worth more than C$1.87 trillion ($1.75 trillion).

China Reforms Seen Adding Less Than Half Point to Growth – Bloomberg China’s broadest economic reforms since the 1990s will add less than half a percentage point to annual growth this decade, a survey showed, underscoring the likelihood of a cut in the nation’s expansion target.

Fourteen of 19 economists see policies from a Communist Party summit last month boosting gross domestic product either by a negligible amount or less than 0.5 percent a year compared with their previous outlook, according to the Bloomberg News survey. Ten analysts say China will need at least a small amount of monetary, fiscal and credit stimulus to meet the government’s “bottom line” of 7 percent growth in the next five years.

Chengdu is the Wild West of China, says our entrepreneur on the ground – Telegraph The city is like the Wild West, quite literally, as it is located further inland, away from the more Western-friendly East coast of the country, and filled with opportunity. The atmosphere, too, is a little like Texas – Texas on drugs.

Chinese VCs Roll up Sleeves Steven Hu, a partner at Qiming Venture recently left the prestigious VC firm to take the reins of local mobile gaming company OurPalm. Mr. Hu said that lots of people – even those who knew him well – couldn’t understand what motivated him to make the jump, and in explaining his mindset, he gave us a fivefold reason, ascribing the departure to his passion for game, perfect timing, OurPalm’s capital advantage and great team as well as a non-stop dream to build up a Chinese entertainment empire.

As a matter of fact, Mr. Hu’s ‘sky dive’ isn’t an isolated case of veteran Chinese venture capitalists leaving their firms to either join one of his/her portfolio companies or to start a new cause. Known as those who always encourage the others to quit on steady income and leisure lifestyle to start a new business, venture capitalists are now rolling up their own sleeves to get some dirty jobs done, from talk the talk to walk the walk.

China overtakes Taiwan with most fast-growing companies **How much of this is rising with the local tide, though? How many would compete globally?** UK-based consulting firm Deloitte says China surpassed Taiwan with the most ranked companies on its annual list of the top 500 fastest-growing companies in APAC, 128, followed by Taiwan with 108, and India with 78.

“China, India and Australia are generating an increasing number of fast-growing, successful technology companies and are challenging Taiwan as a technology hub in the region,” said Ichiro Nakayama of the Fast500 Asia Pacific program.

China Gauges Trade-Zone Deposit Certificate Demand, Herald Says – Bloomberg China’s central bank gauged demand for tradable certificates of deposit among banks operating in the Shanghai free-trade zone and solicited suggestions for regulations, 21st Century Business Herald reported.

Will Chinese Pay for Content? – Silicon Hutong A contentious debate about China in the media industry is whether or not Chinese will pay for content. Most intelligent observers would answer no: Early experiments selling music were not encouraging, and with search engine Baidu offering links to free downloads, and later a legitimate streaming service, China’s mostly-young internet users could be forgiven for thinking “what’s the point of paying?”

Why not list in London | McKinsey China When the Alibaba listing saga entered a new phase a few weeks back with heightened competition between the New York Stock Exchange (NYSE) and the Hong Kong Stock Exchange (HKEx), I found myself wondering: Why not London? Why do so few Chinese companies list in London? When Alibaba actually initiated discussions with the London Stock Exchange (LSE) just a few days later, I decided to look into it.

China bans banks from Bitcoin transactions – FT.com China has banned its banks from handling Bitcoin transactions, after surging demand from Chinese investors helped drive a 5,000 per cent appreciation in the much-hyped virtual currency this year.

Beijing stopped short of outlawing Bitcoin altogether and said individuals were free to buy and sell it at their own risk, but it highlighted what it said were dangers associated with it, including money laundering and criminality.

China widens bad banks’ asset options – FT.com China has given its new provincial “bad banks” a wider channel for selling assets, in an effort to strengthen their ability to handle non-performing loans.

Asset management companies – established this year in the eastern provinces of Zhejiang and Jiangsu to help take bad debt off the books of local banks – will be allowed to sell these loans to buyers outside their respective provinces, according to local media reports.

Fifth Chinese Artwork Sells for at Least 100 Mln Yuan in 2013 – Huang’s Gaiety in the Grassland sold for 129 million yuan, or US $21 million, at an auction run by Beijing Poly International Auction Co. Ltd. The figure was  a record for a work by Huang.

China issues 4G network licences to China Mobile, Unicom and Telecom – Yahoo Finance China has awarded 4G licences to China Mobile Ltd, China Unicom Hong Kong Ltd and China Telecom Corp Ltd in a widely expected move that will benefit industry players from telecom equipment makers to Apple Inc.

China c.bank to monitor development of online financial services – Yahoo Finance China’s finance sector has been dominated by state banks,who traditionally focus on larger companies over the needs of smaller firms and individuals, leaving few options.

But Internet companies, including Alibaba Group Holding Ltd , Baidu Inc and Tencent Holdings Ltd, have started using their platforms to push financial products developed by finance management firms, looking to fill this gap in the market.

China’s IPO Freeze to Melt in Midwinter | China Private Equity, Published by China First Capital IPOs are returning to China. The China Securities Regulatory Commission this weekend announced its long-awaited guidelines on a new, somewhat liberalized process for approving IPOs. The rush is now on to get new IPOs approved and the money raised before Chinese New Year, which falls on January 31st, less than two months from now. Ultimately, the CSRC hopes to clear within one year the backlog of over 800 Chinese companies now with IPO applications on file. Thousands of other Chinese companies are waiting for the opportunity to submit their IPO plans. The CSRC stopped accepting new applicants almost 18 months ago.

A Significant Warning on Reform Roadblocks in China – China Real Time Report – WSJ **Them SEOs aren’t going down without a fight** Wu Jinglian, a major intellectual force behind China’s economic reforms since the 1980s and someone described as “the conscience of China’s economic circles”, said in a widely distributed interview (in Chinese) broadcast on Chinese Central Television on Thursday evening that he was “worried that vested interests are the biggest obstacle to reform and a market economy.”

China NNN Agreements Over Thanksgiving we took on a quasi-rush job (well over one day) for a China NNN Agreement and we just completed that NNN Agreement.  Because the time frame was so short, we had to condense much of our instructions into fewer emails.  The following comes from the email from us to the client, enclosing the completed NNN Agreement. We are posting the bulk of this email below as it is helpful in explaining a bit more about what it takes to secure an enforceable NNN Agreement with a Chinese company.

China’s VAT Reform to Include Railway Transportation and Postal Service Industries | China Briefing News The executive meeting of China’s State Council chaired by Premier Li Keqiang decided on Wednesday that China will expand its reform of value-added tax (VAT) in lieu of business tax (BT) to the railway transportation and postal service industries starting on January 1, 2014.

According to the meeting minutes posted on the State Council’s website, VAT reform is considered a critical part of China’s continued fiscal and tax reforms. Over the past two years, the pilot reforms have proven effective in pushing the development of China’s service sector and boosting the country’s job market.

COMPANIES

Sina Corp., Investment Fund Management Firms Mull Net Sales – Online media company Sina Corp. is negotiating with several  investment fund management companies to sell their products through its  Twitter-like weibo service, a source close to the company says.

It has applied to the securities regulator for a third-party fund sales and  settlement license, the source said. It is unclear when it will introduce the  investment service.

Dongfeng Motor Group Co. Ltd : Dongfeng, Renault Receive China Approval for $1.3 Billion Car-Making Venture | 4-Traders Dongfeng Motor Group Co. and Renault SA) have received approval from China’s top economic planner to start a $1.3 billion car-making joint venture in China, the Chinese firm said in a statement Thursday.

The two parties will each own 50% in the venture, which is expected to produce 150,000 multi-purpose vehicles and engines a year, the statement said. Dongfeng didn’t say when production will start.

GM Nov China auto sales up 13.3 pct y/y – Yahoo Finance General Motors Co and its Chinese joint ventures sold 294,500 vehicles in China inNovember, a 13.3 percent increase from a year earlier, the U.S.automaker said on Wednesday.

In October, GM’s vehicle sales had risen 12.2 percent year on year.

Apple Needs More Than China Mobile (AAPL, CHL) After months of speculation, Apple is reportedly playing nice with China Mobile. A source told The Wall Street Journal that a deal is finally in place for the world’s largest wireless carrier to start stocking the iPhone.

It’s easy to see why Apple fans are welcoming the news. China Mobile had 759.3 million customers at the end of October. Think about that. We’re talking about more accounts than the entire populations of all nations outside of China and India.

China Construction Bank to apply for UK branch license -source – Yahoo Singapore Finance  **London will be friendlier to Chinese investors than New York. Look at David Cameron’s obsequiousness** China Construction Bank is to apply for a branch license to operate in London following an easing in UK rules on how overseas banks can be set up, a person familiar with the matter said on Monday.

Asian LNG buyers to head to China for more price talks in Feb – sources – Yahoo Singapore Finance Asian liquefied natural gas (LNG) buyers plan to meet again in China in February to continue looking for ways to leverage their buying power for lower prices, industry officials said at the end of talks here on Friday.

Officials from India, China, South Korea, Japan and Taiwan which import about 70 percent of the world’s LNG discussed the demand outlook, pricing and supply sources, they said after the two-day meeting, but admitted getting results was a challenge.

Chevron’s $6.4 billion China gas project pushed back again: sources – Yahoo Finance *Is Chevron nervous following Sinopec’s Qingdao disaster? They are right to be careful** A $6.4 billion gas project being built by Chevron (CVN.X) in China is facing further delays due to disagreements with partner PetroChina over how to develop the technically tricky fields, three industry sources said.

The Chuandongbei project, the U.S. firm’s largest investment in China, is now not expected to deliver first gas until the second half of 2014, nearly 7 years after the firms clinched a 30-year deal to produce 7.6 billion cubic meters of gas a year.

Posted from Diigo.

China Business Briefs 25/11/13

Economy

China fights back against U.S. accusations of blocking WTO technology deal | Reuters

(Reuters) – Commerce Minister Gao Hucheng denounced the United States as “irresponsible” on Sunday after Washington accused China of jeopardizing a deal that aims to cut tariffs on technology products, saying Washington had disappointed participants in the talks.

U.S. Trade Representative Michael Froman said on Thursday that China’s demands to exempt more than 100 products from a technology trade deal risked leading to a breakdown in the negotiations.

Where will the jobs come from in China? | McKinsey China

As I see more and more production lines in China equipped with robots and not workers, as I read about the modularization of housing construction and presumably the reduction in needed workers, and as I write about the impact of e-retail in eliminating many physical retail locations and related jobs, I do increasingly wonder where the next wave of jobs is going to come from, and what skills people will require to fill them. 

Edging local governments out of the land market | China Economic Review

Residents in Heze, a third-tier city in Shandong province, were angered last week after they discovered they would have to turn over their homes to the local government. Officials in Juancheng county are offering a scandalously low compensation rate for land that they plan to clear, add basic utilities to, then turn around to a property developer at a steep profit. Residents there say they refuse to move.

Incidents such as these are commonplace. They occur as local governments, entrusted as the sole purveyor of rural land, look to finance regional development with the proceeds of land sales. However, reforms underfoot may soon edge local governments out of the rural land market.

Real estate firms owe $623.58b in tax: report – BUSINESS – Globaltimes.cn

China Central Television (CCTV) ­reported Sunday that major real estate companies are behind on payments of land value-added tax (VAT) amounting to more than 3.8 trillion yuan ($623.58 billion) for the period between 2005 and 2012.China’s real estate companies should have paid a total of 4.6 trillion yuan in land value-added taxes between 2005 and 2012 but only paid 0.8 trillion yuan, CCTV reported, citing Li Jinsong, a Beijing lawyer and certified tax agent.

Companies

Sinopec’s Pipeline Blast May Hurt Reform, Safety Efforts – Bloomberg

An explosion at a China Petroleum & Chemical Corp. (386) oil pipeline and the nation’s deadliest spillage since at least 2005 may threaten the government’s efforts to lure investment to state-controlled industries as President Xi Jinping called for improved industrial safety.

The Nov. 22 accident at the Huangdao district in the eastern city of Qingdao killed at least 52 people, Xinhua News Agency reported. Sinopec, as China Petroleum is known, said yesterday it was still investigating the cause of the blast, which happened after crude oil leaked from a 27-year-old pipeline into Qingdao’s municipal rainwater pipe network.

ZTE Jumps On Smartwatch Bandwagon – China Real Time Report – WSJ

When Samsung Electronics Co’s Galaxy Gear launch in early September created a hype around the potential market for smartwatches, it was certain that we would soon see cheaper versions from Chinese competitors.

Now, ZTE Corp., mainly known for its telecom equipment but also a smartphone maker, plans to launch a smartwatch in the second quarter of next year, according to Lu Qianhao, head of the Shenzhen-based company’s handset marketing strategy.

Insight: For Cisco and Huawei, a bruising rivalry reaches stalemate

Earlier this month Cisco CEO John Chambers admitted in an earnings call that political dynamics were stymieing his company’s long march into Huawei’s backyard.

Asked whether the recent U.S. spying scandal was affecting overseas business, Chambers said it was having an impact, particularly in China, which is Cisco’s biggest emerging market country but represents less than 5 percent of its total revenue.

Sinopec shares tumble after deadly oil pipeline blast – Xinhua | English.news.cn

BEIJING, Nov. 25 (Xinhua) — Shares of Sinopec, China’s top refiner listed in both Shanghai and Hong Kong, opened to tumble on Monday following Friday’s deadly oil pipeline blasts in east China’s Shandong Province.

A-share of Sinopec in Shanghai opened at 4.85 yuan (79 U.S. cents) per share, down 3.96 percent from Friday’s closing price.

Chinalco Group Said to Exit Bidding for Glencore’s Peru Mine – Bloomberg

A group led by Aluminum Corp. of China has abandoned its bid for Glencore Xstrata Plc (GLEN)’s Las Bambas copper project in Peru, two people with knowledge of the matter said.

Chinalco, as the state-owned aluminum producer is known, decided to drop out rejecting a proposal by the Chinese government that it be a minority partner in a combined bid led by China Minmetals Corp., said one of the people, who asked not to be identified as the deliberations are private.

Qualcomm CEO Says NSA Fallout Impacting China Business – WSJ.com

Mobile device chipmaker Qualcomm Inc. expects to continue growing in China, but Chief Executive Paul Jacobs acknowledged U.S. restrictions on Chinese companies and revelations about surveillance by the National Security Agency are impacting its business in the fast-growing country.

Evergrande Crowned “Land King of the Year” in Beijing -Caijing

Evergrande bid for a piece of land with 20.84 ㎡building area in Chaoyang  District, Beijing on Thursday for CNY5.14billion, a premium of 30 percent over  the original auction price.

This is the third plot the group bought in the capital city this year,  raising the aggregate investment to CNY12.7billion in its first year marching  into Beijing’s property market.

China Mobile’s Partners Conference Is Leading To iPhone Speculation Which May Be Too Early – Forbes

One of the key questions is if China Mobile and Apple were to announce their partnership would the 200,000 TD-LTE base stations that it plans to have in place by the end of the year, which could handle 4 million active users, be enough for the initial iPhone demand. At least one analyst believes that 10% of China Mobile’s users, or about 76 million, could be potential customers. Note that as of September 2013 Apple has sold a total of 421 million iPhones worldwide since it was launched over six years ago.

Chinese aircraft company opens first subsidiary overseas – Xinhua | English.news.cn

The COMAC America Corporation aims to further COMAC’s relationship with local civil aviation authorities, aerospace companies and academic institutions, mainly in areas such as airworthiness certification, civil aircraft development and educational training, said Jin Zhuanglong, chairman of the COMAC.

“Chinese civil aviation market is the No.1 booming market…The fast-growing Chinese civil aviation industry is now becoming an indispensable force to world aerospace industry,” Jin said, adding that China is embracing an era of mass aviation with its remarkable air transport growth.

Muddy Waters NQ Short Call Fails to Freeze Chinese IPOs

Chinese companies are selling shares in New York at the fastest pace in two years less than a month after short seller Carson Block’s call spurred a 62 percent plunge in Beijing-based NQ Mobile Inc. (NQ)

Three Chinese companies have debuted on U.S. bourses this month, raising $345.4 million, the most since May 2011, when six companies listed $1.3 billion of shares. 500.com Ltd., an online sports lottery service, raised $75.2 million in an initial public offering. Sungy Mobile Ltd., which makes applications for Google Inc. (GOOG)’s Android software, sold 7 million shares at $11.22. 58.Com Inc. (WUBA), an online marketplace similar to Craigslist, and travel agency Qunar Cayman Islands Ltd. (QUNR) have sold shares above their price targets since Oct. 30.

China considers pipeline reform to boost gas supply – Yahoo Finance

BEIJING, Nov 22 (Reuters) – As China struggles to rid cities of choking smog, one of the early priorities for Beijing’s economic reforms will likely be to force state-run PetroChina to allow private producers fair access to natural gas pipelines.

Without fair access to the distribution network, independent producers have no incentive to develop the country’s vast gas reserves to their full potential. Already the world’s fourth-largest gas user, China’s leaders want to boost domestic output to accelerate the substitution of cleaner-burning gas for coal to fuel power and heating.

Sina to Roll out Credit Payment Service for Weibo Users

Sina will soon launch a service to enable Weibo users to make online payments on credit, Dai Geng, vice GM of Sina Payments, told Nandu reporter (in Chinese).

Zhong An, the online-only insurance company jointly founded by Alibaba, Tenent and Ping An, will provide coverage for defaults on payments.

Posted from Diigo.

China Business Briefs 17/11/13

Economy

Anhui experiments with sales of rural land in 20 counties – BUSINESS – Globaltimes.cn

The government of Anhui Province issued a decree on November 12 to allow rural land designated for construction in 20 counties to be sold, another experiment in changing China’s rigid rural land policy.

The experiment in the eastern province of Anhui also allows farmers in the 20 counties to sell the land designated for them to build their houses on, expanding farmers’ source of income.

The country’s land is divided into rural and urban usage. The law says rural land is owned by the collective and it must be expropriated by governments before it can be sold on the market. The experiment in Anhui, as well as a recent move in Shenzhen, in the southern province of Guangdong, in early November to put a parcel of rural land onto the urban market, represents an attempt by local governments to end their own monopolies.

Chinese Balk at Child-Rearing Costs – China Real Time Report – WSJ

** And if there’s greater demand for powdered milk…**

Beijing’s announcement Friday that couples will be able to have two children if one spouse is an only child was, for the most part, a welcome surprise. A survey on Sina Corp’s Weibo, China’s equivalent of Twitter, showed the majority of nearly 26,000 users who responded the next day would have another child under the new rule.  Their reasons ranged from being able to ease the burden on one child having to take care of retired parents to ensuring that the kids won’t be lonely growing up.

Yet roughly 37% still said they would opt out of having another child.

It’s “unaffordable,” wrote one Weibo user. “A semester of kindergarten alone costs almost 10,000 yuan.”

China Leadership Pledges Expansion of Economic Freedoms – Bloomberg

In the biggest expansion of economic freedoms since at least the 1990s, China’s leaders vowed to expand farmers’ land rights, loosen the one-child policy and encourage private investment in state businesses.

Couples can have two children if either parent is an only child, the Communist Party said in a statement yesterday fleshing out policies set at a four-day conclave this month. Farmers will get more rights over collectively owned rural land, while the household registration system that impedes internal migration will be scrapped in towns and small cities.

China to claim more gains of state-owned capital – Xinhua | English.news.cn

BEIJING, Nov. 15 (Xinhua) — Thirty percent of the gains of China’s state-owned capital will have to be handed back to the government by 2020, according to a decision issued on Friday by the Central Committee of the Communist Party of China (CPC).

At present, the proportion ranges from zero to 15 percent. The money will be used to improve people’s livelihood, said the decision.

The lengthy policy document — officially named “a decision on major issues concerning comprehensive and far-reaching reforms” — was approved by the Third Plenary Session of the 18th CPC Central Committee, a four-day key meeting which ended on Tuesday.

China to build power plants in Yemen, expand ports | Reuters

(Reuters) – China will build power plants in Yemen with total output capacity of 5,000 megawatts and expand the Arab country’s main container ports, the Yemeni president said after his return from a visit to China, state news agency Saba reported.

Saba news agency cited Yemeni President Abd-Rabbu Mansour Hadi as saying late on Friday that he has agreed with his Chinese counterpart during the visit to “work to set up power plants… using gas and coal and with production capacity that will reach 5,000 MW.”

FTZ’s ‘negative list’ policy to be modified |Shanghai Free Trade Zone |chinadaily.com.cn

Officially launched on Sept 29, the FTZ adopted a “negative list” approach, which specifies bans or restrictions on certain types of foreign investment.

The Shanghai municipal government released the list around the time of the launch, covering 1,069 businesses in 89 divisions within 18 main categories. There are also 190 regulations on the conduct of business in the FTZ. Any sectors not on the list are open to foreign investors.

Xi’s four-point plan gives reason for optimism – FT.com

China’s new president hinted at bold new reforms on Tuesday, when the Chinese Communist party’s Central Committee issued a document that was as sweeping in scope as it was short on detail. That apparent contradiction enabled optimists and cynics to focus on either aspect of the communiqué from the so-called Third Plenary Session of the 18th Central Committee.

On Friday, Xi Jinping and the party followed up on their “guideline” document more rapidly than anyone expected. On balance, it appears that the optimists have been proved right.

China IPO Market to Move to Registration-Based Listing System From Approval-Based System as Part of Reforms – China Real Time Report – WSJ

One of the most surprisingly aggressive items in Beijing’s reform blueprint is a pledge to modernize the country’s new share offering system, a planned-economy-style mechanism that has long been criticized as one of the fundamental deficiencies plaguing an otherwise vast stock market.

In the report released Friday, China’s top Communist Part leaders promised to turn the nation’s current approval-based system of initial public offerings into a “registration-based” one, potentially removing a stumbling block that has distorted supply and demand and artificially inflated valuations of new stock offerings in one of the world’s largest capital markets.

Companies

Sina Recalibrates with Mobile Focus

Charles Chao, chief executive of Chinese portal service Sina, told analysts in the conference call following its Q3 financial results that the company would consider acquiring into other areas – especially mobile Internet. According to the company’s latest results, its net revenue increased 21% year-over-year to US$ 184.6 million while net income grew by a whopping 157% year-over-year to 25.4 million.

The numbers all look good but there’s always more than meets the eye. The fact behind the rosy financial statement, is that Sina’s non-ad revenue increased only 4% year-over-year, the company itself must have recognized the imperative to look into opportunities in other areas in addition to ad sales, which is declining on desktop-side.

Chinese site under fire for sale of child-like sex doll

A Chinese e-commerce site that helps Chinese manufacturers sell goods globally is getting into big trouble for one very creepy product being sold on its site. It has been spotted that DHgate has one Chinese merchant who’s selling disturbingly life-like child-size, sex dolls. As you can see in the product page images below, the doll’s figure is far from fully-formed and the shape suggests that of a nine or ten year old girl:

Regulator sets final penalties for trading error by Everbright |Companies |chinadaily.com.cn

The China Securities Regulatory Commission on Friday announced formal penalties for an insider trading case involving China Everbright Securities Co Ltd, levying a fine of 523 million yuan ($85.7 million) and banning four managers from the nation’s financial markets for life.

On Aug 16, a flaw in Everbright Securities’ trading software generated 23.4 billion yuan in erroneous buy orders on the Shanghai Stock Exchange. The brokerage eventually completed 7.27 billion yuan worth of transactions.

In response to the orders, the benchmark Shanghai Composite Index surged 5.96 percent within three minutes, prompting many investors to buy stocks.

Posted from Diigo.