SHANGHAI DAILY

Surge in demand for AI talent

Tue, 12/12/2017 - 17:00
THE demand for artificial intelligence experts by companies in China has nearly tripled in the third quarter this year from the first quarter last year, recruitment portal zhaopin.com said in a report yesterday. The recruitment of AI talent soared 179 percent over the past seven quarters as China’s AI development took off, the report said based on recruitment advertisement posted on the website.

Europe group buys Westfield in biggest takeover of Aussie firm

Tue, 12/12/2017 - 17:00
UNIBAIL-RODAMCO, Europe’s biggest property group, has agreed to buy shopping mall owner Westfield Corp for US$16 billion, marking the biggest takeover of an Australian company and a shift in global retail property to counter online shopping. The sector is grappling with challenges from online retailers led by Amazon.com Inc and the deal, which Westfield said was “highly compelling” for shareholders, follows world No. 2 retail real estate investment trust GGP’s rejection of Brookfield Property’s bid.

AMC secures Saudi cinema contract

Tue, 12/12/2017 - 17:00
GIANT US cinema chain AMC Entertainment has signed a deal to build and operate movie theaters in Saudi Arabia after the conservative kingdom lifted a decades-old ban. The deal, announced by AMC in a statement and confirmed by Saudi state media yesterday, will see the company form a joint venture with Saudi Arabia’s vast Public Investment Fund.

World Bank to halt oil, gas project finance

Tue, 12/12/2017 - 17:00
THE World Bank will stop financing oil and gas exploration and extraction from 2019, it said yesterday at a climate summit seeking to boost the global economy’s shift to clean energy. “The World Bank Group will no longer finance upstream oil and gas, after 2019,” it said in a statement in Paris, where world leaders sought to unlock more money for the shift away from Earth-warming fossil fuels.

China’s need for natural gas to soar in 2040

Tue, 12/12/2017 - 17:00
CHINA’S demand for natural gas will continue to soar toward 2040, outstripping domestic output by around 43 percent, according to an International Energy Agency report published yesterday. “China’s annual gas production will more than double to 340 billion cubic meters in 2040, with shale gas a major contributor, but consumption is foreseen to grow even faster, reaching 600 billion cubic meters,” said the China Special Report of the World Energy Outlook 2017.

Green investment: zero to hero in 2 years

Tue, 12/12/2017 - 17:00
IN a nation that prides itself on green credentials — from electric cars to extensive parklands and rubbish recycling — it’s no wonder that concern about the environment is reaching into the realm of finance. So-called “green finance,” which adds eco-concerns to the mix of factors that determine a good investment, first appeared in China in late 2015. As the practice celebrates its second anniversary, we look back at how the concept has evolved.

Eco-friendly finance needs more participants

Tue, 12/12/2017 - 17:00
TOO few companies and institutions are issuing green bonds, and volumes need to be increased, according to Ma Jun, director of the Center for Finance and Development at Tsinghua National Institute for Financial Research. “Three years ago, we were still discussing why we should do green finance, but now the focus has shifted to how to generate more issues,” Ma told the recent seminar.

Duterte woos China with telecom offer

Tue, 12/12/2017 - 17:00
PHILIPPINE President Rodrigo Duterte has offered China Telecom a slot to be the country’s third telecom provider to break the dominance of two local firms, his spokesman said yesterday. The offer was part of Duterte’s efforts to improve ties between China and the Philippines, spokesman Harry Roque told reporters.

VW sees cash outflows in scandal

Mon, 12/11/2017 - 17:33
The logo of German carmaker Volkswagen seen at a US dealer. Volkswagen expects cash outflows of 4-5 billion euros (US$4.7-$5.9 billion) next year in relation to the dieselgate emissions cheating scandal, the carmaker’s Chief Financial Officer Frank Witter told journalists yesterday. Dieselgate has so far cost the company more than 25 billion euros and contributed to a strategy shift in the sector toward electric vehicles, with most manufacturers having announced far-reaching investment packages. — AFP

Chinese banks extend record US$169b loans

Mon, 12/11/2017 - 17:33
BANK lending in China hit a fresh record after a much stronger-than-expected surge in credit in November while authorities step up efforts to reduce risks in the financial system from a rapid build-up in debt. Chinese banks extended 1.12 trillion yuan (US$169.27 billion) in net new yuan loans in November, data from the People’s Bank of China showed yesterday, well above analysts’ expectations.

AIIB approves 1st project in China since its launch

Mon, 12/11/2017 - 17:33
THE Asian Infrastructure Investment Bank has approved its first project in China since its opening in early 2016. A loan worth US$250 million will go to the Beijing Air Quality Improvement and Coal Replacement Project, which aims to reduce the country’s coal use by about 650,000 tons annually.

Annual NEV sales set to beat 800,000

Mon, 12/11/2017 - 17:33
CHINA reported brisk sales of new energy vehicles in November, with annual sales set to exceed 800,000, as the government’s eco-friendly policy shows effect. Sales of China’s new energy vehicles surged over 80 percent year on year in November to 119,000 units, the China Association of Automobile Manufacturers said yesterday.

Chinese shares record higher finish

Mon, 12/11/2017 - 17:33
CHINESE stocks closed higher yesterday, with the Shanghai Composite Index up 0.98 percent, at 3,322.2. The Shenzhen Component Index closed 1.9 percent higher at 11,143.26.

Bitcoin surges past US$18,000 on trading debut in Chicago

Mon, 12/11/2017 - 17:33
BITCOIN surged past US$18,000 after making its debut on a major global exchange but was trading lower yesterday, highlighting the volatility of the controversial digital currency that has some investors excited but others nervous. Trading on a futures contract began at 6:00pm on the Chicago board options exchange at US$15,000.

China, EU urge stronger WTO amid US criticisms

Mon, 12/11/2017 - 17:33
WORLD Trade Organization members must shore up and strengthen the global trade body, China and the European Union said at the opening of the WTO’s ministerial conference yesterday. “Let us join hands and take real actions to uphold the authority and efficacy of the WTO,” Chinese Minister of Commerce Zhong Shan told the WTO, which has been pushed into a crisis by a US veto of new judges for trade disputes.

New homes sold fall 16.3% in Shanghai

Mon, 12/11/2017 - 17:33
NEW home buying sentiment continued to decline in Shanghai last week despite a major rebound in supply, the latest market data suggested. The area of new homes sold, excluding government-subsidized affordable housing, fell 16.3 percent to 71,000 square meters during the seven-day period ended Sunday, staying below the 100,000-square-meter threshold for the 10th consecutive week, Shanghai Centaline Property Consultants Co said in a report yesterday.

Sri Lanka passes port to Chinese firm

Sun, 12/10/2017 - 17:01
SRILANKA on Saturday handed over a deep-sea port to a Chi­nese firm, in a deal to boost the cash-strapped island’s finances that has raised concerns at home and abroad over China’s growing influence. The US$1.12 billion deal first announced in July lets a Chinese state company take over the southern port of Hambantota, which straddles the world’s bus­iest east-west shipping route, on a 99-year lease. “With the signing of the agree­ment today the Treasury has received US$300 million,” Prime Minister Ranil Wickremesinghe said at a ceremony in Colombo to mark the handover. “This is the beginning of our debt settlement,” he said. The loss-making port will now be jointly managed by the state-owned Sri Lanka Port Au­thority and China Merchants Port Holdings. Sri Lanka owes China US$8 billion that former president Mahinda Rajapaksa’s regime borrowed for its infrastructure development projects, including the port.

Bitcoin futures spark excitement

Sun, 12/10/2017 - 17:01
THE newest way to bet on Bitcoin will arrive, when futures of the cryptocurrency that has taken Wall Street by a storm begin trading. This has given an extra kick to the cryptocurrency’s scorching run this year. Bitcoin’s price soared so far this month, but it has made sharp moves in both directions in recent days, falling by almost a fifth on Friday after surging more than 40 percent in the previous 48 hours. Yesterday, Bitcoin was up about 3 percent at US$15,000 on the Luxembourg-based Bitstamp exchange. On the Gemini Exchange, it was at US$15,650. Bitcoin fans appear excited about the prospect of an exchange-listed and regulated product and the ability to bet on its price swings without having to sign up for a digital wallet. Others, however, caution that risks remain for investors and possibly even the clearing organizations underpinning the trades. The futures are cash-settled contracts based on the auction price of Bitcoin in US dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss. “The pretty sharp rise we have seen in Bitcoin in just the last couple of weeks has probably been driven by optimism ahead of the futures launch,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. “You are going to open up the market to a whole lot of people who aren’t currently in Bitcoin,” Frederick said. The futures are an alternative to a largely unregulated spot market underpinned by cryptocurrency exchanges that have been plagued by cybersecurity and fraud issues. The launch has so far received a mixed reception from big US banks and brokerages, though. Interactive Brokers Group Inc plans to offer its customers access to the first Bitcoin futures when trading goes live but will bar clients from assuming short positions and has margin requirements of at least 50 percent. Several online brokerages, including Charles Schwab Corp and TD Ameritrade Holding Corp, will not allow trading of the new futures immediately. JPMorgan Chase & Co, Citigroup Inc and other large US banks will not immediately clear Bitcoin trades for clients, the Financial Times reported on Friday. Goldman Sachs Group Inc said on Thursday it was planning to clear such trades for certain clients. Bitcoin’s manic run-up this year has boosted volatility far in excess of other asset classes. The futures trading may help dampen some of the sharp moves, analysts said. “Hypothetically, volatility over the long run should drop after institutions get involved,” said Ophir Gottlieb, chief executive officer of Los Angeles-based Capital Market Laboratories. “But there may not be an immediate impact, say in the first month.”

Clean energy set to take on bigger role

Sun, 12/10/2017 - 17:01
Clean energy, including nuclear power and renewable energy, is expected to exceed coal in China’s electricity generating capacity in about 10 years, a senior official has said.China’s installed capacity of clean energy has reached 660 gigawatts, while installed thermal power capacity stood at 900 GW, said Liu Baohua, deputy head of National Energy Administration.“In the near future, clean energy will take a leading role in our electricity consumption,” Liu said at a forum in Beijing on Saturday.China will cap its coal-fired power capacity at 1000 GW in 2020, and non-fossil fuel will account for half of the country’s total power generation by 2030, Liu said.China has been promoting green resources such as wind and solar in recent years to cope with pollution and boost the quality of its growth.In the first nine months of this year, China added 63 million kilowatts of installed capacity of renewable energy, accounting for about 67 percent of the country’s total newly installed power capacity over the period, according to the NEA.

Census on economy in 2018

Sun, 12/10/2017 - 17:01
CHINA will carry out its fourth economic census in 2018 to get a clear picture of the economy, the State Council, China’s Cabinet, has said. The survey targets all businesses in the secondary and tertiary sectors, the State Council said in a document, adding that the census will facilitate economic planning. Statisticians will collect data including enterprise ownership, financial status, production capacity, energy consumption, digitalization, e-commerce trading as well as research and development activities during the census, the document said. It ordered local governments to clamp down on irregularities in the census, including the falsification of data, forging census results and interfering in the census process. The State Council will set up a leading group to enhance management on related issues during the census. The central and local governments will share the expenses for the census, it said.

US$967m irregular debts found

Sun, 12/10/2017 - 17:01
CHINA has uncovered irregular local government debts worth of over 6.4 billion yuan (US$967 million), authorities said. Five local governments in Jiangxi, Shaanxi, Gansu, Hunan and Hainan provinces had raised the debts through irregularly offering commitment letters, according to an audit report in the third quarter by the National Audit Office. The audit findings also showed that 10 cities and counties in Yunnan, Hunan and Jilin provinces as well as Chongqing had inflated their fiscal revenues by a total of 1.5 billion yuan. At the same time, around 800 million yuan had been recouped after auditors found that Anji county in Zhejiang Province had exaggerated the investment volume and borrowed the money from banks against rules. Four people held accountable had been punished, the NAO said.

China leads FDI into Sri Lanka

Sun, 12/10/2017 - 17:01
CHINA has accounted for 35 percent of foreign direct investments into Sri Lanka up to September this year, with FDI for 2017 expected to total US$1.36 billion, local media said on Saturday. According to a statement from the Ministry of Development Strategies and International Trade, there has been a “strong uptick” in exports and FDI into Sri Lanka this year. “Data from the Board of Investment indicates a substantial uptick in FDI inflows to the country of US$795.5 million during January to September this year, 80 percent higher than the same period last year and already exceeding the full year 2016,” the statement said. “FDI from China is around 35 percent of FDI to date, while India’s is 16.4 percent and Singapore’s is 9.3 percent,” it added. Other top 10 countries for FDI into Sri Lanka include Netherlands, Britain, Japan, Malaysia, Sweden, and Australia.

Drop in food prices drags down CPI

Sun, 12/10/2017 - 17:01
CHINA’S consumer inflation slowed more than expected in November, and producer inflation at the factory gate slowed to a four-month low, leaving room for prudent monetary policy to be maintained. The Consumer Price Index, a main gauge of inflation, rose 1.7 percent year on year in November, down from October’s 1.9 percent and missing the market forecast of 1.8 percent, the National Bureau of Statistics said on Saturday. The CPI has grown at less than 2 percent for 10 straight months, pointing to mild inflation in the world’s second-largest economy. The bureau’s statistician Sheng Guoqing attributed the slowdown in CPI to a decrease in food prices, which account for a significant part of the CPI calculation. Food prices fell 1.1 percent in November year on year, 0.7 percentage points more than the decline registered in October. Pork prices slumped 9 percent, dragging down the CPI growth by 0.25 percentage points. On a month-on-month basis, food prices fell 0.5 percent. Prices of pork, aquatic products and fresh vegetables declined on abundant supply. Costs of beef, lamb, egg and fresh fruit rose on rising demand. Non-food prices edged up in November on both a yearly and monthly basis. Non-food costs rose 2.5 percent year on year, 0.1 percentage points higher than the increase posted in October. The costs of health care, housing and culture and entertainment led the gains. On a monthly basis, non-food prices gained 0.1 percent. Fuel and diesel prices rose more than 3 percent. Clothing costs increased 0.7 percent. The Producer Price Index rose 5.8 percent in November from a year earlier — the lowest since July — as factory activity softened due to the government’s ongoing efforts to curb pollution. The rise was slightly less than market expectations and compared with the previous month’s 6.9 percent increase. Analysts had predicted the PPI in November would rise an annual 5.9 percent, easing back also because of a high base a year earlier. “The environmental protection drive could affect production of middle and low-stream firms, easing demand for raw materials,” said Wen Bin, an economist at China Minsheng Bank. “Looking ahead, producer price inflation is likely to slow steadily partly due to the high base effect.” On a month-on-month basis, the PPI rose 0.5 percent in November. As north China officially entered the heating season in mid-November, the government has stepped up efforts to address winter smog, ordering many steel mills, smelters and factories to curtail or halt production to rein in pollution. Analysts expect producer price pressures to recede as the war on smog curtails production, cooling demand from factories for raw materials. Prices of raw materials rose 7.5 percent in November year on year, compared with 9 percent in October, data from the statistics bureau showed. Compared with a month ago, factory-gate prices grew faster in oil and natural gas developers and ferrous metal producers. Costs increased at a slower pace in oil processing and chemical-producing industries. Analysts said the mild inflation will not change the central bank’s monetary stance. China set the tone of its 2017 monetary policy as prudent and neutral, keeping appropriate liquidity levels but avoiding excessive liquidity injections. China has defied market expectations with economic growth of 6.9 percent in the first nine months of the year.

Renting a flat? Meet the corporate landlord

Sun, 12/10/2017 - 17:01
A QUEEN-size bed, wardrobe, one-seat sofa, desk and chair, TV, air conditioner, washing machine, refrigerator and microwave oven. Check! All amenities accounted for in a standard Mofang rental flat. What’s missing here is lots of space.Shanghai-based Mofang is China’s biggest institutional rental apartment company, with a presence in 20 major cities. It provides what some might call “efficiency” apartments — small, furnished units targeted at young white-collar workers priced out of the homebuying market. It’s a home at a hefty price.A 30-square-meter unit in a downtown complex on Jiangning Road costs renters 6,800 yuan (US$1,026), excluding utility fees that usually add up to about 300 yuan per month on average. Leases range from one to 12 months. Renters who stay six months or longer receive a 10 percent discount. Those who pay by quarter instead of monthly avoid an extra 100-a-month charge, and all renters must pay a deposit equal to one month’s rent.“It all sounds pretty expensive,” said an acquaintance of mine, who has been leasing a similar-size one-bedroom apartment about 1.5 kilometers away from Jing’an Temple for more than two years. “Except for a one-time brokerage fee required in my case, I frankly don’t see much difference between the chain-operated apartments you describe and the one I rent from a private individual, but my costs are almost 50 percent lower.”Mofang has capitalized on a market that attracts venture capital and dovetails with government programs to accelerate development of residential leasing. Institutional landlord chains have become the current buzz in the real estate industry.Mofang opened its first apartment complex in Nanjing in 2009 and has since extended its portfolio to more than 200 complexes in cities such as Beijing, Shanghai, Guangzhou, Shenzhen, Suzhou, Hangzhou, Chengdu and Wuhan. The company now has more than 43,000 apartments under management across China.Private equity firm Warburg Pincus was among the investors when Mofang completed a US$300 million round of financing last year. Success breeds competition.Property private equity firm Gaw Capital Partners announced in September that a fund under its management has invested in Harbour Apartments, a network of co-living spaces for talented young people in key Chinese cities. Founded in 2015, Harbour Apartments has invested in 40 complexes in Shanghai, Beijing, Shenzhen, Guangzhou, Hangzhou, Nanjing and Hong Kong. Rents for its furnished apartments range from 3,000-20,000 yuan a month. It is aiming for 80,000 units under management by 2019.“By signing long-term leasing contracts with property owners, most of the current players in the long-stay rental market are prone to high costs, which means that the apartments they offer could be somewhat out-of-reach for the majority of young people,” said Joe Zhou, head of research at JLL China. “Demand for such rental units is undoubtedly robust, particularly in big cities. It all depends on whether more affordable accommodation is available on the market.”Major real estate developers including China Vanke Co and Longfor Properties, among others, are also stepping into the residential leasing sector with their own brands. It’s a challenge because the business requires large amounts of capital and the patience to wait for a return on investment. To some degree, that depends on property prices continuing to rise. Port Apartment, a company opened by Vanke in 2016, had extended its footprint to 21 cities across China by the end of September. It now operates more than 20,000 apartments, the Shenzhen-based developer said in an earlier statement.Longfor Properties, a mainland developed listed in Hong Kong, introduced its long-term rental brand Champion Apartments in 2016. As of July, it had 10 projects in seven Chinese cities, with the goal covering 16 cities and collecting rental income exceeding 2 billion yuan in 2020.City governments have joined a national initiative to develop rental options as a damper on the overheated home-buying market. People are being encouraged to rent rather than buy homes.In Shanghai, the municipal government announced in July that it would add some 700,000 leasing units by the end of 2020 as part of a master plan to expand new housing by 1.7 million units. It promised a better balance between homes for purchase and homes for rent.To facilitate that policy, the city plans to earmark 1,700 hectares of government-owned land for development of residential rental properties.“Between July and November, 15 plots designated for residential leasing and estimated to generate more than 18,000 rental units have been sold in the city,” said Zhang Yue, chief analyst with Shanghai Homelink Real Estate Agency Co, a leading property brokerage chain in China. “If the local land authority maintains that pace, it might add around 200,000 new rental units to the market by 2020, with some 60,000 units being built annually over the next three years,” Zhang added.Six such parcels are due to be released for sale soon, according to auction schedules.Notably, all 15 plots already sold were acquired by state-owned developers, including nine by Shanghai Land (Group) Co and four by Shanghai Zhangjiang High-Tech Park Development Co. “Only one ‘qualified bidder’ was allowed to participate in each of those auctions due to the high threshold set by the land watchdog,” said an industry analyst who preferred to remain unidentified. “That reflected the government’s determination to accelerate the development of the residential leasing market. But on the other hand, more players should be allowed to join the competition if a healthy market is to be created.”

Laying the groundwork for an era of new ideas

Sun, 12/10/2017 - 17:01
From the shared economy of cars and bikes to the development of a cashless society and lean-energy vehicles, China staked its claim to being a recognized pioneer in adapting technology to a changing world in 2017.At the vanguard of this frontier is the campaign to find new and better ways to improve industry, trade and social progress.This year was the prelude to the dawning of a new era for the nation under the leadership of Xi Jinping, who was re-elected Party chief at the 19th National Congress of the Communist Party of China in October.While the nation’s leaders maintained a steady keel on economic growth this year, the road to change hasn’t always been equally stable on the commercial front. The fast expansion of companies in the “new economy” has produced hiccups. The spectacular fall of LeEco, a video-streaming portal that expanded rapidly into cloud computing, smartphones and electric cars, sent a stern message about the pitfalls of business based on boasts. And troubled bikesharing firms like Xiaoming, 3Vbike, Coolqi and Bluegogo have exposed a glaring lack of sensible regulation.“China, as well as the world, has entered a phase of nursing its growth instead of over-stimulating it,” said Huang Jun, chief Chinese analyst at Forex.com. “Investors won’t see aggressive measures any more, but they can anticipate stable growth in China and around the world with mild policy support.”China has been proceeding cautiously with deeper reforms to address what is seen as imbalance and inadequate development in face of the public’s growing expectations for a better lifestyle.Xi’s policies have laid the foundation for a new round of upgrades in China’s industries and its social programs. This issue of Benchmark and the January edition will focus on how key sectors such finance, property, retail, technology and manufacturing are coping with change in innovative but prudent ways.

Insurers shed gimmicks, adopt technology

Sun, 12/10/2017 - 17:01
If you can’t see the Mid-Autumn Festival moon because of cloudiness or your health deteriorates because of too many late nights, there have been insurance policies written to compensate for such setbacks. But gimmicky among insurers is now abating as the industry moves into the more serious and more lucrative field of insurance technology. The face of the new vanguard is ZhongAn Online P&C Insurance Co.ZhongAn is the first mainland insurance company to be granted a license to operate without physical outlets. It listed in Hong Kong in September in a public offering nearly 400 times oversubscribed, chalking up more than US$10 billion in market value.So why were international investors so eager to embrace a company that has yet to show a profit? It certainly wasn’t insurance prospects that drew global attention. Rather, the company’s stature rests heavily on its technology arm, which is adapting artificial intelligence, blockchain, cloud computing, and big data to systems benefiting the financial services and healthcare industries.Among the achievements of the technology was the application of blockchain technology to chicken farms in remote, poor areas to track the origin and activities of the fowl in order to provide reliable information to the food chain.Blockchain uses an encrypted database that cannot be overwritten, ensuring food safety for consumers and help for farmers seeking to acquire financing and insurance coverage.ZhongAn is also active in promoting the adaption of blockchain to record financial transactions and to share confidential medical records among hospitals, healthcare management companies and financial institutions.It has helped reduce the time needed for claims on commercial medical insurance policies to one day from 10 in one small city in Zhejiang Province.The company’s shares in Hong Kong have been trading at about HK$70 (US$8.96). Credit Suisse set ZhongAn’s target price at HK$75.50, about 41 percent of that attributed to the technology unit, where revenue is expected to rise 65 percent a year in the next five years.The insurer reported premium income of 1.6 billion yuan (US$240 million) in the third quarter this year and a cumulative loss of 890 million yuan for the first three quarters.Jeffrey Chen, chief executive of ZhongAn Online, said he envisions that technology will empower financial institutions to address all aspects of daily life.The company listed in Hong Kong, he said, to increase its profile among international investors ahead of expansion into overseas markets.Willis Towers Watson, an advisory and insurance broking company, said in a report that insurers in emerging markets are introducing innovative solutions faster than their peers in more developed markets. Advances in insurance technology make it easier, quicker and cheaper for them to assess customer behavior, needs and risks, and Chinese companies aren’t burdened by the legacies of past insurance practices.“We believe that technology has not only the potential to disrupt national insurance markets, but also alter the balance of power between insurers in developed markets and those in emerging economies,” said Rafal Walkiewicz, CEO of Willis Towers Watson Securities. “Companies in emerging markets are often able to create new innovative solutions faster, and their business models are exportable.”Yunfeng Financial Group, established by e-commerce giant Alibaba and partners such as Giant Group and Sina, acquired Hong Kong-based MassMutual Asia in August for US$1.7 billion.The transaction will give MassMutual Asia, an arm of Massachusetts Mutual Life Insurance Co, access to shareholder financial services platforms and channels for the distribution of asset management and insurance products.Various parties involved in the acquisition will also explore and cooperate on digitalization of insurance systems and use of data analytics in risk pricing.Commenting on the deal, Eddie Ahmed, chairman, president and chief executive of MassMutual International, said the deal creates potential opportunities for MassMutual Asia to collaborate with an innovative network of entrepreneurial Hong Kong and mainland-based businesses. He cited “an exciting range” of initiatives from big data to asset management.On another front, Toi See Jong, president of the Life Insurance Association of Malaysia and chief executive of Tokio Marine Life Insurance Malaysia, led a dozen Malaysian life insurers on a recent visit to Innospace+, a Shanghai innovation community, to learn about new developments in financial technology, including payment systems, risk analysis, online distribution and robotic processing.“China has led innovation in e-commerce and e-payments,” said Toi. “The insurance industry needs this innovation and can learn from China.”Large insurers see technology as a defense mechanism in maintaining market position. Ping An Insurance Group, which has overtaken China Life Insurance Group to become the nation’s largest insurance company in terms of market value, has adopted a strategy of turning from capital-driven business to one driven by technology.The group, which set up a technology unit in 2008 to provide in-house services for its core insurance business, now predicts that the unit will generate half of its revenue from external clients in the next few years.Ping An has invested more than 50 billion yuan in technology development in the past 10 years, mainly focusing on financial technology, medical technology and artificial intelligence.Last month, its technology arm signed a deal with South Africa’s Discovery Ltd, that country’s largest health insurance group, to use Ping An facial recognition in banking services.Ping An said the Chinese government is encouraging the export of such advanced technology as part of the Belt and Road Initiative.“The explosive growth of the insurance industry in China is not constrained,” said Walkiewicz of Willis Towers Watsons Securities.

Consumer glee: the world is our emporium

Sun, 12/10/2017 - 17:01
Shanghai resident Fiona Jiang began comparing prices when she wanted to buy a new Gucci handbag. She looked at the price tags in both physical stores and online shopping sites doing business in imported goods. Her conclusion: prices online were cheaper, and ordering and delivery were no obstacles to a digital purchase. “Most cross-border online retailers now have efficient online tracking systems, making the shopping process much easier and trustworthy,” she said. Jiang said she also enjoys reading product reviews posted by other online buyers, which she thinks are more reliable than the rehearsed sales pitches of typical shop staff.The retail scene in China is indeed becoming more international and more discerning. Digital commerce allows people in one country to easily buy goods from another country without ever leaving home. And people in China have demonstrated their zeal to buy foreign goods that they deem to be of better quality or that they think confer more social status. Many Chinese consumers used their fingers to buy bargains on America’s “Black Friday” sales extravaganza on November 24. Black Friday traditionally marks the start of the US Christmas shopping season, which is said to put retailers “in the black” for the first time every year. In China, NetEase imported goods arm Koala reported sales from Black Friday rose nearly fivefold from a year earlier, adding steam to the company’s aim to become the top-selling import online platform in the next three years.Amazon’s Chinese site said sales of imported goods have surged 22 times since it first launched the service in 2014. The value of import e-commerce in China this year is expected to surge 55 percent from 2016 to 1.85 trillion yuan (US$277 billion), according to private Internet consultancy China E-commerce Research Center. The rapid rise in cross-border retailing has been facilitated by the gradual easing of government restrictions on imports. Free trade pilot zones have been authorized, where merchants can import and store goods for sale in China. The zones provide storage in bonded warehouses free from commercial import duties and consumers can purchase them without having to switch to foreign shopping websites and services. The State Council, China’s cabinet, set up its first “cross-border e-commerce” pilot zone in Hangzhou in 2012. Early last year, the program was expanded to 12 more cities, including Shanghai. Chinese online retail sites such as Tmall Global, JD Worldwide and Koala now facilitate the purchase of a wide variety of overseas products on platforms already familiar to Chinese buyers. Consumers are now in a better position to shop for niche products instead of being forced to accept what’s available in the mass market of consumer goods.Foreign luxury goods have long been a draw card for Chinese consumers, even before the digital shopping craze took hold. They remain a top engine for growth in e-commerce.At present, online channels account for only about 9 percent of luxury sales, but that figure is expected to rise to 25 percent by 2025, according to Bain & Co. Online retail sales this year alone are expected to climb by a quarter. Faster deliveryYangmatou, a Shanghai-based online platform, hosts more than 80,000 offshore vendors offering about 800,000 items. It reported five-fold increase of Black Friday sales this year, and the company is encouraging merchants to offer more individualized services, such as guaranteed returns and refunds on products.More than 80 percent of Yangmatou’s orders are shipped within four days, compared with about 40 to 50 percent at the beginning of the year. Nearly half of the merchandise shipped from overseas destinations are handled by the cargo arm of China Eastern Airlines. While it’s true that price is a big factor in consumer decision-making, buyers of imported goods also pay close attention to delivery efficiency and after-sales services, according to a survey by China E-commerce Research Center. The average spend per buyer is expected to hit US$882 in 2017, according to eMarketer. The Ministry of Finance last month reduced import tariffs on 187 categories of consumer goods, scaling them from an average 17.3 percent to 7.7 percent. The reductions, which took effect this month, are expected to unleash a new buying spree.Matthew Crabbe, Mintel International Group director of Asia-Pacific research, told Shanghai Daily that the reduction will open the door to more foreign brands in China, but merchants will also have to beef up their physical presence in the country to establish more intimate rapport with customers and improve after-sales services. More attention needs to be paid to informing consumers about the quality of products. “Chinese consumers care more about quality and service than price,” he said. “And with their spending power on the rise, they have a wide range to choose from, regardless of whether the product originates here or overseas.” Imported-goods merchants are exploring new business models to increase efficiency and attract more consumers.Fengqu, the cross-border e-commerce arm of SF Express, last month launched a supermarket selling imported goods with a digital payment system and no cashiers.Unmanned shops have become the latest trend in the retail industry, but are they merely a passing gimmick or the face of the future? “They create little value for shoppers or vendors except to stir an initial buzz,” said Wang Wei, managing director at Digital McKinsey for China. “They are merely a novel way to shop.”

Bitcoin tops US$15,000 but hack sparks worries

Thu, 12/07/2017 - 17:01
A Bitcoin mining company in Slovenia has been hacked for the possible theft of tens of millions of dollars, just days before the virtual currency, which hit a record above US$15,000 yesterday, is due to start trading on major US exchanges. NiceHash, a company that mines Bitcoins on behalf of customers, said it is investigating a security breach and will stop operating for 24 hours while it verifies how many bitcoins were taken. Research company Coindesk said that a wallet address referred to by NiceHash users indicates that about 4,700 Bitcoins had been stolen. At yesterday’s record price of about US$15,000, that puts the value at over US$70 million. There was no immediate response from NiceHash to an emailed request for more details. “The incident has been reported to the relevant authorities and law enforcement and we are cooperating with them as a matter of urgency,” it said. The statement urged users to change their online passwords. Slovenian police are investigating the case together with authorities in other states, spokesman Bostjan Lindav said, without providing details. The hack will put a spotlight on the security of Bitcoin just as the trading community prepares for the currency to start trading on two established US exchanges. Futures for Bitcoin will start trading on the Chicago Board Options Exchange on Sunday evening and on crosstown rival CME Group’s platforms later in the month. That has increased the sense among some investors that Bitcoin is gaining in mainstream legitimacy after several countries, like China, tried to stifle the virtual currency. As a result, the price of Bitcoin has jumped in the past year, particularly so in recent weeks. Yesterday it surged to over US$15,000, up US$1,300 in under a day, according to Coindesk. At the start of the year, one Bitcoin was worth below US$1,000. Bitcoin is the world’s most popular virtual currency. Such currencies are not tied to a bank or government and allow users to spend money anonymously.

US-based VW exec sentenced

Thu, 12/07/2017 - 17:01
A US-based Volkswagen AG executive who oversaw emissions issues was sentenced to seven years in prison and fined US$400,000 by a judge on Wednesday for his role in a diesel emissions scandal that has cost the German automaker as much as US$30 billion.The prison sentence and fine for Oliver Schmidt were the maximum possible under a plea deal in August the German national made with prosecutors after admitting to charges of conspiring to mislead US regulators and violate clean-air laws.“It is my opinion that you are a key conspirator in this scheme to defraud the United States,” US District Judge Sean Cox of Detroit told Schmidt in court. “You saw this as your opportunity to shine ... and climb the corporate ladder at VW.”Schmidt read a written statement in court acknowledging his guilt and broke down when discussing his family’s sacrifices on his behalf since his arrest in January.“I made bad decisions and for that I am sorry,” he said.Department of Justice trial attorney Benjamin Singer argued in court that Schmidt was “part of the decision making process” at VW to hide a scheme to fake vehicle emissions results and had opportunities to tell regulators the truth.“Every time he chose to lie,” Singer said.

Ford ties up with Alibaba

Thu, 12/07/2017 - 17:01
Ford Motor Company and Alibaba Group yesterday signed a letter of intent to collaborate strategically in mobility services, connectivity, cloud computing, artificial intelligence and digital marketing.The three-year agreement will drive Ford to work with four of Alibaba’s business units — operating-system developer AliOS, cloud-computing platform Alibaba Cloud, digital-marketing arm Alimama and business-to-consumer (B2C) shopping site Tmall, to leverage digital channels and identify new retail opportunities.Initially, the two companies will pilot a study on digital solutions for new retail opportunities from pre-sales to test drives to leasing options, according to a statement from Ford.“China is one of the world’s largest and most dynamic digital markets, thriving on innovation with customers’ online and offline experiences converging rapidly,” said Jim Hackett, president and chief executive officer of Ford Motor Company. "Collaborating with leading technology players builds on our vision for smart vehicles in a smart world to reimagine and revolutionize consumers’ mobility experiences.

Shares decline for 4th day

Thu, 12/07/2017 - 17:01
SHANGHAI stocks extended their drop for a fourth day yesterday after taking their cue from declines of blue chip counters. The Shanghai Composite Index lost 0.67 percent to 3,272.05 points. “The index’s dropping below 3,300 points (on Wednesday) and the falling blue chip financial shares shook the confidence of some institutional investors,” Cao Xuefeng, chief strategic analyst at Huaxi Securities, said in a note. Financial shares fell from an earlier rally after the index went below 3,300 points. CITIC Securities Co Ltd shed 3.37 percent to 18.61 yuan, New China Life Insurance Co Ltd lost 3.25 percent, and Huaan Securities Co Ltd fell by 2.38 percent. Coal firms also posted some of the biggest drops, with Baotailong New Materials Co Ltd losing 7.54 percent while Shaanxi Heimao Coking Co Ltd and Shanxi Coking Co Ltd both declined over 6 percent.

Incubator for startups

Thu, 12/07/2017 - 17:01
JOHNSON & Johnson said it would launch its incubator platform Johnson & Johnson Innovation JLABS in collaboration with Shanghai government to strengthen the local entrepreneurial ecosystem. JLABS@Shanghai will be its first overseas site outside its eight locations across North America, and the 4,400-square-meter facility will be located in Shanghai’s Zhangjiang Hi-Tech Park and will open in the second quarter of 2019. It is expected to support up to 50 life science and healthcare startups as well as focused on innovations across the entire healthcare spectrum, including pharmaceuticals, medical devices and consumers. Vladimir Makatsaria, chairman of Johnson & Johnson China Group, said Shanghai has become a global hotspot for healthcare innovation. JLABS@Shanghai will allow startups to access talent and mentors, large firms, research universities and capital.

Rosy beverage sales eyed

Thu, 12/07/2017 - 17:01
SWIRE Beverages Holding Limited, a wholly-owned subsidiary of Hong Kong conglomerate Swire Pacific Ltd, expects sales on the Chinese mainland to grow by a high single-digit percentage over the next couple of years. The company, one of the largest Coca-Cola bottlers in the world, is confident of the growth because of rosy prospects in the country’s non-alcoholic ready-to-drink beverage market as well as a strengthened manufacturing, distribution and sales network following a realignment of the Coca-Cola bottling system in the Chinese mainland. “The Chinese mainland is the third-largest market for Coca-Cola globally by volume and the long term growth potential in the country's non-alcoholic ready-to-drink beverage market remains enormous, mainly due to population growth, urbanization and relatively low consumption per capita compared with developed markets,” said Karen So, executive director of Swire Beverages’ China operations. In the first nine months of this year, sales of non-alcoholic ready-to-drink beverages climbed 5.9 percent annually in the Chinese mainland.

Forex reserves increase for 10th straight month

Thu, 12/07/2017 - 17:01
CHINA’S foreign exchange reserves rose for a 10th straight month in November, though slightly below market expectations, as tight regulations and a strong yuan continued to discourage capital outflows. Capital flight had been seen as a major risk for China at the start of the year, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the economy. Reserves rose US$10 billion in November to US$3.119 trillion, compared with an increase of US$700 million in October, central bank data showed yesterday. Economists polled by Reuters had expected reserves to rise by US$11 billion to US$3.120 trillion. It was the first time that China’s reserves have climbed for 10 months in a row since June 2014, and brought its stockpile — the world’s largest — to the highest since October last year. The State Administration of Foreign Exchange said the appreciation of non-US dollar currencies and changes in asset prices were the main reasons behind the rise in forex reserves. Valuation effects due to the dollar’s drop against major currencies such as the euro and yen are also behind the rebound in China’s reserves. The dollar tumbled 1.6 percent against major trading currencies in November. The yuan has gained about 5 percent against the dollar this year, following a drop of 6.5 percent in 2016, its biggest annual drop since 1994. China’s foreign exchange reserves dropped by nearly US$1 trillion from a peak of US$3.99 trillion in June 2014 to US$2.998 trillion in January this year as it sought to shore up the yuan and reduce capital outflows. But reserves have since climbed by US$121 billion. A Reuters poll found that long positions on the yuan held by investors in Asia by end-November rose to the highest since September, as the dollar continues to falter in global markets. Some analysts believe more stability in the yuan and less pressure on outflows could prompt authorities to lighten their hand on the currency. “It therefore seems like an opportune time for (China’s central bank) to take further baby steps toward the long-held goal of exchange rate liberalization, most likely starting with a widening of the renminbi trading band,” said Julian Evans-Pritchard, China Economist at Capital Economics. The slide in the yuan and foreign exchange reserves last year prompted China to restrict capital outflows, including a clampdown on “irrational” outbound investments in property, hotels, entertainment, sports clubs and film industries. On Monday, Chinese financial news outlet Yicai quoted Pan Gongsheng, head of SAFE, as saying that China has “basically exited” from curbs on firms’ irrational outbound investment deals. The yuan’s surge this year has helped increase foreign purchases of Chinese bonds and stocks but authorities might have got a bit queasy as Beijing has long stated that it seeks two-way fluctuation in yuan. Net foreign exchange buying by both China’s central bank and commercial banks rose to multi-year highs in October, marking a policy victory for the authorities after a long battle to stabilize the yuan.

China expects to increase natural gas imports

Thu, 12/07/2017 - 17:01
CHINA’S natural gas imports are set to rise as new cross-border gas pipelines and liquefied natural gas terminals will be put into use, the Ministry of Commerce said yesterday. “China supports domestic enterprises to increase natural gas output and at the same time to diversify imports of the resource,” said spokesperson Gao Feng at a regular press conference. Calling imports “a significant source” of China’s natural gas supply, Gao attributed increasing imports to rising domestic demand and the improvement of infrastructure facilities. Data from China’s customs showed that from January to October, the country’s natural gas imports rose 24.9 percent year on year to 54.165 million tonnes. Liquefied natural gas imports surged 47.7 percent to a record high of 29.09 million tonnes, Gao replied in response to a question on the ongoing natural gas shortage in northern China. As millions of households have changed to gas instead of coal for heating this winter to help combat air pollution, there has been a sudden surge in the demand for natural gas. Since winter heating began on November 15, the factory prices of LNG has increased by 200 yuan to 300 yuan on average per day. On December 1, the figure in some LNG plants surged to a record high of 9,000 yuan (US$1,360) a tonne, according to an industry report. The Development and Reform Commission of Hebei Province has activated a second-level alert over natural gas supply, indicating that the province’s natural gas supply is 10 to 20 percent lower than its total demand. To remedy the situation, consumption for industrial and commercial use has been restricted. Shandong, Henan, Shaanxi, Ningxia and Inner Mongolia also reported shortages. Xu Bo, a senior analyst with China National Petroleum Corporation’s Economics and Technology Research Institute, estimated that natural gas use was expected to reach 230 billion cubic meters this year with 20 billion cubic meters coming from the coal-to-gas transition.

Retail to tap Internet and digital tech

Thu, 12/07/2017 - 17:01
SHANGHAI’S retail conglomerate Bailian Group Co aims to rejuvenate the city’s shopping environment and to better target consumers’ preferences through Internet technologies and digital capabilities as it cooperates with e-commerce giant Alibaba Group. “It’s an inevitable trend for retailers to join hands with online giants to reshape the shopping experience for consumers in the digital age,” said Wang Wei, managing director at Digital McKinsey in China. “Understanding how consumers make their shopping decisions and how to manage supply chain and offerings based on consumer purchasing preferences would be key areas for digital technology to reshape the retail industry in the next one or two years.” The Ministry of Commerce said it’s also upbeat about the prospects of new retail models. “The retail industry is brewing a new round of reform with Internet technologies being deployed to integrate resources from both online and offline while retail merchandise is also quickly catching up with consumption upgrade,” the ministry said in the annual China Retail Industry Development Report. Shanghai's retail sales in the first 10 months rose 8 percent from a year ago to 972.5 billion yuan (US$147 billion).

Household confidence weakens again

Thu, 12/07/2017 - 17:01
CHINA’S household confidence weakened again after people saw income fall and received less returns from investment, a survey showed yesterday. The China Wealth Index, compiled every three months by Bank of Communications and research firm Nielsen, fell to 137 in December from 139 in October and a two-year high of 140 in July. A reading above 100 reflects optimism among 1,885 households interviewed. The index measuring people’s income shed 1 point to 150, with a fall in people’s spending on traveling and entertainment during the period. “China’s economy slowed a bit in the third quarter, but remained largely stable,” said Lian Ping, chief economist of BoCom. China’s gross domestic product grew 6.8 percent in the July-September period, easing from 6.9 percent in the previous two quarters. The sub-index measuring people’s willingness to invest in real estate lost 4 points to 109, the second retreat after it rose in July’s survey, after China extended measures to dampen property speculation to more second-tier cities. “Stricter measures to calm the housing market affected people’s confidence to some extent,” Lian said. The employment index remained stable in the survey’s history of seven years at 130.

PBOC expresses confidence after IMF points to ‘risks’

Thu, 12/07/2017 - 17:01
CHINA’S central bank yesterday expressed its confidence about the stability of the country’s financial system, after the International Monetary Fund and World Bank pointed out potential risks in several assessment reports. The reports yesterday come a day after Chinese regulators drafted new rules to strengthen bank funding. The People’s Bank of China said the reports have fully acknowledged China’s achievements in recent economic and financial reforms, but there are “a few descriptions and views in the reports that we don’t agree with.” The descriptions of the stress testing did not fully reflect the outcomes of the test, the PBOC said on its website. The reports are part of the update of the China Financial Sector Assessment Program. The IMF and World Bank launched the FSAP in 1999 to gauge the stability and soundness of the financial sector, the regulatory framework of member economies and the sector’s potential contribution to growth. China went through its first FSAP exercise in 2009-2011. The update, issued after two years of research, said tensions have emerged as China is undergoing a necessary but prolonged economic and financial transformation, the IMF said. The tensions identified include China’s rapid build-up of credit and risky lending moving away from banks toward less-regulated parts of the financial system, while implicit guarantees added to these risks. “The system’s increasing complexity has sown financial stability risks,” the IMF said, advising China to take measures such as strengthening of systemic risk oversight, further improving regulation and moving toward functional supervision. China has largely relied on debt-fueled investment and exports to drive its tremendous economic growth, but the IMF said this model has reached its limits. Part of the problem lies in high growth targets, the IMF added, which incentivize local governments to extend credit and protect failing companies. “We recommend the authorities to de-emphasize the GDP (growth),” said Ratna Sahay, deputy director of the IMF’s Monetary and Capital Markets Department. China should “incite local governments to strengthen supervision on risks”, she added. The central bank said under the severely adverse scenario during the stress testing, the common equity tier 1 ratios of the banks whose combined assets account for over 65 percent of the total commercial bank assets in China have remained 7 percent and above, attesting to the strong resilience of the financial system. It said the country’s commercial banks have enhanced efforts to address non-performing loans and kept the NPL ratio at a low level. The China Banking Regulatory Commission said that the NPL ratio of Chinese banks stood at 1.74 percent at the end of September, flat with the previous quarter. According to the IMF, the Chinese banks’ NPL ratio was 1.674 percent by 2015, much lower than the world’s average of 3.925 percent. Meanwhile, corporate profitability has improved this year, and local government borrowing has been backed by long-term cash-generating assets, making very limited room for any underestimation of NPL ratio, the central bank said.

Xiaomi asks banks to pitch for IPO in 2018

Wed, 12/06/2017 - 17:01
CHINESE smartphone maker Xiaomi Inc has asked banks to pitch on December 15 for an initial public offering in 2018, people familiar with the plan told Reuters. Xiaomi was valued at US$46 billion in a 2014 funding round completed before its sales stagnated. More recently it has seen expectations of its value pick up following strong results this year. Its float could be the world’s “largest technology IPO” next year, according to one of the people. “It is huge,” said another source, adding that a valuation of US$100 billion would “not be a crazy number”. The world’s most valuable startup for a brief period in 2014 was worth about US$55 billion at the end of June, according to one person close to the company. But two other people familiar with the company’s discussions said it should be worth much more based on its expected earnings. Xiaomi declined to comment. The maker of budget smartphones saw sales stall in 2016 as it attempted to expand internationally while battling intense competition from Chinese rivals Huawei Technologies Co Ltd, Vivo and Oppo. At the time it pulled back from several overseas markets including Brazil and Indonesia, but this year it has launched and re-launched sales in dozens of countries such as Indonesia, Vietnam, Russia, the United Arab Emirates and Ukraine. It has overtaken Apple Inc to become China’s fourth-largest smartphone vendor by sales, driven in part by a focus on offline stores, according to research firm Canalys. The smartphone group’s listing plan comes on the heels of a slew of successful Chinese tech and fintech IPOs in recent months. Already a strong pipeline is building for 2018, with public floats expected from Meituan-Dianping, an online local services group valued at US$30 billion, and Lufax, a wealth management platform worth US$18.5 billion as of its last funding round. Xiaomi’s founder, Lei Jun, had said the company would not go public until 2025, but a bull run in the stock market and its promising financial numbers have sped up the IPO plan, according to the people. Xiaomi was expected to choose either Hong Kong or the US as its listing venue, according to the people, who declined to be named as the talks are confidential.

Pace of hiring by US firms slows in November

Wed, 12/06/2017 - 17:01
US companies continued to hire at a strong rate last month, but the pace slowed from the hurricane-inflated 2017 peak seen in October, payroll firm ADP said yesterday. Nearly every major segment of the economy added employees, including the biggest increase in manufacturing jobs on record, according to the report that is closely watched for hints of what is to come in the key government jobs report tomorrow. Total private employment rose by 190,000 in November, cooling from the blistering 235,000 pace in the prior month, according to the data. The gain was exactly as forecast by economists. Manufacturing employment surged by 40,000 positions, the biggest increase since the data was first compiled in 2002. Despite that gain, the total goods producing sector slowed, adding just 36,000 positions, the lowest since the summer, after rising by more than double that amount in October. Services employment rose to 155,000, slightly higher than the prior month. “The job market is red hot, with broad-based job gains across industries and company sizes,” Mark Zandi, chief economist of Moody’s Analytics, said in a statement. “There is a mounting threat that the job market will overheat next year.” The construction sector saw a rare dip, slipping 4,000 after a stunning 62,000 surge in the prior month boosted by post-hurricane reconstruction hiring in the wake of two major summer storms. Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said the reports of difficulty filling open positions could get worse.

Xiaomi plans to double revenue in 2018

Wed, 12/06/2017 - 17:01
XIAOMI aims to double overseas revenue in 2018 by expanding in areas such as India and Europe, as well as possible new business in the United States. The company is “seriously preparing” to enter the lucrative US market, Xiaomi chairman Lei Jun told a Qualcomm tech conference in the US yesterday. He said a further announcement would be made about the US plans. He said Xiaomi plans to invest heavily on research, its eco-system and new advanced manufacturing. The company has established a 12 billion yuan (US$1.8 billion) fund for the Internet of Things and new materials. Xiaomi’s global revenue is expected to jump 300 percent year on year in 2017 and about another 100 percent next year, Lei said on the sidelines of Qualcomm’s Snapdragon Tech Summit. Xiaomi has taken the No. 1 position in India, the world’s second largest market only after China and is one of the top five players in 12 overseas smartphone markets, including Russia, Greece and Singapore.

New measures to guard against bank liquidity risks

Wed, 12/06/2017 - 17:01
CHINA’S banking regulator announced new requirements yesterday for lenders to better guard the sector against liquidity risks. The China Banking Regulatory Commission (CBRC) introduced three new indicators into a draft revised rule on liquidity risk management that will take effect on March 1. The net stable funding ratio, one of the three new gauges, measures banks’ long-term stable funding to support business development, according to a CBRC statement. The ratio will apply to lenders with assets of no less than 200 billion yuan (US$30.2 billion). The high-quality liquid assets adequacy ratio, which evaluates whether banks have enough high-quality liquid assets to cover short-term liquidity gaps when under stress, will apply to lenders with assets below 200 billion yuan. The liquidity matching ratio, which applies to all lenders, gauges how well bank assets and liabilities are matched in maturity. All three ratios are required to stay no lower than 100 percent. The move can “help commercial banks improve their capability in liquidity risk management,” the statement said. It noted growing differences of various banks in business type and complexity, as well as “increasingly infectious liquidity risks in the banking system.” Interest rate liberalization, financial innovation and stronger inter-bank connections made China’s financial sector more vibrant but also prone to risks. Wang Zhaoxing, vice chairman of the CBRC, warned on Tuesday that liquidity risks were the largest threat to small and medium-sized banks. “China’s financial supervision will be increasingly stricter, with tougher punishment on market irregularities and imprudent operations,” Wang said at the annual meeting of China’s city commercial banks. The CBRC’s current rule on liquidity risk management only involves two indicators, namely the liquidity ratio and the liquidity coverage ratio. The former measures banks’ ability to repay their liquid liabilities with liquid assets. The latter, while similar to the newly introduced high-quality liquid assets adequacy ratio, only applies to banks with assets no less than 200 billion yuan. The addition of the Net Stable Funding Ration follows the new global capital rules known as Basel III, the CBRC said. To avoid short-term impact on bank business operations, the revised rule sets grace periods for the implementation of the high-quality liquid assets adequacy ratio and the liquidity matching ratio. The former ratio requirement should be met by the end of 2018, and the latter by the end of 2019.

Robot captures attention

Wed, 12/06/2017 - 17:01
People look at a robot with a heavy load during the world intelligent manufacturing summit in Nanjing, Jiangsu Province, yesterday. The three-day summit drew over 300 enterprises.

Google blocks YouTube from 2 Amazon devices

Wed, 12/06/2017 - 17:01
A rare public spat in the technology industry escalated on Tuesday when Google said it would block its video streaming application YouTube from two Amazon.com Inc devices and criticized the online retailer for not selling Google hardware. The feud is the latest in Silicon Valley to put customers in the crossfire of major competitors. Amazon and Google, which is owned by Alphabet Inc, square off in many areas, from cloud computing and online search, to selling voice-controlled gadgets like the Google Home and Amazon Echo Show. The stakes are high: many in the technology industry expect that interacting with computers by voice will become widespread, and it is unclear if Amazon, Google or another company will dominate the space. Amazon’s suite of voice-controlled devices has outsold Google’s so far, according to a study by research firm eMarketer from earlier this year. In a statement, Google said, “Amazon doesn’t carry Google products like Chromecast and Google Home, doesn’t make (its) Prime Video available for Google Cast users, and last month stopped selling some of (our sister company) Nest’s latest products. “Given this lack of reciprocity, we are no longer supporting YouTube on Echo Show and Fire TV,” Google said. “We hope we can reach an agreement to resolve these issues soon.” Amazon said in a statement, “Google is setting a disappointing precedent by selectively blocking customer access to an open website.” It said it hoped to resolve the issue with Google as soon as possible but customers could access YouTube through the Internet — not an app — on the devices in the meantime. The break has been a long time coming. Amazon kicked the Chromecast, Google’s television player, off its retail website in 2015, along with Apple Inc’s TV player. Amazon had explained the move by saying it wanted to avoid confusing customers who might expect its Prime Video service to be available on devices sold by Amazon. Amazon and Apple mended ties earlier this year when it was announced Prime Video would come to Apple TV. Not so with Google. In September, Google cut off YouTube from the Amazon Echo Show, which had displayed videos on its touchscreen without video recommendations, channel subscriptions and other features. Amazon later reintroduced YouTube to the device, but the voice commands it added violated the use terms and on Tuesday Google again removed the service.

E-tailing summit debuts in Hong Kong

Wed, 12/06/2017 - 17:01
THE Asian E-tailing (Electronic retailing) Summit debuted yesterday in Hong Kong, offering a one-stop platform for business professionals and online retail experts to examine the latest sourcing trends and market intelligence. A joint ceremony was held for the one-day summit and the SmartBiz Expo, both organized by the Hong Kong Trade Development Council. Speaking at the ceremony, Bernard Chan, Hong Kong’s under-secretary for commerce and economic development, said that organizing the two SME-focused events is timely given the business potential that will be unleashed by the Belt and Road Initiative. Chan also highlighted Hong Kong’s unique trading and logistics role, which is strengthened by the free flow of capital, goods and information, unparalleled trading and global supply-chain management services as well as its world-class logistics and telecommunications infrastructure. HKTDC Executive Director Margaret Fong said that the changing economic landscape and the evolving digital era pose challenges as well as offer business opportunities, especially for SMEs. “To help enterprises capture new opportunities, the Hong Kong Trade Development Council is pleased to launch the HKTDC SmartBiz Expo and the Asian E-tailing Summit to provide timely insights, inspiration, and a platform for action and interaction,” Fong said. Focusing on Asia, the summit sessions centered on three themes: digital consumption, cross-border e-commerce and social commerce, and omni-channel strategies, while examining the challenges and opportunities presented by e-tailing.

Ford to join Alibaba to sell cars via Tmall and ‘auto vending machines’

Wed, 12/06/2017 - 17:01
FORD Motor Co is expected to sign a deal with Alibaba Group Holding Ltd which may allow the US automaker to test selling cars to consumers in China through Alibaba’s online retail arm Tmall, as well as via a new “auto vending machine” store concept, according to a Ford source familiar with the matter. Representatives of Ford and Alibaba, including Ford Executive Chairman Bill Ford Jr and Ford CEO Jim Hackett, are expected to be in Hangzhou today to sign a letter of intent that outlines the scope of the new partnership. According to the source, who did not want to be named because he is not authorized to speak with reporters, the deal is intended to position the Dearborn, Michigan, automaker for an emerging Chinese marketplace where more cars could be sold online. The partnership would be part of Ford’s effort to overhaul its China strategy to revive the growth momentum it has lost in recent months. Alibaba spokeswoman Crystal Liu declined to comment. The source said the proposal could mean that cars purchased online are delivered to buyers by franchised Ford retail stores and would be maintained and repaired by them. But Ford could also use Tmall’s new retail concept called the “Automotive Vending Machine,” a multi-story parking garage that partly resembles a giant vending machine to sell directly to consumers, the source said. Those cars could come directly from Ford or from its dealers but the details are still to be worked out, the source added. According to Alibaba, consumers can use their phones to browse through the cars garaged in the store and choose to either immediately buy one or test drive it. The vehicle would be delivered to them on the ground floor. The model allows shoppers with good credit to purchase their new ride with a 10 percent down payment and then make monthly payments for the car purchase through Alibaba’s affiliate Alipay, according to Alibaba. Ford believes dealers would likely agree to this direct retailing model because they still get to service cars sold through Tmall, the Ford source said. The move, though, could be potentially problematic for dealers, some industry experts said. “When online sales and direct sales volume was small that’s one thing. But if this format gained steam, it would definitely impact dealers,” said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight. “Retail innovation is great, but it is by its nature disruptive and can’t keep everybody happy.” The danger is that the dealers lose out not only on a lot of car sales but also the potentially lucrative auto financing aspect of their traditional business. Direct selling by auto brands is not always possible in many markets around the world. In the United States, for example, because of franchise auto dealer operators’ political clout, except for a small number of states, direct selling is largely not possible. The source said Ford is “behind in using big data” to monitor sales trends and effectively market its cars and the move to online sales as well as the access to Tmall’s massive database of information on consumers would help it to catch up. Online auto sales volumes are currently limited in China because car buyers want to be able to see, touch and drive cars before buying them, said Zhang. The ability to test drive a car ordered online could change that. Ford’s China sales have been sluggish in recent months in part because it has failed to catch on to rapidly changing trends in the marketplace, including the rise of entry-level cars popular in smaller cities, where demand is booming. Ford’s sales in the first 10 months of this year were 938,570, a decline of 5 percent from the same period in 2016, against a 2.2 percent gain to 3.13 million for hometown rival General Motors.

Google blocks YouTube from 2 Amazon devices

Wed, 12/06/2017 - 17:01
A rare public spat in the technology industry escalated on Tuesday when Google said it would block its video streaming application YouTube from two Amazon.com Inc devices and criticized the online retailer for not selling Google hardware. The feud is the latest in Silicon Valley to put customers in the crossfire of major competitors. Amazon and Google, which is owned by Alphabet Inc, square off in many areas, from cloud computing and online search, to selling voice-controlled gadgets like the Google Home and Amazon Echo Show. The stakes are high: many in the technology industry expect that interacting with computers by voice will become widespread, and it is unclear if Amazon, Google or another company will dominate the space. Amazon’s suite of voice-controlled devices has outsold Google’s so far, according to a study by research firm eMarketer from earlier this year. In a statement, Google said, “Amazon doesn’t carry Google products like Chromecast and Google Home, doesn’t make (its) Prime Video available for Google Cast users, and last month stopped selling some of (our sister company) Nest’s latest products. “Given this lack of reciprocity, we are no longer supporting YouTube on Echo Show and Fire TV,” Google said. “We hope we can reach an agreement to resolve these issues soon.” Amazon said in a statement, “Google is setting a disappointing precedent by selectively blocking customer access to an open website.” It said it hoped to resolve the issue with Google as soon as possible but customers could access YouTube through the Internet — not an app — on the devices in the meantime. The break has been a long time coming. Amazon kicked the Chromecast, Google’s television player, off its retail website in 2015, along with Apple Inc’s TV player. Amazon had explained the move by saying it wanted to avoid confusing customers who might expect its Prime Video service to be available on devices sold by Amazon. Amazon and Apple mended ties earlier this year when it was announced Prime Video would come to Apple TV. Not so with Google. In September, Google cut off YouTube from the Amazon Echo Show, which had displayed videos on its touchscreen without video recommendations, channel subscriptions and other features. Amazon later reintroduced YouTube to the device, but the voice commands it added violated the use terms and on Tuesday Google again removed the service.

Smartphone payment creates lighter purse

Wed, 12/06/2017 - 17:01
CHINESE consumers say they feel perfectly comfortable leaving home with cash-empty pockets and relying on smartphones to pay for purchases and services. That confidence underpins the rapid development of electronic payments in China. “Mobile payment enables me to go out with a lighter purse and saves lots of time and trouble,” said Liu Shuang, a college student in Shanghai. “I can’t even remember clearly the last time I used cash to buy something.” A report produced by Tencent, Renmin University of China and French research firm Ipsos found that 84 percent of Chinese have no qualms about the cashless society. Indeed, there are now some 520 million people using mobile payment systems, according to Alibaba financial affiliate Ant Financial. “The development and application of financial technology is an inevitable trend that will open new opportunities for capital markets in China,” said Jiang Yang, vice chairman of the China Securities Regulatory Commission. In the second quarter of this year, Chinese banks handled 8.6 billion payments from mobile services, up 40.5 percent from a year earlier, according to the People’s Bank of China. The combined value of mobile payments jumped 33.8 percent to 39.2 trillion yuan (US$5.9 trillion). “Mobile payment transactions by now have surpassed 158 trillion yuan,” President Xi Jinping told the recent meeting of the Asia-Pacific Economic Cooperation group. Although no one disputes that mobile payments are the face of the future in consumerism, they still have some way to go. Nearly 80 percent of global retail sales are still paid for in cash, according to data from Mastercard. For older people, in particular, paying electronically can be fiddly if not completely outside their technical abilities and comfort zones. “Cash is what I have used to pay with for decades and it seems unnecessary to change,” said Dong Guohui, who retired from work nine years ago. “I rarely use smartphones because they are too complex and of little use to me. It’s even hard to remember passwords. Also, I wouldn’t feel secure putting money on a phone to make payments.” Security indeed does remain a primary talking point in the payments industry. “Security measures are important because payments involve consumers’ personal property and is one of their primary concerns,” said Ling Hai, co-president of Mastercard Asia-Pacific. More companies are focusing on developing technologies to improve security. Biometric identification and artificial intelligence are among the most popular areas of research. “Traditional passwords are both unsafe and difficult to remember,” Ling said. “Our research shows that the most popular password globally is ‘password,’ followed by ‘12345678.’ The better way is to make systems remember and recognize something people are born with, such as fingerprints, rather than to force consumers to remember something they fabricate.” As part of the expanding financial market deregulation, the government is expected to liberalize market access in the payments industry in the near future, with foreign financial companies likely to gain more access to the sector. “China will open up the payments industry in a balanced and orderly way,” Fan Yifei, deputy governor of the People’s Bank of China, told the Sixth China Payment and Clearing Forum. “The government will significantly ease market access and push forward the opening of e-payments.” China will give overseas-funded financial institutions “pre-establishment national treatment,” which means equal treatment with domestic companies, Fan said. As the use of mobile payments expands, so too the competition to develop and adopt new technologies. Companies are actively bringing innovation to the sector. Past breakthroughs have included QR code scanning, now the most popular way to pay in China; “near field communication” payments such as Apple Pay, which can complete a payment with just proximity to a machine; and biometric payment systems, which can recognize voices, faces or other individual human characteristics. Technologies that can recognize a user by an individual trait can be combined with artificial intelligence to improve both convenience and safety for consumers. “Innovation in retail payments can offer tangible benefits to consumers beyond convenience,” said Jerome Powell, a member of the Fed Board of Governors nominated to serve as next chairman of the US central bank. “Improvements in security, such as our ability to authenticate consumers and detect fraudulent transactions, are also possible through innovation.” Mastercard’s Ling said partnerships are important in seizing the opportunities of the cashless society. Alliances between various players in the sector are increasing. Restaurants, convenience stores and shared bike operators, among others, are targets of payment companies seeking to build new partnerships. WeChat Pay and Alipay have set up partnerships with bus systems in major cities. Metro lines, railways and taxis are cooperating with Tencent or Alibaba on systems that allow users to pay with smartphone applications. Shanghai Metro is collaborating with Alibaba to bring voice and facial recognition technologies to the world’s longest rapid-transit system. Alibaba is actively working on a mobile payment system for the Beijing subway, and the Guangzhou metro system formed an alliance with WeChat Pay in November. But for consumers, it all boils down to cash or cashless daily lives. “The biggest competition is not among digital payment companies but with traditional cash payments,” said Ling.

Aviation industry net profits set to take off in 2018

Tue, 12/05/2017 - 17:01
LED by US airlines, net profits in the aviation industry are set to rise by some 11 percent in 2018, the International Air Transport Association said yesterday as it presented economic forecasts for the industry. According to the forecast by the industry’s global trade association, combined net profits will hit US$38.4 billion, from a revised US$34.5 billion in 2017, with US carriers weighing in with almost half. “Strong demand, efficiency and reduced interest payments will help airlines improve net profitability in 2018 despite rising (operating) costs,” said IATA, whose 280 members account for more than three quarters of global air traffic. “These are good times for the global air transport industry. Safety performance is solid. We have a clear strategy that is delivering results on environmental performance,” said IATA director general and CEO Alexandre de Juniac. “Airlines are achieving sustainable levels of profitability,” added de Juniac, while highlighting the challenges of rising fuel costs and well as labor and infrastructure expenses. Although passenger numbers are on the rise, to hit 4.3 billion next year, with passenger business revenues set to grow 9.2 percent to US$581 billion, IATA warned that rising costs overall, notably on higher fuel prices, will pose the biggest challenge to profitability in 2018. IATA expects oil prices to average US$60 for a barrel of Brent Crude — a rise of 10.7 percent on this year, taking oil-related costs up from 18.8 percent to 20.5 percent. Accelarating labor costs will see wages take a 30.9 percent chunk meanwhile next year. De Juniac urged governments to “raise their game” and do more to ensure infrastructure can cope with higher aviation demand. “Governments are not meeting their responsibility to provide sufficient infrastructure for the industry to meet demand,” de Juniac said. “Aviation is the business of freedom and a catalyst for growth and development,” he said, adding the industry benefits to the economy include 2.7 million direct jobs and support for 3.5 percent of global economic activity. By region, North America is forecast to lead the way on performance with net profits in 2018 of US$16.8 billion, up from US$15.6 billion, followed by Europe rising from US$9.8 billion to US$11.5 billion. Asia is set to post an increase(Reuters) from US$8.3 billion to US$9 billion. Africa, in contrast, is likely to turn in albeit stable collective net losses of US$100 million.

Colombo Financial City to arise

Tue, 12/05/2017 - 17:01
Pumps dredge sand to reclaim land at the site of a Chinese-funded US$1.4 billion reclamation project in Colombo yesterday. Half of the reclamation project to build Colombo Financial City, previously known as Colombo Port City, has been completed, with Sri Lanka hoping to turn it into an international financial center with special laws protecting foreign investment.

Nissan eyes field tests for ‘robot taxis’ early 2018

Tue, 12/05/2017 - 17:01
Nissan said yesterday it would begin field tests for driverless “robot taxis” early next year as its rivals around the world step up self-driving technologies.The car giant and Japanese mobile game company DeNA have jointly developed the new driverless vehicle services, dubbed Easy Ride.They plan to carry out the test with public participation for two weeks in March in Yokohama, southwest of Tokyo, using two electric autonomous vehicles based on its Leaf, a Nissan spokesman said, with an aim of rolling out the service by 2020.Under their plan, customers can use a mobile app to call the robo-vehicle, set the required destination and pay the fare.They also plan to support multiple languages and use a remote monitoring system to ensure passenger safety.The number of foreign visitors to Japan has hit record highs ahead of the 2020 Olympics in Tokyo.Auto giants are racing to get autonomous vehicles in gear, and their competition includes Silicon Valley innovators Apple, Google, Tesla, and Uber.Major carmakers have promised to have self-driving models rolling off assembly lines as early as 2020.Last week, General Motors said it was aiming to overtake its rivals by launching a large-scale fleet of self-driving taxis by 2019.

iPhone X unavailability impacts Apple

Tue, 12/05/2017 - 17:01
THE unavailability of the iPhone X during the three months ended October pulled down the market share for Apple’s iPhones in some key regions, while phones running on Google’s Android recorded higher sales, data from a research firm showed yesterday. The market share for Apple Inc’s iPhones, as measured by sales of its iOS mobile operating system, fell to 32.9 percent in the United States, from 40.6 percent a year ago, Kantar Worldpanel ComTech’s data showed. In an analysis of smartphone operating system sales for the quarter ended October, Kantar also said iOS market share slipped in Japan and key European markets, while Android clocked gains in most markets. The iPhone X, the 10th anniversary edition of the smartphone, was launched in early November, more than a month after the iPhone 8’s launch on September 22. “It was somewhat inevitable that Apple would see volume share fall once we had a full comparative month of sales taking into account the non-flagship iPhone 8 versus the flagship iPhone 7 from 2016,” said Dominic Sunnebo, global business unit director at Kantar. Android, Google’s open-source platform, is the leader in mobile operating systems and is adopted by a majority of smartphone makers. In the October quarter, Android's market share rose to 66.2 percent in the US from 58 percent a year ago. Android also gained in other countries including Japan, Britain and Germany.

COMAC wins deal for 55 C919 jets from ICBC Leasing

Tue, 12/05/2017 - 17:01
THE Commercial Aircraft Corp of China yesterday won a contract for 55 C919 jets from ICBC Leasing, the leasing unit of the Industrial and Commercial Bank of China. The latest deal brings total orders for the first domestically developed single-aisle 150-seat passenger jet to 785. The deal signed yesterday also made ICBC Leasing as the biggest customer of the narrow body aircraft with a total of 100 orders. COMAC has so far secured orders from 27 foreign and domestic customers, including Air China and leasing company GE Capital Aviation Service. Overseas orders, which account for 10 percent of the total, include Germany’s PuRen Airlines and Thailand’s City Airways, as well as carriers from Asia-Pacific and Africa.

Apple halts Xiaomi in tablet registration

Tue, 12/05/2017 - 17:01
APPLE Inc succeeded yesterday in preventing Chinese smartphone maker Xiaomi Inc from registering its “Mi Pad” tablet computer as an EU trademark because the name was too similar to Apple’s “iPad”. The European Union’s second-highest court, the General Court, ruled that Mi Pad should not be registered as a trademark because consumers were likely to be confused by the similarity of the signs. Xiaomi’s Mi Pad and Apple’s iPad are both tablet computers. “The dissimilarity between the signs at issue, resulting from the presence of the additional letter ‘m’ at the beginning of ”Mi Pad“, is not sufficient to offset the high degree of visual and phonetic similarity between the two signs,” the Court said in a statement. Xiaomi filed an application in 2014 with the EU Intellectual Property Office to register Mi Pad as an EU trademark. Apple subsequently lodged a complaint that the EUIPO upheld in 2016 on the grounds that consumers would think Mi Pad was a variation on Apple’s iPad trademark. The court agreed with the EUIPO’s decision and said English-speaking consumers were likely to understand the prefix “mi” as meaning “my” and therefore pronounce the “i” of Mi Pad and iPad in the same way.

US tax cuts on Chinese economy two-sided

Tue, 12/05/2017 - 17:01
A tax overhaul in the United States will bring two-sided effects to the Chinese economy, according to analysts. Tax cuts will likely bolster household consumption and private investment in the US, lifting demand for imports from countries including China, according to Sun Lijian, an economist at Fudan University. On the other hand, lower corporate taxes could encourage companies to bring offshore profits back home and boost domestic investments, possibly resulting in capital outflows from China, according to Shenwan Hongyuan Securities. The US Senate on Saturday morning narrowly passed the Republican bill to overhaul the tax code, moving one step closer to the first major legislative victory of the Trump administration and congressional Republicans. The Republican-led Senate approved the legislation, called the Tax Cuts and Jobs Act, by a vote of 51-49. One notable change in the tax bill is a reduction in the corporate tax rate from 35 percent to 20 percent. The cuts are good news for Chinese exporters, who will help the economy remain on solid footing, boosting profits of listed firms on China’s stock market, Sun said. But higher growth prospects in the United States could also speed up the monetary tightening process by the Federal Reserve, putting pressure on China’s own monetary policy, which could negatively impact the A-share market, he said. “The external impact of tax policy change in the world’s largest economy cannot be overlooked,” China’s Vice Finance Minister Zhu Guangyao said at a recent forum. Zhu said China should actively respond to the tax cuts, setting policies on the basis of coordination with other countries to boost overall labor productivity and help people become better off. According to Liu Shangxi, head of Chinese Academy of Fiscal Sciences, China should continue to carry out its value-added tax reform in response to the US tax bill. As the most significant tax overhaul for two decades, VAT is replacing business tax which has been in place for 60 years, streamlining procedure, and avoiding repetitive taxing. It was piloted in Shanghai in 2012 and expanded nationwide in May 2016. By the end of September, more than 1 trillion yuan (US$150 billion) had been saved. China should further to streamline VAT brackets to encourage fair market competition, which in a sense reduces taxes for many enterprises, Liu said.

China’s booming coffee business brewing more cups for Starbucks

Tue, 12/05/2017 - 17:01
IN Wu Qiong’s small cafe in downtown Shanghai, coffee beans nestle in glass jars on the bar while various brews bubble away behind the counter. The cafe — one of thousands of trendy, artisan coffee shops in the city — reflects a growing cafe culture in China that’s driving growth for chains like Starbucks Corp and attracting more competition. “There are many more choices for consumers in the coffee market here now,” said Wu, 35, who set up the store with her boyfriend this year, the couple’s second outlet. “People can choose chains or go for specialist coffee stores.” Starbucks dominates in China and is growing fast in the market, while in the United States it comes under pressure from a “third wave” of boutique coffee sellers and cheaper rivals. Executive chairman Howard Schultz, speaking at the launch of Starbucks’ first overseas “Reserve Roastery” — an opulent flagship store with gourmet coffees and a bakery — said China was on track to be “bigger, more powerful and more significant” than the firm’s US business. “With the rising middle class and the opportunity in China, the market is going to be much larger here,” he said, adding Starbucks was looking to hit 10,000 outlets in China within a decade, catching up with the United States in terms of stores. The firm held a 54.8 percent share of China’s 25.2 billion yuan (US$3.81 billion) specialist coffee shop market last year, far ahead of rivals like McDonald’s Corp’s McCafe and Whitbread Plc’s Costa Coffee, Euromonitor data show. Unlike in the United States, Starbucks’ challenge in China has been winning over traditional tea drinkers to coffee, rather than fending off local rivals. That could be changing. “Right now we notice an increasing number of small brands and independent coffee shops. They are registering explosive growth rates,” said Shanghai-based Euromonitor analyst Yu Limin. Growing cake Shanghai alone has an estimated 6,500 coffee houses, with small chains, independent stores and bakeries battling for a slice of a market that Mintel says could grow to 79 billion yuan by 2022 from 60 billion yuan this year. Convenience stores, which already offer hot food popular with breakfast crowds, are also rolling out coffee. “There are a lot of new players and the cake is getting bigger,” said Lawrence Ge, founder of Single Patch Coffee, who runs coffee workshops and cafes in Shanghai and Suzhou. International coffee chains are now looking to get in on the act, too — despite Starbucks having a big head start. Peet’s Coffee, a craft chain that rivals Starbucks at home, opened its first China store last month, and has brought in local help from investment firm Hillhouse Capital and Sam Su, ex-China head of Yum Brands Inc, who drove impressive growth for KFC and Pizza Hut in China. “China is top of my priorities for 2018,” Pascal Heritier, chief operating officer of Italian coffee company Massimo Zanetti, told Reuters, adding the firm, which sells Boncafe and Segafredo coffee, was in talks with local partners about expanding its presence. “It’s not only for us, but the whole industry. It’s something that is booming... So for actors in the coffee industry, China will be a country to look at in the future.” Craft coffee Starbucks itself is doubling down on China, where in the latest quarter it saw 8 percent same-store sales growth and said it would buy out its joint venture partner in east China for US$1.3 billion. As well as its new Shanghai coffee “roastery”, Starbucks has rolled out higher-end coffee bars in China, is looking to improve its food offering, and has leveraged popular mobile payment platforms from Alibaba Group Holding Ltd and Tencent Holdings Ltd. That premium push may be too late to win back consumers like Zhou Hanwen, a market analyst in Shanghai who says she’s a “serious coffee user”, but has switched from Starbucks’ lattes to smaller, trendy coffee houses. “I like quieter venues and so usually go to rather arty, yuppie places,” she said, while sipping a brew at downtown Mellower Coffee, which has coffees with names like “sweet little rain” — an Americano with a “cloud” of candyfloss. Zhou added she also now more often makes coffee at home — another trend analysts say is challenging physical stores. For now at least, China’s developing cafe culture is likely to be more a boost than burden for big names like Starbucks. “There’s lots of competition, there always has been,” said Schultz. “The market is very large and the competition will survive, we’re not thinking about them.”

Ma warns foreign firms to obey rules

Tue, 12/05/2017 - 17:01
JACK Ma, chairman of China’s Alibaba Group Holding, has warned foreign tech firms wishing to enter the China market to abide by its laws. Speaking at the fourth World Internet Conference yesterday in the east China town of Wuzhen, Ma said foreign companies “are determined to come. Follow the rules and laws and if you’re unhappy, leave. This is not a market (where) you can come and go.” The conference concluded yesterday after three days of discussions and exhibitions of cutting-edge Internet products. Government representatives, heads of international organizations, experts, scholars, and entrepreneurs attended 20 forums, displaying their achievements in innovation and discussing means of cooperation. Well-known tech companies from around the world, including Apple, Alibaba, and Huawei, released their latest products at the conference. Two reports were also issued at the conference, covering the development of the Internet around the world and in China. According to the reports, China’s digital economy reached 22.58 trillion yuan (about US$3.4 trillion) in 2016, ranking second globally and accounting for 30.3 percent of the national GDP. As of June 2017, there were 3.89 billion online users around the world, of which 751 million were in China, the most of any country worldwide. The conference attracted the heads of Google and Apple for the first time to hear China pledge to open up its Internet. “I’d compliment the Chinese government in terms of leadership on using data,” Facebook Vice President Vaughan Smith said yesterday. “The Chinese government, the Cyberspace Administration of China and the Ministry of Industry and Information Technology are doing a fabulous job.” Apple Chief Executive Tim Cook, speaking at the opening of the conference on Sunday, said: “The theme of this conference, developing a digital economy for openness and shared benefits, is a vision we at Apple share.”

Ford’s China revenue to rise 50%

Tue, 12/05/2017 - 17:01
Ford Motor Company said yesterday the company expects to boost China revenue by 50 percent by 2025 compared with this year through further expanding domestic production and launching over 50 new vehicles in the Chinese market.To support the aggressive growth, Ford said more than 15 electrified vehicles and eight sport-utility vehicles will be introduced to China.The automaker will focus on three key areas in the next phase of its China expansion strategy — new-energy vehicle, SUV and connected vehicle, Ford said at a press conference in Shanghai yesterday.“China is not only the largest car market in the world, it’s also at the heart of electric vehicle and sport-utility vehicle growth and the mobility movement,” said Bill Ford, executive chairman of Ford Motor Company. “We now have a chance to expand our presence in China and deliver even more for customers, our partners and society.”Ford plans to assemble five more vehicles domestically starting in 2019, including a Lincoln premium SUV and an electric small SUV.“Producing more vehicles for China locally allows us to improve the benefits for our customers, our partners and our bottom line,” said Peter Fleet, president of Ford Asia Pacific. As well as the 15 new electrified vehicles to be launched by 2025, Ford said its joint venture with Anhui Zotye Automobile Co —Zotye-Ford Joint Venture — will unveil a separate range of electric vehicles under a new brand.“We will meet the growing desire and need in China for new-energy vehicles from Lincolns to Ford cars and SUVs to an all-new electric vehicle brand,” said Jason Luo, chairman and chief executive officer of Ford China. “Each of them will be .... backed by an ecosystem that makes charging, sharing and servicing easy.”

Chinese firms need specialist expertise

Tue, 12/05/2017 - 17:01
CHINESE companies will continue to see rising demand for bilingual talent, experts in Internet technology and human resources in 2018 amid globalization and China’s Internet Plus strategy. People who move to new jobs can expect an average salary increment of 10 to 20 percent while those who stay in their jobs can see a 5 to 8 percent rise in China in 2018, according to a report by Robert Walters, a global recruitment consultancy. This year is likely to see a generally steady salary increase with an average 15 to 20 percent rise, but cooling from a rally last year. With China being the biggest e-commerce market globally with rapid development in digital payments, automation, big data and artificial intelligence under the Internet Plus strategy, employees in information technology companies who change jobs may see a 12 to 18 percent jump in salary, according to the report yesterday. The Belt and Road initiative and the Go Globally strategy are also driving Chinese companies to pursue bilingual professionals who have experience in international companies and understanding of local markets. “The demand for bilingual talents is expected to rise sharply by over 50 percent in several years,” said Sean Li, associate director of the Shanghai branch of Robert Walters.

Shares’ fall sees index end lower

Tue, 12/05/2017 - 17:01
SHANGHAI stocks fell again yesterday, led by drops in non-ferrous metal shares and computer companies. The Shanghai Composite Index shed 0.18 percent to close at 3,303.68 points. Non-ferrous metal shares such as Sanxiang Advanced Materials Co Ltd, Shenghe Resources Holding Co Ltd and TDG Holding Co Ltd all fell by over 8 percent. Computer shares were also among the biggest decliners, with Hunan Copote Science & Tech Co Ltd losing 9.98 percent to 16.23 yuan and Shanghai Wondertek Software Co Ltd shedding 7.76 percent. Bohai Securities said the market was adjusting after earlier retreat of weighted stocks. The lifting of the ban on a large number of non-tradable stocks in December also has influenced the stock market negatively.

Digital use to transform China economy

Mon, 12/04/2017 - 17:01
THE increasing adoption of digitalization in China could lead to a dramatic transformation of the Chinese economy, according to a latest report by McKinsey Global Institute. Creative destruction would sweep across almost all economic sectors and enhance efficiency as well as boosting productivity, which would eventually boost the global competitiveness of Chinese companies, it said in the “Digital China” report released yesterday. “The creative destruction brought by digital technologies is likely to be more rapid and on a relatively larger scale in China because of inefficiencies in traditional sectors and massive potential for commercialization. Digitization can make China’s economy more dynamic, and enable more Chinese businesses to compete globally and even export “Made In China” digital business models,” said McKinsey Global Institute senior fellow Jeongmin Seong. The report identifies three factors that are ripe for China’s digitalization process: a large and young Chinese market suitable for rapid commercialization of digital business models; a rich digital ecosystem; and the government allowing space for digital companies to experiment. China’s digitalization pattern follows that in other countries. In China, the United States, and the European Union, the information and communications technology, media, and finance sectors are the most digitized. Agriculture, local services, and construction tend to be the least digitized in all three regions. But China’s digital journey also differentiates the country from its western counterparts, the report said. In China the digitalization process of consumer-focused industries such as retail and entertainment is ahead of other sectors than they are in either the EU or the US.

Sluggish view halts rally again

Mon, 12/04/2017 - 17:01
Extremely sluggish sentiment among buyers took over Shanghai's new housing market again, terminating a two-week rally that pushed seven-day sales very close to the 100,000-square-meter threshold.The area of new homes sold, excluding government-subsidized affordable housing, fell 14.2 percent to around 85,000 square meters last week, Shanghai Centaline Property Consultants Co said in its weekly assessment yesterday.“Weekly transactions stayed below the 100,000-square-meter threshold for the ninth consecutive week with only Qingpu and Songjiang districts registering sales of more than 10,000 square meters,” said Lu Wenxi, senior manager of research at Centaline. "Centrally located areas — for instance the former Jing’an and Huangpu districts — suffered zero sales due to long-term inadequate supply.”Citywide, not a single unit was released locally, following some 50,000 square meters' of supply launched during the previous week, Centaline data showed.The average cost of new homes edged up 0.3 percent week on week to 49,752 yuan (US$7,514) per square meter, hovering around the 50,000 yuan per square meter barrier for the sixth straight week.All projects making it into the top 10 list cost above 30,000 yuan per square meter, with three recording an average price of over 50,000 yuan.An Evergrande project in outlying Songjiang continued to be the most sought-after development after unloading 3,838 square meters, or 21 units, for an average price of 34,949 yuan per square meter. A project in downtown Xuhui District, which cost 96,166 yuan per square meter, was the most expensive according to Centaline data.

Concrete firms face quandary

Mon, 12/04/2017 - 17:01
CHINA’S concrete producers are facing a quandary of more expensive raw materials amid tighter environmental rules and intense competition which is pushing prices lower, experts said at the World of Concrete Asia 2017 exhibition in Shanghai yesterday. Prices of cement, sand and gravel – raw materials in concrete – have surged over the year so that one ton of cement now sells at over 500 yuan (US$76) in China, up from around 340 yuan one year ago, said Kevin Gan, president of Ambuild Innovative Road Materials Inc, a domestic concrete and coatings producer. Meanwhile the aggregate price of sand and gravel is between 130 yuan and 140 yuan per ton in Shanghai, “jumping over 90 percent from the beginning of the year,” said Li Hua, chairman of caggregate.com, a domestic sand and gravel market consultancy. But producers are paid 800 yuan for paving one square meter of pervious concrete while two years ago it cost 1,500 yuan per square meter.

HK’s housing deals fall

Mon, 12/04/2017 - 17:01
HONG Kong’s Land Registry yesterday said that 7,601 sale and purchase agreements for all building units were recorded in November, up 7.6 percent on October. But the figure was down 11.8 percent compared to the same month last year. The total consideration for sale and purchase agreements in November was HK$66.7 billion (US$8.55 billion), up 24.3 percent on October but down 6.4 percent year on year.

Eye on cruise ship tourism

Mon, 12/04/2017 - 17:01
CRUISE ships will be the focus of a marine exhibition to be held in Shanghai tomorrow as cruise companies eye the huge and promising Chinese market for cruise tourism. The four-day Marintec China 2017 exhibition will highlight luxury cruise ships as well as developments in ocean engineering and shipping, said Xing Wenhua, president of Shanghai Society of Naval Architects and Ocean Engineers. China is one of the largest markets leading the growth and its demand for cruise ships is growing at 30 percent annually, Michael Duck, president of foreign committee of Marintec China, said. China is now the world’s second largest cruise ship market by passengers which totaled 4.5 million last year, up 84 percent from a year ago. A total of 1,010 cruise ships visited China last year, up 61 percent year on year.

HK crowned as world’s most costly office location

Mon, 12/04/2017 - 17:01
HONG Kong has replaced London's West End as the world's most expensive office location as costs in the UK capital fell amid currency depreciation, global property consultancy Cushman & Wakefield said in its latest research. Limited availability and strong demand from Chinese mainland companies has pushed staff accommodation costs in Hong Kong up 5.5 percent to US$27,431 per workstation per annum, according to Cushman & Wakefield’s annual Office Space Across The World report, which surveys occupancy costs across 215 office markets in 58 countries worldwide. Costs in London dropped 19 percent from 2016 to US$22,665 per workstation per annum, still twice as expensive as Paris or Frankfurt. Tokyo in Japan grabbed the No. 3 ranking where it cost enterprises an average US$18,111 per workstation per annum to accommodate staff. Beijing, at US$11,323 per workstation per annum, ranked No. 12 on the list. “In the Chinese mainland, Beijing remains the most expensive office market despite generally stable rental growth over the 12 months ending September 2017,” said James Shepherd, China's managing director of research for Cushman & Wakefield. “A massive supply wave set to hit first-tier Chinese cities through 2020 should keep rental prices in check though occupiers may well look to leverage the prevailing opportunities to renegotiate or upgrade premises at cost-effective rates.” Around the globe, the average annual cost per workstation climbed 1.5 percent over the last 12 months, mainly driven by the Americas where costs rose by 4.2 percent, and the Asia Pacific, up 3.4 percent. EMEA (Europe, Middle East and Africa) saw a fall of 1.3 percent. Currency fluctuations have produced some of the biggest changes in the report’s rankings, the consultancy said. Along with rising occupancy costs, workplace density — the number of workers within a given space — has also risen globally in 2017.

Deal throws up questions on healthcare costs

Mon, 12/04/2017 - 17:01
CVS Health Corp’s proposed purchase of Aetna Inc will change the way many major US corporations buy health coverage for employees and raise new questions over the cost of those benefits, benefit consultants said. CVS on Sunday said it planned to buy Aetna for US$69 billion. Most national companies employing more than 20,000 people keep their prescription drug benefits separate from medical coverage. They believe they are paying less by shopping those contracts around to competitors within each industry. CVS and Aetna argue that their deal will lower healthcare costs for employees of their large corporate customers, giving the company greater clout to negotiate down drug prices and better manage the use of those medicines. “It’s the lower overall cost of therapy. It’s not just the drugs. It’s not just the PBM (prescription benefit manager). It’s the overall outcome for the patient,” Aetna CEO Mark Bertolini told Reuters in an interview. But employers are expected to scrutinize that kind of claim closely, according to benefit consultants in touch with hundreds of large employers. So far, they are taking a “wait-and-see attitude as to whether there is a direct favorable impact on their pricing” of a CVS-Aetna combination, said Jim Winkler, senior vice president for health at Aon, part of Aon Plc. Last year, large employers’ concerns over two proposed mergers between health insurers Aetna and Humana Inc and between Anthem Inc and Cigna Corp were a major factor in US antitrust regulators blocking the deals. Industry experts say that is less likely to happen with CVS-Aetna because of their minimal direct overlap, historically the main concern for customers. “By and large they are in separate places in the value chain, so it’s more of a vertical integration,” said Winkler. CVS is the No. 2 US provider of prescription drug benefits and competes with larger rival Express Scripts Holding Co. Aetna is the nation’s No. 3 health insurer, competing against UnitedHealth Group Inc, Anthem and Cigna to provide coverage for doctor and hospital visits. A combined CVS-Aetna will reorder those options, leaving Express Scripts as the only standalone company big enough to easily provide pharmacy benefits to top employers. Aon’s Winkler expects this will lead large companies to turn to their insurer for pharmacy benefits the same way mid-sized companies have. About 63 percent of large corporations use a separate pharmacy benefit company, consultant Mercer’s 2016 employer survey found. In scale, CVS and Aetna offer a much bigger pharmacy benefits manager than UnitedHealth, which expanded its OptumRx business with the US$13 billion purchase of Catamaran in 2015. Anthem in October said it would expand its own pharmacy benefits business, and hired CVS to help do so. That partnership could be thrown into jeopardy by the new Aetna agreement, health industry analysts said. Insurers say combining the two benefits saves money. Large employers who combine the benefits under one insurer have begun to demand insurers hit a specific dollar figure of medical cost savings per member, per year, said David Dross, national pharmacy practice leader at Mercer, part of Marsh & McLennan Co.

UK eyes EU anti-money laundering rules on Bitcoin

Mon, 12/04/2017 - 17:01
BRITAIN wants to increase regulation of Bitcoin and other digital currencies by expanding the reach of European Union anti-money-laundering rules that force traders to disclose their identities and report suspicious activity. With demand for Bitcoin surging, fueling a 1,000 percent rally in its value so far this year, the British Treasury said it expected negotiations over changes to the EU rules would conclude later this year or in early 2018. Stephen Barclay, economic secretary to Britain’s Treasury, told parliament in a notice dated Sunday — but only reported by media yesterday — that the amendments “bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation.” That would mean those companies would be overseen by national competent authorities, the statement said. The main US derivatives regulator said on Friday it would allow CME Group Inc and CBOE Global Markets Inc to list Bitcoin futures contracts, opening the door to added regulation. Australia has also said it would strengthen its money-laundering laws by bringing Bitcoin providers under the government’s financial intelligence unit.

Gucci confirms probe for tax evasion

Mon, 12/04/2017 - 17:01
ITALIAN fashion giant Gucci yesterday said police raided its offices over suspected tax evasion, confirming a report in the Italian press. The Milan public prosecutor suspects the fashion house of declaring several years worth of Italian sales in Switzerland, and saving around 1.3 billion euros (US$1.5 billion) in domestic tax, La Stampa daily said. The investigation is reportedly based on information from a former senior Gucci employee who has since left the company, which is part of French luxury group Kering. La Stampa said financial police had spent at least three days searching Gucci’s new, ultra-modern Milan headquarters and also other offices. “With respect to an article concerning an audit by the local tax police conducted at Gucci’s offices in Florence and Milan published in an Italian newspaper today, Gucci confirms that it is providing its full cooperation to the respective authorities and is confident about the correctness and transparency of its operations,” Gucci said in a statement. Four years ago, fellow Italian fashion behemoth Prada had to pay 470 million euros to the Italian taxman after it declared a decade’s worth of home revenue abroad.

Bitcoin falls from record high to under US$11,000

Mon, 12/04/2017 - 17:01
BITCOIN dipped back under US$11,000 yesterday, coming off a record high just shy of US$11,800 it hit on Sunday after a surge from under US$1,000 at the start of the year. The cryptocurrency, which trades 24 hours a day and seven days a week, climbed as high as US$11,799.99 on the Luxembourg-based Bitstamp exchange at around 2100 GMT on Sunday. It was not clear what caused the move higher over the weekend other than new investors joining the upstart market.

Facebook to add 800 jobs in London

Mon, 12/04/2017 - 17:01
FACEBOOK opened its new London office yesterday and said it would add another 800 jobs in the capital next year, underlining its commitment to Britain as the country prepares for Brexit. The investment, which makes London the biggest engineering hub for Facebook outside the United States, was welcomed by finance minister Philip Hammond, who was given a tour of the new building located off the main shopping thoroughfare of Oxford Street. “It’s a sign of confidence in our country that innovative companies like Facebook invest here,” he said. Facebook announced the new investment in November last year, shortly after Google said it was building a new hub in the city that will be able to accommodate over 7,000 employees. The twin announcements were seen as a vote of confidence in London’s future as a technological hub despite the decision to leave the European Union which has thrown Britain’s future trading relationships into doubt. “The UK’s flourishing entrepreneurial ecosystem and international reputation for engineering excellence makes it one of the best places in the world to build a tech company,” EMEA vice president Nicola Mendelsohn said. “And we’ve built our company here — this country has been a huge part of Facebook’s story over the past decade, and I look forward to continuing our work to achieve our mission of bringing the world closer together.” The site will also house Facebook’s first in-house start-up incubator aimed at helping kick start fledgling British digital businesses.

Super efficient Port of Qingdao

Sun, 12/03/2017 - 17:01
A containership berths at the automated containter terminal in Port of Qingdao in Shandong Province yesterday. The terminal has broken a world efficiency record by handling 1,785 TEUs (twenty-foot equivalent units) from the vessel in nine hours.

Debt crackdown batters Chinese micro-lenders

Sun, 12/03/2017 - 17:01
EXECUTIVES from Chinese companies specializing in offering consumers small, easy-to-get loans became something of a fixture on Wall Street this year. Led by companies such as Qudian Inc and PPDAI Group Inc, the Chinese micro-lenders raised US$1.2 billion with splashy US listings, cashing in on a boom in borrowing by consumers in China with little access to traditional banks. However, the fortunes — and share prices — of the micro-lenders have slumped in the past week as Beijing clamped down on risks in the financial system, zeroing in on the fast-growing and loosely-regulated market for unsecured “cash loans.” On Friday, China’s financial regulators introduced new measures aimed at restricting the industry, which is estimated to be worth 1 trillion yuan (US$151.5 billion). China has long been known as a nation of savers, but consumers are rapidly embracing debt from non-bank online platforms. The number of borrowers taking out cash loans from the micro-lenders is growing at an unprecedented rate, according to the lending companies and the government. For borrowers, the easy loans can be a risky proposition — especially if they fall behind on payments. The loans are usually in the range of 1,000 yuan; interest is typically about 36 percent annually, and penalty charges and compound interest can quickly add up, according to borrowers. The number of repeat borrowers is rising, which could signal financial stress on borrowers, analysts say. The companies, however, say the repeat lending is just a sign of the attractiveness of their platforms. The People’s Bank of China and the China Banking Regulatory Commission did not respond to faxed requests for comment. Angel Xiao, 23, who lives in the southern boomtown of Shenzhen and does not own a credit card, said she borrowed 10,000 yuan last year from two online lenders, PPDAI and Flower Wallet, to attend a jewelry design class. But after she lost her job as a tutor, she found herself unable to pay back the initial loans. With interest piling up, Xiao eventually took out a series of new loans, with an average maturity of 14 days, from more than 30 other lenders. “I didn’t have money to repay loans coming due,” she said in an exchange on WeChat, a messaging service. “So I took out more loans. Every time when I didn’t have money, I used new loans to repay old loans. That’s how I got trapped deeper and deeper.” China Rapid Finance, an online micro-lender that raised US$60 million in an April listing on the New York Stock Exchange, defended its cash loan business. In a statement, it said that its target customers have little or no history with China’s credit bureau, but that they “are prime and near-prime borrowers,” and that it only grants new loans to borrowers who have repaid in full all prior loans granted by the company. It also said the rates it charges are affordable. In its third-quarter earnings report, China Rapid Finance’s repeat borrower rate was 75 percent. Online consumer lending in China, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for over 85 percent of all such activity globally last year, according to a recent report by the Cambridge Centre for Alternative Finance. The boom in micro-lending comes as lenders seek to cash in on rising incomes in a country where credit card penetration remains at about one-third of the population, according to data from the central bank, which says about half a billion consumers don’t have a credit score. And the online cash loan sector is projected to reach 2.3 trillion yuan by 2020, according to the research firm iResearch. China Rapid Finance in November reported a 514 percent year-on-year surge in short-term consumer lending in the third quarter to US$908 million. PPDAI’S “handy cash loans”, with maturities of one to six weeks, soared over 10 fold year on year to 1.98 billion yuan in the second quarter, it said. Qudian recorded a 695 percent jump in net income for the first six months this year, it said in its listing prospectus. Qudian and PPDAI declined to comment. In addition to the companies that have already listed on US markets, another Chinese lender, LexinFintech Holdings Ltd, filed for a Nasdaq listing in mid-November hoping to raise US$500 million. LexinFintech said in a statement on Friday that it “continues to work toward those objectives as described” in its filing.

China’s November CPI set for mild fall

Sun, 12/03/2017 - 17:01
CHINA’S inflation was expected to fall mildly in November and remain tame until the end of the year amid stable food prices and a weakening carry-over effect, the Bank of Communications said in a report. The consumer price index, a main gauge of consumer inflation, was set drop to 1.8 percent year on year in November from the 1.9-percent rise in October, according to the report. The CPI retreat was mainly due to stable food prices, BoCom’s chief economist Lian Ping said, adding that vegetable prices would ease and meat prices would rise marginally. Meanwhile, non-food prices rose due to more expensive refined oil products. Lian expected no substantial changes in inflation at the year end and the CPI was likely to be around 2 percent in 2018, ruling out the possibility of price hikes. The CPI climbed 1.5 percent year on year for the January-October period, below the government’s annual inflation target of around 3 percent for 2017.

Foreign fund curbs in futures to ease

Sun, 12/03/2017 - 17:01
CHINA’S securities regulator said on Saturday the country will ease or lift foreign investment curbs in its futures market. Foreign businesses will be allowed to own up to 51 percent of shares in futures companies, and the cap will be phased out over three years, Fang Xinghai, deputy head of China Securities Regulatory Commission, said at the 13th China (Shenzhen) International Derivatives Forum. An efficient futures market will play a key role in stabilizing and improving enterprises’ performance, and industrial upgrading, Fang said. China has been developing its commodity derivatives market and plans to gradually open it up to foreign investors. In April, China launched white sugar options, the second commodity options after soybean meal. In August, cotton yarn futures were traded on the Zhengzhou Commodity Exchange. Futures contracts oblige investors to buy or sell underlying assets at a predetermined price at a specified time.

Sinochem unveils smart agri platform

Sun, 12/03/2017 - 17:01
THE Sinochem Group has launched an intelligent agricultural platform in Anhui Province, which the major producer of chemicals and fertilizer hopes will help make farming work easier. An online-offline combination, it can provide a wide range of services ranging from seed selection to soil detection and machinery training. Qin Hengde, president of Sinochem’s agricultural unit, described the platform as an agricultural trusteeship that enables both the direct supply of fertilizer, seeds and pesticides and contract farming of standardized, unified sales. “Costs become lower, and production and sales are matched,” Qin said. The platform, the first of its kind by Sinochem, has started operation in Anhui’s Lujiang County. The province is one of the country’s major grain-producing regions. Sinochem is seeking to restructure its agricultural unit, shifting its focus from sales of agri-materials to agri-technology solutions. Satisfactory results have been seen in mechanized production of agricultural products including rice, corn and wheat, according to the company. Demonstration farms with a combined area of around 66,000 hectares were built in Anhui, Jilin and Jiangsu provinces, among others. Sinochem plans to promote the platform nationwide by building over 50 technical service hubs by the end of the next year.

US Senate narrowly backs corporation tax cut reform

Sun, 12/03/2017 - 17:01
THE United States Senate has narrowly approved a tax overhaul, moving Republicans and President Donald Trump a big step closer to their goal of slashing taxes for businesses and the rich while offering everyday Americans a mixed bag of changes. In what would be the largest change to US tax laws since the 1980s, Republicans want to add US$1.4 trillion over 10 years to the US$20 trillion national debt to finance changes that they say would further boost the economy. Trump, speaking to reporters after the pre-dawn vote on Saturday, praised the Senate for passing “tremendous tax reform” and said people will be “very, very happy.” Once the Senate and House of Representatives reconcile their respective versions of the legislation, Trump said, the resulting bill could cut the corporate tax rate from 35 percent “to 20 (percent). It could be 22 (percent) when it comes out. It could also be 20 (percent).” US stock markets have rallied for months on hopes that Washington would provide significant tax cuts for corporations. Celebrating their Senate victory, Republican leaders predicted the tax cuts would encourage companies to invest more and boost economic growth. “We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief to the middle class,” said Mitch McConnell, the Republican leader in the Senate. The Senate approved their bill in a 51-49 vote, with Democrats complaining that last-minute amendments to win over skeptical Republicans were poorly drafted. “The Republicans have managed to take a bad bill and make it worse,” said Senate Democratic leader Chuck Schumer. “Under the cover of darkness and with the aid of haste, a flurry of last-minute changes will stuff even more money into the pockets of the wealthy and the biggest corporations.” No Democrats voted for the bill, but they were unable to block it because Republicans hold a 52-48 Senate majority. Talks will begin, likely this week, between the Senate and the House, which already has approved its own version of the legislation, to reconcile their respective bills. Trump, who predicted that the negotiations would produce “something beautiful,” wants that to happen before the end of the year. This would to score their first major legislative achievement of 2017 after having controlled the White House, Senate and the House since he took office in January. Hit by infighting Republicans failed in their efforts to repeal the Obamacare health-care law over the summer and Trump’s presidency has been hit by White House infighting and a federal investigation into possible collusion last year between his election campaign team and Russian officials. The tax overhaul is seen by Republicans as crucial to their prospects at mid-term Congress elections next November. In a legislative battle that moved so fast a final draft of the bill was unavailable to the public until just hours before the vote, Democrats slammed the proposed tax cuts as a giveaway to businesses and the rich financed with billions of dollars in taxpayer debt. The framework for both the Senate and House bills was developed over a few months by a half-dozen Republican congressional leaders and Trump advisers, with little input from the party’s rank-and-file and none from Democrats. Six Republican senators, who wanted and got last-minute amendments and whose votes had been in doubt, said on Friday they would back the bill and did so. Senator Bob Corker was the lone Republican dissenter. “I am not able to cast aside my fiscal concerns and vote for legislation that could deepen the debt burden on future generations,” said Corker. Numerous last-minute changes were made to the bill on Friday and early on Saturday. One was to make state and local property tax deductible up to US$10,000, mirroring the House bill. The Senate previously had proposed entirely ending state and local tax deductibility. “The tax reform measure that passed the Senate is negative overall for state and local government finances. Lower federal tax rates for businesses and individuals could result in a modest boost to hiring and consumption, positively affecting state and local revenues,” Nick Samuels, Vice President at Moody’s Investors Service, said. In another change, the alternative minimum tax (AMT), both for individuals and corporations, would not be repealed in full. Instead, the individual AMT would be adjusted and the corporate AMT would be maintained as is, lobbyists said. Another change would put a five-year limit on letting businesses immediately write off the full value of new capital investments. That would phase out over four years starting in year six, rather than be permanent as initially proposed. Under the bill, the corporate tax rate would be permanently cut to 20 percent from 35 percent, while future foreign profits of US-based firms would be largely exempt. On the individual side, the top tax rate paid by the highest-income earners would be cut slightly. The Senate bill would gut a section of Obamacare by repealing a fee paid by some Americans who do not buy health insurance, a step critics said would undermine the Obamacare system and raise insurance premiums for the sick.

China’s PMI rebounds to surpass expectations

Thu, 11/30/2017 - 17:01
CHINA’S manufacturing and services activity rebounded in November beyond market expectations, indicating a steady economic outlook in the fourth quarter. The official Purchasing Managers’ Index, which measures vitality in the manufacturing sector, rose to 51.8 in November from October’s 51.6, the National Bureau of Statistics said today. That was higher than market expectations for 51.4 and remained in expansionary territory for a 16th straight month. November’s PMI was 0.2 points higher than the average so far this year. Zhao Qinghe, the bureau’s senior statistician, said the PMI revealed a balanced growth in demand and supply, and that momentum has rapidly shifted to new industries. The sub-index for production rose to 54.3 from October’s 53.4, and new orders recovered to 53.6 from 52.9. The high-tech and consumer goods sectors continued to expand faster than the average, while the oil processing, coking, and metal industries contracted from the same month last year, the data showed. Zhao said the traditional industries showed a weaker momentum and so reform in these industries have to be strengthened. Nomura said in a note that the rebound was driven by small- and medium-sized enterprises, and expected China’s GDP to rise 6.6 percent in the fourth quarter, slightly slower than 6.8 percent in the third quarter. “The moderate rebound of the official PMI suggests growth momentum was stable in November,” the note said. “As the PMI captures sequential changes in manufacturing sentiment, we believe the slight improvement in November was mainly due to the weak performance in October.” The bureau also released data today showing the non-manufacturing PMI rose to 54.8 in November from October’s 54.3, and was 0.3 points higher than the average so far this year. Increased consumer demand and the Singles’ Day promotions also helped retail, information technology, logistics and warehousing sectors to grow, Zhao added. Bank of Communications said PMIs in both manufacturing and services industries exceeded market expectations.

Use of copper in power to be boosted

Thu, 11/30/2017 - 17:01
CHINA, the world’s largest copper consumer, will boost the use of copper as the country shifts to using electricity instead of coal and oil as the energy source, experts said at the 13th Asia Copper Conference in Shanghai yesterday. By 2035, China’s demand for copper will increase nearly 1.5 times from last year to 12.85 million tons as the nation increases the installation of renewable energy sources and use of electric cars as well as raising requirements on household appliances’ energy efficiency, said Zhou Yanting, analyst at Wood Mackenzie, a UK-based energy consultancy. Copper, the metal used to conduct electricity, will see demand rise accordingly amid the boost in the the use of wires, cables and batteries, she said. Renewable energy sources such as wind power, especially offshore wind power, uses more copper than traditional thermal power to connect equipment and for distribution purposes. China’s installation of wind power will total 200 gigawatts by 2020, up from 149 gigawatts last year, according to the National Energy Administration. Electric cars and household appliances also need more copper for the batteries and to enhance electricity efficiency. Electric cars will account for around 35 percent of the total car sales in China by 2035, the consultancy predicted. Meanwhile policies such as “Made in China 2025” and “coal to electricity” will also help boost the demand for copper as China takes steps to upgrade electromotors, distribution transformers, and rail traffic “which will increase the intensity of copper in these equipment,” said Huang Fangqing, director of Brilliance Consulting, a domestic metal consultancy. The “Made in China 2025” policy, which aims to upgrade the nation’s manufacturing prowess via digitalization, will increase the use of copper by 232,000 tons annually between 2016 and 2025, according to the company.

Incentives for private investors

Thu, 11/30/2017 - 17:01
CHINA’S top economic planner has moved to attract more private investment to infrastructure construction and public service projects. The National Development and Reform Commission yesterday said local governments are advised to provide better services and more subsidies for private businesses that participate in public-private partnership projects. A document released by the NDRC called for a sound business environment to be created and for all infrastructure sectors, except those under access restrictions, to be open to private investment. The NDRC promised more financial support, including helping private investors raise funds via bond issuance and asset securitization. China is pushing the PPP model to reduce government debt burdens and improve efficiency, but has only seen a tepid response from private businesses, partly due to low returns and difficult risk control.

Shares dip amid weak sentiment

Thu, 11/30/2017 - 17:01
SHANGHAI stocks dipped yesterday, led by drops in property and financial shares. The Shanghai Composite Index lost 0.62 percent to close at 3,317.19 points. Shares of property developers, financial firms and infrastructure companies were among the biggest decliners. Shanghai Jinjiang International Hotels Development Co Ltd tumbled 5.21 percent to 29.85 yuan (US$4.5), Shanghai New Huang Pu Real Estate Co Ltd fell 3.92 percent to 16.90 yuan, and Greenland Holdings Co Ltd declined 3.08 percent to 7.23 yuan. Investor sentiment was weak after the key market index slumped to a 3-month low on Monday. Sentiment also dimmed after three companies failed to pass an initial public offering vetting by the China Securities Regulatory Commission, said a statement published on its website late Wednesday.

Shanghai aims to spur digital economy

Thu, 11/30/2017 - 17:01
SHANGHAI aims to integrate medical, education and transport with new technologies such as artificial intelligence and the Internet of Things to boost the city's digital economy. Data, mobile Internet applications for public services and an upgraded network infrastructure will spur a more intelligent living daily to local citizens, said the Shanghai Municipal Commission of Economy and Information Technology. In the first three quarters, Shanghai’s software and information service industry revenue grew 18.5 percent year on year to 210.6 billion yuan (US$31.9 billion). The city's electronics output rose 12.2 percent in the first 10 months, almost double the city’s gross domestic product, according to the commission, the city’s top industry regulator. “Smartphone and Internet have become a city’s organ and blood spurring a new lifestyle in Shanghai,” said Lu Lei, general secretary of Shanghai Information Services Association. Starting Tuesday, a week-long “Smart City, Warm Life” event held by SISA and the commission will offer local users upgraded Internet services and free data traffic packages by carriers as well as online coupons by Alipay. So far, 30 million medical records from 65 hospitals and organizations in Shanghai have been unified into a database. Real-time bus routes and schedules have been displayed on 1,600 LCD screens at local bus stations.

Plant aims to satisfy thirst

Thu, 11/30/2017 - 17:01
Coca-Cola’s biggest bottling plant in north China began operating yesterday in Xianghe County of Hebei Province. The plant will produce bottled water, Coke and Sprite, mainly to serve Beijing, Tianjin, Hebei and neighboring regions, according to Luan Xiuju, president of COFCO Coca-Cola Beverages, a joint venture of Coca-Cola and China’s COFCO Corporation.

Oil producer nations ready to restrict output to lift crude prices

Thu, 11/30/2017 - 17:01
OIL producer nations looked set yesterday to keep a lid on output in an attempt to push crude prices higher, but with signs Russia is starting to get cold feet. Oil ministers from within and outside OPEC at talks in Vienna indicated that the 24 producers would extend an agreement struck in 2016 by nine months until the end of 2018. “Everybody’s working toward that nine-month extension,” Nigerian Petroleum Minister Emmanuel Kachikwu said in a Bloomberg television interview. Currently the accord — which excludes the United States — curbs output by 1.8 million barrels per day and is due to expire on March 31. The agreement among the 14 members of the Organization of the Petroleum Exporting Countrie and 10 other nations including Russia was struck a year ago and extended earlier this year. The aim was to reduce a vast global excess in supply that had pushed oil prices down to a 13-year low of under US$30 a barrel in early 2016 from more than US$100 in 2014. While helping consumers, the low price wreaked havoc with the finances of oil producing nations, prompting belt-tightening even in super-rich Saudi Arabia and other Gulf nations. It starved OPEC member Venezuela of sorely needed foreign currency, exacerbating a dire economic crisis that has pushed it to the brink of a full-blown debt default. While of little help to Caracas, where oil output is on course to hit a near 30-year low in 2018, the accord has eventually managed to lift the price of crude. Oil prices are now at a two-year high, with Brent Crude close to US$65 per barrel and fellow benchmark West Texas Intermediate recovering to over US$60. They fell back slightly in recent days but then gained a bit yesterday, with Brent up 55 cents at US$63.66 in London. The huge amounts of oil sitting in storage worldwide have also fallen to more normal levels. The situation has been helped by improved economic conditions, notably in energy-hungry China, boosting demand for crude. Saudi Arabia and other members of OPEC, including Iraq, have made it clear they want the deal to stay in place. “In the coming months our job will continue. The job is not done,” Khaled al-Falih, Saudi Arabia’s energy minister, said on Wednesday. A joint OPEC and non-OPEC committee on Wednesday recommended that the cuts be kept in place. Kuwait’s Oil Minister Issam Almarzooq yesterday the committee had recommended a nine-month extension.

Tiffany profits from Chinese demand

Thu, 11/30/2017 - 17:01
TIFFANY & Co, which has struggled with online competition and lost its luster with younger shoppers, reported a quarterly profit on Wednesday that beat Wall Street’s expectations as shoppers in China snapped up its luxury goods. The high-end jewelry company’s strength in its third quarter mostly came from the Asia-Pacific region, where sales surged 15 percent to US$283 million. This was mainly due to strong demand in China. Sales were up 5 percent in Europe to US$110 million. But other places didn’t fare as well. In Japan, sales dropped 8 percent to US$139 million. While Tiffany managed to squeeze out a 1 percent sales increase in the Americas, that was considered a disappointment. The company said that a downturn in spending by foreign tourists was part of the reason for the soft sales. Sales at stores open at least a year, a key gauge of a retailer’s health, dipped 1 percent. Under new Chief Executive Alessandro Bogliolo, Tiffany has been trying to lure millennials who are shopping elsewhere online. The company said e-commerce sales increased at a slightly faster pace than overall sales growth. The New York-based company has stepped up its marketing, using celebrities like Janelle Monae and Zoe Kravitz in advertising. It’s also focusing more on design, and adding more lower-price pieces such as US$95 bone china cups that look like paper cups. Tiffany’s flagship Manhattan store on Fifth Avenue, playing off Audrey Hepburn’s classic 1961 film “Breakfast at Tiffany’s,” also recently opened a restaurant that features chairs and tables in the company’s signature blue. Tiffany cited long lines for the cafe every day, and the upcoming block of reservations are full. But the company still has a way to go. “For as much as Tiffany has made strides, it has not yet regained that full youthful vigor that so many of its peers exhibit,” said Neil Saunders, managing director at GlobalData Retail. He also took a swipe at the holiday lights at Tiffany’s Manhattan store.

SK raises rates for 1st time in over six years

Thu, 11/30/2017 - 17:01
SOUTH Korea yesterday lifted interest rates for the first time in more than six years, citing a strong economic recovery, and possibly leading the way for similar actions from other Asian central banks. The hike comes on the back of a series of upbeat readings on Asia’s number four economy that have seen the Bank of Korea and International Monetary Fund lift their growth forecasts and despite an increasingly belligerent Pyongyang. The BOK lifted borrowing costs to 1.5 percent, up 25 basis points and the first since June 2011, pointing to a “solid trend of domestic economic growth,” adding there have been moderate improvements in private consumption and strong growth in exports. “Regarding further rate hikes, we will thoroughly monitor the basic flow of growth and inflation,” BOK Governor Lee Ju-Yeol said. Yesterday’s announcement comes as central banks in Asia prepare for a run of increases by the Federal Reserve, which many fear could lead to a flood of cash leaving emerging economies as investors look for better and safer returns. The US central bank, which has already lifted rates three times since December, is expected to press on with its tightening in 2018 as the world’s top economy improves and Donald Trump looks to push through inflationary tax cuts and spending measures.

India sees GDP rebound to 6.3% in Q2

Thu, 11/30/2017 - 17:01
INDIA’S economy grew at 6.3 percent in the second quarter of the financial year, official data showed yesterday, rebounding from a sharp slowdown in the wake of high-profile reforms. Government data showed Asia’s third-largest economy grew for the first time in five quarters, shaking off the lingering impact of a sudden cash ban and launch of a nationwide tax that had pushed growth to three-year lows. The official figures were slightly below expectations. A Bloomberg News survey of economists predicted GDP growth at 6.4 percent from a three-year low of 5.7 percent in the previous June-ended quarter. But the upturn will come as a relief for Prime Minister Narendra Modi, who has been dogged by criticism over two major reforms that stalled India’s much-needed economic expansion. In the last 12 months Modi’s government withdrew most of India’s high-value banknotes from circulation in a snap move known as “demonetisation” and rolled out a national goods and services tax.

Taxation to save more of China’s water resources

Thu, 11/30/2017 - 17:01
TAXATION will play a larger role in China’s drive to conserve more water with the expansion of a water resource tax program. From today, nine provincial regions, including Beijing, Inner Mongolia and Ningxia, will begin using a new water resource tax, following trials in north China’s Hebei Province. Water conservation is important in a nation where per capita water resources are just 28 percent of the global average. The tax is levied on the use of surface and ground water, with higher rates on enterprises that consume a lot of water. Water use exceeding quotas or in overexploited areas will be met with tax rates up to four times more, while use for agricultural purposes will see a reduction or exemption. The use of water that has come from sewage treatment facilities will also have favorable rates. The taxation will prevent unreasonable use by consumers such as ski resorts and car washes, said Wang Jianfan, an official with the Ministry of Finance. In Hebei, where water shortages are a perennial issue, total water consumption dropped by 460 million tons in 2016, after the first tax trial was launched 18 months ago. To cut production costs and save water, high water-consuming enterprises such as steel, cement and chemical companies have installed water-saving devices and replaced groundwater with desalinated sea water and recycled wastewater. “The main purpose of the tax is not to increase fiscal revenue,” said Cai Zili of the State Administration of Taxation. In the nine regions, a total of 13.3 billion yuan (US$2 billion) of water resource fees were collected last year, only a small fraction of a local fiscal revenue in trillions. The tax has a great ecological significance and will help water management, said Cai. Improvements have been made under new water management measures introduced in 2012 to address water shortages and pollution. In 2016, China’s water consumption dropped from 610 billion cubic meters to 604 billion, and consumption per 10,000 yuan of GDP was down by 7.2 percent. The expansion of the tax trials is a step forward in overall reform of the resource tax system, which is more than 30 years old. Nearly 800 billion yuan of resource taxes were collected from 1994 to 2016, an annual average growth of 14.8 percent, with 95 billion yuan collected last year, according to ministry data. A draft law on resource tax was released earlier this month for public comment and covers resources like crude oil, natural gas and coal.

R&D hub to help lift business

Wed, 11/29/2017 - 17:01
FRENCH auto-parts maker Faurecia expects to grow its business further in China as it opened a research and development center in Shanghai yesterday. “The research and development center represents our determination and goal to achieve further growth of business in the China market,” said Patrick Koller, CEO of Faurecia. “Faurecia expects our sales in China will grow from 18 billion yuan (US$ 2.7 billion) this year to 34 billion yuan in 2020. In 2022, the company hopes to achieve 40 billion yuan in sales in China. In 2020, more than 40 percent of our sales in China will be made with Chinese original equipment manufacturers.” He said Faurecia is going to add 19 plants in China until 2020, or at a rate of one new plant every two months. The plants will include those built by Faurecia, others built through joint ventures and expansion of current facilities. The R&D center will also research and develop clean mobility technologies including emissions control and energy heat recovery.

Toyota robot mimicks user’s actions

Wed, 11/29/2017 - 17:01
JAPANESE auto giant Toyota yesterday showcased a humanoid robot that can mirror its user’s movements, a product it says has uses as varied as elderly care and disaster response. The T-HR3 can be controlled by a wearable system that allows users to operate the entire robot in real-time by simply moving their own limbs. It is one of the main attractions at the International Robot Exhibition that opened in Tokyo yesterday. Toyota’s new robot is the latest in dozens of humanoid models that have been developed recently thanks to rapid technological advances, especially in artificial intelligence. “We are thinking about using this mainly for home elderly care and daily life support,” Akifumi Tamaoki, head of Toyota’s Partner Robot division, said. “Technically, this robot could also be used in workplaces, disaster areas and outer space.” Robot-makers see big potential for their use in Japan, where the number of elderly people is rapidly growing, causing labor shortages in a country that strictly controls immigration. The T-HR3 has 32 joints and boasts smooth human-like movements. It can also balance itself in one-legged poses. Sensors on the robot can detect how much force it should exert on humans or objects. A head-mounted display allows the user to see from the perspective of the black-and-white prototype.

Production resumes at Hyundai

Wed, 11/29/2017 - 17:01
HYUNDAI Motor’s workers have resumed production after a walkout on two assembly lines, the company and the union said yesterday. Workers returned to the plant in Ulsan, 380 kilometers southeast of Seoul, late Tuesday. Nearly 2,000 workers, or 4 percent of the company’s 51,000 union members, had stopped work Monday after talks collapsed over the terms for producing the Kona, Hyundai’s first compact SUV. The talks had resumed, Hyundai said. The walkout delayed production of about 1,200 vehicles, Hyundai said. The Kona is due to launch in the US early next year. Among other issues, the union said it was concerned that workers might lose jobs because the assembly process for the Kona is more automated than for the Accent, a sedan also being made at the Ulsan plant. Hyundai, part of the world’s fifth-largest auto group along with its smaller affiliate Kia Motors Corp, introduced the Kona in South Korea in June.

Bitcoin soars to all-time high of over US$10,000

Wed, 11/29/2017 - 17:01
VIRTUAL currency Bitcoin soared to an all-time high above US$10,000 yesterday on major exchanges and digital currency indexes, including the widely followed Luxembourg-based trading platform BitStamp. At 0600 GMT, it was quoted around US$10,115 on BitStamp, coming sharply off a high of US$10,743.61, which was a rise of over 5 percent on the day. Created in 2009, Bitcoin uses encryption and a blockchain database that enables the fast and anonymous transfer of funds outside of a traditional centralized payment system. It has increased more than 10-fold in value so far this year, posting the largest gain of all asset classes, amid increased institutional demand for crypto-currencies as financial and mainstream use has expanded. But sceptics say it a classic speculative bubble with no relation to real financial market activity or the economy, most famously JPMorgan boss Jamie Dimon who labeled it a fraud. Bitcoin crossed US$10,000 on smaller exchanges such as the CEX.IO exchange, and the crypto-currency index coinmarketcap.com long before it hit the milestone on BitStamp. “The price rise is a continuation of a long-term trend which has been driven by the speculative activity in Japan and also with institutional investors dipping their toes into the cryptocurrency market,” said Thomas Glucksmann, head of marketing at Hong Kong exchange Gatecoin. “The recent surge is just part of that additional element of excitement amongst speculative traders and a growing contingent of liquid traders that have a long-term optimistic view on this technology.” Sol Lederer, blockchain director at US technology company LOOMIA, said this surge will help long-time bitcoiners finally feel vindicated that their currency, which had been ridiculed for years, was at last being taken seriously. “Bitcoin’s future is still uncertain; it faces the same serious technical challenges it has for years and faces stiff competition from newer, more sophisticated blockchains. But even if it were to crash, it’s apparent that Bitcoin is here to stay.” In some emerging markets, Bitcoin had hit well over US$10,000 previously. In Zimbabwe, Bitcoin traded at US$17,875 on Monday. Tuesday’s price in Zimbabwe was not available. In South Korean exchanges, Bitcoin was already close to US$11,000 or higher early this week. It traded at nearly US$12,000 on Tuesday on bithumb after hitting the US$10,000 milestone on Monday. At Coinone, it traded at near US$12,700, and it was up 10 percent in 24 hours at US$12,792 on Korbit. Bitcoin has been boosted as exchanges such as the CME Group Inc and the Chicago Board Options Exchange announced plans to launch futures contracts for the currency. “I’m sure there will be a few dips over the next weeks and months as the cryptocurrency market is quite illiquid so there’s bound to be volatility,” Gatecoin’s Glucksmann said. Mike Novogratz, a former macro hedge fund manager at Fortress Investment Group, said at a Reuters Investment Summit earlier this month that mainstream institutional investors were about six to eight months from adopting Bitcoin.

Apple countersues Qualcomm over patents breach

Wed, 11/29/2017 - 17:01
APPLE Inc yesterday filed a countersuit against Qualcomm Inc, alleging that Qualcomm’s Snapdragon mobile phone chips that power a wide variety of Android-based devices infringe on Apple’s patents, the latest development in a long-running dispute. Qualcomm in July accused Apple of infringing several patents related to helping mobile phones get better battery life. Apple has denied the claims that it violated Qualcomm’s battery life patents and alleged that Qualcomm’s patents were invalid, a common move in such cases. But yesterday, in a filing in US District Court in San Diego, Apple revised its answer to Qualcomm’s complaint with accusations of its own. Apple alleges it owns at least eight battery life patents that Qualcomm has violated. The Apple patents involve ensuring each part of a phone’s processor draws only the minimum power needed, turning off parts of the processor when they are not needed and making sleep and wake functions work better. In its filing, Apple alleges that Qualcomm’s Snapdragon 800 and 820 processors, which power phones from Samsung Electronics Co Ltd and Alphabet Inc’s Google’s Pixel phones, infringe on those patents. Samsung and Google are not named in Apple’s counterclaims. “Apple began seeking those patents years before Qualcomm began seeking the patents it asserts against Apple in this case,” the company wrote in its complaint. Apple said it is seeking unspecified damages from San Diego-based Qualcomm. Qualcomm filed its patent infringement lawsuit at the same time it filed a complaint with the US International Trade Commission seeking to ban the import of Apple iPhones that use competing Intel Corp chips because of the alleged patent violations. The dispute between Apple and Qualcomm over patents is part of a wide-ranging legal war between the two companies. In January, Apple sued Qualcomm for nearly US$1 billion in patent royalty rebates that Qualcomm allegedly withheld from Apple. In a related suit, Qualcomm sued the contract manufacturers that make Apple’s phones, but Apple joined in to defend them.

US records fastest growth in three years in Q3 at 3.3%

Wed, 11/29/2017 - 17:01
THE US economy posted its best performance in three years in the third quarter, growing even faster than initially reported, according to official data released yesterday. The revised figures showed growth remains resilient despite back-to-back hurricanes in late summer that barely left a scratch on the world’s largest economy. GDP growth in the July-September quarter was revised up to 3.3 percent, three tenths of a point higher than the initial estimate and the strongest performance since the third quarter of 2014. The result means growth has surpassed the White House’s three-percent target for the second quarter in a row, after expanding 3.1 percent in the April-June period. However, the growth rate for the full year is likely to come in closer to 2.5 percent. From April to October the US saw the fastest economic expansion since the same period in 2014, when GDP grew by an average of 4.9 percent. So far this year, however, the economy has expanded under 2.5 percent, in line with growth in prior years. The latest quarterly estimate, which remains subject to revision in the coming months, overshot analyst expectations, which had called for a result of 3.2 percent. The news comes as Republican lawmakers in Washington enter a delicate and crucial phase in efforts to adopt a sweeping overhaul of the US tax code. The White House and senior Republican lawmakers have argued the US$1.5 trillion tax package will pay for itself by spurring economic growth — though economists say there is little evidence to support this claim, especially in an already-growing economy. Third quarter growth reflected upward revisions to business spending on computer software and transport equipment, with investment in equipment hitting its fastest pace in three years at 10.4 percent. State and local governments also appear to have spent more on buildings while manufacturing inventories were higher than previously estimated. That helped offset downward revisions in durable goods orders and services exports.

SUVs take center stage at show

Wed, 11/29/2017 - 17:01
Chevrolet unveils its new 2019 ZR1 Corvette Convertible during the auto trade show yesterday in Los Angeles. The floor at this year’s Los Angeles Auto Show starting from tomorrow will look a lot like America’s roads: full of SUVs. Hyundai and Nissan will debut new small SUVs at the show, while Subaru will show its new three-row SUV, the Ascent. Jeep will show a new version of its Wrangler, while Infiniti, Lexus, Lincoln and Porsche will debut more refined models.

Coal giants’ profits boom despite challenges

Wed, 11/29/2017 - 17:01
CHINA’S coal giants are raking in the money, bolstered by government-imposed production cuts amid robust demand — although over-supply remains an issue — industry officials say. The industry’s leading companies reported combined revenue of 2.01 trillion yuan (US$318 billion) for the first nine months of the year and the 90 biggest made a total profit of 104.1 billion yuan, Wang Xianzheng, president of the China National Coal Association, said on Tuesday. This was an increase from last year’s profits of more than 30 billion yuan, which in turn reversed the losses of 2015. And profits for the industry as a whole jumped more than six-fold year on year to 250.6 billion yuan in the first 10 months, the National Bureau of Statistics reported on Monday. Two years ago, coal companies had been hit by falling prices and a backlash over its perceived role as the culprit for devastating pollution and smog in northern China. The industry has staged a comeback, “showing constant progress in profitability, which was bolstered by continuous cuts in supply and a government clampdown on inefficient companies,” Wang said. In the 10 months to end-October, China’s coal inventory fell more than 100 million tons, according to the association. And the number of mines has fallen to below 8,000 from about 12,000 in 2015. But consumption has increased 3.7 percent from a year ago, fueled by the country’s industrial expansion. The official Purchasing Managers’ Index, which measures vitality in the manufacturing sector, has stayed above 51 for 13 consecutive months. A reading above 50 indicates expansion, while a reading below that signals contraction. Alongside falling inventory, prices have continued to gain steam since a rally last year, with some areas such as Inner Mongolia seeing four-month growth in steam coal prices to around 214.2 yuan per ton in October, “which is enough for coal companies to make profit,” says the Inner Mongolia Coal Exchange Center. While China is increasingly moving toward renewable energy — and is a world leader in this field — coal remains the backbone of the economy. Thermal power made up 57 percent of the nation’s total energy installation as of the end of last year, although that was down from a year earlier. “Coal is not as dirty as people imagine, especially after the nation has taken years to ‘clean’ it,” said Miao Xuegang, director of the environmental protection department in Anhui Province. Across China, thermal power plants have been required to upgrade, ensuring that every kilowatt-hour of thermal power consumes less than 315 grams of standard coal, “which is already in the leading league worldwide,” according to the National Energy Administration. By 2016, equipment to pump over 400 gigawatts of thermal power had been upgraded nationwide. “New thermal power plants can’t even open if they don’t have technologies to clean coal off sulphur and nitrates,” said James Zhou, an employee at a state-owned power plant. After sulphur and nitrates have been removed, most of the toxic gas and particular matter have been reduced, “making coal a cleaner resource,” Miao said. Demand for coal remains robust, especially for electricity, with a government subsidy of 0.027 yuan per kilowatt-hour for clean coal power. “This not only ensures constant power supply, but also helps fight air pollution by encouraging clean coal technologies,” Zhou said. Subsidies have helped remove sulphur and nitration from coal and have stayed above 100 billion yuan since 2011, according to bjx.com.cn, a domestic electricity news portal. Despite the progress, the China National Coal Association’s Wang warned that huge questions remain for China’s coal industry as it upgrades to face the future, especially when oversupply remains and renewables are racing to replace coal. In the first 10 months, solar power accounted for almost half the country’s newly installed energy and installed wind power had increased 2.2 percent from a year earlier, China Electricity Council data showed. “The outlook for coal use in the long-term is not optimistic,” Zhou said. “Coal-powered plants these days are trying to shift to renewable energy.” One example is the merger of China Shenhua Energy Co with China Guodian Corp, which “in great part was because Guodian has the largest installation of wind power among China’s five electricity giants,” reported jiemian.com, a financial news portal. Acquiring 25.83 gigawatts of wind power from Guodian, Shenhua — China’s largest state-owned coal miner — will find it easier to diversify its portfolio from coal-powered energy. Meanwhile, coal companies continue to face massive challenges. The top 10 account for 80 percent of the 90 giants’ profits — “with most of the rest on the brink of losses,” Wang said. “Burdened with heavy debts and unable to pay salaries on time.” And although supply has been cut, there is still a significant over-supply. Coal companies must take a longer term approach and thoroughly plan their business strategies to tackle any problems that may arise in the future, Wang said.

Anger over latest anti-dumping probe by US

Wed, 11/29/2017 - 17:01
CHINA yesterday expressed its dissatisfaction with the latest anti-dumping investigations into its export of aluminum sheets to the United States. “China is strongly dissatisfied with the trade protectionism tendency shown in the US move,” said Wang Hejun, head of the Ministry of Commerce’s trade remedy and investigation bureau. On Tuesday, the US Commerce Department launched anti-dumping and countervailing duty investigations into common alloy aluminum sheets in a rare “self-initiated” tactic. The move marked the first time in 25 years that the US had launched such an investigation without a request from a US company or industry. Chinese and US aluminum industries are complementary and aluminum trade between the two countries is two-way, Wang said. “It will hurt both Chinese and US interests to artificially impede the normal order of bilateral aluminum trade.” When the US department set preliminary dumping margins on imports of aluminum foil from China in October, the ministry said it was “a serious distortion” of the real situation. China urged the US to fulfill international obligations and take action to correct the wrong practice, according to a ministry statement on October 31. “An administration that self-initiates an investigation is sending an aggressive signal that it is eager to impose import protection,” said Chad Bown, a trade expert at the Peterson Institute for International Economics, a Washington think tank. A final decision on whether to impose punitive duties on Chinese aluminum products is still months away as self-initiated investigations follow the same process as normal trade cases. Wang said he hoped the US would abide by the consensus reached by Chinese and US leaders on economic and trade cooperation and meet China halfway to support the healthy and stable development of bilateral economic ties. China will take necessary measures to defend the rights of its own enterprises, he said. The US International Trade Commission is conducting its own investigation and is due to make its preliminary determinations around January 16 next year. If the agency determines that there is no injury or threat of injury, then the commerce department’s investigations will be terminated. Cao Hui, a lawyer at international law firm Steptoe & Johnson LLP, said the problem with self-initiated cases is that the commerce department takes on the dual roles of plaintiff and arbiter, which might lead to a lack of impartiality. Cao believed its action was a highly political and symbolic move. The department was unlikely to self-initiate such cases against China in a large scale. In 2016, imports of common alloy sheet from China were estimated at US$603.6 million, according to the commerce department. The last self-initiated anti-dumping investigation was in 1985 and involved semiconductors from Japan. The last self-initiated anti-subsidy case was in 1991 against softwood lumber from Canada. The aluminum move against China comes less than a month after US President Donald Trump’s first trip to Beijing, during which he heaped praise on Chinese President Xi Jinping and lauded US business deals with China valued at hundreds of billions of dollars.

Fitch attests ‘A+’ on 3 policy banks

Wed, 11/29/2017 - 17:01
FITCH Ratings has affirmed the long-term issuer default ratings of “A+” for China Development Bank Corporation, Agricultural Development Bank of China, and Export-Import Bank of China, and said their outlook was stable after the country’s banking regulator unveiled new regulations recently. The three policy banks’ ratings, which are equivalent to those of China’s sovereign ratings, are based on Fitch’s expectations for continued strong support from the state toward them. A “default rating” is the measure of an institution’s credit risk and the ratings are marked by a series of symbols that range between “AAA” (meaning the highest credit quality) and “D” (referring to Default). Fitch believes the China Banking Regulatory Commission’s recent regulations governing supervision of the three policy banks are aimed at “improving their operational efficiency and profitability” so that their capital can become self-sustaining in the long run, according to its report. The CBRC issued the regulations this month in response to the central government's call to promote reform of policy-oriented financial institutions. The new regulations, effective from the beginning of 2018, also put greater emphasis over governance and risk management at the policy banks. Fitch believes tighter supervision at these policy banks is consistent with the authorities’ broader commitment to containing financial sector risks in China. Fitch expects the three policy banks to “maintain their increasingly important policy roles” in supporting and promoting the strategic development of China’s economy by providing financing in key areas. Fitch expects all three policy banks to continue to “play a significant role” in supporting state policy objectives, as the new regulations specifically state that they should give priority to policy-related businesses over commercial activities. China Development Bank is responsible for funding social housing projects, domestic infrastructure projects and pillar industries, while the Agricultural Development Bank of China provides financing for the procurement of agricultural goods and rural development projects, and the Export-Import Bank of China primarily offers financing for the development of international trade.

Bezel-less smartphone to be major trend

Wed, 11/29/2017 - 17:01
BEZEL-LESS design, which offers consumers bigger displays of better quality, will become a major trend in the domestic smartphone market in 2018 as models costing under 1,000 yuan (US$152) have debuted, Shanghai Daily learned. The price drop in the past six months has been drastic because flagship models with this type of technology used to cost 5,000 to 10,000 yuan. About 10 new models featuring bezel-less design debuted in the domestic market in the past week, and they are reasonably priced and feature technological development and innovation in new material and advanced artificial intelligence technology on facial identification, said smartphone vendors like Huawei and Gionee. Bezel-less design creates better experience for video streaming and mobile gaming for users. Initially, the technology was adopted in flagship models like iPhone X and Samsung Galaxy S8 costing over 5,000 yuan each. But the new technology screen will come into the mass market soon, said researcher Canalys. “Fullview Display (bezel-less) design has become an irresistible trend in smartphones," said Liu Lirong, Gionee’s chairman.

Shares up but caution advised

Wed, 11/29/2017 - 17:01
SHANGHAI stocks continued to correct yesterday as investors were urged to take caution. The Shanghai Composite Index edged up 0.13 percent to end at 3,337.86 points. AVIC Securities noted that although the index rebounded yesterday afternoon, investors were urged to take a wait-and-see attitude in the near future. Steel makers jumped with Fangda Special Steel Technology Co up 4.72 percent and Anyang Iron & Steel Co surging by the daily limit of 10 percent to 5.18 yuan (79 US cents). Xining Special Steel Co advanced 7.59 percent to 5.81 yuan. Brokerages were mixed. GF Securities dipped 0.22 percent to 17.86 yuan and Everbright Securities shed 0.99 percent to 14.99 yuan. Northeast Securities added 0.86 percent to 9.37 yuan.

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