BAIDU released its latest Apollo 3.0 artificial intelligence platform to help mass produce self-driving vehicles commercially at the Baidu Create 2018 AI Developer Conference in Beijing yesterday.
“It marks the first year of commercialization for autonomous driving, and this is just the beginning for the evolution of driverless vehicles,” Baidu founder and Chairman Robin Li said in his keynote speech. “We will continue our efforts to allow our open platform of data and algorithm to be accessible for developers around the world.”
The first L4 autonomous mini bus equipped with Baidu’s Apollo AI platform is being mass produced at Fujian-based King Long United Automotive Industry Co Ltd.
The L4 level automated driving technology, the second highest level for driverless vehicles, can operate without human oversight under selected road conditions or geographic environment.
The King Long buses have neither pedals nor steering wheels and the first batch of 100 vehicles equipped with Apollo will soon be deployed commercially in Beijing, Xiongan, Shenzhen, Pingtan and Tokyo later this year or early 2019.
Baidu also joined Google, Nvidia and Alibaba in releasing self-developed integrated circuits for the AI industry.
Baidu’s Kunlun AI chip is now in the test manufacturing process or “taping out” phase. The company will seek collaboration with industry players and target applications in smart devices, audio and graphic recognition.
New energy vehicle company BYD has also sealed a strategic partnership with Baidu on smart vehicles’ production and operations.
BYD founder Wang Chuanfu said the auto industry is increasingly embracing open partnership with industry players to drive innovation.
FRENCH auto parts maker Valeo said yesterday that the company will cooperate strategically with Baidu on its open autonomous driving platform Apollo.
“This partnership, which is in line with our open innovation approach, demonstrates Valeo’s ambitious vision for the development of autonomous vehicles,” said Valeo’s statement.
By joining Apollo, Valeo said it will contribute its expertise in sensors. The company said it has a comprehensive range of sensors including cameras, radar, ultrasonic sensors and laser scanners. The auto parts maker said it will also contribute its skills in sensor cleaning systems, which are key to optimal sensor functioning, connectivity between autonomous vehicles, and control and optimization of air quality inside the vehicle.
By cooperating with Baidu, Valeo said it will benefit in software, hardware and data tools. These areas will consist of operating systems, high-precision positioning and high definition mapping services, simulation engines and cloud algorithms.
Launched in April 2017, Baidu’s Apollo is an open platform to help accelerate the development, testing and deployment of autonomous vehicles via collaboration. It also provides a technical solution for the major features and functions of an autonomous vehicle.
GENERAL Motors delivered a total of 1,844,396 vehicles in the first half of this year in China, up 4.4 percent year on year, according to a statement published by GM on its official website yesterday.
Sales of GM and its joint ventures in China totaled 858,344 vehicles in the second quarter of this year, an increase of 0.7 percent compared with the same period last year.
The US automaker said despite the softening of the passenger vehicle market, its Cadillac and Baojun brands achieved record deliveries for the second quarter, while Chevrolet continued to post double-digit growth.
In terms of brand, Cadillac sales rose 19 percent from a year earlier to 48,712 units in the second quarter. Chevrolet grew 22 percent from a year earlier to 131,895 units from April to June. Chevrolet sales were led by their best-selling Cavalier model. Sales of the Cavalier jumped 54 percent to nearly 49,000 vehicles, while Buick deliveries totaled 230,454.
Sales of Baojun rose 6 percent to 198,986 vehicles, and Wuling deliveries achieved a 3.1 percent year-on-year increase to 248,297 vehicles, according to data provided by the company.
In the second half of this year, GM is going to launch more models on the China market. The automaker said it will add 10 new and refreshed models in the second half of this year, two-thirds of the total for the entire year. The company will focus on segments with the strongest customer demand, including sport-utility vehicles, multi-purpose vehicles and luxury cars.
SHANGHAI stocks fell sharply again yesterday, reversing Tuesday’s rebound, amid investor concern over a wave of looming tariffs to be imposed by the US and China on each other’s goods tomorrow.
The Shanghai Composite Index shed 1 percent to end at a fresh 28-month low of 2,759.13 points.
The US is set to impose tariffs on US$134 billion of Chinese goods tomorrow and China has vowed to do the same on the equivalent value of American products.
Household appliances shares led the losses, with Ecovacs Robotics Co falling by the daily limit of 10 percent.
Stocks related to the Internet such as Shanghai Baosight Software Co, CIG Shanghai Co and Yonyou Network Technology Co shed over 4 percent.
Losses were also suffered by textile and clothing firms, with Sichuan Zhenjing Co slumping by the maximum daily cap of 10 percent while Hunan Huasheng Co dropped 9.7 percent and Huafang Co lost 7.35 percent.
LEGEND Holdings Corporation, parent company of Lenovo, completed the purchase of a nearly 90 percent stake in Banque Internationale a Luxembourg S.A. on Monday.
BIL said in a statement on its website on Monday that Legend has received all regulatory approvals for the acquisition of the 89.936 percent stake.
The Grand Duchy of Luxembourg will retain its nearly 10 percent ownership of BIL.
Legend Holdings is looking forward to supporting the existing management board, maintain and invest further in the development of the BIL brand in Luxembourg, Europe and globally, according to the statement.
In a stock filing dated Monday with the Hong Kong exchange, where Legend is listed, Legend said it paid 1.53 billion euros (US$1.78 billion) for the stake.
The BIL’s current board chairman and chief executive will remain, reporters have learnt.
Liu Chuanzhi, chairman of Legend, said the acquisition is the corporation’s most significant step of going global since Lenovo bought the personal computer business of IBM in 2004.
Founded in 1856, BIL is the oldest multi-business bank in the Grand Duchy. Employing more than 2,000 people, BIL has operations in Luxembourg, Switzerland, Denmark, Sweden and the Middle East.
As of the end of 2017, BIL had total assets of 23.8 billion euros, and its net income after tax in 2017 was 117 million euros.
US authorities have demanded the US arm of Glencore Plc hand over documents relating to its business in Nigeria, the Democratic Republic of Congo and Venezuela, sending shares in the parent company down more than 10 percent.
The Swiss-based commodities trader and miner received a subpoena from the US Department of Justice requesting documents and records on compliance with the Foreign Corrupt Practices Act and US money-laundering statutes.
Shares in Glencore, a major exporter of Nigerian and Venezuelan crude oil, fell as much as 13 percent, their biggest one-day fall in more than two years.
The documents requested from subsidiary Glencore Ltd relate to the group’s business in the three countries from 2007 to present, Glencore said, adding it was reviewing the subpoena.
The US Foreign Corrupt Practices Act makes it a crime for companies to bribe overseas officials to win business.
Analysts at Barclays and Credit Suisse viewed the share price drop as steeper than warranted.
“From our perspective, while it is clearly a risk factor, we stress that these types of requests are more common than perhaps the aggressive drop in the Glencore share price today suggests,” a note from Credit Suisse said.
Jefferies lowered its target price for Glencore but maintained its buy rating.
“The news today regarding a subpoena from the US increases the geopolitical overhang on Glencore shares, even if there are no charges against the company in the end,” analysts at the financial services company wrote.
Glencore accounts for more than a quarter of the world’s cobalt output, most of it from Congo, which itself is the source of around 60 percent of global supplies.
Congo accounts for about 25 percent of Glencore’s net present value, Jefferies said, while analysts said Venezuela’s contribution to the bottom line was smaller.
Washington slapped sanctions on 13 “human rights abusers and corrupt actors” in December last year, including Israeli billionaire Dan Gertler, who was Glencore’s former partner in the DRC and is a close friend of Congo’s president.
Glencore said last month that it had agreed to pay Gertler royalties it still owed in euros instead of US dollars after litigation threats.
In May, Bloomberg News reported that Britain’s Serious Fraud Office was preparing to open a formal investigation into Glencore’s activities in the DRC.
Separately, the US Department of Justice has been investigating suspected bribery plots involving payments to Venezuela’s state oil firm PDVSA and charged five individuals last year.
Chinese state-backed media group CMC Inc said yesterday it raised around 10 billion yuan (US$1.49 billion) from investors including Alibaba Group Holding Ltd and Tencent Holdings Ltd.CMC Inc, one half of the CMC media empire that spans from sports to amusement parks, said the A-round fundraising was led by the two Chinese tech firms along with new investors such as property developer China Vanke Co Ltd.It added the firm was valued at around 400 billion yuan after the round.CMC Capital Partners is the other half of the larger CMC group, founded by media magnate Li Ruigang.Li is often portrayed as China’s version of Australian media mogul Rupert Murdoch, the head of News Corp.Alibaba and Tencent declined to comment.The CMC group is a major force in China’s entertainment and media sectors and has global ambitions. It has a stake in the owner of English Premier League team Manchester City and a joint venture with Hollywood studio Warner Brothers Entertainment.“With the tech revolution driving ongoing change in how people consume content, the global media and entertainment industries are going through a new round of adjustment and change,” Li said in a statement.The investment came as more tech companies are seeking tie-ups with state-backed firms under China’s mixed-ownership reforms.
SHANGHAI took a further step in its fight against housing speculation yesterday by stating that only qualified enterprises will be allowed to buy new homes in the city, following similar moves taken earlier in Xi’an, Changsha and Hangzhou.
Effective yesterday, to be eligible for new home purchase, companies must have been set up for at least five years, pay taxes of at least 1 million yuan (US$150,475) in Shanghai, and employ at least 10 staff who have paid social security insurance and public housing provident funds within the company for at least five years, said a statement posted on the official website of the Shanghai Housing and Urban-Rural Development Commission.
Enterprises that have paid taxes above 5 million yuan in Shanghai are qualified to purchase new homes anyway.
Moreover, companies must wait for five years before they can sell their residential property, compared with the previous requirement of three years, the commission said.
The latest tightening policy probably came after complaints made by some individual home buyers who got frustrated in their failed purchase attempts.
Companies would often emerge as the final winners in the city’s lottery-style system — in use since last August — to decide the order of purchasing rights at all new residential developments around the city.
Currently, there is no limit on the number of new homes a company can purchase in Shanghai, while individual buyers face very strict home-purchase restrictions.
BOE Technology Group Co faces “limited” impact from the US-China trade dispute as the biggest Chinese LCD panel maker owns key technologies and patents, a senior executive at the company told Shanghai Daily yesterday.
“The (trade dispute) impact is limited as we have localized technologies and suppliers (about 70 percent),” Zhang Yu, senior vice president of BOE, said during a display show held recently in Shanghai. “The LCD industrial chain is mainly in Asia, covering the Chinese mainland, Taiwan and South Korea.”
The US and China are embroiled in trade dispute which will see US tariffs on US$34 billion of Chinese goods come into effect on Friday. China has also threatened to retaliate with duties on the equivalent value of American products.
BOE, which has over 10 production lines in China, produced 25 percent of global LCD panels in 2017 to rank the world’s No. 1, said IHS.
SHANGHAI stocks rebounded yesterday after investors were cheered by China’s central bank’s confidence that it would keep the yuan stable.
The Shanghai Composite Index rose 0.41 percent to 2,786.89 points as it reversed its sharp drop in the morning session.
Yi Gang, governor of the People’s Bank of China, said the central bank was closely watching the fluctuations in the foreign exchange market.
He expressed optimism that China has “ample policy tools to maintain the yuan’s exchange rate basically stable at a reasonable and balanced level.”
AECC Aero Science and Technology Co and Avic Aviation High-Technology Co both surged by the daily limit of 10 percent, as did Hunan Copote Science and Technology Co, Suzhou Chunqiu Electronic Technology Co and Shanghai Wondertek Software Co.
STARTING Sunday, China cut import tariffs for daily consumer goods. The average tariff rate for cultured and fished aquatic products has been cut from 15.2 percent to 6.9 percent.
As China reduces import tariffs and simplifies customs clearance processes, it will take much less time for foreign food to make it to Chinese dinner tables.
A batch of fresh milk leaving a New Zealand farm on Monday can reach Chinese dinner tables as soon as Wednesday. At the beginning of the year, it took eight days.
Lobsters, salmon, oysters and other fresh seafood from Canada can arrive in China’s first-tier cities within 36 hours, thanks to China’s trade facilitation policies and fast growth of cold-chain transportation. The customs clearance time has been reduced to less than two hours in several major Chinese cities including Shanghai, Beijing and Guangzhou.
“We now guarantee our lobsters fresh and alive when they arrive on Chinese customers’ doorsteps. If not, they can reject the package on site,” said Leo Liu, general manager of 50N Natural Ecology Group Ltd, a Canadian company.
The tariff cut can make the company’s products more competitive in China, said Liu.
Currently, few Canadian aquatic products and food enterprises have made China their major export market, as their traditional export markets are in America and Europe. Liu’s company has opened online shops on Chinese leading e-commerce platforms, but sales volume in China only accounts for 5 percent of the company’s sales.
“Canada’s food trade with China is mainly grain, oil and other commodities. With China’s import tariff cuts, we are selling more consumer products to China to catch up with the country’s upgraded consumption habits,” said Leo.
Food traders are preparing for increasing iced imports of fresh and frozen food to the China market. Ye Zi, chief business officer of HM (Shanghai) Trade Co Ltd, said the company has started to import frozen aquatic products from Japan for the first time.
“Frozen aquatic products have a shelf life of eight months. As the whole customs clearance process is limited to two weeks, it is now possible to sell imported frozen aquatic products in China,” said Ye.
Milk produced by New Zealand brand Theland can land in Shanghai’s supermarkets and China’s e-commerce platforms in roughly 72 hours after production and bottling near Auckland.
The process used to take five days, said Sheng Wenhao, board chair of Theland New Cloud Digimart, which owns the brand. He said trade facilitation has made it possible to sell imported pasteurized milk in China, which has a shelf life of no more than 15 days.
Earlier this year, the Shanghai Entry-Exit Inspection and Quarantine Bureau and the government of Changning District, home to the city’s biggest Japanese and Korean communities, launched a trial scheme to speed up import inspection.
Theland and four other brands, rated by municipal regulators as having reliable quality and good reputations, have entered the scheme’s list for enjoying a “fast track” import quarantine and inspection. The eight-day customs clearance time of Theland milk has been reduced by more than half since then.
Yang Dongsheng, head of Changning’s commerce commission, said during the trial, the inspection and quarantine department has changed the work mode to carry out the import supervision procedures beforehand and afterwards.
“We start the quality inspection in the country of origin, and implement random checks after the imports arrive in China,” Yang explained.
Chocolate, as an imported product that has witnessed China’s opening up and consumption upgrading, also reflects changes during this round of trade facilitation.
Shanghai Maxmile International Trade Company is the general agent of several famous chocolate brands including Guylian in China.
Wei Wenzhong, general manager of the company, said that Chinese customers now have more diversified demands for flavor, locality and roasting methods of chocolates.
He said Shea butter, while popular around the world, is still new to Chinese consumers. Chocolates with shea butter ingredients used to be blocked in China because shea butter did not have a HS (Harmonized System) code, which is an internationally standardized system of names and numbers to classify traded products.
“Last month, shea butter got its official HS code, and Chinese customers will be able to taste chocolates with shea butter soon,” said Wei. “More food and ingredients will be added to HS. Our new products such as goldberry chocolate will also enter the Chinese market soon.”
The company, and many others, have benefited from the Shanghai government’s accelerated work on HS authentication.
With Shanghai scheduled to host the first China International Import Expo in November, the municipal government has sped up removing restrictions and delays brought by HS codes.
“Shanghai encourages new and innovative products. We have implemented pre-inspection policies for market debuts of new products, which will enable a speedy passage through customs upon arrival. The new measures can allow new products to be sold here even without a proper classification momentarily,” said Kong Fu’an, head of Business and Trading Office of the Shanghai Municipal Commission of Commerce.
GOOGLE’S delayed entry into a consortium of advertising technology companies has spoiled the members’ push to comply with a new European privacy law, six people involved in the program told reporters, leaving some firms exposed to fines.
Most at risk are unwitting owners of ad-funded websites and apps, which Google has said have the responsibility of getting consent to serve targeted ads to European consumers.
The experience shows how Google policy decisions cascade through the US$200 billion global online advertising industry, which is dominated in most facets by the Alphabet Inc unit.
Data about a website visitor’s identity can pass through a dozen ad tech firms before an ad is loaded, and each one must have user consent or another legal basis to access it under Europe’s General Data Protection Regulation.
Hundreds of ad tech firms launched software together a month before GDPR kicked in on May 25 to verify consent before displaying ads. Google announced on May 22 that it would not join the industry program until August.
Google devised a temporary solution that the people said has been imperfect. As a result, some of Google’s advertising clients are targeting ads to users who have not given consent to personalized marketing.
Google declined to comment on possible policy violations, instead reiterating that GDPR “is a big change for everyone,” and that it is working with partners on compliance. GDPR fines can reach as high as four percent of a firm’s annual revenue.
Four ad tech executives said they are counting on deference from regulators until Google supports the consortium technology.
“Once Google adopts the consent framework, much of the confusion will start to settle down a bit,” said Walter Knapp, chief executive of ad software company Sovrn Holdings Inc.
Authorities in France and Germany said they have yet to investigate consent issues related to online ads. Financial and legal analysts said it is a matter of time.
A crucial issue has involved Google’s DoubleClick Bid Manager, which large advertisers use to purchase ad space from ad exchanges.
Many websites now present European visitors with pop-ups asking for consent to send identity data to exchanges and DBM as ad space with user information is far more valuable.
The issue is that DBM cannot yet accept users’ selections because it does not support the consortium standard.
Big exchanges such as AppNexus Inc and Rubicon Project Inc have worked around by guaranteeing that they will only offer ad space on DBM when users have consented.
AppNexus and Rubicon Project declined to specify how they are ensuring compliance.
THE Chinese mainland is expected to see 100 to 120 initial public offerings seeking to raise 200 billion yuan (US$30.09 billion) this year, PwC said.
The number of IPOs in the second half of the year is likely to maintain the trend in the first six months, PwC said in a report released yesterday.
They fell substantially in the first six months as only 63 IPOs were listed on the Shanghai and Shenzhen stock markets, representing a 74 percent slump from the same period last year, the report said.
The value of the IPOs also dropped 26 percent from a year earlier to 93.1 billion yuan in January to June.
Of the 63 IPOs in the first half, 36 were listed on the Main Board of the Shanghai Stock Exchange with a total value of 64.5 billion yuan, according to the report.
Data showed IPOs were predominantly from the industrial product, consumer goods and services, Internet technology and telecommunications sectors.
The number of companies waiting to list fell from 519 at the end of last year to 307 in June following the stricter approval process for A-share IPOs which led a shorter queuing time.
Looking ahead to the second half year, PwC expected the number of IPOs to maintain the trend of the first half, leading to an estimated total number of 100 to 120 IPOs for the whole year, raising around 200 billion yuan.
“We anticipate the first Chinese Depositary Receipt listing in the second half, and we predict IPOs in the A-share markets will be affected by a range of factors in addition to the strict approval process,” Lin said.
The CDR is a new mechanism to entice overseas-listed Chinese technology companies such as Alibaba to return and list on the A-share market.
TAIWAN’S struggling smartphone maker HTC announced yesterday that it would slash 1,500 jobs, around a fifth of its total workforce, in the biggest staff cull for three years following heavy losses.
The announcement of the cuts to its manufacturing workforce comes despite a new deal with Google, completed in January, which boosted HTC’s first quarter performance after a dismal 2017.
It incurred a net loss of NT$16.91 billion (US$554 million) in 2017 and a loss per share of NT$20.58, the highest since it listed on the Taiwan Stock Exchange in March 2002.
Losses of NT$9.8 billion in the last three months of 2017 represented its worst ever quarterly results.
HTC described the cuts — which will be implemented by the end of September — as “a decisive step in the realignment of resources across the organization” that would allow “more flexible operations management.”
Shares in the firm plunged 6.71 percent to NT$52.80 in Taipei yesterday and are sharply down from a high of NT$1,300 in 2011 as its share of the global smartphone market has been worn away.
Under the US$1.1 billion deal with Google, the US tech giant took on half of HTC’s research and development staff — about 2,000 people.
Many of them had already been working on its Pixel handset, manufactured by HTC, as well as acquiring intellectual property licensing.
The deal reflected Google’s wish to emulate the success of Apple iPhones by controlling the hardware as well as the software used in the premium-priced handsets.
Following the Google deal, HTC announced its first quarterly gains for almost three years in May, posting a net profit of NT$21.1 billion.
But while analysts said the Google pact would mean some immediate benefits for HTC, such as more capital and cost cuts, they predicted a turnaround in its fortunes was unlikely.
TENCENT Inc will distribute the Game of Thrones mobile game in China after sealing a deal with game developer Youzu. Tencent will offer software support and distribute GoT and both parties will share the revenue generated from the game, said Youzu in a statement to the Shenzhen Stock Exchange yesterday.
Youzu received the license to develop the GoT game by signing a pact with Warner Bros last year. It was the first mobile game license granted in China by the interactive entertainment division of Warner Bros.
CHINA’S scientific research base for prospecting and exploiting natural gas hydrate will be located in Guangzhou, said a press briefing by the Guangzhou port office. The base will conduct marine geology work focusing on the prospecting and exploitation of the natural gas hydrate — which is a solid formed by water and natural gas under certain conditions — in the sea, deep sea drilling for scientific research, as well as deep sea oil and gas exploitation. This base is part of China’s emphasis on clean energy to play a bigger role.
CHINESE startup Niu plans to roll out two electric scooters in Europe’s high-end market in 2019, Shanghai Daily learned yesterday. The M+ model sells for 2,299 euros (US$2,681) online while the N-GT costs 4,499 euros, said Niu, which has teamed up with European partners including SharingOS and Indigo.
THE Asian Infrastructure Investment Bank has approved investment for projects worth over US$5.3 billion since it started operations about two and a half years ago, AIIB President Jin Liqun said yesterday.
All the projects are in or connected with countries and regions along the Belt and Road Initiative, added Jin, who made the remarks at the Forum on the Belt and Road Legal Cooperation hosted by the Ministry of Foreign Affairs and China Law Society.
Multilateral institutions have an important role to play in underpinning the Belt and Road Initiative by offering support in terms of standards, financing, capacity building, environment and social policies, debt sustainability and dispute settlement, he said.
Jin said it is gratifying to witness astounding achievements in the Belt and Road Initiative, from conceptualization to tangible results. Meanwhile, the Belt and Road Initiative has increasingly attracted a great deal of attention from all stakeholders regarding policies, governance and standards.
It goes without saying there are misunderstandings, even prejudice, about this initiative, said Jin, noting that there was also lots of skepticism and doubts about the establishment of the AIIB in spite of a warm response and support from many countries.
“As the Chinese proverb goes, facts are more persuasive than eloquence,” Jin said, adding that a spirit of transparency, cooperation and inclusiveness has featured prominently throughout the process of establishing and running the bank over the last two and a half years.
He said the AIIB’s performance has earned broad praise and recognition from the international community. The AIIB’s third annual meeting was held last week in Mumbai.
It is broadly recognized that AIIB represents a multilateral development bank with 21st century governance, standards, and multilateralism and sound policies governing operations, environmental and social frameworks and procurement, said Jin, adding that it is a testament to the Chinese government’s firm commitment to the international community and to delivering on its promises.
AIIB’s membership has grown from 57 founding members to 87 members from all continents, with its projects leveraging a total of over US$30 billion in public and private investment.
The three major global rating agencies have given AIIB their top-level rating, while the Basel Committee on Banking Supervision has given AIIB a zero percent risk weighting.
The idea of AIIB and the Belt and Road Initiative came from China, but they serve the whole world, as both are open and inclusive platforms for international cooperation, Jin said.
Six multilateral development banks, including AIIB and the World Bank, entered into an agreement in May last year to enhance cooperation under the Belt and Road Initiative.
The AIIB is now working with the Ministry of Finance, the World Bank, the European Bank for Reconstruction and Development and others to establish a cooperation center for multilateral development bank financing.
CHINA’S manufacturing activity cooled slightly in June, but the pace of growth remained moderate overall, according to a private report yesterday.
The Caixin China General Manufacturing Purchasing Managers’ Index dipped 0.1 to 51.0 last month from May, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media. A reading above 50 signals growth while one below 50 means contraction.
The trend echoed the decline in the official PMI released by the National Bureau of Statistics over the weekend which fell by 0.4 to 51.5 in May from a month earlier.
As a result, the Caixin Manufacturing PMI averaged 51.1 in the second quarter, down from 51.4 in the first three months.
Companies sustained increases in output, suggesting that manufacturing supply was relatively strong, according to the Caixin report. However, demand from overseas remained subdued as the index for new export orders fell for the third month running to the lowest to date, the report said.
“New export orders remained negative, pointing to a grim export situation amid escalating trade disputes between China and the US, which led to weak demand across the manufacturing sector,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group.
Lu Ting, economist at Nomura, attributed the decline in the new orders sub-index and the new export orders to stronger downside pressure on external demand than on domestic demand.
Meanwhile, the rate of job losses was the steepest seen for 11 months amid retirement, company downsizing and insufficient workload.
Zhong said the drop in the employment index for the second straight month indicated worsening layoffs.
The rate of input price inflation rose the sharpest in five months in June, with several firms hit by rising raw material costs. Manufacturers raised their prices charged by the steepest rate since last September, the report said.
But Zhong said that goods producers in China “remained optimistic that production levels would rise over the next year. However, the level of positive sentiment was the lowest recorded for six months on concerns of rising costs and stricter environmental policies.”
In contrast, Nomura held a more negative outlook that “the economy has yet to bottom out, and things will more likely get worse in coming months.”
ALIBABA will spend several billions of yuan in the next few months on its new retail strategy and to integrate its online and offline resources after it acquired on-demand delivery platform Ele.me for US$9.5 billion in April.
The e-commerce giant intends to provide offline merchants, restaurants and food vendors with more resources for them to access potential consumers on its retail platform.
The acquisition of Shanghai-based Ele.me offered a major step to Alibaba Group to expand local lifestyle services beyond its e-commerce ecosystem and to provide new shopper experience.
Alibaba plans to use its merchandising technology and the capability of Ele.me’s delivery network Fengniao to help offline merchants access the massive online shopping population.
Users of Alibaba’s retail site Taobao and payment affiliate Alipay will receive cash coupons to pay for using the e-commerce giant’s on-demand services.
Competition in the on-demand delivery segment has been growing as Meituan Dianping filed for an initial public offering last month and mobility platform Didi Chuxing is also testing the water with its food delivery service in selected cities on the mainland.
Tesla Inc produced 5,031 Model 3 electric cars in the last seven days of its second quarter, the company said yesterday, beating its long-elusive production target after several hiccups.The company also said 11,166 Model 3 vehicles were in transit to customers at the end of the second quarter, and would be delivered early next quarter.Model 3 production tripled to 28,578 in the company’s second quarter from the previous quarter, Tesla said, adding that it expects to increase production to 6,000 per week by late next month.The remaining net Model 3 reservations at the end of the second quarter stood at roughly 420,000, the company said. More than 450,000 people had ordered Model 3 cars at the end of the first quarter.Tesla has been trying to hit a 5,000 per week production target of its Model 3 sedans for months after facing production obstacles. Last month, Chief Executive Officer Elon Musk said the carmaker should achieve its target by the end of June.“The last 12 months were some of the most difficult in Tesla’s history,” the company said in a statement.Money-losing Tesla has been burning through cash to produce the Model 3, and delays have also potentially compromised Tesla’s first-to-market position for a mid-priced, long-range battery electric car as a host of competitors prepare to launch rival vehicles.Tesla also reaffirmed its positive cash flow outlook for the third and fourth quarters.Despite originally touting the Model 3 as a US$35,000 vehicle, Tesla has yet to begin building that basic version and instead is currently building a higher-priced version.To meet its goal, Tesla had set up a new production line inside a tent on the campus of its Fremont factory. The company said the new general assembly line was responsible for about 20 percent of Model 3s produced last week.
SHANGHAI stocks slumped yesterday amid rising concerns over a looming wave of tariffs the US intends to impose on Chinese exports from Friday.
The Shanghai Composite Index tumbled 2.52 percent to close at 2,775.56 points for a 28-month low.
The US tariffs on US$34 billion of Chinese goods will come into effect on Friday. China has also threatened to retaliate with duties on the equivalent value of American products.
Also noteworthy was the Caixin China General Manufacturing Purchasing Managers’ index which slipped to 51.0 in June from May’s 51.1, while China’s official PMI released by the National Bureau of Statistics fell by 0.4 points from May.
Real estate shares were among the biggest decliners, with Zhongzhu Healthcare Holding Co and Wuhan East Lake High Technology Group Co both dropping by the daily limit of 10 percent.
China Pacific Insurance Group Co, Zheshang Securities and Ping An Insurance Group all declined by more than 5 percent.
SHANGHAI Pudong Development Bank unveiled China’s first smart counter as the lender aims to create digital banking services for customers.
The intelligent i-Counter provides customers with efficient and convenient one-stop integrated financial services digitally and the equipment at the counter can handle up to 90 percent of banking services previously done with the help of bank staff in the physical outlets, the Shanghai-based commercial joint-stock lender said.
Wealth management, money transfer and payment will also be handled at the i-Counter.
Qian Zongbao, deputy director of the self-help banking division at the bank’s Internet finance department, said a wide range of banking services will be offered at smart branches in the future.
NEW home sales in Shanghai continued to rebound last week but the market was plagued by zero new supply, a latest industry report showed.
The area of new homes sold, excluding government-subsidized affordable housing, climbed 17.6 percent to 113,900 square meters during the seven-day period ending Sunday, Shanghai Centaline Property Consultants Co said in a report released yesterday.
The city’s remote Qingpu and Songjiang districts registered weekly transactions of 21,200 square meters and 16,800 square meters, up 29.3 percent and 154.5 percent, respectively.
The average cost of a new home dipped 2.11 percent from a week earlier to 51,769 yuan (US$7,790) per square meter, according to Centaline data.
“Notably, several central districts such as former Jing’an, Changning and Hongkou all registered zero sales while on the supply side, not a single new housing unit was launched in the market,” said Lu Wenxi, senior manager of research at Centaline. “Projects targeting customers seeking upgrading, meanwhile, continued to dominate the top 10 list.”
Six out of the 10 most popular projects cost above 50,000 yuan per square meter on average, with two of them selling nine units each for over 100,000 yuan per square meter during the seven-day period, according to Centaline data.
Also, a residential project in remote Songjiang sold 4,825 square meters of new homes, or 38 units, for an average 52,144 yuan per square meter. It was followed by a development in Nanhui, Pudong New Area, which sold 3,820 square meters, or 16 units, for an average 31,253 yuan per square meter.
For June, new home sales dropped 20 percent from May to 437,000 square meters amid a weak supply, failing to meet earlier expectations of analysts. These new homes sold for an average 50,874 yuan per square meter, a month-over-month dip of 0.9 percent, according to a separate report released by Centaline.
Meanwhile, only some 23,000 square meters of new housing spanning two projects were launched in the market last month, down 93.2 percent from May.
“That was the lowest monthly supply registered so far this year which was also very unusual for June, when real estate developers often geared to boost their half-year performance by introducing more projects into the market,” Lu said.
“Very likely, the generally sluggish momentum among both real estate developers and home buyers would continue to prevail this month which itself is the traditional low season for property purchases,” Lu said.
MORE than 20,000 new housing units were sold in Shanghai in the first half of this year, with apartments smaller than 100 square meters accounting for over half, according to a latest industry research.
Between January and June, sales of new homes, excluding government-subsidized affordable housing, totaled around 22,000 units in the city, Shanghai Homelink Real Estate Agency Co said in a report. That compared with 27,000 units sold in the first half of 2017 and 21,500 units transacted in the second half.
“Despite a notable rebound in new home supply, new home sales only recorded very limited growth from the previous six-month period,” Homelink said. “That was both due to inadequate supply in the second half of 2017 and a generally placid mood in the market so far this year.”
During the first six months, about 20,900 square meters of new homes were released locally, according to Homelink data.
By size, new homes sold in the first half averaged 118.9 square meters, the smallest since 2015. About 52.6 percent of the new housing units sold during the period were below 100 square meters, up from the 45.4 percent share registered in the second half of last year.
About 5,100 of the total 22,000 units sold in the first half were located within the city’s Outer Ring Road, exceeding last year’s total of around 4,900 units, Homelink data showed.
A Greenland project in the city’s outlying Qingpu District emerged as the most popular development after selling 99,000 square meters, or 1,001 apartments, for an average unit price of 2.94 million yuan (US$442,397) during the six-month period.
It was closely trailed by a Tahoe project in Changxing Island, Chongming District, which offloaded 88,600 square meters, or 849 units, for an average price of 3.01 million yuan per unit.
EVERDISPLAY Optronics, a new display technology firm, opened a 27.3 billion yuan (US$4.2 billion) AMOLED display plant that boasts Shanghai’s biggest industrial clean room yesterday to make screens for smartphones and VR devices.
The monthly capacity at the 390,000-square-meter plant, featuring an industrial clean room of 320,000 square meters, is designed to make 30,000 units once operations are in full swing. The plant supports flexible display, which is the most advanced display technology on the Chinese mainland.
The company will test equipment in the plant before starting trial production in 2019, it said.
AMOLED (acrive-matrix organic light emitting diode) screens are widely used in smartphones, TVs, laptops, tablets, wearable and VR devices, and market demand is booming.
Demand in the global OLED panel market will hit 1.7 billion units in 2021, up from 300 million units in 2016, said IHS.
Volvo Car China said yesterday it adjusted the suggested retail prices on a total of 11,693 auto parts after China decided to lower import tariffs on vehicles and auto parts.“Volvo has adjusted the prices of some auto parts to benefit our consumers and enhance our service value, with a maximum price cut of 55 percent off its original price,” Volvo said in its statement.Volvo said the new suggested retail prices of auto parts became effective yesterday. Volvo had previously cut the prices of 10,941 types of auto parts in response to China’s reduced import tariffs on auto parts from Sunday.Volvo is among the first batch of carmakers which announced a cut in the prices of its auto parts in the China market. The company also adjusted the prices of other frequently used auto parts and accessories that are not in the country’s tariff reduction list, in order to optimize the cost for Chinese consumers. The frequently used auto parts and accessories cover a number of products which applied to all Volvo cars, including aluminum alloy wheel hub, air conditioner filter, brake disc, brake pad, water pump, and wiper blade.Volvo said car owners will benefit from the price adjustment which sees the price of air conditioner filter cut by 20 percent and that for wiper blade slashed by 40 percent.“Volvo is committed to provide safe, environmentally-friendly, high-quality luxury cars, customer-oriented service and experience to our consumers. Along with reducing the cost, we will provide a better service network,” the company said.In 2017, Volvo sold 114,410 vehicles in China, up 25.8 percent year on year.
CHINA has unveiled a new negative list for foreign investment in the pilot free trade zones, with the number of items down to 45 from 95 in the previous version.
The new list, jointly released by the National Development and Reform Commission and the Ministry of Commerce on Saturday, will be effective from July 30. The list applies to all FTZs in the country.
Compared with opening-up measures detailed in a nationwide list that was made public on Thursday, the list that applies to FTZs further removes or loosens foreign access restrictions in more fields including agriculture and mining, according to an NDRC statement.
Specifically, foreign investors will be allowed no more than a 66 percent stake in breeding new wheat and corn varieties and their seed production, compared with a cap of 49 percent in the previous list.
Restrictions on joint ventures or foreign cooperation in exploration and exploitation of petroleum and natural gas will be removed.
The list also eased restrictions in the cultural sector, as foreign investors will be allowed to own a majority stake in performing arts agencies.
The new version is also more concise than the previous version, with items subject to special administrative measures listed, making it more comparable to the nationwide list.
The country started to pilot FTZs in 2013 in Shanghai as a means to test new ways of managing foreign investment, trade facilitation and transformation of government functions to better integrate the economy with international practices.
China now has 11 pilot FTZs. In addition, the central authorities have decided to support the building of a pilot FTZ in the whole of south China’s Hainan Island.
The negative list approach was first piloted in the Shanghai FTZ. All sectors are open to foreign investors except for those outlined in the negative list.
Saturday’s statement came two days after the country unveiled a shortened negative list for foreign investment, which is applicable nationwide. The number of items on the nationwide list was cut down to 48 from 63 in the previous version. Under the new list, foreign businesses will gain wider access to sectors, including finance, transportation, automobiles, logistics, energy and agriculture.
CHINA’S economy is on track for stable growth with leading indicators pointing to steady factory and service sector activities.
The country’s manufacturing Purchasing Managers’ Index came in at 51.5 in June, above the boom-bust line of 50, the National Bureau of Statistics said in a statement.
While the reading was lower than 51.9 in May, it surpassed an average of 51.3 for the first half of this year, indicating upward momentum, according to the bureau.
“The fundamentals of the manufacturing sector are basically sound,” said Zhao Qinghe, senior statistician of the bureau.
Sub-indexes for production and new orders in June both stayed above the average reading for the first half, indicating steady growth in both production and demand, Zhao said.
Wen Tao, an analyst with the China Logistics Information Center, said the industrial structure of the manufacturing sector has improved, with new growth drivers contributing more to economic growth.
Equipment manufacturing and high-tech industries saw particular strong growth, while expansion in energy-intensive industries slowed.
In another sign of stable growth, the PMI for the non-manufacturing sector expanded at a faster pace in June, according to the statistics bureau. The non-manufacturing PMI came in at 55 in June, up from 54.9 in May.
The service sector, which accounts for more than half of the country’s GDP, showed sound momentum, with the sub-index measuring business activity in the industry standing at 54, unchanged from the reading in May.
Faster expansion was seen in air and railway transportation, telecommunications and banking, the bureau said. The construction industry registered faster expansion, with the sub-index measuring business activity reaching 60.7 in June, the highest point this year.
The sub-indexes for expectations for business activities stayed above the boom-bust line for all surveyed sectors, indicating optimism among service sector companies.
The official data showed the composite PMI output index came in at 54.4 in June, higher than an average of 54.1 for the first half.
PMI data in the first half showed that the economy has maintained stable growth with structural improvement and better supply quality, Wen said.
China’s economy grew 6.8 percent year on year in the first quarter, above the target of around 6.5 percent.
Stable factory and service activities will continue to drive high-quality growth for the country, Wen said.
THE White House is sending a high-level delegation to this month’s Farnborough Airshow to push the Trump administration’s “Buy American” drive aimed at boosting exports of weapons and aircraft, industry sources familiar with the matter said.
The official US delegation will be the highest ranking to attend the air show near London in recent memory and will be led by White House trade adviser Peter Navarro, one of the main architects of the new arms export policy.
The White House’s “Buy American” initiative, first reported by Reuters in April, aims to speed up arms deal approvals and increase the advocacy role of senior US officials, including President Donald Trump, in closing foreign sales, while giving greater weight to business interests in sales decisions that have long prioritized human rights.
The policy, officially named the Conventional Arms Transfer Policy, also loosens US export rules on equipment ranging from fighter jets and drones to warships and artillery.
The “whole of government” approach, from Trump and his cabinet down to military attaches and diplomats, is meant to help drum up billions of dollars more in arms business. Trump himself has pushed weapons sales with foreign heads of state.
While Trump will be in Britain the weekend before the July 16 to July 22 Farnborough show — the largest commercial and military aerospace trade fair of the year — his current schedule does not show him attending.
The State Department’s Under Secretary for Arms Control and International Security Andrea Thompson will attend, a Department of State official said.
In fiscal year 2017 the department authorized, licenzed and provided oversight for US$42 billion in government-to-government sales and US$112 billion in direct commercial sales, the official said. There were more than US$43.4 billion in sales to other governments in the first seven months of 2018, the official said.
The rest of the US delegation will include officials from the Commerce Department, the Air Force and the Pentagon’s weapons export administration, industry executives said.
The White House did not respond to a request for comment on the delegation.
It will not be the first time that the Trump administration has stepped up its profile at an air show. In February, the US sent its diplomat responsible for foreign military sales to the Singapore Airshow to promote US-made weapons.
Companies that stand to benefit most from the new policy include Boeing Co and the other top US defense contractors, Lockheed Martin Corp, Raytheon Co, General Dynamics Corp and Northrop Grumman Corp.
Among the most important contracts up for grabs in the coming years are European nations seeking a new generation of fighter jet. Belgium has already been pre-approved by the US government to buy 34 F-35s made by Lockheed in a sale worth more than US$6 billion, but has yet to decide.
STATE-OWNED Sinochem Group and ChemChina will merge to create a new company, and Sinochem Chairman Ning Gaoning will become the chairman of ChemChina, financial publication Caixin said late Saturday.
Reuters has reported that the two companies were in merger talks to create the world’s biggest industrial chemicals firm worth around US$120 billion, to be led by the head of Sinochem.
Ning will serve as chairman and Party secretary of ChemChina, while ChemChina’s long-serving Chairman Ren Jianxin retires, Caixin reported, citing sources close to the companies.
The personnel change was announced on Saturday at ChemChina’s office by officials from the State-owned Asset Supervision and Administration Commission and the Ministry of Organization, the report said.
“However, there is no definite plan for how to form a new company,” Caixin said.
A Sinochem spokesman declined to comment on the personnel changes, or the possible merger of the companies.
A ChemChina media official did not respond to a request for comment.
Talks to create a Chinese chemicals powerhouse were first reported in late 2016, but were dismissed by both companies as rumor.
Reuters reported that the two companies accelerated negotiations around May last year, after regulators cleared ChemChina’s US$43 billion acquisition of Swiss pesticides and seeds group Syngenta.
China sees a Sinochem and ChemChina deal as a blueprint for streamlining and consolidating its sprawling, debt-heavy state-owned enterprises, leaving fewer, but more powerful, national champions.
THE China (Shanghai) Pilot Free Trade Zone Iron Ore Index has been launched in Shanghai as one of China’s moves to open up its commodity markets.
The yuan-denominated price index, jointly launched on Friday by Shanghai Ore International Trade Center, Xiben New Line Stock Company, and Shanghai OTC Commodity Derivatives Association, combined China’s import iron ore prices with internationally prevailing prices. The index will be published every business day at 9:15am.
China imported 1.075 billion metric tons of iron ore in 2017, which took up 70 percent of global imports. Along with the growing domestic need for hedging, the world’s leading consumer of iron ore has long been in demand of a bigger say in setting commodity prices.
“China will also increase its role in setting global prices and forming its own commodity price system,” said Yu Jianguo, general manager of Shanghai Ore International Trade Center.
OVERSEAS institutions have received more quotas under China’s Qualified Foreign Institutional Investor program to move money into the country’s capital account, according to official data.
A total of 287 overseas institutions had been granted quotas totalling US$100.46 billion under QFII as of June 28, up from US$99.46 billion a month earlier, data from the State Administration of Foreign Exchange showed.
As of June 28, the quotas in the RMB Qualified Foreign Institutional Investor program came in at 622.07 billion yuan (US$94 billion), up from 615.85 billion yuan in May.
Quotas under the Qualified Domestic Institutional Investor program that lets domestic investors access foreign assets, totalled US$103.33 billion, up from US$101.5 billion in May.
The yuan is convertible for trade purposes under the current account, while the capital account is largely run by the state to control inflow and outflow of capital.
CHINA yesterday introduced huge new tariff cuts on consumer goods and automobiles, to help increase imports.
Tariffs on 1,449 taxable consumer goods were reduced from an average rate of 15.7 percent to 6.9 percent, including home appliances, food and beverage, cosmetics and medicines, according to the Customs Tariff Commission of the State Council.
It was the fifth round of tariff cuts for consumer goods since 2015.
“Significantly reducing the import tariffs for daily consumer goods is conducive to expanding China’s opening-up and serves as a major measure and action of the country’s initiative to open its market,” the commission said earlier in a statement.
Meanwhile, vehicles and auto parts also saw marked tariff cuts. The 20-to-25-percent tariffs for cars were cut to 15 percent, and duties on auto parts were slashed to 6 percent from 8 to 25 percent previously.
Analysts believe the measures will help China meet increasing domestic demand, achieve balanced trade and share development dividends with rest of the world.
“Widened access for foreign goods will allow Chinese consumers to enjoy more quality products and prompt domestic companies to improve their competitiveness,” said Zhang Jianping, researcher at the Chinese Academy of International Trade and Economic Cooperation.
The move was part of China’s recent measures to further open up its economy, as the country embraces the 40th anniversary of the reform and opening-up drive, the first and foremost factor behind its economic success.
China has been the world’s second largest importer of goods for nine consecutive years, and took 10.2 percent of global imports last year. Chinese authorities expect the country to import goods worth US$24 trillion in the next 15 years.
The first China International Import Expo will be held in Shanghai from November 10-15 to push forward trade and economic growth.
WOLONG Electric Group Co Ltd, China’s largest electric motor producer, has closed a deal to acquire General Electric Company’s Small Industrial Motor division for US$160 million in an all-cash transaction.
Chen Jiancheng, Wolong Electric chairman, and Russell Stokes, president and CEO of GE Power, jointly signed the closing documents for the Chinese firm’s acquisition of GE’s mid- and low-voltage motor business at a ceremony in Atlanta in Georgia, on Friday.
Effective as of Saturday, GE SIM will officially become a pivotal part of Wolong Electric’s global business, Chen said.
“The acquisition is an important milestone for our global strategy,” Chen said. “Through this cooperation, we will further strengthen our core business, expand the global sales network, develop technical collaboration globally, improve best-in-class manufacturing, grow our global market share and further consolidate Wolong Electric’s global leadership position in motor and control.”
The acquisition includes the design, development, manufacture, sales and other areas of the low-voltage and TEFC medium-voltage motors below 1,750 horsepower.
The assets mainly include 100 percent equity of General Electric Industrial Motors Mexico Corporation, 100 percent equity of General Electric Motor Services Corporation, and 13 other entities involved in assets, and the employees related to them.
Chen said Wolong has also signed a 10-year Trademark License Agreement from the date of closing with GE, which will help Wolong to sell its products with the GE brand to the American market through the SIM business. Meanwhile, this acquisition will expand SIM’s sales channels, enable SIM to sell its key products to China and European markets, and create synergy through close cooperation between operations in two continents.
The new Wolong Electric SIM Sales will be headquartered in Houston in Texas, Chen said.
He believes SIM, with its expertise in motor technology and a sound sales network, will become Wolong’s business center in North America.
CHINA continued to make progress in curbing risks in the financial sector in the first quarter of 2018, said Moody’s.
“We are noticing slowing asset growth and stabilizing asset quality, as well as accelerating loan growth as banks are returning to conventional lending and away from shadow banking activities,” Nicholas Zhu, Moody’s vice president and senior analyst, said in a report.
“Looking ahead, we expect the regulators will maintain a cautious approach in order to alleviate any potential disruption to the real economy from the clampdown on shadow banking and interbank activities,” Zhu said.
China’s banking institutions saw their total assets of 256 trillion yuan (US$38.7 trillion) at the end of the first quarter, up 7.4 percent year on year, slower than the 14.3-percent growth a year earlier, official data showed.
The average non-performing loan ratio for commercial banks was 1.75 percent by the end of the first quarter, edging up 0.01 percentage point from the end of 2017, said the China Banking and Insurance Regulatory Commission.
Asset quality stabilized in line with sustained expansion in the macroeconomy, the report said.
Lenders’ profitability improved, while liquidity remained balanced among the banks, the report said.
Chinese authorities have taken stricter measures to regulate the financial sector, as preventing risks is one of the “three tough battles” it aims to win in the next three years.
THE registration of companies for the enterprise exhibition of the first China International Import Expo ended on Saturday, and applications for pre-registration for the enterprise exhibition of the second expo started yesterday.
The China International Import Expo Bureau said in a statement the registration for the enterprise exhibition of the first import expo to be held on November 5 to 10 was closed.
Firms which filled out registration data on the official website of the import expo after midnight China time on Saturday will be regarded as having registered for the second CIIE, whose dates have not been revealed.
Enterprises planning to pre-register should only log onto the official website of the import expo and complete the required information. All other means of pre-registering will be considered as invalid, the bureau said.
THE tariff-cut amendment of the Asia-Pacific Trade Agreement became effective yesterday, with the Ministry of Commerce saying it would facilitate regional economic integration in Asia.
“The amendment will provide member countries new economic impetus, prompt continued trade increases, facilitate economic integration and help further materialize the Belt and Road Initiative,” the ministry said yesterday in an online statement.
Under the amendment, six APTA members including China, India, South Korea and Sri Lanka cut tariffs by 33 percent on average for products under 10,312 tariff codes. Some products from less-developed Bangladesh and Laos will enjoy special cuts of 86 percent.
It came after a new arrangement was reached during the fourth round of tariff concession talks among the six APTA members in January 2017.
APTA promotes economic and trade cooperation among its members by adopting trade liberalization measures.
Ng Goon-lau pointed at a window inside a dark, tiny bedroom. The window was small and easily sealed, Ng explained, a perfect place for carbon monoxide poisoning.A man once burned charcoal to kill himself there. Another tenant, a policewoman, also hanged herself in the same apartment.“That’s why it was so cheap,” said Ng, the silver-haired 66-year-old landlord, who bought the tiny 30.19-square- meter unit after the double suicides for just over HK$1 million (US$127,400) in 2010, 30 percent below the then market rate.Eight years later, the apartment is probably worth around HK$4.4 million, Ng estimates.Dubbed the “King of Haunted Flats” by local media, Ng has made a name for himself for speculating on such “hongza,” or haunted flats defined here as the places where tragedies, such as suicides and murders, took place. He has been able to buy some of the homes at as much as a 40 percent discount.But Hong Kong’s record-breaking property price surge over the past few years is pushing many to reconsider such inauspicious apartments as bargains too good to pass up, whatever the bad history.The once heavy discount on a haunted apartment’s price has narrowed from about 30 percent in 2013, to about 10 percent this year, said Ng, adding the discount dropped at the fastest rate in the past year.“The market is crazy now, there is so much demand,” the former shark’s fin salesman said. “Buying an unlucky flat is now a very practical way to own a house, so competition is fierce.”The financial hub’s housing prices have been on a record-breaking run for 18 consecutive months, with the city now one of the world’s most expensive real estate markets.A skilled service worker would need to work 20 years to buy a 60.39-square-meter flat near the city center, according to a UBS report in September, which also ranks Hong Kong’s housing market as the least affordable in a list of 20 world cities.Only about 20 percent of Hong Kong’s 1.85 million taxpayers could afford to buy a medium-priced apartment costing HK$8 million, property consultancy Knight Frank said this month.Property analysts expect prices to rise even further this year, with five analysts predicting overall gains of between 8 percent and 17 percent.Even Ng, who has bought around two dozen haunted flats since the 1990s and flipped most of them for profit, is spooked by the market surge.A double whammy of high prices and a heavy tax on non-first time buyers means he hasn’t bought a haunted flat for six years.The amateur unicyclist isn’t looking to sell either, describing his existing portfolio as “pearls and treasures.”Even for public housing, where the average waiting time is five years given limited supply and strong demand in one of the most densely populated cities in the world, many are flocking to a separate “express” queue for less desirable apartments. These include, according to the Housing Authority’s website, those “involved in unpleasant incidents.”Last September, the government received more than 80,000 applications for 576 such flats.The issue of a haunted flat melds the Hong Kong obsession with property with a Chinese population that tends to be superstitious and pursues ancient traditions, illustrated by the use of feng shui by many property developers to ensure that a building uses surrounding natural forces, such as mountains, wind and water, in a harmonious way.Not only does a haunted flat drag down the price of all the flats on the same floor, it can also bring down the value of apartments above and below it, according to property agents.It is commonly believed here that the trapped souls of murder victims are especially haunting, as they linger in humankind, mourning their untimely, vicious deaths and yearning to complete what they did not have time to do while they were alive.A flat a few doors down from the apartment where former British banker Rurik Jutting murdered two women in 2014 was sold last year. The price dropped 6 percent from its previous transaction in 2011, even though Hong Kong’s housing market rose more than 80 percent during the same period.The buyer could not be reached for comment. Jutting’s former landlord declined to be interviewed.“We live in a traditional Chinese society,” said a property agent who did not want to be named. “For some people it is a psychological hurdle, and they won’t feel comfortable living in an unlucky flat.”Banks are also less willing to provide mortgages for a haunted home due to concerns it could be difficult to resell in the event of a mortgage default, according to the managing director of Centaline Mortgage Broker Limited, Ivy Wong.But while some banks unilaterally rejected “hongza” mortgage applications a decade ago, in recent years this policy has been relaxed.“When more home buyers are willing to accept these flats, it gives the banks more confidence,” Wong said.HSBC provided a mortgage for a buyer last year when she bought one of Hong Kong’s most notorious homes — a Tsuen Wan apartment where a man killed his six relatives when he attempted suicide by gas in 1996, according to Land Registry records.There are unofficial websites which keep detailed records of the thousands of haunted homes in the city.Similar websites tracking haunted homes exist in Taiwan and Japan, and a Canada-based website lists haunted and murder homes in North America.Hong Kong property agents aren’t legally obliged to disclose if a flat is “haunted” but they are bound by a code of ethics under the city’s Estate Agents Authority, which has the power to issue and revoke licenses.“I was not afraid at all,” said Jenny Yuen, who once rented one of Ng’s haunted flats when she first moved to Hong Kong from the mainland.“Everybody dies. It’s a very natural thing.”
CHINA Mobile is teaming up with several partners to explore prospects in cloud, VR and smart driving sectors as the world’s biggest telecommunication carrier transforms its business and diversify its revenue.
The telco said yesterday its investment in Shanghai-based cloud service provider Ucloud will enable the two companies to cooperate on an eco-system, technology and products and share resources. Ucloud offers public cloud service for over 80,000 enterprises.
Both sides didn’t provide an investment figure but market observers expected it to be above the 900 million yuan (US$148 million) Ucloud received in its previous round of investment in March.
The two partners will push the “CBA strategy,” referring to cloud, big data and artificial intelligence, Ji Xinhua, Ucloud’s CEO, said during the ongoing Mobile World Congress Shanghai event.
China Mobile will also cooperate with Taiwan’s HTC smartphone vendor to develop 5G and virtual reality. The telco will partner HTC to make VR more accessible nationwide and boost mass VR adoption in the market
A recent system update allows users to stream phone content from Android phones to HTC VR devices.
China Mobile also said it will work with Huawei and SAIC on smart driving using 5G and V2X (vehicles to various devices) connection.
CHINA shares continued their dismal performance yesterday as investors have not yet fully recovered their confidence.
The key Shanghai Composite Index dipped 0.93 percent, or 26.28 points, to close at 2,786.90 after briefly recovering in the morning trading session following strong gains in the non-banking financial sector.
The Shenzhen Component Index lost 1.06 percent to end at 9,071.73 points, while the Nasdaq-style ChiNext enterprise board reversed the morning’s gains to finish the day lower at 1,543.66.
Nanjing Cenbest, one of the top 10 department stores in China, fell by the daily maximum cap of 10 percent to 18.27 yuan (US$2.76), hitting a 12-month low.
Caixin.com quoted Gu Yongtao, a strategist at Xinda Securities, as saying the Shanghai Composite showed signs of recovery, helped by gains of communications, electronics and non-banking financial shares.
“The market is in the process of searching for the bottom,” said Lu Jie, head of research China at asset manager Robeco, expecting the market to stabilize in the second half.
AFTER seven years of litigation that spanned the globe, Apple and Samsung have definitively ended a patent battle launched after the US company accused its rival of “slavishly” copying the iPhone’s groundbreaking design.
According to a brief US court filing on Wednesday, the world’s two biggest smartphone makers finally reached a settlement.
Financial terms were not revealed, and neither company elaborated on the court order by US District Court Judge Lucy Koh which dismissed the litigation “with prejudice” — leaving no option of reopening the case in future.
The deal came a month after a federal court jury ordered the South Korean consumer electronics giant to pay Apple some US$539 million for copying patented iPhone features.
That award was seen as a victory for Apple, which had argued in court that design was intrinsic to the iPhone, and so should enjoy protection as a whole against copycats beyond the usual patents afforded to hardware components.
The US action was the first of dozens of lawsuits spanning Europe, Asia and Australia. The rival companies went head to head over what constitutes protected design in both the hardware and features of their phones and tablet computers.
In the original US lawsuit filed in 2011, Apple said Samsung had “chosen to slavishly copy” the technology, interfaces and product design of the iPhone, which revolutionized mobile telephony when it was launched in 2007.
As their tussle escalated worldwide, a lawyer for Samsung in turn accused Apple of behaving like a “jihadist” in its determination to fight on.
But Wednesday’s court order declares an armistice between the sector leaders, and legal experts said it was the inevitable outcome given the pace of change in smartphones since 2011.
“The market has moved on, the designs have changed, so it becomes increasingly more difficult for anybody to validate any (patent) infringement,” Ranjit Atwal, personal technology analyst at Gartner, said in Paris.
“There are more interesting battles to follow, and they are not necessarily going to be fought in court,” he added. “The smartphone market is saturated — where do they find the next market, how do they move forward?”
Apple insisted it was fighting for a core principle that design is so important to its products that it can actually be considered the “article of manufacture” under patent law.
The three design patents in the case applied to the shape of the iPhone’s black screen with rounded edges and a bezel, and the rows of colorful icons displayed.
Two utility patents also involved apply to “bounce-back” and “tap-to-zoom” functions.
The case had been sent back to the district court following a Supreme Court decision to revisit an earlier US$400 million damage award.
The jury had been asked to determine whether the design features were worth all the profit made from Samsung smartphones that copied them — or whether those features were worth just a small fraction because they are components.
Apple was supported by big names in fashion and manufacturing, citing precedents such as Coca-Cola’s iconic soda bottle.
But Samsung won the backing of Google, Facebook, Dell and Hewlett-Packard.
GROWTH in the US economy was slightly slower than previously thought in the first quarter, with new figures yesterday showing consumer spending was the weakest in almost five years.
Based on more comprehensive data, the Commerce Department’s updated report also showed business investment and export revenues underperformed in the January-March period.
The gross domestic product in the world’s largest economy rose by two percent in the first quarter, two tenths slower than the previous estimate and sharply lower than the 2.9 percent recorded in the final three months of 2017.
A consensus forecast among analysts had called for the final GDP estimate to remain flat at 2.2 percent.
After-tax corporate profits, juiced by President Donald Trump’s sweeping December tax cuts, zoomed 8.7 percent higher, the largest gain in almost four years.
But personal consumption expenditure, a measure that tracks spending by individuals, grew at a sluggish 0.9 percent for the quarter, the lowest level since the second quarter of 2013.
But first quarter growth in recent years has run below trend. And economists expect the second quarter will make up for the difference — perhaps doubling to four percent or more on rising exports, factory orders, capital spending.
Trump has vowed to return the United States to sustained growth of three percent or higher on an annual basis — indeed, the White House is counting on this to pay for the corporate and individual tax cuts.
Economists say that is unrealistic and growth is unlikely to stay that high for long after a decade of recovery for an economy already at full steam.
Economist Ian Shepherdson of Pantheon Macroeconomics said the sudden drop in consumer spending was “nothing more than a correction” after the four percent bounce recorded in the wake of 2017’s repeat late-summer hurricanes.
CHINESE airlines, including China Eastern Airlines and Hainan Airlines, will charge passengers for in-flight Wi-Fi services from the end of this year, China Telecom told Shanghai Daily yesterday.
After equipment upgrades and system tests, Wi-Fi services will begin for all passengers in wide-body aircraft on domestic routes and all international routes by the end of this year.
China Eastern and Hainan Airlines are the first carriers to offer the paid service, an official at China Telecom’s satellite communications subsidiary said during the Mobile World Congress Shanghai.
China Telecom won’t charge passengers directly. Instead, they offer in-flight bandwidth resources to airline firms, Shanghai Daily learned in an exclusive interview.
So far, China Telecom has offered in-flight Wi-Fi services to 1.71 million passengers on 120 aircraft from carriers like China Eastern, Hainan Airlines and Air China.
Airlines declined to comment on the issue yesterday.
Airlines now offer free in-flight Wi-Fi services to a limited number of passengers — China Eastern offers them to 100 passengers on Shanghai-Beijing flights.
In-flight Wi-Fi is a relatively new service in China after the ban on smartphone use was only recently lifted.
In January, the Civil Administration of China announced they would relax regulations and allow passengers to use smartphones in-flight.
Previously, mobile phones were required to be completely switched off during flights on all Chinese airlines.
THE patriarch of South Korean flag carrier Korean Air was grilled by prosecutors yesterday over alleged tax evasion and other crimes, as a series of probes reached the top of the troubled business dynasty.
Cho Yang-ho, 69, and his brothers and a sister allegedly avoided paying 50 billion won (US$45 million) in taxes on the overseas assets they inherited after their father Cho Choong-hoon died in 2002.
“I am sorry. I will sincerely face the investigation,” Cho said when he appeared at the Seoul Southern District Prosecutors Office.
Cho is chairman of the Hanjin Group, which includes Korean Air and used to own the now-bankrupt Hanjin Shipping line. He also faces allegations of embezzling over 20 billion won from company funds and unfairly awarding contracts to companies controlled by his family members.
Cho’s wife and children are being probed over alleged assaults, smuggling and illegal hiring of foreign housekeepers.
Two daughters, who held management positions at Korean Air, became famous for temper tantrums which were dubbed the “nut rage” and “water rage” scandals online.
CHINA has lifted a ban on importing British beef lasting more than 20 years that was triggered by the mad cow disease outbreak, the UK government said yesterday.
China has lifted its ban on exports of beef from the UK, “in a landmark move for British producers estimated to be worth 250 million pounds (US$329 million) in the first five years alone,” said a statement.
The announcement comes two days after China lifted a ban on French beef imposed more than a decade ago.
Announcing an end to the British ban, the UK government said: “More than 20 years after the Chinese government first imposed a ban on British beef in the wake of the BSE (bovine spongiform encephalopathy) outbreak, today’s milestone is the culmination of several years of site inspections and negotiations between UK and Chinese government officials.”
Environment Secretary Michael Gove called it “fantastic news,” allowing the country to “be a truly outward looking Britain outside the European Union.”
China is the UK’s eighth-largest export market for agri-food, with more than 560 million pounds worth of food and drink bought by Chinese consumers last year, the department for environment, food and rural affairs said.
Also yesterday, British finance minister Philip Hammond wrote in Chinese financial magazine Caixin that Britain is committed to promoting free and open trade, and hopes to seize “unlimited opportunities” brought by China’s Belt and Road Initiative.
Hammond is visiting Beijing this week, the latest installment in long-running economic talks between the two countries, which have taken on new importance for Britain as it looks to re-invent itself as a global trading nation after leaving the EU in 2019.
Hammond’s trip also comes against the backdrop of increasingly fraught trade relations between China and the United States, with Beijing accusing Washington of protectionism.
China has been looking for support from European countries to seek common ground against the US, which is also locked in a separate trade dispute with the EU.
“During this visit to China, I will meet with Chinese leaders in order to clearly convey a message to the outside world — as a firm supporter of trade liberalization and a free market, the United Kingdom is China’s long-term trusted partner,” Hammond wrote.
LATEST technologies packed in solar-power backpacks, smart dustbins, eye-tracking VR and 3D facial modeling by a smartphone camera took the spotlight at the Mobile World Congress Shanghai yesterday.
The integration of technologies like 5G, artificial intelligence, Internet of Things, new energy and virtual reality has propelled consumers into a connected and smart society, industry officials said at the event which opened yesterday in Shanghai.
Solar-power backpacks, which can charge smartphones and computers, drew visitors to Hanergy booth at the event. Their products, including portable chargers, can charge themselves in most conditions such as cloudy days or low temperature environments.
The products offer users unlimited power supply and ease “concerns” about batteries running out of power in the digital society, Hanergy said.
Mobile technology and IoT can help developers build “diversified applications” to improve daily life, covering energy, health care and urban management, said Zhao Houlin, secretary general of International Telecommunication Union.
Vivo is showing new 3D facial information capture technology that lets visitors get 3D files of their faces which can be printed by a 3D printer.
Vivo, one of top five global smartphone vendors, said the new technology will be used in education, medical and lifestyle sectors. It has discussed with Tencent to use facial technology on WeChat payment authorization, which will be the first in its kind among domestic smartphone brands.
More than 60,000 visitors from 100 countries and regions are attending the three-day event, which is themed Discover a Better Future to show how mobile is connecting everything to a better future.
CHINA’S fast-developing “new” economy comprising smart, sharing and green elements will impact profoundly the country’s real estate industry, said a white paper released yesterday by global property adviser Cushman & Wakefield.
The white paper identifies “smart” as being technology-enabled and intelligent featuring the Internet of Things, “sharing” refers to collaborating and efficient use of resources, and “green” means creating and promoting sustainable development.
“The ‘new’ economy has tremendous implications for real estate in China,” Shaun Brodie, senior director and head of occupier research at Cushman & Wakefield China, told a forum held in Shanghai.
The impact will be seen in investment, consumer requirements, labor needs, space demand, energy consumption and use of resources in the real estate market, he said.
Cushman & Wakefield has identified 11 specific themes related to the three core elements. They are smart buildings, smart technologies, smart construction, smart industry, smart transport, shared workspace, shared living, shared mobility, green buildings, green technology and green financing.
CHINA shares languished in bear market territory yesterday as investors were still concerned by trade tensions between the US and China as well as a weakening yuan, with declines recorded in consumer, pharmaceutical and financial stocks.
The key Shanghai Composite Index shed 1.10 percent, or 31.33 points, to close at 2813.18.
The Shenzhen Component Index fell 1.83 percent to 9,168.66 points, while the Nasdaq-style ChiNext enterprise board reversed gains on Tuesday to finish lower at 1,546.23.
The escalating Sino-US trade row and the weakening yuan dampened investor sentiment. The yuan slipped to a six-month low, breaking a psychologically key 6.6 per dollar mark today.
The People's Bank of China lowered the yuan's midpoint for the sixth straight trading day to 6.5569 per dollar in a move deemed by analysts as the PBOC's preference for a modest depreciation, a viewpoint echoed by Founder Securities.
Shares of Shanghai Fosun Pharmaceutical (Group) Co Ltd tumlbed 5.79 percent to close at 40.97 yuan (US$6.20).
CHINA is set to lead 5G development globally due to huge investment in research, network infrastructure and mobile technology, Shanghai Daily learned at the Mobile World Congress Shanghai yesterday.
One of highlights of the city’s biggest telecommunications fair held annually was that China Mobile, the world’s biggest mobile carrier, made the country’s first 5G call across multi-vendors based on SA (Stand Alone) technology with technical support from Ericsson and Intel.
The telco will also start large-scale 5G testing nationwide this year with the aim of trialing 5G commercially in 2019 and fully launch the 5G service in 2020, Shang Bing, chairman of China Mobile, said at the event.
Huawei Technologies said it plans to release its first 5G smartphone “as early as” June 2019.
CHINA saw rapid growth in the fast-moving consumer goods market in 2017 as growing middle-class consumers spent more on premium and healthier products, according to a report.
The total value for China’s FMCG market grew by 4.3 percent in 2017, up 0.7 percent from 2016, said the report released yesterday by the consultancy Bain & Company and the consumer market research company Kantar Worldpanel.
Part of the fast growth is due to the rising disposable household income in China. According to the report, the compound annual growth rate for disposable household income per capita reached 8.2 percent over the past six years.
“As disposable income rises, China’s ever-growing middle class consumers are spending more on premium and healthier products,” said Jason Yu, general manager of Kantar Worldpanel and co-author of the report.
The report also highlighted key trends impacting China’s FMCG market.
In 2017, China’s FMCG e-commerce sales grew by more than 28 percent, accounting for about 10 percent of the total market turnover, while consumers in China’s first-tier cities still have the highest online shopping penetration rate at 73 percent.
The sales of local FMCG brands grew by 7.7 percent in 2017, contributing to 98 percent of China’s FMCG market growth, according to the report.
“Local brands have been outperforming foreign brands since 2012 in the FMCG market,” said Bruno Lannes, China partner in Bains Greater China Consumer Products practice and co-author of the report.
China’s central bank drained 150 billion yuan (US$23 billion) from the financial system through open market operations yesterday, with the volume of maturing securities exceeding new injections.The People’s Bank of China pumped 60 billion yuan into the market through reverse repos, with 210 billion yuan of contracts maturing, leading to a net withdrawal of 150 billion yuan.The PBOC said the move was to maintain liquidity “at a reasonable and abundant level.”The PBOC said on Sunday that it would cut the reserve requirement ratio for some commercial banks by 50 basis points, expecting to release a total of 700 billion yuan into the banking system.PBOC said the cut, the third this year following reductions in January and April, was “a targeted, precision regulation” to boost funding for small and micro firms as well as support the debt-to-equity swap program. The cut will take effect on July 5.
CHINA’S major industrial companies posted increased profit growth in the first five months of the year, data revealed yesterday.
Profits at major industrial firms grew 16.5 percent in the period, quickening from the 15 percent expansion for the January-April period, according to the National Bureau of Statistics.
In May alone, combined profits of industrial companies with annual revenue of more than 20 million yuan (US$3 million) each went up 21.1 percent year on year, slightly retreating from the 21.9 percent gain in April.
Among them, state-owned enterprises made a combined profit of 810.35 billion yuan in the first five months, up 28.7 percent from the same period of last year. Collective-owned enterprises, joint-stock companies, overseas-funded firms and private companies saw profit growth of 4.4 percent, 20.6 percent, 6.9 percent and 10.6 percent respectively.
The bureau’s statistician He Ping attributed sound growth to the country’s supply-side structural reforms, which led to falling production costs and lower leverage ratios.
“The supply-side structural reform keeps showing its effectiveness and achievements,” said He.
The cost and expense per 100 yuan of revenue from the main business was down 0.35 yuan to 92.59 yuan in the January-May period from a year earlier. The cost dropped 0.31 yuan to 84.49 yuan.
The leverage rate also dropped, with the debt-to-asset ratio down 0.6 percentage points to 56.6 percent at the end of May, the bureau said.
Its report also pointed out that the overall efficiency of industrial enterprises continued to improve, with faster inventory turnover of products and stronger profitability.
Among the 41 industries surveyed, 31 posted year-on-year profit growth during the first five months.
Manufacturing, which accounted for 84.8 percent of the total industrial profit, saw the sector’s combined profit expand 13.8 percent. The mining industry’s profit surged 41.6 percent, while those of power generation, heating, fuel gas, water production and supply companies went up 26.1 percent.
The ferrous metal smelting and rolling processing industry showed an 110 percent jump in profit in the January-May period.
The non-metallic mineral products industry rose 44.6 percent, chemical raw materials and manufacturing of chemical products grew 27.7 percent, petroleum and natural gas extraction was up 260 percent, and the electric and thermal power production and supply sector advanced 27.8 percent.
“Despite slight slowdown in growth in May compared with April, the total profit of Chinese industrial enterprises saw rapid growth amid lower costs and also higher prices,” He said.
The Producer Price Index rose 4.1 percent in May from a year earlier, 0.7 percentage points higher than the growth in April, while the industrial producer purchase price picked up 0.6 percentage points from April to add 4.3 percent year on year.
According to preliminary calculations, the positive effect of price changes on profit growth in May was 4.3 percentage points greater than the previous month, the bureau said.
Yesterday’s data was the latest in a slew of economic indicators that showed China’s economic resilience, which prompted global institutions such as the World Bank to raise their economic forecasts for the country.
Earlier data showed growth in energy consumption, freight traffic and producer prices all picked up last month, pointing to a firming real economy and progress in structural transformation.
China’s economy grew 6.8 percent year on year in the first quarter, above the target of around 6.5 percent.
Earlier this month, the World Bank upgraded its forecast for China’s economic growth in 2018 to 6.5 percent, 0.1 percentage point higher than its January forecast. The World Bank’s latest China Economic Update said economic activity remained resilient, and the new economy is now a more prominent source of growth.
Morgan Stanley expects China’s GDP to grow 6.6 percent in 2018, up from its previous projection of 6.5 percent.
ELECTRIC vehicles are transforming the auto market. China will be a crucial market for the technology and could produce future global leaders.
Electric vehicles have dominated headlines about the auto sector in recent years. Every announcement — from governments around the world committing to a timetable for phasing out internal combustion engines to plummeting diesel vehicle sales (especially in Europe) and excitement over new models at car shows — seems to give another boost to EVs.
However, while EVs are widely considered the technology of the future, the reality is more prosaic. Globally, sales remain at a low level — high costs, limited charging infrastructure and consumer concerns about range anxiety continue to hold the market back. Nevertheless, it is clear that the industry is moving towards an electric future because of regulatory change focused on emissions standards, which are becoming tighter all the time.
The only way manufacturers will be able to meet new emissions targets is by significantly increasing EV volumes. In Europe, car makers had expected diesel engines to play a major role in CO2 emission reductions but the VW scandal has triggered a sharp decline in sales, meaning electric has become even more important. Currently, regulations focus solely on the environmental impact of EVs in terms of emissions rather than their broader implications such as how EVs, and particularly their batteries, are manufactured and how the electricity which powers them is generated.
It’s impossible to predict which companies will dominate as the auto sector transitions to hybrids and EVs. Japanese companies such as Toyota and Nissan were early movers in the sector while Tesla has captured the world’s imagination and proved electric cars can be desirable to the public (though it has so far failed to scale up production). All major auto makers have electrification strategies now. VW, for example, plans to launch 80 models by 2025.
The fast-shifting shape of the auto market could create an opportunity for Chinese car makers. While Chinese companies tend to be behind their global peers technologically, China has a huge domestic market, enabling its companies to build scale. EV market share in China is in line with the global average. But sales volumes represent 43 percent of production worldwide; China currently has the largest number of EVs on the road with over 1.2 million units in operation.
Moreover, the government is pushing electrification strongly, using both supply- and demand-side measures, to better position its auto industry and combat chronic urban pollution. On the supply side, companies that manufacture or import more than 30,000 vehicles must obtain an energy vehicle score (linked to zero- and low-emission vehicles) of 10 percent in 2019 and 12 percent in 2020. The government has also made it easier for local companies to cooperate with international players by lifting the bar on having more than two joint ventures.
Demand-side measures designed to support EVs include an exemption from license-plate lotteries and registration fees that apply to cars with internal combustion engines in several major cities such as Beijing or Shanghai. China also provides monetary subsidies that, for a representative mid-sized car, amount to approximately 23 percent of the total EV price; lower than Denmark (49 percent) but higher than Germany (13 percent), for example.
As well as supply- and demand-side support, one factor that could play an important role in making China a driving force in EVs is the public’s readiness to embrace new ideas. A survey by PwC shows that compared to the US and Germany, more Chinese say that the next vehicle must be electric and have autonomous and connectivity features.
This enthusiasm for innovation could also have implications for the business models used to get EVs into the market. Both manufacturers and startups are experimenting with a wide range of leasing and mobility models — the car-sharing divisions of Daimler and BMW (Car2Go and DriveNow) have recently announced a merger — but China’s scale, eagerness to adopt new ideas, and the difficulty of installing charging facilities in urban areas (where most people live in apartments with limited parking garages) could give new business models additional momentum.
We would estimate that the total cost of EV ownership — including both upfront costs and ongoing fuel and maintenance — could reach parity with internal combustion engines in four to five years.
At that point, the scale benefits of China’s domestic market will begin to have a major impact and could help to turn its auto makers into global players at the forefront of the electric revolution. EVs could experience an acceleration of their growth in market share.
Volkswagen will store cars awaiting strict new emissions tests at Berlin’s under-construction airport, combining the German national embarrassments of the carmaker’s “dieselgate” scandal and the much-delayed travel hub.“In this case, our normal logistics spaces aren’t enough,” a Volkswagen spokesman said yesterday, saying the firm faces delays to emissions tests on between 200,000 and 250,000 cars.The firm will store vehicles at VW’s testing grounds near its Wolfsburg HQ as well as the Berlin airport and “is looking into other spaces,” he added.Like other carmakers, VW is scrambling to adapt to a new emissions testing regime known as the Worldwide harmonized Light vehicles Test Procedure or WLTP, forcing it to slow production in Wolfsburg as well as storing untested cars.WLTP is designed to more accurately reflect vehicles’ emissions performance under real driving conditions, making it longer and more complex than previous procedures.Volkswagen for years fooled regulators under previous testing regimes.It admitted in 2015 to building software known as a “defeat device” into 11 million diesel vehicles worldwide, reducing harmful emissions in the lab but allowing them to shoot up in on-road driving.Other carmakers like Daimler and BMW have since fallen under suspicion and this year were forced to recall thousands of vehicles for software updates.As a blow to Germany’s pride in its engineering prowess and reputation for honesty in business, the endless, convoluted “dieselgate” scandal has been matched in recent years only by the succession of disasters at Berlin’s new international airport.Slated to open in 2011, the opening of the hub named for former Chancellor Willy Brandt has been repeatedly delayed over issues ranging from fire safety to structural integrity.
Ford Motor China and Baidu Inc signed a letter of intent yesterday to collaborate in jointly exploring opportunities in connectivity, digital services, artificial intelligence and digital marketing.The two companies will collaborate on new in-vehicle infotainment systems and digital services that encompass voice recognition, natural language understanding and image recognition to deliver a personalized user experience for Ford car owners in China.“Together with Baidu’s leading-edge AI technology and Ford’s advanced engineering expertise, we will transform the mobility ecosystem and create the next-generation in-vehicle experience for consumers,” said Zhang Yaqin, president of Baidu.Peter Fleet, president of Ford Asia Pacific, said that the company look forward to working closely with Baidu to offer smart products and solutions to make people’s lives easier and more enjoyable.“Collaborating with leading technology companies such as Baidu supports our vision to become the world’s most trusted mobility company by leveraging new opportunities to build a sustainable mobility ecosystem,” Fleet added.In July last year, Ford joined Baidu’s Apollo autonomous driving open platform as a founding member.
Chery Jaguar Land Rover Automotive Co Ltd’s expanded Changshu plant in Jiangsu Province will increase production capacity to meet rising demand in China.The Sino-British joint venture said yesterday that the expanded Changshu plant will boost output capacity by an extra 70,000 units of vehicles annually, about 50 percent of its previous annual capacity.“From January to May this year, our sales volume increased by almost 20 percent compared with the same period last year,” said Murray Dietsch, president of Chery Jaguar Land Rover in a group interview with Shanghai Daily. “We will strive to meet the market demand here in China.”In October 2014, Chery Jaguar Land Rover opened the Changshu plant phase 1 with an annual capacity of 130,000 vehicles. With the Changshu plant phase 2 officially put into operation yesterday, the total annual output will expand to 200,000 units.“The Changshu plant phase 2 will also help Chery Jaguar Land Rover to present a richer product matrix, continuously enhance the intelligent manufacturing capabilities of the company and contribute to the upgrade of China’s high-end auto manufacturing industry,” Dietsch said.Chery Jaguar Land Rover said that its compact sport-utility vehicle, Jaguar E-PACE, will be the first product of the Changshu plant phase 2. The Jaguar E-PACE is an entry level SUV targeting young Chinese consumers and will be sold in the Chinese market starting from August this year.The carmaker said it is eying the compact SUV market which is set to grow above 10 percent in China annually with the Jaguar E-PACE. The expansion of the Changshu plant is also aimed at preparing the manufacturer to produce new-energy vehicles in the future, according to Chery Jaguar Land Rover.
Two major auto trade groups yesterday warned the Trump administration that imposing up to 25 percent tariffs on imported vehicles would cost hundreds of thousands of auto jobs, dramatically hike prices on vehicles and threaten industry spending on self-driving cars.A coalition representing major foreign automakers including Toyota Motor Corp, Volkswagen AG, BMW AG, and Hyundai Motor Co, said the tariffs would harm automakers and US consumers. The administration in May launched an investigation into whether imported vehicles pose a national security threat and President Donald Trump has repeatedly threatened to quickly impose tariffs.“The greatest threat to the US automotive industry at this time is the possibility the administration will impose duties on imports in connection with this investigation,” wrote the Association of Global Automakers representing major foreign automakers. “Such duties would raise prices for American consumers, limit their choices, and suppress sales and US production of vehicles.”The group added: “Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts.”On Friday Trump threatened to impose a 20 percent tariff on all imports of European Union-assembled cars. On Tuesday Trump said tariffs are coming soon. “We are finishing our study of Tariffs on cars from the EU in that they have long taken advantage of the US in the form of Trade Barriers and Tariffs. In the end it will all even out — and it won’t take very long!” Trump tweeted.The Alliance of Automobile Manufacturers, representing General Motors Co, Ford Motor Co, Daimler AG, Toyota and others, urged the administration in separate comments filed yesterday not to go forward.“We believe the resulting impact of tariffs on imported vehicles and vehicle components will ultimately harm US economic security and weaken our national security,” the group wrote, calling the tariffs a “mistake” and adding imposing them “could very well set a dangerous precedent that other nations could use to protect their local market from foreign competition.”The alliance said its analysis of 2017 auto sales data showed a 25 percent tariff on imported vehicles would result in an average price increase of US$5,800, which would boost costs to American consumers by nearly US$45 billion annually.Automakers are concerned tariffs will mean less capital to spend on self-driving cars and electric vehicles.“We are already in the midst of an intense global race to lead on electrification and automation. The increased costs associated with the proposed tariffs may result in diminishing the US’ competitiveness in developing these advanced technologies,” the alliance wrote.Both automotive trade groups cited a study by the Peterson Institute for International Economics that the cost to US jobs from the import duties would be 195,000 jobs and could be as high as 624,000 jobs if other countries retaliate.The proposed tariffs on national security grounds have been met by opposition among many Republicans in Congress.Trump has made the tariffs a key part of his economic message and repeatedly lamented the US auto sector trade deficit, particularly with Germany and Japan. Some aides have suggested the effort is to try to pressure Canada and Mexico into making more concessions in ongoing talks to renegotiate the North American Free Trade Agreement.
Audi, Volkswagen’s luxury carmaker, now owns 1 percent of SAIC Volkswagen, SAIC Motor’s chairman Chen Hong said yesterday.Volkswagen AG transferred the 1 percent stake in SAIC Volkswagen to Audi. Presently, SAIC Group holds 50 percent in SAIC Volkswagen, Volkswagen AG owns 38 percent, Volkswagen China holds 10 percent, while Audi and Skoda hold 1 percent each.Industry insiders said the change in share structure laid the road to prepare for the development and production of the first car under SAIC Motor and Audi. Cheng is confident that SAIC Volkswagen will be able to manufacture and sell cars under the Audi brand.As part of Volkswagen AG, Audi is not allowed to build its own cars in China as its parent already has two partners including SAIC Volkswagen and FAW Volkswagen.Audi started producing vehicles in China with its Chinese partner FAW Group about three decades ago. In November 2016, SAIC Motor and Volkswagen AG signed a memorandum of understanding in Germany to collaborate long term, which allows SAIC Volkswagen to produce and sell Audi cars as well as set up a 50-50 new joint venture.The memorandum saw Audi adding Shanghai-based carmaker SAIC Motor as a new joint venture partner in China, a move which caused concerns and opposition from FAW-Volkswagen Audi dealers in China. The dealers said they were not informed of the deal in advance and they faced high inventory and other financial pressures. They also mentioned that their interests will be damaged due to the new joint venture.On November 30, 2016, Audi said that it would suspend its discussions about the new joint venture with SAIC Motor to pacify the FAW-Volkswagen Audi dealers.On May 19, 2017, Audi, FAW Group, FAW-Volkswagen and Audi dealers finally reached a consensus and agreed that the cooperation between SAIC Motor and Audi would begin after Audi sales reached 900,000 units in China. During the Beijing Auto show in April, Audi China President Joachim Wedler said the project between SAIC and Audi was proceeding as planned and Audi cars from SAIC Volkswagen will not hit the market until 2022.From January to May this year, Audi sold 258,400 new cars in China, up 27.4 percent year on year. Sales in China accounted for one third of its global sales in the period.
CHINA’S advertising market is predicted to grow 6.5 percent from a year ago to 630 billion yuan (US$96 billion), up from the estimated 5.4 percent growth made in January, representing 16.2 percent of the global ad market.
Growth will be driven by digital spending, which is forecast to make up 60 percent and increase by 14.8 percent in 2018, Dentsu Aegis Network said in its Global Adspend Forecasts.
Internet giants including Baidu, Alibaba and Tencent are projected to contribute about 80 percent of this growth, underlining their dominance in the marketplace.
The China ad market is forecast to grow 6 percent in 2019, driven by a 12.5 percent increase in digital ad spending, with e-commerce spending set to make up 40.5 percent of total digital spending in 2019.
Globally, ad spending is forecast to grow 3.9 percent in 2018 to US$613.5 billion due to a more positive outlook globally, accelerating from a 3.3 percent annual increase in the previous year.
Contribution to new global ad dollars in 2018 is driven in particular by the US and China, which account for around one third and one quarter of new growth, respectively. Russia, India and China will be the three fastest growing markets.
Global advertising expenditure is expected to increase at the same pace next year despite the lack of significant sporting and political events powering expansion.
SHANGHAI shares continued to stay down although the Shenzhen and the Nasdaq-style ChiNext recovered slightly.
The Shanghai Composite Index shed 0.52 percent, or 14.83 points, to close at 2,844.51, notching a tumble of 20 percent from 52-week highs, according to Dow Jones.
The smaller Shenzhen Component Index ended 0.16 percent up at 9,339.37 points. Gains by technology counters helped the Nasdaq-style ChiNext enterprise board rise 1.71 percent to close at 1,564.92.
Huatai Securities said the key Shanghai index’s performance showed the Chinese central bank’s recent liquidity injection of 700 billion yuan (US$108 billion) didn’t cheer investors as the move was in line with the market’s expectations.
Shanghai-listed China National Computer Software & Technology Service Corp soared by the daily maximum cap of 10 percent to 18.03 yuan.
AN emerging “new economy” powered by consumption and services is set to lift China’s A-share market in the second half of the year from recent turmoil, said Robeco, an investment management company.
Uncertainty over a possible full-blown Sino-US trade war and a tit-for-tat dispute between the world’s two biggest economies have lingered over China’s share market.
Consumption and services are likely to play a bigger role in China’s emerging “new economy” which will help the A-share market recover in the second six months of the year, Robeco said.
China has been implementing more effective policies, promoting industry consolidation via supply-side reform, restructuring state-owned enterprises, internationalizing the yuan further and contributing to the recovery of the global economy, the US company said.
Shifting the economy from high speed growth dependent on infrastructure spending to a high quality model will draw investment related to the new economy such as consumption upgrade, technology and innovation as well as structural reform, Robeco predicted.
Investment in UK auto production has almost halved in the last year due to worries over the country’s exit from the European Union, an industry association said yesterday, in the latest warning that uncertainty over Brexit is hurting the economy.The Society of Motor Manufacturers and Traders says investment in new models and facilities fell during the first half of 2018 to 347 million pounds (US$460 million) from 647 million pounds during the same period a year earlier.Chief Executive Mike Hawes said the government’s insistence that the UK will leave the EU’s tariff-free single market and customs union “goes directly against the interests of the UK automotive sector, which has thrived on single market and customs union membership.”“Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it,” he said.The industry statement follows warnings from Airbus, Siemens and BMW that leaving the EU without a comprehensive free trade deal would hurt British businesses and cost thousands of jobs.Uncertainty is already having an impact. A survey by law firm Baker McKenzie has found that almost half of EU businesses have cut back on their investment in Britain since the 2016 vote to leave the bloc.The survey found that European businesses widely support a post-Brexit deal that keeps trade relations as close as possible to the existing conditionsMany UK-based businesses want the same thing, but the British government is split between Brexit-backing ministers who want a clean break so that Britain can strike new trade deals around the world, and those who want to keep closely aligned to the bloc, Britain’s biggest trading partner.
French Finance Minister Bruno Le Maire visit the World Nuclear Exhibition, the trade fair event for the global nuclear community, in Villepinte near Paris yesterday.
GENERAL Electric Co said yesterday it will spin off its health care business and divest its stake in oil-services company Baker Hughes, leaving the once-sprawling conglomerate focused on jet engines, power plants and renewable energy.
The changes are designed to reward battered shareholders and to strengthen GE’s balance sheet by reducing debt, building up cash and further shrinking GE Capital, the company said. Shareholders will receive 80 percent of the value of GE Healthcare as a tax-free distribution of shares.
The 126-year-old company, which was once the most valuable US corporation, will spin off the profitable health care unit over the next 12 to 18 months, and sell its Baker Hughes stake over two to three years.
GE, whose stock has fallen more than 50 percent in the last 12 months, said it would keep its annual 48 cents-per-share dividend until the healthcare spinoff is completed.
The moves, which end a year-long strategic review, mirror changes that Wall Street analysts had called for a year ago. They come as GE is replaced in the Dow Jones Industrial Average, the iconic stock index that GE was a founding member of in 1896.
With these finishing touches, GE said its plan to divest US$20 billion in assets “is substantially complete,” leaving a “simpler and stronger” company with plans to boost its growth, operating profits and shareholder returns.
“We are aggressively driving forward as an aviation, power and renewable energy company — three highly complementary businesses poised for future growth,” Chief Executive John Flannery said in a statement.
The remaining businesses “share similar technologies and industrial markets, in contrast to limited synergies that exist with GE Healthcare,” Fitch analyst Eric Ause said in a note.
The changes leave GE with some of its best- and worst-performing units. Aviation has been highly profitable, but the power business profit has tumbled as sales of plants and services have slowed, and renewable energy profit margins are in the single digits.
The spinoff of its health care unit follows a similar move by rival Siemens AG, which floated its medical business as a separate company, Siemens Healthineers, in March.
GE faces tough competition for medical imaging machines, which include MRI scanners and ultrasound devices, from rivals Philips and Siemens, as well as Asian upstarts.
On Monday GE said it agreed to sell its distributed power unit for US$3.25 billion to US buyout group Advent. GE also has agreed to shed its transport unit, which makes railroad locomotives.
GE bought Baker Hughes in July 2017 and combined it with the GE oil and gas equipment and services operations to create a new company in which GE holds a 62.5 percent stake. The unit reported sales of US$17.23 billion in 2017.
GE estimated that restructuring costs would be between US$800 million and US$1.2 billion, and it plans to cut its industrial net debt by US$25 billion by 2020 and keep over US$15 billion of cash on its balance sheet.
US President Donald Trump denied yesterday that his trade policy is to blame for Harley-Davidson’s decision to shift some motorcycle production overseas, saying on Twitter that the company is using “Tariffs/Trade War as an excuse” to hide previously announced plans to move jobs to Asia.
The Milwaukee-based company said on Monday it came to its decision because of retaliatory tariffs it faces in an escalating trade dispute between the US and the European Union. The company had no immediate response yesterday to the president’s assertions. Trump warned Harley-Davidson that any shift in production “will be the beginning of the end.”
“The Aura will be gone and they will be taxed like never before!” Trump said in one of several tweets yesterday. He was referring to tariffs Harley-Davidson would face on motorcycles produced overseas and shipped back to the US for sale.
Trump has held up the iconic American motorcycle maker as an example of a US business harmed by trade barriers in other countries, but Harley-Davidson had warned that tariffs could negatively impact its sales.
Trump recently imposed steep tariffs on aluminum and steel imported from Canada, Mexico and Europe in his bid to cut trade deficits between the US and its trade partners. But those countries have treated Trump’s action as an insult and have chosen to respond in kind.
Trump tweeted that Harley-Davidson had already said it was closing a Kansas City plant and moving those jobs to Thailand. But it was union officials representing workers at that plant who claimed the jobs were being shifted to Thailand. Harley-Davidson has denied a link between Kansas City and Thailand.
“That was long before Tariffs were announced,” Trump said. “Hence, they were just using Tariffs/Trade War as an excuse. Shows how unbalanced & unfair trade is, but we will fix it.....”
CHINA Mobile will make the country’s first 5G phone call based on the latest SA (Stand Alone) technology during the Mobile World Congress Shanghai, the city’s biggest telecommunications fair held annually.
The two-day telecom show, which starts tomorrow, allows China’s telecom carriers to show their prowess on the development of 5G, a next-generation mobile communications technology. The 5G, which will be commercially available between 2019 and 2020, offers 20 to 50 times faster Internet connection compared with the current 4G networks and can support various new applications, Shanghai Daily learned yesterday.
China Mobile, the world’s biggest telecom carrier with over 800 million mobile subscribers, will be using the 5G SA technology, a more advanced system from the current 4G infrastructure, to make the 5G call.
China Telecom, the country’s top fixed-line operator, released a 5G tech white paper today in Shanghai. The carrier is set to operate a network combining 4G and 5G when the country issues 5G licenses.
With 5G, mobile data consumption will be eight times higher compared with now, said Ericsson in a report yesterday.
THE Ministry of Finance said yesterday it would issue yuan-denominated treasury bonds worth 5 billion yuan (US$760 million) in Hong Kong in the near future.
It will be the first of two rounds of overseas yuan-denominated treasury bonds issued by the ministry this year. The second round will also be worth 5 billion yuan and be issued in Hong Kong, the ministry said, without giving a specific timetable.
The specific date and other details will be released before the issuance. The ministry also planned to issue US$3 billion of US dollar-denominated sovereign bonds overseas in the second half of 2018.
The ministry started selling yuan-denominated treasury bonds in Hong Kong in September 2009 to boost the city’s economy and expand the offshore yuan business.
ABU Dhabi Global Market, the second financial free zone in the United Arab Emirates, and the Hong Kong Monetary Authority agreed yesterday to jointly promote financial technology.
The two sides signed a cooperation agreement to jointly promote and accelerate cross-border business opportunities in Hong Kong and the Gulf state, ADGM said in a statement posted on its website.
ADGM said the agreement will allow the HKMA and the Financial Services Regulatory Authority of ADGM to facilitate greater sharing of relevant information.
Both sides agreed to provide support to the authorization processes, and explore mutually beneficial projects.
The pact was signed in Hong Kong between Nelson Chow, chief FinTech officer of the HKMA, and Richard Teng, CEO of the Financial Services Regulatory Authority of ADGM.
Chow said cooperation between the two sides will strengthen the two authorities in their respective roles and initiatives in FinTech.
GROWING up in the Chinese port city of Dalian in the 1990s, Zhang Hongchang spent hours immersed in Japanese cartoons like Dragon Ball and Naruto.
China’s home-grown cartoons paled in comparison to the Japanese anime series on television and in comic books that captured the imaginations of Zhang and his generation.
Today, Zhang is one of China’s hottest cartoonists and at the forefront of a new wave of Chinese animation that is being driven by the country’s technology and internet giants. His latest hit comic — which stars a high school student who is also a Taoist priest with secret super powers — has been viewed 160 million times online.
China’s tech firms are engaged in a cartoon arms race to develop or buy Chinese characters in an animation market expected to hit 216 billion yuan (US$33.22 billion) by 2020, according to the EntGroup consultancy, trying to emulate the success of Walt Disney Co’s ensemble, which ranges from Mickey Mouse to Iron Man.
A key to that effort, has been the development of artists like Zhang.
“When I started, I was copying Japanese cartoons, but slowly I got my own style,” Zhang said in the Hangzhou studio where he draws comics that are made available to readers on a platform operated by the local gaming firm NetEase Inc.
“I had to spend a lot time getting to understand the Chinese market and what Chinese comic readers wanted.”
Chinese tech giants like Tencent Holdings, Baidu Inc and NetEase are trying to figure out the same thing.
Part of the winning formula has been the use of traditional Chinese religious and cultural themes, and characters. That, and improved quality in terms of art and storytelling, helped China’s comic and animation market reach 150 billion yuan last year, according to EntGroup’s estimates.
China still lags behind the Japanese and American markets, but is catching up. Japan is the top producer of animation, while the United States dominates in terms of sales, taking a nearly 40 percent share of the global industry, estimated at US$220 billion in 2016, according to a report from Research & Markets. China had around 8 percent that year.
For Chinese companies, the development of compelling series and characters could also open up new business opportunities that companies like Disney have exploited, like branded theme parks, games, movies, TV shows, lunch boxes and clothes.
“To make it work there have to be good stories, good production, and content that can resonate with consumers,” said Xu Zhiwei, animation and comic copyright senior manager at Tencent in Beijing.
Tencent is already seeing some success that could help the firm maintain rapid growth and a high valuation.
The gaming-to-social media company bought up “Fox Spirit Matchmaker,” which depicts romances between humans and demons, when it was a little-known comic, created by an artist called Xiao Xin.
The comic has been developed into an animation series that’s been viewed more than 3 billion times, Tencent said, making it one of the hottest hits on its video platform, which has over 60 million paying subscribers.
Tushan Susu, the animation’s main character, has been featured in a commercial for the fast food chain KFC. Tencent is now looking to create a television series and a video game using Fox Spirit characters.
China’s tech giants play an outsized role in Chinese entertainment. Tencent, the search company Baidu, and Alibaba, the e-commerce giant, control most of the top online platforms from movies to sport, and are dominant in social media and online gaming.
These firms are looking to latch on to a surging sub-culture being driven by a young generation with a taste for animation, called “dongman” in Chinese. This group is keen for more local-style heroes, according to industry executives.
They are also wealthier than their parents were, and have money to spend.
“Youngsters, especially the post-2000s, are very willing to spend money,” Geng Danhao, senior vice president at Baidu’s online streaming platform, iQiyi, said at an event in Beijing.
Zhang Tuo, a 21-year-old college student in Sichuan, said he had spent more than 7,000 yuan on comic-related merchandise, from plastic figurines to t-shirts. His favorites are local comics like Spiritpact and Monster List. Tao Jie, 20, a student in the southwestern city of Chengdu, said Chinese cartoons had improved in terms of story lines and animation technique. The use of local tales was also an attraction, he said.
“A lot of the Chinese comic and animation are developed from online novels that I have already read. I like them because I’m already a fan of the stories,” said Tao.
That shift has been helped by supportive government policies to ensure that peak-time television slots are kept for domestic animation.
The big tech firms are starting to spend, though not yet at the level of Disney, which bought Pixar Animation Studios for US$7.6 billion, as well as Marvel Entertainment, and the Star Wars producer Lucasfilm Ltd for around US$4 billion each.
Tencent has invested in more than a dozen comic and animation companies since last year, according to public records, while its film arm launched a “100 animations” project to support domestic productions.
Baidu’s iQiyi, is also splashing out on domestic comics, planning to spend 200 million yuan to sign Chinese artists and develop local characters, which comes on top of an earlier investment in 10 animation projects, the company said in May.
Alibaba and the news aggregator Toutiao have snapped up production companies and launched animation platforms on their own sites. NetEase signed a deal last year with Disney to create Marvel style superheroes, but with Chinese characteristics.
Luo Qiandan, marketing director of NetEase Comics, said the firm was using big data from its platform to analyze what comic consumers wanted and would feed this back to artists.
It was also adopting other elements such as Chinese brush painting techniques and religious themes.
“Everybody is trying to use Chinese elements and Chinese style,” she said.
CHINA’S stock markets fell yesterday despite the central bank announcing the release of about 700 billion yuan (US$108 billion) to boost lending for small businesses, with airlines particularly hit as the yuan continued to depreciate.
The markets opened higher after the People’s Bank of China cut the required reserve ratio by 50 basis points for some banks on Sunday.
During the afternoon session the markets erased early gains, with the Shanghai Composite Index falling 1.05 percent or 30.42 points to close at 2859.34.
The Shenzhen Component Index shed 0.90 percent to 9,324.83 points, while the Nasdaq-style ChiNext enterprise board dipped 0.72 percent to close at 1,538.57.
Airlines flew into turbulence when the yuan fell for an eighth day. Air China Ltd, one of the country’s top three airlines, dropped by the maximum cap of 10 percent to close at 9.78 yuan.
The markets were already clouded by the uncertainty over a possible full-blown Sino-US trade war and a tit-for-tat dispute between the world’s largest two economies last week. On Sunday, President Donald Trump called on other countries to end all trade barriers on his Twitter account, according to a CNBC report.
Gao Ting, head of China Strategy at UBS Securities, said in a latest report that the brokerage believed A-share investors were overly pessimistic and overlooked fine-tuning policies like the targeted reserve requirement ratio cuts.
ONLINE lifestyle services website Meituan Dianping filed for a Hong Kong IPO yesterday as competition intensifies between the Tencent-backed platform and other online-to-offline service providers such as Didi Chuxing and Ele.me.
Meituan began as a group-buying site and, after its merger with smaller rival Dianping in a US$15 billion deal in 2015, it has grown into a platform which connects consumers and various kinds of offline merchants such as food and beverage providers, movie theaters, hotels and entertainment venues.
The filing did not disclose which day it will list or the amount of cash it aims to raise, but Reuters reported the firm is targeting over US$4 billion fundraising and will list in October this year, citing anonymous sources.
The market size of on-demand food delivery from restaurants is set to grow at an average annual pace of 31 percent in the next five years, according to a recent report by domestic Internet consultancy iResearch.
Meituan Dianping’s total transaction volumes jumped 51 percent to 357 billion yuan (US$54.9 billion) last year, and it boasts 310 million consumers as well as connections with 4.4 million merchants in over 2,800 domestic cities, according to its prospectus.
The booming e-commerce sector has been boosted by the prevalence of smartphones and the popularity of online payment infrastructure. Meituan Dianping is also helping merchants with its technological capabilities such as online marketing tools, an on-demand delivery network, plus supply chain and financial solutions to lure and keep consumers.
Its revenue rose from 12.99 billion yuan in 2016 to 33.9 billion yuan last year.
Meituan Dianping remains loss-making, with pre-tax net losses more than tripling from 5.8 billion yuan in 2016 to 19 billion yuan last year, as it subsidizes its operations in the online ticketing, hotel booking and car hailing sectors to compete with Alibaba-backed food delivery platform Ele.me.
Its latest foray into online and offline service includes its newly launched car-hailing service in Shanghai in March this year which aims to take on leader Didi Chuxing. It has also bought public rental bike operator Mobike for US$2.7 billion and seeks to offer a one-stop online-to-offline service on one integrated platform.
THE Chinese mainland saw the highest average initial public offering proceeds year on year in the first half of this year since 2008, EY said in a report yesterday.
From January to June, the average IPO proceeds in the A-share market totaled nearly 1.5 billion yuan (US$230 million) to notch the highest for the same period since 2008, the report showed.
The technology, media and telecommunications sector topped by IPO proceeds while the industrial sector led by deal number in the first six months. More artificial intelligence and new energy automotive technology companies have also launched IPOs on the A-share market since March, the report said.
New economy businesses will continue to boost IPO activities in both the mainland and Hong Kong in the second half of 2018, the report predicted.
Small and medium-scale firms which raised under 1 billion yuan in their IPOs fell by 79 percent by volume and shed 71 percent by proceeds from the prior year.
Meanwhile, IPOs from large enterprises with proceeds above 5 billion yuan took up 35 percent of the total proceeds. Major enterprises and unicorn companies boosted funds raised by the top 10 IPOs to 58.3 billion yuan, up 156 percent from a year earlier.
“During the first half of 2018, policies and measures were released to facilitate listings of new-economy-related enterprises and unicorn enterprises,” Tang Zhehui, partner of EY Assurance Services.
These companies were channeled into a pilot scheme which “offers explicit support to high-tech and new strategic industries including Internet, big data and cloud computing enterprises,” Tang said.
The report also said that the A-share market is set to see the first Chinese depositary receipt listing in the second half year.
“We believes that the first CDR listing or companies returning to the A-share market via CDR are expected to debut in the near future, and more unicorns will list on the A-share market,” said Yuan Yongmin, EY Assurance Partner.
Stringent and accelerated approvals have cut the IPO backlog to 307 companies this month from 519 at the end of 2017.
EY estimates there will be 63 IPOs during the first half of 2018, representing only 25.6 percent of the number in the same period last year. The IPOs raised 93.1 billion yuan, down 26 percent from a year earlier.
SALES of consumer goods via e-commerce are set to grow rapidly to account for 7.2 percent of global sales by 2020 due to increased Internet penetration from Africa and Asia, according to a latest study.
Hypermarkets and supermarkets are still the biggest sales channel by sales value but e-commerce, discounters and cash-and-carry are quickly rising, the study said.
Up to 15.3 percent of fast-moving consumer goods will be sold via emerging channels including e-commerce by 2020, while discounters and cash and carry will contribute 7.2 percent and sales through convenience stores will take up 5.8 percent, said Kantar Worldpanel’s report “Winning Omnichannel: Finding growth in reinvented retail.”
It sees spending in supermarkets and hypermarkets to fall to 48.4 percent in 2020 from 50.8 percent in 2015.
Evergrande Health has become the largest shareholder of electric car startup Faraday Future, which was backed by embattled tech entrepreneur Jia Yueting, after it took over a Hong Kong investment company.Hong Kong-listed Evergrande Health will pay HK$6.75 billion (US$860 million) to buy Season Smart Ltd, which owns 45 percent of Smart King Ltd, a joint venture in which Faraday Future is a major investor owning a 33 percent stake, a corporate statement said yesterday.The deal will make Evergrade Health the largest shareholder of Faraday Future, which said yesterday that it “welcomes Evergrande Health as a new strategic investor” and confirmed that Jia, founder of Chinese tech group LeEco, will serve as its global CEO.California-based Faraday Future said it was still on track to start deliveries this year. In August 2017, it signed a lease for a new assembly plant in California.
Jian Lu from Chinese ride-sharing giant Didi Mobility shows the Didi app on his smartphone in Melbourne yesterday. Didi Chuxing has intensified its drive for global business by launching in the Australia city yesterday as it joins rivals Uber, Taxify and Ola in Australia’s taxi market. Didi, which last year became Asia’s most valuable start-up company, has been in a fierce battle with Uber in the growing ride-hailing market.
China will cut re-lending interest rates for small and micro enterprises by 0.5 percentage point as part of a broader policy package to ease the financial strain on small firms, a central bank document said yesterday.The re-lending and rediscount quotas for small companies, as well as sectors for rural areas, will be raised by 150 billion yuan (US$23.11 billion), according to guidelines for increasing financial support for small and micro firms, released on the website of the People’s Bank of China.Better mechanisms will be in place to support the issuance of financial bonds by small companies, while financial institutions will be urged to issue securities backed by small enterprise loans. These measures are expected to provide credit of over 100 billion yuan, according to the guidelines.Loans for small firms with a credit line of 5 million yuan or less will be included in the scope of collateral for the PBOC’s medium-term lending facility operation.Small firms will be given more weight in the PBOC’s macro-prudential assessment framework under the guidelines.From September this year until the end of 2020, interest income for credit up to 5 million yuan, compared with previous 1 million yuan, for qualified small firms as well as individual businesses will be exempt from value-added tax.China will also support the development of venture capital and angel investments to provide more financing channels for small firms under the guidelines.The measures followed a PBOC statement on Sunday, which said it would cut some banks’ reserve requirement ratios by 50 basis points on July 5.
CHINESE unicorn companies are poised to seize strategic growth opportunities over the next three years if they respond to “challenges in technology, talent, operation and financing,” a PwC report said yesterday.
A “unicorn” is a tech startup valued at least US$1 billion.
Executives at domestic unicorn companies see the most pressing challenges is to adapt to the technology revolution, changes in consumer behavior, and the emergence of new business models, PwC said.
Its survey found that 57 percent of executives at Chinese unicorn firms indicated the continuous emergence of new technologies as the primary external factor likely to affect their companies, while 45 percent noted the emergence of disruptive business models in the next one to three years.
“To rank among the top players in the future, unicorns will increasingly need to use innovative technology as a driver, underpinned by new business models, to secure the commercialization of their technologies,” Gao Jianbin, TMT leader of PwC China, said.
A majority of the unicorn executives saw big data and artificial intelligence to be most influential for business development and product research, followed by cloud computing, Internet of Things, 5G and blockchain, the survey said.
The executives regarded talent as key to sustain their growth strategies for the next one to three years.
The survey found that 64 percent of the executives plan to list their firms in the next two years by tapping the Chinese depositary receipts.
“Unicorn companies are flourishing in China and will embrace strategic growth opportunities in the next three years,” Wilson Chow, PwC Global TMT Leader, said. “These firms have to respond to challenges in technology, talent, operation and financing to win.”
SHANGHAI’S new housing sales rebounded last week amid improved new supply, latest market data showed.
The area of new homes sold, excluding government-subsidized affordable housing, rose 22.1 percent to 96,900 square meters during the seven-day period ending Sunday, Shanghai Centaline Property Consultants Co said in a report released yesterday.
Outlying Qingpu District, where new home sales dipped 3.5 percent from a week earlier, led with 16,400 square meters. It was immediately followed by Nanhui in Pudong New Area, where weekly transactions of new homes surged 208 percent to 15,100 square meters. In Pudong, sales of new homes jumped 49.5 percent to 13,600 square meters.
The average cost of a new home rose 10.4 percent from a week earlier to 52,883 yuan (US$8,096) per square meter, according to Centaline data.
“Despite the rebound, overall sentiment among home buyers was still lackluster as new home transactions failed to exceed the 100,000-square-meter threshold for the second consecutive week,” said Lu Wenxi, senior manager of research at Centaline. “Notably, seven out of the 10 best-selling projects cost more than 60,000 yuan per square meter, leading to the double-digit increase in average price.”
Citywide, a project in Nanhui led others by selling 8,286 square meters of new homes, or 41 units, during the seven-day period. With an average price of 31,150 yuan per square meter, it is also the cheapest project in the top 10 list. Two developments in Pudong, one costing 78,891 yuan per square meter and the other priced at 64,860 yuan per square meter, closely trailed with weekly transactions of 3,497 square meters, or 23 units, and 3,164 square meters, or 29 units, respectively.
On the supply side, about 22,800 square meters of new homes, all located in remote areas, were released locally last week, compared to zero new supply registered in the previous seven-day period, Centaline data showed.
“It was rare that new home supply was so inadequate in June, which should be a critical month for real estate developers as most of them, if not all, would gear up for a better half-year performance,” Shanghai Homelink Real Estate Agency Co said in a separate report.
HARLEY-DAVIDSON, up against spiraling costs from tariffs, will begin to shift the production of motorcycles headed for Europe from the US to factories overseas.
The European Union on Friday began rolling out tariffs on American imports like bourbon, peanut butter and orange juice. The EU tariffs on US$3.4 billion worth of US products are retaliation for duties the Trump administration is imposing on European steel and aluminum.
President Donald Trump has used Harley-Davidson as an example of a US business that is being harmed by trade barriers. Yet Harley has warned consistently against tariffs, saying they would negatively impact sales.
Harley-Davidson Inc sold almost 40,000 motorcycles in the EU last year, generating revenue second only to the US, according to the Milwaukee company.
The maker of the iconic American motorcycle said in a regulatory filing on Monday that EU tariffs on its motorcycles exported from the US jumped between 6 percent and 31 percent, which translates into an additional, incremental cost of about US$2,200 per average motorcycle exported from the US to the EU.
“Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally,” the company said in prepared remarks. “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson.”
The company will not raise its prices to avert “an immediate and lasting detrimental impact” on sales in Europe, it said. It will instead absorb a significant amount of the cost in the near term. It anticipates the cost for the rest of the year to be around US$30 million to US$45 million.
Harley-Davidson said that shifting targeted output from the US to overseas facilities could take at least nine to 18 months to be completed.
The company is already struggling with falling sales. US motorcycle sales peaked at above 1.1 million in 2005 but then fell in the recession.
TIRED of waiting in line to get your car washed? A local company is promising to make the car wash a more convenient, cheaper and more eco-friendly experience.
Sitting across the table from this writer, Liang Shiyong, a 42-year-old entrepreneur who founded car wash brand Abeehoo, proudly talks of his plan to put thousands of self-service car wash machines in a dozen Chinese cities by the end of this year.
With two decades’ experience in the after-sales car service market, Liang set up a company in 2015 focused on providing intelligent car wash solutions with the potential to transform the face of the industry.
Traditionally, cars are washed manually in China and long lines are a common sight in front of car washes. The normal cost is 25-30 yuan (US$3.90-4.70) a time and no 24/7 service is available.
The car wash has become what is often referred to as “rigid demand” in a country on a fast lane to an automobile society, with car ownership topping 200 million in 2017.
For a long time, cars were often seen parked on the roadside to be rinsed, blocking traffic and creating effluents that flowed, untreated, into the sewage system.
City officials cracked down last year to eliminate this eyesore, but Liang says the demand is still there.
That’s where Abeehoo came in. Since 2015, Liang has worked on developing an Internet-enabled car wash machine that he said is “tremendously easy” to use.
The machine entered service in late 2017 after two years of trials and technical improvements.
The size of a fridge, it is equipped with a high-pressure wash gun, foam lance and a vacuum cleaner. The car wash is booked in advance on smartphones, and a standard session lasts 30 minutes.
Compared to traditional business models, where one pays someone else to wash their car, or trusts automation with the job, Liang said his invention has several distinct features.
To begin with, it reduces the amount of water used — usually 80 to 90 liters a time — by two thirds, and bookings via the mobile app and WeChat account free customers from waiting.
Besides, it’s much cheaper, at 8 yuan per 30 minutes.
To illustrate the ease of accessing the service, Liang took out his smartphone and explained how to book a 30-minute car wash and pay through Alipay or WeChat.
Users who finish the session quickly are charged even less — 6 yuan for 20 minutes. Bookings cancelled more than 30 minutes beforehand lead to a full refund.
The biggest merit of this machine is perhaps its flexibility. One need not bother queuing up as he or she is updated real time on the status of bookings.
“Everyone can access the service, which goes very well with the idea behind the sharing economy,” said Liang. “Our goal is not just to bring the price down, but to make our equipment really shared, and hopefully, liked by all.”
Environmental awareness has won his company honors coveted by competitors. It applied for and acquired multiple patents on the strength of its self-developed water treatment device.
Instead of using intensely acidic or alkaline detergent to spray foam, his company developed a dark orange solution he says is made from tangerine oil extract.
The costs are five times higher, but Liang feels it is worthwhile, because this shows “we take our environmental responsibility very seriously.”
Last year, the municipal public sanitation authority approached him to discuss cooperation. Official procurement of the system has already begun in some districts. The service has won accolades as a scheme that “offers convenience to residents.”
The car wash has long been considered as one of the most lucrative segments of the car care market. A host of startups rushed into the sector a few years ago.
Built around the O2O (online to offline) concept, they soon engaged in a brutal war for market share, offering services incredibly underpriced or even for free. When the money dried up, many went bust, leaving investors high and dry.
Liang knew very early on that these O2O startups would fail, because “their model relies on hefty subsidies,” a practice that pushes up customer acquisition costs.
Combined with increasing labor costs, it doesn’t take a genius to see that these O2O businesses are doomed from the outset.
Liang’s business model represents a huge departure from past failures in that it requires no attendants and does not market directly to individual customers, rendering subsidies unnecessary.
Instead, he chose to work with property management companies, which pick the spot for and help promote the service. In return, they get a cut of the revenues.
Location, location, location
This kind of cooperation has enabled Abeehoo to increase its car wash facilities to about 150 citywide — mostly within or near residential complexes — serving 100,000-plus registered users.
Liang also has supplied the machines to other parts of the country, including Jiangsu, Zhejiang and Wuhan of Hubei Province, bringing the total to 300 nationwide.
However, digital map locations indicate that they are usually on the outskirts of urban centers — suburban districts of Minhang and Jiading in Shanghai for instance.
This is a challenge for Liang, who hopes to move his equipment a bit closer to metropolitan areas. But it will be a tough job because the rent is higher there.
One way to tackle this is to enlist support from the authorities to set aside more idle space for car wash facilities. “(With government support), things would be a lot more different,” Liang told Shanghai Daily.
His business logic suggests a marked change in popular attitudes toward Internet-related innovations. The O2O model has increasingly lost luster due to the ever-higher costs of marketing directly to customers and maintaining customer “stickiness.”
Liang is critical of ills plaguing the sharing economy. The most notable example is the notoriously high damage rate of shared bikes. Damaged bikes piled up high in “graveyards” are now a frequent sight.
He blamed this on lack of foresight. Radiating an air of prudence and moderation, a trait often associated with people hailing from Shandong Province, this Shandong native was careful before testing his innovations in the market.
“We gauged upwards of 100,000 users for feedback, and then adjusted our designs accordingly,” said Liang.
Only after the whole process proved feasible did he decide to give it a go. Thanks to such discretion, there are no known reports of damage or vandalism of his equipment. Each unit costs less than 20,000 yuan to build, and their operator is confident of recouping the costs within half a year.
As he drank from a mini-porcelain cup, Liang described the car care market as worth at least 10 trillion yuan, but players using outdated methods will face a “red sea” of competition.
He believes that sensible entrepreneurs must rise above superficial concepts and see the economic folly of, say, pricing car wash at only 5 yuan a time.
His plan for the near future is to put 1,700 more machines across the nation by the end of this year and establish a presence in 10 provinces and municipalities.
The market is so huge that plenty of opportunities await those adept at leveraging the Internet and Big Data. And Liang apparently is one with big ambitions.
“Car wash is only a beginning. Our machines are a good platform for advertisers and other businesses that specialize in precision marketing,” Liang said.
FROM phones used in the Forbidden City a century ago to the next generation 5G technologies, Ericsson stands at the forefront of the communications revolution in China.
The Swedish company, which has been operating in China for over 100 years, bears witness to the nation’s economic reforms initiated 40 years ago as it opened to the outside world. From there, it was no looking back!
Zhao Juntao, president of Ericsson China, talked with Shanghai Daily about the momentous changes.
As a senior executive of the global tech giant, Zhao praises China for aiming to create a business environment with continuous improvement of fairness and transparency, and he looks to even better times ahead.
Zhao and Ericsson veterans Lars A. Stålberg and Per-Olof Björk are bringing their experiences together in a book to be published later this year. It’s entitled “Ericsson and China: A Lasting Relationship.”
Of course, Ericsson will be participating in the first China International Import Expo to be held in Shanghai in November.
Q: What is the most impressive change you have seen in China in the past 40 years?
A: China has experienced dramatic changes since it adopted the reform and opening up policies. It is a miracle that in only one generation, so large a nation can create such great changes.
What comes first to my mind are the construction of infrastructure, a stronger national economy and gradual adoption of universal health care. In recent years, everywhere you travel, you can see beautiful countryside blossoming in every province. We are confident that China will have an even brighter future.
Q: What about changes in the telecommunications industry?
A: Reform and opening up have brought about dramatic changes in our industry. In the early era of reform, the telecom infrastructure in China lagged far behind the West. There were no more than one million telephones across the whole country, and it was an extremely difficult thing for ordinary people to make a long-distance call.
Ericsson was the first company to introduce digital-exchange telephony into China. It was during the early 1980s in Beijing. At that time, the installation fee for a telephone was as high as 5,000 yuan (US$794), while the average monthly salary for a worker was less than 100 yuan.
Now, 40 years later, mobile phone penetration rate in China is more than 100 percent. China has the most advanced mobile networks with the widest coverage in the world. No matter where you are — be it deep in a valley forest or high on the Qinghai-Tibet Plateau — you have mobile coverage even if you walk for hundreds of kilometers without seeing a soul. There is no other country in this world that can top that.
The communications industry has empowered change. Mobile payments, social media and the sharing economy are all possible because of the superb telecom infrastructure.
It could be said that the telecom industry has been the biggest beneficiary of reform and opening up because it embraced the new policies more quickly than other industries.
Q: Chinese President Xi Jinping has pledged to further push China’s reform and opening up. What are you expecting in the next round of initiatives?
A: We would hope to see a more confident China, providing a business environment that is fair, equal and transparent. No matter if a company is foreign or domestic, all should be seen as builders of a modern and beautiful China.
Q: How do these policies equate to economic growth?
A: The importance of reform and opening up is self-evident. The current Sino-US trade tensions are causing a lot of anxiety.
We are glad to see that despite the current situation, the central government is still firmly committed to reform and opening up.
If we look at the development of technologies, we see that they are constantly moving forward. Today, the division of professions has become more detailed. For any specific sector to improve requires a large amount of input and accumulation. It is no longer possible to try to do everything all by oneself.
On the other hand, in order to truly achieve commercial success, the output of research and development has to go through the acceptance testing by both local and global markets.
This cannot be done without an open environment. We have all learned that lesson the hard way.
Q: What is the most important reform affecting your industry?
A: The biggest change in the telecom industry is the advent of 5G, a true milestone. The previous four generations of communications technology focused on connecting people by sharing voice, data or video. All the powerful social media and application platforms that we have today provide solutions to problems related to people.
Since its birth, the fifth generation of mobile communication, or 5G, has been much dedicated to industry, to connect devices, machines, cars and to solve problems for all kinds of industries.
In fact, the application of machine-to-machine communications in industry is still in its very early stage. Such cross-industry application calls for reforms in existing processes, management and control frameworks. For our industry, the next stage of reform and opening up will bring about a huge impact as we would start to work with areas and industries that we have never come across before.
We will meet a lot of challenges, but also a lot of opportunities. The progress of mobile communications technology has led to the rise of e-commerce, mobile payment and social media such as WeChat in China. Our Internet industry has established a strong position in the world. I think, one important success factor is the government’s seizing opportunity and introducing fair supervisory controls. In the upcoming 5G era, we hope to see continuing astute regulation from the government.
Q: Shanghai is hosting the first China International Import Expo later this year. What role will your company play?
A: We will attend the exhibition as part of the Sweden Pavilion. Details of our participation are still under discussion.
CHINA’S central bank said yesterday that it will cut the amount of cash that some banks must hold as reserves by 50 basis points, releasing US$108 billion in liquidity, to accelerate the pace of debt-for-equity swaps and spur lending to smaller firms.
The reserve reduction, the third by the central bank this year, had been widely anticipated by investors amid concerns over market liquidity. But the 700 billion yuan (US$108 billion) in liquidity that the central bank said will result from the reduction in reserves was bigger than expected.
The move is an implementation of decisions made at a State Council executive meeting last Wednesday, the central bank said. The meeting decided targeted cuts in banks’ reserve requirement ratios and other monetary policy tools will be used to boost credit supply to small firms and keep economic growth in a reasonable range.
Economists are not ruling out further reserve reductions for the rest of the year as borrowing costs rise due to China’s clampdown on leverage in the financial system, a campaign now in its third year.
The People’s Bank of China said yesterday that the latest targeted cut in some banks’ reserve requirement ratios — currently 16 percent for large banks and 14 percent for smaller banks — will take effect on July 5.
The PBOC said the cut will release about 500 billion yuan for the country’s five large state banks and 12 national joint-stock commercial banks. Lenders are encouraged to use the money to conduct debt-for-equity swaps.
China’s policy-makers have been pushing for debt-for-equity swaps since late 2016 to ease pressure on firms struggling with their debts.
The country’s top banks have rushed to sign deals with state-owned enterprises to ease their debt burden and give them time to turn around their business and improve their creditworthiness.
The latest reserve requirement ratio cut will also release about 200 billion yuan in funding for small and medium-sized banks to increase lending to credit-strapped small businesses.
The combined 700 billion yuan liquidity injection exceeded market expectations of 400 billion yuan. In the PBOC’s last targeted reserve cut in April, 400 billion yuan of net liquidity was released.
“The intensity of the move exceeded market expectations,” said Wang Jun, Beijing-based chief economist at Zhongyuan Bank.
“This move will help support the real economy and stabilize financial markets. We’ve seen rising debt defaults and funding strains on small firms, as well as a sharp adjustment in the capital market.”
But the latest reserve cut signals a “policy fine-tuning,” not a policy reversal, Wang said.
The central bank said yesterday that it will keep monetary policy prudent and neutral.
The announcement followed the worst weekly loss in the Chinese stock market since early February.
The Chinese yuan on Friday also fell to its lowest versus the US dollar in more than five months, though it has remained firm against a basket of trading partners’ currencies, and a sharp depreciation is not in the cards.
Borrowing costs up
China’s financial risk clampdown has slowly pushed up borrowing costs, and is restricting alternative, murkier funding sources for companies such as shadow banking.
Strained liquidity conditions have caused a growing number of credit defaults with private companies facing mounting refinancing risks. Latest official surveys also showed tight funding has hit smaller manufacturers.
The weighted average lending rate for non-financial firms, a key indicator reflecting corporate funding costs, rose 22 basis points in the first quarter to 5.96 percent, PBOC data showed. That compared with a total of 47 basis points in 2017.
Policy-makers have been trying to strike a delicate balance between the need for tougher supervision and reforms and ensuring the stability of the financial system, while keeping economic growth on track.
ANZ Research said it still expects another 50-basis-point reserve requirement ratio cut in October.
SMARTPHONE maker Xiaomi Corp said on Saturday there is no time frame for a mainland share offering.
Xiaomi had been expected to raise up to US$10 billion, split between its Hong Kong and mainland offerings. But in a surprise move last week, it postponed its mainland share offering until after it completes its scheduled July 9 listing in Hong Kong.
It did not say when it would restart its China depositary receipts issuance process or why it was postponing the mainland offering.
Xiaomi, which also makes Internet-connected devices, awarded its chief executive and co-founder Lei Jun about US$1.5 billion worth of shares for his contribution to the company, it said in an updated regulatory filing last week, in one of the largest one-off share-based corporate bonuses in years.
The US$1.5 billion stock, which has been awarded to Lei’s holding entity — Smart Mobile Holdings Ltd — was recorded by Xiaomi as share-based compensation expenses on April 2, one month before it filed for its blockbuster Hong Kong IPO.
Xiaomi is the latest high-profile company to lavish its senior executives with large stock awards ahead of a stock market flotation in recent years.
Its co-founder and president, Lin Bin, defended the board’s decision on the compensation.
“Many new-economy companies have compensated their chairmen or CEOs with stocks ahead of the IPOs. Xiaomi isn’t the first and won’t be the last to do so,” he said at the news conference.
Lin added Xiaomi’s board unanimously agreed on the stock award to Lei, who “completely knew nothing about it”.
Chinese e-commerce powerhouse JD.com awarded CEO Richard Liu stocks worth nearly $US900 million at the company’s IPO price, ahead of its New York listing in 2014.
The offering is set to be the first listing under new exchange rules designed to attract tech floats, as competition heats up between Hong Kong, New York and the Chinese mainland.
It is selling about 2.18 billion shares at a price range of HK$17 to HK$22 (US$2.17 to US$2.80) each, representing a multiple of 22.7-29.3 times 2019 earnings forecast by its underwriting syndicate.
Lei said he expected to expand its product range and international market presence. Xiaomi’s phones are sold in 74 countries.
“I agree the smartphone market in the next 10 years will grow slowly. But still, it is a giant market,” Lei said.
Set up in 2010, Xiaomi doubled its smartphone shipments in 2017 to become the world’s fourth-largest maker, said Counterpoint Research.
CHINA and Tajikistan embarked on a new US$200 million gold and antimony mining venture yesterday, the Tajik presidential press service said.
A groundbreaking ceremony was held yesterday for a mine that is set to produce its first gold and antimony in 2020.
The venture between Tajikistan’s state-owned aluminum smelter Talco and Chinese company Tibet Huayu Mining Co is expected to produce 1.5 tons of gold annually and 16,000 tons of antimony.
China has acquired rights to a number of mineral concessions in Tajikistan in recent years.
Total deposits at the mine that will be operated by the new jointly-owned company Talco Gold are set to be 50 tons of gold and 265,000 tons of antimony, according to the press service.
This year another Chinese company TBEA acquired the rights to operate a mine in Tajikistan’s northern Sugd region as partial compensation for its construction of a power plant.
SHANGHAI wants to entice the world’s leading brands to pick the city as their first choice to debut their new products as well as open their first store in China.
The city will develop platforms to help these leading fashion brands to debut and will promote the Shanghai Fashion Week to become the fifth biggest fashion week globally. The city will also foster the development of new platforms to debut certain products such as cars, costumes, cosmetics and electronic devices.
Shanghai held a launch ceremony to promote the city as the choice for global debuts on June 15, part of the city’s ambitious implementation of its three-year action plan for the Shanghai Shopping brand.
Shanghai will also establish professional agencies to provide services in terms of media, advertising and promotions for brands which are willing to launch their new products in the city.
The city will capitalize on the the opportunity offered by the first China International Import Expo to be held in November in Shanghai to boost the influence of the Shanghai Shopping brand, according to the Shanghai Commerce Commission.
“As the import expo will bring together the world’s top brands, products and services, it can be the best chance and support for us to first build up a reputation of the Shanghai Shopping brand and further improve its global influence,” the commission said.
Innovation, being the driving force behind consumption upgrading, will be emphasized to boost the attraction of the Shanghai Shopping brand.
Shanghai has become the biggest retailing city for consumer products and the distributing center for imported goods as its total commodity sales amounted to nearly 12 trillion yuan (US$1.85 trillion) last year. Its retail sales of consumer goods exceeding 1 trillion yuan for the third straight year.
INVESTMENTS in projects and funds by the Asian Infrastructure Investment Bank surpassed US$4.2 billion in 2017.
The figure was a sharp increase from US$1.7 billion of investments a year earlier as the bank funded 23 approved projects in transport, energy and telecommunication, up from 8 projects in 2016.
The bank’s net profit in 2017 was US$252 million, up from US$167 million a year earlier, a report said.
The bank’s annual report identified AIIB’s priorities as sustainable infrastructure, cross-border connectivity and private capital mobilization.
In 2017, total amount of private cofinancing by AIIB exceeded US$560 million, a sharp rise from US$5 million in 2016, the report said.
Asia’s infrastructure funding needs are estimated at US$1.7 trillion per year until 2030.
PROFIT growth in China’s state-owned enterprises accelerated in the first five months, official data showed.
Combined profits surpassed 1.29 trillion yuan (US$198 billion) for the January-May period, up 20.9 percent from a year earlier, said the Ministry of Finance. The pace of growth quickened from the 18.4-percent rise registered in the first four months. SOE business revenue rose 10.2 percent to 22.3 trillion yuan in the first five months, while their operating costs grew 9.7 percent to 21.4 trillion yuan.
THE total volume of goods ferried by China’s railways in May grew at its fastest pace this year.
Railway freight rose 11.8 percent year on year to 339 million tonnes in May, accelerating sharply from 1.4-percent rise registered in April, according to the National Bureau of Statistics. For the first five months, the volume of railway freight topped 1.6 billion tons, up 7.2 percent from a year earlier.
Fixed-asset investment in the railway sector totaled 199 billion yuan (US$31 billion) in the first five months, down 8.5 percent from one year earlier.
A total of 670 billion yuan (US$103 billion) of reverse repos are set to mature in the coming week. To keep ample liquidity, the People’s Bank of China has kept injecting funds into the money market through open market tools in the past week to offset factors including maturing reverse repo deals and deposit of required reserves.
SHANGHAI shares fell yesterday amid weak market sentiment on concerns about trade tensions between China and the US.
The Shanghai Composite Index shed 1.37 percent to close at 2,875.81 points. Shares of telecommunication firms, semiconductor companies and electronic firms were among the biggest decliners.
Guangdong Super Telecom Co tumbled 9.70 percent to 25.97 yuan (US$4), JiLin Sino-Microelectronics Co lost 7.14 percent to 6.11 yuan and Jiangsu Changjiang Electronics Technology Co fell 6.32 percent to 15.86 yuan.
Investor appetite was weak amid lingering worries over rising China-US trade tensions.
The Ministry of Commerce said yesterday that if the US chooses to impose tariff on Chinese goods and distort the global trading order leading to unfair trade, China will take comprehensive countermeasures to protect the interests of the country and the people.
“In early June, the two countries conducted discussions on agriculture and energy sectors in Beijing. China and the US both agreed to talk further on manufacturing and services industries as well as structural problems. However, the US escalated trade tensions and China has to response,” said Gao Feng, a ministry spokesman.
Gao Ting, head of China Strategy at UBS Securities, pointed out that “Sino-US trade tensions could further escalate” and this “could have a long-term negative impact on production and investment activities.”
CHINESE smartphone maker Xiaomi kicked off its initial public offering yesterday but the firm is likely to pull in about US$6.1 billion, far less than originally expected, with investors having mixed views about its main business.
Xiaomi had hoped to raise US$10 billion with the Hong Kong IPO, making it the biggest since Alibaba’s US$25 billion New York debut in 2014 and valuing the company at about US$100 billion.
However, the firm is offering 2.18 billion shares at HK$17-HK$22 (US$2.2-$2.8) apiece, according to Bloomberg News, which values it at about US$53.9-$69.8 billion.
Xiaomi had hoped to be the first company to list shares in Hong Kong at the same time as launching new Chinese Depository Receipts in Shanghai under new rules announced in April by mainland authorities to open up markets in the world’s number two economy.
But on Tuesday it put off its decision on listing the CDRs until it completes its IPO in Hong Kong. The China Securities Regulatory Commission said it has cancelled a listing review originally scheduled for Tuesday.
This delay, as well as differing market views about Xiaomi’s business model, were also among reasons for the lower valuation.
CEO Lei Jun claimed it was an Internet services company making money via online games and advertisements despite 70 percent of its revenues coming from selling hardware, particularly smartphones.
The firm, which mainly sells cheap but high-quality smartphones in China, is looking to push into Europe — recently opening its first flagship store in Paris — as the home market reaches saturation point.
China Mobile Ltd and US wireless-chip giant Qualcomm are among the cornerstone investors and it is expected to list on July 9.
Chinese authorities devised the CDR program, under which homegrown companies listed abroad can simultaneously list at home, after watching technology heavyweights Alibaba and Baidu list on Wall Street.
The objectives of the plan include helping to develop China’s share markets while allowing domestic investors to invest in the country’s big tech champions.
Alibaba and Hong Kong-listed Tencent have expressed an interest in the plan.
Xiaomi shipped 28 million smartphones worldwide from January to March, up 88 percent annually.
That was fourth in the world after Samsung, Apple and Huawei, data from International Data Corporation showed.
INTEL Corp Chief Executive Brian Krzanich resigned yesterday after a company probe revealed that a consensual relationship he had with an employee violated company policy.
The head of the largest US chipmaker is the latest in a line of powerful men in business and politics to lose their jobs or resign over relationships viewed as inappropriate, a phenomenon highlighted by the #MeToo movement.
“An ongoing investigation by internal and external counsel has confirmed a violation of Intel’s non-fraternization policy, which applies to all managers,” Intel said in a statement.
The board named Chief Financial Officer Robert Swan as interim CEO and said it has begun a search for a permanent CEO, including both internal and external candidates.
Intel declined to give any further information about the probe. Krzanich, 58, was named Intel CEO in May 2013, and moved its focus to growing data centers from personal computers.
A Chinese businesswoman who is an avid buyer of Baccarat glassware added the famed French crystal maker to her collection of business assets yesterday in a 164-million-euro (US$189 million) deal.
Coco Chu, founder of the Hong Kong-based Fortune Fountain Capital, has completed the acquisition, whose hand-crafted sculptures and champagne flutes have been made since the reign of Louis XV.
Baccarat announced that Fortune will buy an 89 percent stake held by the US investment firms Starwood Capital and L Catterton, which have struggled to revive the 250-year-old brand.
Baccarat’s luster has faded as it failed to benefit from the explosive growth in demand for luxury items in emerging markets, particularly in Asia.
It began falling into the red when the global financial crisis struck in 2008, only once posting a small annual profit until regaining its footing in 2016.
During those years investments in new designs and marketing were scaled back as losses accumulated.
“This isn’t the kind of growth seen in a luxury company,” said Eric Rogue, a union delegate at the company’s glassworks in the eastern town of Baccarat, which eventually gave its name to the glassworks founded by royal decree in 1764.
“We’re a luxury brand that could be developing much faster than we are now,” he said last month, pointing to annual revenues that have stagnated at around 150 million euros over the past five years.
Baccarat’s designs are found in temples of taste around the world, its sculptures gracing the storied Crillon Hotel in Paris, its glittering chandeliers hanging in palaces and museums.
Prices for a pair of champagne flutes — a stalwart on wealthy wedding registries — start at 300 euros, while a best-selling coffret of six colored tumblers lists for 1,030 euros.
This month it unveiled a collection of 100 sculptures of Zinedine Zidane’s foot costing 40,000 euros each.
US claims for unemployment fell for the fourth week in a row last week, extending an unprecedented streak of low levels, the Labor Department said yesterday.
The continued scarcity of layoffs suggested June was likely to be another strong hiring month as the data were collected during the survey week for the department's more closely watched monthly US employment report.
For the week ending June 16, the number of new claims for jobless benefits fell by 3,000 to 218,000, marking the 21st week below 250,000.
Claims have now held below 300,000 for over three years, the longest such stretch ever recorded. The less volatile four-week moving average fell a steeper 4,000 to 221,000 claims.
Though they can see big swings from week to week, jobless claims can be used as a barometer of the health of labor markets and the prevalence of layoffs.
FOREIGN financial institutions will be allowed to establish a branch and subsidiary at the same time while foreigners can own majority stakes in domestic life insurance companies in the Shanghai Pilot Free Trade Zone.
These will be possible under 25 new rules issued by the Shanghai Pilot Free Trade Zone Administration yesterday in the FTZ’s latest effort to test the ground for further liberalization of the economy to open up its financial sector wider.
Under the rules commercial banks are allowed to form financial asset investment and management companies without any cap on foreign ownership.
Foreign banks are also urged to engage in a wider range of businesses, such as trust, financial leasing, auto finance, money broking, consumer finance and other banking sectors.
The FTZ also encourages foreign-funded securities firms and insurance companies to entice foreign investors as major shareholders of stock brokerages, fund management companies and futures firms.
Overseas central banks and international financial bodies are allowed to establish their representative offices or branches in the FTZ, while rating agencies are allowed to conduct credit rating business in the interbank bond market.
The new rules support leading trans-national asset management companies to set up their regional headquarters in the FTZ to build a comprehensive development platform for asset management in the zone. They will also be allowed to help found the Lujiazui Asset Management Association.
The new rules also allow foreign institutions to form financial leasing companies in the FTZ.
The FTZ will also urge the Shanghai Stock Exchange, the Shanghai Futures Exchange and the China Financial Futures Exchange to cooperate with Belt and Road countries and regional financial markets.
It will enhance strategic cooperation with the offshore yuan market to promote the issuance of yuan bonds and asset securitization products by overseas institutions and enterprises. It will also encourage financial institutions of “Belt and Road” countries to establish branches in the FTZ.
The new rules also encourage foreign-funded financial institutions to help build Zhangjiang Science City and set up branches there. Overseas investors are allowed to invest in sci-tech startups through a “qualified foreign limited partner” scheme.
Qualified overseas talents can open free trade foreigner accounts at financial institutions in the FTZ, and their lawful earnings in China are deemed as overseas capital investment to help them start a business.
The FTZ will also create a financial dispute resolution mechanism in line with international rules and an integrated financial supervision platform to monitor risks.
FOUR major procurement alliances were officially formed yesterday by the Shanghai trading group in preparation for the first China International Import Expo in November.
The four alliances deal with cross-border import e-commerce companies, large-scale retailers, comprehensive trade service providers, and exhibition services platforms or organizations.
“The four major purchasing alliances will help the Shanghai trading group make deals with targeted matchmaking for industries,” said Shen Weihua, deputy director of the Shanghai Commission of Commerce.
“They will also help organize supporting activities for the import expo. Companies included in the alliances have already submitted plans for over 60 activities to match make various industries before, during and after the expo,” Shen said.
The cross-border import e-commerce alliance will tap cross-border e-commerce giants such as Tmall Global, JD Global, Red and Ymatou to be the main channel to introduce overseas new products to the expo with the support of the Shanghai Cross-Border E-Commerce Association.
The large-scale retailers alliance, formed by domestic retail companies such as Bailian Group and Bright Food Group, as well as foreign-funded retailers such as Metro AG and Walmart, will provide service platforms for offline direct selling.
The alliance for comprehensive trade service providers will rely on integrated trading corporations such as Orient International Group and Shanghai Eastbest & Lansheng International Group to provide services in logistics, trading, customs declaration and commodity inspection.
The exhibition service alliance aims to integrate the city’s current bonded exhibition platforms for wines, machine tools, autos and cosmetics in the Waigaoqiao Free Trade Zone, the import goods exhibition and trading center in the Hongqiao Business District, and national commodity centers such as the pavilions of 16 Central and Eastern European countries.
SHANGHAI aims to ride the waves of the cruise tourism economy by further tapping the potential as the city is set to welcome nearly 26 million cruise passengers by 2022, said a report released yesterday by the Shanghai Academy of Social Sciences.
“Shanghai has made great progress in the past decade in developing the cruise economy, bucking the global trend when this relatively new type of tourism was hit by the economic downturn,” said Li Xiaonian, director of the Maritime Silk Road Research Center under the SASS.
Ranked as the biggest cruise port in Asia and the fourth largest in the world, Shanghai saw 512 cruise ships depart or dock at the city’s three ports last year, receiving 2.97 million visitors. The volume took up 43.3 percent of China’s total.
The city is set to handle 25.7 million people on cruises by 2022, the report said.
Carnival Corp, Royal Caribbean and MSC Cruises have made Shanghai their port of call.
ANT Financial’s online lending affiliate MYBank said it aims to connect with 1,000 financial service providers to cover as many as 30 million small and micro businesses.
“We’ll be combining Ant Financial’s technologies with small loan firms and a wide range of financial institutions to extend our reach to more under-banked small and micro business owners to boost economic development through empowering the grass-root level,” said MYBank president Huang Hao.
MYBank has been extending its services from online vendors to more offline brick-and-mortar small business owners who have little access to financial support due to their lack of credit history and collateral.
The online lender, in which Ant Financial holds a 30 percent stake, hopes to share its technological capabilities to help smaller financial institutions with risk management and to enhance operation efficiency.
MYBank is now working with 100 to 150 partners including financial institutions, micro-lending firms, information technology and data service providers.
UnionPay’s international business arm said it is well prepared to ride the upcoming outbound summer travel season, with the number of participating merchants doubling from last year and reaching a new high.The summer campaign this year will cover 70 popular spots in over 40 countries and regions. About 20 countries and regions along the Belt and Road will participate in the promotion.UnionPay International will offer some unique benefits for outbound Chinese tourists using its app. Cardholders can buy tickets in Moscow for Aeroexpress, a Russian air-rail link services operator, for only one ruble (2 US cents). Merchants in Hong Kong, Japan and Russia are also providing discounts through the company’s mobile payment service.