China Business Briefs 27/12/13


‘Home’ Chosen as Mainland’s Chinese Character of the Year; Taiwan Chooses ‘Fake’ – China Real Time Report – WSJ **For “nearly three years”? It’s a lot longer than that** In Mainland China, residents have been plagued for nearly three years with surging home prices, prompting both the central and local governments to implement a number of measures in attempts to cool the market. Data from November showed that the growth in home prices is tapering, but the trend has been weighing on people enough to justify fang (), or home, as the choice for Chinese character of the year. As the Beijing Evening News reported, the character was an “easy choice” because so many people are facing the same problem: rent hikes and spiraling prices that are putting the dream of owning their own home out of reach for many average Chinese.

China outlines measures to protect small investors – Xinhua | **Yet no word of what this “slew” contains** China’s cabinet on Friday outlined a slew of measures which may better protect the interests of small and medium investors in the capital market.

Small and medium investors are the main player in the country’s capital market, but their interests are prone to the infringement, said a document issued by the State Council.

Chinese Banks’ NPL Ratio Climbs to 0.97Pc by End of Q3: Report -Caijing **Oh really? How much are bundled over with new loans?** The NPL ratio was at 0.95 percent at the end of 2012, when outstanding NPLs jumped to 492.9billion yuan before soaring to 563.6billion yuan nine months later, China Chengxin International Credit Rating Co., Ltd. (CCXI) said in its 2013 ratings report on China’s banking industry.

Shanghai starts simulated trade in equity options – Headlines, features, photo and videos from|china|news|chinanews|ecns|cns Simulated trading began on Thursday morning, the SSE confirmed to China Daily, and more than 60 securities firms took part.

The shares of Ping An Insurance Group Co of China Ltd, SAIC Motor Corp Ltd, the China 50 ETF and the Shanghai SSE180 ETF were used in the exercise.

Regulator Has Eyes on Popular Online Investing, Sources Say – Virtual stores touting high-yield funds have been extremely popular with retail investors this year because they promise returns much higher than bank deposits, with some exceeding 10 percent. The benchmark interest rate for a one-year deposit is of 3.25 percent.

Fund management companies, licensed independent fund sellers, news websites and Internet companies have joined the game, and some of their marketing tactics apparently worry the CSRC.

China’s Economy: Five Barometers of Change in 2014 – China Real Time Report – WSJ **I would also look at occupancy rates of real estate, both residential and commercial** Here are five places to look in the new year for signs of just how serious China’s leaders are about change – and how well the economy is handling it.

China says satellite network to be big asset, others can use it too | Reuters China’s homegrown satellite navigation system will bring untold economic, social and military benefits and other countries in Asia are welcome to use it, the director of China’s satellite navigation agency said on Friday.

The year-old Beidou satellite navigation system is a rival to the U.S. Global Positioning System (GPS) and Russian GLONASS. Beidou’s 16 satellites serve the Asia-Pacific but the number of satellites is expected to grow to 30 by 2020 as coverage expands globally.

China Money Rate Slides as PBOC Adds; Yuan Gains to 20-Year High – Bloomberg The seven-day repurchase rate tumbled 252 basis points since Dec. 20, the biggest decline since July 2011, to 5.08 percent in Shanghai, a daily fixing from the National Interbank Funding Center showed. The gauge of funding availability in the banking system fell 25 basis points, or 0.25 percentage point, today.

The yuan strengthened beyond 6.0700 to the dollar for the first time, touching 6.0670 before trading 0.1 percent higher at 6.0686, China Foreign Exchange Trade System prices show. That’s a 0.04 percent gain since Dec. 20. The PBOC raised the yuan’s reference rate by 0.17 percent to 6.1050 per dollar today, the strongest since a peg to the greenback ended in July 2005.


How they fell: The collapse of Chinese cross-border listings | McKinsey & Company Do these IPOs—and three others this year—mark a broader return of Chinese cross-border listings in the United States? It’s too early to tell; after all, Qunar’s listing was the second from a reputable company in a well-understood industry.1 And fit neatly into the sweet spot of US tech-industry analysts. These are among the first major Chinese listings in the United States after more than 100 Chinese companies were delisted or suspended from trading on the New York Stock Exchange in 2011 and 2012 as a result of fraud and accounting scandals. The fallout of that episode, which destroyed more than $40 billion in value, continues to reverberate through the investment community and in subsequent lawsuits.

China Banks Keep the Fees Flowing – By one estimate, Chinese banks will require about $320 billion in additional capital—including from bonds, hybrids and equity issuance—over the next five years, according to consulting firm McKinsey & Co. Of that, a sizable amount could be through IPOs, which in Hong Kong pay between 1.5% and 3% of the deal’s size as fees to underwriters.


General Motors recalls 1.5 mn Buick, Chevy Sail cars, Ford too hits Kuga alarm in China – Financial Express **Who oversees quality control? Shocking** Shanghai General Motors Co Ltd, GM’s venture with SAIC Motor Corp, will recall about 1.46 million Buick and Chevrolet models produced locally due to issues with a bracket that secures the fuel pump, the country’s quality watchdog said on Friday.

Separately, the watchdog said Ford Motor Co’s joint venture with Chongqing Changan Automobile Co Ltd will recall close to 81,000 of its Kuga cars over a steering part.

Tech in China 2013: Chinese Tech Stocks Recovering? **Would not see this as a trend** Two Chinese tech stocks SouFun Holdings Ltd. (NYSE: SFUN) and Qihoo 360 Technology (NYSE: QIHU) ranked No. 2 and No. 4 respectively of the top 10 best-performing tech stocks by total return in the US stock market in 2013, according to this Forbes post published on December 23th (The writer doesn’t believe there will be any changes in the ranking by the New Year’s Day).

China’s banks are coming – this time for real | Reuters **Because the domestic market is going to get rough for them** In 2013, China’s lenders abroad mostly stuck with what they knew – servicing Chinese companies. But there were firsts. Agricultural Bank of China started clearing yuan trades in the United Kingdom, and Industrial and Commercial Bank of China issued a yuan-denominated UK bond. Those niche markets can still grow fast: the yuan is now the second most-used trade currency after the U.S. dollar.

Takeovers are the logical next step. A dream pairing of ICBC and UK-based emerging market lender Standard Chartered may be too complex, despite the latter’s sliding valuation. But majority stakes in markets where Chinese companies trade and invest make more immediate sense. China Construction Bank set the tone by buying a stake in Brazil’s BicBanco in November. Africa and Eastern Europe may see similar deals. Even oil-rich Iran could be a target in a future sanctions-free world.

Japanese govt warns against Baidu input – BUSINESS – Japan’s National Information Security Center (NISC) and Ministry of Education, Culture, Science and Technology advised 140 institutions including government departments, universities, and research centers not to use the input software developed by Chinese Internet company Baidu Inc, reported, citing Japanese newspaper Yomiuri Shimbun.

Alipay Wallet to Launch 8.0 Edition and An English Version Alipay, the mobile payment and service provider of Alibaba Group, will launch an 8.0 version of Alipay Wallet mobile app in the coming January. The biggest change with the update is that merchants can move physical loyalty cards onto the platform. Previously Alipay Wallet released a WeChat Official Account program that merchants can have users subscribe to their digital loyalty programs; for instance, you’ll receive deals or coupons by Starbucks after subscribing to its Alipay Wallet account.

Deutsche Boerse Agrees to Collaborate With Bank of China – Bloomberg The two companies agreed on a memorandum of understanding to promote the development of the offshore renminbi market in Europe, the exchange said in a statement today. Deutsche Boerse will help Bank of China gain access to European capital markets through its branch in Frankfurt, and the two will co-operate on investor education and business development.

Why did Alibaba and Jingdong apply for telecom licenses? **Vertical integration** For one thing, Alibaba and Jingdong, as the country’s two largest e-commerce firms, both sell a lot of phones. In their view, selling products and services that typically accompany phones – mobile data and call minutes, mainly – could be an easy avenue through which a few extra dollars can be earned. Customers might purchase a brand-new Samsung Galaxy S4 on Taobao and subsequently select a service package from just before the final checkout page.

Leaked photo emerges of a 7-inch Xiaomi tablet When we interviewed Xiaomi founder Lei Jun in October 2012, he stated clearly that the startup phone-maker was not working on an Android tablet. But that was 14 months ago. A leaked image this week claims to show a 7-inch Xiaomi tablet (pictured), suggesting that Xiaomi might have been swayed by the success of budget tablets like the original Nexus 7.

Overseas dealmaking: China scores – Juxtapose the Apollo/Cooper fiasco against Shuanghui’s $5bn purchase of American pork processor Smithfield. In spite of congressional scepticism of Chinese motives – a headwind that Indian buyers do not face – the largest Chinese takeover of a US company passed scrutiny. Shuanghui secured financing of $7bn and is poised to list its shares.

BRIEF-China Railway Construction’s unit signs road, undersea tunnel project in Malaysia for $1.2 bln – Yahoo Singapore Finance China Railway Construction Corp Ltd

* Says unit signs road and undersea tunnel project in Malaysia for $1.19 billion

The Himalayan Times : Melamchi project gets a new life – Detail News : Nepal News Portal The government terminated the contract with the China Railway 15 Bureau Group Corporation and China Machinery Industry Construction Group Inc (CRCC) on September 25, 2012 after their failure to perform as per the signed agreement. The CRCC could build only a 6.5-km stretch of a tunnel in three years though it had signed a deal with the Melamchi Water Supply Development Board, a government undertaking, on February 19, 2009 to complete the construction of a 27.5-km-long tunnel at a cost of Rs 4.28 billion by September 2, 2013. Uganda: 2013 – Tax Battles, Refinery Plans Shaped the Oil Story (Page 1 of 3) Tax battles in London, government’s issuance of the country’s first production licence to Chinese oil giant, Cnooc, accusations and counter accusations of ‘meagre’ compensation rates to people living around the refinery site, and the request for qualifications for oil refinery shaped the country’s oil and gas sector this year.

Sinopec Engineering to build $3.1 bln coal-to-chemical plant | Reuters 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.

Chinese firm to build expressway in Serbia – People’s Daily Online Shandong Hi-Speed Group of China has stated to construct the E763 expressway project, which is a section of Pan-European traffic corridor, in Belgrade. The project, totaling 50.9 kilometers, is worth 334 million U.S. dollars. This is the first infrastructure project that China has implemented within the framework of the loan agreement for central and eastern Europe; it is also Serbia’s first expressway project undertaken by Chinese firm.

Govt weighing Chinese offer on SEZ in Ctg | FIRST PAGE | Financial Express :: Financial Newspaper of Bangladesh The Chinese company China Communication Construction Company Ltd (CCCC) completed the feasibility study earlier this year and showed interest in construction of the tunnel. It also placed its proposal to the Bangladesh Bridge Authority (BBA), which forwarded it to the Economic Relations Division (ERD) so that necessary steps are taken for arranging the fund through government-to-government (G2G) negotiation.

Posted from Diigo.


China Business Briefs 16/12/13


China’s HSBC flash PMI sinks to three-month low, but rebound signals stay | South China Morning Post Growth in activity in China’s vast factory sector slowed to a three-month low in December as reduced output offset a pickup in new orders, a preliminary private survey showed on Monday, in line with other recent data pointing to a resilient but slowing economy.

The flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to 50.5 from November’s final reading of 50.8, but for a fifth consecutive month remained above the 50 line which separates expansion of activity from contraction.

China’s overall capacity utilization rate – a major gauge of overcapacity – eased to 57.8 percent last year, well below the historical average of roughly 73 percent set during the decades following 1978. And according to the National Bureau of Statistics, capacity utilization in heavy pillar sectors was only 78.6 percent at the end of the second quarter of 2013, meaning that 21.4 percent of capacity was idle.

Company pay to surge in 2014: survey An average pay rise of 8.8 percent is expected for company employees in China next year, according to a survey released on Sunday by, China’s leading jobs website.

Some 17.3 percent of the surveyed companies plan to increase pay for their staff at least once next year, a slight dip compared with the figure in 2013, the survey revealed, adding that 74.9 percent chose to increase pay only once in 2014.

Land sales hit new record in Shanghai |Industries | **I love the “sources said”** Shanghai sold 200 billion yuan ($33 billion) worth of land as of Dec 12 this year, marking a new annual record, sources said.

Three land sites were sold for a total of 1.9 billion yuan on Dec 12.

According to a statement released Saturday following an urbanization work conference hosted by the Communist Party of China’s Central Committee, which included Party leader Xi Jinping, residents in some urban areas could expect to see an easing of hukou (household registration) restrictions.

China Sets Out Urbanization Plans to Support Economic Growth – Bloomberg China will map out city clusters across the country’s central, western and northeastern regions and develop them into engines for growth as part of its urbanization strategy, according to the nation’s leadership.

“Diverse and sustainable” funding mechanisms will be developed to finance policies, they pledged at an urbanization conference, according to a report of the meeting by the Xinhua News Agency yesterday. Attention must also be paid to the environmental impact of such development, they said.

China CDs Show Banks May Benefit From Rate Reform, Mizuho Says – Bloomberg Chinese banks’ ability to raise funds below benchmark interbank costs by selling negotiable certificates of deposit shows they may benefit from interest-rate liberalization, according to Mizuho Securities Asia Ltd.

When 10 banks sold 34 billion yuan ($5.6 billion) of the certificates last week, they paid less than the Shanghai interbank offered rate, easing concern that the industry could face a funding shortage, Jim Antos, a Hong Kong-based Mizuho analyst, wrote in a note today. Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, sold CDs at 5.1 percent on Dec. 12, compared with the one-month Shibor of 5.42 percent, data compiled by Bloomberg show.

Short Circuit for Foreign Electronics Vendors – **Unprovable protectionism** What’s hot lately in China’s electronics industry is not the latest gadget but procurement guidance from the central government that is starting to sting Western companies. That guidance can be summarized in two words: Buy local.

Several sources close to the American electronics giant Cisco Systems Inc. told Caixin that Chinese government agencies and state-owned enterprises (SOEs) have been told to “when possible” turn their backs on electronics equipment offered by overseas firms in favor of domestic company products.

Cabinet Pledges Tax Change to Cut Coal Reliance – **Bad news for China Shenhua** The cabinet unveiled a document titled an Opinion to Promote the Stable Operation of the Coal Industry on November 28. It says the government will speed up a shift in the coal tax from one focused on volume to one based on value.

This would significantly increase costs for coal producers, and thus be an attempt to cut back on the country’s heavy use of coal. China is the world’s largest producer, buyer and user of coal.


Alibaba to Invest over HK$ 2.8 Billion in Haier Subsidiaries – On December 9, the companies announced a deal in which Alibaba will invest a total of HK$ 2.82 billion in Haier subsidiaries. Under the agreement, Alibaba will pay HK$ 541 million for a 9.9 percent stake of Qingdao Haier Logistics Co.

Alibaba will also buy HK$ 1.32 billion worth convertible bonds from Hong Kong-listed Haier Electronics Group Co. that can be turned into to a 24.1 percent stake in Qingdao Haier Logistics.

China Auto Industry News | Chinese Made Volvo S60L Launches in China From 269,999 RMB to 384,900 RMB | China Car Times – China Auto News After a long winding road, Volvo has finally brought its Chinese factory online in Chengdu where the facility is now producing the China only S60L.

Volvo came under Geely’s control in early 2010 with the mission of bringing Volvo more sales in China to offset falling sales in Europe and elsewhere. One issue in Volvo’s China plan was a lack of production facilities within China, of course they had the CKD agreement with Chang’an but Chang’an were busy with multiple joint ventures with Ford, Mazda and Suzuki as well as its own range of vehicles. Geely and Volvo developed a new facility in Chengdu in record time to produce the long wheelbase S60 for China.

Wuhan: Detroit of the East gives green light to Renault | 4-Traders Renault SA clinched full access to China’s auto market on Monday by sealing a joint venture agreement with state-owned Dongfeng Motor Group in Wuhan, a city fast shaping up as China’s own Detroit.

Nine years after the two companies first announced plans for the joint venture, they finally inked a $1.3 billion 50-50 partnership to introduce the French carmaker’s own locally assembled models in the world’s biggest auto market.

Shell Exiting Woodside Opens Door to China Bids: Real M&A – BloombergRoyal Dutch Shell Plc’s (RDSA) long-awaited sale of its $6.4 billion stake in Woodside Petroleum Ltd. may open the door for Asian buyers to grab a slice of Australia’s second-largest oil and gas producer, or even the whole company.

Shell, which said last month it was entering “a divestment phase,” may exit its 23 percent holding in Woodside as soon as 2014 as its importance to Europe’s largest oil company fades, said Nomura Holdings Inc. While Shell may opt to sell the stock back to Woodside and institutional investors, China’s Cnooc Ltd. and China Petroleum & Chemical Corp. might pursue the stake or a full takeover, Morningstar Inc. said.

Clearing facility to support London’s RMB business – Headlines, features, photo and videos from|china|news|chinanews|ecns|cns The benefits of the facility include same-day clearing for London transactions, the ability to clear transactions without being affected by Chinese public holidays and clearing under the laws of the United Kingdom.

The facility is being jointly established by Standard Chartered and Agricultural Bank of China Ltd. It was announced last week during Prime Minister David Cameron’s visit to China.

Online Estate Service Soufun Launches Third-party Financial Platform to Tap Online Finance Industry China’s leading online estate service Soufun launched Soufun Financial Service Platform today, offering third-party financial products to customers to cater for their funding demands for property acquisition, home leasing and decoration.

The service will be firstly launched in first-tier cities like Beijing and Shanghai, and then expanded to other cities, according to Mo Tianquan, board chairman of the company. Mo added that Soufun will join hands with financial institutions to roll out custom financial products for its members, and then, develop in-house financial products in the future.

After China Mobile sugar rush, Apple will fight for customers | Reuters **Won’t be easy** For all the hype, Apple Inc’s long-awaited iPhone agreement with China Mobile Ltd may deliver little more than a fleeting revenue jolt for the U.S. giant.

A deal with the world’s largest mobile carrier, expected as early as this week, nets Apple 759 million potential new customers that could generate $3 billion (1.8 billion pounds) in 2014 revenue, or nearly one-quarter of Apple’s projected revenue growth in its current fiscal year.

Posted from Diigo.