版权所有 - 中国日报�(ChinaDaily) China Daily <![CDATA[Vacation rental websites see significant growth on Spring Festival rush]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533079.htm Online shared accommodation booking platforms are forecasting significant growth during the upcoming Spring Festival holiday, driven by a growing number of Chinese millennial tourists who tend to travel with their families and the increasing popularity of homestays as a novel form of accommodation.

Tujia.com estimated inbound travel will increase twofold year-on-year during the Spring Festival holiday. Beijing, Guangzhou, Xiamen, Chengdu and Chongqing are the favorite domestic destinations, while outbound travel can witness a whopping 300 percent increase.

The peak season falls on Jan 25,26 and 27, as Chinese tourists typically take a trip after finishing their family reunion dinners. The millennial generation prefers traveling with their parents and children, so family trips will take up nearly 50 percent of total travel, according to Tujia.com.

Along with soaring enthusiasm for the Spring Festival travel, the prices of short-term rental houses are also rising. The average price of accommodation in Huzhou, Zhejiang province, exceeded 2,000 yuan ($290), which is the most expensive among all domestic destinations, Tujia.com said.

Data from United States-based Airbnb Inc showed that the share of outbound travelers from the Chinese mainland doubled during the holiday. The top five destinations are Osaka, Bangkok, Tokyo, Seoul and Chiang Mai.

It indicated that Beijing, Guangzhou and Shanghai occupy nearly 50 percent of the bookings among all popular domestic destinations as more and more Chinese youngsters invite their parents to the first-tier cities where they work to get together and celebrate the festival.

Airbnb noted that group tours, which consist of three family members or more, take up 82 percent of all tour types. The average length of stay by group tours is 5.2 nights.

China's vacation rental market is surging as Chinese consumers have started to pursue high-quality travel and accommodation experiences. This has spurred the explosive growth of home-sharing service providers.

According to a report by the State Information Center, a government think tank, the market for vacation rental services is expanding rapidly in the country. The sector's revenue is expected to reach 50 billion yuan in 2020.

It forecast that by 2020, the number of tenants is likely to exceed 100 million and the number of shared homes will be more than 6 million.

Wang Liantao, chief operating officer of Chinese vacation rental company Xiaozhu Inc, said family travel has become mainstream during the Spring Festival holiday. Some villas with private swimming pools and high-quality homestays are favored by family members.

"The wide range of short-term vacation rental services are enough to satisfy the personalized needs of various kinds of tourists, especially families," said Han Mengying, an analyst from market consultancy Analysis, adding compared with hotels, the price of shared accommodation is cheap.

 

A host cleans a room for guests in a village in Shandong province. SUI XIANKAI/XINHUA

 

 

 

 

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2020-01-22 00:00:00
<![CDATA[Services sector boosts consumption of electricity]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533133.htm Power consumption in China saw steady growth in 2019 driven by a surging need for electricity in the tertiary sector, an industry report showed on Tuesday.

According to a report by the China Electricity Council, total power consumption in 2019 increased 4.5 percent year-on-year to 7.23 trillion kilowatt-hour.

Electricity consumed in the tertiary sector saw rapid growth of 9.5 percent year-on-year to 1.19 trillion kWh last year. Power consumption in the tertiary sector contributed 33.1 percent to China's total power consumption growth in 2019, 10.1 percentage points higher compared with that in 2018.

Yu Chongde, vice-chair and secretary-general of CEC, said: "China's rapid development of technology-backed emerging industries like big data and artificial intelligence has made the tertiary sector a major contributor to China's power consumption growth."

The contribution of innovative industries to China's total power consumption is likely to continue in the following years, Yu said.

"We also predict power consumption growth to fall between 4 to 5 percent in 2020," Yu said.

Among all categories in the tertiary sector, power consumption in industries like rental, commercial services, real estate and retail has projected double-digit growth, while power consumption in information transportation/software and information technology services has seen a 16.2 percent year-on-year growth, the report showed.

Compared with the rapidly growing need for electricity from the tertiary sector, power consumption in the secondary sector, which accounted for a major part of total power consumption in China last year, has seen slower growth.

Power consumption in the secondary sector hit 4.94 trillion kWh last year, up 3.1 percent year-on-year. It accounted for 68.3 percent of total power consumed last year in China, down 0.9 percentage points compared with that in 2018.

Power consumed in the secondary sector contributed 47.9 percent to China's total power consumption growth last year.

Han Xiaoping, chief researcher at industry and energy website china5e.com, said China's manufacturing sector is undergoing a fast-track transformation to becoming more energy-efficient, backed by fast developing innovative technologies, which partly contributed to the slower growth.

The report also showed China's rapid development in green energy.

Power generated from non-fossil energy hit 2.39 trillion kWh last year, up 10.4 percent year-on-year. It accounted for 32.6 percent of China's total power generation, up 1.7 percentage points compared with that of 2018.

Last year, generation of water power, nuclear power, wind power attached to the State grid, and solar power attached to the State grid have grown 5.7 percent, 18.2 percent, 10.9 percent, and 26.5 percent year-on-year respectively.

 

 

 

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2020-01-22 00:00:00
<![CDATA[Shanghai reports $553b worth of output]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533131.htm The services sector's contribution to Shanghai's GDP continued to expand last year, with foreign investment, new economy activities and strategic emerging industries shoring up economic performance that local authorities defined as "progressive amid stabilization".

The metropolis reported 3.82 trillion yuan ($553 billion) worth of economic output in 2019, up 6 percent year-on-year, the Shanghai Municipal Statistics Bureau said in a news conference on Tuesday.

Among them, the services sector jumped 8.2 percent to add about 2.78 trillion yuan, accounting for 72.7 percent of the city's GDP. The finance sector surged 11.6 percent year-on-year to 660 billion yuan, which is among the fastest-growing sectors.

The city dispelled global uncertainties to secure a large number of foreign direct investment deals. The number of newly attracted FDI contracts reached 6,800, up 21.5 percent from a year earlier, while contract value jumped 7.1 percent to $50.2 billion.

Investment from the United States' private sector exhibited strong momentum, with contract value climbing 1.3 times to reach $3.03 billion, whereas the actual use of foreign capital soared 29.6 percent from a year earlier to $603 million, said Tang Huihao, deputy chief of the bureau.

New economic activities such as internet-related services and technology startups were shaping up to be a major force driving economic growth. Online shopping hit 1.3 trillion yuan, up 27 percent year-on-year, whereas web-based transaction in the service sector jumped 26.2 percent, though detailed figures were not disclosed.

"From January to November last year, companies engaged in scientific research and technology services saw their revenue expand 12.4 percent from the same period in the previous year, and that of information software and services rose 10.3 percent," Tang said.

Market vitality has been continuously strengthened, with the average number of new companies set up hitting 1,476, up 12 percent. Research and development investment is forecast to hit 150 billion yuan, and the average number of patents held by every 10,000 residents was 53.05.

Strategically emerging industries jumped 3.3 percent year-on-year to reach 1.1 trillion yuan, significantly outpacing that of overall industrial output, which recorded an ebb of 0.3 percent in 2019.

According to Tang, leading drivers in that sector include the new energy industry, which surged 17.7 percent, as well as biology-related industries, which expanded 7.3 percent, fueled by foreign pharmaceutical firms.

The per capita disposable income in Shanghai grew by 8.2 percent for urban residents and 9.3 percent for rural residents last year, with the latter recording faster growth than the former for eight consecutive years.

Shanghai's economy will continue to benefit from new opportunities like an expanded free trade zone, a science and technology bourse, the integration of the Yangtze River Delta region, as well as hosting the China International Import Expo, said Mayor Ying Yong on Monday at the close of the city's annual legislature meeting.

The city has just passed a regulation that bolsters its goal of constructing a world-class innovation hub through multiple means.

 

A Tesla Model 3 vehicle is seen at a Tesla store in Shanghai. XINHUA

 

 

 

 

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2020-01-22 00:00:00
<![CDATA[Lunar New Year travel rush changing direction]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533126.htm Lin Xue, a 28-year-old bank employee from Changzhi in North China's Shanxi province, booked two high-speed railway tickets for her parents two weeks before the upcoming Spring Festival holiday.

Lin settled down in Beijing for better work opportunities about three years ago after she received a master's degree. "It is difficult to acquire a train ticket or plane ticket to my hometown during the Spring Festival travel rush, so I decided to invite my parents to Beijing this year and they will arrive on Thursday.

"Most people leave big cities for smaller places where their parents reside during the travel rush, so it is easy to book tickets from my hometown to Beijing. I want to let my parents experience a different Lunar New Year here," she added.

With the Year of the Rat just around the corner, a growing number of young people are inviting their parents to the cities where they work for family reunions, a new trend during the annual travel rush.

According to a report from Chinese internet search giant Baidu Inc, the search volume of reverse Spring Festival travel in 2020 has increased fivefold year-on-year, with Beijing, Guangzhou, Chengdu, Shanghai and Chongqing being the most popular destinations.

The Chinese authorities have also encouraged reverse travel with preferential policies allowing travel companies to offer discounts on ticket prices. The reverse rush has maintained an average growth of 30 percent over the past two years, said Fliggy, Alibaba's online travel service provider.

Moreover, data from Baidu showed that more and more elderly people are beginning to send Lunar New Year's greetings through short videos, which have witnessed explosive growth in China thanks to the rapid development of 5G and artificial intelligence.

The revenue from the short video industry reached 14.01 billion yuan ($2.0 billion) in 2018, up a blistering 520.7 percent year-on-year, and the figure is expected to surpass 55 billion yuan in 2020, said market research company iResearch.

Meanwhile, the post-1990 generation account for 80 percent of the people who plan to work overtime during the upcoming holiday, while the post-1980 generation take up 12 percent, with "Spring Festival overtime payment" becoming a buzzword.

In addition, the annual Spring Festival Gala, the most-watched annual show on Chinese New Year's Eve, is still popular with young people, with 44 percent of the post-1990 generation expected to tune in.

Boston lobster, Norwegian salmon, fish from Chagan Lake and other fresh foods are favored by the post-1995 generation, who prefer eating spaghetti, steak, salad and salmon, and drinking red wine at family reunion dinners on the eve of the Lunar New Year.

It is noteworthy that the post-1980 generation tend to buy intelligent home appliances, apparel and fresh food products for the upcoming Spring Festival, while the post-1990 generation spend money on electronic devices and game consoles.

The search volumes of homegrown brands, such as Moutai, Hsu Fu Chi, Wahaha and Three Squirrels have skyrocketed 1,504 percent compared with last year. Northerners are fond of dumplings, while those from regions in the south are keen on rice during the Spring Festival.

Apart from watching the Spring Festival Gala, visiting relatives and setting off firecrackers, people spend time watching online videos, playing games and reading comics. They are also encouraged to collect digital red packets as major internet companies are preparing to dish out record sums of money to attract new users.

Wei Xiang, an associate professor from the National Academy of Economic Strategy of the Chinese Academy of Social Sciences, said the reverse Spring Festival travel rush will effectively reduce the pressure on the transportation system and make use of idle transport resources.

 

Passengers prepare to leave the railway station of Nanjing, capital of Jiangsu province, for their Spring Festival journeys. SU YANG/FOR CHINA DAILY

 

 

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2020-01-22 00:00:00
<![CDATA[Revised QFII rules may be rolled out in near future]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533080.htm China may soon enforce the revised rules for qualified institutional investor programs and allow foreign access to almost all major financial assets, leveling the playing field for domestic and foreign institutional investors, officials and experts said.

The China Securities Regulatory Commission, the country's top securities regulator, said recently that it will, as soon as possible, roll out the revised rules for the Qualified Foreign Institutional Investors program, known as QFII, and the renminbi-denominated RQFII, two programs that enable licensed foreign institutions to invest in the mainland markets.

The CSRC will also work to expand the channels for foreign capital to access onshore exchange bond markets, as part of its efforts to speed up putting into place the announced opening-up measures, the commission said in an exclusive written interview with China Daily.

"China's capital market will be more open toward the rest of the world and welcome quality overseas financial institutions and long-term investors to operate and invest in China," the commission said, adding that domestic and foreign players will share the benefits of the long-term stability of China's economic development.

Wang Tingting, an associate professor of finance at the Central University of Finance and Economics, said the revised rules for qualified institutional investors programs are expected to give foreign investors wider market access, especially to the derivatives market.

"This will help satisfy foreign investors' growing needs to trade onshore derivatives for risk hedging and portfolio diversification, making the country an important destination of global asset allocation," Wang said.

In early 2019, the commission solicited public opinions on the draft of revised rules governing securities and futures investment under the QFII and RQFII programs, which proposed to consolidate the two programs into one so that foreign investors only need to make one license application.

The draft widened the access for licensed foreign investors from mainly exchange-listed securities and mutual funds into a much wider range that also covers financial and commodity futures, options, private investment funds, bond repurchases, and stocks admitted on the National Equities Exchange and Quotations system. The NEEQ system is an equity trading platform serving small-to medium-sized enterprises.

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said the investment scope stipulated in the draft almost covers all major categories of financial assets.

"Therefore, licensed foreign institutional investors will receive basically the same regulatory treatment as domestic players once the expanded investment scope is enforced, given that China has removed QFII/RQFII quota limits," Dong said.

China removed the quota limits on QFII and RQFII in September, as part of the country's breakthroughs in capital market opening-up last year.

Foreign investors' holdings, as a proportion of the A-share market's total free float market capitalization, increased rapidly to 4.21 percent by the end of last year, versus 3.15 percent a year earlier, the CSRC told China Daily.

The commission said there is "a strong consensus" among the Chinese government and financial regulators that deepening financial opening-up will usher in more competition and mature investment ideas, conducive to improving investor structure and strengthening support for the real economy.

It will actively study new measures to further open the capital market as well as the securities, funds and futures industries to foreign investment, the securities watchdog said.

Wang said the country's financial opening-up measures closely relate to its efforts to make the capital market more supportive of the real economy.

For instance, introducing institutional foreign investors into the NEEQ could improve market liquidity and therefore facilitate reform of the system, which is set to gather speed this year, according to him.

 

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2020-01-22 00:00:00
<![CDATA[SF embraces tech to tap demand for fresh food products]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533117.htm SF Express, China's leading express delivery company, is on a fast track to become a technology-driven logistics service provider as its international transport capability embraces a golden period amid international trade for fresh food products.

In 2018, the company transported live lobsters for the first time from the United States to China on a chartered plane. Since then, it has transported fresh Canadian lobsters and Chilean cherries to China more than 10 times.

During air transportation, the cabin temperature has to be between 2 C and 8 C to guarantee the survival of the lobsters.

"After the plane lands, SF employees can finish the work of unloading, dismantling plates, commodity inspections and customs clearance within two hours," said SF in a statement.

"Next, we will explore port-to-doorstep, or doorstep-to-doorstep transportation, and further extend our business chain," the company said.

Soon, SF will launch stable freight routes, shifting from temporary charters to fixed ones specifically to transport lobsters and cherries to China. It will also continue to seek new sources of fresh produce for transportation. For instance, it may transport salmon on its European route.

As of June 2019, SF operations involved 2,088 flights, including self-operated fleets, flights operated by leased aircraft, and leased space on commercial flights to transport goods, according to its earnings report.

In the first six months of last year, SF transported 3,407 metric tons of goods daily, on an average of 4,170 flights to 43 major Chinese cities and 15 foreign cities, according to the company.

Last year, SF launched eight new international freight transportation flights, operated by its self-owned aircraft. They include flights between Chengdu, Sichuan province and Incheon, South Korea; Urumqi, the Xinjiang Uygur autonomous region and Bishkek, Kyrgyzstan; Urumqi and Almaty, Kazakhstan; Changsha, Hunan province and Dhaka, Bangladesh; and Zhengzhou, Henan province and Kuala Lumpur, Malaysia.

Currently, Shenzhen-based SF Airlines, the aviation branch of SF Express and China's largest cargo airline, owns a fleet of 58 freighters. The company is also building its own airport in E'zhou, a small city in Hubei province. The airport is expected to become the first cargo transportation hub in Asia.

"From a basic logistics network to standard product transfers, and then to develop into a company that provides personalized solutions, this should be SF's growth path, just like other global comprehensive logistics giants such as DHL, UPS and FedEx," Changjiang Securities said in a research report.

As quality-conscious Chinese consumers show an increasingly strong demand for premier fresh products, the consumption market for imported top-end food and fruits has shifted from a niche segment to become mainstream.

Over the past few years, China has actively expanded imports, and gradually reduced the threshold for foreign goods to enter the China market. The country has also significantly reduced import tariffs many times, in addition to the introduction of some favorable policies for cross-border e-commerce business.

A research report by data analytics company Nielsen found that when people buy fresh food products, they are most interested in quality and safety, and many Chinese consumers are interested in trying new products.

In Ruijin, a small city in East China's Jiangxi province, there is an automated center owned by SF that offers integrated services such as sorting, cleaning, packaging, labeling and distribution of oranges.

Last year, the center introduced a near infrared sensor, which can display the weight, color, size and sweetness of oranges using image spectral analysis and digital weighting. The center can process 90,000 tons of oranges in an hour, and it is 1.4 times faster than manual sorting, with 30 percent less deterioration, SF said.

SF has also developed four packaging solutions that can satisfy the demands of different customers. For example, SF's packaging lab introduced damp-proof and freeze-proof packaging for goods transported to North China in winter.

So far, SF has established 16 such centers nationwide, which can process flowers, seafood, fruits and vegetables.

"SF is building its import and export cold-chain logistics system and services globally, with the support of its comprehensive self-owned warehouses and logistics infrastructure," said Zhao Xiaomin, a logistics industry analyst.

"With the fast growth of global trade and the business opportunities brought by the Belt and Road Initiative, SF is bound to become a leading player in the fresh products transportation segment in the next few years."

 

Cargo from an aircraft of SF Airlines is unloaded at Xi'an Xianyang International Airport. YUAN JINGZHI/FOR CHINA DAILY

 

 

 

 

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2020-01-22 00:00:00
<![CDATA[Production bases to ensure steady supply of medicines]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533115.htm Vigorous efforts by the Chinese authorities to boost the production of drugs that are often in short supply will help meet clinical demand, but there is a need to push harder on procurement and hospital use of those drugs to restore the balance between demand and supply under a market mechanism, industry experts said.

The Ministry of Industry and Information Technology, the National Health Commission, the National Development and Reform Commission and the National Medical Products Administration recently announced the selection of three pharmaceutical company alliances to establish the second batch of three new production bases for drugs that are clinically needed but are often in short supply.

The first list of three production bases was released in early 2019, and they were also formed with three pharmaceutical alliances.

In a joint notice, the three pharmaceutical alliances are led respectively by Grandpharma China Ltd Co and Guangzhou Pharmaceutical Holdings Ltd, Northeast Pharmaceutical Group Co Ltd, and North China Pharmaceutical Group Corp and CSPC Pharmaceutical Group Ltd.

The move is in line with a notice the four ministries co-released in early 2018 in which they would work together to organize the building of production bases to alleviate shortages of drugs with small-scale clinical demand.

In August, China's State Council also decided at an executive meeting to establish a long-term mechanism to prevent shortages and unreasonable price hikes of commonly used drugs. This included allowing producers to decide on the prices of drugs in shortage for a public procurement process without bidding to the authorities, and establishment of those production bases.

The production bases are expected to make use of the resources of member companies to scale up production, and ultimately to stabilize output and supply by 2020 for 100 titles of drugs that are often scarce.

Pharmaceutical companies on the two lists have expanded to provide cover all over the country. This will help coordinate production on a national basis for drugs that are scarce, as those selected are among the top domestic pharmaceuticals that have a rich product portfolio, strong quality control, and wide distribution network, industry experts said.

China introduced a market-oriented drug pricing reform in 2015 to replace the government's direct control over drug prices. It granted more pricing and negotiation flexibility to pharmaceutical companies, which in turn significantly raised the productivity of the sector.

But short supplies of some common drugs that have low prices and a small clinical demand are becoming a problem that has often hit the news headlines in recent years.

Shi Lichen, founder of Beijing Dingchen Consultancy, a medical consulting company in Beijing, said the undersupply usually occurs among low-price or reimbursable drugs when manufacturers are not capable or willing to continue their production due to low profitability caused by increases in manufacturing costs of items like active pharmaceutical ingredients.

Reductions in prescriptions, purchases and delayed payment from hospital buyers also reduced the confidence of manufacturers in the market, Shi said.

"The introduction of production bases will help secure production capacity for drugs that are often in short supply. But more measures that ensure public procurement, hospital use and timely payment are needed so that the companies will actually use the capacity," he said.

Shi suggested establishing a national surveillance system to deal with hospital behavior that affects the ability of pharmaceutical companies to produce and supply drugs. That includes the avoidance of prescription or procurement of the drugs on the national or regional shortage list, along with delays in payment.

The current public bidding and procurement process usually only decides the drug price, but not the amount that is purchased. The ongoing drug bulk-buying program guarantees to some extent both drug quality and quantity, he explained.

Shan Shenggao, executive president of Shanxi Quality Association for Pharmaceuticals, observed that drug undersupply is often accompanied by price hikes that in many cases are caused by illegal manipulation of the price and production of active pharmaceutical ingredients.

He pointed out that as the selected companies are mainly State-owned or publicly listed, they are expected to strictly follow laws and regulations to avoid scandals such as malicious reduction in production and supply in pursuit of improper profits.

He also said more measures should be taken so that the market could play a decisive role in the drug pricing mechanism, including effectively striking at illegal behavior that manipulates the supply and price of active pharmaceutical ingredients.

It is also important for the drug prices to fluctuate within a normal range as a reflection of the dynamics of market forces to avoid such malicious manipulation, Shan added.

 

A technician works on the production line of a pharmaceutical enterprise in Nantong, Jiangsu province. XU CONGJUN/FOR CHINA DAILY

 

 

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2020-01-22 00:00:00
<![CDATA[Air cargo market gets big boost from corporate giants]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533084.htm China's air cargo industry is undergoing a shake-up as major players, driven by growing market potential, seek to strengthen their positions.

Corporate giants at home and abroad are injecting capital and confidence into the Chinese air cargo field with larger fleets, more complete route networks and stronger infrastructure and service support.

On Dec 24, 2019, China Southern Air Holding Co Ltd launched an air cargo company as a new business entity to further tap the market. With a registered capital of 1 billion yuan ($144 million), the new company is registered in Guangzhou, South China's Guangdong province.

CSAH is the parent company of China Southern Airlines Co Ltd, China's largest air carrier with a fleet of more than 860 aircraft.

The move is aimed at consolidating its position in the air cargo market with services throughout the air cargo industry chain.

On Dec 31, SF Airlines announced its all-cargo freighter fleet had reached 58 on its 10th anniversary. The Shenzhen-based airline has become China's largest air cargo airline and has created a global air cargo service network with 65 destinations.

This year, the all-cargo freighter fleet of SF Airlines is expected to exceed 60, with more than 70 global destinations.

"Chinese enterprises are constantly optimizing their global industrial distribution and strengthening their global performance. Meanwhile, Chinese customers have shown their great cross-border consumption capacity," said Liddel Li, president of SF Airlines.

"All these factors foster our sustainable growth and confidence in the Chinese air cargo market."

SF Airlines has evolved into a medium-sized cargo airline over the past 10 years, a golden decade for China's express delivery and civil aviation industries.

China's express delivery industry has become the world's fastest-growing and most dynamic emerging post and delivery market. The volume of China's express packages has exceeded the total sum of the United States, Japan and Europe.

The civil aviation industry is also a highly sensitive barometer of the economy. China's civil aviation market has generally maintained growth momentum, and the air cargo sector is particularly impressive.

Airports are the most important infrastructure sustaining the development of the air cargo and air passenger transport sectors.

Thanks to the country's sustainable economic growth and persistent support, China's civil airport sector has achieved high-speed and high-quality development in the past decade, according to Zhang Rui, deputy director-general of the airport department of the Civil Aviation Administration of China.

From 2009 to 2019, the number of China's certified civil airports increased from 158 to 238 and eight airports advanced into the world's Top 50 airports.

In the same period, the cargo throughput of China's civil airports increased from 8.83 million metric tons to 16.74 million tons.

"The enhanced air cargo capacity is a highlight in the new round of airport renovation and construction," said Zhu Qianhong, general manager of the Guangdong Airport Authority.

In newly approved airport construction plans by the CAAC, the designed annual collective cargo capacity of Kunming, Yunnan province, Xiamen, Fujian province, and Chongqing airports will exceed 1 million tons.

The newly opened Beijing Daxing International Airport is expected to handle more than 2 million tons of air cargo by 2025. And major air hubs in Shanghai and Guangzhou will also gain increased air cargo throughput capacity.

SF Express has also invested heavily in constructing an international logistics hub in E'zhou, Central China's Hubei province. With a cargo-focused airport in the hub, the Chinese express delivery giant will strengthen its worldwide air express delivery system.

"Intensive moves of corporate giants in the Chinese air cargo market are driven by market potential. China's huge consumption market and unleashed spending power will drive the air cargo industry into a new round of development," Zhu said.

In October 2019, Guangzhou Aircraft Maintenance Engineering Co Ltd, or GAMECO, and Boeing announced a plan to launch a 737-800 Boeing Converted Freighter production line at GAMECO's Guangzhou Baiyun International Airport hangar.

China's rapidly growing e-commerce and express delivery market will make air cargo a key growth driver. Over the next 20 years, the Chinese market is expected to have demand for 230 new freighters and 500 converted freighters, said Boeing's latest market forecast.

"Air France-KLM Cargo greatly values the potential of China's air cargo market. We will continue to consolidate a foothold in the market through a prudent and judicious approach," said Rahul Pathak, head of Air France-KLM Cargo China.

"There is no other better place in the world than China where digital content and usage are embraced and welcomed. We have provided Chinese customers with a suite of 365-day, round-the-clock services on the digital platforms," he said.

Moreover, the airline has recently introduced a data platform specially designed for small-and medium-sized enterprises, enabling them to stay responsive to market changes swiftly and flexibly.

"China's air cargo market is embracing greater opportunities and challenges alongside the advance of the Belt and Road Initiative and higher demands in the global logistics system from all sectors," Li of SF Airlines said.

"It is a major opportunity for our domestic enterprises and also new business chances for global peers."

The writer is a reporter with Xinhua News Agency.

Employees of China Southern Airlines' air cargo unit prepare to load goods onto a plane at Dalian International Airport in Dalian, Liaoning province. CHINA NEWS SERVICE

 

 

Employees unload cargo from a B757 aircraft of SF Airlines at Nantong Xingdong International Airport in Nantong, Jiangsu province. XU CONG JUN/FOR CHINA DAILY

 

 

SF Airlines' employees unload goods from an aircraft at Xi'an Xianyang International Airport. YUAN JINGZHI/FOR CHINA DAILY

 

 

 

 

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2020-01-22 00:00:00
<![CDATA[White paper: Benefits of digital technology outweigh economic challenges]]> http://www.chinadaily.com.cn/kindle/2020-01/22/content_37533118.htm Managing the unanticipated impacts brought about by digital technology is critical, but academic literature on this topic remains sparse with most of the discussion being carried out in the press and social media.

The Luohan Academy, a think tank composed of renowned social science luminaries initiated by Alibaba Group Holding Ltd, attempted to fill the void by publishing its first white paper addressing how digital progress brings material benefits that outweigh challenges to developing economies.

The white paper titled Digital Technology and Inclusive Growth is expected to debut on Amazon soon. It focuses on the crucial issue of the contribution that e-commerce has made to China's growth and to the inclusiveness of the patterns associated with e-commerce, mobile payments and digital financial services.

"Two important objectives of the academic community are first, to understand business models and market structures that enable growth and progress, and second, to identify the impact of digitization on individual and social welfare," said Chen Long, managing director of the Luohan Academy.

For instance, unemployment caused by changes in skill requirements, abuse of private information, lagging competition policy, and increased inequality are some of the major concerns caused by technological advancement.

But industry experts pointed out that global unemployment rates have remained relatively stable since 1991 when comparable statistics became available, even though nearly 1.6 billion people have been added to the working age population since 1991, an increase of 50 percent.

Robots and artificial intelligence are still in the early stages of development and their ability to replicate sophisticated reasoning remains a matter of conjecture.

Previous waves of technological changes have been accompanied by fears that they would cause massive unemployment. Those fears ultimately proved to be unfounded.

China's experience showcased the potential for digitization to transform the process of "creative destruction" into one of "creative construction" in which the benefits from technological advancement can be to the benefit of everyone, Chen said.

A case in point are financial services that have become much more accessible, affordable, and sustainable. Millions of Chinese startups now enjoy access to credit without having to provide collateral.

More importantly, entrepreneurship disparities between regions, gender, income, and age have decreased. This is largely due to the lowered threshold of education and skills needed to take advantage of a new technology.

A World Bank report published in 2016 said because of their exceptionally low skill requirements, mobile phones and the internet have penetrated regions around the world at unprecedented speeds.

Inclusiveness is therefore enhanced by helping small-and medium-sized enterprises to grow, especially those in less-developed regions. There are now 10 million SMEs and startups on Taobao, China's largest e-commerce platform.

"China has accumulated rich experience that can be used to study key issues, opportunities and challenges related to digital technology," said Bengt Holmstro m, who is a 2016 Nobel laureate and an economics professor at the Massachusetts Institute of Technology in the preface. "At a time when almost all economies are increasingly being built on digital foundations, this is timely indeed."

As to the lingering doubts whether it's possible for nations to advance economically while having fewer resources than China, the white paper points out the difference between China and other developing countries is not as vast as one might think.

It said the costs for broadband, the critical digital infrastructure, vary dramatically around the world. China's costs are not the lowest: They are more than five times higher than those of South Korea, and two times higher than in the United Kingdom.

But that does not bar China from investing heavily in improving broadband access in rural areas, which is an important lever to spur e-commerce. That means taking full advantage of the lowest possible skill threshold that is required to adopt and deploy digital technologies.

"We hope that this first report will contribute to research on the digital economy and to balancing the debate that has shifted in a negative direction in the recent past, at least in some countries," said Christopher Pissarides, an economics professor at the London School of Economics and a 2010 Nobel laureate in economics.

"We also especially hope that the China experience as laid out here helps other developing countries integrate digital elements into overall growth and development strategies."

 

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2020-01-22 00:00:00
<![CDATA[Hainan medical tourism pilot zone supports pursuit of beauty]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37532997.htm China's pilot medical tourism zone in Hainan province has approved its first medical aesthetics product, and high-end international companies are stepping up efforts to take a share in the nation's booming medical aesthetics market.

On Dec 29, Ireland-based pharmaceutical giant Allergan announced that its medical aesthetics product Volux was introduced to Boao Super Hospital at the Boao Lecheng International Medical Tourism Pilot Zone, enabling beauty seekers at Boao Lecheng to get access to the product, which has not come to the Chinese market yet.

The zone is the only one of its kind in China that enjoys nine preferential policies, such as special permission to import medical technology, medical equipment and medicine.

Specifically, the policies allow medical institutions in the zone to import and use badly needed drugs and medical equipment from overseas that are not yet approved by the top drug authority in China.

However, this is the first time the pilot zone has approved a medical aesthetics product.

Liu Zhefeng, deputy head of the zone administration, said: "The reason we introduced a medical aesthetics product into the pilot zone is that we are seeing a constantly surging need. Every year, 600,000 Chinese go abroad to see a doctor, among whom 20 percent are seeking medical aesthetics services.

"We hope that Chinese residents can enjoy international-standard medical products without going abroad."

Chen Qiaoshan, a medical analyst at Beijing-based market research consultancy Analysys, said that the introduction of the medical aesthetics product into Boao Lecheng demonstrated that China's medical aesthetics industry is in line with international standards, and the scope of international docking has been expanded.

"Medical aesthetics consumption is one major part of overseas healthcare. Currently, the medical aesthetics market is mixed, and there are a flood of fakes. If highend international products are introduced to China, consumers won't bother to go abroad," she said.

"For international pharmaceutical companies, it is a signal that China's medical market is further opening up to complementary pharmaceutical products. Medical aesthetics is one sector, and the next sector may be assisted reproduction," she added.

Qiu Hanhua, general manager of the medical aesthetics business unit of Allergan China, said: "In the past five to 10 years, China's medical aesthetics market demands have grown rapidly, maintaining double-digit annual growth, and the growth momentum will remain. However, the supply side is far from enough. Many high-quality products haven't entered China yet."

A report by Chinese cosmetic surgery platform Gengmei showed that in 2018, China's standard medical aesthetics market reached 495.3 billion yuan ($71 billion), growing 20 percent year-on-year. There were 22 million consumers, each spending 22,000 yuan a year on average.

"Medical aesthetics consumption is a rigid demand. With constantly surging demand, Allergan will keep on innovating to meet consumers' high-quality demands," Qiu said.

Chen Kai'an, deputy head of Boao Super Hospital, noted that the pursuit of beauty has become a manifestation of a nation's development. "In the future, we will work with Allergan on the clinical research and application of medical aesthetics products, and fulfill the demands of domestic beauty seekers."

According to Allergan, its training center will cooperate with Boao Super Hospital to train local doctors on medical aesthetics operation, in order to benefit more Chinese consumers.

Qiu noted that there are three subcategories in medical aesthetics: surgery, micro plastic injection and skin care. In the coming few years, the number of consumers choosing the first subcategory will decline and those opting for the latter two will increase.

"With the rise of consumer confidence, they prefer to adhere to the principle of not changing their looks completely, but just pursuing a better look," Qiu said.

According to the company, Allergan will introduce skin care products and medical equipment to China this year to provide Chinese consumers with multiple choices.

 

A doctor gives a patient an injection of Volux, a medical aesthetic product of Allergan, at Boao Super Hospital in Boao, Hainan province. CHINA DAILY

 

 

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2020-01-21 00:00:00
<![CDATA[Imports of Kazakhstan beef to help raise supply in Beijing]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37533053.htm With the help of China CITIC Bank Corp Ltd, the Xinfadi Agricultural Products Wholesale Market in Beijing imported 60 metric tons of beef from Kazakhstan and will conduct a large volume of trade business with the Central Asian country in the long run.

The first container carrying 20 tons of beef has already entered the Xinfadi market to ensure the beef supply in Beijing during the forthcoming Lunar New Year holiday.

It is expected that the market will import 5,000 tons of fresh meat from Kazakhstan annually and will carry out cooperation in upstream areas such as animal husbandry, fattening operations and slaughtering, said Zhang Yuxi, chairman of the market, at a ceremony marking Beijing's first beef import from Kazakhstan on Monday.

"We are looking forward to more Kazakh agricultural products to come into Xinfadi and the Chinese markets," Zhang said.

Supplying 90 percent of agricultural products in Beijing, the Xinfadi market had a trade turnover of 131.9 billion yuan ($19.2 billion) last year.

China imported more than 18 tons of beef from Kazakhstan for the first time in August, via the land port of Horgos in the Xinjiang Uygur autonomous region, after China lifted the foot-and-mouth disease related ban on imports of beef of Kazakh origin.

"Up to now, four Kazakh beef production companies were allowed by the General Administration of Customs to export to China … We will further promote the Chinese administration to include more Kazakh beef exporters on its white list," said Tursyn Kabduldanov, deputy chairman of the committee of veterinary control and supervision at Kazakhstan's Ministry of Agriculture.

Liu Jiangping, an official from China's Ministry of Foreign Affairs, said the two countries have established close cooperation in trading agricultural commodities including wheat, soybean, beef and mutton.

During Chinese Vice-Premier Han Zheng's visit to Kazakhstan in May, China CITIC Bank and Halyk Bank, Kazakhstan's largest lender by assets, jointly held a sub-forum for high and new technology enterprises from both countries and arranged visits and business exchange activities for Chinese companies in Kazakhstan.

China CITIC Bank completed its purchase of a 50.1-percent stake in Altyn Bank from Halyk Bank in April 2018 and became the first Chinese bank to acquire equity stake in another bank in countries and regions associated with the Belt and Road Initiative.

Li Qingping, chairperson of China CITIC Bank, said, "The Belt and Road Initiative has brought development dividends for both countries … our bank will firmly implement the initiative and promote deeper cooperation between the two countries."

 

A vendor sells beef at a trade show in Kazakhstan. WEN LONGJIE/CHINA NEWS SERVICE

 

 

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2020-01-21 00:00:00
<![CDATA[Coworking hospital cuts costs for startups]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37533051.htm While the sharing economy has changed many aspects of people's lives in China, its latest beneficiary seems to be the medicine aesthetic industry.

Cosmetic medical clinic franchise BeauCare Clinics and online platform So-Young International Inc jointly opened China's first coworking hospital in Beijing in early November, where doctors can book a room to conduct treatment, with supporting staff, medical devices, and medicines provided by the hospital.

The six-story hospital is certificated to conduct class-3 surgeries, with everything ready in consultation rooms, operation rooms, and patient wards. In China, surgeries are categorized in four groups in terms of complexity, and class-3 is the second-highest level.

It employs administrative staff, nurses and anesthetists, but has no plastic surgeons, and does not accept walk-in patients.

Jin Xing, CEO and co-founder of So-Young, said such a model aims to meet the demand from doctors who want to start their own businesses but not have enough funds and resources.

"The shared hospital greatly reduces doctors' cost to start a business, and enables them to focus on patient treatment and surgeries," he said.

Li Bin, president of BeauCare Clinics, said the hospital is aiming to reach a break-even point within three months of operation, and more shared hospitals and clinics will be built if the first one succeeds.

It has already made enough to cover staff salary expenditure in the first month, with commissions charged at an hourly rate, he said.

Du Taichao, an established plastic surgeon with Beijing Huangsi Aesthetical Surgery Hospital, said the hospital had attracted the attention of the medical aesthetic community and his personal experiences there proved the hospital was helpful to doctors seeking safe freelance practice.

"With the market demand booming, many medical aesthetic doctors want to start their own businesses, and those employed by hospitals also want to practice at multiple places in their spare time," Du said.

"The shared hospital provides doctors a safe site to practice, when patients are more likely to choose doctors rather than hospitals for treatment nowadays," he said.

Du also spoke highly of the insurance programs BeauCare Clinics and the Beijing arm of Ping An Property & Casualty Insurance Co jointly developed for medical aesthetic doctors and patients.

China's medical aesthetics market reached 122 billion yuan ($17.5 billion) in 2018, with compound annual growth rate from 2014 hitting 23.6 percent. The market is expected to triple to 360 billion yuan by 2023, according to research firm Frost& Sullivan.

However, data from Ping An Property & Casualty Insurance showed the industry has a high incidence of botched procedures and incidents, with 40,000 cases recorded annually.

Officially unveiled in mid-December, the insurance products are intended for doctors and patients involved in the clinic franchise's operation.

If they prove to be mutually beneficial for both the insurance company and those insured, the products are likely to be open to all doctors and patients in the industry, according to Li.

He also claimed the insurance programs would help reduce the illegal practices and unnecessary treatments that are common in the industry, because they are only open to qualified doctors and do not offer compensation if malpractice is detected.

Products for doctors are categorized by surgical and nonsurgical practices, and the highest compensation is as much as 2.5 million yuan.

For patients, small-scale claims under 5,000 yuan will be approved as soon as they are proposed. Claims ranging between 5,000 yuan and 50,000 yuan will be approved within five days, and for those above 50,000 yuan, the insurance company will pay 50 percent of total compensation in advance within three days of a proposed claim.

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2020-01-21 00:00:00
<![CDATA[Home appliance firms deepen foreign expansion]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37533049.htm Marching into overseas markets has become a new profit growth point for Chinese home appliance companies due to the saturation of the local market and increasing costs of labor, logistics and raw materials, industry insiders said.

They said overseas branches or production bases not only brings China's advanced manufacturing, research and development, and management capabilities to overseas markets, but create job opportunities for local people, boost brand awareness, and enhance the competitiveness of Chinese enterprises in a global market.

Chinese television manufacturer Konka Group Co Ltd has announced plans to establish a branch company in Southern California in the United States this year in a bid to further tap the North American market and accelerate global expansion.

The new branch will focus on its own brand business-color TV sets-before expanding to other businesses such as smart home appliances. It plans to sell one million home appliances in the US by 2022.

"Our products have entered the North American market. But this time, we will re-enter the market as a brand," Zhou Bin, president of Konka, said during the Consumer Electronics Show (CES) 2020 held in Las Vegas. He added the company will hire local staff to speed up its globalization push.

Konka has showcased its latest products-Smart Wall, which uses the cutting-edge Micro LED technology at this year's CES, as well as other advanced display products such as 8K OLED TV, 8K Mini LED TV and a series of high-tech smart home products.

Konka has recently stepped up its pace of global expansion. In August 2019, the company set up a joint venture in Egypt, and established a complete supply chain system to facilitate the firm's expansion into Africa, the Middle East, Europe and the US.

It is committed to developing technological innovations outside the home market with an incubator. To date, the incubator has established 15 innovation bases in seven Chinese cities and five foreign countries, gathering top talents around the world.

Beijing-based consultancy All View Cloud said TV sales reached 22 million units nationwide in the first half of this year, down 2.7 percent compared with the same period last year, and related sales revenue totaled 64 billion yuan, a fall of 11.8 percent year-on-year.

The competition in the domestic home appliance market is fierce, and the price decline of major TV products has resulted in a decreasing profit margin and increasing pressure on enterprises, said Zhu Yuanyuan, head of the electronic products division at AVC.

The traditional TV market is almost saturated and companies need to seek new growth points, said Dong Min, an independent researcher in the home appliances sector.

"Expansion into overseas markets could not only relieve the pressure of high inventory in the domestic market but increase the international influence of Chinese home appliance companies," Dong explained.

TCL Technology Group Corp, another Chinese home appliance maker, is stepping up efforts to expand its presence in North America through the export of its advanced manufacturing technologies, and by boosting the production capacity of large-sized products in its Mexico factory.

In 2014, TCL bought Sanyo's TV assembly factory in Mexico for the final assembly of products to be sold in the North American market. The factory could make 3.5 million TV units annually. It has about 1,590 employees, most of whom are Mexican.

In order to cope with trade frictions between China and US, He Daoqing, deputy general manager of the Mexico factory under the TCL Electronics overseas manufacturing center, said the company added three production lines that mainly produce large-sized TVs in the second half of last year.

The sales of TCL color TV products increased 30 percent in North America last year, driven by the continued investments in brand marketing, expansion of retail channels and communication with local users, said Wu Yuji, vice-president of TCL Electronics and general manager of TCL Holdings' intelligent terminal business group (overseas) marketing headquarters.

He added TCL will launch large-sized 65-inch, 75-inch and 85-inch 8K TVs in the North American market this year. During the CES 2020, the company unveiled for the first time a next-generation display technology called Mini-LED, which delivers exceptional contrast and powerfully brilliant luminance.

"We believe that Mini-LED technology will shape the near future of the industry and TCL has pioneered in applying this technology to TVs," said Kevin Wang, CEO of TCL Industrial Holdings and TCL Electronics.

Apart from North America, TCL is expanding in emerging markets such as India, Southeast Asia and South America. The Huizhou, Guangdong province-based TCL began construction of its first-ever smart integrated manufacturing industrial park in Tirupati, India, in December 2018.

It also commenced construction of its new integrated manufacturing base in Vietnam last year. A report by research firm Sigmaintell said TCL ranked second globally in terms of TV shipment volume in the first half of 2019, next only to Samsung.

China exported 97 million TV sets in 2018, up 21 percent, said Peng Jianfeng, deputy secretary general of the China Video Industry Network.

Liang Zhenpeng, a consumer electronics analyst, said the growth rate in the domestic home appliance market is dropping so major players should accelerate steps to expand in overseas markets such as North America and South America, Africa and Europe as they continue to show huge growth potential in low, medium and high-end products.

Chinese electronics giant Hisense Group reported the global sales of its TVs reached over 20 million in 2019, ranking first in the domestic market, along with the South African and Australian markets, said Lin Lan, vice-president of the Hisense Group.

It has set a global sales goal of 40 million units within the next three years, which would rank it among the top two in the world. The revenue from overseas markets rose 20 percent year-on-year last year, the Hisense official said.

Lin noted the company has expanded the production capacity in its Mexico factory given the complex trade environment, with 4 million units of TVs being made each year. An additional 1 million fridges and kitchen appliances will go into production next year in this factory.

In 2015, Hisense purchased Sharp's TV business in Mexico and acquired Sharp America's TV line for the North and South American markets. It acquired a 95-percent stake in Japan's Toshiba Visual Solutions Corporation as part of its efforts to expand globally in 2017.

In August 2018, the Qingdao, Shandong province-based company completed the acquisition of Slovenian appliances producer Gorenje.

So far, Hisense has established 54 overseas branches in Europe, the Americas, Africa, the Middle East, Australia and Southeast Asia. It has five overseas production bases to ensure it has its own supply chain and 12 research and development institutions worldwide.

"In the past, most of the Chinese enterprises adopted the OEM or original equipment manufacturer model, but nowadays they tend to build up their own brands to participate in global competition," Liang said.

He added establishing factories in Mexico will help Chinese enterprises avoid trade barriers brought about by US-China trade frictions and speed up localization efforts.

 

A visitor checks out a Konka 8K Micro LED display during the Consumer Electronics Show 2020 in Las Vegas, the United States, on Jan 7. WU XIAOLING/XINHUA

 

 

An attendee poses for photographs at Konka's booth during the CES in Las Vegas, the United States, on Jan 7. WU XIAOLING/XINHUA
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2020-01-21 00:00:00
<![CDATA[More efforts needed to promote responsible application of AI tech, say experts]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37532998.htm As artificial intelligence is evolving from a fancy concept into an integral part of people's daily lives, industry experts called for more efforts to promote responsible AI practices through better measures in protecting privacy and data security.

Xiang Yang, an AI expert at the China Center for Information Industry Development, said AI is being used in more scenarios so consumers are giving serious attention to how their biometric information, especially facial information, is used.

"Compared with ID card and fingerprint information, facial recognition can help identify a person more accurately," Xiang said. "If such information is collected improperly or leaked, the risks will be considerable."

The comments came after a rash of AI-related controversies that have occurred in China and the rest of the world. In October, the first lawsuit against the use of facial recognition technology in China was filed by a professor who sued a wildlife park in Hangzhou, Zhejiang province.

Guo Bing, an associate professor at Zhejiang Sci-Tech University, sued the Chinese wildlife park for making it mandatory for visitors to subject themselves to its facial recognition devices to collect biometric data. The park had upgraded its system to use facial recognition for admission. Currently, the lawsuit is going through the courts.

The case occurred just one month after a face-swapping app went viral in China and triggered heated online debates about its possible violation of user privacy.

China's top industry regulator, the Ministry of Industry and Information Technology, later summoned social networking firm Momo Inc. The company powers ZAO, which lets users superimpose their faces onto those of celebrities and produce synthesized videos and emojis.

The ministry asked the company to collect user information by abiding by relevant rules and regulations, revisit the respective user agreements and protocols, and strengthen the protection of internet data and individual user information.

The pictures uploaded to ZAO are categorized as "personal sensitive information" that should not be leaked, illegally provided or abused. Some clauses in the app represent a violation of a national standard on personal information and impeachment of user privacy, said Wang Zheng, a lawyer at Zhejiang Taihang Law Firm.

In November, China's social media went into overdrive again after videos emerged showing some students in a primary school wearing AI headbands designed to track their attention levels. Many netizens expressed concerns the product would violate the privacy of students. Others doubted whether the bands would really improve learning efficiency.

"AI has the potential to enhance learning and students' academic performance, but a prudent approach would be desirable. It is the responsibility of schools to enhance teaching quality. Students' privacy should not be sacrificed or compromised," said Xiang Ligang, director-general of the telecom industry association Information Consumption Alliance.

On top of data leak risks, some profound problems emerged that posed questions about how human beings can co-exist with AI peacefully in the future. In one terrifying incident, an unregulated smartspeaker advised its user to commit suicide "for the greater good".

A UK student from Doncaster, Yorkshire, named Danni Morritt, said she was terrified when she asked the smart speaker to tell her about the cardiac cycle as part of her revision to become a paramedic.

The smart device advised her to stab herself in the heart for the greater good and to protect the Earth.

Li Deyi, an academician at the Chinese Academy of Engineering, said there was no need to exaggerate one AI incident as a serious threat to mankind. Many tech companies are also using AI to prevent suicide.

AI as a technology is not a problem, but its adoption must be regulated before a special law is introduced, Li added.

As AI gets increasingly smarter, some discussions have also emerged about whether the technology deserves some legal rights.

In January, the European Union's Patent Office rejected applications submitted on behalf of AI programs, sparking debates on whether AI can hold a new patent.

Some believe that AI should be regarded as an inventor that can hold its own patents to promote progress in societies. But others said AI is just a tool and it should not be granted the same rights as human beings.

"The increasing penetration of AI into more areas will pose more challenges to existing laws and regulations, which will require more efforts to pre-think about how to deal with such legal and ethical issues," Li added.

 

Security guards use a facial recognition system, supported by AI and big data, for security checks at Shenzhen Bao'an International Airport in Shenzhen, Guangdong province. MAO SIQIAN/XINHUA

 

 

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2020-01-21 00:00:00
<![CDATA[PBOC leaves interest rates unchanged]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37533033.htm Chinese monetary authorities have left interest rates unchanged, despite market calls, to maintain stable lending prices before the Lunar New Year holiday and ensure ample liquidity in the interbank system.

The one-year loan prime rate, or LPR, was reported at 4.15 percent on Monday, unchanged since November. The five-year LPR, which suggests the price of mortgage loans, also remained unchanged at 4.8 percent, the People's Bank of China, the central bank, said in a statement.

Many analysts speculated that the PBOC would reduce the new benchmark lending rate in January, a measure to lower financing costs of companies and support economic growth after GDP growth rate moderated to 6 percent in the fourth quarter last year.

But it doesn't rule out rate cuts in the near term, said experts. The LPR is updated on the 20th of each month. This new regime allows the central bank to change monetary policy more frequently, and to respond quickly to counter economic downside risks if necessary.

One reason the PBOC did not cut rates this month could be because of the commercial banks. Banks would like to keep a relatively stable interest income amid growth downside pressure, to offset losses from bad loans, said Zhong Linnan, an analyst with Yuekai Securities. "There is still the invisible lower limit of lending rates agreed by commercial banks."

It is more like a trade-off between the banking sector and the nonbank companies, especially for the smaller ones. And the PBOC has to make a decision either to sacrifice banks' profits, or reduce the loan prices for borrowers, said analysts.

Also, the unchanged interest rate level is conducive to maintaining a stable yuan exchange rate and preventing a rapid rise in the debt level, which is indicated by the leverage ratio, according to Zhang Xu, an economist with Everbright Securities.

To encourage banks to issue cheaper loans, the central bank may have to reduce the rate of medium-term lending facility (MLF), the instrument through which the PBOC lends money to commercial banks, after the Lunar New Year holiday, said Ming Ming, an economist at CITIC Securities.

Before that, the PBOC may focus on maintaining ample liquidity in the interbank system, through open market operations, such as reverse repurchase agreements, to inject additional funds, he said.

As China's interest rate system becomes more complicated, due to the so-called "liberalization reform", Sun Guofeng, head of the monetary policy department of the PBOC, clarified on Thursday what "cutting interest rates "means in the reformed system.

"Unlike the straight cuts of benchmark deposit and lending interest rates before, we should pay more attention to the changes of the real interest rate," according to Sun. For lenders, the benchmark has been shifted to the one-year LPR, and its level is generally determined by the market.

The one-year deposit rate, which was set by the State Council, will continue to play the role of the benchmark in the long term, but it can be adjusted according to economic growth and price level, Sun added. China's one-year deposit rate is 1.5 percent, unchanged since October 2015.

Since August, the LPR has only been cut by 0.16 percentage point, which indicates the Chinese monetary authorities do not want to stimulate economic growth by aggressive monetary easing.

According to the PBOC, the average interest rate of new loans issued in December was 5.74 percent, the lowest level since the second quarter in 2017, and it was down by 0.55 percentage point from the peak in 2018.

]]> 2020-01-21 00:00:00 <![CDATA[Quality of China's economic growth further improves]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37533029.htm The quality of China's economic growth further improved last year, as the industrial structure continued to upgrade with high-technology manufacturing industries being a strong driver, the nation's top industry regulator said on Monday.

China's industrial output rose 5.7 percent year-on-year last year, hitting its annual growth target range of 5.5 to 6 percent. It showed that China has stabilized the economic fundamentals against growth pressure and external turbulence, said Miao Wei, minister of industry and information technology.

According to Miao, the high-tech sector is playing a bigger role, as witnessed by the fact that the segment registered a year-on-year growth rate of 8.8 percent and outpaced the overall industrial output growth in the period.

Miao noted that emerging industries also maintained sound momentum. For instance, productions of urban mass transit vehicles and solar photovoltaic cells has increased 32.6 percent and 26.8 percent year-on-year respectively.

Last year, sales of vehicles were down by 8.2 percent year-on-year with new energy cars also experiencing a drop. The Ministry of Industry and Information Technology said on Monday it expected that the market will start to stabilize and recover this year.

In response to questions on whether China will cut subsidies for new energy vehicles in June and whether it will completely stop offering such subsidies by the end of 2020, Miao said the issue is still under discussion and the ministry "is likely to postpone the timeline".

"To build the 'mansion' of manufacturing next year, China will first ratchet up efforts in the research and development of core technologies. A group of State-level innovation centers on manufacturing will be built next year," said Miao.

He added that accelerated steps will also be made to transform traditional industries to boost the "resilience" of the construction.

"Efforts to transform traditional industries and nurture emerging sectors are of significance to China," said Wang Peng, deputy president of the China Center for Information Industry Development, a government think tank.

To maintain stable growth of the manufacturing industry, the first and foremost approach is to leverage advanced technologies to transform traditional industries, which accounted for 80 percent of the total sector, Wang said.

"Emerging industries, on the other hand, will decide China's position and competitiveness on the global stage. Sectors including 5G, artificial intelligence and the internet of vehicles will not only pull up manufacturing but will also stimulate investments in new infrastructure," he said.

China kicked off the commercialization of 5G in late October. GSMA, a global association of mobile operators, predicted the number of 5G users in China will reach 400 million by 2025, accounting for about one-third of the world's total.

By the end of last year, a total of 130,000 5G base stations have been built and more than 13.8 million smartphones have been shipped, the Ministry of Industry and Information Technology said on Monday. US investment bank Goldman Sachs painted an even more optimistic picture, predicting that China would build about 1 million new 5G base stations this year, up from its original prediction of 600,000.

Another report by the China Academy of Information and Communications Technology said that the superfast 5G is expected to directly bring 10.6 trillion yuan ($1.5 trillion) in economic output between 2020 to 2025, and 8 million jobs by 2030.

In terms of 6G, Wen Ku, head of information and communication at the Ministry of Industry and Information Technology, pointed out on Monday that China will maintain a steady pace in developing the next-generation technology.

"We started related work of 6G in 2017, but it is still in its infancy since we are still in the process of developing the 5G technology, including in terms of independent networking and applications," Wen said.

Miao added that China has enlarged the IMT-2020 (5G) Promotion Group to IMT-2030 to join global efforts in promoting standards on such technologies. "Whether for 5G or 6G, China will never close the door on making globally unified standards."

 

Employees work on the production line of a heavy machinery manufacturing plant in Zhangjiakou, Hebei province. CHEN XIAODONG/FOR CHINA DAILY
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2020-01-21 00:00:00
<![CDATA[Tourists favor experience-based travel]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37533015.htm Rather than joining tour groups for shopping and sightseeing, Chinese tourists are looking for unique experiences and new cuisines, according to a seasoned hospitality expert.

In fact, a growing army of travelers seeking novelty, whether embarking on domestic or international trips, are treating hotels as destinations in their own right, said Nils-Arne Schroeder, vice-president for Luxury& Lifestyle at Hilton, Asia-Pacific.

"In Asia Pacific and in China, it (the emerging trend) is about experiencing the hotel," said Schroeder, who also oversees the Hilton's luxury brand Waldorf Astoria in the region. "Luxury is not about shopping. It is about a unique experience that is personalized to you."

His optimism is backed by a joint research carried out by Hilton and consultancy Kantar last year that highlights the changing pattern of Chinese tourists' behavior, notably millennials who are tech savvy and have an impulse to share.

According to the study, 83 percent of respondents are "keen to explore" different local cultures, 82 percent enjoy "self-pampering", 77 percent are "open" to socializing with locals, and 77 percent are "self-expressive" by seeking out new experiences.

Schroeder pointed to the adoption of technology to cater to unique needs. For instance, the hassle of choosing room types, floors, even locations (such as closer to the gym, far away from the elevator), can now be achieved with a few taps on a mobile device through Hilton Honors app, or via local partnerships with WeChat, where the hotel giant runs a mini program that facilitates everything from booking to payment.

According to Schroeder, this leaves guests more time for personalized experiences with the help of a concierge who can tell them the secrets of the city they are visiting, rather than being shackled to simple and redundant logistics tasks.

"We will continue to be absolutely positive about domestic travel in China, given that 11 percent of GDP growth here is related to tourism and the government is pushing ahead with tourism-related projects," he said.

The "me generation" who thrive on being in the limelight, relish opportunities to be visible, including sharing images through social media to express their identities.

"People post on Weibo, on WeChat and Instagram, showing they are proud of their happiness," he said. "And this is a trend where Asia-Pacific is ahead, and China in particular."

This is also in accordance with a related finding by consultancy firm McKinsey, which said trendseekers tend to venture into new territories and follow popular routes on social media such as Douyin or Instagram.

Contrary to the myth that these tourists prefer their own cuisine, Chinese travelers do go to certain destinations specifically to try food. To cater to that need, Schroeder said there are 11 exceptional dining venues offering an incredible selection of unique, immersive experiences at Waldorf Astoria's newly opened resort in the Maldives.

According to hospitality intelligence firm STR, about one quarter of rooms under construction in the Asia-Pacific region belong to the Hilton group, a figure that increases to one-third in China. Waldorf Astoria is on course to open its fourth property in the coastal city of Xiamen in Fujian province this summer.

Another driver is an ever-expanding demographic that is defined as three-generation travel. This refers to travelers seeking more spacious hotels, with an increasing variety of needs, and more leisure time, unplugging from stressful urban life and relaxing with family and friends, Schroeder said.

The proportion of luxury hotels in China could eventually expand to nearly 40 percent from the current 20 percent, thanks to rising disposable incomes and a growing propensity of travelers to find places to stay that fit their personalities, said Chen Xin, an analyst at UBS Securities who specializes in the hospitality industry.

"As income growth outpaces price tags for rooms in five-star hotels, we are seeing the majority of guests shifting from business travelers to leisure travelers in these hotels in China," Chen said.

"That means spending will not just grow but become much more dynamic in sectors that cater to individual pursuits."

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2020-01-21 00:00:00
<![CDATA[Private sector offers doctors flexibility]]> http://www.chinadaily.com.cn/kindle/2020-01/21/content_37533037.htm Plastic surgeon Guo Shuzhong decided to resign from First Affiliated Hospital of Xi'an Jiaotong University in mid-2017 to establish a private plastic surgery hospital with a group of renowned doctors and investors.

Guo, now 56, conducted China's first and the world's second face transplant operation in 2006 at Xijing Hospital, a military hospital in Xi'an, capital of Shaanxi province, where he worked for 33 years until late 2015, before joining the university hospital in early 2016.

He achieved international recognition again in late 2016 when he and his team grew a human ear on a man's arm after his ear was deformed in a car accident.

Now, as president and equity holder of First BCC Plastic Surgery Hospital in Beijing, Guo said he is satisfied with the current situation and looks forward to new possibilities, despite not being able to continue with basic scientific research.

"I earn much more money than I used to, but what's more valuable to me is the freedom to focus on ear surgeries and the agreeable work environment where both patients and doctors feel respected," he said.

His dream is to build a world-class ear reconstruction surgery center in China in terms of both surgery quality and quantity, and feels the private hospital is the right place to realize it.

In public hospitals, much of his energy was diverted to other plastic surgery fields he had little interest in, administrative affairs and training of young doctors.

Now he can spend more time on communicating with patients, has more outpatient visits for ear reconstruction, and performs more ear surgeries.

Guo is among a growing number of aesthetic medicine professionals venturing into the private sector in pursuit of higher pay and career advancement.

Despite a lack of reliable data on China's aesthetic medicine professionals practicing in private facilities, China's leading online platform for aesthetic medicine, the Nasdaq-listed So-Young International Inc, reported impressive growth in the third quarter of 2019, with most registered practitioners coming from the private sector.

So-Young's total revenue in the third quarter of 2019 reached 302.4 million yuan ($43.35 million), a 79.6-percent increase year-on-year, while profit from operations was 20 million yuan compared with a loss of 22.1 million yuan in the same period of 2018.

Du Taichao, an eminent plastic surgeon with Beijing Huangsi Aesthetical Surgery Hospital, attributes the surging number of aesthetic medicine practitioners in the private sector to China's ongoing medical reforms that optimize distribution of resources under market mechanism, particularly to the policies that remove restrictions on independent practice and encourage licensed doctors to practice at multiple sites.

Internet applications, especially social media and specialist platforms for aesthetic medicine, also make it easier for doctors to promote themselves, he said.

Gengmei, a Chinese online aesthetic medicine platform, said about 20,000 doctors and 8,000 facilities have registered on it, among which 90 percent are from the private sector.

So-Young provides a variety of tools for doctors to create and promote online content as well as channels for doctor-patient communication, including online consultancy, video sharing and livestreaming, to help doctors and facilities gain professional reputations and provide services.

In 2019, the gross merchandise volume of 423 doctors on the platform surpassed 1 million yuan, increasing 70 percent from 2018.Their average income through the platform was 2.03 million yuan, with average customer expenditure increasing 31.53 percent, figures from the company showed.

Plastic surgeon Jiang Ya'nan left a public hospital to work for a private facility in 2014, and opened her own practice in 2016.

Last year, she answered online inquiries from more than 10,000 patients on So-Young, which helped her attract attention from potential customers, and made the platform the largest online channel for her clinic to get customers.

Guo observed that the internet is becoming a vital channel for China's private aesthetic medicine practitioners to get in touch with targeted customers, build their reputations, and create close doctor-patient bonds to enhance services and boost revenues.

His hospital, which was officially established in September 2017, is already making a profit and is gaining a good reputation among customers and the medical community.

The hospital's rapid rise is mainly because it is managed by professional doctors who have equity shares and pay extreme attention to fair pricing, patient experiences and avoidance of overtreatment, but the influence of the internet is also indispensable.

Social media and video-sharing platforms enable the hospital and its doctors to communicate with patients directly, respond to their inquiries quickly, and post problem-solving articles, tutorials or videos that patients are interested in, to foster trust and establish a professional and caring image, he said.

Yang Mingjie, an experienced plastic surgeon from Dalian, Liaoning province, who established her own practice Dalian Calmagic Cosmetic Clinic in 2015, agreed that easy access to internet platforms for both doctors and patients, including social media, video-sharing apps, and So-Young, provide doctors more cost-effective channels to demonstrate to potential customers their medical and aesthetic expertise-the core of their professional skills.

Her team regularly spends time on So-Young, Sina Weibo, and WeChat to promote professional knowledge and enhance doctor-patient communication.

In 2018, her clinic's monthly revenue hit more than 1 million yuan, although it declined in 2019 due to overall economic slowdown.

The brand promotion of an aesthetic medicine practitioner should center on pre-and post-surgery demonstration and the doctor's personal philosophy of aesthetics, with complementary information on their educational experiences and career achievements, so that messages delivered to patients will not be misunderstood and the communication between doctor and patients will be productive, according to Yang.

"While conducting an aesthetic medical procedure is relatively less demanding on the number of doctors and nurses, or the operation of complicated medical devices, compared with heart, brain or other major medical surgeries, it requires more high-quality doctor-patient communication and mutual understanding to avoid medical disputes because the appreciation of aesthetics is quite subjective," she said.

However, both Guo and Yang noted that market competition has become fiercer amid the surging number of aesthetic medicine practitioners in the private sector.

Guo advised that doctors, especially those who leave public hospitals for private ones, strengthen their medical and self-promotion skills.

He also said integrity is a must if a doctor wants to stand out from the competition.

 

A plastic surgeon examines a patient who is about to undergo surgery in Nanjing, Jiangsu province. XINHUA

 

 

A surgeon performs an operation on a patient in Hefei, Anhui province. JIANG YU/FOR CHINA DAILY
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2020-01-21 00:00:00
<![CDATA[Brighter Sino-German ties could stabilize global economy]]> http://www.chinadaily.com.cn/kindle/2020-01/20/content_37532818.htm Since 2015, the China-Germany High Level Financial Dialogue has become a key platform for bilateral communication and policy coordination on strategic, overarching, and long-term issues in the fiscal and financial fields.

Chinese Vice-Premier Liu He and German Vice-Chancellor and Minister of Finance Olaf Scholz successfully co-chaired the second dialogue in Beijing on Jan 18, 2019.

They had in-depth exchanges on promoting cooperation and coordination in the areas of macroeconomic landscape, global economic governance, financial industry and its regulation, as well as monetary and fiscal policy.

The dialogue sent a most positive message of China and Germany committed to jointly safeguard multilateralism and economic globalization.

Over the past year, steady progress was made by both China and Germany to consolidate outcomes of the dialogue, contributing to the development of bilateral economic relationship and global economic governance. With financial cooperation being the key among all outcomes from the dialogue, China is further opening up its financial sector, encouraging German-funded financial institutions to conduct business in China with multiple measures introduced.

To list a few: the China Banking and Insurance Regulatory Commission signed a letter of intent during the dialogue to strengthen banking regulatory cooperation with Germany; after the dialogue, the China Securities Regulatory Commission also signed a memorandum on derivatives regulatory cooperation and information exchange with the German Federal Financial Supervisory Authority, to strengthen financial regulation and market cooperation.

New policies issued in July 2019 allowed qualified foreign institutions to obtain "Class A" panda bond lead underwriting license, which has a wider business scope compared with the "Class B" license. Last September, Deutsche Bank received the "Class A" lead underwriting license in China's inter-bank bond market under the new policy.

Germany also attaches great importance to the connectivity of the capital markets between the two countries, providing more investment and financing opportunities for German institutions and individuals, promoting the transformation of the German financial system and the construction of the European capital market alliance.

The China Europe International Exchange and Eurorex have set up a joint working group to support the launch of China A-share index derivatives in Frankfurt.

The two countries are preparing for a potential Shanghai-Germany Stock Connect program, which aims to strengthen the interconnection of the Chinese and German stock markets, and promote the German "blue chip" listed companies to issue Chinese depository receipts on the Shanghai Stock Exchange. It will also support qualified Chinese listed companies, especially the manufacturing companies, to issue global depository receipts in the Frankfurt stock market.

China-Germany cooperation in cross-border renminbi business has made extraordinary progress. In the past year, three German institutions including Deutsche Asset Management, have been approved as RMB-qualified foreign institutional or RQFII investors, which accumulated an overall quota of 10.54 billion yuan ($1.51 billion).

The internationalization of RMB will allow China to expand its macroeconomic policy space, improve its ability to participate in global financial governance, and help build a more competitive and sustainable international monetary system.

The successful experience of Germany's economic and social reconstruction after the World War II could be utilized by China as an important inspiration in terms of deepening reform, promoting the modernization of national governance system and governance capacity. Germany, which has close ties with China in economy and trade, will further enjoy the development dividend of China's reform and opening-up.

With the bilateral dialogue, the two sides are further deepening cooperation in areas including structural reform centered around sound and transparent public finance. Stable macroeconomic policies, housing policies, innovative financing mechanisms for small and medium-sized enterprises, fintech, tax reform, anti-money laundering and anti-terrorism financing, green finance, and sustainable finance... all these fields are tipped to benefit.

China and Germany, as countries with significant influence, both bear compelling obligations on world economic development and financial governance. The two countries shall promote China-EU interconnection platform, by linking the Belt and Road Initiative with the EU-Asia Connectivity Strategy and the European Infrastructure Plans. In 2019, the major financial institutions from China and Germany maintained close communication on the BRI and the third-market cooperation, contributing to the development of both economies, as well as the third-party countries participating in the BRI.

Both China and Germany are major trading nations. For years, China has been the largest trading partner of Germany, and Germany has been China's biggest trade destination among EU countries. Germany is also the EU country with the largest investment in China.

In recent years, Chinese enterprises have largely increased the amount as well as the efficiency of their investment in Germany, showing that trade and investment between the two countries are complementary and mutually beneficial.

From January to September last year, bilateral trade reached $138.43 billion. China's investment in Germany rose by $1.25 billion, up nearly 23 percent year-on-year. Germany's investment in China also rose by $1.38 billion.

Both sides recognized that a non-discriminatory, open market access and a stable institutional framework are prerequisites to boosting bilateral trade. Both countries are expected to lower existing barriers to market access and investment, improve business environment for foreign enterprises, and further strengthen bilateral economic and financial ties.

We need to recognize that global uncertainties continue to exist. Economic nationalism is on the rise. But, as the major economies of Asia and Europe, China and Germany could help improve matters.

Bilateral communication and cooperation under the high level financial dialogue mechanism will not only reinforce and deepen economic and financial ties between the two economies and bring sustainable economic and social development to the two countries, but also impart tremendous momentum to the development of international monetary system, and global economic and financial governance, boost global development and help avoid imbalances in development during the process.

In this regard, the steady advancing cooperation between China and Germany makes a perfect model of mutually beneficial cooperation, and most certainly will play an increasingly important role in global economy with an unlimited future ahead.

Hu Kun is the deputy director of the Economic Research Office at the Institute of European Studies. The IES is part of the Chinese Academy of Social Sciences. He is also the secretary general and deputy researcher at the China-Germany Cooperation Center.

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2020-01-20 00:00:00
<![CDATA[New Retail digitalizes fresh food trade to top huge potential]]> http://www.chinadaily.com.cn/kindle/2020-01/20/content_37532873.htm On-demand food delivery platform Ele.me is banking on China's fresh food e-commerce sector and developing its new Exianda project to help its customers buy fresh vegetables from home.

The company will cooperate with local vegetable markets to run the project, in an attempt to help groceries improve their digital operations, and let consumers and small restaurants buy their food more efficiently.

Xiong Bin, vice-president of Ele.me, said the company will also build an open digital platform for supermarkets and retail chains. The platform will include supports in the form of a digital supply chain, distribution, finance and retail functions. It has inked in-depth cooperation agreements with Carrefour, RTMart, Bailian and Wumart.

Xiong said the growth of orders for fresh products from third-and fourth-tier cities has surpassed that from first-and second-tier cities, showing huge potential.

Ele.me data revealed fresh product delivery is continuously increasing and the transaction volume jumped ten-fold in the past year. More than 33 percent of consumers who buy fresh vegetables through the app are the younger generation, with their ages ranging from 25 to 29.

The number of middle-aged and elderly Chinese customers who buy fresh vegetables on Ele.me has increased by more than 500 percent in 2018, compared with 2017.

The average value of an order placed on Ele.me for vegetables is about 60 yuan in Beijing, according to the platform. So far, the fresh food delivery services of Ele.me have expanded into 400 cities from 100 in March 2019.

Data from consulting firm iResearch showed China's fresh food e-commerce trading volume exceeded 200 billion yuan ($29.1 billion) in 2018, and the number is expected to soar to 705.4 billion in 2022, representing huge market potential.

The rapidly growing number of China's high-income consumers has become a key driver of premium brands and other high-quality food products.

Chinese e-commerce giant JD said it would open more than 500 7Fresh-JD's fresh food stores-within five years, eyeing the opportunities emerging from the fresh food retail sector.

"Fresh food is the most demanding category in e-commerce, and covers a range of fields including logistics, finance and user-end operations. But at the same time, it has huge market potential," said Lyu Haoze, an analyst with the China E-Commerce Research Center.

Lyu said the online fresh food sector has entered a shakeout phase, and survivors are likely to see explosive growth.

Hema Fresh, a fresh food chain backed by Alibaba Group Holding Ltd, is also likely to reshape the landscape of China's retail industry.

As a pioneering example of Alibaba's New Retail strategy, which integrates online with offline shopping and provides a refreshing consumer experience, Hema had opened 150 brick-and-mortar stores across the nation as of June 30, 2019.

 

Shoppers at a JD fresh food store in Beijing. MAO YANZHENG/FOR CHINA DAILY

 

 

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2020-01-20 00:00:00
<![CDATA[Market fundamentals in focus on opening-up]]> http://www.chinadaily.com.cn/kindle/2020-01/20/content_37532819.htm It makes sense that foreign banks, money managers and other financial firms are eager to do business in China's domestic markets. In October 2019, the Credit Suisse Global Wealth Report calculated that 100 million Chinese are now in the top 10 percent of global wealth, compared to 99 million Americans.

China also has 4.4 million dollar-millionaires, second largest in the world. Despite increasing consumption in recent years, China still saves about 40 percent of GDP.Chinese households are sitting on about 90 trillion yuan ($13.1 trillion) of investable assets.

Deloitte estimates that China's potential "addressable" retail financial wealth, even ignoring future GDP growth, amounts to more than $30 trillion. Foreign financial companies see great opportunities in managing even a small part of this money.

But what is in it for China?

The Chinese government decided to open up its domestic financial markets in order to: 1) help create more institutional ways for Chinese citizens to save money; 2) create more risk mitigation tools; 3) supply more funds to the private sector; and 4) focus investors on real-economy fundamentals rather than speculation.

In the past, investing in Chinese stock markets was seen by many investors as basically a kind of gambling. Even worse, many investors believed that there may be an implicit government guarantee that the markets would not be allowed to fall or that indebted companies would not be allowed to fail.

As part of the phase one trade deal with the United States, China stated that it would increase market access for international finance firms and impose stricter rules around intellectual property and currency movements. It should be noted that these measures fulfill US requests, but they are clearly in China's interest and are already well underway as part of China's broader process of reform and opening-up.

A key factor in China's financial reform is increasing the role of professional institutional investors-insurance companies, mutual funds, pension funds-who will invest on the basis of fundamental analysis. That is, they will determine whether to invest by using publicly available information from the invested companies to assess the prospects for future profits and growth.

This is tied in with recent regulatory changes designed to force Chinese companies to increase their disclosure, to increase the penalties for misrepresentation or nondisclosure, and to convince investors that they need to do their own analysis and not rely on assumptions that there is a government guarantee of the value of any particular stock or bond.

These reforms will increase the stability and predictability of the Chinese markets and raise the level of investment into them. It will also help savers by giving them a larger variety of savings venues and by increasing the transparency and stability of their available investments.

The foreign financial firms coming into the domestic market will also increase competition and create new financial products for customers. Liu Min, China Market Analyst for European brokerage house FXTM, said: "The opening-up has introduced new competition in China's financial market which has propagated the optimization of resource allocation and benefited China's investment environment … (This) will put some internal pressure on the domestic financial system and accelerate the reform of the domestic financial services sector by strengthening the pace of financial innovation, products optimization and service updating."

On Jan 1, foreign insurers were allowed to set up 100 percent-owned units offering life insurance. Since life insurance is often a way of saving and because insurance companies are large institutional investors in both the stock and bond markets, foreign expertise in this market could help increase the importance of analysis of fundamentals of the underlying value of companies in the Chinese markets.

Also, on Jan 1, overseas firms were allowed to set up their own futures trading entities. Assuming that the futures and derivatives markets are strongly regulated, this offers the potential to create new tools for firms to limit financial risks. For example, a company could invest strongly in renewable energy, but might buy a futures contract to give them some protection against a fall in electricity prices.

Beginning in April, foreigners can apply to set up 100 percent-owned mutual funds. Again, increasing the role of large institutional investors will stabilize the Chinese stock and debt markets and strengthen the role of fundamental analysis of the value of the invested companies.

Finally, beginning Dec 1, global investment banks will be able to carry out domestic banking business in China, without needing a Chinese joint-venture partner. This will force China's huge number of smaller investment banks to consolidate and become more competitive-with the goal of eventually creating Chinese investment banks that are internationally competitive with the US and UK giants.

It will take some time for foreign companies to find a viable business model in this market. Liu of FXTM said: "Foreign financial firms will likely go through a trial period to test the waters and get familiar with China's market. As such we do not believe that a significantly higher amount of capital will be made available to the private sector in the early stage… At present, the most common and likely business model for foreign financial firms and foreign capital will still be share-holdings. However, we believe that once foreign players become more familiar with the Chinese market, they might explore more options."

With so much domestic savings, China does not really need foreign money. Even with the recent influx of overseas investment because of the inclusion of A shares in the MSCI indexes, the actual amount of money is a tiny portion of the total market capitalization. However, foreign inflows are a signal of confidence in the Chinese markets. Plus, the investments made by foreign companies doing fundamental analysis is an indicator of valuable companies.

China's reforms in its financial services markets will increase the methods that average savers can use to save for retirement, education, emergencies, or major purchases. Until recently, many put most of their money into low-return bank accounts.

And, one reason housing prices are high is that apartments were seen as one of the most secure investments. Many investors also speculated on high-return wealth management products, without fully understanding the risks involved.

The growth of pension funds, mutual funds, and various insurance products will give savers better ways to make fundamentals-based investments and avoid uninformed speculation.

The opening of the financial services markets is part of a larger policy of opening-up. For example, foreign ownership restrictions on building commercial vehicles will be removed this year, followed by liberalization of the rules on passenger cars by 2022, to be followed by removal of all restrictions in the automobile market in the next few years.

And, starting May 1, foreign companies will be allowed to apply for licenses to conduct oil and gas exploration and production. Last year, the Chinese government implemented a "negative list" system that allows foreign investment in any sector not explicitly prohibited. And, the new foreign investment law allows 100 percent foreign ownership in most areas and treats foreign firms as legally the same as domestic firms.

Because of China's financial services market opening up, 2020 will be remembered as a year of financial reform, at least on a par with the famous London "big bang" of 1986.

There are some dangers in opening up financial markets. After all, risky investments by the large US and UK banks were largely responsible for the global financial crisis of 2008. But, combining opening-up with a strong regulatory environment can mitigate the risks.

Emphasizing disclosure and fundamental analysis will lead to the development of a financial system built around institutional investors that can properly reward savers while directing investment toward the most productive companies.

 

CAI MENG/CHINA DAILY

 

 

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2020-01-20 00:00:00
<![CDATA[Vivo vows to dial switch-off message]]> http://www.chinadaily.com.cn/kindle/2020-01/20/content_37532851.htm A unique subway station in Gurgaon, a city about 30 kilometers southwest of India's capital New Delhi, is named after Chinese tech major Vivo. Its walls are painted with a giant advertisement of the smartphone vendor. The Vivo logo on the subway station, it appears, is bigger than the one on the Chinese company's office building across the street in northern India.

To reduce operating costs, Indian metro operators in various cities outsource the maintenance and daily management of subway stations to the private sector. Vivo has signed contracts to maintain two subway stations in India. The other one is in Mumbai, India's financial and commercial capital located in the western region.

As a result, Vivo became the only smartphone vendor in India that has a subway station named after it.

The move is designed to establish closer bonds with local consumers and to boost its brand image in the world's second-largest smartphone market.

Currently, Vivo's products and services are available in more than 30 countries and regions, with India being one of its key stops in the go-global journey. Vivo started exploring the opportunities in India in 2014, after gaining wide popularity on its home turf with strong offline retail channels and cutting-edge smartphones.

Five years on, the company, based in Dongguan, Guangdong province, is the No 3 smartphone vendor in the South Asian country. It has a better understanding of its own go-global strategy, which is summarized as "more local, more global".

"'Go-global' is not about how many countries a company operates in. It is about how we have tried our best to use a local mindset and integrate with local culture and local management styles to serve local consumers," said Chen Zhiyong, CEO of Vivo India. "That is what Vivo founder Shen Wei has summarized as 'more local, more global'."

Currently, the company accounts for 15. 2 percent of the Indian smartphone market, according to the latest data from the market research company International Data Corp. From July to September 2019, Vivo registered strong year-on-year growth of 58.7 percent.

When it comes to offline retail, Vivo has climbed to the second spot in October, grabbing 23 percent share, data from another market research company Gfk showed.

None of these milestones was reached easily. For instance, every company is looking for ways to get associated with Bollywood and cricket, two critical factors in India, to boost their brand awareness.

Since it is said opportunities beckon only those who are prepared, Vivo has established links with local cricket associations as soon as it entered India. It was among the first to know that there was a chance to sponsor the Indian Premier League, the most popular franchise-based cricket tournament in the game's shortest format.

Finally, in 2015, Vivo spent about 2.2 billion yuan ($320 million) to be the title sponsor of IPL for five years. At the signing ceremony, something interesting happened. Vivo India's CFO paid the first instalment of the sponsorship money immediately. The prompt, upfront payment came as a complete and pleasant surprise to the IPL Governing Council as Vivo still had 48 hours to the deadline.

"It was a big amount of money which, if put in the bank for 48 hours, can generate handsome interest. But since we had already inked the deal, we wanted to show our sincerity. It's part of our Vivo culture that we never make small gains at other people's expense,"Chen said.

Vivo is influencing not only its partners but also its employees with its unique culture. An Indian worker at Vivo's plant in the Greater Noida area of Uttar Pradesh state, said he used to work for South Korean company Samsung's local factory earlier.

"Operations in Samsung are more system-based, but Vivo is more culture-driven," he said. The elevators of Vivo's plant are decorated with posters that explain the company's Benfen culture, which has a profound meaning ("do the right thing, no matter what", and "never try to benefit at the expense of others").

The Vivo plant employs more than 9,900 workers, and runs at full annual production capacity of 25 million units. Vivo is investing 4 billion yuan to set up a second manufacturing plant in India, to better meet local consumers' growing demand.

Xiang Ligang, CEO of telecom industry website Cctime, said:"Amid fierce competition in India, Vivo has infused the market with its own characteristics. For instance, it is the first and only smartphone vendor that runs all of its after-sales service centers, to ensure quality."

In its latest Indian advertisement featuring actor Aamir Khan, who is also well known in China thanks to his smash hits such as Dangal and Secret Superstar, Vivo made a bold move by telling users to take a break from their phones, a message that some commentators interpreted as potentially suicidal for a smartphone company to spread.

But the message triggered positive responses online. The target audience of consumers took it as "Your loved ones wish for your time. Vivo encourages you to choose your switch-off time".

"We have more than 55 million consumers in India. I feel the onus is on us to spread the right message about the responsible usage of smartphones," said Nipun Marya, director of brand strategy, Vivo India.

Indians now account for 95 percent of Vivo India's employees, with factory workers, salespersons and people in its local headquarters all recruited locally.

"We can now say we have survived in India. We will use what we have learned here as the first signs of dawn to light up our long way to going global," Chen said.

 

A salesperson (second from right) shows a prospective buyer the features of Vivo mobile phone on display at a stall in the
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2020-01-20 00:00:00
<![CDATA[Data gives rare insight into magic of delivery]]> http://www.chinadaily.com.cn/kindle/2020-01/20/content_37532822.htm The sight of deliverymen speeding on their two-wheelers on China's roads has become so common I used to barely notice them until recently. But a recent industry report made me sit up and take notice.

The report-more on that in a bit-said 77 percent of the deliverymen come from rural areas in Henan, Anhui and Sichuan provinces in China. And 15 percent of them are university graduates!

The significance of China's on-demand food delivery and services platforms can't be overemphasized. They are playing a vital role in solving the employment issue amid slowing economic growth.

The booming digital economy has brought hundreds of millions of new jobs to migrant workers, especially in China's first-and second-tier cities.

As the world's most populous country, China is aware its tremendous workforce is one of the most important factors that has contributed to its unparalleled economic development over the past decades.

The Chinese government attaches great importance to the issue of employment, and takes employment as the first priority in the task of improving people's livelihoods and ensuring the stability of the society.

Ele.me and Koubei, which provide local delivery services, plan to recruit more than 5,000 new employees, said Wang Lei, president of Alibaba's local services company in February 2019.

He also said Ele.me and Koubei had already hired over 6,000 new employees in November and December of 2018 and January of 2019.

Alibaba's local services company has also proposed a plan to empower 1 million catering merchants to upgrade their digital solutions, help 1 million vendors to create online offerings, and create 1 million New Retail-related jobs in 2019.

About 77 percent of its deliverymen come from rural areas, and the incomes of the full-time riders exceed the average monthly salary of the employees engaged in private enterprises in urban areas across the nation, according to the company, which was expected to add at least 800,000 new registered riders in 2019.

In addition, more than 2.7 million riders across the country have gained incomes from Meituan Dianping, another food delivery and lifestyle services platform, said an employment report from Meituan's research department.

The figure was up about half a million from 2017, and around 30 percent of the workers, who mostly deliver meals via electric bikes, earn more than 5,000 yuan ($726.5) a month. Most of them were born in the 1980s or 1990s. And 92 percent of them are male.

About 50 percent of the deliverymen have become the major sources of family incomes, and 60 percent are married and have kids, while the spouses of 40 percent of the drivers stay home to look after children or parents.

The report said that about 45 percent of them deliver over 20 orders a day and 40 percent travel over 50 kilometers, the length of Beijing's Fourth Ring Road. Furthermore, 35 percent of them earn a supplementary income in factories or at enterprises, in the public sector or by running their own businesses.

The data also showed that although they spend most of their time on the road, more than 40 percent used their limited spare time for learning and self-development in the past year, with 9 percent choosing online classes and 2 percent attending offline lessons.

 

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2020-01-20 00:00:00
<![CDATA[E-buying A to Z from local shops]]> http://www.chinadaily.com.cn/kindle/2020-01/20/content_37532853.htm Zhang Chenlin, 31, a bank employee in Beijing, prefers to use mobile apps to buy, well, almost everything these days-lunch, dinner, groceries, flowers, fruits, cosmetics, medicine, magazines, accessories, household stuff, you name it.

Particularly on days when she is unwilling to dine out with colleagues on work days, the apps come to her rescue time and again. In about 20 minutes after placing an online order for lunch, a deliveryman of Ele.me, a third-party online food delivery platform, materializes with Sichuan spicy diced chicken, Mapo spicy bean curd and a bowl of rice.

"With a simple tap on my mobile phone, I can also order daily necessities like towels, tissues, shampoo as well as medicine," Zhang said. "I don't need to go to supermarket after work, and these commodities are delivered to my home or office within half-an-hour. This is really very convenient."

This potentially economy-boosting online-to-offline or O2O business model is made possible by new online platforms of internet giants that bridge consumers and neighborhood businesses like never before.

Company executives of Ele.me and Koubei, a local services company of Chinese tech titan Alibaba Group Holding Ltd, said they are committed to providing digital solutions for local merchants to enhance the latter's operational efficiencies.

Industry insiders said that on-demand food delivery services are expanding beyond traditional catering to include supermarkets, fresh fruits and vegetables, and flowers and plants.

Wang Lei, president of Alibaba's local services company, said they are beefing up resources to drive forward the digitalization plan and upgrade the local services market.

These digitalized services will include site selection of restaurants, supply chain, reservations, queuing, ordering, instant delivery, online payments and service ratings based on evaluation or user reviews.

"The online penetration rate of food delivery and other local services in the country's catering industry is less than 15 percent," said Wang, while noting they will empower catering merchants to digitalize their operations and help these vendors improve online offerings, such as online membership management, smart ordering and discount bookings during off-peak hours.

Alibaba formed its local services company in 2018 by merging food delivery platform Ele.me and lifestyle services firm Koubei. The move intensified a battle with rival Meituan Dianping, which is backed by Tencent Holdings Ltd, in China's fiercely competitive on-demand services market.

The Ele.me-Koubei combine will seek to expand beyond the catering industry and redefine urban life, improving local services so as to make living more convenient for city dwellers.

It is expected to cover a full range of local services and businesses, including supermarkets, beauty salons, KTVs, as well as leisure and entertainment. Its services will likely be used by an estimated 800 million urban residents, according to the company.

In April 2018, Alibaba announced it had acquired Ele.me. The e-commerce giant aims to enhance the last-mile delivery capacity crucial to its New Retail strategy.

New Retail refers to the integration, or interlinking, of online and offline shopping using modern technologies, data and customer engagement techniques. The term was coined in 2016 by Alibaba's charismatic founder Jack Ma. In his words, New Retail is making the distinction between physical and virtual commerce obsolete. It indicates a combination of the best in physical and online retail.

In line with the New Retail era, the country's catering sector is becoming increasingly technology-empowered. The market size of China's online food delivery market is expected to reach 603.5 billion yuan ($87.7 billion) in 2019, up almost 31 percent year-on-year, according to mobile internet big data monitoring platform Trustdata.

Data from the Trustdata said users aged 30 and below are the major force in the online food delivery market, taking up more than 48-percent share.

The market research company iiMedia Research said China's third-tier cities and below have become a new growth point for the food delivery industry. In the first half of 2019, the proportion of new customers in the food delivery industry in the third-tier cities and below exceeded 44 percent.

"The number of orders in the online food delivery market maintained a rapid growth in the past four years, with the figure surging to 10.96 billion in 2018 from 1.7 billion in 2015," said Yang Xu, a life and services analyst at consultancy Analysys. Yang said the booming O2O segment has not only focused on food delivery but also expanded their business scope, spanning supermarkets, fresh products, flowers and medicine to lure consumers. "The digitalized and intelligent solutions that empower merchants and help improve their services will also be a development direction in the online catering industry."

Meituan Dianping, another food delivery and lifestyle services platform, is also operating Meituan Instashopping, a non-food delivery business, to connect local retailers and consumers.

The on-demand grocery delivery services promise 30-minute delivery, including for flowers, medicine and even vegetables. They also help merchants to digitalize their inventories of fresh products.

Wang Puzhong, senior vice-president of Meituan Dianping, said the online food delivery industry is an intersection of some segments of the services sector and the retail industry. "The online penetration rate of fast-moving consumer goods, medicine and flowers is very low, hovering around 3 percent in the past five years."

Wang said Meituan Instashopping aims to empower the traditional catering merchants by offering operational, distribution and technology support, upgrading digital solutions and helping these vendors improve their online offerings.

The company announced its total revenue surged 44 percent year-on-year to 27.5 billion yuan in the third quarter of 2019, buoyed by the growth in key business areas such as food delivery, in-store purchases, hotels and travel, while its net profit reached 1.9 billion yuan.

Revenue from its core food delivery business increased by 39.4 percent year-on-year to 15.6 billion yuan in the same quarter, and the in-store, hotel, and travel business contributed a revenue of 6.2 billion yuan, a rise of 39.3 percent compared with the same period of 2018.

According to Beijing-based market consultancy Analysys, Ele.me and Star. Ele.me, which was formally known as Baidu Waimai until Ele.me acquired it, accounted for 43.9 percent of share in China's food delivery market in the third quarter, while its arch rival Meituan Dianping accounted for 53-percent market share.

In addition, Dada Group, a platform for local on-demand retail and delivery, has cooperated with most of the leading retailers such as Walmart and Carrefour, and more than 100,000 offline stores, to provide more convenient and upgraded shopping experiences. Its services cover goods of all varieties, ranging from fresh fruits and vegetables, groceries to pharmaceutical products. Consumers from more than 600 cities and counties in China are said to be its beneficiaries.

The company has launched omnichannel fulfillment solutions for supermarkets, providing the latter with middle platform systems, smart logistics systems and customized solutions. They integrate warehousing, picking and distribution, and significantly improve supermarkets' working efficiency. They also guarantee one-hour delivery of omni-channel orders.

"Dada Group is rooted in supermarket O2O and grocery delivery, and has proposed the best solution-omni-channel business aggregation platform and fulfillment system," said He Huijian, its vice-president."The core of retail is efficiency and shopping experience. And it is the mission of Dada Group to help retailers to develop e-commerce efficiently and provide consumers with the best shopping experience."

After covering all first-and second-tier cities and helping retailers to achieve high-speed online sales growth, it will ramp up efforts to expand its presence into more lower-tier cities, Dada Group said.

Chen Liteng, an analyst from the China E-Commerce Research Center, said competition in the on-demand food delivery market has led to the construction of an ecosystem and expansion of service scenarios.

"How to make profits and maintain the stable development became the core of issues for the local life service platforms," Chen said, adding online caterers need to use AI-powered technologies to ensure efficiency and put the quality of services first.

 

Sales revenue of China's on-demand food delivery market MA XUEJING/JIN DING/CHINA DAILY

 

 

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2020-01-20 00:00:00
<![CDATA[Consumption to sustain momentum]]> http://www.chinadaily.com.cn/kindle/2020-01/18/content_37532749.htm Consumption continued to be the mainstay of economic growth in China and contributed to 57.8 percent of GDP growth, 26.6 percentage points higher than the gross capital formation, as the country's per capita GDP exceeded $10,000 for the first time last year, the National Bureau of Statistics said on Friday.

Experts said the rising per capita GDP and higher disposable incomes are indicative of the massive purchasing power that is waiting to be unleashed in the world's second-largest economy. A growing number of young shoppers aspire to pursue high-quality and exquisite lifestyles, along with consumption upgrade, they said.

"Consumption plays a fundamental role in China's economic development and is the primary driving force behind the economic growth," said Ning Jizhe, head of the National Bureau of Statistics, adding that the steady growth in the income of residents will boost consumption.

Data from NBS showed that China's per capita disposable income stood at 30,733 yuan ($4,478) last year, up 5.8 percent year-on-year in real terms after deducting price factors.

Separately, urban and rural per capita disposable income reached 42,359 yuan and 16,021 yuan last year, up 5 percent and 6.2 percent in real terms, the NBS said. Moreover, per capita consumer spending increased by 5.5 percent on a yearly basis in real terms to 21,559 yuan last year.

In 2019, the total retail sales of consumer goods reached 41,164.9 billion yuan, up 8 percent from the previous year. Online retail sales reached 10.6 trillion yuan, a year-on-year growth of 16.5 percent.

Wang Yuanhong, an economist at the State Information Center, a government think tank, said China's rising per capita GDP indicates that the overall consumption level will continue to expand, accompanied by an advancement in consumption upgrade.

"The growth in overall GDP and per capita GDP represent an elevation of the country's comprehensive economic strength and social wealth, as well as the steady improvement of people's living standards," said Xu Hongcai, deputy director of the economic policy committee of the China Association of Policy Sciences.

Xu said China's economy still has huge growth potential and strong resilience, despite the complex and fast-changing external environment, with over 1.4 billion population, who have increasing demands for consumption, as a significant pillar for economic development.

]]> 2020-01-18 00:00:00 <![CDATA[Securities regulator vows to contain financial risks]]> http://www.chinadaily.com.cn/kindle/2020-01/18/content_37532775.htm Containing financial risks will continue to be a key priority of China's top securities regulator this year as it pledged on Friday to effectively and properly resolve risks in equity collateral business, bond defaults and private equity investment.

The China Securities Regulatory Commission also vowed to step up a crackdown on illegal activities such as fraudulent initial public offerings, financial fraud, insider trading and market manipulation.

The regulator gave the statement after its two-day annual work conference which closed on Friday in Beijing.

Pushing market-based IPO reform is also a main objective of the regulator as it will gradually expand the registration-based share sale system with an emphasis on information disclosure to the wider marketplace.

Shenzhen's innovative startup board ChiNext will pilot the new IPO system based on the successful experience of Shanghai's technology-focused board called the STAR Market.

"The registration system is a sign that the Chinese stock market is becoming more mature as it is now connecting closer and closer to the global markets through arrangements such as Mainland-Hong Kong stock connect programs and the Shanghai-London trading link," said Chen Jiahe, chief investment officer of Novem Arcae Technologies.

"It is a system that aims at increasing the efficiency of the market. This will also bring more requirements to the expertise of investors," Chen said.

The CSRC said that it will also encourage more technology firms to go public and raise funds in the capital market. It will work to attract long-term institutional capital including equity funds into the market and promote the balanced development of financing and investment.

China's top legislature adopted the revised Securities Law last month which laid the legal basis for the country to deepen capital market reform, step up investor protection and substantially raise the costs companies will face for engaging in illegal activities.

The revised law will become effective on March 1.

The regulator said it will comprehensively strengthen the rule of law in China's capital markets, promote the revision of the country's Criminal Law, and push the legislation of the Futures Law to better protect the rights and interests of investors.

It will likewise work to improve the quality of listed companies and optimize a market-oriented and rules-based delisting process.

The regulator said it will boost the role of the capital market in serving the real economy and providing necessary financing to smaller businesses.

]]> 2020-01-18 00:00:00 <![CDATA[Cross-border capital flows to remain stable]]> http://www.chinadaily.com.cn/kindle/2020-01/18/content_37532750.htm Crossborder capital flows are expected to remain stable this year along with a more flexible yuan exchange rate mechanism and a possible current account surplus in an improved trade environment, China's top foreign exchange regulator said on Friday.

"China will keep improving the market-oriented foreign exchange regime and maintain flexibility of the yuan exchange rate, generally at a reasonable and stable equilibrium this year," said Wang Chunying, spokeswoman of the State Administration of Foreign Exchange, the country's foreign exchange regulator.

The phase one trade deal, which was signed on Thursday between China and the United States, was in line with investors' expectations. It sent positive signals to the foreign exchange market and the yuan appreciated, Wang said.

Since January, the onshore yuan has appreciated by about 1.2 percent against the US dollar. In 2019, the yuan-to-US dollar exchange rate dropped by 1.3 percent. The degree of vulnerability of the yuan-to-US dollar onshore spot exchange rate was 7.7 percent last year, an indicator of higher flexibility, according to SAFE data.

Huang Jun, chief China analyst at Forex.com, a global foreign exchange platform, said that in the short term, "it is difficult for the yuan to depreciate back to 7 and beyond, given the weaker US dollar index after the peak in the third quarter of last year. The room for yuan appreciation is limited."

Despite the global economic slowdown and sluggish international trade and investment, China recorded stable improvement in net capital inflows, especially during the fourth quarter. Last year, total cross-border receipts and payments by the non-banking sector recorded a surplus of 164.4 billion yuan ($24 billion), according to official data.

In December, foreign exchange settlement and sales by banks recorded a surplus of $2.2 billion, the first in seven months after 16 months of deficit, according to the SAFE, indicating that more corporates and individuals would like to hold the yuan.

China's economic and market fundamentals, as well as policies-including proactive fiscal policy and prudent monetary policy this year, will help support a stable foreign exchange market, Wang said.

"Since China has a huge domestic market, consumer consumption still has immense potential, and the demand for high-quality consumer goods will be strong, which will improve the imports and exports of goods this year, and stabilize the surplus of trade in goods," Wang said.

Given the relatively higher interest rate level in China, compared with other major economies, the yuan-denominated assets will continue to be attractive for global investors and more foreign central banks are likely to increase their holdings of yuan assets as reserves, she said.

China reported annual GDP growth of 6.1 percent in 2019, meeting the official target range for the year. A day before that China signed the phase one trade deal with the United States and analysts said the same will boost business confidence and support stable global economic growth this year.

"The deal was preceded by other indications of an easing in US-China economic relations, including the removal of China's currency manipulator tag by the US Treasury Department and reports that semiannual economic discussions between the two countries would be revived," said Brian Coulton, chief economist of Fitch Ratings, a global credit ratings agency.

China's foreign exchange reserves rose to a six-month high of nearly $3.11 trillion by the end of December, supported by stronger exports and stable capital inflows amid the financial sector opening-up, according to data released by SAFE on Tuesday.

The foreign exchange reserves increased by 1.1 percent over the level in 2018, and rose by $12.3 billion in a single month in December, which suggested a general supply-demand equilibrium in the foreign exchange market.

]]> 2020-01-18 00:00:00 <![CDATA[Quality of economic growth improves]]> http://www.chinadaily.com.cn/kindle/2020-01/18/content_37532762.htm The quality of China's economic growth further improved last year as the country's industrial structure continued to upgrade and the economy kept rebalancing toward a service, consumption and innovation-driven one, a senior official said on Friday.

The service sector continued to be a major stabilizer of the country's economic growth, expanding by 6.9 percent last year and accounting for 53.9 percent of China's GDP, according to the National Bureau of Statistics. The share of the service sector in the economy was higher than the level of 53.3 percent in 2018.

Meanwhile, industrial structure continued to upgrade as the equipment manufacturing and high-technology manufacturing sectors grew faster than the average level. The two sectors accounted for 32.5 percent and 14.4 percent of the overall output of the industrial sector respectively, according to the NBS.

"High quality has been the main theme of China's economic development as the country is shifting from high-speed growth to high-quality growth," Ning Jizhe, head of the National Bureau of Statistics, said at a news conference in Beijing.

"The economy has been growing within a reasonable range. Major indicators were within expectations, which shows that the economy is moving toward high-quality development," said Ning.

Ning said that the country is committed to building a modern economic system and the quality and efficiency of the economy have risen substantially since the country adopted a new development concept and moved away from the old investment and export-led growth model.

In the meantime, innovation continued to drive economic growth with new industries and business models thriving. The emerging and strategic industrial sector grew by 8.4 percent last year. The growth rate was 2.7 percentage points higher than the average industrial growth rate.

Regional disparity and the development gap between urban and rural areas were also reduced last year, indicating a more balanced growth on a nationwide basis. Industrial output in the middle and western regions grew by 7.7 percent and 6.2 percent respectively last year, faster than that of the country's eastern regions.

Jeremy Stevens, an economist at Standard Bank, said that the economic data released by the NBS on Friday indicated decent growth momentum in the first quarter of this year.

"Promisingly, China's monthly macroeconomic figures imply that economic momentum loss has been suspended. In both November and December, the economy posted positive signs of recovery. Growth in industrial production rebounded, consumption remained firm, fixed asset investment stabilized-buoyed by public sector projects-and real estate resilience remains despite authorities remaining tight on financing," Stevens said in a research note.

Steven Zhang, chief economist at Morgan Stanley Huaxin Securities Co, said that China's economic transition toward consumption-driven growth is a long-term trend and the direction will change due to weaker growth.

]]> 2020-01-18 00:00:00 <![CDATA[BUSINESS]]> http://www.chinadaily.com.cn/kindle/2020-01/18/content_37532764.htm

CHINA DAILY

]]> 2020-01-18 00:00:00 <![CDATA[Stability, maturity will mark new era in foreign investment supervision]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532597.htm China's Foreign Investment Law and its supplementary regulation took effect on Jan 1, marking an official shift in the country's supervision of foreign investment from the old model of case-by-case approval to negative list management.

Foreign investment supervision enters stable and mature period

The introduction and utilization of foreign capital is an important part of China's basic national policy of opening-up and the opening economic system. It is also one of the country's significant achievements in reform and opening-up for more than 40 years. China's success in attracting and utilizing foreign investment is the result of many factors. For instance, the previous management and legal system related to foreign investment played a significant role.

However, shortcomings of the old foreign capital regulatory models have become increasingly prominent; and, as the international environment changes, while the Chinese economy thrives and the country's economic system reform deepens.

Therefore, in recent years, China has been gradually simplifying foreign investment approval procedures and exploring ways to deepen the reform of the foreign investment management system, in order to adapt to the current economic situation where average foreign direct investment is continuously growing and channels are becoming increasingly diversified.

The Foreign Investment Law and its supporting measures summarize the practical experience of foreign investment utilization for more than 40 years since the reform and opening-up policy was implemented. They adapt to the new situation, meet the new requirements, and make unified regulation on the access, promotion, protection and management of foreign investment. They help build the basic framework of the new legal system for foreign investment, and provide a more stable and mature legal regulatory environment.

Legal protection for continuous promotion of higher-level opening up

The Foreign Investment Law establishes the pre-establishment national treatment and negative list management system, which is a fundamental change in China's foreign investment management system. It will help further enhance the transparency and predictability of China's foreign investment regulatory framework and optimize China's business environment.

Since China began to introduce a negative list management system in the Shanghai free trade zone in 2013, the country's efforts in opening-up have continued to increase.

Between 2013 and 2019, the negative list for the FTZs was reduced from 190 items to 37. The list for nationwide implementation shortened from 93 items, as then stipulated in the Catalogue of Industries for Guiding Foreign Investment (2015 edition), to 40 items in 2019.

In order to ensure the fair and efficient implementation of the Foreign Investment Law in the judicial field, Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Foreign Investment Law also came into force on Jan 1. The above-mentioned new laws and regulations will provide China with a strong legal guarantee for setting up a new system of comprehensive opening-up.

Responding to concerns and demands of foreign investors

Actively responding to the demands of foreign-invested enterprises in China has been an important part of China's foreign investment supervision during the past 40 years of reform and opening-up.

After the Foreign Investment Law was passed in 2019, foreign enterprises have paid extensive attention to the proposed foreign investment information reporting system, worrying that the reporting system may lead to the leakage of enterprise operating information or become an "administrative approval" in disguise.

To address these concerns, the Ministry of Commerce and the State Administration for Market Supervision have jointly formulated the Measures for Reporting Foreign Investment Information, which came into effect on the same day as the Foreign Investment Law.

The Foreign Investment Law and its implementation regulations also responded to China's intellectual property protection environment. The law's Article 23 stipulates that the administrative organs and their staff members respect the confidentiality of the business arrangements of foreign investors and foreign-invested enterprises during the performance of their duties, and that they must not disclose or illegally provide any details to others.

With respect to foreign investors' concerns regarding forced technology transfer issues, Article 24 of the Regulation for the Implementation of the Foreign Investment Law stipulates that administrative organs and their staff members are prohibited in using the implementation of administrative licenses, administrative inspections, administrative penalties, administrative coercions, or other administrative means to force foreign investors or foreign-invested enterprises to transfer technology.

Dividends need to be gradually implemented

The Foreign Investment Law replaces three old laws and becomes the basic law in the field. The newly minted law, together with other supporting regulations that came into effect on the same day, will assume the important task of China's foreign investment supervision in the new era and is committed to creating a stable, transparent, predictable and fair market environment in China.

In order to ensure a smooth transition from the old management system to a new one, there is a five-year transition period for foreign companies.

Under the old regulatory model, China promulgated a large number of laws related to foreign investment, administrative regulations and rules with different levels of effectiveness. The implementation of the new law means that the previous laws, regulations and regulatory documents need to be abolished or revised. Therefore, the authorities concerned are currently cleaning up the outdated terms. But it will still take some time.

In addition, the improvement of the new foreign investment legal system, taking the Foreign Investment Law and its supporting regulations as a core, is not a one-time event. It needs to be gradually optimized. Negative list management is a kind of institutional innovation, and its effective implementation also requires a change in people's attitudes-which cannot happen overnight. Therefore, foreign investors need to wait patiently for the gradual release of the dividends brought by the Foreign Investment Law and its supporting regulations.

In summary, the implementation of the Foreign Investment Law and its supporting regulations indicates that after more than 40 years of exploration, China's supervision of foreign investment has entered a new era characterized by stability and maturity. The release of dividends brought by China's institutional opening-up is generating fresh development opportunities for foreign investors.

 

A Tesla Model 3 car made in China is displayed at the company's first overseas plant in Shanghai. FANG ZHE/XINHUA

 

 

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2020-01-17 00:00:00
<![CDATA[Housing prices stabilize in major Chinese cities during December]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532653.htm Housing prices stabilized in major Chinese cities last month as prices of new and pre-owned homes remained unchanged or grew at a slower pace from a year ago, suggesting that the property market is on the right track with stable land and home prices, said experts.

New home prices declined in 16 cities during December, while in the secondary market 26 out of the 70 major cities tracked by the National Bureau of Statistics (NBS) recorded monthly declines in pre-owned home prices.

"Local governments have actively carried out the central government's guidances for the real estate sector. They have stuck to their respective measures to stabilize local markets as well as establish a long-term mechanism," said Kong Peng, chief statistician of the NBS.

Fifty cities reported growth in new home prices during December, six more than the 44 in November, and nine less than December 2018. At the same time, 38 out of the 70 cities saw their pre-owned residential property prices grow, six more than the previous month, and nine less than a year ago.

"Thanks to promotions by property developers in the past few months, more cities reported price growth for new homes on a monthly basis in December," said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.

Yan said the growth in new home sales influenced pre-owned home prices and rose 0.1 percent month-on-month.

"In the used homes market, another direct reflection of the residential market, more than 20 cities reported drops in pre-owned home prices, the seventh straight month for such a trend, showing that the home market is gradually stabilizing," said Zhang Dawei, chief analyst at Centaline Property Agency Ltd.

Zhang said local governments are becoming more flexible in regulating the property market with regard to the local situations.

"As many as 620 real estate measures and policies were announced in 2019, 38 percent more than that of the previous year, creating a record," said Zhang.

New home prices in the four first-tier cities edged up by 0.2 percent on a monthly basis. Prices rose by 0.7 percent in Shenzhen, followed by Beijing with 0.4 percent. Prices remained flat in Shanghai while Guangzhou was the only first-tier city to see a mild drop of 0.3 percent from November in new home prices, according to the NBS.

In the pre-owned home market of the four cities, average price growth was 0.4 percent, compared with November. Beijing and Shenzhen grew by 0.6 percent and 1 percent, while Guangzhou remained unchanged, whereas Shanghai edged down by 0.2 percent, according to the NBS.

Compared to last year, the four first-tier cities saw 3.8 percent and 1.7 percent growth in their new and existing home prices on an annual basis.

The NBS index also indicated that the 31 tier-2 cities, mostly provincial capitals, saw 7.3 percent and 3.7 percent growth in new home prices and used home prices from a year ago, narrowing the growth rates by 0.6 percentage point and 0.2 percentage point from November. Thirty five tier-3 cities saw their new home prices increase by 6.7 percent and used home prices rise 3.9 percent from the previous year.

"Both new and pre-owned home prices in second-tier cities saw growth narrowing on an annual basis for eight months in a row, while third-tier cities reported unchanged or declining growth rates for nine consecutive months," said Kong.

 

Potential homebuyers look at property models during a real estate expo in Taiyuan, capital of Shanxi province. WEI LIANG/CHINA NEWS SERVICE

 

 

 

 

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2020-01-17 00:00:00
<![CDATA[High-speed rail operator's shares zoom by 43.24%]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532633.htm Beijing-Shanghai High Speed Railway Co Ltd, the operator of the high-speed railway linking the two most developed cities of China, saw its shares rising by 43.24 percent to 6.99 yuan ($1.02) on debut before closing at 6.77 yuan on Thursday, up 38.73 percent from its initial public offer price of 4.88 yuan.

The strong debut signaled investors' confidence in the State-owned railway operator, as it owns China's most lucrative high-speed rail network, and has been deepening reforms to enhance performance and operation efficiency, analysts said.

MSCI Inc, the world's largest index provider, said on Thursday that it would include the company's shares in two of the indexes for China's stocks, starting Feb 6.

Ping An Asset Management Co, the representative of an insurance fund consortium, said it remains confident on the high-speed railway's growth, and will hold the company shares for the long term.

The company, founded in 2007, has reported sustained profitability for five consecutive years since 2014, according to national railway operator China State Railway Group Co Ltd, the parent of Beijing-Shanghai High Speed Railway's controlling shareholder China Railway Investment Co Ltd.

The company's 1,318-kilometer railway line between Beijing and Shanghai, which started operations in 2011, is the world's longest high-speed railway line constructed in a single phase with highest quality standards, and covers 66 counties of seven provinces and municipalities in two of China's most densely-populated and busy economic areas-Beijing-Tianjin-Hebei and Yangtze River Delta regions.

It earned a net profit of 9.52 billion yuan on revenue of 25 billion yuan by the end of September 2019, and earned profit of 10.25 billion yuan in 2018, up 13.2 percent on a yearly basis, the company said.

"The company's performance on its first trading day was not a surprise, with its promising profitability and its inherent advantage as a State-owned company and its huge customer base," said Dong Dengxin, director of the Wuhan University of Science and Technology's Finance and Securities Institute.

"The main significance of the company's listing is not just raising funds, but the fact that it sets an example for a State-owned railway company to use the capital market to deepen reforms and enhance operations."

Once listed and subject to capital market rules, the company will become more transparent and regulated in its operations and management and could use the IPO proceeds and capital market tools to better implement its strategic plans to expand, including mergers and acquisitions, he said.

That means, the company's operation and management efficiency will be enhanced, and it will accumulate experiences for the State-owned asset owners to leverage on the capital market to bring in diversified investors, to strategically manage industry resource allocation, and to improve the optimal distribution of State-owned capital and the operational efficiency, he said.

The company got approval for an IPO from the China Securities Regulatory Commission on Nov 14, after submitting a request on Oct 22.

It raised 30.7 billion yuan by selling 6.29 billion shares at 4.88 yuan apiece and had a price-to-earnings ratio of 23.39 times, above the current cap of 23 times for the first time in new shares issuance.

 

Beijing-Shanghai High Speed Railway Co Ltd is listed on the Shanghai Stock Exchange on Thursday. CHINA DAILY

 

 

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2020-01-17 00:00:00
<![CDATA[Tajikistan-China ties to boost regional links]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532632.htm Having seen the successful opening of the China-Tajikistan-Uzbekistan highway last August, the Tajikistan ambassador to China said in Beijing that his country plans to open the China-Tajikistan-Afghanistan highway as soon as possible in a bid to boost regional transport.

Parviz Davlatzoda said Tajikistan and Afghanistan also signed an agreement on Dec 30 last year on constructing a railway line between the two countries.

He said the pact will help lay a solid foundation in building a future Turkmenistan-Afghanistan-Tajikistan railway line, which can lead to a larger China-Kyrgyzstan-Tajikistan-Afghanistan-Iran rail project.

The railway line is expected to reach the ports of Gwadar in Pakistan, Bandar Abbas and Chabahar in Iran, key trading outposts along the Belt and Road Initiative.

The ambassador noted that currently, China and Tajikistan are enjoying a new level of "further deepened comprehensive strategic partnership." It helps to link Tajikistan's national development strategy up to 2030 with the BRI.

While Tajikistan has gained international prestige since its independence in 1991, he said its real growth rate in gross domestic product reached 7.5 percent last year.

"In the past seven years, Tajikistan's annual GDP growth rate has remained at 7 percent. We are determined to maintain a stable socioeconomic development and strive to see a sustained GDP growth exceeding 7 percent," he said.

At this time, there are some 350 Chinese enterprises doing business in Tajikistan, the ambassador said, noting that his country puts attracting more Chinese visitors as one of its priorities.

Tajikistan has a pleasant climate and many beautiful scenic spots. The country intends to develop tourism projects involving ecotours, medical care, leisure and mountaineering, he said.

The country intends to open direct flights between the Tajikistan capital of Dushanbe and Beijing, and will also consider flights between Tajikistan and China's southern regions.

Chinese travelers can stay up to 45 days in Tajikistan as tourists with a single-entry visa. This can be extended to 45 days for multiple entries. It will also allow them to visit Tajikistan's neighboring countries.

"We want to see the number of Chinese tourists to our country increase manifold," he said.

In addition to major achievements in the political, economic, and security fields, the two countries have also seen satisfying achievements in cultural and humanities cooperation, including in culture, education, science, media, sports and tourism.

"These are all positive phenomena that help to bring people closer and make our friendship last forever. This is our common wealth," he added. The two neighbors established diplomatic ties in January 1992.

At present, there are some 3,500 people from Tajikistan studying in China either on scholarships or on individual expenses, the ambassador said.

Besides learning the Chinese language, he said, he hopes they can learn more specialized knowledge, which can be used to help build a better Tajikistan.

 

A group of Chinese tourists take photographs at the Fon Mountains in Tajikistan. HU FENG/FOR CHINA DAILY

 

 

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2020-01-17 00:00:00
<![CDATA[Guangdong ramps up 5G network efforts]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532598.htm Guangdong province in South China is sparing no effort in promoting its digital economy by accelerating construction of 5G networks and boosting the commercialization of 5G service in the months ahead.

According to the Report on the Implementation of Economic and Social Development Plan in 2019 and the Draft Plan in 2020 of Guangdong Province, Guangdong plans to build more than 48,000 new 5G base stations this year. It will cover the major urban areas in the Pearl River Delta that has become one of the country's most open areas to the outside world.

The report was submitted to Guangdong Provincial People's Congress for review by Ge Changwei, director general of Guangdong Provincial Development and Reform Commission, in the annual Guangdong provincial legislative session that opened on Tuesday.

"The report aims to speed up construction of 'smart cities' to serve and promote the economic construction in Guangdong province, window of the country's reform and opening up," Ge said.

To this end, construction of 5G base stations will be included in the development plans of all the cities in the province before the end of June, the report said.

All the Guangdong cities are required to map out detailed plans for their 5G base station construction, including the selection of construction sites, construction of computer rooms, pipelines, power supply and related supportive facilities, the report said.

The province has taken the lead in the country's 5G network construction and application, with more than 30,000 base stations having been set up by the end of last year, representing 23.8 percent of the country's total.

Most of Guangdong's 5G base stations have been constructed in Guangzhou, capital of the province, the Shenzhen special economic zone, and the cities of Foshan, Dongguan and Zhuhai.

China has built about 126,000 base stations nationwide by the end of 2019.

 

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2020-01-17 00:00:00
<![CDATA[PBOC to focus on growth and yuan stability]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532627.htm Maintaining currency stability and strengthening economic growth will be key objectives of the monetary policy this year, as flexible measures from the People's Bank of China, the central bank, will help maintain ample liquidity in the financial system, officials said on Thursday.

Though there is still room for lowering the reserve requirement ratio (RRR), or the cash set aside by commercial banks as reserves, to inject additional liquidity if necessary, the window is limited, said Sun Guofeng, head of the monetary policy department of the PBOC.

Monetary policies will stress on dampening inflation expectations, maintaining yuan stability and supporting economic growth, said Sun. China's consumer inflation increased by 2.9 percent in 2019, driven by surging pork prices.

Responding to queries on whether the central bank will cut interest rates in the future, Sun said the new benchmark lending rate-the loan prime rate-has dropped since it was first introduced in August last year. "The LPR reflects the current market demand and supply," he said.

According to the PBOC, most of the financial data for 2019 that were released on Thursday indicate a stable growth in money supply and credit and stronger financial support for the real economy.

The broad money supply, or M2, increased by 8.7 percent last year, the highest level in almost two years, compared with 8.1 percent a year earlier and 8.3 percent by the end of November, according to the People's Bank of China.

The outstanding amount of total social financing, a broad measure of credit and equity capital supporting the real economy, increased by 10.7 percent on an annual basis in December. The total social financing increased by 2.1 trillion yuan ($305 billion) last month, 171.9 billion yuan higher than the same period in 2018.

The statistical range of this indicator has been enlarged since last month, with treasury bonds and all types of local government bonds, including special bonds, included in the calculation.

"The newly incorporated total social financing will include fiscal and monetary policies to improve coordination and enhance macroeconomic administration," said Ruan Jianhong, head of the central bank's statistics and analysis department.

New yuan loans increased by 12.3 percent year-on-year in December, compared with 13.5 percent in the same period last year, with outstandings up by 16.81 trillion yuan in 2019 compared with the level in 2018, the PBOC said.

The latest financial data show that there is reasonably ample liquidity in the banking system, said Ruan.

The accelerated growth of both money supply and credit was a result of the counter-cyclical adjustments of the monetary policy, mainly because of the faster growth in bond issuances and commercial banks' stronger lending to small-and medium-sized companies, said Ruan.

Earlier, the central bank had injected 400 billion yuan into the financial sector on Wednesday, to maintain sufficient liquidity ahead of the upcoming Lunar New Year. This follows the RRR cut announced on Jan 6.

The PBOC has also injected 300 billion yuan through the medium-term lending facility (MLF), while keeping the one-year MLF interest rate unchanged at 3.25 percent. The LPR will be revised again on Jan 20, based on the MLF adding risk premium, and some analysts expect the LPR to fall by 0.5 percentage point this month.

 

Growth of China's M2 supply (y-o-y) LIU LUNAN/CHINA DAILY

 

 

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2020-01-17 00:00:00
<![CDATA[Huawei unveils plan to support UK developers]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532609.htm Huawei Technologies Co has unveiled a 20 million pounds ($26.16 million) plan to support app developers in the United Kingdom and Ireland, as the Chinese tech giant steps up efforts to build its own mobile software ecosystem to mitigate the fallout from US restrictions.

At its first app developer conference in the UK, Huawei said the investment will be used to encourage British and Irish app developers to make apps for its own Huawei Mobile Services mobile ecosystem and its self-developed mobile operating system Harmony OS.

The Chinese tech giant, which was restricted by the US government from accessing Google's Android apps and services, has held numerous app developer conferences over the past year across Europe. It aims to build the ecosystem for Huawei Mobile Services, the foundation for its ability to sell smart devices in overseas markets.

The investment is part of a wider global plan presented by Yu Chengdong, CEO of Huawei's consumer business group, in Munich last September, which envisages a total investment of $3 billion.

"Ultimately, we envision an all-scenario intelligent consumer experience for the future of Huawei Mobile Services and will provide businesses and developers with the opportunity to reach new audiences, expand and monetize, as they prepare for the fully connected world," said Anson Zhang, managing director of Huawei UK's Consumer Business Group, according to a report from Xinhua News Agency.

Huawei Mobile Services already has 600 million active users in more than 170 countries and regions, with 72 million of them being European users, data from Huawei show.

The Shenzhen-based company is currently the world's second-largest smartphone vendor by shipments after South Korea's Samsung. Last year, it shipped more than 240 million units of smartphones, despite it being added to the US government's "Entity List", which bars it from accessing any US technologies without special government approval.

The company announced on Wednesday that it had shipped 6.9 million units of 5G smartphones by the end of December.

Xiang Ligang, director-general of the telecom industry association Information Consumption Alliance, said there is a good chance that Google's Android will remain inaccessible for Huawei this year and hence must work hard to support its in-house alternative.

Huawei unveiled its much-anticipated in-house operating system Harmony OS in August, marking what some call the company's biggest push yet to build its own software ecosystem for the era of the internet of things.

 

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2020-01-17 00:00:00
<![CDATA[Allianz banks on Shanghai unit for growth]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532608.htm The opening-up in the Chinese financial industry entered a new phase, with the first wholly-owned foreign insurance holding company, Allianz (China) Insurance Holding, being unveiled in Shanghai on Thursday.

The Germany-based company received official approval in mid-November from the China Banking and Insurance Regulatory Commission (CBIRC) to commence operations of its insurance holding company in Shanghai.

Public information showed that the registered capital of Allianz (China) Insurance Holding reached about 2.7 billion yuan ($392.5 million). Some 2 billion yuan is financed by Allianz SE in Germany.

Sergio Balbinot, chairman of Allianz (China) Insurance Holding, explained that the large population, the rise of the middle-income group and the low penetration rate of commercial insurance all point to large room for growth in the country.

Oliver Bate, chief executive officer of Allianz SE, said that up to 30 percent of the newly generated premium in the world will be coming from China in the next 10 years.

Having a presence in the Chinese market is crucial to the sustainable growth of Allianz, and this will now be made possible by China's steady opening-up of its capital market, he said.

While the detailed agenda of the new insurance company could not be released at this time, Bate said that they would like to bring their expertise in protection, risk management and reinsurance into the Chinese market. The number of changes that the Chinese government is enacting in areas such as health insurance, pension and annuities is on Allianz's radar, he said.

Allianz's know-how in asset management has been stressed by Bate when it comes to the German insurer's outlook on the Chinese insurance market.

As China's economic growth is more consumer-led and now has more risk exposure to the outside world, Chinese individuals would need to invest more strategically outside of the country and diversify their investments, he said.

On the other hand, investing in China has been highly lucrative over the past three decades given the large number of market opportunities and the constantly strengthening renminbi, Bate explained.

China has accelerated its opening-up in the insurance sector with 34 detailed policies introduced in April 2018. Those policies relaxed rules on foreign ownership, insurance intermediaries and asset management.

The CBIRC said the limit on foreign ownership of life insurance companies has been completely lifted on the first day of this year.

Industry giant AIA will likely be the first wholly-owned foreign life insurance company in the country, according to public information released on Jan 9. Prior to that, three asset management companies of foreign insurers began operations last year.

A survey from UBS showed that the presence of foreign insurers in China is still at a very early stage when compared to other Asian markets.

Global insurance leaders account for 50 to 80 percent of the market share in countries like the Philippines, Malaysia and Singapore. They only take up 8 percent of the market share in China.

Kelvin Chu, an analyst for Asian insurance and diversified financials at UBS Securities, said that one or two foreign insurers are able to compete with local insurance companies in the first-tier Chinese cities, accounting for 3 to 6 percent of the local market share.

"Although China is the world's second largest life insurance market, taking up 15 percent of the world's annual premium, the market saturation and insurers' penetration still remain at a low level. It is for sure that China will need an ample supply of commercial insurance to cater to the rising need of consumers," said Chu.

 

 

 

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2020-01-17 00:00:00
<![CDATA[Smaller lenders look to reduce interbank liabilities]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532599.htm Some small-and medium-sized commercial banks reduced quotas that they reported to China's central bank concerning their plans to issue interbank negotiable certificates of deposit (CD) this year, as they tried to improve their liability structure by cutting their interbank liabilities.

Guiyang Rural Commercial Bank Co Ltd reported to the People's Bank of China, the central bank, to set a quota of 9 billion yuan ($1.3 billion) on its planned issuance of interbank negotiable certificates of deposit this year, down by 35 percent from the level of the previous year.

The quota reported by Shanghai Huarui Bank Co Ltd, one of the first batch of five pilot private banks nationwide, fell by 30 percent year-on-year to 4.9 billion yuan during the same period.

Quotas reported by Tianjin Rural Commercial Bank Co Ltd and Jiangsu Zijin Rural Commercial Bank Co Ltd also dropped by more than 20 percent year-on-year, based on their CD issuance plans posted on the website of the National Interbank Funding Center.

Small-and medium-sized banks are under pressure to downsize their interbank business, said Xiong Qiyue, a researcher with the Bank of China Research Institute.

"Regulators are looking forward to guiding small-and medium-sized banks to return their focus to their main business and strengthen their functions to serve the local economy. This will weaken banks' urge to further increase their assets and will cause a decline in their demands for interbank negotiable certificates of deposit," Xiong said.

"Furthermore, as credit rating differences intensified among small-and medium-sized banks, financing costs became high for some of them, reducing their interest in issuing CDs," he said.

Earlier this month, China's top banking and insurance regulator said it will strengthen regulation of the quality of assets and liabilities of banks and insurers to make sure that their liabilities, especially those of small-and medium-sized financial institutions, remain stable.

"In the past, many banks tried to expand their business scale as soon as possible, relying on interbank funds as a type of liability. However, interbank funds lack stability. When market conditions worsen, liquidity problems will emerge at banks whose interbank funds account for an unduly large proportion of their liabilities," said Zeng Gang, deputy director-general of the National Institution for Finance and Development.

After Chinese regulators took over the troubled Baoshang Bank Co Ltd last year, increased differentiation of channels and costs among banks to replenish liquidity had an impact on banks where a large part of liabilities are interbank liabilities, Zeng said.

"The core of liability management is to strengthen banks' liquidity management and make their liability structure more reasonable. Stable core liabilities will account for a desirable proportion of banks' total liabilities, whereas interbank liabilities will be reduced moderately. This will ensure that bank liquidity will not be overly affected by market changes," he said.

Wen Bin, chief researcher at China Minsheng Banking Corp, said the action of some banks to cut their quotas on the issuance of interbank negotiable certificates of deposit has a lot to do with the current monetary policy of the country.

China will keep monetary policy prudent, flexible and appropriate this year. It is widely expected that the People's Bank of China will further cut the reserve requirement ratio and the benchmark interest rate.

The central bank will launch policies and use monetary instruments, including the targeted medium-term lending facility, to encourage small-and medium-sized banks to lend to small and private businesses, Wen said.

"As the central bank will increase liquidity and corporate borrowing costs will fall, the pressure on banks to satisfy their liquidity needs by issuing interbank negotiable CDs will be less heavy than before," he said.

"Besides, under regulatory guidance, financial institutions will step up support for the real economy, the part of the economy that produces goods and services, especially by increasing medium-and long-term loans. However, the duration of interbank negotiable CDs is short. This may create a maturity mismatch risk. So it is necessary for banks to adjust their assets and liabilities with the aim of making reasonable arrangements," he said.

 

A customer comes out of an outlet of Shanghai Huarui Bank in Shanghai. CHINA DAILY

 

 

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2020-01-17 00:00:00
<![CDATA[Phase one deal benefits China, US and world]]> http://www.chinadaily.com.cn/kindle/2020-01/17/content_37532629.htm The whole world should breathe a sigh of relief at the news that China and the United States have signed a phase one trade deal. Even though the deal is not comprehensive and many issues are still to be resolved, any step showing goodwill and amity between China and the US is important for shaping the rest of the 21st century for the better.

Many of the steps taken by China are in fact part of China's long-term economic reform and opening-up strategy. Over the past few years, China has been strengthening the commercial rule of law, pushing to increase the role of the market, and opening up many sectors to foreign competition. These steps were taken for the good of China, but they can also benefit other economies.

It should especially be noted that China is making strong good-faith efforts to meet the US at least halfway and to alleviate the relevant concerns of the US. No country would ever agree to take steps that could sabotage its future growth or technological development. But, the phase one deal, combined with widespread reform and opening-up, shows that China is working hard to strengthen its own real economy and to reach a win-win deal with the US.

China is buying more of the kinds of products that the US has a comparative advantage in producing. The US has strong capabilities in agricultural products, energy, and some kinds of manufactured products. Trade in these products is good for China and for the US.

Since 2013, the Chinese yuan has fallen less against the dollar than the euro has, so the charge that China manipulated the yuan never had any basis in fact. But it is a welcome sign that the US has formally removed China from the list of so-called currency manipulators.

China is in the midst of a widespread opening up of its domestic economy to foreign participation. It is further opening up its financial services markets, vehicle manufacturing, oil and gas exploration and so forth. In most sectors, foreign companies will be allowed 100-percent ownership. Plus, China has been strongly increasing its means to enforce intellectual property rights. Both the law and China's top leaders guarantee that foreign companies will not be forced to transfer technology.

All these things were put in motion long before the phase one deal and are in China's interests. Further opening up the economy to foreign competition will help force Chinese companies to raise their expertise and competitiveness. China's companies are rapidly developing their own proprietary technologies, so China has strong reasons to enforce intellectual property rights. This is part of a widespread reform of the economy to boost the private sector and allow market forces to allocate resources.

Even this partial deal will be good for both US and Chinese businesses. The US tariffs on Chinese imports have disrupted supply chains of US producers, since there are many inputs that are best sourced from the many entrepreneurial companies in China. Even worse than the current tariffs, fear of the future has limited the ability of US companies to plan production.

US consumers have also had problems because of the tariffs. For example, cameras and lenses have increased in price about 15 percent because of the tariffs. Many other products increased in price by similar amounts.

The phase one deal will also benefit Chinese consumers. For example, imports of farm products from the US should help reduce the high price of pork, which was caused by the African swine fever epidemic.

The change in atmosphere between the two countries is more important than the details of the phase one agreement. There is no good reason for the recent animosity between the US and China, but it will be very bad for the world if it continues. The two countries have many interests in common and few real interests in conflict.

I have been worried lately by the increased talk in the bipartisan US foreign policy establishment about a new cold war. It is beginning to seem that the only type of analysis that many of these so-called experts can think about is in terms of the US-Soviet Cold War. This kind of thinking could be self-fulfilling and could lead to a much worse world in the future.

In his final address to the nation as president (1953-61), Dwight Eisenhower, who was a career military officer and commanded Allied forces in Europe during World War II, famously warned about the influence of the military-industrial complex. I used to scoff at the idea that financial interests might be a key factor in leading the US into conflict and war. But, the US and China have so little in real dispute between them that I'm reluctantly concluding that much of the push for a new cold war is coming from people whose incomes and careers depend on finding an enemy.

The relationship between the US and China is nothing like the mid-20th century relationship between the US and the Union of Soviet Socialist Republics. Central Europe was a clear and important area of potential military-strategic conflict during the Cold War. But the US has no significant strategic interests impacted by China.

During the Cold War, the US and the USSR had almost no economic or cultural contact. Today, hundreds of thousands of Chinese have studied and worked in the US, so lots of Chinese have a deep understanding of the US system and culture. On the other hand, I do fear that very few US citizens have more than a superficial, largely false, understanding of China.

Right now, the US economy is booming. Famously, the unemployment rate is the lowest since 1969-maybe the lowest ever in peacetime. But we don't know whether this great economic situation is a permanent improvement, or just a bubble that will be followed by the inevitable bust.

There are some fundamental long-term problems in the US economy-especially the rise of consumer indebtedness and the decline of manufacturing-but China had little, if anything, to do with causing these problems.

President Donald Trump is right to worry about the long-term effects of the decline of US manufacturing jobs. But, this decline was caused primarily by a failure of US firms to invest in manufacturing. The US financial system led many corporate leaders to emphasize short-term profits while ignoring long-term investment. Beginning in the 1960s, financiers replaced engineers as leaders of companies. Furthermore, US elites began to look down on people who made things or worked with their hands.

The decline of the once great US manufacturers cannot conceivably be blamed on China. The only solution is domestic reforms. For US citizens, it is time to stop blaming others and fix our own problems.

I have never met President Trump and have no inside knowledge of his thinking, but my analysis of his speeches leads me to believe that he sees China as a business rival, not as a strategic enemy. If this is true, it is critically important. Business rivalry benefits the world and leads to positive sum outcomes. Treating others as enemies can lead only to very, very negative sum outcomes.

The whole world should welcome the phase one agreement as a first step toward an amicable, win-win relationship between the world's two largest economies.

 

An employee shows a Lenovo tablet at the 2020 Consumer Electronics Show in Las Vegas. The phase one trade deal will be good for both US and Chinese businesses. XINHUA

 

 

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2020-01-17 00:00:00
<![CDATA[Dalian company plans facility to tap surging demand from developed nations]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532420.htm Jiachem BentBio Co Ltd, a Dalian-based manufacturer producing chewing gum, lozenges, nutritional supplements and over-the-counter (OTC) goods, will add another plant in Dalian this year to meet the strong demand from developed economies.

About 90 percent of its products, especially chewing gum with xylitol and lozenges, are exported to markets in the European Union and the United States. Its products are mainly sold in dental hospitals, private clinics and pharmacies. One of its investors from North America is JCM Canada Inc.

Backed by its patents, over 70 percent of xylitol chewing gum and tablet sugar products sold in North American and European markets are supplied by Jiachem BentBio.

Under the company's plan, its new manufacturing facility will start in the second quarter of this year and is expected to be operational in 2021.

"With the new factory, we will be able to diversify our cooperative categories with foreign partners such as Nestle SA, the Walt Disney Company and Mondelez International Inc," said Jiachem BentBio's general manager Ding Yong, adding once its second plant is completed, the firm's annual sales revenue could reach 1 billion yuan ($145 million).

To further expand its market presence in emerging markets, the company has been working with the customs office of Dayaowan, which is under the jurisdiction of Dalian customs office, to study foreign tariff policies and domestic customs procedures to export its products to economies related to the Belt and Road Initiative.

Apart from growing demand for subway projects, water conservation, railways and highways in those markets, Ding said many of the opportunities also come from the surging need for a healthy lifestyle, better food and healthcare products.

Healthcare products and food consumption is a reflection of economic success, he said, adding oral care and dental product usage is rising.

The types of such products people use are likewise diversifying. They have become more sophisticated and they need to be more convenient. Therefore, the whole market and related industries have been dramatically transformed in China.

Established in 2007, the company's average annual sales revenue has surged by over 30 percent on a year-on-year basis in the past two years. The firm produced 1,000 metric tons of high-end oral health products in 2018. Some 90 percent of them were exported to developed nations, particularly the US, Germany, France and Switzerland.

Ding said the firm is also set to expand its domestic sales channels and deploy more financial resources on research and development of candy made by xylitol to stop smoking and for weight loss. It is also upgrading its technologies and service, as Chinese consumers are paying more attention to oral health the past few years.

Jiachem BentBio predicted that sales for various dental care products will reach 3,000 tons in China alone over the next three years.

"It is a combination of growth and demand that is linked to income and urbanization. Those elements came together to create the sheer size of the market so it has attracted a lot of investment," said Sun Fuquan, a researcher at the Beijing-based Chinese Academy of Science and Technology for Development.

With China's success in e-commerce and mobile payments, consumers in China are trying out new things, while marketing and selling channels on the supply side enjoy lower costs and higher efficiency. This has created more space for domestic and global companies to enlarge their sales, he added.

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2020-01-16 00:00:00
<![CDATA[Internet firms try to keep smartphone users hooked]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532472.htm With the Year of the Rat just round the corner, internet-related companies are vying with each other to find strategies that can keep the multitudes of smartphone users in China engrossed.

Most of the users are in for a huge treat as more companies are planning to give away virtual red envelopes-a tradition of giving and receiving lucky money as gifts-during the Spring Festival that falls on Jan 25.

But experts said they have exhibited somewhat similar strategies to entice new users or enhance user engagement, underscoring the saturation of China's mobile internet market that could put a dent on revenue growth over time.

Though Tencent Holdings Ltd's WeChat popularized the digital red packet ritual in 2014, it is its burgeoning sister product Weishi, Tencent's short video app, that has taken the center stage this year. The company said on Wednesday it would spend 1 billion yuan ($145 million) to subsidize users who download the app and perform a variety of tasks.

From Jan 17 to Feb 8, customers are encouraged to send virtual red packets containing as little as 0.01 yuan as they share short video clips with peers who use the same app. The company then randomly subsidizes each red packet that could reach as much as 888 yuan.

Another chunk of the cash incentives comes from fulfilling tasks like watching and curating videos, inviting friends to download the app, collecting virtual cards regarding people's hometowns, among others.

Rival app Douyin, which claimed to have 400 million daily active users by January, is poised to dish out a generous 2 billion yuan. To take a slice of the pie, people need to participate in a variety of interactive games and sign up for lucky draws at designated periods.

The competing momentum is in line with the growing popularity of short video platforms, which are "set to have the biggest growth potential across all media forms in the coming two years", said Liu Yuan, an analyst on China internet research at UBS Securities.

"One noticeable trend of internet companies is to foster and facilitate creation of high-quality content in the digital realm, especially people-to-people engagements," he said.

What also differentiates this year's practice from previous years is the enhanced coordination among various business groups. For instance, Douyin users stand to split 500 million-yuan worth of cash if they manage to collect virtual cards containing logos of all six brands under Bytedance, including news aggregator Toutiao and photo processing app FaceU.

Search engine Baidu Inc also plans to leverage the occasion to create business synergies. Aside from Baidu's namesake mobile app, the company has appointed seven other apps that provide users a gateway to obtain a share from the 500-million-yuan cash pool.

And it doesn't shy away from the conspicuous intention of getting new users through the event, with 300 million yuan up for grabs exclusively for those who recommend friends to download the app.

Alipay, the mobile wallet with over 1 billion global users, is taking the modern Lunar New Year ritual farther overseas this year. Some 300,000 merchants in 56 economies allow participants to scan the different fu, or the Chinese character representing luck and fortune, spotted in shops, using augmented reality technologies.

 

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2020-01-16 00:00:00
<![CDATA[Sci-tech center to lift GBA prospects]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532467.htm Building a comprehensive science and technology center in the Guangdong-Hong Kong-Macao Greater Bay Area will help better upgrade industries in Guangdong province, officials said on Wednesday.

"We will actively participate in the construction of an international science and technology center in the Greater Bay Area, which is of great importance for our industrial upgrade and high-quality development," said Liang Weidong, the Party Secretary of Dongguan.

Thanks to years of industrial upgrading, Dongguan's economy is expected to grow by over 7 percent year-on-year in 2019, according to Liang.

Dongguan's imports and exports grew by about 2 percent on a yearly basis last year, amid rising pressure from trade friction between China and the United States, he said.

Liang, also a deputy to the provincial legislative meeting, which opened on Tuesday in Guangzhou, the capital of Guangdong province, said advanced manufacturing, which is closely linked to technology innovation, will play a key role in Dongguan's economy.

"Dongguan's future economic development will rely on the industrial upgrade and advanced manufacturing, which is a result of technological innovation," said Liang.

According to Liang, Dongguan will start construction of the second phase of a spallation neutron source project in the city and set up new materials research and development institutes.

In a government work report to the annual session of the provincial legislative meeting, Ma Xingrui, governor of Guangdong, said the province would accelerate construction of an international science and technology innovation center within the Greater Bay Area.

"We will start construction of a comprehensive national-level science and technology center, build a technology innovative corridor linking Guangzhou, Shenzhen, Hong Kong and Macao," said Ma.

Guangdong's economy is predicted to grow by about 6.3 percent year-on-year to more than 10.5 trillion yuan ($4.03 trillion) in 2019, according to the government work report.

According to Ma, nine cities in Guangdong, which are included in the Greater Bay Area, will optimize procedures for market access, intellectual property protection and government service, for better integration of industrial and business resources.

High-quality and advanced manufacturing, along with technological innovation, have helped drive Guangdong's healthy economic growth and would better integrate resources in the Greater Bay Area, said Lin Jiang, an economics professor at the Lingnan College under the Sun Yat-sen University.

"A streamlined business environment in Guangdong will also help better attract investment, technology and talent," said Lin.

The province has also reformed 106 items concerning administrative approvals, significantly simplifying business operation procedures and helping attracting international businesses, with GE and BASF launching projects in Guangdong last year.

"Guangdong's vast market and sound business environment are reasons why BASF chose the province for the project," said Stephan Kothrade, president for Asia-Pacific and China operations at BASF.

 

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2020-01-16 00:00:00
<![CDATA[Seven key tasks for 2020]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532466.htm 1.Encouraging more IPOs on the sci-tech bourse

Shanghai will actively promote the "Light of Huangpu River" plan, which includes a series of preferential policies to enable more tech and innovative companies to get listed on the Sci-Tech Innovation Board. The municipal government will also provide more services for aspects like legal affairs, credit ratings, guarantees and sponsorships.

2. Advancing regional integration for Yangtze River Delta demonstration zone

The city will further develop the Hongqiao International Transportation Hub and promote cooperation and integration projects on technology innovation, infrastructure, security, environment protection and public services in the demonstration zone. The area will make concerted efforts in creating a unified market with greater access to the world.

3. Enacting a competitive taxation policy in the Lingang Special Area

The city will quicken the development of the Lingang pilot free trade zone in Pudong new area, giving greater freedom and space in the area for investment, trade, capital, transport and personnel. A competitive taxation policy and comprehensive risk management plan will be put into practice in the free trade zone.

4. Hosting the third China International Import Expo for continued success

The city will come out with long-term measures to ensure the continued success of the CIIE and step up efforts to expand the influence of the Hongqiao International Economic Forum.

5. Building the city as an international financial center with multilayered markets

Shanghai will become an international financial center and asset management center that is commensurate with China's economic strength and the status of the renminbi with a cluster of key financial institutions. It will open up more financial sectors to accelerate the internationalization of the renminbi, build a multitiered financial market system, and boost the development of fintech. The city will also fortify its regulatory system to keep financial risks under control.

6. Becoming an international hub in the global trade network

The city will optimize the balance of trade in goods and in services, expand the share of re-exporting and transit trade, offshore trade and digital trade. Domestic and foreign trade will be equally emphasized in a modern market system where commodities, capital and personnel can flow freely. Reforms will be undertaken to provide a single-window service platform that is aligned with international trade and investment rules.

7. Accelerating smart city development

Shanghai's key tasks for this year include acceleration of the smart city development and improving the capacity of the new generation of information infrastructure. The city will achieve citywide 5G coverage within this year and become a broadband city with both wired and wireless gigabit networks.

 

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2020-01-16 00:00:00
<![CDATA[China at forefront of global blockchain boom]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532421.htm China is bullish on the blossoming blockchain sector, seeing it as the next frontier for national competitive advantages as well as a digital future.

As one of the first major countries to acknowledge the potential of the blockchain technology, China is ramping up efforts to push toward global dominance over blockchain, the underlying technology behind digital currencies like bitcoin and a wide range of applications.

The country is moving rapidly ahead in constructing a robust blockchain network, as President Xi Jinping highlighted the key role of blockchain technology in the new round of technological innovation and industrial transformation last October, urging more efforts to accelerate the development of blockchain technology and industrial innovation.

Xi's speech unleashed a wave of activity and now the country is in the midst of a blockchain boom.

Experts and entrepreneurs believe the government's strong support for blockchain technology will boost the future development of the sector, but cautioned that it is necessary to be rational and not hype the concept.

Combining the application of distributed data storage, encryption algorithms and other advanced technologies, blockchain offers an open and decentralized database of any transaction involving money, goods and property among others. It provides a high level of security by creating a record whose authenticity can be verified by the whole community.

Wei Kai, deputy director of the Cloud Computing and Big Data Research Institute of the China Academy of Information and Communication Technology, said as wealth and talent pour into the blockchain sector, the technology will be applied to a wide range of real-world scenarios.

"The government's strong support will further standardize and develop blockchain in China. The development of blockchain will also empower the financial sector and the real economy, as it will help improve efficiency, reduce operating costs and build a more efficient credit system," Wei said at the recent Trusted Blockchain Summit 2019 in Beijing.

Wei noted that blockchain technology will be a new frontier of innovation in various fields, including cross-border payments, global trade, logistics, supply chain, finance, government affairs, intellectual property protection, food traceability and invoicing.

In fact, China is at the forefront globally in terms of blockchain development, as the country is leaping ahead in terms of blockchain patent filings, said a recent report released by the China Academy of Information and Communication Technology.

As of July 25, 2019, there were more than 18,000 blockchain patent applications globally, of which China accounted for more than a half of the total. Among the top 20 global corporate applicants, Alibaba and China Unicom have gained the top spot and fifth place respectively.

The report showed 2,450 blockchain companies had been set up globally as of August 2019, mainly in the fields of cryptocurrency and blockchain technology research and development. The United States topped all other countries in terms of the number of blockchain companies, followed by China and the United Kingdom.

The blockchain boom is sweeping across the whole nation. As of May 2019, more than 30 provinces, municipalities and autonomous regions had issued guidance to develop blockchain technology, such as Beijing and Shanghai, as well as Guangdong, Jiangsu and Guizhou provinces, said the report.

"The major reasons for the emergence of this new technology were to solve the trust problem between multiple agents, reduce costs for communication and improve efficiency for collaboration," said Wei from the CAICT.

However, Wei noted that blockchain technology is at an early stage of development.

"We still face problems such as the lack of supervision, immature technologies and the hiatus between demand for, and supply of, blockchain talents," Wei added. "As we are driving to a blockchain future, we need to stay rational and not hype the blockchain concept. Not all scenarios require blockchain, and we should find the right direction."

China's blockchain spending is estimated to see rapid growth in the coming years, according to a recent report by global research firm IDC.

Over the forecast period from 2018 to 2023, China will contribute about 68 percent of all blockchain spending in the Asia-Pacific region, the report said. In particular, the country will see a compound annual growth rate of 65.7 percent during the period, while the Asia-Pacific region records 50.3 percent.

Jeff Xie, senior market analyst at IDC Asia-Pacific, said the adoption rate of blockchain technology has been growing at a steady pace.

"Use cases leveraging on blockchain are maturing as well, filtering out the overhyped or solutions overselling the technology from the implementations where blockchain brings value to ecosystems," Xie said in the report.

"The technology is here to stay, organizations need to assess the benefits that blockchain can bring to the business like the way it assesses other emerging technology, and identify realistic areas of implementation where the technology can reduce costs and increase efficiency. With proper analysis, leveraging the adoption of blockchain can assist organizations to enhance their digital transformation journey," Xie added.

Seeing the big potential of the blockchain sector, many tech companies are gearing up to expand blockchain-related business, and many have already made considerable progress.

Chinese internet titan Tencent has worked closely with the tax bureau in Shenzhen in Guangdong province to roll out blockchainbased invoicing. And the first blockchain-based invoice was issued to a local restaurant in Shenzhen in August 2018.

So far, the blockchain-based invoice system has rapidly covered a wide range of industries, including financial insurance, wholesale, retail, hotels, catering, property management, car parking, transportation and internet services in Shenzhen.

As of Dec 24, 2019, Shenzhen had issued more than 14.2 million blockchain-based invoices, amounting to 9 billion yuan ($1.3 billion).

Li Maocai, general manager of blockchain technology at Tencent, said Xi's remarks highlighted the key role of blockchain technologies, which will largely boost the future development.

"Cryptocurrency is just one among the many applications of blockchain," Li said. "With the government's strong support, blockchain companies, experts and institutes will accelerate their push for making breakthroughs in the underlying technologies and overcoming the current technological bottlenecks, which will definitely inject new impetus into the whole industry."

According to him, more efforts are needed to integrate blockchain with cloud computing, big data, the internet of things and other new technologies to deal with real-world problems, and Tencent will continue to explore applications in blockchain games, supply chain finance, blockchain-based invoicing and more.

Chinese blockchain giant Xunlei is also getting serious about carving out a stake in the rapidly expanding blockchain sector.

Currently, Xunlei has applied for more than 100 blockchain patents, mainly in the core underlying technologies.

As of October 2019, the company had introduced products covering more than 10 industries, including environmental protection, telecommunications, traceability, biotechnology, live services, digital media, information services, advertising, public welfare, catering, insurance and copyright.

Xunlei's partners included the Copyright Protection Center of China, digital marketing service provider Hylink and Naresuan University Hospital in Thailand, the company said.

Lai Xin, chief engineer of Xunlei's ThuderChain blockchain platform, said as the government has shown great resolve in embracing blockchain, a wide range of blockchain projects will emerge in 2020.

"In the long run, the key is to focus on the application of blockchain technologies," Lai noted. "Currently, the difficulty lies in the willingness of some enterprises and institutions to apply blockchain as well as the talent shortage. More efforts are needed to cultivate talents with a big-picture thinking and cryptography professionals."

 

Visitors learn about the future applications of the combination of 5G and blockchain technology at a recent industrial expo in Hangzhou, Zhejiang province. LONG WEI/FOR CHINA DAILY
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2020-01-16 00:00:00
<![CDATA[New rules to streamline asset management firms]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532449.htm China tightened regulations for cash management-oriented wealth management products to firmly implement new rules governing the asset management industry, which is undergoing a huge transformation.

The China Banking and Insurance Regulatory Commission recently announced that it will apply the same regulations to cash management-oriented wealth management products and money market funds because they are similar products.

In the past, the regulations on cash management-oriented WMPs were loose compared with those for money market funds. As a result, banks' cash management-oriented WMPs were more attractive to investors than money market funds due to higher liquidity and returns, said Liu Bingbing, managing director and partner of Boston Consulting Group.

"The recently issued regulations will create a level playing field for cash management-oriented wealth management products and money market funds. It shows the strong determination of top policymakers and regulators to firmly carry forward new regulations governing the asset management sector. A major principle of the new regulations is to implement unified regulations on asset management solutions in various financial sectors according to their functions," Liu said.

In the past year, cash management-oriented WMPs were widely welcomed by many investors who were concerned about financial risks due to their increasing occurrence.

Cash management-oriented WMPs accounted for about 60 to 70 percent of the total volume of new WMPs that adopted a net value model rather than an expected return model. They were issued by banks after China announced new regulations governing the asset management sector, Liu said.

"Restricting the growth of cash management-oriented WMPs will greatly affect the growth of assets under management in the banking sector and the growth of revenues generated by WMPs offered by commercial banks, especially if we take into account that cash management-oriented WMPs are not just asset management products. They also help banks attract, serve and maintain clients more effectively."

"Because of the launch of new regulations, this type of product will go through further transformation and upgrading in the short term. Besides, commercial banks also face greater pressure to develop other types of WMPs that may raise the requirement on banks' WMP management capability in the long run," he said.

Following a decrease in the volume of low-risk quasi fixed-income products, the difficulties for banks to provide asset management services will increase significantly. The current market environment is also forcing bank clients to make a choice of either highlighting asset security while enduring low returns or taking higher risks to earn greater returns, he said.

Despite this, banks still have other solutions which include structured deposits and large-denomination certificates of deposit to mitigate the effect of tighter regulations on cash management-oriented products.

Min Cheng, head of investment products and investment advisory at the wealth management division of Standard Chartered China, said: "In the past, the wealth management business of the Chinese banking sector actually deviated from the real nature of asset management and separated itself from the real economy due to a lack of professional management. The launch of new regulations on the asset management business and wealth management products will completely reform the domestic asset management sector and raise hopes for the development of the wealth management business in the future."

Min said it takes time for Chinese investors who are used to principal protected wealth management products which provide guaranteed rates of return to assume the risk that they may suffer investment losses or WMPs may fail to meet expectations.

While banks are improving the assessment of investors' risk tolerance and the identification of different levels of risks associated with wealth management products, they will also step up investor protection.

"The top priority for asset managers is to strengthen their investment capabilities and to build and optimize their investment research platforms," Min said.

 

An employee addresses queries on wealth management products from a customer at a China Minsheng Banking Corp branch in Taiyuan, capital of the Shanxi province. BEI HE/XINHUA

 

 

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2020-01-16 00:00:00
<![CDATA[PBOC moves closer to the launch of DC/EP, its own digital currency]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532436.htm The Chinese monetary authority has identified digital currency as one of the nation's most important infrastructure areas in the coming years, and the global community is expecting the birth of a digitalized renminbi this year.

Senior officials from the People's Bank of China, the central bank, said recently that the testing of the central bank's "digital currency and electronic payment", the so-called DC/EP, had already finished.

According to a speech made by Fan Yifei, vice-governor of the PBOC, there are some experimental areas for the DC/EP pilot program, for further testing the application scenarios and service scale, and the functions of the digital sovereign currency still need to be improved.

Although few new details have been disclosed, some basic ideas of the DC/EP design and issuance structure have not changed from the initial version.

Who will issue the digital RMB?

The PBOC will be the only legal body to issue the digital RMB, not directly to customers, but to institutions including retail banks. Then the institutions will distribute the digital currency to users, much as physical currency is issued now. Some technology and nongovernment companies may also join the distributing group.

In order not to disturb monetary policy and macro-prudential management, the central bank digital currency has adopted a "double-layer" mechanism, which does not change commercial banks' operation system as "credit intermediaries", said Qian Xuening, an economist with the Institute of Economics, which is part of the Chinese Academy of Social Sciences.

Will the digital RMB change the existing monetary system?

The upcoming digital RMB will only replace cash in circulation, or the M0. It will not disrupt the money supply system and the monetary policy transmission mechanism, which also include deposits held in bank accounts.

The design of the central bank's digital currency has not yet involved other parts of money supply besides M0, so it will not have a great impact on the monetary transmission mechanism, said Qian.

Will it be fully anonymous?

As a digital currency, transaction information about DC/EP can be recorded and tracked. If the central bank has the right to check the information it will pose a threat to privacy. But a fully anonymous digital currency may encourage illicit transactions, such as terrorist financing and money laundering. So the digital RMB will be "controllable anonymously", creating a balance between privacy protection and preventing crimes, according to Mu Changchun, head of the PBOC digital currency research institution.

When will it be launched?

The PBOC started research into digital currency in 2014. In 2016, it opened the Institute of Digital Currency and established a special work team in 2017 for experimenting with the central bank-backed DC/EP.

After five years, the research and testing processes are almost finished, and the PBOC will "steadily promote the launch and application" of digital RMB, said central bank officials.

What are the advantages of digital currency?

At present, the world's major sovereign digital currency models include the "Rscoin" generated in the United Kingdom, and China's DC/EP. The original idea of both models is to replace and develop the existing paper currency and electronic accounts, in order to enhance monetary stability, improve financial efficiency and monetary policy functions, said Qian with the CASS.

To replace paper money, the digital currency can record information of real-time transactions, including criminal transactions and money laundering.

"After the complete substitution of paper money, the central bank can implement a subzero interest rate through the digital system, so that the monetary policy can break through the zero interest rate limit," Qian added.

 

A woman passes by the People's Bank of China in Beijing. ZHU XINGXIN/CHINA DAILY

 

 

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2020-01-16 00:00:00
<![CDATA[CNPC to increase output of oil and gas]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532434.htm China National Petroleum Corp, the State-owned energy giant, is planning to ramp up oil and gas output to more than 200 million metric tons of oil equivalent this year, while looking to raise the share of natural gas output to a record high of 50 percent.

The company announced the annual goal during its work conference for 2020 held on Tuesday in Beijing. It plans to invest 5 billion yuan ($726 million) this year on oil and gas exploration.

Natural gas capacity at CNPC's Tarim Oilfield and Southwest oil and gas field will exceed 30 billion cubic meters, while shale gas production will surpass 11 billion cubic meters, it said.

CNPC said natural gas production increased 8.6 percent year-on-year in 2019, registering the highest growth in five years, while crude oil production reversed from a decline in four consecutive years, without revealing details.

The oil and natural gas output of its Changqing Oilfield, China's largest oil and gas field, reached 57.01 million tons of oil equivalent in 2019, including 41.23 billion cubic meters of natural gas.

Industry experts said CNPC's goal reflects Chinese oil and gas companies' surging interest in natural gas development, to cope with the country's commitment to environment protection, and the slowdown in oil consumption growth.

Statistics from the National Development and Reform Commission showed China's consumption of natural gas rose 9.5 percent year-on-year to 246.28 billion cubic meters between January and October last year.

Over the same period, consumption of refined oil was 275.16 million tons, up 1.9 percent year-on-year, while crude oil output rose 1.2 percent year-on-year to 159.29 million tons.

"For CNPC, as well as other oil and gas companies, China's increasing appetite for natural gas provides an alluring new growth momentum, when oil consumption growth has slowed down," said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.

Natural gas accounts for only about 8 percent of primary energy consumption in China, while the country's energy development plan for the 13th Five-Year Plan (2016-20) period pledged to source respectively 10 percent and more than 15 percent of primary energy consumption from natural gas and non-fossil energy by the end of this year, to expand clean and renewable energy in its energy mix, according to Lin.

Strengthening natural gas development is a practical choice that meets the country's energy upgrade demand, and the company's pursuit for new growth when oil consumption growth is no longer as fast as in the past, he said.

Li Li, research director at energy consulting company ICIS China, said strengthening natural gas development is necessary for China's oil and gas companies from the perspective of both production and demand.

It is relatively easier to boost natural gas production than crude oil production, due to China's lack of resources, while demand for natural gas has maintained steady growth, she said.

 

Maintenance staff check facilities at CNPC's Tarim Oilfield. XINHUA

 

 

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2020-01-16 00:00:00
<![CDATA[China to further slash taxes, fees for manufacturing sector]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532423.htm Manufacturing enterprises in China will benefit from the government's continued efforts to cut value-added tax and fees this year, and the total scale of the reductions in cost for the sector was expected to reach 1.65 trillion yuan ($240 billion) for 2019, officials said.

Last year, the total reduction in taxes and fees for companies were forecast to reach 2.36 trillion yuan, and the fee reductions for manufacturing companies accounted for nearly 70 percent of the total, the Ministry of Industry and Information Technology said this week.

The value-added tax of the manufacturing sector, the backbone industry in China, has been cut to 13 percent. There is still room for further reductions, industry experts said.

The key measures rolled out in early January by the State Council aims to further improve the business environment for enterprises. For example, enterprises with annual revenue of 20 million yuan or higher, will enjoy favorable power policies like joining market-oriented electricity transactions to reduce costs.

"Continuing to implement tax cuts and fee reductions for companies, particularly for the manufacturing sector, will help reduce their burden and bring more benefits. The measure will also guide enterprises to increase investments in research and development and promote the transformation and development of the sector," Zhang Yiqun, deputy director of the China Special Committee on Budget Performance, was quoted in a report by the Securities Daily.

"The tax cut of the manufacturing sector has reached a certain scale. Next, we should focus on fee reduction, especially on the monopolistic industry fee charges such as fees of electricity use, telecommunication and transportation. Thus, it will help further stimulate the growth potential and vitality of the manufacturing industry," Zhang said.

He added that the government should continue to build a market mechanism and free and fair competition environment, and thus shape a stable tax cut and fee reduction mechanism.

In the first 10 months of last year, the government cut taxes totaling 1.97 trillion yuan for companies nationwide. From April to October, reduction of taxes in the manufacturing and wholesale sectors reached 459.9 billion yuan, down 25.7 percent year-on-year, according to the Ministry of Finance.

In 2018, the State Grid Corp of China met the target of lowering electricity prices by 10 percent for general industrial and commercial companies. In 2019, the State Grid met the target of lowering the electricity price by another 10 percent for those companies. In the two years, the total cost savings have reached 155.6 billion yuan.

"By further reducing the burden of manufacturing enterprises, it will help promote the investment and development of the sector, and thus form a benign cycle. Tax cuts and fee reduction are an important measure to help lower the costs and they will help manufacturing companies to raise their product qualities," said Liu Xiangdong, an associate researcher at the economic research department of the China Center for International Economic Exchanges.

Chen Bin, executive vice-president of the China Machinery Industry Federation, said the policy will help related companies to achieve high-quality development, transformation and upgrade the manufacturing capabilities.

"In addition to saving costs on power, transportation and financing, and relieving the burden of Chinese manufacturers, the government's tax cut and cost-reduction measures will support the growth of the producer price index (PPI), and create an ample space for domestic companies to invest in innovation and sales network development," Chen said.

With more funds available in hand, China's construction machinery makers, including Sany Group and Xuzhou Construction Machinery Group, have already put more efforts in the transformation to digital and smart technology, green production, and upgrading of traditional sectors.

Chen added that Chinese companies should pay attention to the optimization of the business environment related to the service sector and the operational mechanism of manufacturers.

The government should create competitive financing conditions for small-and medium-sized manufacturing companies, and encourage more foreign companies to partner with them to expand in both the home and overseas markets.

Wei Xufeng, vice-president of Dalian Huarui Heavy Industry Group, said the essence of the government's targeted tax and fee reduction policy is to promote manufacturers' capital turnover and boost activities in research and development in State-owned and private companies.

"Besides factories, we have also benefited from reduced charges on roads, railways and ports, and regulate charges for banking and intermediary services. As an equipment and machinery exporter, these moves have effectively reduced the burden on our operations in the domestic and export market," Wei said.

Supported by over 10,000 employees, the Dalian-based SOE has sold its products in 91 countries and regions, including Australia, South Africa and Italy. Its products have served sectors such as metallurgy, mining, ports, shipbuilding and energy.

 

An employee polishes bicycle rims at a production facility in Hangzhou, capital of Zhejiang province. HU JIANHUAN/FOR CHINA DAILY
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2020-01-16 00:00:00
<![CDATA[Shanghai banks on reform, opening-up]]> http://www.chinadaily.com.cn/kindle/2020-01/16/content_37532450.htm Shanghai will leverage on overall stability and sustained economic momentum to be the role model of China's ongoing reform and opening-up this year along with concerted efforts to reaffirm its position as a bellwether of the Chinese economy to the rest of the world, top officials of the city said on Wednesday.

According to the report on the work of the government released by the municipal authorities on Wednesday, Shanghai's GDP growth was estimated to be over 6 percent for last year. The city expects its GDP to grow by 6 percent this year.

"Over the past year, confronted with the complicated situation of rising risks and challenges at home and abroad, we have remained firm in our strategic focus and development confidence," said Ying Yong, mayor of Shanghai, while delivering the report during the Third Session of the 15th Shanghai Municipal People's Congress, the city's legislative body.

"Rising to the challenges head-on, we have put stabilizing growth high on our agenda, achieving high-quality development through steady growth and effectively addressing external uncertainties with certainties of our own development."

Last year, Shanghai implemented three decisions for the development of the city that President Xi Jinping elaborated on in November 2018. These include the establishment of the Lingang Special Area as an expansion of the China (Shanghai) Pilot Free Trade Zone, the launch of a science and technology innovation board at the Shanghai Stock Exchange and piloting a registration system for listed companies, as well as the integrated development of the Yangtze River Delta region. The city also successfully hosted the China International Import Expo for the second time.

The city is now set to further develop these important policies to strengthen the city's role in global resource allocation, scientific and technological innovation breakthroughs and leading growth in surrounding regions, Ying said.

The construction of the Lingang Special Area will help champion innovation and the opening-up of the whole FTZ of the city, said the mayor.

"We will strive to realize the freedom of investment, trade, capital, transportation and employment and the quick information connections within Lingang, and use an internationally competitive taxation system and complete risk management system," Ying said.

"Such moves will help deepen system innovation and development upgrade in other areas of the Shanghai FTZ, contributing to new breakthroughs in high-level reform and opening-up of the Pudong new area, which is celebrating the 30th anniversary of its development and opening-up this year," he said.

Launched in August, the Lingang Special Area, designed as a pilot zone for new industries and business and trading models with an initial area of nearly 120 square kilometers, has seen registration of more than 4,000 enterprises with total investment of nearly 82 billion yuan ($12 billion) and signing of 168 key business projects, according to the municipal government.

Attractiveness to foreign investment has long been Shanghai's competitive edge, Ying said. Newly established foreign enterprises and foreign investment increased by 21.5 percent and 10.1 percent respectively on an annual basis last year.

The city also became home to another 50 regional headquarters of multinational companies and 20 foreign-funded research and development centers last year.

Ying said Shanghai will continue to leverage the CIIE platform to promote trade, investment, cultural and people exchanges, to enhance global economic governance and international cooperation, as well as to attract more multinational corporations to set their regional headquarters in the city.

Shanghai also plans to complete the construction of "four international centers"-those for economy, finance, trade and shipping, which were put forward in the mid-2000s, Ying said.

The city is looking to accomplish the building of a basic framework for a scientific and technological innovation center with global influence by the end of this year, Ying said.

Xing Yi contributed to this story.

 

Tourists take selfies with Shanghai's financial center as a backdrop. WANG GANG/FOR CHINA DAILY

 

 

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2020-01-16 00:00:00
<![CDATA[Service outsourcing efforts gathering speed]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532345.htm China will further boost the service outsourcing industry and step up digital transformation in key sectors such as cloud computing and software, said a guideline issued by the Ministry of Commerce and seven other ministries and commissions on Tuesday.

By 2025, China's offshore service outsourcing will be able to further strengthen its position as the main channel for service exports, and the proportion of digital services with high technology and high added value will continue to increase, said the guideline.

"The average annual output value of China's service outsourcing employees will be the largest in the world by 2035."

Outsourcing is a business practice where a company hires another company to perform tasks. In recent years, the new wave of technology advancement has generated opportunities for Chinese service outsourcing providers to transform and adapt to the digital era.

Thanks to the widespread application of the new-generation information technology, the service outsourcing industry has featured digitalization, intelligence, high-end and integration, said the document.

To further transform and upgrade the industry, the guideline has laid out several major tasks, for instance, accelerating digital transformation.

A major task is to bolster information technology outsourcing. IT-related research and development and applications, such as cloud computing, basic software, integrated circuit design, and blockchain can gain funding support from the national science and technology plans, according to the guideline.

In addition, more efforts will be made to bolster new models. "China will rely on 5G technology, to vigorously develop new models such as crowdsourcing, cloud outsourcing, and platform subcontracting," the document said.

Xing Houyuan, director of the China Service Outsourcing Research Center, said that "the thriving service outsourcing industry will help empower the traditional service sector."

Xing said the rapidly developing information technology has penetrated into a lot of fields. He said there have been a large number of cutting-edge technologies that rely on artificial intelligence, especially in the financial services sector.

Zhang Dongwei, chief marketing officer of Pactera Technology International Ltd, said: "The service outsourcing industry has been gradually evolving from labor oriented to technology oriented in recent years."

An increasing number of Chinese outsourcing providers have been enhancing their technological and innovative capabilities, Zhang said.

Between January and September 2019, the service outsourcing industry in China grew steadily, data from the Ministry of Commerce showed. The value of service outsourcing contracts signed by Chinese enterprises amounted to 886.4 billion yuan ($128.8 billion) in the nine-month period, up 4.4 percent year-on-year.

The sector helped create 449,000 new jobs in the first three quarters of last year. By the end of September, a total of 11.13 million people were working in the sector, 64.5 percent of whom had a college degree or above.

 

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2020-01-15 00:00:00
<![CDATA[More foreign-invested banks to get bond underwriting nod]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532404.htm More foreign-invested banks will be allowed to underwrite bonds issued by the local governments in China, as part of the country's financial sector's further opening-up efforts, experts said.

Allowing foreign-invested banks to participate in the underwriting will not only bring in more overseas investors, but also boost the faster expansion of the country's 20 trillion yuan ($2.9 trillion) local government bond market this year.

Local governments are expected to issue 135 bonds worth more than 400 billion yuan this week, the highest issuance in history, according to data released by the China Central Depository and Clearing Co Ltd.

To ensure that enough funds can be raised and used for infrastructure projects, the Ministry of Finance has urged local governments to revise the rules so that fully foreign-funded banks, Sino-foreign joint venture banks and foreign banks' branches in China can all underwrite local government bonds.

Three foreign-invested banks-Fubon Bank, the Bank of East Asia and Deutsche Bank, are already part of the local government bond underwriting groups, said the Ministry of Finance. It means that these banks will now be able to sell the bonds to their clients, including overseas investors.

The new policy, in line with the country's financial sector opening-up strategy, will expand the issuance channels of local government bonds, and promote the diversification of bond investors, said the ministry in a statement. In addition, "it will make the bond issuance sustainable, facilitate the opening of the government bond market, and promote the internationalization of the renminbi."

Yulia Wan, a vice-president and banking analyst at global credit ratings agency Moody's Investors Service, said: "We expect more foreign banks to join local government bond underwriting groups, which can help complement current sales channels and diversify investor base for local government bond issuances."

Joining the local government bond underwriting groups can help foreign banks diversify their business in the Chinese market and increase their source of income, Wan told China Daily on Tuesday.

China's foreign exchange regulator, the State Administration of Foreign Exchange, also launched new strategies to attract foreign investors to the domestic bond market on Monday. It said that foreign institutions, both banking and non-banking investors, can trade in the interbank foreign exchange market, using financial instruments and derivatives to hedge foreign exchange risks.

The SAFE will continue to push forward the opening-up and reform of the foreign exchange market, and better serve the real economy, according to a statement on the website.

China's bond market may attract more capital inflows than 2019 this year as some major central banks and private sector firms will increase their investment in Chinese bonds, said a research note from China Merchants Securities. Foreign institutions purchased Chinese bonds worth 457.8 billion yuan last year, up 32 percent from 2017, the note said.

Local governments' new bond issuance stood at 3 trillion yuan during the January-to-November period of 2019, and outstanding local government debt reached 21.3 trillion yuan at the end of November, below the debt ceiling of 24.1 trillion yuan, according to data from the Ministry of Finance.

To improve the transparency and disclosure of local government financial information, the Ministry of Finance established a website earlier this month that discloses detailed debt and financial data by province-level regions.

Several provinces have revealed issuance plans for special purpose bonds with total planned issuance in January 2020 of around 564.6 billion yuan, said a report from Moody's.

"The early allocation of the 2020 bond quota allows local governments to issue bonds one month earlier than the previous process. Because early allocations of special bonds are not allowed to be used for property-related projects like land reserves and shantytown renovation, we expect infrastructure investment growth to pick up at the beginning of this year," it said.

 

An outlet of the Bank of East Asia in Shanghai. CHINA NEWS SERVICE

 

 

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2020-01-15 00:00:00
<![CDATA[Canon eyes growth in China with greater focus on B2B sector]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532403.htm Japanese camera and imaging equipment maker Canon Inc is betting big on the business-to-business or B2B segment, and expanding its presence in education, medical equipment, finance, video surveillance and government in China, which has become an important engine to drive the company's growth.

"More than 30 million enterprise clients and about 60 million self-employed individuals in the Chinese market offer great growth potential for Canon," said Howard Ozawa, president and CEO of Canon China.

Ozawa said the company will continue to strengthen its B2B business, which maintained double-digit growth last year, covering business imaging solutions, photographic and imaging equipment, 4K and 8K televisions and camera lenses, as well as video surveillance equipment. He said the whole B2B business is expected to account for about 50 percent of its revenue this year.

Canon is accelerating efforts to apply cutting-edge 5G and artificial intelligence tech through cooperation with third-party organizations to promote the digital and intelligent transformation of the office industry, and launch more tailor-made products that satisfy the demands of Chinese consumers, Ozawa said.

It is also committed to transmitting 8K ultra-high-definition TV content through superfast 5G networks, and has developed a facial recognition system that can be used in security, attendance and entrance guard.

Technologies like 5G seem like a revolution in the data industry and will have deeper integration with industrial facilities, medical equipment and transportation.

The popularity of smartphones with built-in cameras has eaten into some of the market share of traditional camera manufacturers.

According to data from the Japanese Camera& Imaging Products Association, total shipments of digital cameras in 2018 fell by 22.2 percent year-on-year, with a significant decline of 34.9 percent in built-in lens digital cameras to 8.7 million units.

The Japanese electronics giant has been seeking new business growth points.

In 2016, Canon agreed to buy Toshiba Corp's medical equipment unit for nearly $6 billion to enter the high-margin medical devices sector. It also made a $2.83 billion cash bid to acquire Swedish network video solutions provider Axis Communications AB in 2015, to expand into video surveillance.

The company foresees huge development opportunities in the medical equipment market under the guidance of the Healthy China 2030 Initiative, which aims to boost the market for healthcare services to 16 trillion yuan ($2.3 trillion) by 2030.

Liang Zhenpeng, a consumer electronics analyst, said it was an inevitable trend that the camera market was shrinking and camera makers had to seek new growth points, expand product chains and move toward diversified portfolios.

By the end of last year, Canon's business imaging solution group witnessed continuous revenue growth in the past 48 months, with sales of color multifunction devices surging 130 percent year-on-year, manifesting the company's push in the B2B sector.

 

A visitor tries out Canon's VR medical solution during an expo in Shanghai. XINHUA

 

 

 

 

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2020-01-15 00:00:00
<![CDATA[Spring Festival to boost sales of imported goods in smaller cities]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532401.htm Belgian beer, Thai rice, New Zealand milk, Norwegian salmon, Canadian Arctic sweet shrimp and Chilean cherries-these are just a small part of a long list of affordable options for Chinese consumers from lower-tier cities and towns to welcome the Chinese Lunar New Year, which will fall on Jan 25 this year.

Shopping for festive goods has long been a tradition in China, not only for family celebrations, but also for gifts sent to relatives and friends.

Nowadays, imported goods are no longer exclusive to residents in first-and second-tier cities, owing to the rise in the disposable income of people in third-to fifth-tier cities, along with convenient and efficient e-commerce channels, experts said.

JD Daojia, the local on-demand retail platform of Dada Group, said that during the first round of a Spring Festival shopping carnival held from Dec 28 to Jan 5, total sales from third-tier cities and below increased by 5.6 times over the same period last year, while those for imported goods grew by 9.8 times year-on-year.

Fruits, milk, candies and chocolates are the most popular types of imported goods in third-and fourth-tier cities, the data showed.

In addition, sales in some low-tier cities such as Putian in Fujian province, Jiangyin in Jiangsu province and Zhuhai in Guangdong province have doubled year-on-year. The top three products sold in third-tier cities and below were pure milk, soft tissue and normal temperature yogurt.

As the Spring Festival approaches, the overall sales of imported goods increased 2.3 times year-on-year. Among them, the sales of milk powder, nuts and washing products grew by three times or more year-on-year, JD Daojia said.

The consumption of imported fruits has also risen 2.2 times compared to the average sales in December last year. Bananas, Chilean cherries and longan have become the bestsellers among imported fruits.

Amazon began a monthlong Spring Festival sales drive on Monday, offering consumers millions of international selections, exclusive offers and compelling deals.

Chen Tao, a senior analyst from market consultancy Analysis, said people in smaller cities and towns are eager to celebrate the Spring Festival by purchasing imported goods, and have greater access to various kinds of special purchases due to the rising e-commerce penetration rate in these lower-tier areas.

"E-commerce platforms hope to unleash the consumption potential from fourth-tier cities and below, as the growth of online shopping in first and second-tier cities is slowing down," said Cao Lei, director of the China E-Commerce Research Center.

He noted the third-to fifth-tier cities and rural areas have become a source of new customers, adding their enthusiasm and spending power for the Spring Festival should not be underestimated.

Statistics from global data analytics company Nielsen showed there are 953 million people living in third-tier cities and below, far surpassing the 427 million people in the first-and second-tier cities. The data showed that smaller cities have huge untapped consumption potential.

A report from Deloitte China, the China Chamber of International Commerce and AliResearch said demand from less-developed areas is becoming a new driver for the imported goods market in China.

The demand for quality imported products with specific added value is higher due to maturing consumption patterns and increasing income in third-to fifth-tier cities and counties, as well as growing coverage by convenient, efficient e-commerce channels, it noted.

"We expect consumption in lower-tier cities to surge from $2.3 trillion in 2017 to $6.9 trillion in 2030," Robin Xing, Morgan Stanley's chief China economist, said in a research note. "Further, these smaller cities could be the engine driving China's overall private consumption market of $11.8 trillion over the same period."

The per capita disposable income of China's rural residents continued to grow at a faster pace than that of the country's urban dwellers in the first three quarters of 2019, the National Bureau of Statistics said.

Pan Helin, a senior researcher at public policy think tank Pangoal Institution, said consumers in third-tier cities and below, counties and rural areas account for about 70 percent of China's population, indicating huge untapped consumption potential.

 

A customer checks out Boston lobsters at a shopping mall in Hangzhou, capital of Zhejiang province. LONG WEI/FOR CHINA DAILY

 

 

 

 

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2020-01-15 00:00:00
<![CDATA[Families set to increase spending on snacks, banquet food and gift packages]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532350.htm A few days prior to the weeklong Spring Festival holiday that starts from Jan 24, Wang Wen has started to prepare for the family gatherings.

Her parents-in-law are expected to join her family of three to spend the holiday with them. Wang, 33, is busy shopping for imported fruits, snacks, and frozen meats to prepare for the Lunar New Year Eve banquet the night of the 24th.

Imported cherries from Chile, apples from the United States, beef and kiwi fruit from New Zealand or Australia are on her shopping list. She is also considering getting more fresh food, candy, wine, beer and flowers to add more fun to the holiday.

"The New Year Eve banquet is one of the most anticipated events in our family," said Wang. "Eating healthy, fresh and having fun will be our theme."

Family consumers prefer a lot of fresh food, especially imported and high-end fruits.

Across the country, consumers like Wang have boosted retail channels which have unveiled a series of promotional activities to celebrate the Year of the Rat and to diversify the New Year banquet with several high-end food and beverage products.

Directly-imported products saw a year-on-year growth of nearly 30 percent in 2019 in Walmart, with newly released products up by double digits.

Walmart China has launched "Lunar New Year street" at its more than 400 stores, community shops and online distribution channels early this month.

Brand-new products with unique features, medium-and-high-end products that are extremely popular, have lifted the overall sales for the category, mostly the confectionary and biscuit sectors.

In the alcohol segment, quality wine, liquor and beer are top of the charts. Walmart has signed with Kweichow Moutai Co Ltd for delivery of 100,000 bottles of Feitian Moutai, with the first batch distributed to five Sam's Club stores and five Walmart hypermarkets before the Spring Festival.

Liquor has accounted for 66 percent of its Spring festival alcohol sales on its online and offline channels, with expectedly large sales in its medium-and high-end brands.

Walmart's imports of Chilean cherries this year have grown by double digit levels compared with the same period of the last Spring Festival a year ago.

Fish is also essential to the New Year banquet during the Spring Festival because it means "Having sufficient every year" in the Chinese idiom. Sales of frozen fresh fish, crabs, shrimps and other imported sea food have grown 50 percent year-on-year during the Spring Festival shopping period, according to Walmart.

Jason Yu, general manager of Kantar Worldpanel China, said the traditional festival is now a reflection of a new lifestyle and status of living in the country.

Based on statistics from Alibaba and JD, traditional Chinese brands and established household names are still immensely popular, Yu said. New and fun products with the Year of the Rat IP are winners among younger consumers. Spring Festival is also a peak occasion for high-end gift packages, Yu said.

Given delays in the delivery system during the Spring Festival, purchases at brick-and-mortar retailers are also expected to grow as shoppers prefer to visit physical stores at this time of the year.

 

An employee arranges snack products at a supermarket in Qingdao, Shandong province. YU FANGPING/FOR CHINA DAILY

 

 

 

 

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2020-01-15 00:00:00
<![CDATA[Self-driving sector gains momentum]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532396.htm BEIJING-From carrying out test runs on closed roads to transporting passengers in cities, China's self-driving industry took a big step forward in 2019, attracting more foreign manufacturers.

The Chinese government's guidance and support have promoted the rapid development of this sector, said Gao Qianqian, an official from the China Association of Automobile Manufacturers.

Self-driving cars have to maintain stable connections with base stations to enable monitoring of their operational status, which requires a large amount of data exchange. With the 5G network, the delay is within a few tens of milliseconds, said Han Xu, CEO of China's smart mobility company WeRide.

As the basis for autonomous driving, China's 5G technology, with the advantages of large bandwidth, ultralow delay and large-scale connection, has accelerated its development.

A self-driving vehicle running at 100 kilometers per hour starts braking at least 1.4 meters after recognizing obstacles in 4G networks, while the 5G network can shorten the distance to about 3 centimeters.

The support of the upgraded network has facilitated the autonomous vehicles shifting from road tests to passenger-carrying tests.

In November, a fleet of self-driving vehicles equipped with Baidu Apollo autonomous driving systems developed by Chinese tech giant Baidu, carrying passengers ran on test roads with a total length of 114 kilometers and completed a diverse range of scenarios including cruising and changing lanes.

At the end of last year, WeRide launched a trial run of autonomous taxis, named Robotaxi, in a 144-square kilometer area of Guangzhou, capital of South China's Guangdong province. Passengers can order a taxi via its app and experience a driverless journey.

"As the basis of the technological advantages, our country has numerous talents, especially in fields including artificial intelligence, big data and cloud computing," Gao said.

China has been engaged in the construction of self-driving infrastructure to enhance safety and efficiency in test rides.

Beijing added a new area of 40 square kilometers for testing selfdriving cars carrying passengers on Dec 30. The city has opened 151 roads with a distance of about 503.68 kilometers for autonomous driving, ranking first in the country.

Last May, Beijing's tech hub Haidian district began constructing a 100-square-kilometer demonstration area for self-driving vehicles.

The area will be a place to develop smart connected cars and smart transportation featuring multiple scenarios, cloud management, simulated tests and data support. Companies and researchers would be able to test commuting, logistics and delivery technologies as well as those related to road cleaning, said Dai Binbin, head of the Haidian district government.

In Southwest China's Chongqing municipality, a demonstration area for 5G-based autonomous driving, including a closed test area covering more than 470,000 square meters, was launched in August.

Besides the construction of infrastructure, cities including Beijing, Shanghai and Chongqing issued policies and license plates for autonomous vehicles to assist in the research and development of the self-driving industry.

In September, several tech companies including Baidu obtained commercial licenses for self-driving vehicles issued by Wuhan's transportation department, followed by Beijing, which issued 40 license plates for Baidu's autonomous cars carrying passengers later in December 2019.

"I believe China's driverless commercial era may come faster than we planned because we are taking the lead in infrastructure efficiency and capabilities around the world," said He Xiaopeng, chairman of China's electric vehicle maker XPENG Motors, at the Boao Forum for Asia annual conference in March 2019.

It is estimated that the revenue from car sales and related services of autonomous driving in China will exceed $500 billion by 2030, according to experts at the second China International Import Expo held in Shanghai in November last year.

The Chinese market has attracted increasing numbers of international car manufacturers to develop their self-driving sector here, said Gao.

"China is the world's largest market for new cars, and the space for large-scale application of new products and technologies of this industry in the future is considerable," she said.

At the 2019 World Intelligent Connected Vehicles Conference held in October, German automaker BMW obtained license plates for intelligent connected vehicles issued by the Shanghai local government.

Thomas Müller, executive vice-president of Volkswagen Group China, said at the 2019 World Internet of Things Exposition held in Wuxi, East China's Jiangsu province, that Audi would focus on expanding China's smart car market and developing self-driving technology to meet the needs of the country's consumers.

Audi's innovation in China would become its basis to develop self-driving vehicles, said Müller, adding that a research center had been set up in Wuxi last year to provide support for the testing of its self-driving vehicles.

But Gao also noted that despite a fruitful year of autonomous driving for Chinese companies and their international partners, there is still a long road ahead for the industry's commercialization, with challenges including the improvement of regulations, the ability to control costs, as well as the sustainability of its commercialization value, to be overcome.

Xinhua

Passengers get aboard a self-driving mini bus for a test at the Zhengzhou International Convention& Exhibition Center in Zhengzhou, capital of Henan province, on Sept 25, 2019. LIU XU/FOR CHINA DAILY

 

 

Visitors get an experience of a 5G self-driving car at the Sixth World Internet Conference and the Light of Internet Expo in Wuzhen, Zhejiang province, on Oct 21, 2019. ZHU XINGXIN/CHINA DAILY

 

 

 

 

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2020-01-15 00:00:00
<![CDATA[Large-scale commercial use could become reality sooner than expected]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532395.htm Large-scale commercial use of self-driving technologies could become a reality sooner than expected, as tech companies are beefing up efforts to conduct passenger tests on unmanned vehicles, build out vehicle-to-everything infrastructure, and promote the application of superfast 5G technology.

Chinese internet search giant Baidu secured 40 licenses to test self-driving vehicles carrying passengers on designated roads in Beijing on Dec 30, 2019. To date, the company has obtained 120 such licenses.

It has conducted road tests in 23 cities across the nation, with the tested self-driving cars traveling more than 3 million kilometers in total, and filed 1,237 patents on intelligent driving.

In July 2019, Baidu obtained the first batch of testing licenses for its L4 self-driving vehicles. Level 4 autonomy means the car can drive itself in most conditions without a human driver.

As of December 2019, Beijing had opened 151 roads with a total distance of 503.68 kilometers for road tests of self-driving vehicles, ranking first in the country. So far, the city has issued road test licenses to 77 vehicles from 13 companies, which traveled more than 1 million kilometers.

Rong Jun, deputy head of the Beijing Municipal Commission of Transport, said self-driving has gradually developed from road tests to passenger-carrying tests both in China and abroad.

Road tests for self-driving vehicles are available in more than 20 provinces and cities in China, and six cities-Beijing, Shanghai, Guangzhou, Changsha, Wuhan and Cangzhou-have allowed passenger-carrying tests on autonomous vehicles.

Other companies such as SAIC Motor, BMW, Didi Chuxing and DeepBlue Technology have also obtained such plates for passenger-carrying tests.

Moreover, smart infrastructure will enable faster and safer deployment of autonomous vehicles. In addition to advancing autonomous driving technology, it is just as important to develop sophisticated communication capabilities between vehicles and their environment.

The Beijing-based tech behemoth Baidu has also rolled out an open platform for its V2X or vehicle-to-everything solutions, which will create synergetic interactions between smart cars and intelligent roadways to improve safety and mitigate traffic congestion. Under this system, autonomous vehicles will be able to better communicate with traffic lights.

Li Zhenyu, vice-president of Baidu and general manager of its Intelligent Driving Group, said that artificial intelligence is transforming the automotive industry.

Working with partners such as Ford, Mercedes, BMW, Hongqi, Great Wall Motors and Chery, Baidu is building a new framework for connected vehicle solutions and intelligent transportation, and accelerating the transition of cars to something more than vehicles of transportation, he added.

It launched Apollo Robotaxi in Changsha, Hunan province, in September, with the first batch of 45 self-driving taxis officially starting trial operations on urban roads. It is also China's first group of autonomous driving taxis managed by Baidu's V2X system.

"We will continue to work together with our partners with the aim of bringing a safer, more comfortable and more efficient autonomous driving experience to all," Li said.

Officials have high hopes for the market. China expects vehicles with some autonomous functions to account for half of new vehicles sold in the nation this year, according to a guideline released by the National Development and Reform Commission.

In April 2018, the authorities concerned released a national guideline on road tests for self-driving vehicles.

Consultancy Roland Berger said China is accelerating its development of autonomous driving and is expected to become a leader in the technology, which is seen as key to the future of the automotive industry.

It is also noteworthy that 5G technology has been applied to self-driving vehicles. The 5G self-driving minibus developed by BroadXT Inc made its global debut during the sixth World Internet Conference in Wuzhen, Zhejiang province.

Powered by a variety of advanced techniques such as sensors, high-precision positioning, the fifth-generation wireless network and V2X cooperative vehicle infrastructure system, the autonomous bus adopts a Level-4 autopilot technology and is able to identify pedestrians, vehicles and other obstacles within 200 meters.

"The autonomous bus can react within 100 milliseconds under complex road conditions owing to the 5G, sensors, AI and cutting-edge computing technologies," said Shang Wenzhu, president of BroadXT.

Shang added that the vehicle will be the first mass-produced 5G autonomous minibus in China that has passed tests on open urban roads, while the official said China is taking the lead in autonomous driving technology.

Experts have warned, however, that firms should proceed cautiously, especially when it comes to people's safety.

"More tests are needed before such vehicles can reach mass production and enter large-scale commercial application because of widespread safety concerns," said Zeng Zhiling, managing director of LMC Automotive Consulting Co.

"Intelligent vehicles with fully autonomous functions may account for 10 percent of the new vehicles in 2020," said Yang Diange, dean of the Automobile Engineering Department at Tsinghua University, estimating that "self-driving vehicles will be part of our daily lives in 2030".

 

A self-driving car is displayed at the China Hi-Tech Fair in Shenzhen on Nov 13, 2019. XUAN HUI/FOR CHINA DAILY

 

 

 

 

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2020-01-15 00:00:00
<![CDATA[Online transactions of industrial products buoy e-commerce firms]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532358.htm Buying and selling of industrial products via online platforms could well be the "next blue ocean" in China's e-commerce sector and drive digitalization of global business-to-business sales, a new report said on Tuesday.

The market value of industrial products e-commerce is slated to hit 2.3 trillion yuan ($333 billion) in 2024 from 700 billion yuan last year, global consultancy Bain & Co said in a white paper jointly released with 1688.com, Alibaba Group Holding Ltd's B2B trading arm for domestic trade.

That represents a 25 percent to 30 percent compounded annual growth rate during the period, when the e-commerce penetration rate of B2B industrial products is forecast to rise from the current 2 percent to 5 percent in four years.

"The next wave of e-commerce bonus will come from the B2B end, with the tens of millions of our buyers poised to benefit from data, branding and operations support from online trading platforms," said Li Congshan, general manager overseeing industrial brands at 1688, which hosts over 10,000 industrial brands from home and abroad.

"The process is inevitably much more complicated compared with consumer-facing businesses, such as settlement, logistics, local installments and after-sales service," said Zhao Liqiang, a partner at Bain and chair of its manufacturing practice.

B2B e-commerce sites have become established avenues for information sharing, with 72 percent of surveyed companies reporting that they leverage online channels to compare prices and 55 percent use the platform to check key product parameters.

They are shaping up to be brand-promoters, with companies indicating that browsing of daily products has risen by 58 percent on average on 1688. In a similar vein, transaction volume for these companies is also 2.5 times faster than industry average.

For multinational industrial conglomerates, online channels facilitate a much broader outreach of prospective buyers, who are typically small-and medium-sized companies in remote places in China, said Zhu Wenhui, who is responsible for e-commerce channel development at Schneider Electric.

Zhu said the French company has seen clients from third-and lower-tier cities grow by 60 percent since its namesake flagship store and a matrix of reseller stores opened in 2018, while the number of orders secured jumped 80 percent.

"The online site has helped us better penetrate the lower-tier markets with much lower costs and higher efficiency that would not have been attainable just by ourselves," Zhu said.

The so-called customer-to-manufacturing trend, featuring tailored production based on customer preferences, is also picking up momentum.

Chemical giant BASF customized the design and production of a special dishwashing glove after it learned of customer complaints on conventional designs from other brands.

More than 20,000 newly-designed gloves were snapped up in two days, which was equivalent to roughly two months' sales recorded on Tmall, Alibaba's B2C site, according to data from the e-commerce site.

"We have seen tremendous simplification in the entire process, trimming the traditional offline sales cycle from two weeks to just two days now," said Liu Yanli, business and market development director at BASF China. "BASF's e-commerce practice in China is arguably the best within our company globally.

 

Scale of industrial products e-commerce in China LIU LUNAN/CHINA DAILY

 

 

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2020-01-15 00:00:00
<![CDATA[E-commerce firms lend farmers helping hands]]> http://www.chinadaily.com.cn/kindle/2020-01/15/content_37532399.htm The Spring Festival is a joyous occasion when people reward themselves for a year's hard work by buying and preparing delicacies.

Now it is also turning out to be an opportunity to reward others with cash.

Chinese e-commerce sites are rolling up their sleeves to help farmers sell their agricultural products, a combination of philanthropy and business that contributes to the nationwide eradication of poverty by the end of the year.

China's top e-commerce player Alibaba Group Holding Ltd announced a goal of helping farmers sell over 150 million kilograms of agricultural products during the month long festive season, which practically covers the majority of January.

The company is trying to maximize public exposure of local produce from impoverished regions by linking customers with a dedicated, one-stop landing page via Taobao's home page.

"Our purpose is to help farmers increase their income and make quality, yet affordable, agricultural produce more accessible to the vast consumer group," said Li Shaohua, vice-president of Alibaba and general manager of its rural business unit Rural Taobao.

Dubbed "Rural Produce and Fresh Food", the channel hosts e-shops from 832 poor counties across China. Local products are displayed and introduced through vivid story telling in a variety of media formats.

Shanghai-based social commerce site Pinduoduo has allocated 4 billion yuan ($580 million) worth of cash rebates to encourage 500 million consumers buying everything from agricultural products to local specialties as they celebrate the Chinese New Year with their families.

From Dec 20, the platform garnered over 1,000 leading merchants who specialize in agricultural produce and encouraged them to bring their latest harvests to the site by providing subsidies of over 100 million yuan.

They employ data analysis to pinpoint and predict consumer needs.

"For instance, oranges, mangos, and high-quality rice from Northeast China have become sought-after items from top-tier cities consumers to those residing in smaller townships and even the rural areas," said Han Dongyuan, senior director of the new agriculture business unit at Pinduoduo.

Wang Ning, a cherry and mango seller participating in this year's Spring Festival gala, saw her 100,000 fruit orders being snapped up in 24 hours. A majority of the buyers came from fourth-and fifthtier cities. She employed data analysis from Pinduoduo to record sales in the past three years and made her predictions accordingly.

Prospective buyers are also expected to be drawn by livestreaming shows which exhibit farmers and local government officials coming together to promote goods and discuss opportunities and challenges of local interest.

During the last Nov 11 shopping festival held by Alibaba, agricultural product sales jumped 64 percent year-on-year to 7.4 billion yuan. A total of 370,000 livestreaming shows were conducted in September alone, which offered 1 billion agricultural items via online channels.

Alibaba's Li said the platform will look to cultivate 1,000 livestreaming hosts from poverty-stricken areas in 100 counties and help them each generate more than 10,000 yuan in monthly income. The platform will also work with media outlets such as China Central Television to curate professionally-produced content about fresh produce as well as the farms themselves.

Encouraging self-development and empowerment of the poor population through novel measures has proved to be an effective approach as China aims to achieve total poverty eradication by the end of this year, industry experts said.

"Multisectoral approaches, targeted strategies, leadership, constant innovation such as using e-commerce to connect farmers to markets have been core enablers of poverty alleviation in China by adding income and enhancing commitment," said Ehizuelen Michael Mitchell Omoruyi, executive director of the Center for Nigerian Studies at the Institute of African Studies in Zhejiang Normal University.

Technology plays a role not just in promoting sales and marketing since it improves agricultural efficiency from the production end. A variety of smart agricultural technologies from Pinduoduo precisely controlled temperature, time, and humidity for orange planting in an orchard in Yunnan province. This has greatly enhanced fruit quality and has translated into more robust sales.

"Technologies help standardize the growing process and monitor the maturity of fruits in a more efficient manner. We strive to empower more agricultural companies through technology tie-ups," Han said, adding that certain farmers saw their annual income jump five times after technology kicked in.

"E-commerce-powered poverty elimination drive is expected to gain bigger momentum this year, as the internet facilitates not just the consumer end (i.e. making it easy for people to purchase), but the industrial end as well. This means research and development, manufacturing and logistics for agricultural produce can be customized and automated through the adoption of artificial intelligence, big data and cloud computing," said Li Yongjian, a researcher of the internet economy at the Chinese Academy of Social Sciences.

China has vowed to eradicate poverty in all poor counties and regions by this year to build a moderately prosperous society in all aspects.

 

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2020-01-15 00:00:00
<![CDATA[Drug reimbursement list brings benefits to patients]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532200.htm China's new drug reimbursement list has demonstrated the country's determination and efforts in enhancing the overall health of the public, along with encouragement for innovation from international pharmaceutical companies, a senior executive of Allergan said.

Starting Jan 1, a total of 70 new medicines covering, among other diseases, cancer, hepatitis, diabetes, and tuberculosis, are included in the new drug reimbursement list.

Ireland-based pharmaceutical giant Allergan got its first product included in the new drug reimbursement list through national negotiation. The product focuses on macular edema caused by retinal vein occlusion (RVO), an eye disease that puts about 7.4 million patients in China at risk of going blind.

"Apart from lifesaving drugs, many drugs that are closely related to improving people's quality of life are included in the new drug reimbursement list. This demonstrated that the government is determined to better enhance the overall health of the public, and that it is encouraging international pharmaceutical companies to innovate," said Allergan China unit president White Wang.

Wang Yi, a 50-year-old who has been suffering from macular edema for over a year, said the new national medical insurance policy is really a blessing for him.

Dai Hong, director of the ophthalmology department at Beijing Hospital, said that RVO is a blinding retinal eye disease which develops rapidly. If not treated in time, over 90 percent of the central retinal vein occlusion patients' final visual acuity will be lower than 0.1, causing blindness.

"Lack of treatment severely threatens patients' health and quality of life, bringing great burdens to families and the society," he said.

Apart from the eye treatment drug, some 22 anti-cancer drugs, seven drugs for rare diseases, 14 for chronic diseases and four for children are included in the new drug reimbursement list. The prices of three new drugs for hepatitis C were reduced by an average of 85 percent, according to the National Healthcare Security Administration.

After the price reduction and medical insurance reimbursements, the financial burden on patients will be reduced by over 80 percent, the NHSA said.

"In the past, the anti-cancer drug that my dad has been taking cost over 50,000 yuan per pack, which could only hold for a month. In less than a year, our family spent over 400,000 yuan on the drugs. I was planning to sell my house to save money for my dad's drug.

"Now, the drug was included in the medical insurance, lowering the price to roughly 2,000 yuan per pack," said a man whose father suffers from lung cancer. He chose to remain anonymous.

Rogers Luo, vice-president of Gilead and general manager of Gilead China, said that China's favorable policies in accelerating drug access and encouraging innovation over the past few years have promoted the research and development of new medicines, helping build a healthy drug ecology in the country.

"The policies help biopharmaceutical firms to focus on producing medicines that contain more R&D value. It benefits the public eventually, promoting the sustainability of the healthcare sector," Luo said.

"The country is accelerating the process of including innovative drugs into its national medical insurance system, which encourages foreign enterprises to focus on introducing innovative products to China, further expanding the Chinese market," said a research report of China International Capital Corp Ltd.

 

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2020-01-14 00:00:00
<![CDATA[M&As set to gather pace, says leading law firm]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532255.htm Cross-border mergers and acquisitions are expected to gather pace in China this year as the country's accelerated opening-up efforts, both in terms of widening market access and improving business environment, will boost inbound investments, a leading global law firm said on Monday.

"Foreign investors' confidence and interest in the Chinese market have considerably increased after the nation expedited financial and automobile sector opening-up," said Shen Yuxin, a partner with the United Kingdom-based Freshfields Bruckhaus Deringer LLP.

"Inbound cross-border M&As should be on an upward trajectory this year and next," Shen said on Monday.

A number of policies to ease restrictions on foreign investment are set to take effect this year, especially in the financial sector. Foreign capital was allowed to hold 100 percent ownership in life insurance and futures joint ventures from Jan 1, while mutual funds and securities industries will follow suit a few months later.

The implementation of the Foreign Investment Law-the fundamental law governing inbound foreign direct investment-from Jan 1 also proved to be a major boost for investor confidence, as it helped form an expectation of continuous improvement in related regulations, said Shen.

"The biggest significance of the law lies in that it sets the tone for foreign investment regulations, such as the protection of intellectual property rights," Shen said, adding the principles will make local governments better guided in fostering a foreign investment-friendly environment.

According to data compiled by Freshfields, last year should be the first year since 2015 when foreign companies bought more assets in China than Chinese corporates acquired overseas.

This came in partly as harsher global supervision over M&As dampened outbound investment, while inbound investment remained relatively stable backed by China's progress in opening-up, Shen said.

From the beginning of last year to Nov 26, a total of $32.8 billion in M&A investment flowed into China, while Chinese enterprises acquired $17.5 billion worth of overseas assets, both lower than the whole year of 2018, according to the law firm.

Many foreign investors in the life insurance and automobile sectors are now considering increasing their stakes in their Chinese joint ventures to gain greater say in management and better tap into the vast Chinese market, Shen said.

"Global investors may no longer regard China as a manufacturing base with low-cost labor, but a strategically important consumer market," Shen said, citing that future growth in inbound M&A investment may mainly come from consumer goods sectors, instead of export-oriented factories.

He added that he expects more active outbound M&A investment by Chinese enterprises this year as well, given the stabilizing Chinese yuan and the mainland stock markets.

"China's economic momentum will continue this year with domestic consumption leading the way, selectively creating opportunities," said Gordon Orr, a senior advisor to consulting firm McKinsey& Co.

 

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2020-01-14 00:00:00
<![CDATA[New energy vehicle sales slow in 2019]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532234.htm As new energy vehicle sales in China fell by 4 percent last year, the segment's first decline in the country, industry experts have urged new measures, especially non-monetary ones, to fuel its development.

Chinese and international carmakers delivered 1.206 million electric cars and plug-in hybrids in China last year, down from 1.256 million in 2018, according to the China Association of Automobile Manufacturers.

"The fall was primarily the result of a cut in government subsidies in late June 2019," said Chen Shihua, deputy secretary-general of the association.

"Due to the small scale of the segment, new energy carmakers are losing money. The sharp fall following the subsidy cut shows the segment is still in need of policy support, at least measures to facilitate their use," said Chen.

At an industry forum on Saturday, Miao Wei, minister of industry and information technology, said the government will not reduce the subsidies substantially this year to stabilize the market and ensure the segment's healthy development.

China started to finance the segment in 2009 and has been phasing out since then.

Miao said the ministry is working on guidelines for the segment's development and will promulgate them soon.

Dong Yang, vice-president of leading industry think tank China EV 100, urged the authorities to clarify the policies as soon as possible so that carmakers are prepared. "Give them something they can be sure about. They need a stable policy and environment," said Dong.

Despite the temporary setback, Miao said China's new energy vehicle industry has gained a lead globally and the country will continue the strategy to consolidate the momentum.

"There is no change in the sound and long-term development of new energy vehicles," he said.

China overtook the United States as the largest market for new energy vehicles in 2015. Since then, annual sales in China have accounted for more than half of the global total.

By the end of last year, there were around 3.8 million electric cars and plug-in hybrids in China, according to data from the Ministry of Public Security.

China's overall vehicle sales fell by 8.2 percent on a yearly basis to 25.77 million units last year, following a 2.8 percent dip in 2018, said the association.

It expects vehicle sales to fall by another 2 percent this year because of the slowing economy and the ongoing trade friction between China and the United States.

Miao said on Saturday that he expected the overall vehicle market to hit the bottom in 2020 or 2021 and then rebound.

Last year, most of the carmakers in China were affected. SAIC Motor, the country's largest carmaker, delivered 6.24 million vehicles, down 11.54 percent year-on-year.

GM, the country's second bestselling foreign carmaker, saw its sales in the country fall by 15 percent from a year earlier to 3.09 million units. The company delivered 3.65 million vehicles in 2018 and 4.04 million units in 2017.

Great Wall Motors saw a meager growth of 0.69 percent from 2018, with its total sales hitting 1.06 million units.

Honda was one of the few that was insulated last year. With its two joint ventures, the Japanese carmaker sold a company-record 1.55 million cars in the country last year.

Most premium carmakers saw their sales rise despite the headwinds that have lingered for two years.

Swedish carmaker Volvo sold 161,436 vehicles in China last year, up 18.2 percent year-on-year.

Volvo said its sport utility vehicle models served as a particular highlight as the company gained market share in China, the United States and Europe amid stagnating global car markets.

Mercedes-Benz delivered 693,443 vehicles of its namesake brand in the country, up 6.2 percent year-on-year and was China's best-selling premium vehicle brand.

Hubertus Troska, a board member of Daimler AG responsible for the China region, termed 2019 as "remarkable" for the company's operations in China, as it contributed to nearly one third of its global sales.

Audi's China sales grew 4.8 percent year-on-year last year to 688,888 units. Lu Yi, executive vice-president of Audi China, said he expects the premium segment to grow further this year, although it is hard to say by how much it will grow.

 

Cars made in China are ready for export in Lianyungang Port, Jiangsu province. WANG CHUN/FOR CHINA DAILY

 

 

]]> 2020-01-14 00:00:00 <![CDATA[Guangdong FTZ pushes ahead with greater opening-up, foreign investment]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532232.htm China (Guangdong) Pilot Free Trade Zone has proved itself a top destination for foreign investment with its ever-improving business environment and deepening reform and opening-up efforts creating more opportunities for businesses.

The FTZ in Guangdong province was officially launched in April 2015. Covering a total area of 116.2 square kilometers, it is composed of three major parts: Nansha in Guangzhou, Qianhai and Shekou in Shenzhen, and Hengqin in Zhuhai.

All the three parts demonstrated strong growth in foreign investment last year.

In August 2019, French nutrition giant Danone opened its first cross-border e-commerce warehouse in the Chinese mainland in Nansha, allowing its products ordered online to be shipped directly from its overseas factories to China. It was an important development in Nansha becoming an international distribution center.

The warehouse will save logistics and storage costs for Danone, more efficiently connect with e-commerce channels in China and better serve Chinese consumers, according to the company.

It took just five months for the warehouse to go from project preparation and construction to completion and opening, according to the management of the FTZ.

In October, it was decided the Guangzhou Futures Exchange would be located in Nansha with an expected registered capital of 3 billion yuan ($432.8 million). It will be the fifth futures exchange in the Chinese mainland and the first approved by the China Securities Regulatory Commission in 26 years.

In November, Nansha International Cruise Home Port began operating. It is the largest cruise terminal in China and can berth the largest cruise liner in the world.

In the Qianhai-Shekou area, official figures indicate a total of 12,611 foreign-funded companies have been approved since April 2015.

The area attracted some $3.76 billion in foreign investment from January to November 2019, accounting for 18 percent of the province's total, according to official statistics.

Hengqin, which mainly serves the development of Macao, attracted 745 newly registered companies from the special administrative region last year. The total number of Macao-funded companies in Hengqin reached 2,157 by Dec 16, 2019, with an accumulative investment of $18.8 billion.

As a whole, about 42,600 companies were added to the Guangdong FTZ from January to November in 2019. About $6.84 billion in foreign investment had been utilized during the period, up 22 percent from a year ago. The sum of utilized foreign investment accounted for more than 30 percent of the province's total.

As a domestic leader in attracting foreign investment in the modern services and advanced manufacturing industries, the Guangdong FTZ has welcomed many quality projects. They include the country's first fund and securities company controlled by foreign capital, the first wholly-foreign-funded ship management company, the first foreign-funded mutual insurance company and the first foreign-funded bulk commodity trading platform.

The FTZ has been one of the areas in China with the best performance in terms of opening-up. It has attracted a large number of foreign industrial leaders, including JP Morgan Futures, HSBC, Siemens and Maersk. Many large domestic companies have also located their international, regional or functional headquarters in the FTZ, including China COSCO Shipping, China Communications Construction and China Railway Construction.

After more than four years' development, the Nansha area of the Guangdong FTZ mainly focuses on the five industries of shipping and logistics, high-end manufacturing, finance, technological innovation, and health and life sciences.

The Qianhai-Shekou area has an emphasis on finance, modern logistics, information services and technological services, and Hengqin focuses on tourism, financial services, culture, science and high technology.

Business environment

A report released by global auditor KPMG in April 2019 said that the business environment in the Guangdong FTZ is excellent, especially when it comes to starting a business, power acquisition and contract enforcement, and ranks among the top 15 globally. The report looked at the World Bank's ease of doing business indexes, a system it used to assess business environment across 190 economies and selected cities.

The Guangdong FTZ has also performed well in terms of cross-border trade, taxation and access to loans, according to KPMG's report.

To further improve the business environment, the management of the FTZ said optimization will continue in terms of making it easier for companies to attain business registrations and construction permits, carry out cross-border trading and pay taxes more efficiently.

For example, customs will further cut import and export clearance time to improve the efficiency of cross-border trading, according to the FTZ's management.

The FTZ also plans to set up express services for companies from Hong Kong and Macao to pay taxes and register real estate.

"The Guangdong FTZ has a special and irreplaceable position," said Wei Jianguo, former vice-minister of commerce. "I am optimistic that Guangdong will play a leading role in quality development in the next five years as its FTZ can make more breakthroughs."

He said Guangdong has a unique advantage in its manufacturing industry, forming the most sophisticated industrial chain in China. This will provide a strong base for its FTZ to achieve a deep integration of high-end manufacturing with modern services.

 

About 42,600 companies were added to China (Guangdong) Pilot Free Trade Zone from January to November in 2019. CHINA DAILY

 

 

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2020-01-14 00:00:00
<![CDATA[Talent project gives Alibaba global edge]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532202.htm With its diverse culture and delicious food, China has long captured the imagination of Zahra Roji Baitie, a British Ghanaian whose father traveled frequently to the country for business during her childhood.

But what propelled the 28-year-old to spend several years here was the myths and miracles China has created in the digital realm, which represents a fertile ground for some of the world's most innovative businesses and inspirational stories.

A development studies graduate from Yale University, Baitie has always trained her sights on inclusive growth models, working on several field projects in Africa for a London-based consultancy. A master's program at Tsinghua University took her on a weeklong dive into Alibaba, the internet emporium that has pioneered a multitude of things in China from mobile payments to rural e-commerce. From there she sensed immense opportunities.

"Learning the role of digitalization and the idea of smart governance presented by Alibaba executives, I was blown away by the various opportunities for Alibaba's globalization journey and the impact Alibaba has in China," said Baitie, who works at AliExpress, a business-to-customer site serving overseas markets of Alibaba.

"There were a lot of opportunities for people who were interested in bridging China with the rest of the world and supporting this expansion of Chinese companies like Alibaba to engage with the rest of the world in a sustainable and impactful way."

Alibaba sees its go-global strategy as one of its three growth pillars, and has vowed to serve 2 billion customers globally by 2036. International talents are crucial to realizing that goal.

Baitie was recruited under the Alibaba Global Talent Development initiative, which is a two-year program putting high-caliber, international workers on its international facing business units. The program includes on-the-job training, workshops and a buddy and mentor program.

"AGTD members will gain in-depth business knowledge and cultural experience at Alibaba," said Alfred Yao, senior talent development manager at Alibaba. "We expect graduates to take critical roles in key global businesses."

AGTD was borne out of a previous initiative called the Alibaba Global Leadership Academy, which debuted in 2016 and recruited two batches of candidates who were put on rotation arrangement. Now it has evolved into an umbrella organization responsible for developing various training programs like AGTD.

"We adjusted the rotation arrangement because we would prefer candidates to command an in-depth understanding of a certain business, which has grown quickly in scale and complexity just over the past two years," Yao said.

For Baitie, though, she got the opportunity to zoom in on multiple business segments a little further through special projects-such as the African Netrepreneur Prize Initiative that digitally empowers young local business owners and the eFounders training program which aims to transit the current resource-intensive approach to an ecosystem-driven approach backed by technologies and ideations.

"The positive social impact is obvious and China experience adds a lot of value here," she said. "We provide business knowledge and implement in a way that takes into account different cultural nuances."

Understanding cultural differences is a pivotal but often-neglected element as companies branch out to other markets. For 29-year-old associate Shin Jang-hwan, his South Korean affiliation has given him an edge, enabling him to outperform his peers, and it proved a blessing for Alibaba's overseas expansion.

Joining the company's smart logistics arm Cainiao Network, Shin said he and other international colleagues naturally hold an insider's view on local knowledge and are more apt at interpreting policy guidance and its implications for businesses.

"For instance, as top leadership changes in South Korea, I tend to keep an eye on the impacts on labor policies. Because overseas warehouse deployment is a labor-intensive industry, any policy change could exert an impact on our business," he said.

While the work has put newly recruited associates into uncharted water, Gary Toppe, Baitie's line manager who also graduated from the sister AGLA program, has much experience to share. He is now the lead for AliExpress' Central and Eastern Europe business, overseeing a team of seven from business strategy to execution.

"The first thing (about the program) is to help understand Alibaba as a company. It is quite complicated, especially for foreigners, so it's meaningful to deepen understanding of Chinese culture and language and help put things in a bigger context," Toppe said.

He said the AGLA legacy is conducive to his coaching of subordinates like Baitie, who have strong capabilities but need guidance to understand the challenges not just about the work, but also life at Alibaba and in China.

He has seen first hand how Chinese technologies and business models can be of relevance to other markets. For instance, popular functions like image search and influencer endorsement via livestreaming are quickly gaining traction in Poland, a market where Alibaba is experiencing exponential growth.

"It's quite exciting to live here because a lot of the innovation is coming from China," he said. "The speed of changes here is fascinating and I would see myself making a bigger contribution by staying here rather than outside (of China)."

Yao agreed. He said a majority of AGLA/AGTD graduates have risen quickly up the career ladder to become the backbone of respective international businesses.

"Their winning recipe is a combination of strengths in knowing the Alibaba culture, the business itself and the local market. They are quickly gaining skills and experience and at the same time bolstering the growth of our diverse and complicated businesses," he said.

 

Trainees from Russia take courses at Alibaba's Taobao University in Hangzhou in September 2019. NIU JING/FOR CHINA DAILY

 

]]> 2020-01-14 00:00:00 <![CDATA[Pilot programs for national digital currency rollout likely this year]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532215.htm Monetary authorities will need to find answers to issues beyond the basic design architecture, including the regulatory framework and the competition relationship with the existing electronic payment tools, ahead of the official debut of the national digital currency in China, experts said on Monday.

If China launches its digital currency as a legal tender, at the present stage, it may have some "transitional features", which means maintaining the existing market operation mechanism and monetary policy transmission system, Li Lihui, former president of the Bank of China, said at a seminar hosted by Peking University's National School of Development on Monday.

The government-backed digital currency will "gradually" replace the traditional currency and payment instruments. Before that, there is no need to rebuild financial infrastructure or currency issuance and management structure, which can save investment and is conducive to risk management and control, said Li.

Central bank officials called the sovereign digital currency the digital currency and electronic payment, or DC/EP. The latest information from the central bank was that some pilot areas will be chosen for the DC/EP experiments.

Analysts said that the pilot program for the Chinese sovereign digital currency in select regions may happen this year, although some legal issues still need to be sorted out, such as whether the basic laws need to be revised.

According to Sun Tianqi, chief accountant of the State Administration of Foreign Exchange, it is still not clear on how the DC/EP would be regulated. When it comes to the issue of cross-border usage of digital sovereign currency, the global regulatory environment is more complicated. More issues need to be figured out, including international regulatory coordination, before the launch of the digital currency.

Huang Zhen, director of the Institute of Financial Law of Central University of Finance and Economics, said that for the pilot DC/EP programs, the regulatory sandbox can be introduced to test the digital currency ecosystem within a limited context, while the experimental process can be supervised by regulators.

"China needs to speed up the development of digital currency supervision and sovereign digital currency issuance mechanism," said Li, who is also head of the blockchain research working group at the National Internet Finance Association of China.

"As digital currency will be at the core of the future global digital economy competition, it is necessary to accelerate the research of the feasible paths of China-led global digital currency," he said.

How the DC/EP will compete with the existing electronic payment methods is another issue that needs to be studied, analysts said, as the new central bank digital currency may change the current business structure of the payment sector.

Yang Tao, deputy director of the National Institution for Finance and Development, a Chinese financial think tank, said that at the current stage, the DC/EP could be a diversified complement of third-party electronic payment platforms.

Unlike WeChat or Alipay, the two largest mobile payment platforms in China, the DC/EP transaction can be offline and separated from bank accounts, which are also its "advantages" over the two popular third-party payment platforms. Whether the DC/EP can replace WeChat and Alipay will be finally determined by the market, depending on its convenience, usage cost and public acceptance, said Li.

 

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2020-01-14 00:00:00
<![CDATA[Fuel cell vehicles key to NEV sector]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532214.htm Fuel cell vehicles are expected to play a role as important as electric cars in China's new energy vehicle blueprint and the two will coexist for a long period of time, a senior official said.

"Each of them has their positions in the market and they will not replace each other," Wan Gang, president of the China Association of Science and Technology, said at an industry forum on Saturday.

Wan, the country's former minister of science and technology, is the chief architect of the new energy vehicle initiative in the country a decade ago.

China is now the largest market in the world for both of them.

By the end of 2019, China had around 3.8 million electric cars and plug-in hybrids on its roads, said the Ministry of Public Security. Wan said fuel cell vehicles in the country numbered around 4,000.

Wan stated electric vehicles are a prime choice for private rides inside cities, while fuel cell ones are a better option for long-distance heavy duty commercial vehicles, buses and logistics vehicles.

Compared with electric cars, fuel cell vehicles, which mix hydrogen and oxygen to power electric motors, have a shorter refill time and longer driving ranges. They do not generate pollution since the only by-product is water.

Due to their appeals, fuel cell vehicles were included in the central government's report in 2019 and a growing number of local authorities and companies have shown great enthusiasm for the sector.

Zhang Xiaoming, a senior executive at the China Center for International Economic Exchanges, said hydrogen is a source of energy and fuel cell vehicles have great potential. But he urged local authorities and companies not to rush to prevent vicious competition and repetitive construction.

As the chief author of the book Research on China's Hydrogen Industry Policy, he said last week there are conditions to start commercialization of the segment in the country. Around 1,500 units were sold in 2018 and another 1,100 units delivered in the first half of 2019.

Despite the number, he added that hurdles exist in such aspects as producing core parts including compressors, building hydrogen stations, and establishing effective business modes.

There are around 130 hydrogen stations which have been completed or are under construction. Operational stations are currently around 50, said Wan.

China's experience in developing the electric vehicle segment can benefit the fuel cell vehicle segment because current problems are basically the same as when the country started its initiative to promote electric vehicles a decade ago, Wan said.

"It is no doubt that hydrogen is strategically important, but the technological hurdles and exorbitant costs have been global challenges. The key lies in innovation," said Ouyang Minggao, a professor of automobile engineering at Tsinghua University.

He said considering current technological progress for a driving range of 500 kilometers, fuel cell vehicles will be more expensive than electric cars by 2025.

Yet many countries expect their sales to accelerate within 10 years. China has set a goal to have 5,000 such vehicles on its roads by this year, 50,000 by 2025, and 1 million by 2030.

The United States expects its number of fuel cell vehicles to reach 5.3 million by 2030.

Many carmakers are investing in the future technology while others are not as keen.

Great Wall Motor Corp Ltd, the first Chinese member of the Hydrogen Council, said its premium brand Wey will release its first FCV in 2020 and start mass production in 2022.

 

Visitors check out the interior of a fuel cell vehicle during an auto exhibition in Rugao, Jiangsu province. XU CONGJUN/FOR CHINA DAILY

 

 

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2020-01-14 00:00:00
<![CDATA[Young entrepreneurs reap rewards after moving businesses online]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532213.htm Much has changed for Alibaba Group since the Chinese juggernaut debuted its shares in New York in 2014: market cap, business scope and geographical outreach.

So when it listed its shares in Hong Kong last November, the internet giant invited 10 business partners from eight nations to its bell-ringing ceremony, in a gesture of globalization and diversification.

Each representing a different area from cloud computing and financial services to the internet of things, the group was a snapshot of the variety of businesses in which Alibaba is now engaged.

Among them was Kevine Kagirimpundu, a shoe-lover from Rwanda who has long dreamed of having a brand of her own.

But for the 27-year-old, being the first person to launch a footwear shop online in her home country, was beyond her wildest imagination. After all, the dot-com wave is still a novelty in a country where cash largely dominates transactions.

Her brand Uzuri K&Y has had a solid offline presence since 2013. Last year, as a successful startup business owner, she was recruited onto an Alibaba-led empowerment program dedicated to young African entrepreneurs.

A trip to Alibaba's Hangzhou headquarters became a true eyeopener. She learned that some Chinese farmers had made fortunes simply by opening a warehouse, setting up an online shop and selling their produce across China.

"Inspired by some of the best practices in rural areas in China, I decided to move my business online," she said. "If we can make full use of e-commerce, our businesses can operate in a sustainably long-lasting fashion."

This innovative approach helped to significantly reduce operating costs for Kagirimpundu, who started to make a profit just six months after the online store was launched.

While Kagirimpundu's digital shop was built from scratch, Halil Erdogmus leveraged Alibaba's platform and experience to give his existing online store a substantial leg-up in its global expansion.

His store Ebebek, a shopping platform for mother-and-baby products, was a top online venue in Turkey, but its international performance had been lukewarm. The problem, according to Erdogmus, was a lack of penetration into foreign markets through proper channels.

That's where AliExpress came in, as a business-to-customer platform of Alibaba selling to overseas users only. By early 2019, the platform covered more than 200 countries and regions around the world, served over 150 million consumers, and helped merchants to sell goods to global markets.

"The experience-sharing of Chinese sellers, one-on-one online customer service chat room, and step-by-step training provided by third-party operators were useful in helping me explore other markets," he said.

Alibaba has long upheld the value of making it easy to do business anywhere, with a vision to be a good company that can last over 100 years. It has pledged to serve 2 billion consumers globally, create 100 million jobs, and provide the necessary infrastructure to help 10 million small businesses become profitable on its suite of platforms.

Also reaping unexpected gains from digital sales is Yee Poh Soon, co-founder of Malaysian durian producer DKing. He never thought he would sell 300,000 yuan ($42,300) worth of durian products in 10 minutes until the dream turned into reality with the aid of Chinese internet celebrities.

"They (key opinion leaders) are professional and … have such trustworthy appearances that you are willing to allow them to promote products on your behalf," said Yee, who exports A-level Musang King durians to China. "Such staggering speed is possible only in China."

Yee, who was invited to the center stage at Alibaba's Hong Kong listing, is amazed at the innovative business models the internet has to offer and the holistic solutions from logistics to marketing to smooth cross-border e-commerce.

In May, China decided to allow imports of whole Malaysian durians. Ever since, fruit traders in China and Malaysia have been blazing a trail in the multibillion-yuan durian market.

Yee has jumped on the durian export bandwagon in earnest. He picks up only premium-quality fruits for export to China. Every durian is tied to the tree with a cord so it does not fall and split open prematurely.

But, for the owner of a relatively small business like Yee, rivaling Thailand's dominance in the durian export market is no mean feat. He teamed up with Alibaba, which has pledged to facilitate cross-border trade for small-and medium-sized enterprises through a variety of digital vehicles.

"Obviously, Tmall and Hema Fresh (both Alibaba e-commerce platforms) provide good platforms for us to reach the most remote parts of China," said Yee. He has inked a deal to supply one container-load of whole durians to Hema Fresh every week during peak seasons. "This is one of the fastest, most secure and stable ways to be in this massive market."

 

A salesperson introduces Alibaba's AliExpress platform to a customer at a wig shop in South Africa. NIU JING/FOR CHINA DAILY ]]>
2020-01-14 00:00:00
<![CDATA[Banking regulator to step up risk control efforts]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532203.htm Core regulatory indicators show that the overall risks of banks and insurers are still under control, and their operation still remains fairly good although the level of risks is higher at some small-and medium-sized financial institutions, said an official of China's top banking and insurance regulator on Monday.

"The China Banking and Insurance Regulatory Commission remains vigilant all the time, screening high risk financial institutions and thinking of various methods to dispose of their risks," said Xiao Yuanqi, chief risk officer and spokesperson of the commission.

"Apart from taking regular measures, we also took action proactively, such as restructuring Hengfeng Bank Co Ltd and joining hands with the People's Bank of China in a takeover of Baoshang Bank Co Ltd. Just as we did last year, we will adopt a comprehensive suite of risk disposal solutions this year, which includes introducing new strategic investors, restructuring, and mergers and acquisitions. We will take different risk mitigation measures for different financial institutions," Xiao said during a news conference at the State Council Information Office in Beijing.

Huang Hong, vice-chairman of the commission, said, "In 2019, we continuously tightened financial regulations, resolutely fought against financial market irregularities, properly handled major risks, and made crucial progress toward our goal of winning a tough battle against financial risks."

The commission said at its recent annual work conference that it will comprehensively strengthen regulation of assets and liabilities' quality to improve the liability status of banks and insurers, especially small-and medium-sized financial institutions.

"The effort is aimed to strengthen liquidity management of banks, which means stabilized core liabilities will account for a fairly large proportion of their total liabilities, whereas interbank liabilities will be cut moderately. This will ensure that bank liquidity is not unduly affected by rising market fluctuations," said Zeng Gang, deputy director-general of the National Institution for Finance and Development.

China's banking sector disposed of around 2 trillion yuan ($290 billion) in nonperforming loans last year. About 19,200 creditors' committees were set up nationwide, supporting debt-for-equity swaps totaling 1.4 trillion yuan, according to the regulator.

A creditors' committee, defined by the regulator as a temporary organization established by at least three banking institutions that are creditors of a company that has difficulty in repaying a large amount of debt, helped the company deleverage, reduce debt and improve efficiency.

Besides, the regulator kept dismantling high-risk shadow banking and reduced the volume of this type of business by 16 trillion yuan over the last three years compared to the historical record. It also severely punished banks and insurers for allowing funds to flow into the real estate sector by violating regulations. The growth of bank loans directed to the property sector dropped by 3.3 percentage points year-on-year in 2019.

 

A client fills in forms at an outlet of the Industrial and Commercial Bank of China in Hangzhou, Zhejiang province. SHI JIANXUE/FOR CHINA DAILY

 

 

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2020-01-14 00:00:00
<![CDATA[A pioneer in reform and innovation]]> http://www.chinadaily.com.cn/kindle/2020-01/14/content_37532231.htm A hub for high-level opening-up

Established in April 2015, China (Guangdong) Pilot Free Trade Zone is designed as a pioneering zone for high-level opening-up and a demonstration zone for the cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area.

Consisting of three sections

With a total area of 116.2 square kilometers, the zone is composed of three sections-Nansha in Guangzhou, Qianhai and Shekou in Shenzhen and Hengqin in Zhuhai.

Opening wider to foreign investors

It is home to the country's first fund and securities company controlled by foreign capital, the first wholly-foreign-funded ship management company, the first foreign-funded mutual insurance company and the first foreign-funded bulk commodity trading platform.

Booming investment from China and overseas

The number of newly-established enterprises in the zone totaled 42,600 in the first 11 months of 2019. Its actual utilized overseas investment amounted to $6.84 billion, accounting for more than 30 percent of Guangdong's total.

High rank in ease of doing business

A KPMG report on ease of doing business in 2019 gave the FTZ a ranking higher than China's average, rating it among the top 15 globally in indicators of starting a business, power acquisition and contract enforcement. It leads China in indicators of cross-border trade, taxation and access to loans.

Pioneer in reform and innovation

The zone has pioneered reform and innovation with many practices being national firsts. It has accumulated 456 cases for institutional innovation.

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2020-01-14 00:00:00
<![CDATA[Startups of ROK find in Chengdu a good bet]]> http://www.chinadaily.com.cn/kindle/2020-01/13/content_37532130.htm CHENGDU-Having lived in the city of Chengdu for nearly 20 years, Park Weon-seo, an entrepreneur from the Republic of Korea, is highly optimistic about the relations between the western Chinese city and his country.

"The market in west China is so large-and contact between Chengdu and the ROK has become more convenient since more direct flights have been launched," said Park, 54, CEO of Sino-Korea Future Incubator.

Based at the Sino-Korea Innovation and Startup Park, the agency is located at Jingrong Inno-Hub in Chengdu, capital of Southwest China's Sichuan province.

Established in 2017, the agency has been playing the role of a communication platform for Chinese and ROK science and technology innovation enterprises, providing services for ROK enterprises in Chengdu.

During the sixth China-Japan-ROK leaders' meeting held in 2015, leaders from China and the ROK proposed to create a creative startup platform for youth, and the park emerged at that time.

Now four incubators, 30 Sino-ROK joint ventures and ROK companies have entered the park, covering the fields of artificial intelligence, energy-saving and environmental protection, pan-entertainment games and commerce.

At Jingrong Inno-Hub, signage includes Chinese, English and Korean, and there is a specialized service zone for ROK enterprises.

A street full of Korean restaurants is not far from the area. "The Korean food here is not bad and reminds me of my hometown," he said, adding that convenient living arrangements and policy support are significant factors that attract enterprises and individuals to come.

Next to Park's company, there is a well-decorated coffee shop, which belongs to Jay Ji, also managing director of Huayi Brothers Korea.

"Most enterprises from the ROK used to gather in China's eastern coastal areas. However, with China's economic transformation and industrial transfer, more are moving toward central and western China," said Ji.

In Ji's eyes, Chengdu is an important junction of western and southern China, with a huge market and a skilled workforce.

Now Ji and his Chinese partners have opened several coffee shops in Chengdu and are preparing to build a Korean culture center in Chengdu's downtown area.

"I'm expecting more exchanges in culture, animation and games between the ROK and Chengdu in the future," said Ji, whose company is working with its Chinese partner, reshooting popular Chinese films and TV series.

By connecting Chinese and ROK associations of small and medium-sized enterprises, Ji has also helped many Chinese and ROK products enter each other's market.

 

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2020-01-13 00:00:00
<![CDATA[Technology simplifies procedures, cuts red tape]]> http://www.chinadaily.com.cn/kindle/2020-01/13/content_37532156.htm Taxpayers in China no longer need to visit the tax administration's offices to file their income tax returns in person; they merely need to use a mobile app, which helps save much time.

It seems the process or method of determining an individual citizen's tax liability tends to be contentious in many countries. A taxpayer's feelings could shape the broader perception of the government.

In November, the State Taxation Administration reported that taxpayers who have registered personal information in the tax-paying system do not have to re-declare for the additional tax deductions. It was a measure introduced in China in 2019 to reduce individual income tax.

The STA developed a mobile app to collect taxpayers' e-applications for additional deductions. The app can be downloaded by scanning a QR code. Taxpayers can key in information about their children's education, continuing education, treatment for serious diseases, mortgage interest, rent and elderly care into the system.

Sustained focus on technology has made tax payments a breeze. The STA has also launched the Golden Tax III system in 2017, which facilitated e-filing of different stamp duty taxes.

In addition, China implemented a series of measures in the past two years, which simplified payment of corporate income tax, labor tax, value added tax, as well as e-delivery of invoices.

Last year's Paying Taxes report, published by the World Bank, showed that if tax payments are seen as easy, straightforward, fair and robust, then individuals and businesses may associate those traits with their government more broadly.

If citizens can see how their taxes are used and if they recognize the corresponding value generated for society, they may be more likely to comply with their tax obligations.

Technology is changing how taxes are administered. An increasing number of companies worldwide are using tax software, and more and more tax authorities are creating user-friendly online tools that can simplify tax compliance.

Tax administrations worldwide have sought to introduce and continuously enhance their online systems in the past 15 years to improve their efficiency and facilitate more comprehensive and faster risk assessment and compliance checks on returns. This efficiency, in turn, has also benefited taxpayers by easing the compliance burden.

It is not just tax payments that have benefited by adopting technology. In China, digitalization has enhanced processes and procedures relating to doing business like cross-border trade. Broader use of technology has also strengthened the government's determination to cut red tape.

Some local governments in China have made it easier for entrepreneurs to start up by fully integrating various procedures under a single window or one-stop shop system.

China also made exports and imports easier by implementing an advance cargo declaration, upgrading port infrastructure, optimizing customs administration, and publishing fee schedules, which have been recognized by the World Bank.

 

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2020-01-13 00:00:00
<![CDATA[New reforms to boost investment]]> http://www.chinadaily.com.cn/kindle/2020-01/13/content_37532149.htm The task of deepening the integration of China into the global economy is posing a series of challenges to the Chinese authorities as it requires improvements to the local standards of doing business, additional measures beyond the opening-up policy, and enhanced legislations, experts said.

China ranked 31st in the World Bank's Doing Business 2020 report, and among the top 10 fastest-reforming countries around the world for two years in a row.

What's more, in terms of the best environment for "doing business", China moved up the rankings by almost 50 places during the past four years, joining the world's top 30 countries.

The latest edition of the World Bank Doing Business report acknowledges the 10 economies that improved the most in terms of "ease of doing business" after implementing regulatory reforms: China, Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, India, and Nigeria.

These 10 economies implemented a total of 59 regulatory reforms, accounting for one-fifth of all the reforms recorded worldwide. Their efforts focused primarily on the areas of starting a business, dealing with construction permits, and trading across borders, the report said.

It indicated that, in 2018 alone, China implemented significant reforms in eight out of 10 "doing business" areas, from starting a business, through construction permits and getting electricity, to paying taxes and registering property.

Improvement in dealing with construction permits, for example, has been particularly notable. While only a few years ago, it took more than a year to get a construction permit in Beijing, now it takes just 93 days.

China has managed to combine the substantial progress in streamlining the regulations with enhancing their quality: it now scores all 15 points on the building control quality process, supporting public safety.

In March 2018, Premier Li Keqiang said in the annual Government Work Report that China would set the stage for municipal governments to implement a reform agenda.

Then standards of the Doing Business report became the benchmark, aligned with the central government's ambition to improve the competitiveness of the Chinese economy.

Following that, the Chinese government created working groups targeting each of the "doing business" indicators.

But, the doing business reforms may not be sufficient on their own to sustain China's remarkable performance, said Yang Shaolin, managing director of the World Bank.

"This is because the quality of the business environment goes beyond the doing business ranking.

"One important dimension of this is the environment faced by foreign investors. In recent months, China has taken some steps to improve legislation, through the Foreign Investment Law, and to reduce restrictions in, for instance, the financial or in the automobile sector.

"The legislative improvements are important. A key concern is consistent implementation, including at the local government level."

In addition, opening up key service industries would not only bring additional capital to China but enhance competition and contribute to higher productivity growth. It would also increase the chance of improving trade and investment relations with key partners and facilitate the conclusion of new trade and investment agreements, said Yang.

"This in turn would help to reduce the current uncertainty we face in the world economy and provide a boost not just to foreign but also domestic investment in China."

According to the Ministry of Finance, the next round of reforms to continually improve the business environment has started. The sample cities in China, to be evaluated by the World Bank for the next rankings, may be expanded to four from two (Beijing and Shanghai) in the report. The candidate cities, however, have not been identified yet.

Chinese Finance Minister Liu Kun said at a forum in Beijing on Nov 22 that in recent years, the Ministry of Finance, various government departments, and Beijing and Shanghai municipal governments have jointly participated in the World Bank's global business environment assessment and promoted a series of reforms, taking the "global best practices" as guidance.

The reforms also promoted opening-up, in line with the international rules and standards.

Although the World Bank's annual assessment measures the government's regulation from the point of view of domestic entrepreneurs, it is also correlated with regulation affecting foreign direct investment or FDI.

Foreign investment in China has been showing steady growth. According to figures released by the Ministry of Commerce, FDI rose 6.5 percent in renminbi terms and 2.9 percent in US dollar terms in the first three quarters of last year compared with 2018.

However, experts said that the US-China trade ties and the slowing Chinese economy may pile pressure on efforts to attract more FDI into the world's second-largest economy.

The new Foreign Investment Law, which came into force on Jan 1, is the latest move by China to improve the business environment, especially to encourage FDI.

The new law was approved by the National People's Congress, the country's top legislature, in March 2019. Overseas investors have been expecting this landmark law whose drafting began in 2015. Their hope is it will help improve the country's foreign investment policy framework.

Some key principles highlighted by the new law are: intellectual property rights of foreign businesses are deemed to be protected in the same way as the local firms; foreign investors can freely remit profits, capital gains and liquidation proceeds to their overseas entities, in renminbi or in foreign currency; and foreign investors should be equivalently treated as the Chinese companies (that is, they will enjoy the "national treatment").

"One of the key objectives of countries putting in place policies to encourage foreign investment is to lower barriers to business entry in order to stimulate domestic competition, provide local consumers with new products or services, expand employment opportunities and foster innovation-all of which are engines of growth," said Harry Broadman, managing director and chair of the emerging markets practice at the Berkeley Research Group and a member of the Johns Hopkins Faculty.

This new Foreign Investment Law, and its corresponding regulations that are implemented, mark one of the most significant developments in China's treatment of foreign investment, experts said.

Its new regulations intend to accelerate market opening reforms, level the playing field for foreign and domestic firms, and eliminate inconsistencies in the enforcement of laws, according to an article published by Dezan Shira & Associates, a Hong Kong-based pan-Asia, multi-disciplinary professional services firm.

Liu Shijin, deputy head of the economic committee of the National Committee of the Chinese People's Political Consultative Conference, said that China still has room to catch up with best international practices to improve the ranking across the "doing business" indicators, in particular in the areas of getting credit, paying taxes, dealing with insolvency and trading across borders.

It is also a measure to strengthen foreign investors' confidence of doing business in China, he said.

"So far, the financial institutions and products for small and micro enterprises should be increased; and more State-owned capital can be transferred into the social security fund to reduce companies' burden of paying social security fees. Further, the insolvency mechanism for companies should be improved," said Liu.

Wang Yiming, vice-president of the Development Research Center of the State Council, China's Cabinet, said there are still many areas that need improvement, such as the restrictions on market access, and limits on private capital in certain fields like finance, healthcare, and education.

"Market supervision also needs to be improved, and there is no buffer period for some places to implement the new regulatory standards, or there is a one-size-fits-all approach. The efficiency and ability of government services need to be improved, and the credit system needs to be more efficient for cross-sector and cross-regional credit services," said Wang.

 

Two Afghan businessmen who run a trade company in Yiwu, Zhejiang province, look for goods to be purchased at the Yiwu International Trade City in July 2019. ZHANG FAN/XINHUA

 

 

A British businessman (right) bargains with a Chinese seller for made-in-China small commodities at the Yiwu International Trade City. TAN JIN/XINHUA

 

 

Customers from Nigeria negotiate purchase order terms at a car aromas company in Guangzhou, Guangdong province. DENG HUA/FOR CHINA DAILY

 

 

Foreign direct investment in China in 2019 CHINA DAILY ]]>
2020-01-13 00:00:00
<![CDATA[Amid slowing growth, a strong case for fiscal expansion]]> http://www.chinadaily.com.cn/kindle/2020-01/13/content_37532141.htm Expansionary fiscal policy is known to lead to short-term escalation in a country's fiscal deficit. Yet, it would be reasonable for the Chinese government to accord top priority to the task of preventing the economy from any further deceleration. The government would do well to adopt a more powerful fiscal stimulus, in coordination with monetary easing.

China's GDP growth has been slowing steadily since the first quarter of 2010, when it exceeded 12 percent year-on-year. In the third quarter of 2019, the GDP growth came in at 6 percent year-on-year, the lowest since 1992. Such a steady deceleration is unprecedented for the world's second-largest economy.

This downtrend is riskier than many observers seem to realize. First of all, after nearly a decade of continuous slowing growth rate, investors and consumers are becoming increasingly reluctant to spend. Any further growth deceleration will likely strengthen their expectation of economic slowdown and further dampen investment and consumption, kicking off a vicious cycle in which pessimistic expectation of economic growth fulfills itself.

Second, given that GDP and GDP growth rate are the denominators of almost all economic and financial indicators, a slower GDP growth rate will lead to deterioration of the indicators. For example, if deleveraging efforts induce a sharper decrease in GDP than in outstanding debts, the debt-to-GDP ratio will become higher rather than lower.

Third, a decline in GDP growth will impede economic restructuring. For instance, the shutdown of zombie enterprises-companies whose operating profits could not cover interest expenses by a version of definition-entails re-employment of the workers laid off, which will be easier amid buoyant economic conditions than in an economic depression. Moreover, if economic growth slows down continuously, more companies will be less profitable and even become zombie enterprises.

Also, China needs relatively strong domestic demand to buffer any possible escalations in the external environment, let alone that a slower GDP growth may strain the employment situation, which may not be as strong as indicated by the headline jobless rates.

After a decade of economic deceleration, a question hangs over both the academia and the public: when and at what speed will the Chinese economy finally stabilize at the so-called "L-shape" shift pattern of GDP growth?

If there was no policy space to counter downward pressure, such a deceleration would be inevitable. But this is not what facing the Chinese economy now. We should not give up in guaranteeing a 6-percent GDP growth.

There are basically two preconditions to test whether an economy could resort to expansionary macro adjustments.

The first is inflation. If growth in the indexes of consumer prices and producer prices are on the upward trajectory, it may indicate that the economy will overheat and expansionary policies may not be appropriate. For China, the major concern is deflation instead of inflation.

The Consumer Price Index in December rose 4.5 percent year-on-year, and the annual average CPI growth stood at 2.9 percent for 2019, official data showed. Though tight supply of pork pushed up the CPI growth during the second half of the year, the core CPI, or the index that excludes food and energy prices and better reflects the aggregate supply-demand relationship, remained low.

Meanwhile, the year-on-year growth in the Producer Price Index that gauges factory-gate inflation has been trapped in the negative territory since July, pointing to risks of deflation.

Indeed, China's broad money supply, as a share of GDP, is among the world's highest. But this may not be proper attestation that China has run out of the space for monetary expansion: since household saving is a proportion of M2, China inevitably has a rather high level of M2 by global standards because of the high saving rate of Chinese residents.

The second is fiscal position. If the fiscal situation is terrible and marked by difficulties in selling government debt, any expansionary policies may not be worth the risk. China's fiscal position, in fact, is relatively healthy by global standards.

We must be fully aware of the risks in the high leverage of local governments. But even when the off-budget local government special-purpose bonds are taken into consideration, China's fiscal position would remain significantly stronger than those of most developed economies.

More importantly, the Chinese government boasted net assets worth $17 trillion by 2016, according to the Chinese Academy of Social Sciences. Such assets can be a powerful buffer against fiscal shocks.

Therefore, I would argue that China should adopt more powerful fiscal expansion. Giving up fiscal stimulus and letting the economy drift into further slowdown will lead to escalations in fiscal deficit in the longer run.

The focus of fiscal stimulus should be increasing the government deficit to finance more infrastructure investment. Boosting government expenditure should be a more efficient approach than cutting taxes for the purpose of stimulating the economy, as part of the reduced taxes could be saved instead of being spent.

I disagree with the assertion that China has little space for expanding infrastructure investment. China will long remain in the process of urbanization, which entails more infrastructure investment. In the areas ranging from the heating system for southern China in winters and rail traffic networks in mega cities, to basic research and vocational training, infrastructure is still in shortage.

Government-led infrastructure investments in those areas will create profitable business opportunities and attract private investment. This will help address the lack of investment, a main source of economic downward pressure, and lead to higher residents' income and therefore more consumption.

On the monetary side, it is necessary to lower the interest rates. The main purpose of such easing measures should be to support expansionary fiscal policies. Making monetary policy shoulder too many responsibilities may dampen policy efficiency.

It should be noted that expansionary macro policies and structural adjustments should work hand in hand, and China needs to stick to reforms to promote economic restructuring and redress institutional problems.

But given that GDP growth has slowed so much to the current level, we should not overdo the restructuring efforts, or avoid pushing ahead the reforms at the cost of further economic deceleration. For instance, when pushing ahead environmental protection campaigns, local governments should take a phased approach and avoid shutting a large number of factories at one go.

A pure pursuit of structural reforms during the current downward pressure is a kind of idealism and will not work, because many structural problems, in the short term, cannot be resolved, or could only be resolved at unbearable expenses.

China has long adopted the approach of pushing ahead reforms amid a pursuit of economic growth, and the country should, and is still able to, adhere to this development path.

Yu Yongding is an academic council member of the Chinese Academy of Social Sciences and former president of the China Society of World Economics.

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2020-01-13 00:00:00
<![CDATA[Reform of tax system may boost FDI]]> http://www.chinadaily.com.cn/kindle/2020-01/13/content_37532143.htm The process of paying taxes is one of the aspects measured by the World Bank to compile its annual ease of "doing business" rankings. China has continually improved its standing insofar as the "paying taxes" score is concerned, on the back of the government's tax and fee cuts campaign.

This is revealed in Paying Taxes 2020, a sub report of the World Bank's Doing Business 2020 that evaluates four factors of each economy's tax environment: the number of payments; time; total tax and contribution rate for a firm to comply with all tax regulations; and the post-filing processes.

The time required to complete the process of paying corporate taxes and comply with tax obligations in China reduced to 138 hours, according to the new report, compared with 142 hours a year earlier.

The total tax and contribution rate for a firm declined to 59.2 percent. Although it was a relatively high level compared with some advanced economies, it has improved from the previous year's 64 percent.

"In the past two years, China has been in the world-leading position in terms of tax payments, time, and corporate income tax correction and declaration, with tax payment indicators ranking in the top three of the BRICS (Brazil, Russia, India, China and South Africa) group," said Peter Ng, the mainland and Hong Kong tax leader of PwC.

"The World Bank also gave positive comments on China's achievements in optimizing and upgrading its electronic tax declaration and payment system," he said.

China implemented a proactive fiscal policy, with tax cuts and rate reductions as the most important measures since 2018. Specific policies included deepening the reform of value-added tax (VAT); adding special additional deductions of personal income tax; further expanding the scope of small enterprises that enjoy preferential corporate income tax; and policies to promote the development of innovative and high-tech startups.

"Many of the above reform measures have been reflected in the Paying Taxes 2020 report, which has been recognized by the World Bank. China's total tax and contribution rate index has been significantly reduced," said the PwC partner.

The World Bank research report showed that the complexity of tax systems is a major determinant of foreign direct investment or FDI. Economists found that the number of payments and time to comply with tax obligations has significant negative effects on FDI flows.

During the past years, China has accelerated tax reforms to make the paying tax process easer, faster and more accurate. According to Doing Business 2006, for example, businesses in Shanghai spent 832 hours per year on average back then to prepare, file, and pay taxes, and they had to make 37 payments. By the time Doing Business 2020 was published, these metrics have been reduced to just 138 hours per year and seven payments, according to the World Bank.

"Modern technologies pose a number of complex questions for tax policy," said Rita Ramalho, senior manager of the World Bank's Global Indicators Group. For the ninth year in a row, the most common feature of reforms in paying taxes is the implementation or enhancement of electronic filing and payment systems.

The State Taxation Administration, the country's tax authority, launched a system that facilitated e-filing of different stamp duty taxes. Additionally, China implemented a series of measures in the past two years, which simplified corporate income tax, labor taxes, value-added tax declarations, and e-delivery of invoices.

In 2014, China's integrated taxpayer services were launched on mobile tax apps and official accounts on the two main Chinese social media platforms-WeChat and Weibo. A year later, the "Internet+Taxation Initiative" unlocked the potential of big data for taxpayer services, such as data sharing among government bodies, online training, and e-invoices.

 

A tax official explains the new policy of reduction in fee to an Indian businessman at a taxation office in Donghai county, Jiangsu province, in April 2019. ZHANG KAIHU/FOR CHINA DAILY
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2020-01-13 00:00:00
<![CDATA[Securities reform backs real economy, savers]]> http://www.chinadaily.com.cn/kindle/2020-01/13/content_37532142.htm A comprehensive revision of China's Securities Law was approved by the National People's Congress on Dec 28, 2019 and will go into effect on March 1. This will shift the financial enforcement system from one requiring prior approval and evaluation before initial public offerings to a system that focuses on requiring companies to fully disclose all material facts to investors.

The new regulatory system also sharply increases the penalties for false disclosure or non-disclosure and increases legal protections for small investors.

The social purpose of capital markets is to facilitate using the savings of individuals to support capital investments in productive companies. Market forces are essential to ensuring that the capital is directed to useful purposes.

But it seems somewhat ironic that strong government regulation and constant enforcement are needed to make this key market work. Without clear information about the companies they are investing in and some assurance that company executives will act in the interests of investors, savers will be unwilling to trust the market.

"Making the financial sector better serve the real economy has been the major purpose of financial reform," explained Zhu Ning, deputy dean of the Shanghai Advanced Institute of Finance. "The new securities law is a change of spirit-giving law enforcement and regulators more power in terms of enforcing what has been written in the law."

A key provision of the new law has been tested by the Sci-Tech Innovation Board, called the STAR Market, of the Shanghai Stock Exchange since its creation in July 2019.

Previously, IPOs were closely vetted by the government and the companies were required to show sustained profitability in order to list. The initial offer price was set low enough that almost all new issues rose above the initial price.

The new system will require companies using IPOs to register with the government, but the price will be set by the market, requiring investors to be responsible for assessing the prospects of the companies.

Under the old system, tech startups were often not allowed to list because they were unprofitable, even if they had strong prospects for future growth. The new system leaves these decisions, and the inherent risks, up to investors.

This new system is similar to the financial regulation strategies of the European Union, the United States and the United Kingdom, so it will also encourage international investment in the Chinese stock and bond markets.

More importantly, according to Zhu, Chinese investors have seen the IPO registration process as a kind of government stamp of approval for the stocks-strengthening the belief that there is an implicit government guarantee and discouraging investors from doing proper fundamental research and due diligence.

"The registration-based IPO system is trying to solve two problems with one stone," said Zhu. "The first is to help more companies list their shares and get better financing.

"Second, if you do too much encouragement, a lot of bad apples are going to pop up. So, at the same time they are trying to say, 'yes, we are going to allow more freedom in listing your shares, but the listed companies and the professionals helping the companies have to be held liable for whatever bad consequences that come out of mis-disclosure or non-disclosure of material information.' That is the main direction," said Zhu.

This policy is similar to the US Dodd-Frank Act of 2010, which was implemented to clean up the financial system after the 2008 global financial crisis by strengthening regulatory insight over financial institutions, attempting to strengthen market discipline by eliminating expectations of government bailouts, and increasing consumer protection.

Paradoxically, the corporate bond defaults that have happened in China over the past several years are also a sign that market reform is working. They force investors to be cautious about where they put their money, instead of relying on an implicit government guarantee-this reduces the total risk in the system and helps ensure that funds flow to the best companies. However, more still needs to be done to strengthen the bankruptcy system and to protect bondholders against being ripped off by company executives or equity owners.

The history of stock market reform in the US shows various alternative approaches to reforming markets, with some positive lessons and many examples of regulatory policies to avoid.

During the 1920s, known as the "roaring 20s", the valuation of the New York Stock Exchange soared as new technologies-radio, electrification and cars-changed the economy and on the basis of optimism after the end of World War I. But, the NYSE was so-called self-regulated, with very little legal control.

Insiders used all kinds of shenanigans to steal the money of average investors. Insider trading, company executives with special information trading before the public, was rampant. Brokers would push up prices, then sell out before the collapse.

The president of the NYSE went to prison for outright theft of a customer's money. Without reform and strong government intervention, the great crash of 1929 would have been the end of US stock markets because no one would have trusted their savings to such a corrupt system.

The securities acts of 1933 and 1934 were based largely on the principle of disclosure. All publicly traded companies were required to file detailed accounting statements with the government, so that average investors could have the fundamental financial information they need to decide whether to invest or not. Strong criminal penalties were created to try to stop insider trading, broker malfeasance, and other ways that had been used to steal from the public.

Of course, this system has not worked perfectly. Especially leading up to the 2008 market crash, many companies shaped their accounting statements to hide information about risks from the public. And, the Securities and Exchange Commission, the US regulator of capital markets, has so few people that it is hard for them to catch all the crooks. But the system has worked well enough to allow the continued existence of the capital markets.

The sharp rise in valuation and in foreign investment are good signs that the reforms are giving investors confidence in the Chinese stock markets.

China's A-share market was the highest performing stock market in the world in 2019, rising 31 percent compared to 22.3 percent for the US' S&P 500 index, 8.5 percent for the UK's FTSE 100 and 11.5 percent for Japan's Topix index-though, of course, past performance does not promise future performance in any of these markets. And, the A-share market suffered large losses in 2018. The huge 2019 rise in the A-share market is especially impressive in the face of trade frictions with the US.

In an expression of confidence, MSCI, the leading compiler of global market indices, quadrupled the percentage of funds allocated to the China market in relevant indices. For example, China's A shares will have a weight of 12.1 percent in the MSCI China index and 4.1 percent in the MSCI Emerging markets index. Analysts at the China International Capital Corp (CICC) estimate that the total MSCI weighting adjustments in 2019 will result in an additional inflow of around $60 billion into the China markets.

As we have seen in every stock market around the world, no regulatory system is perfect. But China's new securities law revision will be a big step toward ensuring that capital flows to the most productive companies in the real economy and that investors are protected.

 

CAI MENG/CHINA DAILY

 

 

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2020-01-13 00:00:00
<![CDATA[Software that aims to win user hearts]]> http://www.chinadaily.com.cn/kindle/2020-01/13/content_37532147.htm In the Windows personal computer office-software and apps market, Microsoft Office remains the world's best, said Zhang Qingyuan, chief operating officer of Beijing Kingsoft Office Software Inc, which is known for its WPS Office suite.

The acknowledgement of MS-Office as the leader of the pack is Zhang's way of staying humble and aspiring to be a giant-killer one day.

Founded in 1988, Kingsoft Office launched the first edition of WPS Office suite in the same year. It was China's first domestically developed office software. After weathering the most difficult time in the late 1990s and early 2000s due to the competition from Microsoft Office and pirated software, Kingsoft Office reached a turning point in 2011 when it shifted its focus to mobile devices.

As of March 2019, the company gathered more than 328 million monthly active users, who accounted for nearly half of China's office-software users. Its sales revenue surged from 541 million yuan ($77.7 million) in 2016 to more than 1.1 billion yuan in 2018. The company's headcount has reached nearly 2,000, the majority 70 percent of whom specialize in product research and development.

The rapid growth may be attributable to its paths: adapting its Office suite to the Mac and the Linux operating systems, and more importantly, designing Office software for mobile devices.

"It makes no sense to confront and compete directly with Microsoft Office," said Zhang.

The tactics have worked well for its overseas reach. Ever since Kingsoft Office adopted the "all-in mobile" strategy in 2011, WPS Office has won more than 187 million mobile monthly active users worldwide as of March 2019, which is 41.7 percent higher than the number of monthly active users at the PC end.

The mobile version of its Office software is distributed via Google Play app store in over 220 countries and regions. In 2018, mobile data and analytics service provider App Annie chose WPS for the "2018 Top App for Overseas Growth" award.

To date, about 25.8 percent of the monthly active users of WPS are in overseas markets. Users from emerging markets such as India, Indonesia, Russia and Brazil show special preference for Kingsoft's software products. In fact, more than half of its overseas users are from these markets.

On the one hand, the reach in some of these markets is in accordance with the country's Belt and Road Initiative, explained Zhang. On the other, WPS products and the brand name are better accepted by users in emerging markets, especially India and Indonesia, which are seeing their internet market expand rapidly, he said.

But it does not mean that WPS has totally steered clear of the more mature markets in the United States and Europe. To differentiate itself from Microsoft Office, WPS has focused on the Office suite designed for Mac, subscription services such as PDF toolkit and template services, and other value-added services.

"The success in the Chinese market over the past few years has prepared us financially to explore the overseas markets. The strong economic base has become our competitive edge so that we can take our time to realize our goals. We will not confront our competitors directly or wage any price war. We only want to win the hearts of consumers with our products," he said.

To be sure, there are differences regarding the user habits in different regions. While China has leapfrogged the development of mobile internet over the past few years, users in the Western markets are still using the functions which are prevalent in the PC age. Therefore, such functions are added to products launched in some of the overseas markets but cannot be found in the Chinese version.

Such subtle variations were not provided from day one. "We thought introducing our products to overseas was just a snap. We thought we could hire a translation company and make different language versions and that's it. But soon we found that our understanding was totally wrong. The cultural differences and complexity in each market mean that you cannot just leave a translated version of your software on the official website and go," said Zhang.

"International companies in a real sense have invested a lot of time and resources to explore markets one by one. It is also one of the reasons that we have started with markets with easier access."

In this sense, help from Google was indispensable. WPS took small steps in the overseas markets as its mobile versions of its Office applications were available on the Google Play app store.

"We are much stronger in product development than in management, especially lacking management experience in overseas markets. The Google team works as a mentor to us, solving problems regarding our software per se and building the ecosystem. Many detailed things such as commercialization and subscription are all explained by them."

Thirty-one years after its founding, Kingsoft Office successfully listed on the technology-focused STAR Market of the Shanghai Stock Exchange on Nov 18. For Zhang, the company's ultimate goal should be to grow into a truly international company with world-class products.

"We don't have a specific timeline for it. We can spend another 30 years to realize that goal," he said.

 

Users try WPS Office software in Bangkok, Thailand. LI MANGMANG/XINHUA

 

 

Kingsoft executives showcase WPS Office's Thai version at a promotional event in Bangkok, Thailand. LI MANGMANG/XINHUA

 

 

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2020-01-13 00:00:00
<![CDATA[Serious topics come to the fore in live talk shows]]> http://www.chinadaily.com.cn/kindle/2020-01/12/content_37532056.htm While Dick Clark's New Year's Rockin' Eve has dominated the broadcast scene for decades as the Americans embrace the New Year, Chinese are opting to stay in front of a TV watching a live talk show discussing serious topics like the economy this year.

The talk was presented by Luo Zhenyu, founder of Dedao, an independent media platform and online community providing new knowledge and insights in entrepreneurship and business.

The four-hour New Year celebration titled Time's Friend, is one of their iconic offerings. It debuted in 2015. Luo promised they are going to do such theme lectures for the next two decades, with many snapping up the 20-year pass tickets.

This year, Luo set the theme as the "Basic Situation," discussing a variety of macro issues on China's economy, consumption trends, flow of wealth, education, science and technology as well as manufacturing prowess.

Together with the release of four industry-specific reports, the knowledge-sharing oriented gala aims to "provide a clue to the outlook of China amid uncertainties and help everyone better identify their unique strengths to cope with the changing tides," the company said in a statement.

Luo is not alone in his endeavor to bring a knowledge-intensive new year to knowledge-thirsty Chinese.

Business and finance commentator Wu Xiaobo hosted a like-minded speech on Dec 30 in Shenzhen, putting forward eight trends he deemed critical to navigate Chinese society in the coming year. Wu runs a similar media channel.

Talk shows as such are the synopsis of the so-called "knowledge economy," which encourages lifelong learning given the fragmented time people face. They typically invite influencers to record short speeches or lectures on their skilled topics, while paid subscribers listen to the audio lectures during their leisure time.

"These institutions are designed to impart knowledge to a broader audience. So from that perspective, it's fair to say that they have already done their part," said Sun Jinyun, associate professor of the department of business administration at Fudan University.

For 35-year-old Zhou Yulu, who attended the show at the fully-packed Shanghai Oriental Sports Center, he was "heartened" by the show as it "serves as a baton guiding the future and points to the key areas to focus on."

Others like Chen Qian, a second-time spectator in Beijing, appeared more rational. She regarded the show as an extension and epitome of paid-content offerings and confessed that her efforts at constant, continual learning are "highly unsystematic."

"I pay to download audio books from history to wealth management on my smartphone. I learn something but there's always this nagging feeling of 'so what?' and 'what next?'" Chen said.

Audience measurement readings confirmed a slight ebb in attention. Luo's talk show this year was not ranked among the top five most watched shows of Shenzhen Satellite TV during the time it was aired on Dec 31. In the previous two years, the show was in the top three slots.

Anxiety tends to prevail as uncertainties in the macro environment linger, and talk shows as such manage to appease and address such anxieties, Sun noted. But neither do these entities create knowledge nor can they help people internalize what they learned on a fragmented basis.

"It (the talk show) functions as a nice marketing move but the business per se isn't that sustainable, because no commercial institutions stand to predict mega-trends precisely," Sun said. "And it's increasingly becoming a paradox when the more impactful these apps are, the more critical people become toward their predictions."

Investment in paid online content once peaked on the back of consumer demand for self-learning. From 2016 to 2017 alone, the industry saw output tripling to 4.9 billion yuan ($730 million), a report by market consultancy iResearch said.

But the courses have since recorded a fall in popularity, leaving many to ponder their value in an era of information overload, industry analysts said.

"Content homogenization and intellectual property infringements are among the top reasons why users and investors have shown a higher level of rationality toward the once-explosive sector," said Liu Shijie, an analyst at consultancy iMedia.

Others believe rationality and consolidation are in fact conducive to the segment's long-term development.

"It's not a fad. It's just that people have woken up to the fact that listening to online courses during their spare time alone won't make a life-changing difference. So they have become more realistic toward the effects of these apps," said Gao Guolei, managing partner of Zhanghe Capital.

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2020-01-12 09:11:58
<![CDATA[Brands bank on Mickey and friends to drum up sales in Year of the Rat]]> http://www.chinadaily.com.cn/kindle/2020-01/12/content_37532043.htm With the Year of the Rat just around the corner, consumer brands are vying with each other to use popular cartoon characters like Mickey Mouse and Minnie Mouse as their brand ambassadors to reach more Chinese consumers.

"Mickey Mouse stands for optimism, joy and friendship, themes that are familiar for most Chinese consumers," said Kermid Rahman, who is in charge of the consumer product business at the Walt Disney Co for China and South Korea.

On Friday, Disney teamed up with top artists to launch handmade Mickey-themed lanterns in Yu Garden in Shanghai for celebrating the upcoming Lunar New Year. It has also joined hands with Alipay for developing Mickey Mouse-themed red packets or lucky money. Tencent's WeChat platform rolled out its Mickey and Minnie emojis on Friday for users to send Lunar New Year greetings. Disney has also incorporated traditional Chinese cultural elements with many of their designs such as the Kung Fu Mickey images.

The company has worked with over 450 local licensees and witnessed a double-digit growth in terms of the revenue from the licensed products sold in China. China is Disney' fastest growing market for licensed consumer products by revenue in the world.

"We expect better sales than last year for the upcoming Year of the Rat as we have more movies and content to boost local consumption," said Rahman, whose team launched a three-year marketing campaign for Mickey Mouse in 2018.

The company has developed more than 20,000 stock keeping unit products specially for the Year of the Rat, with many adding localized designs according to various geographic regions in the country.

Sales of Disney-themed licensed products have seen stronger growth in the third-and fourth-tier cities despite the bulk of the market being in the first-and second-tier cities.

"Lunar New Year is the most important festival in China and a time that consumers are willing to spend more money on products that are unique, interesting and bring a sense of fortune and good luck," said Jason Yu, general manager of Kantar Worldpanel China.

"Mickey Mouse and Jerry Mouse from Tom and Jerry also have eternal and wide appeal."

Unlike the United States, Disney consumer products are purchased by more adults than children in China, Rahman said, with 55 percent of the Disney consumer products including licensed products bought by adult consumers versus 45 percent by children. The ratio for adults and children was 15 percent and 85 percent respectively a decade ago in the country.

The change reflects the growing interests of teenagers and young Chinese consumers for Disney-themed consumer products, he said.

Meanwhile, this year Disney is expanding its commercial presence and making its products and characters more visible at top shopping malls in eight cities across the country to bring consumers closer to Mickey Mouse and Minnie.

Cartoon and animated characters help consumer brands to enhance their Lunar New Year sales as they can be widely used for various products without too much restrictions, thereby making the products popular with children and adults alike, said Jason Yu. Last year, Peppa Pigthemed products dominated the market in the Year of the Pig.

]]> 2020-01-12 09:11:58 <![CDATA[More young people set to travel for Spring Festival]]> http://www.chinadaily.com.cn/kindle/2020-01/11/content_37532030.htm During the weeklong Spring Festival holiday this year, 450 million people are expected to travel, and taking trips, rather than returning to their hometowns, has become the most popular way to spend the holiday for young people. The Spring Festival falls on Jan 25 this year.

This year, the Palace Museum in Beijing will celebrate the 600th anniversary of the Forbidden City, and experiencing a royal New Year in Beijing has become a hot choice. Besides, the Oriental Pearl Tower and Disneyland in Shanghai, West Lake in Hangzhou, Zhejiang province, Chimelong Ocean Kingdom in Zhuhai, Guangdong province, and the panda breeding base in Chengdu, Sichuan province, are expected to see the largest numbers of visitors.

Going skiing in northern cities and visiting hot springs, as well as going to warm places to avoid the winter chill have become main travel themes for the Spring Festival. Among the Top 10 destinations for group tourists, Beijing, Kunming, Guangzhou, Lijiang and Xiamen top the list, Trip.com found.

"Young people who come from smaller cities are showing a stronger willingness to travel. The number of travelers who were born in the 1990s and come from third-and fourth-tier cities such as Wuhu, Anhui province, and Baoding, Hebei province, surged more than 100 percent year-on-year," said Sun Jie, CEO of Trip.com Group.

As of Dec 31 last year, of those who booked travel products on Trip.com Group, the country's largest online travel agency, more than 30 percent chose to depart before the Lunar New Year's Eve.

Starting Friday, the number of people departing will continue to rise, and the travel peak is expected to occur on Jan 21.

More than 70 percent of those traveling have chosen high-speed trains, and most of them are born in the 1980s and 1990s. Besides, hotels near airports and train stations are in high demand, Trip.com found.

Among those who will take trips during the holiday, those born in the 1990s account for 45 percent of the total, people born in the 1980s make up 26 percent, and those who were born after 2000 took 11 percent.

Meanwhile, Thailand, Japan, Indonesia, Singapore and Vietnam are the most popular nearby overseas destinations for Chinese travelers during the Spring Festival holiday. Going to Japan to visit hot springs and enjoy beautiful snowy scenery is particularly popular, according to Tuniu Corp, an online travel agency based in Nanjing, Jiangsu province.

 

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2020-01-11 00:00:00
<![CDATA[Shanghai opens door further for investors]]> http://www.chinadaily.com.cn/kindle/2020-01/11/content_37532029.htm

A technician works on the production line of a Volkswagen plant in Shanghai. XINHUA

Shanghai further consolidated its role as a major hub for global industry leaders after the municipal government inked agreements for 60 new foreign-invested projects worth $7.3 billion on Friday.

Nine of these projects are investments by Fortune 500 companies. About 20 projects saw investment value of over $100 million each, covering industries like integrated circuits, artificial intelligence, biomedicine, automotive, finance, information technology, culture, entertainment and healthcare.

The world's largest publicly traded property and casualty insurance company Chubb reached an agreement on Friday to set up the insurer's China headquarters in the city.

Kevin Bogardus, general manager of Chubb Insurance Co Ltd, said that Shanghai's goal of building itself into a world innovation center has provided opportunities for Chubb to develop its life science risk control services in the city. The development of fintech in Shanghai has led to the blockchain application standard for insurers which Chubb jointly launched with Shanghai Insurance Exchange in late December, which is the first blockchain application standard introduced in the Chinese financial sector.

"Apart from its industrial competitiveness, Shanghai has seen the spillover effect of the financial sector radiating to a larger area, which points to much room for development for us. We will continue to seek more opportunities in the city, which provides top-notch business environment," said Bogardus.

On the first workday of 2020, the municipal government of Shanghai released 32 detailed policies to further facilitate investment and a revised plan to better its business environment in the hope of attracting more foreign capital.

In 2019, Shanghai attracted about 6,800 new foreign-invested projects, up 21.5 percent from a year earlier. The amount of contractual foreign capital increased 7.1 percent year-on-year to top over $50.2 billion.

Also present at the signing ceremony on Friday was Watergen, an Israel-based company that provides renewable sources of clean drinking water. According to Ivan Melnikov, the company's chief representative in China, Watergen has signed an agreement with Shanghai municipal government to set up its regional management headquarters in Shanghai this year.

But the regional headquarters is just a short-term target, said Melnikov. The company also plans to set up a production facility in the Yangtze River Delta region this year, with an investment of around 200 million yuan ($29 million). Meanwhile, a small research and development center is also expected to be set up in Shanghai this year.

"We expect to meet all these targets before the third China International Import Expo in November. It is our goal to build a complete sales and distribution network in the country by that time," he said.

Corteva Agriscience, the US agricultural chemical and seed company which was spun off from DowDuPont in June last year, has decided to set up its regional headquarters in Shanghai to look after business and investment in the Chinese mainland, Hong Kong and Macao. Life sciences, digitalized policies and technology will be the focus of the regional headquarters in Shanghai, said Alec Zheng, marketing and strategy vice-president of Corteva Greater China.

"The large number of technology startups and sufficient talent supply in Shanghai makes it the ideal place to introduce our digital agriculture know-how into China," he said.

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2020-01-11 00:00:00
<![CDATA[A milestone in capital market transformation]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531930.htm On Dec 28, the revised Securities Law of the People's Republic of China was approved and adopted by the Standing Committee of the National People's Congress, the country's top legislature, and it will come into effect on March 1.

Compared with the original law, the revised law substantially raises the bar in the punishment of illegal activities and rule violations, strengthens the requirement of information disclosure and improves the system to protect investors' rights and interests, which is of far-reaching significance for China to build a rules-based and transparent capital market.

The adoption of the law is a milestone event in the process of transforming China's securities market into a market-oriented, rules-based and international one.

In recent years, the number of rule violation cases in China's securities market has remained high. According to Wind Info, there were 1,917 cases of rule violation by A-share listed companies last year.

The number was much higher than the 1,203 cases in 2017, although it was a slight decrease from the level of 1,968 in 2018. There were a total of 685 listed companies that engaged in rule-violation activities last year, accounting for 18.22 percent of all A-share listed companies. Most violations were related to information disclosure.

The revised Securities Law substantially raises the maximum punishment in this area to 10 million yuan ($1.44 million) from only 600,000 yuan in the original law. The previously low penalty for committing a crime has undoubtedly encouraged the occurrence of illegal activities and resulted in some serious law violations with bad social impact.

For example, Chinese pharmaceutical firm Kangmei Pharmaceutical engaged in one of the country's largest financial frauds totaling $12.7 billion last year. The company's stock price plunged by more than 75 percent in less than two months, causing huge losses for investors.

The emphasis on information disclosure and investor protection is crucial to improving the efficiency of the financial market. Information is the basis of investors' decision-making process. Timely and complete information disclosure will help improve the efficiency and liquidity of the financial market and a sound mechanism for the protection of investors' rights and interests can ensure investors' legitimate profits and help promote the healthy development of the financial market.

An efficient and rules-based secondary market is also important for the function of the primary market. The improvement of the efficiency and liquidity in the secondary market is beneficial for the corporate financing and valuations in the primary market, thus promoting the development of the real economy.

The development of an efficient financial market also relies on a stable and orderly market environment, which requires a sound information communication channel to ensure market forces play a major role. This has become the consensus of scholars and industry experts. The illegal activities in the securities market have jeopardized fair market competition, harmed the normal and stable operation of the market, and undermined investors' interests and confidence.

Building a rules-based and transparent capital market requires market players to obey rules and regulations and disclose information in a timely manner. It also requires the regulators to act swiftly to crack down on illegal activities.

Therefore, the adoption of the revised Securities Law will further energize the market, help boost investors' confidence and allow the financial market to play a more effective role. A healthy and orderly financial market will better support economic development, better meet the financing demand of companies and promote sustainable economic growth.

The introduction of the revised Securities Law holds far-reaching significance as it will help draw more investors from home and abroad into the Chinese capital market. Global economic growth has been sluggish amid growing challenges and uncertainties. Investors' sentiment has been depressed.

Against such a backdrop, China has been firmly pushing capital market reforms, aiming to build a standardized, transparent, open, and dynamic capital market. As Chinese A shares and sovereign bonds are increasingly being included in major global indexes such as the MSCI and FTSE, the Chinese market has drawn growing attention from international investors.

The adoption of the revised Securities Law is a major step in China's capital market reform and it will help boost the market's attractiveness to foreign investors, improve their confidence and maintain a stable and orderly market environment.

On the other hand, the introduction of the new Securities Law also helps to better regulate the behavior of institutional investors. As an important part of the securities market, institutional investors can help stabilize the market and put checks on listed companies.

The provisions of the new Securities Law, such as strengthened regulation on information disclosure and higher penalty for fraudulent securities issuance, will expand the positive influence of institutional investors in both the primary and secondary markets.

The revised law will enable them to better screen and verify the quality of the unlisted companies in the primary market and the behavior of the listed companies in the secondary market, therefore forming an effective linkage between the two markets and eventually helping improve the quality of the Chinese listed companies.

 

 

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2020-01-10 00:00:00
<![CDATA[RRR cut allows banks to better support real economy]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531974.htm China announced at the start of this year that it would cut the reserve requirement ratio, or the amount of cash banks must keep in reserve, to free up about 800 billion yuan ($115 billion) for funds to potentially boost infrastructure and other sectors and help stabilize the economy.

Considering the slowdown in domestic economic growth and the international economic landscape, the Jan 6 RRR cut is a step to appropriately increase liquidity to boost growth and, in the short term, satisfy the high demand for funds that usually occurs at the start of a year.

Generally, demand for funds rises strongly ahead of the traditional Spring Festival, which falls on Jan 25 this year. It is estimated that in January, there will be 600 billion yuan worth of reverse repos and more than 250 billion yuan worth of targeted medium-term lending facility loans maturing, leading to a fund shortage of over 850 billion yuan. The move by the People's Bank of China, the central bank, to cut the RRR in the short term offsets the maturing monetary facilities to maintain the stable supply of money and ease liquidity shortage in the market.

The cut is also a countercyclical measure to "effectively increase funds of financial institutions and lower their funding costs so that they can better support the real economy", the central bank said.

China's small-and medium-sized financial institutions, such as city commercial banks, rural cooperative banks and township banks, which mainly serve private, small and micro enterprises, will have access to more than 120 billion yuan worth of extra long-term funds after the RRR cut.

The central bank estimated that the cut will help lower the funding costs of financial institutions by 15 billion a year, which will in turn help lower the financing costs of small and micro enterprises and private companies.

China's small-and medium-sized enterprises account for more than half of the country's GDP growth and tax revenues and most of the jobs. But the financing bottleneck has become a major problem affecting their development. China has cut the reserve requirement ratio four times since the start of last year, which has substantially improved the access of small-and medium-sized enterprises to lower-cost funds.

The improved performance of small-and medium-sized enterprises is crucial for the economy, whose growth slowed to 6 percent in the third quarter of last year.

The RRR cut is mainly targeted at revitalizing the economy, allowing increased funds to flow into areas such as infrastructure construction through bank loans to increase economic activity and create jobs.

In the annual work conference of the central bank, convened last week, policymakers claimed that countercyclical adjustments should be strengthened and liquidity should be kept "reasonably ample" so that monetary supply and social financing scale can match the pace of economic development.

Economists widely expect the RRR cuts to continue if economic growth weakens further this year. The country could also cut benchmark interest rates to further reduce financing costs of enterprises.

Considering China's massive economic scale of about 90 trillion yuan, such countercyclical measures will help boost growth.

Policymakers agree that funds will be encouraged to flow into the real economy, supporting small and micro enterprises and infrastructure construction, rather than pushing up asset prices, which would incur serious financial risks.

As proof of the country's still prudent monetary policy stance, funds flowing into the real estate sector will be strictly controlled, the authorities said. Last year, governments at varying levels issued 570 real estate regulatory policies, the most in recent years.

The tone-setting Central Economic Work Conference, convened in December, reiterated that housing is for living in, not for speculation, meaning control of the sector will not be loosened any time soon.

The Ministry of Housing and Urban-Rural Development said late last month that it will ensure the stable development of the real estate sector and will not use the stimulation of the sector as a means to boost economic growth, a stance that was put forward at a key meeting of the Political Bureau of the Communist Party of China Central Committee in late July. Therefore, the RRR cut this time may generally benefit the real estate sector, but capital flowing into the industry is set to be put under strict control.

Facing increasing financing pressure, some domestic real estate developers have opted to reduce property prices, especially in the winter, which is often the low season for the sector. Industry watchers said developers should prepare for another difficult year.

From a global perspective, China's move is nothing unusual as a large number of economies have introduced proactive monetary policies to boost growth.

As the world economy slows, protectionism is on the rise and global trade has faltered. Policymakers worldwide have had few viable choices but to cut interest rates to keep their economies on track.

Last year, 48 countries cut interest rates a total of 85 times, according to Jiemian, a Chinese-language online news provider.

Countries around the world have tried to bolster weakening economies by cutting lending costs.

Among those that cut interest rates last year, Turkey made the steepest cut by a total of 1,000 base points and India made the most cuts-five. Compared with those countries, China's pace of monetary adjustments is quite mild.

For China, however, the problem is that cutting benchmark interest rates might trigger some undesirable side effects such as further ballooning of real estate bubbles and intensified capital outflow pressure.

Chinese policymakers, therefore, have been cautious about lowering interest rates. To maintain stable growth, they have instead resorted to RRR cuts three times last year, which can release more funds into the market and are less likely to trigger asset bubble risks.

 

 

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2020-01-10 00:00:00
<![CDATA[Bay Area plan, rising tourist numbers shape Macao's transformation as leisure hub]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531965.htm The Macao Special Administrative Region has witnessed strong growth in both the number of travelers and flights going there and the region in Southern China is closer in its aim to become a global leisure tourism center.

Last year, a record 9.6 million people took flights at Macao International Airport, up 16 percent over the previous year's level. It was the highest growth since 2006, and 14 times higher than the local population.

The travelers mainly came from the Chinese mainland, Southeast Asian and Northeast Asian countries. They accounted for 40 percent of the total, according to Carnoc, one of the largest civil aviation portals in China.

"With a stable social environment, the tourism and gambling sectors in Macao are seeing booming growth prospects. Under the impact of the unrest in Hong Kong, many travelers from the Chinese mainland would prefer to choose its neighboring region Macao," said Lin Zhijie, an aviation industry analyst and a columnist of Carnoc.

"The Macao airport is saturated and it needs to start its expansion project as soon as possible. The area has only one local carrier, Air Macao. If it could introduce a second carrier, it would help to provide more flights options and cheaper prices to passengers," Lin said.

In 2019, more than 77,000 flights took off and landed at the airport, a figure that is 18 percent higher over 2018. Of the total, the number of flights that connected Macao with the Chinese mainland grew 25 percent year-on-year, while flights that connected Macao and Southeast Asian countries increased by 14 percent year-on-year.

In 2019, the Macao airport launched 13 new destinations. It connected Macao with more smaller cities in the Chinese mainland such as Wenzhou in Zhejiang province, Yangzhou and Nantong in Jiangsu province, Shenyang, Liaoning province, and Changsha, Hunan province.

The airport also launched international flights that connected Macao with neighboring foreign cities such as Jeju in the Republic of Korea, Pyongyang in the Democratic People's Republic of Korea, Cam Ranh in Vietnam, and Mandalay, Myanmar.

"The fast economic growth of Macao has attracted a large number of travelers. 2019 was also the 20th anniversary of the former Portuguese colony of Macao returning to China. Macao has added a lot of capacity in its air travel market. It needs to improve the infrastructure to support capacity increase," said Zou Jianjun, a professor of the Civil Aviation Management Institute of China.

With 34 carriers operating at the Macao airport, the airport aims to further grow middle-and long-haul flights this year to attract more local and international passengers to fly or transfer through the territory.

On Feb 18 last year, the outline development plan for the Guangdong-Hong Kong-Macao Greater Bay Area was unveiled by the central government. Macao has developed rapidly and integrated itself into economic globalization through the development strategy.

During the New Year holiday this year on Jan 1, which falls on last Wednesday and people from the Chinese mainland only take one day off from work, the number of travelers who set out on the road to Macao did not drop.

Compared with the New Year holiday last year, those who took trips to Macao this year jumped by 12.1 percent. The largest number of travelers came from Shanghai, Hangzhou and Bangkok, according to Qunar, one of the country's biggest online travel agencies.

In the full year of 2019, Chinese mainland travelers who visited Macao surged by 47.7 percent over 2018. Travelers from Shanghai, Hangzhou and Beijing topped the list of tourists, Qunar said.

In contrast, Chinese mainland travelers who visited Hong Kong last year dropped 4.1 percent over the previous year. During the New Year holiday this year, the number of travelers fell 7 percent year-on-year.

"With convenient location and unique tourism resources, Macao has become a popular flight transfer destination, especially for those who travel from the Chinese mainland to Southeast Asian countries," said Qunar Vice-President Lan Xiang.

"Traveling with children and the elderly has become the fastest-growing groups. Last year, most people traveled to Macao in February and March, which follows the Spring Festival holiday, as well as in August, the summer vacation period," Lan said.

To enjoy some delicious food is now also an essential part of traveling to Macao. Portuguese egg tart, pork chop buns, and crab congee have become some of the most popular dishes.

On Dazhongdianping, a Chinese customer review app similar to Yelp, the number of people who searched about Macao in October last year jumped 31.9 percent year-on-year.

People from Guangdong province, which is the closest to Macao, booked the largest number of hotel rooms last year. With convenient transportation such as the Hong Kong-Zhuhai-Macao Bridge, going to Macao to spend a weekend with the family has become a new way for many travelers from Guangdong to take a short vacation.

In the first 11 months of 2019, cross-border vehicle traffic went up by 9.1 percent year-on-year to 4,893,915 trips, the Statistics and Census Service of Macao said.

Overall, the number of hotel bookings in Macao last year soared 61 percent over 2018.

On the other hand, residents living in Macao would like to take trips to Shanghai, Hangzhou and Taipei as their travel destinations, Qunar said.

 

 

 

 

 

]]> 2020-01-10 00:00:00 <![CDATA[Powering a cleaner, brighter future with biogas]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531932.htm Instead of hauling urban waste to landfills, China is hoping to turn the trash into a billion dollar business.

Organic waste such as food scraps, animal waste, and agriculture crops can be decomposed to produce a mixture of methane and carbon dioxide. They can soon become an important renewable energy source and be used for heating or powering your car.

More importantly, the waste-derived biogas produces clean fuel without polluting emissions, helps reduce the country's heavy reliance on fossil fuels like coal and oil and produces fertilizers for crops.

That's a large part of the reason why the Chinese government is increasing its bet on the industry to diversify energy sources and curb carbon emissions.

Last December, the National Development and Reform Commission and nine other central departments rolled out new guidelines to support the country's biogas growth.

Measures include prioritizing the use of biogas, launching favorable tax plans, encouraging improvements in the industrial chain, and many others.

The goal was to expand biogas production to over 10 billion cubic meters by 2025 and over 20 billion cubic meters by 2030.

That means the emerging industry will play an increasingly important role in China's energy sources. A report by Sinolink Securities estimates China's natural gas consumption is likely to hit 476.6 billion cubic meters by 2025.

"China has an abundant source of organic waste ... about 2.2 billion metric tons of animal waste and about 700 million tons of agriculture crops... well enough to support the production goals. Our estimation is even more positive. Those organic wastes can support biogas production of about 160 billion cubic meters," said Zhang Dayong, secretary general of the China Biomass Energy Industry Promotion Association.

China started attempts on this front several years ago. From 2015 to 2017, the Chinese government has been offering financial support to scale production of biogas and has supported 63 projects in total.

However, only five have started commercial operations by 2017, with annual gas production reaching about 57.6 million cubic meters. In 2019, China's production of biomethane is estimated at 60 million cubic meters.

"China is still at a very early stage in developing the biogas industry," Zhang said.

"Tech barriers, a lack of successful business models, high production costs and low profit returns... those problems are hindering China's biogas development," he said.

Zhang said that further technological breakthroughs are needed for more advanced production in the industry. He said at this time, methane accounts for 50-70 percent of biogas produced, far lower than the industry standard of 90 percent.

"That means much of what is produced (biogas) cannot be pumped into natural gas pipelines," Zhang said.

Aside from technological barriers, Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, said a lack of successful business models are also causing problems.

"Take recycling agricultural crops as an example. Many farmers would rather burn crops down than selling to biogas producers. For one, transportation costs are very high and the crops need a large space to be transported and stored. For another, those crops are hard to sell at a very high price. Farmers would give up recycling crops and selling to biogas producers if they found the whole process cannot make ends meet," Lin said.

"In addition, investments in research and development of biogas projects are usually high and need a long time before harvesting profits. Biogas projects also need trained professionals from various fields including agriculture, environment protection, energy, and fertilizers. All those requirements have set a high bar for investors who want to step into the field," Zhang said.

"Lower-than-expected profits in China's current biogas industry have also made investors less interested," Zhang said, who added that about two-thirds of industry revenue for biogas comes from turning waste into fertilizers, rather than producing energy.

Despite the fact the country has recorded great achievements in the research of biogas fermentation and equipment manufacturing, there is still a gap in tech innovation between China and other countries that are in the forefront of the industry, Zhang said. Chinese project operators can learn some advanced methods from overseas.

Zhang cited the European Union as an example. The EU has set up a series of industry standards to support biogas production and commercial operations. Its standards cover areas of equipment manufacturing, construction, security, hygiene, environmental protection, emission, quality checks, equipment maintenance, grid transportation, and many others.

EU governments have introduced a series of supportive measures. In Sweden, the country has been offering subsidies to biogas plant construction to encourage related projects.

EU countries have also set up biogas consumption goals. Germany said it plans to consume 10 billion cubic meters of biogas by 2030. Sweden made a plan for biogas consumption accounting for 50 percent of total gas consumption by 2020, and 100 percent of total gas consumption by 2050.

"The biogas industry is set for rapid growth on a global scale. There are many experiences that Chinese biogas producers can refer to," Zhang said.

At the early stage of development with annual biogas production lower than 3 billion cubic meters, government subsidies are needed for Chinese biogas producers to guarantee profits and hedge investment risks so that the industry can attract more investors, Zhang said.

Despite the fact that biogas development in China faces great challenges, the sector is still poised to grow and is expected to generate great value, Lin said.

 

 

 

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2020-01-10 00:00:00
<![CDATA[Textile firms bank on BRI for growth]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531943.htm China's textile industry, a sector that provides jobs to over 27.15 million people in both production and sales, will tap more growth seams in economies related to the Belt and Road Initiative and improve garment makers' innovation capabilities to stay competitive this year, said a senior industry official.

As participating countries are expected to sign the Regional Comprehensive Economic Partnership this year, China's textile industry must accelerate the adjustment of products, capacity and trade structure to better integrate regional development in the next stage, said Sun Ruizhe, president of the China National Textile and Apparel Council.

"The simplification and unification of rules will boost resource flows within the region, and cut transaction costs and risks," he said, adding the RCEP will further enrich regional cooperative content in areas such as digital economy and intellectual property protection, paving the way for future cooperation among industries across the mega trade bloc.

The rise of emerging markets such as Vietnam, India and Bangladesh has also changed the division pattern of labor and trade in the global textile business, he said.

Affected by weak demand from developed markets and the rise of protectionism, China's textile and apparel exports dropped 2.2 percent year-on-year to $232.31 billion between January and October last year, data from Beijing-based CNTAC show.

In the meantime, China's textile and apparel shipments to the US, the European Union and Japan declined 4.5 percent, 5 percent and 5.5 percent year-on-year respectively, while its total exports to countries and regions participating in the Belt and Road Initiative grew by 1.3 percent, and exports to Africa jumped 6.6 percent from the same period a year earlier.

To improve the product value and tackle climate change, Sun said green textile products have already become the new trend in the textile industry.

"Textile makers in China have already begun to adopt renewable energy sources, environmentally friendly textile materials including biomass fiber and recycled substances to make the whole production process pollution free, as well as cut dependence on crude oil when producing common synthetic materials such as nylon or polyester," he said.

Since the fourth industrial revolution is still in its infancy and many technical applications are immature, Sun said the instability of certain new technologies can lead to higher initial investments and trial costs.

For example, Adidas said in November that its two automated plants in Germany and the United States will soon shut down, and it will transfer the capacity to Asia.

Huang Qunhui, director of the Institute of Industrial Economics at the Chinese Academy of Social Sciences in Beijing, said domestic companies must have a rational attitude toward relatively advanced industrial applications like quantum computing and other emerging technologies, and deploy more resources in innovation and green development to better compete with their established global rivals.

Ningbo Peacebird Fashion Co Ltd, a Zhejiang-based multibrand fashion company, plans to expand its global presence with more flexible branding strategies, international designers and innovation.

Zhang Jiangping, the company's chairman, said the firm will enter overseas markets such as Vietnam and Malaysia soon, after learning of local consumers' higher purchasing power and changing lifestyles.

"China has fabulous designers, a large market, and outstanding brands, but it needs to make global consumers aware of the charm of Chinese brands, which certainly can be promoted on a bigger stage," he said.

The business executive also found that crossover branding has become a hot term for many sectors. "Brand collaboration arouses consumers' curiosity, giving them a new reason to spend. It usually generates unexpected market feedback and decent sales both at home and abroad," he said.

 

An employee works at a textile plant in Qingdao, Shandong province. LIANG XIAOPENG/FOR CHINA DAILY

 

 

 

 

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2020-01-10 00:00:00
<![CDATA[Inflationary pressures stay subdued in China]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531934.htm Inflation pressure has started abating in China and could remain subdued for the rest of the year as consumer prices, led by pork, have started softening since last month, analysts said on Thursday.

China's consumer price index, a main gauge of inflation, rose by 4.5 percent year-on-year in December, the same as the previous month, breaking a three-month streak of rising consumer inflation, the National Bureau of Statistics said on Thursday.

The country's whole-year CPI came in at 2.9 percent, well within the government-stipulated target of 3 percent, according to the NBS.

The CPI stabilized last month as food prices rose at a slower pace of 17.4 percent, compared with 19.1 percent in November, the NBS said. The year-on-year rise in pork prices, which accounted for nearly half of the headline CPI growth, eased to 97 percent in December from November's 110.2 percent.

"With positive changes in hog production, the release of pork reserves from central and local levels into the market, and the rise in pork imports, concerns about tight pork supplies have further eased," said Shen Yun, a senior statistician with the NBS.

Nonfood prices gained 1.3 percent year-on-year last month, up from 1 percent in November, as prices of services such as medical care and education rose, said Shen.

On a monthly basis, the CPI remained flat last month, versus a 0.4 percent rise in November, as pork prices dropped by 5.6 percent from a month earlier, the bureau said.

Zhang Deli, chief macroeconomic analyst with Guangdong province-based Yuekai Securities, said that the concerns about spikes in consumer prices due to a shortfall in pork supplies are fading, as the nation has ramped up hog production steadily.

China's stock of breeding sows rose for the third consecutive month in December, up by 2.2 percent from November, the Ministry of Agriculture and Rural Affairs said on Wednesday.

"The CPI may peak in January because of strong demand for pork during Spring Festival and a low basis last year, but then decline gradually," Zhang said.

Tensions between the United States and Iran may push up crude oil prices and therefore the overall prices, yet only temporarily, Zhang said.

Steven Zhang, chief economist with Morgan Stanley Huaxin Securities, said that if the US-Iran tensions cause a continuous tightening of global crude oil supplies, inflationary pressures may increase in China.

The possible disruptions from pork and oil on overall prices, however, are unlikely to change this year's focus of monetary policy from stabilizing economic growth to tempering inflation, he said.

The NBS data showed that the rise in core CPI, which excludes food and energy prices, remained low at 1.4 percent year-on-year in December, unchanged from a month earlier, indicating sluggish domestic demand.

To reduce financing costs for the real economy, China's central bank may cut required bank reserves another two or three times this year, and the loan prime rate-the new benchmark lending interest rate-may see further drops, he said.

The producer price index, which gauges factory gate prices, dropped by 0.5 percent year-on-year last month, versus a 1.4 percent decrease in November, pointing to more industrial activity, NBS data said. For the whole of 2019, the PPI edged down by 0.3 percent.

Li Xiang contributed to this story.

 

A salesman sorts fruit at a supermarket in Handan, Hebei province. HAO QUNYING/FOR CHINA DAILY

 

 

 

 

 

 

]]> 2020-01-10 00:00:00 <![CDATA[Nation's pig breeders make hay as pork prices surge]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531933.htm Major pig breeding firms posted robust sales and higher net profits last year as pork prices surged and the uptrend is likely to continue this year, industry experts said.

An African swine fever outbreak had led to a shortage of more than 10 million metric tons of pork in China, or at least 20 percent of China's total pork output in 2019. It will take about six months for a recovery in the pig production capacity and breeding of new pigs. The shortage has helped pig breeders achieve strong earnings and created more billionaires in the sector.

Qin Yinglin, founder of Muyuan Group, a Henan-based major pig breeder, became the richest man in the food sector last year. With a personal fortune of 117.38 billion yuan ($16.9 billion), he was the only one from the food sector in the Top 10 of China's Richest 2019 list of Forbes.

In 2019, Muyuan netted sales of 19.66 billion yuan, up 48.17 percent on a yearly basis. The valuation of the Shenzhen-listed company is now more than 200 billion yuan, the highest among pig breeders in the country.

"Since June last year, pig breeding has started entering a profit-earning period. After October, the income of pig breeders reached a new high," said Zhu Zengyong, a researcher with the Chinese Academy of Agricultural Sciences.

"Affected by the pig recovery cycle, pork supplies will be tight in the first half of this year, and pork prices will remain high. Prices are expected to decline in the second half, while the whole-year average price is foreseen to be still higher than last year," he said.

"With higher slaughter rate, the revenue from pig breeding will be higher than last year," he said.

Guangdong-based Wens Foodstuff Group Co Ltd, China's largest pig breeder, is expected to achieve net profit of 13.85 billion yuan to 14.3 billion for 2019, up 249.97 percent to 261.35 percent on a yearly basis, according to its latest earnings forecast.

Last year, the company netted sales revenue of 39.55 billion yuan, up 20.03 percent year-on-year. It sold 18.52 million pigs, down 16.95 percent year-on-year, while the average selling prices stood at 18.79 yuan per kg, jumping 46.57 percent year-on-year, the company said.

Meanwhile, New Hope Liuhe, a listed company of China's major feed producer New Hope Group, also posted strong sales last year. From January to November last year, New Hope Liuhe sold 3.14 million pigs and achieved sales of 7.02 billion yuan. In November, the breeder sold 395,800 pigs, up 66 percent year-on-year. Its net income in the month reached 1.45 billion yuan, soaring 291 percent year-on-year, according to the company.

 

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2020-01-10 00:00:00
<![CDATA[WeChat quick response codes help generate jobs and boost businesses]]> http://www.chinadaily.com.cn/kindle/2020-01/10/content_37531964.htm What's in a quick response (QR) code? An economy worth more than 8 trillion yuan ($1.15 trillion), says a new report released on Thursday.

New industries and business models fostered by WeChat, China's all-in-one application connecting people and businesses with a QR code, created a market value of more than 8.58 trillion yuan last year, WeChat operator Tencent Holdings Ltd said in a joint study with Tsinghua University's Institute for Global Industry.

Featuring WeChat's mini program, public accounts and payment functions, the so-called WeChat ecosystem generated some 26 million jobs related to transactions via QR codes last year, the company said during its annual WeChat-themed Open Class in Guangzhou, Guangdong province.

For instance, its mini program, or a built-in app aggregator, saw transactions reach 800 billion yuan in 2019. The adoption of a WeChat Pay Score, which gauges users' credit worthiness using data analytics, helped save deposits of various service types worth over 100 billion yuan.

WeChat currently hosts over 1 million mini programs, with 1.5 million developers and 82 million third-party platforms devoted to enriching various services via the app, which boasts 1.15 billion users globally. Among them, 800 million have chosen to tie their bank cards to the app so that they can pay with their phones across tens of millions of stores in more than 300 cities.

Due to its ubiquity, WeChat has effectively prolonged the operating hours of businesses. Data showed that evening expenditure was most vibrant between 8 pm to 10 pm, whereas a quarter of WeChat Pay users opened their virtual wallets from 10 pm to midnight.

Meanwhile, technology advancements have also empowered mom-and-pop stores and individual peddlers. The number of transactions settled via WeChat Pay tripled between 2017 and 2019. More than 50 million small merchants, or 79.4 percent nationwide, use WeChat Pay as a payment method.

In the retail realm, people used WeChat Pay 5.8 times per month on average for purchases last year. Scanning the QR codes for food purchases jumped six times, while public transportation benefited from increased adoption of QR code swiping for metro rides and consequently enhanced entry efficiency by three times.

WeChat has also shouldered bigger social undertakings. Mini programs related to civic services were used 900 million times in 2018, while over 60 percent of hospitals used WeChat Service Account, a customer relations management-like function that cuts the average queue time by 43.6 minutes.

As a bridge connecting the real world and the virtual world, QR codes lower costs for business operators, add more value in a smoother fashion, and are set to accelerate digitalization of the entire society, said Wu Jing, a researcher with the Institute of Science and Development at the Chinese Academy of Sciences.

WeChat said it plans to include more functionalities this year to better monetize mini programs. These include livestreaming, targeted QR codes pegged to items, and object-recognition capabilities to help merchants better convert clicks into cash via WeChat, said Du Jiahui, vice-general manager of WeChat Open Platform.

 

 

 

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2020-01-10 00:00:00
<![CDATA[Bullish trend expected for A-share market]]> http://www.chinadaily.com.cn/kindle/2020-01/09/content_37531810.htm China's A-share market is expected to generate higher-than-expected profits and see increased participation from foreign investors this year, as economic growth stabilizes in the country through further restructuring, experts said on Wednesday.

The world's largest mutual funds provider Vanguard expects returns from the A-share market to be between 7.5 percent and 9.5 percent in the next decade, outshining all the other markets in the world.

Wang Qian, chief economist for Vanguard Asia-Pacific, said that China's economic development will be more stable in the next few years as the problem of overcapacity has been properly addressed and more supportive macroeconomic policies are in place.

Lynda Zhou, chief investment officer in China for equities at Fidelity International, said the fund manager had an optimistic outlook on this year's A-share market performance.

Over the past few years, China has been through economic restructuring featured by deleveraging and cutting overcapacity. As a result, the country's annual GDP growth rate has been adjusted from the past double-digit figures to the current 5 percent to 6 percent. Such changes have exerted some negative impact on the stock market, she said.

"But as the more moderate GDP growth has become a new normal, the negative impact incurred by macroeconomic ups and downs on the A-share market will gradually subside in the next five to 10 years. A more stable A-share market will be conducive to higher-than-expected profits," she said.

Fidelity estimates that foreign capital in excess of 300 billion yuan ($43 billion) flowed into the A-share market in 2019, accounting for nearly 7 percent of the total market value of the A-share market. That number is equal to the positions held by mutual funds last year.

The number of breakthroughs and reforms in the Chinese capital market last year, including the launch of the technology-focused STAR market in Shanghai, the introduction of registration-based initial public offering mechanism, and the revised securities law announced at the end of last year, will enable a mature, sustained development of the A-share market, said Zhou. Foreign capital will continue to flow, helping to adjust the valuation system of the A-share market, she said.

Cheng Hao, a fund manager at Fidelity China, said that apart from rate bonds, overseas investors have started to invest in debentures. Compared to the coupon in other markets, the rate bonds and debentures will continue to be attractive to foreign investors.

Ethan Wang, head of investment strategy for wealth management at Standard Chartered China, said that there will be more fiscal stimulus than favorable currency policies in China in the next few years. The fiscal incentives will be translated into investment opportunities. High-end manufacturing, technology and consumption will be the sectors that will see the most supportive policies, as China's economic development is being increasingly driven by domestic demand.

Therefore, the A-share market will be the main investment target for Standard Chartered in its Asia strategy for the next six to 12 months, said Wang.

 

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2020-01-09 00:00:00
<![CDATA[Geely sets up JV with Daimler in Ningbo]]> http://www.chinadaily.com.cn/kindle/2020-01/09/content_37531844.htm Zhejiang Geely Holding Group said on Wednesday that it has set up a 50-50 joint venture with Daimler AG in Ningbo, Zhejiang province, as part of the efforts to develop and produce electric vehicles under the German carmaker's "smart" brand for global markets.

The 5.4 billion yuan ($778 million) joint venture is tasked to develop the brand established in 1998 as a leader in premium electrified vehicles, and from 2022, China will be the sole producer of smart-branded vehicles.

Daimler's Mercedes-Benz will be responsible for the styling of the vehicles and Geely, which is Daimler's largest shareholder, will undertake the engineering and development work.

The vehicles will be built at a plant in China but the location has not been released.

Geely and Daimler also plan to expand the smart lineup to include compact models, which are seeing growing demand in China. It will also set up sales centers in China and Germany.

Before the launch of new models in 2022, Daimler will continue to produce the current generation of smart vehicles in France and Slovenia.

"Geely will share its advantages in development, production and supply chains as well as its insights about the Chinese market," said Geely Chairman Li Shufu.

"Together with Daimler, we will promote the effect of synergy on a win-win basis and facilitate the brand's transformation toward electrification so that it will succeed in the global market."

In an earlier interview Daimler Chairman Ola Kaellenius said the company weighed options but it is a natural choice to have a Chinese partner as China and Europe are the largest markets for its smart-branded vehicles.

China will prove crucial to the brand's future. It has been smart's second largest market and is the world's largest electric car market. Besides, it is home to over 100 cities that have more than 1 million people, an ideal market for small-sized vehicles.

In a guideline released in late December, Chinese authorities expect new energy vehicles including electric cars and plug-in hybrids to account for a quarter of new car sales in 2025.

Kaellenius called Geely a "perfect partner" because of its strong technological capabilities and operational experience as Daimler is looking for a global solution for its smart division.

John Zeng, managing director of LMC Automotive Shanghai, said Geely has shown outstanding manufacturing and cost-control abilities as demonstrated by its Lynk & Co models.

As one of the most successful private carmakers in China, Geely has been spending heavily to sharpen its competitive edge. Its research and development expenses in 2018 totaled 21 billion yuan, accounting for 6.4 percent of the group's total revenue in that year. Over the past decade, it has invested over 100 billion yuan in research and development. It has also established five major research and development facilities, employing up to 20,000 engineers.

Besides the joint venture, Geely and Daimler have partnered to explore opportunities in shared mobility in China. The two also invested in Germany-based flying-car startup Volocopter in September 2019.

"The 21st century features industrial revolution and is full of opportunities and challenges as well. That means playing solo will not work," said Geely in a statement.

"We are willing to partner with all outstanding companies including Daimler to promote transformation in the global automotive industry," it said.

 

An employee works on the assembly line of a smart car factory in Hambach, eastern France. REUTERS

 

 

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2020-01-09 00:00:00
<![CDATA[Measures to streamline approval procedures, strengthen confidence]]> http://www.chinadaily.com.cn/kindle/2020-01/09/content_37531817.htm China's Foreign Investment Law will provide legal protection for opening-up at a higher level and further strengthen confidence of foreign investors, senior officials and experts said.

The newly minted law took effect in China on Jan 1 to better protect the interests of foreign investors. With the law, foreign-funded enterprises will be granted access to government procurement markets through fair competition.

Zong Changqing, director-general of the department of foreign investment administration of the Ministry of Commerce, said the ministry will ensure the implementation of the Foreign Investment Law and its regulations, remove unnecessary procedures for foreign investment approval, while striving to create a market-oriented, legal and international business environment.

Last year, the ministry took the lead in organizing the nationwide review of laws and regulations related to foreign investment in order to guarantee the smooth implementation of the Foreign Investment Law.

More than 400 laws and regulations that were inconsistent with the new law were revised or abolished, Zong said at the ministry's year-end meeting.

The Foreign Investment Law bans the use of administrative licensing and penalties to force foreign investors to transfer technology. Foreign companies are entitled to equal participation as their domestically invested peers in the formulation and revision of national, industrial and local standards in accordance with the law.

Zong said the measures China has taken in the past year help strengthen the confidence of foreign investors and effectively ensure that the country can achieve the goal of stabilizing foreign investment.

Between January and November last year, China's actual use of foreign capital reached 845.94 billion yuan ($121.4 billion), an increase of 6 percent year-on-year, the ministry reported.

"It is expected that for the whole year of 2019, China's foreign direct investment will grow by about 5 percent year-on-year," Zong said.

Experts said the introduction of the Foreign Investment Law-a gesture to higher-level opening-up-will better protect foreign investors in China while stimulating economic vitality.

Liu Chunsheng, an associate professor of international trade at the Central University of Finance and Economics, said the Foreign Investment Law, together with its supporting regulations, will further guarantee the legitimate interests of foreign investors and allow them to enjoy the same rights as other entities in the market.

"China has made enhanced efforts to optimize the business environment, which will facilitate market vitality and help with highquality economic growth," Liu said.

Zhu Qibing, a macroeconomy researcher with securities firm BOC International (China), said: "The law will help absorb more foreign capital, and thus contribute to China's economic transformation and upgrade."

He said the law will make it easier for foreign capital gains to be remitted in and out of the country, but there was no need to worry that it would add a burden to the outflow of domestic capital. "Primarily, capital flow hinges on the fundamentals of the Chinese economy," Zhu said in a research note.

Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges, said: "In the future, the country is expected to carry out more measures to optimize trade structures, foster new businesses, build a better trade environment and continuously deepen reform and opening-up."

He said the Foreign Investment Law will bring about several changes. For instance, foreign investment is expected to flow to not only big-ticket projects this year, but to small-and medium-sized ones, Wei said.

While China's eastern areas will continue to attract foreign capital, more foreign investment is expected to flow into central and western regions, which have been revving up efforts to attract talents, the vice-chairman said.

The enactment of the Foreign Investment Law is a clear signal to the world that China is striding toward higher-quality openness, Wei said.

"I am confident that China will be able to attract foreign investment of $140-150 billion next year, ranking first in the world," he added.

 

Officials and business representatives witness the signing of deals for 10 Germany-invested projects at the Sino-German Ecopark in Qingdao, Shandong province, on Nov 28, 2019. YU FANGPING/FOR CHINA DAILY

 

 

 

 

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2020-01-09 00:00:00
<![CDATA[CITIC to offload 22% stake in McDonald's China]]> http://www.chinadaily.com.cn/kindle/2020-01/09/content_37531819.htm CITIC Ltd, the listed arm of Chinese State-owned conglomerate CITIC Group, is planning to sell part of its stake in McDonald's China Co less than two years after it purchased the same.

McDonald's China, which is still expanding in the country, said on Wednesday that CITIC is looking to sell a 22 percent stake. McDonald's China said the related transactions will have no impact on its operations on the Chinese mainland and Hong Kong and it would not comment on any speculation at the moment.

The bottom price for the stake has been set at 2.17 billion yuan ($312 million) and the bidding process is ongoing, according to a disclosure document filed by CITIC to the Beijing Equity Exchange.

CITIC Capital Holdings Ltd, the group's flagship alternative investment arm, is believed to be keen on acquiring the stake, apart from the 20 percent it already owns in McDonald's China.

"CITIC Capital is confident about the future growth and prospects of the business and we are actively participating in the bidding process," said a Hong Kong-based spokeswoman.

The stake sale comes as the fast-food chain saw revenue and profit growth stall amid fierce competition in China's dining scene.

CITIC's disclosure document showed that revenue for the McDonald's China master franchiser, called Fast Food Holdings Ltd, was 24.8 billion yuan in 2018. For the first 11 months of 2019, it was 24.4 billion yuan. Operating profit for the first 11 months of 2019 was 16.2 billion yuan and net profit for the same period was 856.2 million yuan, according to the statement. This is compared with 16.4 billion yuan and 1.15 billion yuan respectively for 2018.

McDonald's China said its business in China remains sound and healthy, with same-store sales having risen for three years in a row since CITIC and its partners acquired the franchise in 2017. Its same store sales, sales per customer and profits grew steadily last year.

Jason Yu, general manager of Kantar Worldpanel China, said McDonald's China is still a very healthy and steady asset for the long term. Yu said further penetration into the lower-tier cities and new consumption scenarios including takeout foods and online-to-offline integration will bolster McDonald's future prospects in the country.

McDonald's China announced later last year its plan to speed up its expansion to lower-tier cites to attract new customers and update its menu with more nutritious and iconic food items. The company opened more than 1,000 new restaurants in China between 2017 and 2019 and there are 3,300 outlets in China at present, according to McDonald's China.

In 2017, the US chain sold most of its businesses in the Chinese mainland and in Hong Kong to CITIC and private equity group Carlyle for up to $2.1 billion. CITIC took the majority stake of 52 percent in McDonald's China operations.

 

A pedestrian walks past a McDonald's outlet in Yichang, Hubei province. ZHOU JIANPING/FOR CHINA DAILY

 

 

 

 

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2020-01-09 00:00:00
<![CDATA[Foreign firms to gain broader market access]]> http://www.chinadaily.com.cn/kindle/2020-01/09/content_37531818.htm Zha Sheng, general manager for Chinese operations of Vorwerk Group, the German manufacturer of household appliances, recalls how two decades ago he and his colleagues had to contact the city-level foreign affairs offices every time the company wanted to increase investment or invest in certain locations in China.

It wasn't easy to complete all the official procedures, Zha said, as any investment project over 30 million yuan ($4.3 million) involved meetings with local and provincial government branches, and then needed to be approved by the Ministry of Foreign Trade and Economic Cooperation, now the Ministry of Commerce.

As China moves to further expand the scope of opening-up and encourage closer synergy via more inclusive and diversified partnerships, Zha has found that China's newly implemented Foreign Investment Law not only better protects the legitimate rights and interests of foreign investors, but also pushes the government to offer more power and services to global companies.

He made the remarks after the law came into effect on the first day of this year, replacing the preceding laws on Chinese-foreign equity joint ventures, wholly foreign-owned enterprises and Chinese-foreign contractual joint ventures.

Consisting of 41 articles in six sections emphasizing investment promotion, protection, management and legal responsibility, the law is designed to offer foreign businesses broader market access, and safeguards intellectual property, prohibits forced technology transfer and guarantees a level playing field for both foreign and domestic companies.

Denis Depoux, China managing director of German consultancy Roland Berger, said the implementation of an integrated Foreign Investment Law is another milestone for China as it moves toward further openness in legislation.

"This is a big shot in the arm for foreign investors, and they can expect to witness more foreign investment flowing into the Chinese market in the long run," he said.

Since President Xi Jinping pledged again to support globalization and multilateralism at the World Economic Forum in Davos in January 2017, the Chinese government has consistently announced further reform and opening-up measures.

The new law was drafted in 2015 and went through two readings by the National People's Congress Standing Committee before being passed at the second session of the 13th National People's Congress in March 2019.

The law enables foreign companies and their domestically-invested peers to participate equally in the formulation and revision of national, industrial and local standards in accordance with the rule. They can make standards-related recommendations and undertake such work as setting standards.

"This has systematically been followed by action and rapid execution. We can see an acceleration, at a time when adverse forces are actively trying to hinder global trade," Depoux said, stressing that the removal of joint venture equity caps, reduction of negative lists, new free pilot trade zones and the Foreign Investment Law are welcome advancements in attracting global capital.

A negative list indicates areas where investment is prohibited or restricted; all other areas are presumed to be open.

The law is an important signal to the outside world that China is committed to further opening up and improving the investment environment for foreign investors, a major testament that the country is actively taking concrete initiatives, said Pascale Sourisse, president of Thales International, an international arm of Thales Group, the French industrial conglomerate.

"It undoubtedly reinforces our confidence in the Chinese market," she said.

This sentiment was echoed by Ingrid Zhang, president of Novartis Pharmaceuticals China, who believes that new products from the pharmaceutical sector can be approved faster than before.

Apart from diversifying its sales network and market presence in lower-tier cities, Schneider Electric of France will increase its research and development investment in China by 50 percent over the next two years to invigorate its operations, said Yin Zheng, its executive vice-president who is also the president of its China unit.

Supported by China's Foreign Investment Law and other policies, Yin said that the group will focus on areas including the digital economy, the development of the Belt and Road Initiative, green development and modern manufacturing in China.

As China's industrial sectors are upgrading, new investment opportunities are emerging for foreign businesses in the transformation of traditional industries, high-end and smart manufacturing, Yin added.

The Foreign Investment Law offers a range of benefits for foreign investors in China, including moving to more liberal corporate governance rules, creating greater flexibility in funding new businesses and leveling of the playing field by entrenched use of negative lists, said Paul McKenzie, managing partner for Shanghai and Beijing offices at international law firm Morrison and Foerster.

The law also prohibits the use of administrative measures to force transfers of technology, a recognition that the conditions of any intellectual property license are a commercial matter for negotiation between parties based on fairness, as well as to address intellectual property infringement.

Since last year, China has established more intellectual property rights courts at both central and provincial levels to boost global companies' confidence in the country.

The law's implementation is expected to stimulate foreign investment growth this year, said Tang Wenhong, director-general of the department of pilot free trade zones and free trade ports at the Ministry of Commerce.

Notable growth can be seen in areas that were previously not as open as others, such as the services sector including finance and insurance securities, he said, adding that the majority of foreign investment entering China will no longer require approval from local authorities. These new judicial rules can help fight monopolies and other forms of unfair competition in the domestic market.

In addition, the government started to implement regulations on optimizing the business environment to promote productivity and high-quality development on Jan 1, the same day the law became effective. This move demonstrates its resolve to embrace the outside world and promote economic globalization.

A total of 36,747 foreign-funded companies were newly established across China between January and November last year, data from the Ministry of Commerce showed.

Foreign direct investment into the Chinese mainland during the period stood at 845.94 billion yuan, up 6 percent year-on-year, while the number of foreign-funded projects with investment of at least $100 million reached 722, up 15.5 percent from the same period a year earlier.

Under the new law, factors such as fair treatment and transparency to participate in government projects and procurement will encourage global companies to deploy more financial resources in China, not only in the factory business, but also in areas of innovation, service and third-party market development, said Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges.

Thanks to China's huge consumer base, and complete and efficient supply chain, he predicted that about $140 billion worth of FDI will stream into China this year, making the nation the world's leader in terms of FDI inflow volume.

Affirming China's efforts in improving foreign companies' access to the country in recent years, McKenzie from Morrison and Foerster said that there will be challenges for investors and government regulators alike, given the lack of detailed guidance on implementation so far. The law rewrites only the broad principles to govern foreign investment.

Practical implications including the effect of the Foreign Investment Law on cross-border mergers and acquisitions, and corporate governance in Chinese subsidiaries of foreign companies, depend on implemention rules, he said.

"We will adopt a more open and inclusive attitude when dealing with such lawsuits to protect the rights of foreign investors and offer a sound legal environment for the country's further reform and opening-up," said Gao Xiaoli, deputy head of the No 4 Civil Division of the Supreme People's Court.

The law applies to all contracts arising from direct or indirect investment by foreign individuals, enterprises or other organizations in China, including contracts on the establishment of foreign-invested companies, new projects or the transfer of shares, property or stock rights.

However, courts will not support a contract if the investment area is on China's negative list. If it is a restricted sector, judges will have to review the detailed circumstances, she said.

 

A ceremony is held for the launching of BASF's Verbund site project in Zhanjiang, Guangdong province, on Nov 23, 2019. XINHUA

 

 

 

 

 

]]> 2020-01-09 00:00:00 <![CDATA[Luckin enters vending machine sector]]> http://www.chinadaily.com.cn/kindle/2020-01/09/content_37531821.htm Luckin Coffee Inc, which surpassed Starbucks as the country's largest coffee chain operator in term of store numbers by the end of last year, said on Wednesday that it was entering the coffee and snack vending machine market to further expand its network, but this does not necessarily generate a quick boost to profits.

The Xiamen-based coffee chain operator will offer two kinds of machines including "Luckin Coffee Express", a coffee vending machine, and "Luckin Pop", a vending machine for snacks and beverages, to reach more consumers, particularly in office buildings.

Luckin Coffee said that it had 4,507 self-operated stores by the end of 2019 in China, making it the largest coffee chain in terms of stores. The company added 10 million new customers in the fourth quarter of last year and had 40 million customers as of Dec 31, 2019. Luckin attributed the growth in customers to hand-brewed tea drinks, snacks and new retail outlets.

Starbucks has more than 4,100 stores in China, with larger single store areas than Luckin's.

Luckin said that its snack and beverage vending machine-Luckin Pop-offers lower prices than its competitors by working closely with global suppliers and receiving discounts through large volume procurement. The two types of vending machines are expected to cover various locations including office buildings, campuses, airports, bus terminals, gas stations, highway service stations and communities, complementing current Luckin's retail store network.

Zhu Danpeng, a food and beverage analyst, said by creating a new consumption scenario, Luckin can further expand its retail presence and make its products available in expanding areas. But investment in vending machines is also slowing down the pace of generating profits quickly, he aid.

Qian Zhiya, chief executive officer of Luckin Coffee, said the company's new vending machine network, stores and e-commerce channels, have empowered it to build a closed-loop smart retail platform. She said the company's efficiency is on the rise, with the number of monthly transaction customers far higher than the number of stores, meaning more loyalty and consumption frequency.

She said the new vending machines, which took about a year in research and development, have strengths in light investment and zero store decoration fees and less restrictions in terms of locations.

The company will continue to grow both its traffic and products. Its vending machines are expected to reach more customers in campuses, airports, gas stations and other leisure locations, Qian said.

According to consultancy firm Mintel, China's brewing coffee market has witnessed rapid growth, and reached 64.7 billion yuan in 2018, up 7.5 percent from the level in 2017. The growth rate is expected to continue till 2023, with annual growth rates of 6 percent.

Wang Hao, an analyst who tracks the food and beverage sector at Mintel, said the new e-commerce driven coffee shops have promoted market growth. However, the growth is expected to be slower thanks to the local consumers' increasing preferences for hand-brewed tea drinks and tea-based beverages.

Jason Yu, general manager of Kantar Worldpanel China, said there is major potential for the development of coffee vending machines in China, particularly those that can produce quality coffee.

Nestle last year teamed up with coffee giant Starbucks to launch a new series of coffee products featuring coffee capsules that allow consumers to make coffee at home or in the office by themselves.

 

Most popular coffee drinks in China LIU LUNAN/CHINA DAILY

 

 

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2020-01-09 00:00:00
<![CDATA[Tesla plans to produce Model Y in Shanghai]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531598.htm US electric carmaker Tesla Inc said on Tuesday that Model Y would be the second model it would make in China after the Model 3 sedan, a move that analysts say would help it gain a bigger share in the world's largest car market.

CEO Elon Musk announced the start of the project to produce the electric SUV at the Shanghai plant, which broke ground exactly a year ago. He said the plant would also produce future models and Tesla will build a China design center that will design original models for the world, but did not give any specific timeline.

Tesla China's website shows that the Model Y could be produced as early as 2021. Globally the electric SUV is expected to go into production first in Fremont, the United States, later this year.

Musk made the announcement after delivering 10 China-made Model 3 sedans to outside customers at its Shanghai plant. Fifteen Tesla employees had received their vehicles in late December.

The Shanghai plant started trial production in late October and is now producing 3,000 vehicles a week, said the carmaker. Tesla started selling cars in China in 2014.

Last week Tesla cut the starting price for its China-made Model 3 sedans by 16 percent to 299,050 yuan ($42,919) after making it into the list of electric carmakers eligible for government subsidies. Prices of other models available in the Chinese market have been cut as well.

Cui Dongshu, secretary-general of the China Passenger Car Association, said he expects Tesla to slash the prices of China-made vehicles to around 250,000 yuan by the second half of 2020 as the carmaker ramps up the Shanghai plant's production capacity and localizes its supply chain.

The carmaker said it wants to completely localize its China supply chain by the end of this year, which stands at around 30 percent now.

Tesla said it started to assemble battery packs starting from December as well, which are the most expensive parts of electric vehicles.

By reducing prices, Tesla is looking to gain a competitive edge over Chinese startups like Nio and Xpeng.

Xpeng's P7 sedan, which is a rival of Model 3, is expected to hit the market later this year with a presale price starting from 240,000 yuan.

Nio unveiled its EC6 in late December but it decided to announce the prices later. The EC6 will take the Model Y head-on.

"We would like to have some room for adjustments as some other outstanding models are around the corner, such as the Model Y," said Li Bin, Nio founder and chairman.

Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight, said Chinese electric car startups will be under great pressure because Tesla has a better brand reputation, more reliable products and good prices.

"Tesla has all the features of premium brands, and its products including battery performance have been proven. After all, it has been there for more than a decade," said Zhang.

Qin Lihong, co-founder and president of Nio, said that lower brand recognition is hurting Nio's sales.

"Statistics show that of the visitors who tried models from both companies, the chances of their choosing us is 50-50. But sometimes they don't come in," said Qin.

Zhang said the China-made Model 3 will also become a rival of traditional premium brands' entry-level gasoline cars.

"It will be a reasonable choice if you don't have a license plate for gasoline cars in big cities like Beijing or Shanghai. It will not take long before Audi, Mercedes and BMW recognize the new competitor," said Zhang.

Wang Hao, general manager of Tesla China, said in a Weibo post on Jan 3 that: "The Chinese market is vast enough (for all electric carmakers) and our rivals are gasoline carmakers."

Automotive Foresight estimated sales of China-made Model 3 sedans could reach 100,000 units this year. Analysts at Industrial Securities expected sales to touch 150,000 during the same period.

Last year, Tesla delivered around 367,500 vehicles globally, with the Model 3 sedans accounting for 83 percent.

Zhang at Automotive Foresight said Tesla's increased China presence will have little impact on established carmakers that are also exploring the electric car market because they have better abilities than startups in manufacturing and cost control.

Xu Heyi, chairman of Mercedes and Hyundai's Chinese partner BAIC Group, said: "Tesla's Model 3 is a benchmark and it will spur us to pursue healthier development. You ask if we are afraid of it? No, we are not. We have our advantages."

The group's new energy arm, BJEV, is one of the largest electric carmakers in the country, and its EU-series vehicles were second only to Model 3 in volume globally in the first 10 months of last year, but were much cheaper.

BJEV is making every effort to move upward and has started trial production of models under its Arcfox brand in a plant built with Canadian automotive supplier Magna.

 

US electric carmaker Tesla Inc delivers China-made Model 3 sedans to customers at its Shanghai plant on Tuesday. ZHANG HENGWEI/CHINA NEWS SERVICE

 

 

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2020-01-08 00:00:00
<![CDATA[XCMG gets nod for fully-owned bank in Brazil]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531644.htm Chinese construction machinery maker Xuzhou Construction Machinery Group (XCMG) has got the necessary approvals to set up a fully-owned overseas bank in Brazil during the first quarter of this year, according to a top company official.

The move is part of XCMG's efforts to meet the diversified local demands and promote the development of network distribution in finance products and services, said XCMG Chairman Wang Min.

XCMG has become the first beneficiary of a new policy issued by the Brazilian government that allows foreign investment in the country's financial institutions.

According to the report by Xinhua News Agency on Tuesday, a branch or a representative office of Banco XCMG will be established in Brazil's biggest city Sao Paulo during the first quarter of this year.

"We believe that Banco XCMG, with the support of China and Brazil, will become a professional, highly efficient and pragmatic corporate bank, be a new financial platform serving Chinese and Brazilian enterprises, and a new contributor to the economic development and employment in Brazil," said Wang.

"The integration between manufacturing industry and finance will set a new model of overseas development (for Chinese companies)," said Yin Jingbo, an associate professor with Shanghai Jiao Tong University.

The development of manufacturing requires consistent capital, while the integration of industry and finance could create more value in supporting the industry, said Yin.

XCMG has already been present in Brazil for over eight years. The company has now realized the necessity of integrating industry with finance, and the bank is a breakthrough of Chinese assets in the South American financial services sector.

Nearly 95 percent of Brazilian's annual engineering machinery sales is materialized through bank loans, and a few of XCMG's competitors have their own banks for providing financing solutions to their clients, said XCMG's Wang.

Last October, the Central Bank of Brazil (Banco Central do Brasil) approved Banco XCMG to open in six months. It is not only the first overseas bank of the Chinese manufacturing industry, but also the first foreign participant bank to receive direct approval from the Central Bank of Brazil.

Banco XCMG will be able to operate in businesses like financing and leasing, capital loans, consumer credit, lending, as well investment, said Gu Shiying, head of Banco XCMG.

It will support XCMG's sales in the Brazilian market and offer financial products and services while supporting the development of XCMG's distribution network, Gu said.

"The bank will be able to further enhance XCMG's core competitiveness through product innovation, lower financial transaction costs and improve risk management. Being an industrial player, XCMG's thorough understanding of the industry will enable it to provide more tailor-made financial products and services," said Yin.

The approval of Banco XCMG by BCB will allow XCMG to explore a new, customer-centric sales model to further market expansion.

"Compared to conventional commercial banks, Banco XCMG is capable of providing suitable financial products for its end users and distributors with high service efficiency and low financing costs," said Wang Min.

XCMG has set the goal of becoming one of the top three companies in the industry by 2025. It has identified overseas markets and highend development as key to its future. In the past three decades, XCMG's overseas revenue has risen from less than $10 million a year to more than $2.3 billion.

 

 

 

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2020-01-08 00:00:00
<![CDATA[Smartphone vendors raise their game in India]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531643.htm Chinese smartphone vendors are upping their ante in India as they increase investments to open more factories in the world's second largest smartphone market.

The move comes as India is seeing a record high in smartphone shipments, driven by the desire of consumers to upgrade their handsets.

Chinese smartphone brand Vivo, the No 3 player in India, is investing 4 billion yuan ($571 million) to set up a second manufacturing plant in the country. The move will likely double its local factory employee head count to about 20,000 in the next five years.

Chen Zhiyong, CEO of Vivo India, said the company has acquired land for the new factory adjacent to its existing facility in the Greater Noida area of Uttar Pradesh. Work on the new facility has commenced and will be put into operation phase by phase over the next five years.

"The first phase of the new plant is scheduled to start production in May or June," Chen said.

Vivo started manufacturing handsets in India at the end of 2015. Its existing plant employs more than 9,900 workers and has an annual production capacity of 25 million units.

Earlier last year, Chinese smartphone vendor Oppo also announced that its manufacturing facility, located in Greater Noida, has completed its first phase. The factory currently manufactures about 4 million smartphones every month, or a total of 48 million units a year.

Oppo said it aims to scale up operations at this plant and double the monthly production this year.

The efforts by Chinese smartphone vendors came as Xiaomi Corp, which is the top smartphone vendor in India, already has seven smartphone manufacturing plants in the country. Xiaomi is in partnership with Taiwanese multinational electronics company Foxconn and Singapore-based technological manufacturer Flex Ltd.

"We started manufacturing locally in 2015 with one plant and expanded to two units in 2017 and seven units in 2018. Across these seven plants, we have employed more than 25,000 people," Manu Jain, vice-president of Xiaomi, was quoted in a report by the Indo Asian News Service.

Jain said at this time, about 99 percent of Xiaomi's phones sold in India are made in the country, and the company makes three phones per second locally.

The expanding manufacturing presence of Chinese companies dovetails with their work of the past five years in tapping into the opportunities in India.

Chinese brands now dominate the local smartphone market in the country. Four of India's top five smartphone vendors are Chinese brands. They are Xiaomi, Vivo, Realme and Oppo.

Their combined market share, in terms of smartphone shipments, exceeded 68 percent in the third quarter of 2019, data from market research company International Data Corp showed.

"Chinese smartphone brands are entering a new stage in India. They no longer just see the country as a market. India has also become an important manufacturing base for them," said Fu Liang, an independent telecom analyst.

The change is partly the combined result of favorable tax policies by the Indian government and the improved efficiency at assembly lines.

A senior executive of a Chinese smartphone maker told China Daily that after several years of training, Indian workers are now almost as efficient as their Chinese counterparts.

The growing enthusiasm of Chinese companies toward the Indian market also came as their home turf, the world's largest smartphone market, has reached a saturation point.

Most Chinese consumers have already bought fancy 4G smartphones and the limited 5G network coverage has yet to trigger a widespread use of 5G smartphones.

In the third quarter of last year, the Chinese smartphone market posted a year-on-year contraction of 3.6 percent, data from IDC showed.

In contrast, India has just started witnessing a new round of burgeoning demand with consumers in third-to-fourth-tier cities ready to upgrade their feature phones into smartphones.

From July to September 2019, over 46.6 million units of smartphones were shipped to India, marking a 26.5 percent quarter-over-quarter and 9.3 percent year-over-year growth, IDC said in a report.

Nipun Marya, brand strategy director of Vivo India, said smartphones only account for about 60 percent of Indian's phone market, with the rest made up of feature phones. This signifies huge potential for future growth.

"Consumers in third-and fourth-tier cities of India are eager to upgrade their phones. That is an opportunity all players want to pounce on," Wang Shuo, head of marketing at Realme India, said.

To meet the demand, Realme is ratcheting up resources to accelerate offline expansion as the company emerged as the fastest-growing smartphone brand in India because of its popularity among online young consumers.

The company expanded its offline sales to 150 Indian cities last year and will soon offer tailor-made smartphones for offline customers.

But offline retailing is a battlefield where Vivo has already established a strong foothold. So far, the company has about 70,000 brick-and-mortar outlets that sell its smartphones. Vivo is also the only smartphone vendor in India that runs all offline after-sales centers, Marya added.

Despite the intensified efforts of Chinese smartphone vendors to attract Indian consumers with diversified products and services, they still face a common challenge-the relatively low average selling price of smartphones in India.

IDC's report showed that affordable smartphones in the range of200 account for 80 percent of the total shipments to India. This means Chinese smartphone makers can not generate very high profits from selling hardware in the country.

To overcome the challenge, Chinese companies are working hard to moving up in the price range with more expensive products. They are also eyeing internet finance services for more profit avenues.

Xiaomi announced its Mi Credit lending service (and Mi Pay) to make its mark in the fintech space a few months ago.

Realme unveiled its new payments platform, Realme PaySa, which is designed to help individual customers and small-or-medium-sized businesses financially. Vivo also announced plans to move in that direction.

Such efforts also show the ambition of Chinese smartphone vendors not to limit themselves as hardware companies. Instead, they want to position themselves as a tech company that offers a wide range of services with the help of smart terminals.

Vivo India's Chen said at this time several Chinese smartphone majors all have good word-of-mouth in the country.

"In the past five years, we have worked together to reshape how Indian consumers perceive Chinese brands and products," Chen said. "But that is just the beginning of internationalization. To become more global, we need to be more local. There is still a long way to go."

 

 

 

 

 

]]> 2020-01-08 00:00:00 <![CDATA[Groundbreaking measures start to pay off for mainland bourses]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531609.htm Despite a lukewarm global landscape of new share sales, capital raised on the Chinese mainland market last year surged to a seven-year high, as groundbreaking market-oriented reforms started to pay off in serving the real economy, experts said.

The Shanghai Stock Exchange and the Shenzhen Stock Exchange recorded 201 initial public offerings last year, up by 91 percent from the previous year. Capital raised also surged by 83 percent year-on-year to 253.3 billion yuan ($36.4 billion), according to market tracker Wind Info.

This contrasts with a 19-percent decline in IPO deals globally last year, which raised198 billion in total, down by 4 percent year-on-year, according to forecasts in a report released by multinational professional services firm EY in December.

China's IPO market bucked the global decline last year as the debut of the sci-tech innovation board in July drove IPO activity up, said Zhang Ningning, an assurance partner at EY.

The new board, also known as the STAR Market on the Shanghai bourse, led to the listing of 70 companies last year, the highest among all A-share submarkets. The STAR Market also contributed 32 percent of capital raised in the A-share market for the whole year, according to Wind Info.

"Since the launch of the STAR Market, it has performed steadily with active investor participation. Various innovative mechanisms have begun to take effect," she said.

For instance, under the pilot registration-based IPO system, the time taken for an IPO has tremendously decreased, as the interval between a company's IPO pre-announcement and its market debut dropped from more than 600 days for other submarkets to about 165 days for the STAR Market, according to Zhang.

"The registration-based system on the STAR Market focuses on information disclosure, simplifies and optimizes listing standards and empowers investors to make choices, which has greatly enhanced the efficiency of resource allocation in the capital market," she said.

The STAR Market especially boosted IPO activities of companies engaging in new generation information technology and biotechnology, whose IPO deals accounted for 44 percent and 24 percent respectively of all STAR IPOs last year, according to the EY report.

Robust A-share IPO activities also resulted from several large IPOs by proceeds. Last year, four IPOs in the A-share market raised more than 10 billion yuan each, versus one in the previous year, Zhang said.

Looking ahead, EY expects A-share IPO activities to remain robust this year, Zhang said, as the steady performance of the STAR Market has encouraged more companies to file IPO applications, and as a booming technology sector led by 5G is bringing about more IPOs from innovative enterprises.

Liu Wenqiang, a researcher with Shenzhen-based Great Wall Securities, said another factor expected to buoy IPO activities this year is the securities regulator's continuous efforts to enrich financing channels in the capital markets to better serve the real economy.

Market expectation has formed that the China Securities Regulatory Commission, the country's top securities regulator, will speed up the registration-based reform of the ChiNext this year and advance efforts to normalize new share sales, or not to impose administrative controls on the pace of IPOs to smooth market fluctuations, he said.

The implementation of the registration-based system on the ChiNext and the recent green light of subsidiaries of listed firms going public as independent entities, are expected to forge new growth points in the IPO market this year, Liu said.

"The steady expansion of fundraising is unlikely to take a heavy toll on market liquidity and structural opportunities will abound," Liu said, citing that global capital is expected to continue adding exposure on A-share assets-one of the most attractive asset categories globally.

Apart from advancing reforms to better serve financing needs of the real economy, the country will take more actions to strengthen the investment function of the A-share market this year, such as fostering the development of mutual funds focusing on equities investment and encouraging more mid-to long-term funds to enter the market, according to a CSRC statement.

Global professional service provider KPMG said in a report that the STAR Market, as well as companies from the telecommunications, media, and technology or TMT sectors, are expected to continue to be the key drivers of the A-share IPO market this year.

Chen Jia contributed to the story.

 

 

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2020-01-08 00:00:00
<![CDATA[Innovative use of sales agents gives Vivo a massive edge in subcontinent]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531629.htm Chen Xiaofei has been a smartphone sales agent in India for more than five years, but he clearly remembers the day when he followed Chinese smartphone vendor Vivo to venture into the South Asian country for new opportunities.

"We came to India on April 15 in 2014. Back then, few Indian consumers recognized Chinese brands for they had a very low trust on Chinese products. When we looked for local people to be our retailers, nobody wanted to talk to us," Chen recalled.

Five years later, Vivo has surpassed Samsung as the No 1 smartphone vendor in Gujarat, a western Indian state where Chen has helped build a sprawling sales network for the Chinese company.

Data from market research company GfK showed that Vivo accounted for 26.6 percent of the state's smartphone market.

Chen is one of dozens of Chinese agents that have followed the footsteps of Vivo to India when the Dongguan, Guangdong-based company chose a unique way of going global.

Unlike most companies which tend to build their distribution and sales systems from scratch in each market, Vivo relies on agents, who have been working with it in China for years, to build a sales system in a foreign country.

That struck many as a surprise and seemed to violate the principle of localization at first glance. But Vivo succeeded by finding a way of combining its management style with the characteristics of the Indian market, industry experts and executives said.

"These agents all have their own businesses, but they also share a common vision, a common cultural value and the same brand with Vivo. We have an inseparable tie," Chen Zhiyong, CEO of Vivo's Indian branch, said when asked why Vivo decided to bring to India the Chinese agents who knew little about the country.

A senior executive of Vivo's rivals said that finding new local agents entails a long time to build trust, ease cultural differences, and find a proper way to share profits.

In contrast, bringing agents who know very well each other's way of doing things can quickly cultivate a market. The only thing is that they cannot directly copy what they are doing in China to India. They must adjust themselves to local market conditions.

That's exactly what Vivo is doing.

In China, the company's sales network included two levels of agents and retailers. Vivo cut the second-level agent in India and added the new role of managing distributor into the system.

"The logistics system and finance systems in India are not very developed and the country has a strong control over cash. As a result, we need managing distributors to help solve those problems. MDs are in a better position to maintain the relationships with retailers. Such a model shows partly why Vivo has been doing well in India," Chen said.

Except for the heads of level-one agents being Chinese, all other people in the company's sales system are Indians. Overall, about 95 percent of Vivo's employees are Indian, with the proportion even higher in its factories.

Such a model has significantly improved the income of smartphone retailers in India. Chen said that retailers used to earn just 300 rupees to 400 rupees ($5.6) from one smartphone they sell. Now, they can earn as much as 1,500 rupees to 2,000 rupees from Vivo.

Vivo has about 70,000 outlets across India and the company directly runs all of its after-sales centers to ensure good service. All of these efforts have helped Vivo become the third largest smartphone vendor in India. That marks a long way from where it started five years ago.

"In 2014, Vivo CEO Shen Wei told us that we needed to prepare for a possible five-year loss period in India. From a business perspective, most people would not join such a team. But because we share the same vision with Vivo that long-term initial investment and input are needed before a thing succeeds, we followed the company. We are taking root and thriving with Vivo in India," Chen recounted.

Now as Vivo is preparing to march into western European markets for the next wave of its growth, Chen said his company has also decided to follow Vivo's lead.

 

 

 

 

 

]]> 2020-01-08 00:00:00 <![CDATA[Consultancy firm finds sweet spot in strategic positioning services]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531620.htm Trout& Partners, a US firm which offers strategic advisory services, is increasing its presence and investment in China to help more Chinese companies use strategic positioning for gaining an edge in global markets, according to company officials.

Deng Delong, global president of the company, said he remained bullish on the company's prospects in China, which plays a significant role in its global layout. "China's consulting market will continue to flourish. As the labor market becomes more subdivided, and the external environment becomes more complex, enterprises will need an external perspective to gain professional knowledge in various fields," Deng said.

Deng said that positioning is the core of corporate strategy. In order to have a sustainable competitive advantage, enterprises should not chase existing markets, but create new ones-new demand and new customers and lead them, he said.

"We will continue to invest in companies, whom we regard as partners instead of clients in the usual sense, and expect to become the second-largest shareholder of our client companies, which is the most suitable position for us in the enterprise to guide the strategic direction."

He said enterprises should avoid copycat products, and make unique ones, in a bid to win minds. "The existing markets are not your markets, but markets for other existing companies."

Trout & Partners has established 27 branches worldwide. It is a global network of strategy experts that applies Jack Trout's concepts, the "Positioning Theory", and develops his methodology around the world. It has consulted with a wide range of companies including Apple, AT&T, IBM, Procter& Gamble and General Mills.

The consultancy's China branch was founded in 2002, and is now the fastest-growing and the largest in scale. It has helped many Chinese companies establish their strategic positioning and achieve outstanding performance, which further led them to become the benchmark of their industries.

"We obtain a long-term relationship with enterprises by signing contracts that are over five years and investing in firms with enormous potential, and we make ourselves 'strategy partners' of entrepreneurs," Deng noted.

It has helped Guazi.com, which was originally a sub-channel of online service provider Ganji.com, establish its positioning as a "used-car direct-selling platform" and the unique value of "no intermediaries and price differences", and enabled it to gain leadership in the category of used cars.

Wang Xinxin, a professor from Shanghai University of Finance and Economics, said the Positioning Theory emphasized the differentiation when enterprises make strategic decisions, as well as winning the prospect's mind and letting people realize brand value, but enterprises should do more to satisfy personalized and dynamic demands from consumers.

Xue Peng, founder and CEO of FlashEx, a provider of intracity delivery services to individual customers, said with the help of Trout & Partners, the company has established its positioning as a "one-to-one or exclusive delivery service", which has completely differentiated it from other delivery competitors.

 

 

 

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2020-01-08 00:00:00
<![CDATA[Tech firms to benefit from innovation]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531610.htm China's A-share market is finally going to see the first initial public offering of a firm with dual-class shares, a special equity structure used by overseas public tech firms, which received the regulatory nod last month.

The China Securities Regulatory Commission, the country's top securities regulator, said on Dec 24 that it had agreed the IPO registration of UCloud Technology Co Ltd, a Shanghai-based cloud computing services provider, signaling that the company will debut soon.

Upon a fully subscribed IPO, UCloud's three co-founders will retain 23 percent of the company's total shares but 60 percent of the voting rights because of the dual-class share structure.

This first A-share IPO allowing dual-class shares resulted from the optimization of listing standards on the sci-tech innovation board, or STAR Market, which debuted on the Shanghai Stock Exchange in July.

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said the IPO registration of UCloud reflects the STAR Market's inclusiveness to innovative enterprises, which is unprecedented in the history of the A-share market.

"The biggest innovation of China's capital market in 2019 was the launch of the STAR Market with the registration-based IPO system. This marks the determinant battle of capital market reforms and has profound implications," Dong said.

For many tech firms with strong management teams, the dual-class share structure is critical, as it will guarantee founders' control over the company despite enormous equity financing, according to Dong.

Other groundbreaking listing standards friendly to tech firms have also taken effect. As of Jan 7, one red-chip firm, which is based on the mainland but was incorporated overseas, had passed reviews for STAR Market IPOs and are awaiting registration with the CSRC, according to market tracker Wind Info. One firm yet to make profits is expected to get listed next week.

President Xi Jinping announced in November 2018 that China would launch the STAR Market and pilot the registration-based system. The country's top leadership said this is an important move for China to both support innovation in key technologies and push ahead reforms in fundamental institutions of the capital market.

As well as attracting tech firms, the STAR Market is performing a role spearheading registration-based reforms such as those relating to market-oriented share pricing, market data show.

The STAR Market has removed the unwritten price-to-earnings ratio ceiling of 23 for IPOs and strengthened information disclosure to ensure investors are well-informed to price the offerings. Listed companies were priced at about 60 times earnings per share on average in 2019, according to Wind Info.

Also, eased secondary-market trading limits, especially the removal of price fluctuation limits during the first five trading days, have shortened the time of initial speculative trading and helped stock prices to reflect the value of listed firms faster, analysts said.

An index compiled by GF Securities that tracks stock prices of STAR Market-listed companies hit the highest level on the 11th trading day of the new board. By contrast, it took nearly 25 days for the ChiNext, Shenzhen's innovative enterprise-heavy board that debuted in 2009, to stop the initial stock price surge driven by investor enthusiasm.

Based on the experience of the STAR Market, the country is ramping up registration-based reform efforts on other A-share submarkets.

On Dec 28, the nation adopted the revised securities law and amended new share sales arrangements to set the basis of registration-based reform across the whole A-share market step-by-step, with the ChiNext to be the next test board for the registration-based system.

The registration-based reform led by the STAR Market will play a key role in China's high-quality development, according to analysts.

Unlike the past 40 years when industrialization powered China's growth, the new economy backed by technological innovation will be the main driver of future economic development, said Xiao Gang, a national political adviser and former chairman of the CSRC.

To fit such economic upgrading, China's bank-dominated financing system will also undergo major changes. The capital markets, with multilayered systems that cater to enterprises in different stages, will play a more important role, according to Xiao.

"New risks come with new technologies, so we need a financing mode whereby the fund provider and the fund receiver will bear the risks and reap the returns together. This is what capital markets do," Xiao said at a policy panel at Tsinghua University in December.

Implementation of the registration-based system, meanwhile, will help the country's capital markets to enhance their ability to serve the new economy by driving systemic reforms, according to Xiao.

Without the registration-based system, it would be difficult to either enforce stricter delisting rules or reform how the securities regulator functions, let alone intensifying crackdown on legal breaches and strengthening investor protection, Xiao said at a separate forum recently.

Looking ahead, analysts expect the market scale of the STAR Market to rapidly grow to accommodate tech giants, better performing its function of sharpening the country's technology innovation capacity.

Li Daxiao, chief economist with Yingda Securities, said this would entail both a faster pace of IPOs and listing of firms with larger market capitalization and business revenue, such as those comparable to Ant Financial and ByteDance.

A report from GF Securities said between 160 and 180 firms are expected to list on the STAR Market this year, up from 70 last year, adding that the market may welcome its official index "STAR 50" in the first quarter.

Moreover, the "the sci-tech Q board" in the pipeline has big potential to coordinate with the STAR Market to promote the development of high-tech companies, said Xue Yi, a professor of finance at the University of International Business and Economics.

The Shanghai Equity Exchange said in December that it will establish the sci-tech Q board, where Q represents quotation, to nurture more companies suitable for STAR IPOs.

Companies above a certain size and with the potential to file IPO applications on the STAR Market in the next few years will be qualified to list on the Q board, whereby they could disclose company information, offer stock quotes online, and transact equities offline, the exchange said.

The Q board could address the weak link of the STAR Market whereas it cannot serve the financing needs of small high-tech companies, Xue said. "Information disclosure before IPOs will help mitigate information asymmetries and attract more investors, reducing financing costs faced by small high-tech companies."

If the Q board's quotation system grants companies the right to choose investors, it can go a long way toward maintaining their innovative capacity, as they could choose investors that attach less importance to short-term financial performance but encourage long-term innovation activities, Xue said.

For the STAR Market to become a real success, several reforms should be pushed ahead, such as introducing more long-term institutional investors, and formulating policies to address concerns of red-chip companies considering listing on the new board, said a report from the Evergrande Research Institute.

"The STAR Market has just started a groundbreaking journey, and there is still a long way to go to fulfill its ambitious commitment," it said.

 

 

 

 

 

]]> 2020-01-08 00:00:00 <![CDATA[Piano maker hits the right notes for growth in China]]> http://www.chinadaily.com.cn/kindle/2020-01/08/content_37531630.htm US piano maker Steinway & Sons is bullish on long-term growth prospects in China and has earmarked an ambitious expansion plan to achieve the same, according to a top company official.

"We will roll out various approaches to upgrade our stores in first-tier and lower-tier cities in China to elevate overall customer experiences. But we have not set a robust goal for growth as clients' firsthand experience of our pianos always happens before purchases," said Wei Wei, president of Steinway & Sons Asia-Pacific.

The piano brand with a history of over 167 years operates franchise stores of various sizes in 80 Chinese cities. Apart from increasing the piano models at its stores, Steinway will spruce up some of the existing stores by adding practice rooms, Wei said in an interview during the opening of the Steinway Hall in Shanghai.

Wei said that business in the ensuing years would largely come from sales to individuals. "Two decades ago, 99 percent of the Steinway pianos sold in China went to performance houses, orchestras, and conservatories of music. Currently these sales account for just 40 percent, and the rest goes to individuals," Wei said.

Sales to individuals and families started in the China market in 2006 and the ratio has been increasing steadily every year, she said.

Higher incomes and changes in living standards have contributed largely to the increased sales. More Chinese parents are now willing to invest more on their child's first piano, while most of their counterparts bought entry-level pianos for children 20 years ago, according to Wei.

China is the world's largest piano market with roughly 30 million amateur piano learners, according to the Chinese Musicians' Association.

The country also produces the largest number of pianists, and is home to excellent piano educators and conservatories of music, rivaling those in Europe and the US, said Ron Losby, chief executive of Steinway& Sons.

"I would say without question and hesitation that China is Steinway's largest market and one of those with the fastest growth worldwide and our future in China will produce more milestone events," he said.

The company's growth in China has been rapid in the past three years. It announced the opening of a new Asia-Pacific headquarters at the Shanghai Free Trade Zone in 2018, and launched a Steinway gallery in Beijing's Shunyi district, aiming to gain higher market shares in North China.

Steinway Hall Shanghai with 500 square meters including a concert hall, piano practice rooms and showrooms will hold concerts and master classes, and provide pianos for practice for roughly 2,000 Steinway artists during their trips to Shanghai for performances, according to the company.

"We hope that this place in downtown Shanghai's Middle Huaihai Road will become a new music landmark for Shanghai and supplement the city's rich cultural life," Wei said.

Before Shanghai, Steinway Hall Beijing was opened in June 2017 and has held more than 500 concerts and master classes, making it a home for music enthusiasts and driving sales growth in Beijing, the company said.

 

A pianist plays a Steinway piano during an expo in Nanjing, capital of Jiangsu province. LIU JIANHUA/FOR CHINA DAILY

 

 

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2020-01-08 00:00:00
<![CDATA[Playing games online finally starts to pay off for China's skill-sharers]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531432.htm Those who dream of getting paid to play games can now do exactly that as demand for companion services takes off.

Today, Chinese novice gamers are paying master players to play with them and beat competitors in popular video games, such as King of Glory and League of Legends.

This burgeoning business has attracted a growing number of companies to cash in on the trend such as Bixin, an app that serves as a digital platform for the gaming community.

The app specifically caters to those born in the 1990s and 2000s who like playing video games. It offers game companion services for those who yearn for higher rankings in the games or are simply seeking better gaming experiences.

Lady Han Qi, 20, is a full-time skill-sharer on Bixin platform who usually spends more than eight hours a day playing and talking with novice gamers on the internet.

"I'm a die-hard fan of King of Glory," she said. "Making money by playing games is just such a perfect option. And I do feel some sense of achievement when I successfully help others get higher rankings in the game."

In fact, the job helps her make big money. She usually receives 500 orders a month, with a total income of about 30,000 yuan ($4,300).

Lin Song, CEO of Shanghai-based Bixin platform, said instead of being a subculture, the increasingly tech-savvy younger generation has fostered the strong cultural power of video games, creating a market worth tens of billions of yuan in the nation.

"Unlike those born in the 1970s and 1980s, the younger generation are more willing to pay for services such as game companionship. And they view playing games as a skill," Lin noted. "And we are dedicated to serving those who yearn for gaming companionship and those who are able to share gaming skills."

Lin claimed Bixin now has more than 20 million users, 85 percent of whom are aged between 18 and 30. Major paid users are living in first-, second-and third-tier cities.

According to Lin, among all users, 20 million are skill-sharers. Full-time skill-sharers usually earn 8,000 yuan to 10,000 yuan a month, and part-time sharers will earn an average of 3,000 yuan to 4,000 yuan a month.

"Major skill-sharers work part-time on Bixin platform, and many live in fourth-and fifth-tier cities where most people earn 2,000 yuan to 3,000 yuan a month," he said. "Doing a part-time job on Bixin really helps them make big money, and they would love to introduce Bixin to other gamers."

Gaming has become one of the most profitable industries in history, especially the blossoming esports sector. In 2019, the gaming sector generated 233 billion yuan in revenues, with a 8.7 percent year-on-year growth, according to Gamma Data Corp.

Wang Xu, chief analyst of Gamma Data, noted the revenues generated from the esports industry jumped 16.2 percent to 96.96 billion yuan in the first half of 2019, higher than that of the gaming sector.

"There's big growth potential in the esports market," Wang added. "With its rapid development, a wide range of businesses will emerge and thrive accordingly."

Seeing the growing trend of the younger generation's rising enthusiasm for esports, Lin from Bixin aims to boost the current user base tenfold in five years.

"Today, China has about quite a large number of gamers, among whom many are esports enthusiasts. As those born in the 1990s and 2000s gradually become the main driving force in the gaming market, we will see significant growth in the number of esports lovers. By then, I expect there will be still more players using the gaming companionship services," Lin said.

Lin has a larger goal to help foster the long-term and healthy development of the sector. In fact, Bixin is among the organizers of a certification test for esports trainers, guided by the Ministry of Industry and Information Technology.

"We hope to offer more career options for master players," Lin said. "In fact, we are already working with esports clubs, gaming companies, livestreaming platforms and short video platforms to offer a wide range of job options, such as professional esports players, online celebrities, voice actors and actresses."

"There's a job gap of 2 million in the esports market, and I believe the number will continue to increase," he added.

 

 

 

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2020-01-07 00:00:00
<![CDATA[Long-term investment products gain traction]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531483.htm China will promote effective conversion of household savings into long-term funds in capital markets by strongly developing enterprise annuities, as well as various health and endowment insurance products, according to the China Banking and Insurance Regulatory Commission.

The country will also allow wealth management, insurance and trust products to play an effective part in direct financing, foster the mindset of value investing and long-term investing, and improve the structure of investors in its capital markets, the banking and insurance regulator said in guidelines issued recently for promoting high-quality development of the banking and insurance sectors.

Zeng Gang, deputy director-general of the National Institution for Finance and Development, said in the past, asset management products were mostly invested in quasi-credit assets including nonstandard products, rather than being invested in capital markets from which companies raise money directly.

"Financial regulators are promoting transition in the asset management industry by investing a large portion of assets in stocks and bonds, instead of nonstandard products. This will promote healthy development of capital markets in the long run by providing long-term and sustainable sources of funds and fostering more institutional investors. As the number of institutional investors increase, investment decisions will become more rational," Zeng said.

"A growing part of household savings will gradually turn into long-term funds in capital markets. During the process, to ensure the safety of funds and lower capital market risks effectively, China should carry out fundamental capital market reforms to enhance the quality of listed companies, build a diversified market withdrawal system, optimize regulations, and improve minority investor protection. This is an overall reform that needs China's banking and insurance regulator as well as securities regulator to chip in with their contributions," he said.

The latest guidelines will promote diversification of China's banking and insurance system and improve its service capability, said Zhang Xingrong, managing director of the Bank of China Research Institute.

The development of wealth management subsidiaries of commercial banks and insurers will further diversify household savings, which will be increasingly invested in medium-and long-term investment markets such as the annuity market. This will promote steady and long-term development of the financial market where borrowers raise money directly, in addition to helping investors achieve the goal of prudent investment and realizing profits to a certain extent, Zhang said.

"The investment and research capabilities of financial institutions are a major criterion for clients to choose asset managers. Institutions that have stronger risk management capability and more secured returns on investment than their competitors will enjoy better growth," he said.

"The hunt, fostering and deployment of talents specialized in asset management is the top priority for improving financial institutions' investment and research capabilities. It is also important to respond to market changes more quickly and optimize investment portfolios to help clients hedge against risks by adopting quantitative market analysis and new instruments backed by artificial intelligence. Besides, with the establishment of wealth management joint ventures in China, household asset allocation will become increasingly globalized and diversified," he said.

Wen Bin, chief researcher with China Minsheng Banking Corp, highlighted the importance of the development of capital markets to the economic transformation of China and the development of innovative enterprises.

"The main institutional investors in the stock market were brokerages, mutual funds and private fund companies. In the next stage, household savings will also become part of the supply of long-term funds for capital markets," Wen said.

To better contain risks, he said regulators have set requirements on the scope of investment for different institutional investors, putting limits on leverage ratios of investment products and on the proportion of investment in equity assets to total assets.

 

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2020-01-07 00:00:00
<![CDATA[Short video apps fast becoming popular in China]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531468.htm Short video applications are not only flourishing in China, but gaining more strength as people across various age groups and geographical locations are using them to kill time, record lives, and even make a fortune.

Douyin, the most popular short video app in the country, said on Monday that the number of daily active users on its app had risen to 400 million by January. That represented a whopping rise from the 250 million recorded during the same period a year ago, according to an annual report summarizing the app's highlights in 2019. Such an achievement is phenomenal, considering that the app made its debut in 2016.

At first glance, it would be would be easy to assume that Douyin is largely used by the trendy and savvy Generation Z customers. Not exactly, say the experts, adding that Douyin is also an integral part of virtual family get-togethers. The company said some 3.08 million parental-themed issues were shot and uploaded on Douyin last year, whereas 460,000 families have utilized Douyin for recording family portraits.

People of virtually all ages are glued to the app, and they double as both viewers and content curators, the company said. For instance, those in their 50s were more keen on creating dance-related videos and enjoyed watching video clips on wedding scenes.

Those born in the 1980s adored recording childhood memories with phones and watching beautiful scenery, whereas teenagers and younger customers were keen on videos regarding animes, comics and cute pets.

As an emerging emotional bond, Douyin witnessed 1.76 million new born babies, 180,000 college entrance exams, 380,000 graduations and 7.09 million shares of weddings as avid users chose to record and upload videos of these momentous occasions in their life onto the platform.

Douyin said the platform has enhanced mutual understanding and encouraged positive energy. Videos featuring teachers, nurses, firefighters, traffic police and doctors got the highest number of likes last year and were in the top five categories.

Due to its increasing ubiquity, Douyin is shaping up to be an unavoidable bellwether for the popularity of tourist attractions. The platform saw 6.6 billion "check-ins" at tourist sites across 233 countries and regions, with one video featuring an ancient city wall in Xi'an being played 2.3 billion times.

Industry experts are also now realizing the potential of such platforms. Chinese millennial travelers tend to favor destinations that are considered to be off the beaten path, and the likes of Douyin are normally places where they turn to find inspiration, said Peng Tao, Airbnb's China unit president.

"They appear to be enthusiastic about going to new destinations … and as trend followers, they follow popular routes on social media apps such as Douyin," he said.

Short videos have become one of the fastest-growing media phenomena in China. Typically lasting 15 seconds to a few minutes, video clips on apps like Douyin and rival Kuaishou are consuming around 9 percent of Chinese internet users' time, with the percentage constantly on the rise, according to digital consultancy QuestMobile.

With followers amassed at warp speed for top influencers, businesses are also sensing marketing opportunities. This year more marketing dollars will be given to short videos and livestreaming for better engagement with customers and the creation of compelling content, according to Maggie Wang, president of data marketing technology firm AdMaster.

"For social marketing, it has become more imperative to generate original content to resonate with spectators," she said. "It's highly likely to turn clicks into cash if the contents are to their tastes."

 

A visitor walks past the booth of Douyin during an industry expo in Hangzhou, capital of Zhejiang province. LONG WEI/FOR CHINA DAILY

 

 

 

 

]]> 2020-01-07 00:00:00 <![CDATA[Competition heats up in esports industry]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531433.htm As the lights dim and the audience goes quiet, Zheng Yanzhao keeps his eyes locked on the big screen, ready to watch his favorite esports team play in the 2019 League of Legends Spring Playoffs.

Around him, hundreds of young fans have gathered in the LGD esports venue in Hangzhou, capital of East China's Zhejiang province, waiting to cheer on their teams in the match.

In fact, that playoffs game received more than 440,000 views on Chinese popular video-sharing platform Bilibili.

Zheng, who traveled several hundred kilometers to watch his favorite team, says he is a die-hard fan of League of Legends, one of the biggest esports with various annual tournaments taking place globally.

"Generally, I only watch my favorite esports club, Edward Gaming, so I just don't want to miss the opportunity," said the 19-year-old sophomore at Hohai University in Nanjing, capital of East China's Jiangsu province.

"Ming Kai is my favorite player. He really understands the importance of sportsmanship and I really admire him for practicing self-discipline and for his hard work and diligence," Zheng said.

Zheng, also president of the esports club of Hohai University, usually spends about two hours playing League of Legends a day, and sees esports as similar to traditional sports like football and basketball.

"Esports is just a natural part of my daily life. Actually, it means much more than simply playing regular video games, requiring both personal and teamwork skills," he said.

With more than 500 student members, Zheng's club organizes activities and matches to meet the young tech-savvy generation's increasing demand for the new form of entertainment.

For a long time, gaming groups were deemed a niche field compared to traditional sports or other forms of entertainment. Today, esports is seeing rising popularity and revenues, and Zheng and his club members are among the growing group of fans globally.

A recent report by gaming intelligence provider Newzoo said that the year 2019 marked a major milestone for the global esports market, as it would for the first time exceed the billion-dollar revenue mark.

The report said the passion of 453.8 million viewers was set to create a market worth an impressive $1.1 billion in 2019, up by 26.7 percent year-on-year, and the figure is tipped to hit $1.8 billion by 2022. More than 80 percent of the total market will likely come from brand investment, including media rights, advertising and sponsorship, the report said.

According to the report, China would overtake West Europe as the second-largest esports market, generating an estimated revenue of $210.3 million in 2019.

Wang Xu, chief analyst at Chinese gaming database Gamma Data Corp, took a rosy view of the future development of esports, saying there is huge growth potential in the burgeoning market.

"Currently, the esports industry is still at an early stage of development, and there's plenty of room for growth in esports tournaments, livestreaming and advertising," Wang said. "The business-friendly environment and the growing user base will have a positive impact on the esports growth."

Wang said esports had already become popular in China. The International 2019, the world's largest Dota 2 esports tournament, was held in Shanghai last August, with a $34.3 million prize pool.

"As esports and traditional sports are similarly consumed, professionals can manage and operate esports events similarly to traditional sports events. And many already see it as a form of sports competition using video games," Wang added.

Xiao Hong, CEO of Perfect World Co Ltd, which helped organize The International 2019, agreed, saying the esports sector will witness key development in the next five to 10 years.

"Those born in the 1990s and 2000s have grown up in an electronic environment. They were born into a world with portable devices, which means esports is just part of daily life. Simply by opening a gaming app on a smartphone, they can access esports," Xiao said.

Liu Yuhang, 22, is a die-hard fan of esports and president of the esports club of the Renmin University of China.

"Our group members increased from about 50 people in 2017 to more than 200 people now. And the number is set to rise to about 400 by the end of last year," Liu said. "Today, more and more students are showing great enthusiasm for esports, such as League of Legends and King of Glory. Esports requires teamwork and unique skills. I believe it can enrich our lives and we can have a better understanding of sportsmanship."

Esports is experiencing rapid growth in China, becoming a key driving force boosting the growth of the domestic gaming sector. Major cities and provinces, such as Hainan province, Shanghai, Chongqing and Hangzhou, are actively competing to become the country's new esports hub.

"Combining gaming and competitive sports, esports will become a key driving force to empower the traditional industries," Xiao of the Perfect World said. "Buoyed by the booming esports sector, we will access richer content including esports variety shows, movies and music."

"On the other hand, esports will also empower other industries, generating a variety of new businesses in terms of tourism, finance, e-commerce and training. Thus it will generate new momentum in the economy and bring more development opportunities for cities," Xiao added.

To foster the long-term healthy development of the esports industry, more efforts are needed to cultivate esports talents, Wang from Gamma Data Corp said.

"China lacks various esports talents, such as players, tournament operators, gaming developers and business developers. We need more professional educational organizations instead of the so-called esports training organizations that induce students to drop out and play games," Wang added. "And local governments need to keep a rational attitude, taking into consideration their own conditions."

 

 

 

 

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2020-01-07 00:00:00
<![CDATA[Snack firms, retailers banking on Spring Festival for more growth]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531466.htm This Spring Festival, three new flavors-cranberry yogurt, purple sweet potato and milk, and coconut-will make the Chinese sweetand-crispy pastry called sachima from confectionery company Hsu Fu Chi International Ltd special.

According to market watcher iiMedia Research, several new varieties of various snacks are expected to flood the 1.1 trillion yuan ($157.7 billion) Chinese consumption market during the traditional Lunar New Year, which falls on Jan 25 this year.

For, food firms are eager to exploit the changing tastes of the younger generation, the largest consumer group that is powering the growth of the market.

Much is at stake, and snack-makers such as Hsu Fu Chi are roping in celebrities as brand ambassadors and product endorsers to boost sales.

For instance, Zhao Liying, a popular actress idolized by many of the young generation in China, will promote Hsu Fu Chi's products this Spring Festival.

"By inviting popular superstars to represent the brand, we get a better chance to communicate with and connect with consumers," said Su Qiang, CEO of Hsu Fu Chi.

Such a connect is necessary because Chinese consumers buy loads of snacks during the festive period, which typically account for a huge chunk of annual sales.

A Nestle survey showed that last year, consumers in China spent an average of 791 yuan on snacks during the New Year holiday, accounting for 40 percent of full-year consumption.

Sales of snacks grew nearly 4 percent year-on-year during last year's weeklong Spring Festival holiday. Market insiders are expecting similar growth this year as well, according to consultancy Kantar Worldpanel.

According to Kantar, China's annual snack consumption usually peaks during the Spring Festival holiday as people have more leisure time during that period and may also need to offer presents when visiting friends and relatives.

So, sales of snacks in gift packs tend to surge during the holiday period. In addition, given the ongoing consumption upgrade in China, rising living standards and increasing disposable incomes, sales of high-end snacks are receiving a big boost, the report from Kantar said.

To exploit the trend, snack producers from home and abroad are expanding their business in China.

"The Spring Festival holiday period represents a peak season for the fast-moving consumer goods (FMCG) industry. We attach great importance to the sales during the holiday and will focus on two growth points: high-end products and e-commerce," said Su.

For this Spring Festival, Hsu Fu Chi has teamed up with the Summer Palace to launch five high-end gift packages. Integrating classical Chinese elements with modern design, the gift packages serve as a great choice as presents during the holiday.

In addition, Hsu Fu Chi got brand-new packages for its traditional candies and chocolates, giving consumers a sweet tooth cause for celebration.

For their part, e-commerce platforms such as Tmall, JD and Suning have launched Spring Festival shopping carnivals, offering discounts on holiday treats such as snacks and beverages. Some online snack stores are offering "buy one, get one free" deals, while others offer deep discounts on large purchases.

Industry experts said the first quarter of a year, which witnesses Spring Festival, will continue to be a busy selling season even amid global economic uncertainties.

Small wonder, the FMCG industry is still experiencing rapid growth as consumers always long for tasty food and a better user experience, they said.

According to Hsu Fu Chi, in the second half of last year, its sales growth increased. Specifically, during the fourth quarter, it achieved double-digit growth for two consecutive months. Its lollipop growth contributed 30 percent of the total market, while the sales of its KitKat chocolate bars surged by 450 percent year-on-year.

"We are confident of maintaining our growth momentum this year," Su said.

A report from Tencent Financial Technology showed that during the 2019 Spring Festival holiday, consumers who were born after 1970 accounted for 90 percent of consumption. Those born after 1980 accounted for 40 percent of overall transactions.

Another report from Alibaba on last year's Spring Festival holiday consumption trends showed that among the consumer groups, the 1980s and 1990s generations took up 33 percent and 27 percent of consumption respectively.

 

 

 

 

 

]]> 2020-01-07 00:00:00 <![CDATA[Opening up, reform results help Tianjin attract foreign investors]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531465.htm Overseas investors and foreign companies have shown great interest in the mixed ownership reforms of State-owned enterprises in Tianjin after a promotional seminar held in Beijing highlighting Tianjin's achievements in luring private investors to traditional SOEs.

Lin Zhi, an official in charge of economic cooperation under the Embassy of Ireland in China, indicated that the mixed ownership reforms projects promoted by Tianjin in "such a great volume and extensive coverage of sectors," means ample opportunities for Irish companies.

"Currently, about 120 Irish companies have contacts with China and I will bring the information to more Irish companies. Since Irish companies especially have advantages in food and pharmaceutical industries, I will mainly introduce the sector's latest reform opportunities to them in a bid to promote possible future cooperation," Lin said.

During the event, the city showcased many of the country's time-honored brands from Tianjin Food Group and Tianjin Pharmaceuticals Group, both of whom are vying for foreign investors.

"I'm impressed by Tianjin's resolute efforts to launch the reforms, and particularly, in some cases the amount of equity transfer can even reach 100 percent," said Xiao Bo, a senior investment executive of the Australian Trade and Investment Commission.

Statistics showed that currently, 13 local SOEs have finished their mixed ownership reforms, involving total assets of 498.4 billion yuan ($71.5 billion).

A total of 44.7 billion yuan has been introduced to the companies, said Liu Zhi, deputy director of the Tianjin Municipal State-owned Assets Supervision and Administration Commission.

The city has released Policies on Supporting Mixed-Ownership Reform of the State-Owned Enterprises of Tianjin (Interim), including 15 policies concerning the land integration of real estate, tax planning and other respects.

The moves are aimed at boosting the business climate for new investors, he said, citing the Tianjin Building Material Group as an example.

It has been more than a year since the enterprise has implemented its mixed-ownership reform with BBMG, the country's third largest cement company which is headquartered in Beijing.

By promoting the employee's stock ownership plan, the group has improved its incentive system to build a community with a shared future between the employees and the enterprise.

By the end of September 2019, the revenue of Tianjin Building Material Group reached 12.36 billion yuan, a year-on-year increase of 198.5 percent, Liu said.

Its net profits have been recorded as eight times the figure during the corresponding period of last year and the asset-to-debt ratio dropped by 3.2 percent year-on-year.

The Central Economic Working Conference held last December has put forward the proposal that SOE reforms be accelerated.

The mixed ownership reforms of SOEs have been significantly enlarged in terms of their overall scale in recent years.

Data analyst company Wind said that by the end of December 2019, a total of 298 cases of the mixed-ownership reforms of SOEs had been conducted among A-share listed companies, of which 186 had been completed successfully, and over 100 SOEs had been infused with private capital.

The Foreign Investment Law came into being on Jan 1. It will include more opportunities for foreign companies to be involved in the mixed ownership reforms of SOEs.

 

 

 

 

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2020-01-07 00:00:00
<![CDATA[E-commerce platforms eye fresh food expansion]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531453.htm Major online retailers are accelerating steps to expand their presence in the fresh food sector by providing an offline shopping, leisure and entertainment experience that serves as a pioneering model for future brick-and-mortar stores to satisfy the diversified and personalized needs of their consumers.

Industry experts said that although fresh food supermarkets are still at an initial stage, the new model is reshaping China's traditional retail sector. The cold chain logistics and quality control of fresh food is of great significance for e-commerce players, the analysts said.

Chinese e-commerce giant JD opened 7Fresh Life, a new fresh food chain supermarket which is open 24 hours a day, seven days a week, in late December.

It is a combination of a restaurant, fresh food store and convenience store, offering more than 3,000 different items of fresh produce, daily groceries, ready-to-cook and ready-to-eat food, said Sun Xichao, the head of 7Fresh Life who added the store is equipped with an in-store dining area.

The first store covers an area of 300 to 400 square meters and is located in the Huilongguan residential area in northern Beijing. It is also the new retail concept from JD's offline supermarket 7Fresh. Sun said they plan to open 600 to 800 new stores in Beijing and Tianjin in the future.

"7Fresh Life will better serve the diverse and unique needs of Chinese families, serving each person at any time for any need, online or offline," said Wang Jing, the head of 7Fresh.

The store is connected with an app which allows consumers to shop any time and have items delivered to their doorstep in as fast as 30 minutes. It also provides other convenient services such as 24-hour parcel pickup lockers, bill payment and dry cleaning service.

Data from consulting firm iResearch showed China's fresh food e-commerce trading volume exceeded 200 billion yuan ($28.7 billion) in 2018, and the figure is expected to soar to 705.4 billion yuan in 2022, representing a huge market potential.

The rapidly growing number of China's high-income consumers has become a key driver of premium brands and other high-quality food products.

JD has also rolled out the first of its kind Seven Fun lifestyle space in Galaxy SOHO in Beijing. The store is designed specifically to cater to working professionals aged between 26 to 45 in first-tier cities, and provides "not just a space but a lifestyle".

With an area of around 1,000 square meters, Seven Fun provides consumers with a choice of over 3,500 different products such as fresh food, baked goods, fresh flowers and groceries. It also features 12 eateries selling international delicacies, including three bars offering wine, Japanese sake and craft beer.

"The store functions as a gathering place for white-collar professionals, and more stores are expected to open in early 2020," said Wang of 7Fresh, adding the facility provides a combination of dining, drinking and social networking.

Wang added the sustainable development of any retail business is built on accurate insight into user needs and satisfaction of their needs, which actually tests the retailers' ability in the fields of supply chain, technology and scenario construction.

"Only when the online retailers continue to expand and operate a certain number of fresh food supermarkets or stores in communities can we discuss the profitability issue," said Lu Zhenwang, CEO of Shanghai-based Wanqing Consultancy.

Hema Fresh, a fresh food chain invested by Alibaba Group Holding Ltd, is also likely to reshape the landscape of China's retail industry with the opening of the first digitalized shopping mall Hema Li in Shenzhen.

The center is dubbed a "community mall" covering the four categories such as retail, catering, life services and family. The aim is to create a neighborhood that strengthens family relations. About half of the 100,000 commodities sold at the mall could be ordered online through an app and delivered to the doorstep of consumers.

Hou Yi, CEO of Hema Fresh, said consumers come to the mall not just for shopping, but for leisure, entertainment and experience.

Cao Lei, director of China E-Commerce Research Center, noted that online retailers should ramp up efforts in cold chain logistics construction and increase investment in the supply chain to ensure the quality of their products.

 

 

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2020-01-07 00:00:00
<![CDATA[New order increase buoys service sector]]> http://www.chinadaily.com.cn/kindle/2020-01/07/content_37531467.htm Though the service sector expanded at a slower pace in December, the growth in new orders in the sector is an indication of further economic stabilization, with more policy easing expected to be implemented in the coming quarters, economists said on Monday.

The Caixin China General Services Business Activity Index stood at 52.5 in December, one percentage point lower than that of November, suggesting that China's service sector grew at a slower pace in that month.

The new order index, a sub index of the Caixin service PMI index, continued to rebound in December, hitting a three-month high and indicating improved demand, according to a survey jointly released by media group Caixin and information provider IHS Markit.

Surveyed companies in the service sector said that the growth in new orders was aided by rising client numbers, product innovation and marketing campaigns. Factors like uncertainties in the trade negotiations between China and the United States, slower economic growth and labor shortages could crimp business prospects this year.

Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said that while the service and manufacturing sector expansion slowed in December, the overall economic activities were on a stabilizing trajectory.

"Business confidence is still at a low level … which is an important factor that has constrained the economic rebound. China and the US signing the phase-one deal will help restore business confidence," Zhong said.

Robin Xing, chief China economist at Morgan Stanley, said that China's exports of goods and services may rebound in a restocking cycle given a possible recovery of global GDP growth starting from the first quarter and gradually gaining momentum over the course of the year.

China's private consumption may grow at a faster pace of 6.3 percent this year, compared with 6 percent in 2019. Stronger consumption will help stabilize the labor market, release pent-up demand and support a solid expansion of the service business, the economist said.

Xing said that better external demand and improved business confidence will also facilitate a modest recovery in manufacturing fixed-asset investment growth. He said that China's GDP growth may improve to 6 percent in the first quarter after reaching a bottom of 5.9 percent in the fourth quarter of 2019, as external uncertainties have abated temporarily, which could stabilize private sector confidence and lead to a mild recovery in exports and private spending.

China is scheduled to release a set of key economic data for December this week including consumer price index, social financing, money supply growth and foreign direct investment.

"We expect the upcoming December data release to show largely stable domestic activities and faster trade growth, with slightly slower growth of industrial production and retail sales, and steady overall FAI (fixed-asset investment) growth," Wang Tao, chief China economist at UBS, said in a research note.

"We expect the overall policy stance to continue with easing bias in the coming quarter, and more policy details to be rolled out in the upcoming meeting of the National People's Congress in March. We expect China's sequential growth momentum to rebound in the first and second quarter, and maintain our 2020 GDP growth forecast at 6 percent," Wang said.

 

Food deliverymen set out in snow in Taiyuan, capital of Shanxi province, over the weekend. SUN RUISHENG/CHINA DAILY

 

 

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2020-01-07 00:00:00
<![CDATA[Economy's resilience, infrastructure shine in 2019 data]]> http://www.chinadaily.com.cn/kindle/2020-01/06/content_37531282.htm For the second month in a row, China's official Purchasing Managers' Index or PMI for manufacturing stood at 50.2 in December 2019, remaining above the 50-point mark that divides expansion from contraction. This shows that the production and business confidence of China's manufacturing sector has recovered step by step. In addition, it signals the Chinese economic performance is worth looking forward to this decade.

This trend is in line with the Caixin China General Manufacturing PMI. Released by Caixin Media and IHS Markit, the index rose for five months in a row to 51.8 in November, its peak since 2017.

The pickup in macroeconomic data in November showed the strong resilience of Chinese economy. Moreover, China's stock market, a barometer of economic health, rebounded by more than 20 percent in 2019, which may indicate that the country's economy has begun to get through the tough times.

This year is the final one for China to secure a decisive victory in building a moderately prosperous society in all respects. A series of policy measures launched by the government to stabilize the economy started to take effect gradually, and we believe that the government will send a growing number of positive signals on its determination to stabilize the economy this year.

The Political Bureau of the 19th Communist Party of China Central Committee held a meeting on Dec 6, detailing the economic work to be carried out this year. The top decision-making body of the Communist Party of China offered solutions to problems in the area of infrastructure investment, touching upon several related aspects.

The Ministry of Finance also announced on Nov 27 that it had made an early allocation of 1 trillion yuan ($143.6 billion) of the 2020 local government special-purpose bond quota. The allotment amounted to 47 percent of the special-purpose bond quota in 2019, which was 2.15 trillion yuan.

This move will encourage infrastructure investments this year and will have a positive impact on the production and operational status of upstream and midstream enterprises. Therefore, it will hopefully underpin Chinese economic growth.

Besides, the runaway pork prices of mid-2019 have dropped since November. The increase in the Consumer Price Index was expected to weaken in December, thus providing space to the People's Bank of China, the central bank, to further implement its prudent monetary policy. And market liquidity will hopefully continue to improve.

China's economic growth will maintain an uptrend in the long run on the back of the Chinese government's commitment to improving the domestic business environment, strong promotion of the development of private enterprises, and encouragement to foreign investments in the country.

China kept lowering tariffs, stepped up the opening of the domestic financial market, and enacted a new Foreign Investment Law-all at a time when protectionism is on the rise globally.

Unlike the traditional models of economic growth, the Chinese new economy is relying on new models to achieve growth. The rebound in Chinese economic data in November might be preliminary confirmation of a successful economic transition and also provided space for transformation of economic growth models.

The latest economic data showed the results of a series of economic policies. China launched measures to boost the economy in all respects after the government vowed to coordinate efforts and policies to stabilize employment, finance, foreign trade, foreign investment, domestic investment and expectations at a Politburo meeting in July.

The effect of these policies started to appear gradually, after more than a year had passed.

On Nov 5, the PBOC cut the interest rate of one-year medium-term lending facility by 5 basis points to 3.25 percent. By providing a relatively loose liquidity environment, the central bank reduced the financing costs of companies and stabilized market expectations.

According to data released by the National Bureau of Statistics, the profits of industrial enterprises above designated size (which refers to industrial enterprises with annual main business revenue of 20 million yuan or more) increased by 5.4 percent year-on-year to 593.91 billion yuan in November. The growth rate was 15.3 percentage points higher than the figure in October.

The increase in the growth rate of industrial production and sales, coupled with the narrowing of a decrease in the industrial Producer Price Index, led to the huge rebound in the profits of industrial enterprises above designated size.

Having said that, the economic rebound still faces challenges in terms of continuity, as China's economy is under a lot of downward pressure. Although investment has growth potential, consumption growth still faces uncertainties to a certain extent. In particular, auto sales that can drag down the data of consumption have not bottomed out yet.

The future direction of the China-US economic and trade relations could be in either direction-up or down. The global economy has not completely gotten through the downturn. These are all unfavorable external factors that will likely affect efforts to stabilize the Chinese economy.

Zhou Xuezhi is assistant researcher at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences in Beijing.

 

 

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2020-01-06 00:00:00
<![CDATA[Shenzhen heralds new era in city life by embracing innovative solutions]]> http://www.chinadaily.com.cn/kindle/2020-01/06/content_37531319.htm As a tech reporter, I travel a bit covering events, developments and companies in the sector, and I just realized one of the most frequently visited destinations is Shenzhen, a pioneering city in South China's Guangdong province.

What impresses me most about the city is its smart services. Take the Shenzhen Bao'an International Airport. There, I can use my national ID card to go through all the security checks and board the plane. There is no need to even have a boarding pass.

More importantly, I don't have to subject the tools of my trade, like laptop, camera and smartphones, and accessories like power bank, umbrella and, well, cosmetics, for additional security checks-a contrast to the scene at other big-city airports.

Such convenience is possible because I've been to the airport so many times that personal as well as relevant travel data have been stored on the airport's big data platform.

The airport recognizes me as a trustworthy traveler, and saves me a lot of trouble and time (no long queues for me).

The airport offers a glimpse of what a smart city might be like in the not too distant future. The smart city concept took form after rapid urbanization created a string of challenges in transportation, water conservation, communication, waste disposal and pollution.

To tackle them, government officials are keen to overhaul how a city is managed. They are leveraging the latest technologies such as 5G, artificial intelligence, the internet of things, big data and cloud computing.

Many people use the fancy idea of "digital twin city" to describe how to build a smart city. Of course, modeling a real-world city in a digital form, or having a virtual representation of the physical objects and assets in a city, can help governments improve urban planning.

But, in my view, what truly matters is whether or not these technologies improve the quality of life and living in urban areas. Would they be able to ensure traffic is smooth always? Would they improve law enforcement? Can resource utilization be made more efficient? Will public buildings become more energy-efficient?

Take driving in China's metropolises. It's never easy. In Shenzhen, more than 500 vehicles vie for space in 1 square kilometer. But, of late, local drivers are finding that traffic lights are becoming smarter and making their daily trips more pleasant, because police officers are keen to embrace technology-driven solutions to improve matters.

Previously, local drivers had to wait for several minutes at crossroads, with their eyes glued to traffic lights and feeling that centuries are passing them by while they wait for the red light to turn green. But now they can go through key intersections within seconds.

The secret to this dramatic improvement lies in a string of artificial intelligence-enabled cameras and a digital platform. The AI-powered cameras, installed near traffic lights, can see 200 objects in four lanes. The platform, functioning as "a brain", can adjust traffic lights in accordance with queuing vehicles and weather conditions, and not in a rigid, predetermined manner. All these tasks are accomplished in real time.

Li Qiang, director of transportation technology at the Shenzhen Municipal Public Security Bureau, told me in an interview that the platform can assist in traffic management by automatically identifying whether or not people are wearing seat-belts or making phone calls while driving.

With the platform put into use on certain road sections of Shenzhen, the traffic flow has improved 8 percent, with the average vehicle speed surging by 15 percent, he said.

Shenzhen is just one of a growing number of cities across China that are spending big on smart city initiatives. Consulting company Deloitte said in an earlier report that the country already has the highest number of smart city pilot projects in the world.

The world's second-largest economy has more than 500 smart city pilot projects ready or under construction, accounting for about half of the world's total. The number is far higher than that of second-placed Europe, which has about 90 such projects under way or planned, the Deloitte report said.

China has kicked off the commercialization of 5G technologies in October. I believe the superfast wireless technology will inject new vitality into the construction of smart cities across the country.

 

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2020-01-06 00:00:00
<![CDATA[Shanghai's Hand helps digitalize small US companies]]> http://www.chinadaily.com.cn/kindle/2020-01/06/content_37531318.htm DETROIT-Ken Chen has a dream to spread what he learnt in China to the US digital world.

"It will be a long process for a Chinese company to get integrated into the US market. A decade is just a start and 50 years won't be long," said Chen, CEO of Hand Enterprises Solutions USA Inc, in the suburb area of Detroit.

"Since we started our business in the United States 10 years ago and our company was established five years ago, we've found that some medium-and small-sized enterprises and companies are actually not synchronized with the times, particularly in management means," Chen said.

"Filling in a data form by pen? Using a landline telephone? These are common. I dare say that they really need our services for accuracy and efficiency," he said.

Hand USA boasts an international clientele of 40 factories and companies, with several top-of-the-world manufacturers of automotive spare parts.

Currently, Chinese factories and corporations are the mainstay of its customer list.

Positioning the company as the "one-stop enterprise digital management solutions service provider," Chen has planned to find more medium-and smallsized enterprises in the US.

"Big ones give you clout. Middle and small ones make you sound," said the 42-year-old Chen.

His parent company, also named Hand and headquartered in Shanghai, is one of China's largest IT consulting service providers.

Hand started to design enterprise resource planning or ERP system in 1996, and now boasts over 5,000 clients worldwide with its market value peaking at $6 billion.

Chen said nowadays IT system should come first while a factory or company is being updated, bought or established, because this will enable the investor to collectively analyze essential information to avoid waste and guarantee profit.

"The system or platform serves to collect data and figures. Data and figures tell you what to do and what not to do. Through a digitalized process, all the crucial elements of an enterprise can get integrated into the platform, where the investor finds balance, ease, sobriety and confidence to make decisions," said Chen.

"Data and figures. These are the magic of modern economy and production," said Chen, adding that digitalized management supported logical and precise decision-making.

Hand USA has been expanding its resource-integrating capability to help clients gain an overall reading of their financial information from all US banks where they reserve their money and assets.

"Better experience. This is our selling point," said Chen.

To adapt Hand USA to its local customers, Chen has been diversifying his team by learning from the parent company's hiring strategy: enrolling fresh faces from college, training them first for theory study and then for project completion, before discerning who are suitable.

"It is like selecting diamonds. Only after all this sifting and burnishing can the best and the most suitable emerge, to contribute benefits and profits to Hand," he said.

 

 

 

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<![CDATA[Investment, reforms key to growth this decade]]> http://www.chinadaily.com.cn/kindle/2020-01/06/content_37531298.htm The path taken by economic growth is never straight and economists are deeply divided on the causes that have led to China's recent economic downturn. Is it cyclical, structural, or due to something else?

Cyclical fluctuations appear to be inevitable in any economy, and China is no exception. Some economists have blamed the socalled structural factors, such as lagging institutional reforms, a shrinking demographic dividend, and lack of innovation, for the current downturn. But such factors can't explain the downturn.

For, changes in demographics generally affect economic growth gradually over the long term. And China's level of innovation is actually rising rapidly.

It is not some supply-side structural factors but demand-side factors that have contributed to the slowdown.

As the growth of China's investments, exports and consumption declined significantly between 2013 and 2018, so did its GDP growth rate, mainly due to the nosedive in fixed-asset investment growth.

Note: All growth rates in this article are real after adjusting for price changes. In most years, data on real growth rates in consumer retail sales and fixed-asset investments are released by the National Bureau of Statistics. In the absence of NBS data, the author has calculated real growth rates by subtracting the relevant price index from the nominal growth rates.

After 2013, government policy goals became more diversified. Instead of simply pursuing higher GDP growth as it had done before, the Chinese government turned its attention to environmental protection and fighting government corruption, which cooled the investment scene, naturally putting a brake on China's economic surge as the investment boom leveled off.

Fiscal and monetary policies became more contractionary than expansionary, perhaps as a defensive reaction to a flurry of criticism leveled at the strong stimulus policies rolled out in 2009. Investment and export growth slid dramatically between 2014 and 2015.

The so-called "pro-cyclical" tightening policy in the midst of a significant economic downturn was adopted because of some fundamental misconceptions about the Chinese economy. Specifically, the importance of investment in economic growth was underestimated, while the extent of loose money supply and high corporate leverage was overestimated.

As investment rates were significantly higher in China than in other countries, many economists believed that China had been relying too much on investment to drive economic growth, which not only generated overcapacity, but also a high leverage ratio in the corporate sector. Based on this premise, China's economic downturn could be blamed on excess aggregate supply, rather than insufficient aggregate demand, hence the need to cut overcapacity and deleverage.

Another misconception was that there was an excess in China's money supply, as reflected in the high M2/GDP ratio, which had created asset bubbles, especially in the real estate sector, and increased leverage in the corporate sector, leading to high financial risks.

According to various sets of data, China's M2/GDP ratio hit 2.08 in 2016, amongst the highest in the world, more than twice that of the US, and three times the global average. In this sense, China's M2/GDP ratio seemed to be too high. Nevertheless, there are no economic theories indicating that a high M2/GDP ratio is bad for an economy. The relatively high M2/GDP ratio in China should be no surprise, since M2 is largely synonymous with bank deposits, which have become the primary savings vehicle, giving rise to a high M2/GDP ratio.

Rising M2/GDP ratios between 2006 and 2016 was a global phenomenon and not unique to China. In fact, China's M2/GDP growth rate was below the global average (39.48 percent), while even the US was experiencing a surge of 21.48 percent.

The past decade has seen money supplies growing rapidly around the world, in stark contrast to slower GDP growth, lower inflation rates, and lower interest rates. This is a new macroeconomic phenomenon that is still little understood.

To understand the mid-to-long-term prospects for China's economy, we need to first distinguish economic fluctuation from economic growth.

In economics, economic growth generally refers to the sustained increase in a country's capacity to produce goods and services over a mid-to-long-term period, while economic fluctuation refers to the short-term ups and downs in GDP growth rates along a long-term growth trend.

By definition, economic growth is about increasing production and supply, not about demand. Consequently, the three drivers of long-term economic growth are physical capital accumulation (investment), human capital accumulation (education), and technological progress, and not the troika of consumption, investments and exports often cited in the media.

The latter are three demand-side factors that affect short-term economic fluctuations. The only common element between the two sets of factors is investments, because they generate both short-term demand and long-term supply.

With regards to the first engine of economic growth, China's investment rate, which has been among the highest in the world for around three or four decades, is underpinned by China's high savings rates, and is therefore a major driver of China's rapid growth.

For the second engine of growth, latest research shows that the quality of basic education is the best predictor of a country's economic growth. The quality of China's basic education now matches the levels achieved in developed countries, forging solid foundations for economic growth.

Finally, the impact that education has on economic growth in developing countries is primarily from people being able to capitalize on advanced technologies learnt from developed countries. A number of indicators show that the pace of technological progress in China is the fastest in the world, providing the third engine powering China's economic growth.

China would score very well on investment, quality of education and speed of technological progress over the past four decades of rapid growth, thanks mainly to the central values that characterize the Confucian culture, which are the importance attached to education and thrift.

So long as China pursues its course to becoming a more market-oriented economy and continues to implement policies that enshrine reform and opening-up in the rule of law, it should join the ranks of developed high-income countries in the foreseeable future.

Exports to the United States only make up less than 4 percent of China's GDP. Even if the US imposed a 25-percent tariff on all exports from China to the US, the short-term impact on China's GDP growth would still be limited.

Looking at the longer term, trade friction may trigger a technology war. While such tension could hamper China's technological progress, it could also be the catalyst for home-grown innovation.

External trade frictions may slow the rapid rise of China's economy, but they cannot reverse it. The real engine that will determine its longer term economic progress in the future lies within China itself.

In the short term, therefore, China needs to loosen up those fiscal and monetary policies that have been overly contractionary in recent years.

In the longer term, China will be able to depend on investment, quality education, and rapid technological progress to achieve medium to long-term economic growth.

So long as China keeps its course toward a more market-led and rule-based economic system, its economy will be able to achieve a medium-to-high-speed growth of 6 percent to 8 percent over the next decade.

Zhu Tian is the Santander Chair in Economics and an Associate Dean at the China Europe International Business School or CEIBS in Shanghai.

 

 

 

 

]]> 2020-01-06 00:00:00 <![CDATA[Popularizing tech the Chinese way]]> http://www.chinadaily.com.cn/kindle/2020-01/06/content_37531303.htm When you ask a Danish cabby how to reach the Denmark headquarters of Chinese tech heavyweight Lenovo Group Ltd, it's likely he or she will proactively find the quickest route to the building in Soborg, about 10 km northwest of capital Copenhagen. The taxi driver may even attest to the good quality of the brand's products.

That is because the local unit of the company has been championing a mission called Taxi Driver, which is helping make Lenovo a household name in Denmark.

Currently, Lenovo accounts for more than 50 percent of the PC market in Denmark, according to data from market research company International Data Corp.

It is part of the Beijing-based company's broader efforts to earn the trust of consumers and enterprise customers on the global stage. Currently, the Chinese company operates in more than 180 countries and regions, and has 15 research and development bases around the world. Five Lenovo devices are sold every second.

"We are a global company, with Chinese heritage, founded in China, and we believe globalization is good for both consumers and businesses," said Gianfranco Lanci, president of Lenovo.

He said Lenovo is a strong believer in globalization and operates always with focus on local people, local management and compliance with the local law. The company has a very strong manufacturing base not only in China but elsewhere. It also boasts a deeply integrated global supply chain.

Asked how companies could win trust in sophisticated global environments, Lanci said: "The most important thing is to be as open as you can."

Lenovo started to build its international presence in 2004 after it acquired IBM's PC unit making the popular ThinkPads. "Lenovo PC acquired a business which was big but mainly limited to commercial business. We have been able to take this business, fix certain things and grow the business. We've been able to keep up in terms of innovation and product development with all the keys coming from IBM," Lanci said.

He recalled that when he joined Lenovo in 2012, he saw a lot of people who came from IBM. They are all still here, which attests to the buyer being a good employer post-acquisition. "Usually, when you acquire a company, you tend to think that you must be better than the other people because you are the buyer. But Lenovo did exactly the opposite, they said let's look what's good and what's not good and get rid of the things that are not good."

A similar thing happened after Lenovo acquired Motorola Mobility from Google Inc for $2.9 billion in 2014. Though it cost some time for Lenovo to fully absorb the impact of the merger, the company's mobile business, which includes smartphones, has finally become profitable for four consecutive quarters.

"In Latin America, we are running at between 18 and 20 percent market share, and in the US, we have seen about 5-percent year-on-year growth and 15-percent quarter-on-quarter growth in terms of activation, and both of them are very profitable. Now, the next step is really how we can continue to grow and maintain profitable growth," Lanci said.

The company will step up investment in Europe, with focus on four to five countries, including the UK and Italy, to drive sales of its smartphones in the region. It will also intensify resource deployment in emerging markets, including some Asia-Pacific countries.

"We can leverage our sound PC infrastructure in these countries for mobile phones," Lanci said.

In the quarter ended September 2019, Lenovo posted $13.5 billion in revenue, marking its ninth consecutive quarter of year-on-year growth. The company's net income also increased 20 percent year-on-year to $202 million.

Lenovo's good performance in the PC business, and emerging returns from new businesses are encouraging it to press ahead with its transformation into a software and services provider.

From July to September, Lenovo shipped 17.3 million units of PCs worldwide, growing 7.1 percent year-on-year and grabbing a global market share of 24.6 percent, according to data from market research company IDC.

"Commercial demand (for PCs) should accelerate as enterprises work through the remainder of their Windows 10 migration," IDC research vice-president Linn Huang said in a statement.

Lenovo's Lanci predicted that the global PC market is likely to remain relatively flat or record slight growth in 2020. As the Windows 10 refresh cycle in the commercial market will continue to contribute to the gain, the sector will likely continue to face a shortage in CPU supplies, he said.

According to Lenovo, although global trade and geopolitical uncertainties persist, they continue to have a negligible material impact on the financial performance of the company.

"Lenovo has always been a beneficiary and promoter of globalization. We have always promoted the integration of globalization and localization with an attitude of openness and cooperation. Lenovo firmly supports the rule-based global economic and trade relations," said Yang Yuanqing, chairman of Lenovo.

 

 

 

 

 

]]> 2020-01-06 00:00:00 <![CDATA[Full stack of innovation gives Huawei edge in smart cities]]> http://www.chinadaily.com.cn/kindle/2020-01/06/content_37531302.htm Several Chinese tech giants are betting on local governments' growing enthusiasm for building smart cities, which they see as new growth opportunities.

Huawei Technologies Co aims to stand out among this string of firms, with its years of technological prowess.

Sitting on its more than three decades of R&D and experience of working with different vertical sectors, Huawei aims to turn the idea of a smart city into reality.

Yan Lida, president of the enterprise business group at Huawei, said the goal of smart cities is to facilitate governance, serve the people and boost business growth.

"In the process of building smart cities, Huawei aims to construct the essential and fundamental platform, or the soil, for all partners to thrive, and to bring in all their capacities so as to help drive digital transformation forward," Yan said.

According to him, Huawei has already participated in the construction of more than 200 smart cities, and with more than 16,000 partners around the world, the Shenzhen-based company will step up its push to construct an open platform and lure more companies in.

Huawei's intensified push into the smart city arena came as a clutch of tech heavyweights such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and Baidu Inc are upping their ante.

A McKinsey research report forecast that the global smart city industry covering 600 cities worldwide is projected to spawn a $400 billion market by the end of 2020. These cities are expected to generate 60 percent of the world's GDP by the end of 2025.

"In comparison with rival products, our platform's edge lies in our full stack of technology support, the capacity to serve all industries and our open attitude toward all partners," said Lu Qi, president of marketing and sales at Huawei's enterprise business group.

Different from most players that focus only on offering the platform as a service, or PaaS, Huawei has a sprawling presence across hardware, infrastructure as a service, and PaaS.

The company is also in a good position to serve all sectors, with a focus on public governance, transportation, finance, energy and manufacturing at the moment, Lu said.

According to him, clients who choose Huawei's platform have a choice to adopt technological solutions for specific application scenarios from other companies. Such freedom has enabled Huawei to stand out from the competition.

In 2018, Huawei announced it was partnering with the Tianjin municipal government to build a smart platform, or digital twin, for the Binhai New Area.

The platform will be able to help government officials deal with daily routines related to tasks like reducing unemployment, and emergencies including floods and fires.

"Huawei has helped us design over 4,000 parameters such as education indexes and health indexes to gauge the status of urban citizens. We will use such data to develop a slew of models to conduct intensive analysis, which will allow officials to predict what will happen and how to respond to them," said Chen Song, an official in Tianjin in charge of smart city construction for the Binhai New Area.

"Without a good platform, it is impossible to coordinate and integrate mounting cross-system resources. Huawei's full package of products has put it in a good position to help us build such a platform," he said.

Ma Jionglin, a senior partner at Deloitte, said in an earlier interview: "China is one of the most active countries in the world in building smart cities. With the advancement of urban management and the increasing emphasis on people's living and working styles, smart cities will enter a new stage of development."

Already, China has included the smart city initiative in its national strategy and made significant investments in these projects. Both first-tier cities and small and medium-sized cities are home to smart city projects and they have formed many smart city clusters across the eastern and southern coastal areas of China, according to a Deloitte report.

 

 

 

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2020-01-06 00:00:00
<![CDATA[Smart cities for an intelligent nation]]> http://www.chinadaily.com.cn/kindle/2020-01/06/content_37531306.htm Imagine ... no this isn't a mushy lyric ... Imagine a world of cities where multistory buildings, cars, traffic lights, people and a zillion other things all communicate with each other. Such "smart cities" will acquire dimensions of reality in China sooner than you would imagine, field experts said.

Powered by the next-generation information technologies such as 5G, mobile internet, internet of things, artificial intelligence and cloud computing, China is gearing up to develop smart cities nationwide.

In China, improving cities, especially metropolises, is an urgent and pressing demand as the urban population is growing amid rapidly increasing urbanization, experts said.

In 1949, just 10.6 percent of people, or 57 million residents, lived in 132 cities in China. But, by the end of 2018, nearly 60 percent of the country's population, or 830 million residents, lived in 672 cities. The figures continue to grow.

"As the population grows and we become more urbanized rapidly, the carrying capacity of the cities cannot sustain the pressure of population explosion. Diseases could emerge as new problems in cities due to resource shortages, traffic congestion and pollution, raising new concerns for the government's public management capabilities," said Shan Feng, deputy head of the Digital City Engineering Research Center, which is part of the Chinese Society for Urban Studies, at a meeting on smart cities in November in Beijing.

By the end of 2018, more than 500 Chinese cities proposed to build smart cities in their respective local government work plan, according to Shan.

Today, China has also become a key force in the development of smart city technologies and the industrial innovation globally.

A new report from market research firm MarketsandMarkets estimated the smart cities market in China is projected to reach $59.9 billion by 2023 from $30.4 billion in 2018 with a compound annual growth rate of 14.5 percent.

According to the report, the growth is mainly driven by the increase in population, the need for rapid urbanization and the government's investment and policies to speed up the implementation and development of smart city projects.

MarketsandMarkets noted China is the biggest marketplace in the Asia-Pacific region in terms of development of smart cities, and the APAC region is set to emerge as the main revenue contributor to the smart cities market globally.

By 2023, the global market for smart cities is estimated to grow to $717.2 billion from $308 billion in 2018, at a compound annual growth rate of 18.4 percent, the company said.

In fact, the adoption rate of smart cities solutions is growing rapidly in China. Not only some big cities but small and mediumsized cities are actively embracing the digital solutions.

For instance, Yingtan, a city in Central China's Jiangxi province, is accelerating the push for building an internet of things-enabled digital economy.

By 2018, Yingtan's 1.1 million people had connected to the internet of things. And more than 200 internet of things companies have been set up in the city, helping Yingtan to better embrace the digital transformation.

So far, the city has officially provided more than 40 kinds of internet of things services, including 5G services, smart transportation, smart water utilities, smart streetlights and smart parking.

For instance, 95 percent of the local families have installed smart water meters, which help save 2.4 million metric tons of water a year.

Yao Yao, head of property investment and management consultancy JLL's research in China, said smart cities' construction plays a more important role in China when compared to other markets.

"On the one hand, the practice of smart cities will help alleviate the increasing burden on traditional infrastructure systems caused by the rapid increase in urban population. On the other hand, intelligent application in fields including travel, safety, health and energy will improve the quality of all aspects of the residents' life. And the key issue is how to meet people's growing need for a better life," Yao noted.

Seeing the growing potential in smart cities development, an increasing number of tech companies are ramping up the efforts to carve out a stake in the rapidly expanding sector.

Beijing Percent Information Technology Co Ltd has seen huge potential in the market. So far, it has served more than 10,000 clients both at home and abroad, including a number of government customers.

"In the era of data intelligence, data has become a new and most important means of production, while data intelligence has become a key infrastructure in the cities," said Su Meng, chairman and CEO of Beijing Percent Information Technology.

According to Su, China has seen a growing number of digital cities and e-government projects on the ground.

"The digital cities market is really huge," Su noted. "The government is aware of the importance of data assets and the social benefits brought by the data sharing and exchanges. And now, we are at a very early development stage."

The company mainly provides e-government, digital cities and safety services for governments.

Powered by Percent's AI and big data technologies, governments will be able to access more data related to citizens, cars and other details in the cities. With a comprehensive big data governance and sharing platform, the government will be able to better operate in areas like market supervision, social governance and offering public services.

In fact, Percent has expanded its services globally. The company has built a visual national center data analysis and decision-making system for the Angolan government.

Previously, most of Angola's population information was recorded on paper, which was difficult to access and manage. With the new platform, the Angolan government can accurately and dynamically record entire data of local population in terms of birth, education, marriage, social security, fingerprint, faces and more.

A firm called G7 (not to be confused with G-7, or the Group of Seven, the leading industrial nations) is another example of Chinese companies actively engaging in the construction of smart cities. Unlike most tech firms eyeing the digital government solutions, G7 aims to empower traditional industries to embrace the digital transformation, which will not only help boost the productivity of the companies, but help create a better life for local citizens.

"Technology is having a profound impact on various industries," said Zhai Xuehun, founder and chief executive officer of Beijing-based internet of things company G7. "Based on the IoT, big data and artificial intelligence, G7 has already helped connect 98 percent of logistics factors to the internet in China. It is just a small step. We are also using the internet of things to inter-connect traditional industries, injecting new impetus into those industries."

Powered by its own internet of things technologies and algorithms, G7 is able to access the truck driver's real-time conditions. With AI and artificial means, G7 helps reduce the number of driver deaths to one-sixth of the previously reported number.

The company also offers a whole batch of services to drivers. With the support of the internet of things, drivers can make oil and gas payments online.

Shan Feng from the Chinese Society for Urban Studies said next-generation technologies such as the ultrafast 5G and smart cities will see rapid development, and new applications will pop up gradually.

"However, we are still facing some challenges in the development of smart cities," Shan said. "Some cities only focus on software and hardware investment, while local people seldom engage in the process and lack the sense of gain. More efforts are needed to shift the focus to residents, innovation, integration of different sectors and refined management."

 

Two technicians analyze data at the smart city operational center in Langfang city, Hebei province. LI XIAOGUO/XINHUA

 

 

 

 

 

 

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<![CDATA[Ant Financial applies for wholesale digital banking license in Singapore]]> http://www.chinadaily.com.cn/kindle/2020-01/05/content_37531231.htm Ant Financial Services Group has applied for a digital banking license in Singapore, as more Chinese technology powerhouses hasten their pace in expanding their digital offerings beyond the Chinese mainland.

The company said on Thursday it has submitted an application to the Monetary Authority of Singapore for a wholesale license, which would allow it to serve corporate clients.

"Ant has long been committed to the development of inclusive finance globally. We look forward to contributing to the development of digital banking in Singapore," a spokesperson said in an emailed statement.

MAS announced in June that it would offer up to two digital full bank licenses and three digital wholesale bank licenses in a bid to liberalize its banking sector, making it more "resilient, competitive and vibrant", according to its website.

Ant, the financial arm of Alibaba Group Holding Ltd, stands to benefit from the e-commerce giant's presence to support the development of Lazada, its newly acquired e-commerce counterpart in Southeast Asia, said Vey-Sern Ling, an analyst from Bloomberg Intelligence.

Gaming company Razer Inc also said it was leading a consortium that has applied for a license, while earlier this week Singapore Telecommunications Ltd and Southeast Asian ride hailing firm Grab said they were teaming up for a bid of their own.

Southeast Asia's digital lending market is expected to more than quadruple to $110 billion by 2025, according to a report by Bain, Google and Temasek Holdings.

Last year, Hong Kong offered digital banking licenses to companies including Alibaba, Tencent Holdings Ltd and Xiaomi Corp. Ant has been developing and fostering local digital wallet solutions in nine economies, the majority of which are in Southeast Asia, whereas Tencent is also heavily invested in supporting payment in local currencies in the region.

The likes of Alibaba, Ping An and Tencent are "increasing their investments as consumers from India to Japan to Malaysia turn to digital channels for retail purchases-both online and offline", said Jacob Dahl, a senior partner of consultancy McKinsey.

"These moves pose significant threats for incumbent banks, as these attackers have momentum in scaling innovative business models centered on data collection and the application of advanced analytics to identify new revenue opportunities and make smart lending decisions," he said.

As a result, incumbent banks like DBS have embarked on digital transformation inspired by platform players like Alibaba and Tencent, according to a McKinsey report on the importance of ecosystems. Over the past five years, DBS has invested S$1 billion ($741 million) annually in its transformation, resulting in a substantial increase in digital customers from 33 percent in 2015 to 48 percent in 2018.

IMF data showed that in 2017, roughly 39 percent of the adult population in low-and middle-income countries did not have a bank account, 55 percent of whom live in Asia. However, with an extremely high rate of mobile penetration over the past few years, this trend is improving, said Arunkumar Krishnakumar, a venture capital investor at Green Shores Capital.

"With technology firms joining the digital and financial inclusion wave, Asia (not just China) could be the new consumer fintech hub of the world," he said.

A visitor pays via the Alipay app at a private museum in Singapore. XU KANGPING/FOR CHINA DAILY

]]> 2020-01-05 14:37:13 <![CDATA[China plans more commercial insurance products for elderly people]]> http://www.chinadaily.com.cn/kindle/2020-01/05/content_37531129.htm China will improve the supply of commercial insurance products for people aged 60 years and above by stepping up research and product innovation in this field, to satisfy the growing insurance demands of an aging population.

Liu Hongjian, deputy director of the life insurance supervision department of the China Banking and Insurance Regulatory Commission, said the regulator will further promote the insurance sector to optimize product supply, accelerate the launch of insurance products specially designed for the elderly, and provide the elderly with products that offer more comprehensive coverage at lower premiums.

"The CBIRC will improve regulations, deepen supply-side structural reform in the financial sector, and make guidelines for enriching insurance product supply targeting the elderly and encouraging innovation of such products. We will also urge insurance companies to develop products that are specially designed for the elderly based on their risk features and demands for insurance services, and to further increase product supply mainly in the areas of sickness insurance, medical insurance, long-term care insurance and accident insurance," said Liu during a media conference held by the State Council Information Office on Thursday.

Besides, the banking and insurance regulator will develop actuarial mechanisms for insurance products targeting the elderly, make rules on how to price these products, and launch relevant regulatory measures, in an effort to guide insurers to price their products scientifically and reasonably, she said.

Among the existing products offered by commercial insurance companies, more than 1,000 products are available for purchase by Chinese people aged 60 years and above. However, these still cannot meet the senior people's robust demand for insurance products.

Currently, most of the products are not specially designed for the elderly. Instead, they just relax the restrictions on the age and conditions of insurance policies that are made for younger customers. The premiums are much higher for the elderly who may be charged 10 times the premium paid by the young and middle-aged people for accident and health insurance products. Not to mention that some elderly who are in poor health cannot find insurance products that are suitable for them, Liu said.

To solve these problems, domestic insurers must improve their risk management capability, service awareness and product innovation, she said.

Huang Hong, vice-chairman of the CBIRC, pointed out that these problems also show that insurance companies did not accumulate enough data on the elderly in terms of health and old age care, nor did they conduct enough research on the law of risks for elderly insurance.

"As the population of Chinese elderly aged 60 years and above reached 250 million at the end of 2018, we must strengthen the efforts to develop insurance products for the elderly," Huang said.

The CBIRC will make regulations and rules urging insurers to support the elderly insurance market, he said.

 

 

 

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2020-01-05 14:37:13
<![CDATA[Beidou system on fast track of commercialization, application]]> http://www.chinadaily.com.cn/kindle/2020-01/05/content_37531124.htm China's Beidou Navigation Satellite System has started offering its services to a wide range of sectors as well as an expanding number of countries, as the homegrown system steps up its application and commercialization.

Beidou has had great applications in a string of areas including transportation, electrical power, fisheries, mining and agriculture, said Wang Yanyan, deputy general-secretary of the Global Navigation Satellite System and Location-Based Services Association of China.

Official data showed that the direct output of domestic satellite industries exceeded 300 billion yuan ($43 billion) by the end of 2019, with Beidou contributing 70 to 80 percent of the total.

"In addition to the navigation function that is well-known to the public, Beidou's applications in areas like pipe leakage detection has also made substantial progress," Wang said.

She noted that Beidou's technology in pipe network detection has already been applied in at least 600 cities, counties and towns across China.

Beidou has recently cooperated with Swiss industrial giant ABB in launching the world's first gas leakage detection system with an accuracy as fine as ppb or parts per billion, overturning the traditional accuracy of parts per million seen worldwide.

"With the new move, Beidou can not only position accurately the gas leakage points but is also able to analyze data, for example, to offer solutions," Wang said.

Zhang Yijin, head of analysis meter of ABB China, said that such an application has come into the forefront of global high-accuracy gas leakage detection, which has exceeded that of the global positioning system and Google.

"It is of great importance and also business potential given that the gas network in China alone has grown from 400,000 kilometers to 800,000 kilometers in the past five years," she said.

Zhang said that such technology is prepared to go into the foreign markets soon with the Beidou system set to be complete by 2020.

Currently, there are 46 operational Beidou satellites and China plans to send two more satellites in geostationary orbit in the first half of 2020 to finish the deployment of all of Beidou's space-based assets.

China began to construct its Beidou navigation system, named after the Chinese term for the Big Dipper constellation, in the 1990s and started to serve the Asia-Pacific region since 2012. It is currently one of the four largest space-based navigation networks operating globally, along with the US GPS system, Russia's GLONASS and the European Union's Galileo.

Such progress also dovetails with China's determination to step up the application of Beidou systems in a wide range of sectors as well as various regions.

Statistics from the China Satellite Navigation Office showed that as of April, the Beidou system had been put into use in more than 6.2 million taxis, buses and trucks as well as at least 40,000 fishing ships across the country.

By the end of last month, Beidou's solutions were exported to more than 120 countries and regions, according to the China Satellite Navigation Office.

The system is now being applied in more international sectors including precision farming, digital construction and smart port construction, the office said.

"It is beneficial for the Association of Southeast Asian Nations, South Asia, Eastern Europe, West Asia and Africa," the office said.

With the 5G era, Beidou is also integrating with the new technologies including blockchain and artificial intelligence, according to the office.

In December, the Civil Aviation Administration of China released a roadmap for the application of Beidou, which pointed out that the civil aviation sector should gradually see full coverage from Beidou by the end of 2035.

"The application of Beidou in the segment will make up for the inadequacy of traditional navigation systems as the new application will greatly enhance safety and efficiency," said Liu Lianxi, an official at the CAAC.

 

Visitors check out a model of Beidou Navigation Satellite System during an exhibition in Beijing. ZOU HONG/CHINA DAILY

 

 

 

 

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2020-01-05 14:37:13
<![CDATA[Lego looks to brighten its brand presence with 80 new stores this year]]> http://www.chinadaily.com.cn/kindle/2020-01/05/content_37531115.htm Ahead of the approaching Year of the Rat, the Lego Group, one of the world's leading manufacturers of toys and play materials, has unveiled two new Lunar New Year sets-Lion Dance and Chinese New Year Temple Fair.

The launch of the toys follows on from the success of popular sets Dragon Boat Race, Dragon Dance and Chinese New Year's Eve Dinner, which were also created to mark Chinese festivities.

The sets also come complete with eight figures including lion dancers and a man in a rat costume.

The new Lego sets, featuring Chinese traditional cultural elements, which were rolled out in China and Asia-Pacific markets on Dec 26 and globally available this month, are part of the Danish company's efforts to get closer to young Chinese consumers.

"Playing helps children acquire some of the skills and personal characteristics they need to be successful in the future, including creativity, problem-solving, collaboration and resilience," said Lego CEO Niels Christiansen.

"Ideally, you can acquire those skills through play. We can play a big role in that," he added.

Lego invests heavily in innovation, with at least 60 percent of products renewed every year, which is quite a challenge and hard to achieve for an established toymaker, said Christiansen.

But strength and capacity to excite kids are at the heart of Lego. "It keeps us fresh because it is new," he said.

The priority for Lego in China is to enhance its brand presence and make it more accessible to Chinese families.

Since the launch of its first flagship store in Shanghai in 2016, the group has set up three flagship stores and 140 certified stores in more than 20 cities on the Chinese mainland, according to Lego's data.

In 2019, Lego opened 73 new stores in 16 cities in China and will open 80 new stores this year. The company opened its first certified store in Northwest China in July last year.

About 42 percent of its certified stores are located in emerging first-tier cities such as Chengdu in Sichuan province and Wuhan in Hubei province. About 12 percent are in second-and third-tier cites including Hefei in Anhui province, Changchun in Jilin province and Wuxi in Jiangsu province.

By the end of 2020, Lego expects to operate 220 stores in China, a pace that shows the toy retailer's ambition to penetrate further into the country's second-and third-tier cities.

The Chinese market achieved double-digit growth in the first half of 2019 for the private, family-owned company, which had stores in 35 cities in China by the end of last year.

Revenue for the period grew 4 percent to 14.8 billion Danish krone ($2.18 billion) compared with the same period of the previous year, according to Lego's financial returns for the first half of 2019 released earlier last month.

The CEO said Lego's global e-commerce will double over the next four years. But in China, the growth will come from both physical stores and digital channels.

"For us, physical bricks will always be at the center. When kids come to toy stores, magic happens. We can use digital channels to enhance that, but we always know it all starts with a brick," he said.

 

Visitors check out a Bugatti car built with Lego bricks at a shopping mall in Nanjing, Jiangsu province. SU YANG/FOR CHINA DAILY

 

 

 

 

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2020-01-05 14:37:13
<![CDATA[Online Chinese dramas bank on esports themes to attract young consumers]]> http://www.chinadaily.com.cn/kindle/2020-01/05/content_37531111.htm Given the growing number of tech-savvy young gamers, online Chinese drama series are actively embracing esports themes because they see it as a new big hit in the market.

Generating more than 3 billion clicks on the Tencent Video platform, the esports themed series The King's Avatar has become one of the most viewed online dramas, gaining a huge following among young audiences.

Adapted from the hit novel of the same title, The King's Avatar tells the story of a top-level professional esports player, Ye Xiu, who has been forced to retire from the team and then rise again with a new team to win back lost glory.

Notably, the popular online drama for the first time features pure esports related plots instead of romantic themes.

"When I finished the first volume of the The King's Avatar novels, I was deeply impressed by the sportsmanship and the spirit of teamwork shown by the characters engaged in the esports," said Yang Xiaopei, the drama's chief producer and vice-president of Shanghai-based studio Linmon Pictures.

"I'm really interested in such a new theme, which allows me to build brand-new characters and innovation in the way to build up scenes in the drama."

Yang added the drama caters particularly to younger generations born in the 1980s and 1990s, who are in some degree enthusiastic esports fans.

"In fact, we were making something that had no reference before," Yang said. "The story mainly focuses on esports plots and highlights teamwork, friendship, brotherhood as well as sportsmanship. The difficulty lies in the connection of the online virtual world and the offline real world. To make a good esports story, we need to combine refined management and top technologies."

To offer the audience immersive experiences, the new drama has used a wide range of world-leading technologies, including motion capture, face capture and unreal engine real-time rendering, which are commonly used in movies like 'The Jungle Book' and 'Rise of the Planet of the Apes.'

Those technologies help build up a complete world outlook well stocked with virtual and real life stories. Yang said she hopes more audiences will have a better understanding of esports through the new series.

"Esports actually combines gaming and competitive sports and has created many jobs chances as the sector has been upgrading in recent years," Yang added.

"With the rising government support, esports is booming in China, generating a series of new businesses. We do see the huge potential in this emerging sector. More efforts are needed to add more innovation to related entertainment products and offer audiences better experiences."

Li Yiyang, an analyst at consulting firm iResearch, said esports have already become a red hot field in terms of market size and popularity.

In fact, Chinese gamers' rising enthusiasm has created a huge market worth 233 billion yuan ($33 billion) in 2019, up 8.7 percent on a yearly basis, a report released by Chinese gaming database Gamma Data Corp said.

Revenues generated from the esports industry jumped 16.2 percent to 96.96 billion yuan in 2019, growing faster than the overall gaming sector, the report added.

"With young gamers' growing purchasing power, they have already become the key driving force to drive esports-related consumption, and they are willing to pay for beloved stuff," Li said. "Looking ahead, the future esports industry will be able to boost the development of various sectors, such as the esports themed online dramas and other derivative products."

 

A group of professional esports gamers interact with visitors during an animation and video game exhibition in Hangzhou, Zhejiang province. LI ZHONG/FOR CHINA DAILY

 

 

 

 

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2020-01-05 14:37:13
<![CDATA[Online Chinese dramas bank on esports themes to attract young consumers]]> http://www.chinadaily.com.cn/kindle/2020-01/05/content_37531094.htm Given the growing number of tech-savvy young gamers, online Chinese drama series are actively embracing esports themes because they see it as a new big hit in the market.

Generating more than 3 billion clicks on the Tencent Video platform, the esports themed series The King's Avatar has become one of the most viewed online dramas, gaining a huge following among young audiences.

Adapted from the hit novel of the same title, The King's Avatar tells the story of a top-level professional esports player, Ye Xiu, who has been forced to retire from the team and then rise again with a new team to win back lost glory.

Notably, the popular online drama for the first time features pure esports related plots instead of romantic themes.

"When I finished the first volume of the The King's Avatar novels, I was deeply impressed by the sportsmanship and the spirit of teamwork shown by the characters engaged in the esports," said Yang Xiaopei, the drama's chief producer and vice-president of Shanghai-based studio Linmon Pictures.

"I'm really interested in such a new theme, which allows me to build brand-new characters and innovation in the way to build up scenes in the drama."

Yang added the drama caters particularly to younger generations born in the 1980s and 1990s, who are in some degree enthusiastic esports fans.

"In fact, we were making something that had no reference before," Yang said. "The story mainly focuses on esports plots and highlights teamwork, friendship, brotherhood as well as sportsmanship. The difficulty lies in the connection of the online virtual world and the offline real world. To make a good esports story, we need to combine refined management and top technologies."

To offer the audience immersive experiences, the new drama has used a wide range of world-leading technologies, including motion capture, face capture and unreal engine real-time rendering, which are commonly used in movies like 'The Jungle Book' and 'Rise of the Planet of the Apes.'

Those technologies help build up a complete world outlook well stocked with virtual and real life stories. Yang said she hopes more audiences will have a better understanding of esports through the new series.

"Esports actually combines gaming and competitive sports and has created many jobs chances as the sector has been upgrading in recent years," Yang added.

"With the rising government support, esports is booming in China, generating a series of new businesses. We do see the huge potential in this emerging sector. More efforts are needed to add more innovation to related entertainment products and offer audiences better experiences."

Li Yiyang, an analyst at consulting firm iResearch, said esports have already become a red hot field in terms of market size and popularity.

In fact, Chinese gamers' rising enthusiasm has created a huge market worth 233 billion yuan ($33 billion) in 2019, up 8.7 percent on a yearly basis, a report released by Chinese gaming database Gamma Data Corp said.

Revenues generated from the esports industry jumped 16.2 percent to 96.96 billion yuan in 2019, growing faster than the overall gaming sector, the report added.

"With young gamers' growing purchasing power, they have already become the key driving force to drive esports-related consumption, and they are willing to pay for beloved stuff," Li said. "Looking ahead, the future esports industry will be able to boost the development of various sectors, such as the esports themed online dramas and other derivative products."

 

A group of professional esports gamers interact with visitors during an animation and video game exhibition in Hangzhou, Zhejiang province. LI ZHONG/FOR CHINA DAILY

 

 

 

 

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2020-01-05 14:37:13
<![CDATA[Demand rising for feline care products in China]]> http://www.chinadaily.com.cn/kindle/2020-01/05/content_37531080.htm Wearing hanfu, the traditional clothing of the Han ethnic group, is no longer a fashion trend among China's young generation.

Today, buying hanfu for their pet cats is increasingly popular as a growing number of millennials largely born in the 1980s and 1990s have started to raise cats in their homes.

A recent report by Alibaba's e-commerce platform Taobao said sales of hanfu for cats jumped tenfold in early December from the year earlier.

Taobao noted in the report that almost half of the pet owners in cities are those born in the 1990s, and they usually take their responsibilities as pet parents very seriously.

"I love my cat so much, and it has become a full-fledged member of my family," said 28-year-old Cathy Liu, who lives in Beijing. "I just want to do my best to provide it a high-quality life."

Liu has spent more than 6,000 yuan ($860) on her cat in the past six months. Pet food gets the lion's share of this spending, or about 300 yuan per month. Other expenses include medicines, snacks, toys, vaccines, a cat climber and a bed.

"My cat provides me companionship and teaches me responsibility," Liu said. "My cat takes up most of my spare time. In fact, I would rather snuggle up with it than people around me. And I will suffer anxiety when separated from my pet. Once I have to leave for holiday travels or business trips, I need to watch it and even talk to it via pet cameras every day."

She's not alone. A growing number of young people in China are spending their time and money on raising cats. They are willing to purchase high-quality items for their precious pets.

By the end of 2018, there were approximately 67 million pet cats in China, a report by consulting firm Frost & Sullivan said. It noted that the love for cats by Chinese consumers has created a market worth 60.2 billion yuan in 2018.

The annual average spending on each pet cat was 3,117 yuan. Of that amount, the largest share is 1,340 yuan on average which was spent on food.

Experts believe China's pet industry will further develop along with the increasing number of pets and the growing purchasing power of pet owners. Frost & Sullivan estimated the market size of China's pet industry would reach 472.3 billion yuan by 2023, up from 172.2 billion in 2018.

Peng Kunyi, a researcher at Qianzhan Industry Research Institute, noted that cat-owning households are becoming more willing to pay for their cats, leading to greater prosperity in the cat economy.

"China has witnessed a significant surge in the number of pet cat owners," Peng said.

"The country has a unique family structure, namely the elderly, office workers and the only children. For the elderly, raising pet cats is playing a key role in easing their loneliness and enriching their spiritual life. And raising cats also can teach the only children responsibility. For office workers leading fast-paced lives, pet cats can provide companionship and help relieve stress."

The new trend is also backed by a new report released by e-commerce giant JD and global data analytics company Nielsen.

The report said young people born in the 1990s, especially those who live alone, are now the core group of pet owners.

"Those young working groups lack time and energy to walk the dogs. Many of them love cats for their independence. Compared with dogs, cats don't take up space and is not time consuming," the report noted.

Cat owners are mainly young females who are more likely to purchase some expensive high-quality items for their pet cats, the report added.

JD said that high-end and high-tech pet products were very popular during the recent Singles Day shopping event in 2019.

For instance, sales revenue for insect repellents for pets surged 243 percent year-on-year, and sales of litter boxes for cats increased 232 percent.

Peng from Qianzhan said a whole bunch of cat-related businesses are booming in China such as pet foods, pet clothes, supplies, medical care, insurance, hotels and services.

"Currently, China is still at the very early development stage of a cat economy," Peng added. "More efforts are needed to tackle problems, such as expensive medical bills and low-end food processing."

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An attendee brings her cat to a pet exhibition in Shenyang, capital of Liaoning province. HUANG JINKUN/FOR CHINA DAILY

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2020-01-05 14:37:13
<![CDATA[China's economic rise benefits US companies]]> http://www.chinadaily.com.cn/kindle/2020-01/04/content_37531223.htm NEW YORK-China's economic rise over the past few decades has benefited many companies in the Midwestern United States, Leo Chan, executive director of the Ohio-based Midwest USA Chinese Chamber of Commerce, told Xinhua in a recent interview.

China's success in poverty alleviation and its massive middle-income group have brought huge opportunities for business cooperation, said Chan. His organization boasts around 200 members from the Midwest that all have economic ties with China.

"We're glad to see Chinese achievement in poverty alleviation, education and healthcare in the last decades and we wish more could be done in this regard in 2020," he said.

"We hope more Chinese enterprises will go global and land in the United States, bringing in capital, technologies and even manpower," Chan said, adding that Chinese Americans can play a more active role in deepening exchanges between the two sides.

Business cooperation between the two countries has also contributed to world peace, stability and economic development, he added.

According to Chan, local-level cooperation such as those between sister cities should be put into full play, and his organization has been promoting such economic and trade ties as well as investment.

The Midwest USA Chinese Chamber of Commerce will have a 150-square meter booth to promote US enterprises at the third China International Import Expo (CIIE) in Shanghai, he said.

The second CIIE, held in November 2019, concluded with $71.13 billion worth of tentative deals reached for one-year purchases of goods and services, a 23-percent rise from what was recorded in the first CIIE.

"A world-class enterprise and a number of small-and medium-sized enterprises on technology, food processing and others from the Midwest will join the next CIIE," he said.

Chan also called on the two countries to build a platform that could help channel limited resources into important areas like people's welfare, infrastructure and innovative social governance.

]]> 2020-01-04 00:00:00 <![CDATA[Bayer looking to strengthen R&D focus, innovation]]> http://www.chinadaily.com.cn/kindle/2020-01/04/content_37531229.htm Bayer Pharmaceuticals sees great potential in the Chinese market to foster innovation and digitalization, and has singled out China as one of its priorities, according to a top executive of the company.

Its president Stefan Oelrich said the company has a particular position of strength in China that is linked to its extensive history in the country, and is looking to further sustain and strengthen its position in the nation through strong innovation and digitalization.

"We have our research and development base in China. We hope to strengthen that in the future and to bet more on Chinese innovation," he said.

China's pharmaceutical demand has been booming in recent years due to the rapidly aging society with burgeoning purchasing power. It has become the world's second-largest market for pharmaceuticals, and the biggest emerging market with growth tipped to reach $145 billion to $175 billion by 2022, according to healthcare information company IQVIA.

The Chinese authorities have rolled out a series of policy reforms for drug registration, regulation, reimbursement, and public procurement process, with focus on innovation and homegrown research and development.

Experts said such a move aims at reconstructing and upgrading China's pharmaceutical market and will stimulate cooperation between domestic and foreign companies.

"China's pharmaceutical market has the greatest potential in the world, due to its tremendous population, even though it is now second to the United States," said Shi Lichen, founder of medical consultancy Beijing Dingchen Consultancy.

"Besides, opportunities arising from the restructuring of the market matter even more than the huge market size itself to multinational pharmaceutical firms eyeing the alluring market."

He explained that in the US, a typical mature pharmaceutical market, about 70 percent of the medicine expenditure paid by medical insurance are for original, innovative, or rare drugs, while in China about 80 percent of the payments from the public medical insurance funds are on generics, causing great financial burden to both patients and society.

That drives the authorities to reform related regulations and mechanisms to restructure the domestic market, with a focus on development and procurement of high-quality generics and novel drugs, which is creating room for further cooperation between domestic and foreign companies to explore new opportunities on R&D and marketing of high-quality generics and new drugs, he said.

Bayer Pharmaceuticals, the first to market in certain areas with advanced technologies, is increasingly envisaging to deepen its local cooperation with Chinese companies and Chinese academia, and also hopes to play a role in digital solutions for patients, an area China is very advanced with, according to Oelrich.

As Chinese digital giants, including big names such as Baidu, Tencent and Alibaba, have been betting on the healthcare industry in both consumer and business sectors, Oelrich said the combination of digital companies and traditional healthcare companies complements each other.

Digital companies have an advantage that the traditional players in healthcare may not have, coming from their use of big data technologies and smart algorithms that can connect across all sections of healthcare system, he said.

"Healthcare is very much structured in silos. You have the hospitals, you have other people that pay for it, and then you have the industry that provides medicines, devices, or solutions," he said.

Besides, as China is speeding up innovation in line with the Healthy China 2030 Initiative and improving patients' access to medicines and affordability, the company can bring innovations faster to Chinese patients, which means not only record-setting access for patients but also reimbursements that benefit the company, he said.

With deep roots in China's scientific community, the company also hopes to start exporting Chinese science to the rest of the world at some point, a new and upcoming trend in healthcare, he said.

Oelrich estimated China must have become the company's largest market in 2019 in terms of revenue, for the first time, despite the absence of any full-year data.

Bayer said its sales revenue in the Chinese mainland, Hong Kong special administration region and Taiwan province reached 3.13 billion euros ($3.47 billion) in 2018.

The booth of Bayer Pharmaceuticals at the China International Import Expo in Shanghai. FU TIAN/CHINA NEWS SERVICE Stefan Oelrich, president of Bayer Pharmaceuticals ]]>
2020-01-04 00:00:00
<![CDATA[Local bond issuances to boost growth]]> http://www.chinadaily.com.cn/kindle/2020-01/04/content_37531241.htm China's first local government bond issuance for this year debuted this week, the earliest such issuance since 2015 and a month earlier than last year, with analysts signaling that policymakers are more determined than ever to spur economic growth through more investments.

Local governments of Sichuan and Henan provinces offered a combined 87.6 billion yuan ($12.6 billion) of special bonds on Thursday. Authorities in the city of Qingdao, Hunan and Zhejiang provinces also released the special bond issuance plans for January. The total amount of special bonds may exceed 800 billion yuan in the first quarter, according to analysts and data from the China Central Depository and Clearing Co Ltd.

The capital raised from the special bonds will be invested into municipal infrastructure projects, environment protection and transportation. About 89.7 percent of the first batch of special bonds in Sichuan and Henan have maturity periods of more than 10 years, the Ministry of Finance said.

The earlier-than-ever local government bond issuance came after the People's Bank of China, the central bank, announced plans to inject 800 billion yuan in the financial sector by cutting the reserve requirement ratio (RRR) for banks by 0.5 percentage point on Wednesday.

The PBOC said the RRR cut will save about 15 billion yuan in funding costs for banks this year, and the injected funds may help to lower the new benchmark interest rate-the loan prime rate (LPR) when banks will report the rate later this month.

The central bank's move was to coordinate with the local government bond issuance, to prevent liquidity tightening when the bond sales rise in January, said Wen Bin, chief economist with China Minsheng Bank.

Local government bonds are more attractive for banks because of the lower risk and higher returns compared with corporate bonds, said analysts. For example, for the 10-year special bond for toll roads in Sichuan, the coupon rate was 3.38 percent, compared with 3.1956 percent for the 10-year treasury bond on Thursday.

Liu Yu, an analyst with Guosheng Securities, said on Friday that the quota for newly-issued special bonds in 2020 may reach 2.95 trillion yuan, 800 billion more than the new quota in 2019, as the local governments have to increase financing resources to strengthen investment but with a limit in the budgeted fiscal deficit. Her prediction was in line with many experts.

The Ministry of Finance released a statement on Friday, indicating that the local government bond issuance work of 2019 was "successfully" completed. A total of 4.36 trillion yuan of such bonds were issued, including 2.15 trillion yuan of special bonds.

To prevent local government debt risks, at a two-day annual meeting that concluded last week, Finance Minister Liu Kun asked local government officials to carry out debt dissolving plans "in a practical and detailed way", accelerate the market-oriented reform of local government financing platforms, most of which are indebted State-owned companies guaranteed by the local governments, and strengthen supervision to curb growth in implicit debt.

Individual investors have been allowed to buy local government bonds since March 2019, and this group accounted for 37 percent of all types of investors by the end of last year, the finance ministry said. The average coupon rate of local government bonds was 3.47 percent last year, 42 basis points lower than a year earlier, the statement said.

"With the deceleration in economic growth, policy support is still needed. We continue to expect a 20 to 30 basis points decline in the official one-year loan prime rate for this year and think the PBOC will also reduce the interest rate for its medium-term lending facilities," said David Qu, China economist of Bloomberg.

A research from Citigroup Inc said that the monetary authority is expected to keep an easing bias by maintaining a measured pace in the rate cut cycle, and policy rates, such as the medium-term funding rate, will likely drop by 5 to 10 basis points in the first quarter this year.

]]> 2020-01-04 00:00:00 <![CDATA[Briefly]]> http://www.chinadaily.com.cn/kindle/2020-01/04/content_37531249.htm Suspension of stock connect denied

China's top securities regulator on Friday denied media reports about the suspension of the stock trading connect between Shanghai and London. Reports saying that China has suspended the Shanghai-London stock connect are untruthful," said Chang Depeng, spokesman of the China Securities Regulatory Commission, at a regular news conference. Chang said that the stock connect is an important effort by China to open its capital market and to expand cross-border investment and financing. Reuters reported on Thursday that China had suspended the Shanghai-London stock scheme over political tensions with Britain.

Refined oil import quota unchanged

China will keep the quota for refined oil imports by non-State companies unchanged at 16.2 million metric tons for 2020, according to the Ministry of Commerce. A statement by the MOC listed the detailed application requirements for the import quota, including the scale of oil storage tanks and bank credit lines. China is one of the world's largest oil buyers. Customs data showed its imports of refined oil amounted to 27.25 million tons in the first 11 months of last year.

Employment up in Germany last year

Roughly 45.3 million people were in employment in Germany in 2019, an increase of 0.9 percent compared to the previous year, according to the Federal Statistical Office (Destatis). The increase was lower than the relevant growth of 1.4 percent in 2018. According to Destatis, the employment growth observed in Germany for the past 14 years continued but with less momentum. A higher labor force participation of the German population as well as immigration of foreign workers more than offset the effects of demographic change, Destatis said. The number of people in employment last year was the highest since German reunification in 1991.

]]> 2020-01-04 00:00:00 <![CDATA[RRR cuts to boost liquidity in housing market]]> http://www.chinadaily.com.cn/kindle/2020-01/03/content_37531116.htm The People's Bank of China's decision to reduce the reserve requirement ratio, or the amount of cash banks have to set aside as reserves, will ease credit pressure for homebuyers but may not spur huge spikes in home sales, as the broad sentiment that housing is for living instead of for speculation remains unchanged.

The central bank cut the RRR on Wednesday for most financial institutions by 0.5 percentage point effective on Jan 6 to support the development of the real economy and lower social financing costs.

The across-the-board RRR cut on the first day of this year will help increase liquidity and lower social financial costs, with indications that more adjustments in loan and interest rates are in the offing, said Yan Yuejin, research director at the E-House China R&D Institute.

"The RRR cut, the first this year after three instances in 2019, indicates that the monetary environment is shifting from tight to loose, and will be positive for the real estate sector in terms of financing," said Yan.

Reasonably ample liquidity and social financing will open up more lending avenues for homebuyers in the first quarter, but property developers may continue to see crimped financing conditions, said Zhang Bo, chief analyst of Anjuke, a leading Chinese property portal.

Analysts said the application of the loan prime rate introduced by the central bank will possibly bring down home purchase costs.

The central bank had last Saturday decided to scrap the traditional benchmark lending rate for new loans starting from this year, and made the loan prime rate (LPR) the only benchmark rate for fresh lending starting this year.

Financial institutions and their clients can negotiate a floating rate higher or lower than the benchmark, and for those loans already issued but yet due, new contracts will be signed between banks and borrowers between March and August to shift to the LPR.

"The increased liquidity will likely lead to a cut in the LPR, which means the interest rate for homebuyers will be marked down too," said Zhang Dawei, chief analyst at Centaline Property Agency Ltd.

Despite the positive impact for homebuyers, industrial analysts said demand for homes will remain steady, as the annual Central Economic Work Conference has earmarked stabilizing land and home prices as well as market expectations as one of the key tasks to ensure steady and health development of the property market this year.

"The key target for the real estate market is to prevent risks, so that the financing environment for the property sector will remain stable in the future," said Xu Xiaole, chief market analyst with Ke Research Institute, a research organization under real estate brokerage platform Ke.com.

"It is highly likely that the central government will take steps to ensure adequate liquidity and lower financing costs this year, but such decisions will not be a stimulus for the property market. We have to bear in mind that housing is for living in, and not for speculation," said Ding Zuyu, CEO of E-House (China) Enterprise Holdings Ltd.

Xu said the consistent reserve ratio reduction since 2018 is a response to ease the financing difficulties of medium-and small-sized enterprises in particular as China's economic development is shifting from high growth to quality growth. The RRR cuts will not increase demand for home purchases, he said.

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Potential homebuyers look at property models at a real estate expo in Bijie, Guizhou province. LUO DAFU/CHINA NEWS SERVICE

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2020-01-03 00:00:00
<![CDATA[Kweichow Moutai forecasts lower full-year profit]]> http://www.chinadaily.com.cn/kindle/2020-01/03/content_37531125.htm Share prices of Kweichow Moutai Co Ltd saw fluctuations on Thursday after the high-end spirit maker reported lower-than-expected annual sales estimates and profit for 2019. The company's shares fell by as much as 5 percent in early trading despite an overall strong A-share market performance.

Moutai, a distiller from Maotai town in southwestern China's Guizhou province, closed at 1,130 yuan ($162) per share on Thursday after opening the day at 1,128 yuan. Though the company's share prices have declined from the high levels seen in May last year, it is still the most expensive stock in the A-share market with a valuation of more than 1.4 trillion yuan.

Other major liquor makers also saw lackluster stock performances on Thursday. Shares of Sichuan province-based Wuliangye Yibin Co Ltd and LuzhouLaojiao Group dropped by 0.7 percent and 1.42 percent.

Moutai said it expects to achieve full-year sales revenue of 88.5 billion yuan in 2019, up 15 percent year-on-year. Net profit during the same period was forecast to reach 40.5 billion yuan, up about 15 percent year-on-year, a slower growth rate for sales and net income from the previous two years, according to the company's estimates.

Last year, the distiller produced 49,900 metric tons of liquor, and 25,100 tons of series wines. This year, the company plans to sell 34,500 tons of liquor, which is 11 percent higher than its plan for 2019, and it aims to achieve an annual sales growth of 10 percent in 2020, according to the company.

In 2017 and 2018, Moutai achieved sales revenue of 58.2 billion yuan and 73.6 billion yuan, jumping 49.61 percent and 26.46 percent over the previous year. Its net profit reached 27.1 billion yuan and 35.2 billion yuan, surging 62.28 percent and 29.89 percent year-on-year.

Moutai, one of China's most prominent consumer brands, earlier became the first consumer stock with a market value exceeding 1 trillion yuan. As one of the leading stocks in the A-share market, Moutai has seen continuous steady growth and its rising share prices have been a trigger for several other peers. Once such companies report lower-than-expected sales, their share prices are likely to drop significantly, industry observers said.

This year, Moutai plans to establish its own e-commerce platform and further promote overseas sales of its products.

"Moutai plans to increase its self-operated product volumes and adjust its sales channels. The company's sales are expected to maintain steady growth. The distiller also might raise its ex-factory price to dealers to maintain good performance," said a research report from Sealand Securities.

 

Employees pack liquor products at the production line of Kweichow Moutai Co Ltd. YANG JUN/CHINA DAILY

 

 

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2020-01-03 00:00:00
<![CDATA[Equities soar on mainland exchanges]]> http://www.chinadaily.com.cn/kindle/2020-01/03/content_37531126.htm Share prices rallied on Chinese bourses on Thursday as investor sentiment got a boost from the central bank's decision to inject fresh capital into the financial market to shore up growth by reducing the amount of cash financial institutions must set aside as reserves.

The benchmark Shanghai Composite Index rose by 1.15 percent to close at 3085.2 points, the highest level since late April. The Shenzhen Component Index gained 1.99 percent to close at 10,638.82 points.

The market rally was led by internet and technology firms, financial companies, machinery and semiconductor manufacturers. The rise reflected investors' expectation of the monetary loosening by the central bank to help ensure reasonably ample liquidity in the market and reduce financing costs for companies to stabilize the country's economic growth, analysts said.

The People's Bank of China said on Wednesday that it will lower banks' required reserve ratio by 0.5 percentage point, which will be effective from Monday. The RRR cut is expected to release about 800 billion yuan ($115 billion) into the financial sector.

Zhang Yulong, chief strategist at China Securities, said that the latest RRR cut by the central bank will help ensure the stability of China's financial sector and maintain ample liquidity in the market ahead of the Lunar New Year holiday.

"It is also beneficial to the stock market and the A shares are likely to continue to rise with stocks in sectors like property, construction and finance being the preferred picks of investors," Zhang said in a research note.

Market confidence was also boosted by the stabilizing trend of the Chinese economy. The official purchasing managers index of the manufacturing sector, a gauge of factory activity growth in China, stood at 50.2 last month. It is the second consecutive month that the index has remained in the expansion territory.

Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said that the Chinese economy continued to stabilize in December as business owners' confidence has been improving and there is a stronger willingness among them to expand production and increase stocks.

Economists expect more monetary loosening to come, but China's policy easing will be modest as policymakers intend to avoid using massive easing to stimulate the economy. They said that the monetary easing could help boost China's infrastructure investment and credit growth this year.

"More monetary easing should help boost credit growth from 10.8 percent in 2019 to 11.4 percent this year, although this rebound would be much more modest than previous episodes of policy easing," Wang Tao, chief China economist at Swiss bank UBS, said in a research note.

Wang expected another RRR cut by 0.5 percentage point over the rest of this year and a 0.1 to 0.15 percentage point cut of the medium-term lending facility rate after inflation peaks in the first quarter.

"Overall, we continue to expect sequential growth momentum to rebound in the first and second quarters and maintain our 2020 GDP growth forecast at 6 percent," Wang said.

 

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2020-01-03 00:00:00
<![CDATA[Local toymaker wins market with innovation]]> http://www.chinadaily.com.cn/kindle/2020-01/03/content_37531128.htm During the 2019 Singles Day festival, a shopping occasion created by Tmall, neither Lego or Bandai, the top two toy brands in the world by value, topped the chart in the toy category.

The champion in terms of revenue was Pop Mart, a Beijing-based lifestyle retailer, which in nine seconds sold 55,000 toys in mini blind boxes-small, sealed packages containing collectible toys that are part of a series. It also sold more than 2 million art toys-designer toys normally designed by artists-worth 82.12 million yuan ($11.8 million).

The growth compared with the previous year's event is 295 percent, and it was only the third time Pop Mart had participated in the Singles Day shopping spree. All the other top four toy brands were foreign. According to Tmall, about 80 percent of the art toys sold on Tmall during the 2019 Singles Day were from Pop Mart.

The company said its victory over international leading toymakers did not come from low costs and large quantities, a stereotype of Chinese toymakers.

"We beat them by selling at decent prices and relying on our own brands," said Wang Ning, founder and CEO of Beijing Pop Mart Culture and Creative Co Ltd. "We are not selling copies of popular toys. We won by innovating a completely new toy category."

Compared to the brick toys and robots, Wang's toy empire is founded on art toys, and Pop Mart's toys are targeting mostly at teenage and adult consumers aged between 15 and 35-people they refer to as art toy collectors. The company has 2 million active registered customers.

"The growth in demand for toys from adult consumers is probably bigger than that from children and parents," he said. "And this has immense potential."

Walking into his Beijing office with its views of the central business district, one might mistake it for that of an artist. Filled with displays of collectibles, paintings and sculptures, the center piece is an electronic drum set that Wang occasionally plays.

Wang opened a store in 2008 in his sophomore year at university, renting out small spaces in the store to individual sellers. In 2010, he founded Pop Mart to sell arty designer products including accessories, makeup and digital products.

While the business was largely unsuccessful, Wang discovered one toy, SonnyAngel, was a big hit. In 2015, Wang took a risk and dropped many categories and focused on selling art toys, notably securing the licensing rights for the character Molly by Hong Kong toy designer Kenny Wong, founder of Kennyswork Co Ltd. His risky move proved successful.

Now defined as an integrated intellectual property operation service provider, Pop Mart is engaged in retailing art toys, acting as a broker for artists, developing new media entertainment and organizing large-scale exhibits.

In China's first-and second-tier cities like Beijing and Shanghai, Pop Mart has about 130 retail stores and more than 700 machine terminals, making it the largest art toy retailer in China. It has cooperated with well-known brands and artists around the world and launched a variety of popular art toys.

In 2017, Pop Mart publicly listed on the National Equities Exchange and Quotations, known as the "new third board", with a loss of 30 million yuan. In the following year, the company made a profit of 8 million yuan. In the first half of the third year after listing, Pop Mart reached a profit of 25 million yuan. The company went private in March 2019.

A total of 65 percent of Pop Mart's business comes from brick-and-mortar stores and the rest comes from online sales. Wang believes offline stores serve as a channel to not only sell products, but also create a space to cultivate a sense of culture.

According to global asset ranking firm Hurun, Pop Mart's capacity in building its own intellectual property supply chain-designing, manufacturing and retailing-has contributed to its sudden surge in the retail and entertainment sector.

"Our business is to commercialize and industrialize what artists have created," Wang said. "It is a pity that an artist can sell only 200 pieces of artwork. I want to bring them to a mainstream audience through our platforms and the ecology we have built."

Speaking about what makes art toys popular in China, Wang said it sometimes requires decades of cultivation for major international intellectual property such as Star Wars to make an impression on Chinese people. But art takes less time and effort, he said. "You could be moved to tears just by looking at a painting simply because it moves you," he said. "That is probably the charm of Molly."

According to Wang, art toys are popular with adults because they meet their desire to preserve rare and collectible figures, especially those hidden in blind boxes.

"Collecting is a natural human desire," said Wang. "Collecting art toys is similar to older generations collecting stamps, or rich people collecting paintings and antiques, girls collecting bags and boys sneakers."

Besides encouraging collecting, Pop Mart has cashed in on the popularity of its products in the secondhand trade market.

According to Xianyu, Alibaba's online platform for secondhand goods, since the second half of 2018, more than 300,000 blind boxes have been traded, with Molly toys traded more than 230,000 times.

Wang said the reason people want to trade and collect art toys such as Molly is the strong demand for the toys. "What has been revealed from the secondhand market is the tip of the iceberg," Wang said.

The desire for individuals to please themselves is also a market opportunity. Wang compares buying blind box toys to sending gifts to yourself. Opening a blind box and finding a rare figure involves anticipation, surprise and delight, he said.

In addition to retail, Pop Mart also engages in intellectual property operations, working with renowned organizations including The Walt Disney Company.

It collaborates with leading artists and nurtures young artists through courses at art academies around the country. Exhibitions attract hundreds of artists and serve as a talent show for Pop Mart to select partners.

Wang's vision is to be inclusive, and to nurture the entire market.

"If we want to become a company that creates something like Hello Kitty, it would make us a rival to all the toymakers," he said. "But working closely with those toymakers with influential intellectual property, we've become a distributor and collaborator."

Pop Mart has plans to become an incubator for global artists amid its fast expansion to overseas markets. With a presence in 20 countries and regions, Pop Mart's sales have achieved growth worldwide, Wang said.

He hopes overseas sales revenue will eventually contribute half of the company's total revenue, though at present it's below 10 percent.

"China has for so long been a top toy manufacturer, but never a leading toymaker," Wang said. Pop Mart now works with more than 30 domestic top toy manufacturers in Dongguan, Guangdong province, where it has manufactured toys for leading toymakers in the United States and Europe for decades.

"Our orders have taken up more than half of the manufacturing capacity of many such factories," Wang said. "High-end toy orders with more profitability and respect for internationalized manufacturing procedures are incentives to turn Chinese manufacturing capacities to producing toys for Chinese brands."

Art toy sector is still a niche market therefore is challenging to expand to mainstream consumers, said Jason Yu, general manager of Kantar Worldpanel China. However, Pop Mart's capacity to empower art toys with social features and to define them as trendy toys with popular IP and affordable prices have contributed to its high repeating purchase rate, he added.

In addition, Pop Mart's collaboration's and cross-over with other renowned IP have further widened its access to consumers, Yu said.

An art major, Wang said his vision is to make Pop Mart a company that spreads warmth and happiness, and a company that could become the Chinese equivalent of Disney or Netflix.

"We want to stand for well-known intellectual property. When consumers think of our logo, they feel happy," he said.

 

A girl rides a merry-go-round which features Pucky, Pop Mart's star toy series, at a shopping mall in Tianjin. HU LINGYUN/FOR CHINA DAILY

 

 

Visitors tour the 2019 Beijing Toy Show at the China International Exhibition Center in Beijing in August 2019. CHINA DAILY

 

 

 

 

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2020-01-03 00:00:00
<![CDATA[Strong efforts to further open financial sector 'beyond expectations']]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37530970.htm China has accelerated the opening-up of its financial sector by launching a series of policies and measures last year, said financial practitioners and experts.

Nomura Holdings Inc's majority-owned securities joint venture in China, Nomura Orient International Securities Co Ltd, opened for business in Shanghai on Dec 20. It became the first newly formed securities joint venture, in which the foreign side holds a controlling interest, that has opened for business in China.

Nomura owns 51 percent of the outstanding shares of the joint venture, whose registered capital is 2 billion yuan ($287 million), Orient International (Holding) Co Ltd 24.9 percent, and Shanghai Huangpu Investment Holding (Group) Co Ltd 24.1 percent.

"It was beyond market expectations that China made strong efforts to push further opening-up in the financial sector last year, bringing a number of business opportunities for foreign institutions," said Tang Shengbo, head of China financials research at Nomura.

The country will lift foreign ownership limits on securities, fund management and futures companies by 2020, a year ahead of schedule, said the State Council's Office of Financial Stability and Development Committee on July 20 when it announced 11 measures to further expand the financial sector's opening-up.

Encouraged by policies, foreign shareholders of a joint venture in China may hope to take a controlling interest in the company or even hold 100 percent of its shares. Besides, some foreign financial institutions, which either withdrew from joint ventures they previously formed with Chinese partners or have not yet conducted business in the country, may apply for new business licenses or re-enter the Chinese market through mergers and acquisitions, analysts said.

"Foreign investors are now willing to invest in China's financial market, and the country is removing regulatory barriers to foreign investment. As the financial market is comprehensively opening up in many sectors including insurance, asset management and mutual funds, there is a lot to do for foreign investors in different business segments," Tang said.

Tang noted that foreign insurers holding a controlling ownership interest in joint ventures in China can set up asset management companies later, just like their Chinese counterparts.

"Recently, regulators have kept highlighting the principle of equal treatment for foreign and domestic investment. Many foreign-invested companies will think of ways to take the opportunity," he said.

"Policymakers and regulators need to make detailed rules for the implementation of these policies. They may even allow some existing regulatory frameworks of Chinese investment to be applied to foreign investment," Tang added.

China's accelerated opening-up of its financial sector since April 2018 will also bring development opportunities for the country's commercial real estate market, said Cushman& Wakefield, a global real estate services firm, in a report issued on Dec 18.

"As overseas financial institutions keep coming to China, they will bring business opportunities to the office market in first-tier cities and certain core second-tier cities. Meanwhile, overseas insurers will enter the Chinese market continuously and will hopefully give strong support to the bulk properties investment market," said Wei Dong, head of North China research at Cushman& Wakefield.

CG Lai, CEO of BNP Paribas (China) Ltd, said: "The year 2019 marked a set of milestones for China's further reform and opening-up of its financial sector, sending a strong signal of the country's determination to uphold an even more open economy, laying solid groundwork for further market liberalization and injecting confidence into all foreign financial institutions in the Chinese market.

"We believe that the policies toward liberalization are enabling foreign subsidiaries and branches in China to be more connected with their international franchise network, easing the procedures to leverage resources from parent companies, which ultimately address the growing and robust demands from both foreign and domestic clients."

BNP Paribas is one of the first two foreign banks that have received a Type A Corporate Bond Lead Underwriting License from the National Association of Financial Market Institutional Investors after China announced 11 measures in July to promote the further opening-up of the financial sector, allowing foreign banks to apply for such licenses.

"For all foreign financial institutions in China, the world's second-largest credit market is definitely appealing and will inspire a wider array of cooperative models and tailored products among domestic and local players," Lai said.

"Alongside a deepened engagement of foreign institutions in China over the past few years, market governance will be enhanced, driven by the participation of all, and we are confident it will reach new heights through an even more open financial environment in the near term," he said.

Further opening-up of China's financial sector will particularly benefit foreign asset managers, life insurers and securities brokerages, for some of the skills they have in these niche markets are not yet mastered by their Chinese counterparts, said Nicholas Zhu, vice-president and senior credit officer at Moody's Investors Service.

US-based asset manager Vanguard and Ant Financial Services Group announced on Dec 14 they had established a joint venture to provide a fund investment advisory service to Chinese individual investors, as approved by the China Securities Regulatory Commission. Ant Financial holds a 51 percent stake in the joint venture whose registered capital is 20 million yuan, and Vanguard holds 49 percent.

Back in 2017, Vanguard launched its wholly foreign-owned enterprise in China-Vanguard Investment Management (Shanghai) Ltd-in Shanghai free trade zone.

Charles Lin, chief executive officer of Vanguard Asia and chairman of Vanguard Investment Management (Shanghai) Ltd, said: "China's new round of opening-up of its financial sector provides foreign asset managers a rare opportunity to enter the Chinese market. Following the launch of a series of policies, the country will make big progress in its asset management industry, which will help the industry to keep up with international standards and practice."

In the past, many domestic asset managers took distribution channels and sales capability as the core of the asset management business. They built their resources, experience and abilities mainly in terms of looking for credit assets and designing financial products that were nested in multiple layers. However, as far as Vanguard is concerned, investment and asset management capabilities lie at the core of asset management, Lin said.

"As foreign asset managers, we think the road map for China's opening-up of its financial sector is crystal clear, and we believe the Chinese market will open up continuously. This has further consolidated foreign institutions' long-term confidence in China and has also given us clearer directions," he said.

"We hope that our company and the Chinese market and financial system will learn from each other, become accustomed to each other, and grow together. Only by building a better financial market and business environment through multi-party efforts, could we provide higher quality services to investors more efficiently."

Vanguard is looking forward to bringing its experience and advantages in mutual fund product investment, research and development in the US and other developed countries to China, promoting practices to develop an enduring investment philosophy, and launching mutual fund products, which are suitable for long-term investment by individual and institutional clients, he said.

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Billboards of foreign and domestic financial institutions are seen on a street in Shanghai. YAN DAMING/FOR CHINA DAILY

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2020-01-02 00:00:00
<![CDATA[Goat milk infant formula gaining popularity]]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37531012.htm A niche has developed for the relatively small category goat milk infant formula in China.

Goat milk formula has been popularized and is better recognized by consumers after a decade of growth and more dairy makers are making investments in the product, given the increasingly fierce competition in the milk formula market.

Chinese dairy giant Inner Mongolia Yili Industrial Group launched its first goat milk infant formula product in the high-end segment in December. The product uses goat milk which is originated from the Netherlands. It is meant for babies till the age of three.

Yili said goat milk infant formula will be easier to digest and absorbed by babies and will help to enhance the resistance of infants to diseases. The launch of the new product will help the company to enrich its high-end product portfolio. Yili is the largest dairy maker in Asia.

"The market of goat milk infant formula has been growing rapidly in China. With scarce output and richer nutrition, the category is seeing good growth prospects," said Zhao Xin, vice-president of the Yili Group.

"With increasingly specialized nutritional demand from young mothers, the goat milk formula we have launched is expected to help revive domestically-made infant formula products," he said.

The goat milk formula market in China is forecast to hit 10 billion yuan ($1.4 billion) this year. The figure was 5 billion yuan in 2015 and 300 million yuan in 2008, said an industry report issued by the China Academy of Social Sciences.

Dutch dairy provider Kabrita, a sub-affiliate of Chinese dairy maker Ausnutria Dairy Corp, has taken a commanding 60 percent share in the imported goat milk formula market in China. The company said it plans to launch more diversified kinds of goat milk formula goods in the next few years.

A bottle of 800 grams of goat milk formula costs 274 yuan on Tmall, an e-commerce platform under Alibaba Group, higher than the similar size of traditional milk infant formula brands.

In the first half of 2019, sales of goat milk formula products under Ausnutria reached 1.32 billion yuan, surging 45.3 percent year-on-year. During the period, sales of milk powder jumped 20.7 percent year-on-year, according to the company.

"Compared with normal milk, the digestion rate of goat milk infant formula is closer to that of breast milk. Goat milk formula also contains more protein, fat, minerals and vitamins," said Wang Junbo, a professor at the School of Public Health of Peking University.

"With increasingly higher recognition of the nutritional values of goat milk by the public, goat milk has been more widely applied to dairy products and skincare products, and it is seeing ample growth potential in China," Wang said.

Some other domestic brands such as Guangdong Yashily Group and Synutra Dairy Group have become major industrial players in the goat milk formula market in China.

The new generation of young mothers have recorded higher and more personalized demand, so dairy makers have to conform to the trend and keep enriching their product portfolios to meet those requirements, industry experts said.

Song Liang, a dairy industry analyst, said the growth rate of goat milk formula has actually slowed down in recent years, with an increasing number of big companies promoting the category, and some small-and middle-sized companies will suffer a loss as a result.

"Yet, big brands can promote new products with their sales and marketing advantages, and the bonus from brand imaging still exists for major players," he said.

 

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2020-01-02 00:00:00
<![CDATA[Reforms, opening-up to bolster capital market]]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37531009.htm Continuous capital market reforms and further opening of the financial industry to foreign capital will lend solid support to China's A-share market this year and market analysts remain cautiously optimistic about Chinese stock market prospects this year.

The benchmark Shanghai Composite Index gained 22.3 percent in 2019, its best annual performance since 2014. The Shenzhen Component Index also rallied 44.08 percent in the past year, the biggest annual gain in nearly 10 years.

Analysts believe that market sentiment will continue to be supported by investors' expectation of more capital market reforms this year, which will help boost the quality of the listed companies, improve the efficiency of the Chinese stock market and make it more market-oriented.

China's top leadership pledged at the Central Economic Work Conference in December to speed up financial sector reforms and continue improving the underlying framework of the capital market.

From diversifying financing channels for the country's private and smaller firms to further liberalizing the financial market to foreign investors, the reform measures have helped facilitate China's economic upgrading and defuse financial risks, analysts said.

The recently adopted revision of the Securities Law has also set the legal basis for China to expand the pilot registration-based system for initial public offerings to the whole A-share market. It means that the country's new share sale system will be market-based and administrative approval will no longer be required.

The capital market reforms have helped create more policy consistency and improved market transparency, which will boost investors' confidence and draw more institutional capital from home and abroad into the A-share market this year.

Analysts at Guosheng Securities said in a research note that foreign capital, insurance funds and wealth management money will continue to flow into the A-share market this year and they will be the most important supporting factor for any possible rise of the Chinese stock market this year.

This view was echoed by analysts at Industrial Securities who believe that institutional investors including insurers and pension funds have been flowing into the A-share market in a faster pace and the Chinese stock market will likely appear attractive to some investors as the global market has entered a period of negative interest rates.

Yang Delong, chief economist of Shenzhen-based First Seafront Fund, said that the valuations of the A-share market remain attractive compared with global equities markets and the trend of the stabilizing and steady growth of the Chinese economy in the mid and long-term has not changed, which will continue to draw global capital into the Chinese market.

Possible recovery of corporate profitability as a result of the government's pro-growth policies this year will also bring structural opportunities in the A-share market, analysts at BOC International said.

The China Securities Regulatory Commission, the country's top securities watchdog, is scheduled to hold its annual work conference this month. The CSRC is expected to lay out its work priorities and reform objectives at the meeting.

In September, the CSRC listed 12 priorities for deepening the reform of the capital market, charting a clear roadmap for the sector.

The key tasks include giving full play to the role of the STAR Market, the high-tech and innovative board on the Shanghai Stock Exchange, as an experimental field, encouraging listed companies to enhance their quality, further promoting the reform of the Nasdaq-style board ChiNext, and pushing faster improvement in China's National Equities Exchange and Quotations, or the "new third board".

In a bid to accelerate the high-level opening up of the capital market, China will implement opening-up measures and safeguard financial security in an open environment, the regulator said.

"With the implementation of the reform measures, China's capital market will see fundamental improvement to better play its role in facilitating economic transformation and high-quality development," said Han Qian, a professor at the School of Economics at Xiamen University.

Xinhua contributed to this story.

 

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2020-01-02 00:00:00
<![CDATA[Foreign capital to have wider access to futures market]]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37530975.htm China's derivatives market is expected to embrace a big round of opening-up this year as the country's policymakers aim to facilitate high-quality development by encouraging greater participation of foreign investors and drawing more long-term institutional capital into the Chinese financial industry.

The futures market became the first sector in the Chinese financial industry in which foreign companies can have full control of their business entities as the country removed ownership restriction on futures companies on Jan 1.

An official at the China Securities Regulatory Commission said the regulator is keen to give foreign investors greater market access in a hope of consolidating and energizing the industry, which is less developed compared with the country's securities and fund industries.

The regulator is expected to issue a revised regulation soon on qualified foreign institutional investors, which will substantially expand their investment scope and allow them to trade in the derivatives market including financial and commodity futures and options.

Meanwhile, more types of commodity futures and options contracts will be made available for overseas investors this year. The Shanghai Futures Exchange will launch the trading of low-sulfur bunker fuel oil futures contracts and container freight index futures contracts this year, which will allow foreign investors to participate in trading. The exchange will also open copper futures trading to foreigners this year.

China has been accelerating the opening of its derivatives market since 2018 when the country launched the trading of crude oil futures contracts and opened it for the first time to foreign investors, a milestone development of the country's futures market. Following crude oil, three more products-iron ore, pure terephthalic acid and technically specified rubber 20 futures contracts-became available to foreigners.

The efforts underscored China's intention to boost its pricing power in the international commodity markets as the country has been a major importer of raw materials and commodities but has had limited pricing influence in the international markets.

The liberalization of the futures market will also help raise the global profile of the Chinese currency as the contracts of commodity futures and options contracts that are open to global investors are denominated in renminbi, or the yuan.

"The opening of the futures market is line with the development of China's international trade. It is also a necessary way to boost the international pricing capability of the Chinese futures market," Fang Xinghai, vice-chairman of the CSRC, said at a derivatives forum recently.

"The trading of both domestic and foreign investors in the futures market will help create a more consistent, transparent and fair market pricing … and the yuan-denominated contracts will help push the internationalization of the renminbi," Fang said.

Fang said the securities regulator will continue to enrich the derivatives market by approving and offering more products to investors at home and abroad this year. In December, two new option products, the gold option and CSI 300 stock index option, debuted in the market and more are expected as the regulator aims to strengthen the functions of the country's commodity and financial derivatives markets to offer companies and investors more tools to manage risks amid a slowing economy.

Wang Wei, director at the market economy research institute of the Development Research Center of the State Council, said promoting the two-way opening of the futures market will allow China to better participate in the allocation of global resources and ensure the national economic security and stable growth while enhancing the country's global competitiveness and pricing influence.

Li Zhengqiang, chairman of the Dalian Commodity Exchange, said the financial industry should serve the economy by providing not only necessary funding but also efficient risk management products and services, which include important tools such as forward contracts, futures and option contracts.

The view was echoed by Xiao Gang, former CSRC chairman and now a national political adviser. He urged the country to fully unleash the risk-hedging function and accelerate the internationalization of the derivatives market, an indispensable part of the country's financial sector.

The development and liberalization of China's derivatives market has been welcomed by global investors who will gain more access to hedging and risk management tools for their exposure in the onshore capital markets.

"I think what is welcome is the continued ability to allow investors to innovate in terms of hedging tools and derivative trading. The expansion of derivatives in the Asian financial markets has been an important step for overseas investors to gain confidence in the ability to access the market in a more liquid fashion," said Kevin Anderson, head of investments for Asia-Pacific at State Street Global Advisors.

Christine Lam, chief executive officer of Citi China, said the US bank Citigroup is seeking opportunities to develop new types of business and obtain new licenses as China will remove foreign ownership restrictions for futures.

"We are interested in this type of business. As foreign investors are increasingly taking part in China's financial markets, our clients' demand for risk hedging and mitigation products such as futures is also on the rise. We look forward to the opportunities to develop new business," Lam said.

Another positive development is that the country's lawmakers are accelerating futures market legislation. The first Futures Law is already in the national legislative process and lawmakers are reviewing the draft.

While China's futures market came into existence in the early 1990s, there has not been an industry law that governs and regulates the sector. Investors are hoping that the first Futures Law can be approved by national lawmakers as soon as possible.

Fang, the CSRC vice-chairman, said the legal process of the futures market has lagged behind the market's fast development.

He noted that China should carefully study the mature legal and regulatory systems in international markets and borrow useful experience and expertise to push the domestic rules and regulation to be consistent with international standards and practice.

 

A pedestrian walks past the Shanghai Futures Tower building. WANG GANG/FOR CHINA DAILY

 

 

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2020-01-02 00:00:00
<![CDATA[AI use set to grow in govt offices nationwide]]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37530997.htm Artificial intelligence is no longer the purview of scientists or businesses capitalizing on the rapidly emerging technology. Instead, it is giving new wings to a surprising category of users-government officials, who are now actively promoting the technology.

It is precisely this aspect that has kept Chen Haibo, founder and CEO of DeepBlue Technology, a Shanghai-based AI company, occupied in the past year by sharing his understanding of the topic through intensive writings and lectures.

So when his new book Talk About AI to Government Leadership made its debut last week in the Party School of the Central Committee of the Communist Party of China, responses were exceptionally popular.

"The subject has always attracted tons of attention and inquiries," said Chen, whose firm offers an array of AI-backed services. "You can easily sense the enthusiasm from government and State-owned enterprise representatives of all levels about utilizing this cutting-edge technology."

China has upheld AI as a key cornerstone to drive the next phase of growth, unleashing a series of policies in the past two years to bolster the sector's development. The guiding "New Generation AI Development Plan" has set 2030 as the year for accomplishing the global AI lead, with a bevy of milestones to be reached by the end of 2020.

"The pursuit of AI-related knowledge shows their eagerness for strategically emerging industries, and how they want to drive economic growth using technologies in a sustainable manner," he said.

Chen's book starts with a historical retrospect on the different impetuses driving growth worldwide, and pinpointed AI as the next engine that will revolutionize industries and power economic transformation. He has taken care to avoid technical jargon and keep the language straightforward and easy to comprehend.

"While internet represents explosion in scale and innovation in business models, the core game changer is so-called 'hard-core technologies'," he said. He said the foreseeable abundance of AI-related graduates, the wealth of data, as well as the government's determination in driving AI initiatives, are conducive to China's goal of leading the global AI pack.

It is imperative that government officials follow the AI trend, riding the next wave of information technology and swimming with the tide, said Xu Weixin, former vice-president of the school, on the same occasion when the book was unveiled.

To this end, the school held a one-day seminar with a particular focus on how smart cities should be developed with the aid of new technologies like AI and blockchain.

"We need to understand the technology and its law of development, and optimize relevant laws and regulations so as to bolster the healthy development of such emerging technologies," Xu said.

It is critical for people in leadership positions to understand the relationship between AI and the Fourth Industrial Revolution, the role of the digital economy and how technologies can be integrated into the manufacturing sector, all of which are properly addressed in the book and relevant lectures, said Ni Guangnan, an academician at the Chinese Academy of Engineering.

"And it's important to share concrete examples and case studies in the application of such technologies, making it the profound and seemingly-distant technology relevant for decision-makers at all levels," Ni said.

DeepBlue's Panda Bus fleet is an example of how AI could ensure a safe and smooth public commuting experience. The smart vehicle uses a combination of AI technologies including computer vision, biometrics, autonomous driving and voice recognition to give buses a digital makeover.

"Our deal in Tianjin is the first government procurement of self-driving buses of its kind worldwide," Chen said. "It shows the boldness and determination of how the government wants to improve people's livelihood leveraging technological leaps."

A recent report by global consultancy Accenture pointed out that AI has the potential to add as much as 1.6 percentage points to China's economic growth rate by 2035.

"Policymakers should prepare the next generation for the AI future … and advocate a code of ethics for AI," wrote Mark Purdy, managing director Accenture Research and lead author of the report.

 

An employee with DeepBlue Technology demonstrates how to use a biometric access gate during a digital tech expo in Fuzhou, capital of Fujian province. XINHUA

 

 

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2020-01-02 00:00:00
<![CDATA[Better EV charging services on the way as demand booms in nation]]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37530989.htm It's easy to plug your electric vehicle into a charger, but it's hard to first find a nearby charging pile available, cheap and efficient. It is even harder to do that for someone venturing far from home.

Not having enough access to efficient charging piles remained problematic for EV drivers in China, according to a McKinsey survey.

With the total number of EV chargers climbing dramatically by 61.2 percent year-on-year to 1.17 million units by November, services bridging between charging stations and drivers have emerged as a top concern.

Buoyed by increasing demand for charging services, a rising number of EV charging infrastructure operators in China are exploring new business potential through information sharing, mapping, battery maintenance, and many other sectors, an expert said.

"As the total number of EV charging piles increase, EV drivers' demand for charging services like information and battery maintenance will soar," said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.

China's EV charging service market is estimated to create an industry value worth 2.2 billion yuan ($315.9 million) by 2020, a report by industry association China EV100 and the Natural Resources Defense Council said.

The boom in China's EV charging service sector came as the government is extending its financial support to the operation of charging stations.

As a result, subsidies will be offered to EV charging operators that are commercially viable and able to guarantee a minimum usage and will no longer be easily available for electric vehicle charging infrastructure makers, Lin said.

"It is natural that an increasing number of companies are rushing into the sector and trying to take a share in the promising business. For them, it (developing EV charging services) is also a good opportunity to have businesses with added value and generate new growth points. Currently many of them fail to make ends meet," said Lin.

China's largest charging infrastructure provider Qingdao TGOOD Electric Co Ltd with 2 million kilowatt-hour annual charging capacity and about 190,000 charging piles, has joined hands with the second player State Grid Corp of China, the third-ranked Star Charge, as well as China Southern Power Grid to launch a website and app for classifieds for EV drivers, named Uniev, to tap the growing market.

By November, Uniev has its platform connected to over 390,000 public charging piles which make up about 85 percent of China's total. The platform covers information about the locations of the piles, availability such as whether it's fully occupied, prices, and user ratings.

The platform has also been developed for adaptation into various platforms like mobile phones, a mini app on WeChat, government platforms and in-car systems.

Huang Shan, general manager for charging services at Uniev, said the company has partnered with nearly a hundred charging operators and NEV manufacturers. It will continue offering products and solutions for NEV drivers, charging infrastructure providers, and NEV manufacturers.

 

A driver charges his new energy vehicle in Weifang, Shandong province. WANG JILIN/FOR CHINA DAILY

 

 

 

 

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2020-01-02 00:00:00
<![CDATA[Going global efforts of new economy firms gain traction]]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37530979.htm Global expansion is becoming increasingly popular with Chinese new economy companies whose innovations are competitive and popular both inside and outside China, according to bankers at US-based Citigroup Inc or Citi.

The technology, media and telecom business has been the fastest growing business in Citi's China franchise in recent years. Its TMT business has grown by double digits every year since the bank set up a team specializing in the TMT sector at the end of 2016, said Jianxun Toh, head of technology, media and telecom of Citi China Corporate Banking.

Gerald Keefe, head of Citi Asia-Pacific Corporate Banking, said, "We see the innovations that the Chinese new economy players have created and probably perfected here in China as very attractive to the rest of the world, and that attraction is promoting their expansion."

Keefe further explained that the innovations which have made commerce more accessible to people, and which have promoted financial inclusion by enabling people who did not have access to banking to make and receive payments, are easily identifiable examples of innovations from the Chinese new economy that are spreading globally.

"Our role in this is to support these Chinese new economy champions as they expand globally by making our global network available to them, which provides rails for their systems to run on," he said.

Being physically present in almost 100 countries and regions, Citi provides financial services in more than 160 markets. The bank maintains 13 China Desks around the world, out of a total of 32 Asia Desks it has globally, to support its global clients as they go out and invest, and develop their business worldwide.

Within each country, Citi has banking teams that cover financial institutions, the public sector, subsidiaries of multinational corporations, and locally headquartered corporates. Within each of those teams, it has groups specializing in certain industries, namely TMT, energy, power and construction, consumer and healthcare, and diversified industrials.

"The desks where we send people out overseas are typically staffed by mainland residents whom we hire and train here (in China) and then give them an opportunity to go out into the Citi network and be global bankers," Keefe said.

"Our Chinese clients have a very high standard for turnaround time and a very high expectation of how hard their bankers are going to work. So we send bankers out to meet those expectations in local language because it makes the whole interaction of the Citi network with those clients more effective," he said.

Bob Zhang, Citi's China Desk head in Europe, said, "New economy companies make decisions quickly and require banks to respond much faster than they do to companies in traditional sectors… This has raised new challenges for us in terms of product innovation and customer responsiveness, forcing us to optimize our internal procedures and make decisions more quickly."

It is worth noting that in recent years, the types of Chinese TMT companies that are going global are evolving from hardware manufacturers and large technology companies to technology platforms in a horizontal market, as well as small-and medium-sized payment service providers. Citi provides TMT companies with wide-ranging financial services including on-the-ground support as they enter new markets, cash management, supply chain financing, and strategic advice on industry developments, Toh said.

The number of fintech companies, especially third-party payment processors, that enter the European market, keep rising because Europe has higher standards for personal privacy protection and information safety than any other continent. Many companies believe that once they successfully enter the European market, it will be easier for them to enter other markets. Emerging fintech companies are using Citi's platform to help merchant clients expand their business overseas, collect cross-border payments, and send the money back to their bank accounts in China as quickly as possible, and settle a payment in renminbi at the best exchange rate, Zhang said.

 

Gerald Keefe, head of Citi Asia-Pacific Corporate Banking

 

 

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2020-01-02 00:00:00
<![CDATA[E-commerce companies lend a helping hand to farmers via product sales]]> http://www.chinadaily.com.cn/kindle/2020-01/02/content_37531006.htm Chinese e-commerce sites are rolling up their sleeves to help farmers sell their agricultural products, a combination of philanthropy and business that contributes to the nationwide eradication of poverty by the end of the year.

Alibaba Group Holding Ltd is scheduled to launch its annual sales campaign for the upcoming Chinese Lunar New Year from Thursday, with a goal of helping farmers sell over 150 million kilograms of agricultural products during the monthlong festive season.

Alibaba plans to maximize public exposure of local produce from impoverished regions by linking customers with a dedicated, onestop landing page via Taobao's home page.

"Our purpose is to help farmers increase their income and make quality, yet affordable, agricultural produce more accessible to the vast consumer group," said Li Shaohua, vice-president of Alibaba and general manager of its rural business unit Rural Taobao.

Dubbed "Rural Produce and Fresh Food", the channel hosts e-shops from 832 poor counties across China. Local products are displayed and introduced through vivid story telling in a variety of media formats.

Prospective buyers are also expected to be drawn by livestreaming shows, which exhibit farmers and local government officials coming together to promote goods and discuss opportunities and challenges of local interest.

During the last Nov 11 shopping festival held by Alibaba, agricultural product sales jumped 64 percent year-on-year to 7.4 billion yuan ($1.06 billion). A total of 370,000 livestreaming shows were conducted in September alone, which offered 1 billion agricultural items via online channels.

Li said the platform will look to cultivate 1,000 livestreaming hosts from poverty-stricken areas in 100 counties and help them each generate more than 10,000 yuan in monthly income. The platform will also work with media outlets such as China Central Television to curate professionally-produced content about fresh produce as well as the farms themselves.

Encouraging self-development and empowerment of the poor population through novel measures has proved to be an effective approach as China aims to achieve total poverty eradication by this year, according to experts.

"Multisectoral approaches, targeted strategies, leadership, constant innovation such as using e-commerce to connect farmers to markets have been core enablers of poverty alleviation in China, by adding income and enhancing commitment," said Ehizuelen Michael Mitchell Omoruyi, executive director of the Center for Nigerian Studies at the Institute of African Studies, Zhejiang Normal University.

Other platforms have also upped the ante. Shanghai-based social commerce site Pinduoduo said a dedicated project that sells farm produce from poverty-stricken regions earned "record revenue" and is on course to make the endeavor into a regular poverty relief initiative with the assistance of information technology.

E-commerce major JD said in the first half of 2019 people spent 6.6 times that of the previous year on agricultural produce from poor counties via its platform. In just three years' time, sales of dragon fruit, pineapple and avocado from rural regions surged 8, 3.3 and 3.4 times by the middle of last year, JD's data showed.

"E-commerce-powered poverty elimination is expected to gain bigger momentum this year, as the internet facilitates not just the consumer end (i.e. making it easy for people to purchase) but the industrial end, meaning research and development, manufacturing and logistics for agricultural produces can be customized and automated through the adoption of artificial intelligence, big data and cloud computing," said Li Yongjian, a researcher of the internet economy at the Chinese Academy of Social Sciences.

China has vowed to eradicate poverty in all poor counties and regions by this year to build a moderately prosperous society in all aspects.

 

A villager in Ninghai county, Zhejiang province, receives New Year celebration decorations at a rural Taobao shop. ZHANG YONGTAO/FOR CHINA DAILY

 

 

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2020-01-02 00:00:00
<![CDATA[Cinema chains bank on high-tech for growth]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530803.htm Wanda Film Holding Co Ltd launched on Monday its Prime cinemas to offer premium watching services, as the entertainment giant continues to bet on technologies to boost profits amid a sluggish market.

The launch came as Wanda Film is seeking ways to reverse its fortunes after it saw net profit drop by 57.25 percent year-on-year to 829 million yuan ($118.68 million) for the first three quarters of the year.

The Prime line cinemas of Wanda will have RealD Ultimate Screens which are expected to bring in an enhanced visual experience, high frame rates, and Dolby Atmos, according to the company.

Wang Qi, chief technology officer of Wanda Film, said the company is working to offer top-notch technologies and individualized services for an enhanced film watching experience.

High technologies have been a focus of efforts by Wanda to lure back moviegoers.

Earlier this year, Wanda agreed to install 20 Cinity Cinema Systems in its cinemas. The system offers film screenings in 4K stereoscopic 3D at 120 frames per second, which is considered superior compared to the often-used 24 frames per second.

Wanda was not the only one to bet on high-tech embedded film screenings to boost profits.

Major cinema chain Guangzhou Jinyi Media Corp also agreed to install 20 Cinity Cinema Systems in its cinemas earlier this year after seeing its net profit drop by 24.17 percent year-on-year to 105 million yuan for the first three quarters of this year. So did Bona Film Group Ltd.

"There are many reasons. Viewers' enthusiasm was cooling. Consumers' spending on entertainment was weakening due to economic slowdown. Supercheap film tickets (sold at 9.9-19.9 yuan per ticket) were rare on the market," said Chen Shaofeng, a professor of culture and entertainment at Peking University.

Chen said the booming home cinemas and rapidly-developing online streaming services are also part of the reason for the changes.

"Many industry people hold the view that current film screening services had outstripped movie going demand," he said.

In the first half of 2019, the total box office revenue stood at 31.17 billion yuan in China, down 2.7 percent year-on-year, data from National Radio and Television Administration showed. Total cinema visits were 808 million during the same period, a decline of 10.3 percent year-on-year.

"As film giants are betting on tech-embedded enhanced film screening services, film technology companies like Imax and Dolby are enjoying great popularity among cinema chain companies," Chen said.

Imax China has posted a double-digit growth in box office revenues from cinemas supported by its systems in the first half of this year.

"Aside from tech-embedded film screenings, cinemas are also eyeing non-box office sectors to boost new revenues," Chen said.

A report from industry analysis website Forward the Economist said revenue from ads shown before a film's screening is expected to create a 20 billion yuan market in 2020.

"In addition, sectors like film-related accessories and dining are also growing," Chen added.

Wanda Film's merchandise sales and dining had a 67.43 percent profit margin in the first half of 2019. Its ads business had a 65.43 percent profit margin in the same period. Its businesses leading to box office revenue, which accounted for 80 percent of Wanda Film's operation cost, only had a profit margin of 6.07 percent.

Talking about future potential of those sectors, Chen made a reference to Disney. In 2018, Disney reaped big bucks from its parks and resorts business, having netted $20.3 billion out of total revenue of $59.43 billion. Earnings from consumer products and interactive media contributed $4.65 billion to the total revenue.

"Although Chinese cinema companies are still at a very early stage in developing businesses in non-box office sectors and are facing challenges like copyright protection, many companies are on a fast track exploring this field," Chen said.

 

A customer walks into a Wanda Cinema in Changzhou, Jiangsu province. ZHEN HUAI/FOR CHINA DAILY

 

 

 

 

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2019-12-31 00:00:00
<![CDATA[Direct train links speed up Chinese goods export to Europe]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530868.htm FRANKFURT-In the holiday season in December, people across Europe may have different ways of celebrating, but their celebrations have one thing in common: made-in-China products are increasingly making their most important festival merrier.

Thanks to direct freight train service between China and Europe, Chinese businesses with an intimate knowledge of the European market have stepped up their game in Europe's Christmas economy by means of innovation and new designs.

The latest data from Germany's Federal Statistical Office showed that in 2018, the country imported 17,720 tons of Christmas items worth around 143 million euros ($159 million). Nearly three quarters of the items were from China.

In fact, from decorative LED lights to automated Santa toys, more than 60 percent of the world's Christmas-related merchandise come from the eastern Chinese city of Yiwu, around 260 km south of Shanghai. The great variety of holiday products there have earned the place a nickname: "China's Christmas Village".

"European customers prefer simple and elegant designs for Christmas trees, green pine trees with snow, and a couple of jingle bells would be enough," said Zhu Zhijuan, who discussed different regions' preference regarding the choice of a Christmas tree.

Based in Yiwu, her company Xintean Arts and Crafts have been making artificial Christmas trees for 15 years. Its annual revenue amounts to 100 million yuan ($14.3 million), and is expected to grow 10 percent this year, Zhu said.

In Yiwu, the Christmas goods section alone boasts 15,000 varieties. The manufacturers have their own organization-the Yiwu Christmas Products Industry Association-and follow regularly published market indicators.

The local commerce bureau has listed 333 exhibitions around the globe as recommendations for local businesses to attend. Shortly after the holiday season, in January or February each year, for example, Zhu will go to Frankfurt Consumer Goods Trade Fair in Germany to get prepared for the coming year.

More and more Chinese products have made their way onto the shopping lists of European households in the holiday season.

In downtown Brussels, local residents were busy with Christmas shopping at Kam Yuen Supermarket, the largest Asian supermarket in Belgium.

"Kam Yuen used to be a small shop for Chinese people, now 70 percent of the customers are non-Chinese," said Liu Jingrui, CEO of Kam Yuen Investment.

In Warsaw, Chinese retailer MINISO has become one of the most popular places for Christmas gift shopping, and their best-seller this year is a stuffed snowman imported from China.

Piotr Piorkowski, the shop's manager, said that the customers like the original design of the Christmas products sold there and the quality they get for the price they pay.

For Anna Godlewska, co-owner of Amko Toy Store in central Warsaw which imported 90 percent of its customers' goods from China, its love for Chinese toys is obvious: Two days before Christmas, all the products in the store like dollhouses, stuffed animals and baby shoes were sold out.

"People love to buy products from China for Christmas because they have a reasonable price and really good quality," said Godlewska.

In Budapest, a lot of Hungarians turn to Chinese tech products for Christmas gifts for their loved ones.

According to Extreme Digital, a leading Hungarian online marketplace, their best-selling products during Christmas this year were the Chinese sandwich maker and a smart fitness watch produced by Huawei.

 

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2019-12-31 00:00:00
<![CDATA[Retail sales of consumer goods set to top $5.73 trillion in China]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530867.htm China's retail sales of consumer goods is expected to exceed 40 trillion yuan ($5.73 trillion) for the first time this year, maintaining its pillar position in the country's economic growth for six consecutive years, officials from the Ministry of Commerce said on Monday.

Total retail sales of consumer goods is likely to reach 41.1 trillion this year, up 8 percent on a year-on-year basis, said Wang Bin, deputy director-general of the ministry's department of market operations and consumption promotion.

Thanks to emerging business models such as fresh food and broadcasting-themed e-commerce, as well as the expansion of global firms including the US warehouse club chain Costco and German supermarket chain Aldi in China this year, the country's online retail sales amounted to 7.6 trillion yuan between January and November, up 19.7 percent from same period a year earlier.

The strong growth has also been driven by the diversified import channels, service sector, daily living expenses, the nighttime economy and strong purchasing power from China's central and western regions this year, Wang said at a media briefing during the ministry's year-end meeting from Sunday to Monday.

Boosted by cross-industry cooperation, digital tools and e-commerce related business models, Wang said China's booming consumption sector has created a large number of jobs and built better infrastructure network in the country's lower-tier cities, counties and rural areas.

For instance, the number of deliverymen at Meituan-Dianping, one of the country's largest on-demand service platforms by sales revenue, surged from 2.7 million in 2018 to 4 million this year.

"With digitalization being one of the trends of China's takeout business, the delivery options have also expanded. In addition to food and beverage, orders for flowers, green plants, cosmetics and daily necessities have grown in recent years," said Hu Jianping, deputy director-general at the ministry's department of market system development.

She said that meeting the daily needs and festive demands is a new consumption trend across China. Consumption potential can be further unleashed by increasing residential incomes and improving product quality to build a strong domestic market.

Though many parts of the world are confronting downward economic pressure, a strong domestic spending power with many emerging service and business modes is key to attracting foreign direct investment in the long term, said Zong Changqing, director-general of the department of foreign investment administration development at the Ministry of Commerce.

For the next step, the ministry will accelerate the upgrading of pedestrian streets in the country's major cities, and further release consumption potential in the country's rural areas via e-commerce, modern agriculture, tourism projects and infrastructure development.

Apart from building a sound domestic consumption environment, Xian Guoyi, director-general at the ministry's department of trade in services and commercial services, said the government will study and formulate a negative list for cross-border service trade in 2020.

He said China will expand service exports, cultivate new growth points in service trade and further enlarge the global market for service trade next year, as well as import more quality services to meet domestic demand.

These moves target short-and long-term consumption, and focus on stabilizing products such as passenger vehicles and digital goods, while also cultivating new drivers from service sector and 5G technology, said Ma Yu, a researcher at the Beijing-based Chinese Academy of International Trade and Economic Cooperation.

 

A customer buys fruit at a supermarket in Shijiazhuang, capital of Hebei province. JIA MINJIE/FOR CHINA DAILY

 

 

 

 

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2019-12-31 00:00:00
<![CDATA[How China proved pessimists wrong in 2019]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530866.htm BEIJING-Pessimists may find little evidence to support their ill-informed and misleading claims about the Chinese economy in 2019.

In their eyes, doom and gloom seemed the only possible scenario for the country amid trade disputes and mounting external uncertainties. However, the resilience and vigor of the Chinese economy have proved quite the opposite.

Here is a fact-check on how at least six claims about China's economy have fallen apart.

Natural slowdown or bleak growth?

Some scaremongers have long tried to sell the message of a "hard landing" of the Chinese economy, whose resilient growth this year made this theory all the more flimsy.

China's GDP expanded 6.2 percent year-on-year in the first three quarters of this year, data from the National Bureau of Statistics showed. The growth, in line with the government's annual target of 6-6.5 percent set for 2019, still outpaces other major economies including the United States, Japan, Germany and India.

A slowdown, rather than a steep fall, is "to be expected and is not surprising or alarming in any sense", as the economy is moving along an expected natural path of maturing growth following its unprecedented growth pace over four decades, said Ahmed Saeed, vice-president of the Asian Development Bank.

Global ratings agency Fitch in November maintained its A+ credit rating on China, affirming its stable growth outlook supported by the country's robust external finances and strong macroeconomic performance.

Stable job market or employment crisis?

Navigating headwinds, China has delivered robust job gains with a stable unemployment rate instead of the massive layoffs predicted by some. NBS data showed that 12.79 million new urban jobs were created in the first 11 months of this year, exceeding the annual goal of creating more than 11 million new jobs.

As China's economic structure has shifted from being industry-led to service-led, the growing service sector, new business models and multiple support policies are also generating more opportunities.

Every percentage point growth of the country's economy can be translated into about 2 million new jobs, said Liu Aihua, spokesperson of the NBS, adding that the job market is kept stable as steady economic growth, structural adjustments and entrepreneurial innovation continue apace.

Made-in-China: Boom or gloom?

In another sign of economic resilience, made-in-China continued to display dynamism despite increased downward pressure. NBS data showed that the purchasing managers' index for China's manufacturing sector re-entered the expansion zone by firming up to 50.2 in November from 49.3 in October.

Analysts suggested that China, as the only country that possesses all the industrial categories in the United Nations industrial classification, has the competitive edge of a complete and efficient supply chain.

As the country continued its structural shift to quality-oriented growth, high-tech manufacturing has also been forging ahead, with an output increase of 8.9 percent in November, and investment surging 14.8 percent year-on-year in the first 11 months of this year, far outpacing the manufacturing sector's average growth of 2.5 percent, official data showed.

Foreign trade: Firming up or faltering?

At odds with what some market observers may have surmised, China's foreign trade remained steady this year, climbing 2.4 percent year-on-year to 28.5 trillion yuan in the first 11 months with exports of high-tech, high-quality and high value-added goods expanding at a faster-than-average rate.

The scope and scale of foreign trade has kept growing as China opens wider to the world. In the first 11 months of this year, China's trade with the European Union and ASEAN expanded, while trade with countries involved in the Belt and Road Initiative reported faster growth than the overall average to account for 29.3 percent of the total trade.

China's commitment to increasing imports is evident in hosting the China International Import Expo and adjusting import tariffs for a range of products starting next year, allowing other countries and regions to share in China's development.

Foreign firms: Investing or retreating?

Misgivings about foreign firms faced with trade tensions and rising costs withdrawing from China are overblown, as the country saw foreign direct investment utilized in the first 11 months of this year rising 6 percent year-on-year, and more than 100 new foreign-invested firms set up every day.

China remains the second-largest recipient of FDI and the largest among developing economies, according to a report by the United Nations Conference on Trade and Development.

The country has taken concrete policies and legislative measures to improve its business environment that grants equality of rights, opportunities and rules for domestic and foreign companies alike, ascending 15 places to rank 31st globally this year on the World Bank's ease of doing business list.

Capital market: Improving or imploding?

Defusing risks and improving the market system, China saw its capital market make a bullish run this year, with the Shenzhen Component Index rising almost 40 percent and the Shanghai Composite Index up nearly 20 percent from closing on the last trading day of 2018.

China's financial opening-up efforts, which include stock connect schemes and scrapping QFII and RQFII quotas into the country's capital market, as well as its strong and increasingly international currency, made yuan-denominated assets more attractive to investors worldwide as foreign holdings of Chinese stocks and bonds jumped 53.56 percent and 27.6 percent respectively in the first nine months of this year.

Inclusion to and increased weighting of China's stocks and bonds in global benchmarks like the MSCI, FTSE Russell, S&P Dow Jones and Bloomberg Barclays index are expected to channel more foreign capital into China's financial market, while ongoing reforms including the registration-based IPO system and spin-off listings bode sustainable growth.

En route to high-quality and more sustainable growth, China is yet to dazzle the world as it stands poised to finish building a moderately prosperous society in all respects next year and turn its institutional strength into better governance in the long run.

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An aerial photo taken by a drone shows a high-speed train passing through fields in Duchang county, Jiangxi province. FU JIANBIN/XINHUA

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A container with furniture produced by local enterprises is hoisted onto a ship on Dec 17, before being exported to European countries involved in the Belt and Road Initiative. XU YU/XINHUA

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2019-12-31 00:00:00
<![CDATA[Baowu Steel set to buy majority stake in peer]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530865.htm China Baowu Steel Group, the nation's largest steelmaker, is approaching its target of becoming a global industry leader with an annual output of 100 million metric tons as it intends to acquire a controlling stake in Chongqing Iron and Steel Co Ltd.

Shanghai-listed Chongqing Iron and Steel announced on Friday in a statement that its actual controller, Four Rivers Investment Management Co Ltd, had signed a letter of intent with China Baowu on transferring the controlling stake in the steelmaker.

According to the statement, China Baowu would take the controlling stake in Chongqing Iron and Steel through a share purchase. The deal is expected to be completed by the end of next June.

"Taking a controlling stake in Chongqing Iron and Steel is one of the latest acquisitions and consolidations China Baowu has made in the past few years since it unveiled the target of expanding its capacity to 100 million tons by 2021," said Wang Guoqing, director of the Lange Steel Information Center.

In its development scheme published in November 2017, China Baowu set a goal of expanding its output from 80 million tons to 100 million tons between 2019 and 2021.

China Baowu, a monolith formed by the merger of Shanghai-based Baosteel Group and Wuhan Iron and Steel Group in Central China's Hubei province in December 2016, is the nation's most competitive steelmaker with a production capacity of 70 million tons, second only worldwide to the Luxembourg-based ArcelorMittal.

The steel mill keeps expanding its scale. In June this year, it announced it would acquire Maanshan Iron and Steel Co Ltd (Magang), whose output of crude steel totaled 19.64 million tons in 2018.

"Magang has 20 million tons of steel capacity, and its unique product portfolio will extensively consolidate Baowu's strengths and increase its output to more than 90 million tons," said Chen Derong, chairman of China Baowu.

Chongqing Iron and Steel, established in 1997, went through a mixed ownership restructure at the end of 2017, according to ThePaper.cn report. Four Rivers is a fund launched in 2017 committed to forwarding the steel industry's restructuring and upgrade.

Baowu's Hwabao Investment Co Ltd and US-China Green Fund originally held 25 percent each in the fund. WL Ross & Co owned 26 percent and China Merchants Finance Holdings Co Ltd held the remaining 24 percent.

"Based in southwestern China, Chongqing Iron and Steel will also complete China Baowu's nationwide presence, as the steel giant already has a presence in the East, South, Northwest and most recently the North by Shougang Group transferring 15 percent of its listed arm stake to Baowu in November," said Wang.

"We are going to see more mergers and acquisitions in the future as an industry-wide restructuring and upgrade continues to roll out," she added.

By 2025, the country's top 10 steel enterprises will have their combined output contribute between 60 percent and 70 percent of the nation's total, among which, the top three or four companies' annual capacity will reach 80 million tons each, according to the target set by the State Council.

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2019-12-31 00:00:00
<![CDATA[What's news]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530859.htm GOVT AND POLICIES

SMEs play important role in fostering economy

China's medium-sized, small and micro enterprises made important contributions to the country's economic development during the 2014-18 period, official data showed. At the end of 2018, the number of medium-sized, small and micro enterprises rose 115 percent from 2013 to 18.07 million, making up 99.8 percent of all legal entities, according to a report on China's fourth economic census released by the National Bureau of Statistics. Those enterprises employed around 233 million people, accounting for 79.4 percent of all enterprise employees nationwide, the report said. Total annual operating revenue of those enterprises stood at 188.2 trillion yuan ($26.9 trillion) in 2018, accounting for 68.2 percent of that from all companies in the country.

CDB transfers $14.29b to small businesses

The China Development Bank, a major policy bank, has so far transferred 100 billion yuan ($14.29 billion) of loans this year to boost the development of small and micro firms and spur industrial growth in poverty-stricken areas. Since the beginning of this year, the loans have been channeled to 322 banks, benefiting more than 120,000 small and micro-sized firms. Of the total, loans worth 10.5 billion yuan have reached some 100 impoverished counties and helped lift tens of thousands of people out of poverty. The CDB will continue to give full play to the vital role of development finance institutions and provide high-quality and effective financing services for real economy.

Coking coal imports increase in November

China's imports of coking coal saw steady growth in November, according to data from General Administration of Customs. Last month, the imports of the coking coal surged 16 percent year-on-year to 6.18 million tons, customs data showed. The import turnover reached $7.89 million, decreasing 3.9 percent year-on-year. From January to November, a total of 72.8 million tons of coking coal was imported, up 17 percent from the previous year, according to the GAC. The main use of coking coal is to refine coke, material for making steel.

COMPANIES AND MARKETS

China sees record daily number of startups

China's market vitality has been further boosted this year due to easing market access and streamlining approval procedures, according to the country's top market regulator. Around 21.79 million new market entities were established in 2019. A record 20,000 new firms were set up every day on average, data from the State Administration for Market Regulation showed. China has long been ramping up efforts to improve business environment to unleash market vitality and boost high-quality economic growth. The country started the pilot reform to separate business operation permits from business licenses in all 18 pilot free trade zones on Dec 1. The reform is expected to cover the whole country in 2020.

Regulator clears 3 new floats on sci-tech board

China's securities regulator has given the nod to the registration-based initial public offerings of three companies on the science and technology innovation board. UCloud Technology Co Ltd, Willfar Information Technology Co Ltd and Guangzhou Jet Bio-Filtration Co Ltd will be listed on the Shanghai Stock Exchange's sci-tech innovation board, commonly known as the STAR Market, according to the China Securities Regulatory Commission. The companies and their underwriters will confirm the IPO dates and publish their prospectuses following discussions with the stock exchange.

Volkswagen to produce more electric cars

German automaker Volkswagen AG said that it is ahead of schedule in producing electric cars and announced a new overall plan to produce 1.5 million electric cars by 2025. The previous strategic target of 1 million electric cars is expected to be reached by the end of 2023-two years earlier than anticipated, the company said. In September this year at the Frankfurt Motor Show, Volkswagen unveiled the new all-electric ID. 3 model and vowed to become a world market leader in e-mobility. Over 37,000 customers have reserved an ID. 3 and paid a pre-booking deposit, the company said, adding that the model is expected to appear on the market from summer 2020.

Toyota to recall 1,380 defective vehicles

Japanese automaker Toyota will start recalling 1,380 vehicles on Jan 10, from the Chinese market, according to China's market regulator. Filed by Toyota Motor (China) Investment Co Ltd, the recall involves 723 imported Alphard Hybrid models manufactured between Aug 19, and Sept 10, as well as 657 imported Vellfire Hybrid produced between Aug 19, and Sept 6, the State Administration for Market Regulation said in a statement. Due to a defective emergency locking retractor, the safety belts may fail to take effect when vehicles are involved in collisions, said the statement.

AROUND THE WORLD

Japan's jobless rate drops to 2.2% in Nov

Japan's unemployment rate improved in November for the first time in four months, the government said in a report. According to the Ministry of Internal Affairs and Communications, the unemployment rate stood at 2.2 percent in the recording month, dropping 0.2 percentage point from October. Unadjusted for seasonal factors, the number of unemployed people was 1.51 million in the recording month, down by 170,000 from a year earlier and still hovering near the lowest levels since the early 1990s amid the nation's ongoing labor crunch. The statistics bureau also said that 630,000 people left their jobs of their own volition, a decline of 120,000 from the previous year, while those laid off stood unchanged at 220,00 people in the recording period.

Brazil reports primary deficit of $19.8b

The Brazilian central government registered an accumulated primary deficit of $19.8 billion from January to November, which represents the best result since 2014, said the National Treasury Secretariat. The figure declined slightly from $21.8 billion in the same period last year. The primary balance of the central government is influenced by that of the National Treasury, the Central Bank and the social security system. From January to November, the National Treasury and the Central Bank had a primary surplus of $29.8 billion, while the social security system accumulated a primary deficit of $49.6 billion.

Malaysia to issue five digital banking licences

The Malaysian central bank said that it would issue up to five licences to qualified applicants to establish digital banks to conduct either conventional or Islamic banking business in Malaysia. Bank Negara Malaysia said in a statement that it had issued the exposure draft on licensing framework for digital banks, which allowed digital banks to offer banking products and services to address market gaps in the underserved and unserved segments. "Such digital banks are expected to offer meaningful access to and promote responsible usage of suitable and affordable financial solutions to financial consumers," said the central bank.

 

 

 

 

 

 

 

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2019-12-31 00:00:00
<![CDATA[Measures are taken to boost pork supply]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530857.htm Zhu Guolong, who owns a mid-sized pig farm in Jilin province, had planned to expand his farm as pork prices gradually rose from the summer, but he did not carry out his plan for fear that the African swine fever that has swept some parts of the country may continue to spread.

"I fear that I would lose money if the disease continues to spread even after I expand my farm," said Zhu, who owns the Changchun Topigs Animal Husbandry Co Ltd in Dehui.

"If prices continue to stay at such high levels, I will consider expanding my farm then," he said.

According to the Ministry of Agriculture and Rural Affairs, China's pork prices in surveyed markets averaged 51.22 yuan ($7.3) per kilogram in the last week of November, the fourth consecutive week of falling prices. In some cities, pork prices peaked at more than 60 yuan per kilogram in October.

In June, pork prices were only about 20 yuan per kilogram. Then they started to surge and more than doubled in October, pushing the national consumer price index above 3 percent to hit 3.8 percent, and further lifting it to 4.5 percent in November.

Facing the continual and strong spikes in pork prices, the authorities have adopted a slew of policies to increase market supply and encourage hog farming.

Governments at all levels have vowed to support the building of pig farms and fiscal subsidies are given to those who raise pigs.

In Jilin province, for example, the provincial government has provided subsidies and loan interest discounts for raising pigs. It has also encouraged the expansion of insurance coverage for raising of pigs and sows to alleviate risks to farmers and enterprises.

"We will implement relevant policies from the central government," said Lu Guoping, an official of the Jilin Animal Husbandry Bureau.

Imports have been increased to fill the gap in the domestic market. And the authorities have taken out pork reserves to increase market supply and stabilize prices.

Moreover, as China and the United States signed the Phase One trade deal, the country is set to increase imports of pork from the US, which will help increase domestic supply.

"Prices of live pigs hit 40 yuan per kilogram in the wake of the seven-day National Day holiday, the highest level this year," said Wang Dali, head of a pig farm owned and operated by Jilin University in Changchun, Jilin province. However, consumers could not afford such high prices and the demand decreased, leading to price falls, he said. "Even without the government measures to control prices to make pork affordable, prices will drop."

He said the State's release of pork reserves into the market is not on a large scale and cannot satisfy market demand. "But the move sends an important signal to the market: the State will not allow pork prices to continue to rise; then pig farmers will not wait for higher prices and increase sales of pigs, leading to more supply and lower prices," he said.

On Dec 27, 2 million tons of pork reserves were released into the market, the seventh such move this year. Some local governments have also taken similar measures to increase pork supply. China's output of pork amounted to 54 million tons in 2018.

But given the advent of the Lunar New Year, which falls on Jan 25, pork prices may not drop significantly and may even rise moderately during the Spring Festival holiday, analysts said.

Traditionally, demand for pork increases seasonally in the month before Spring Festival, said Zhang Ming, an economist of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences. The rising demand may bring extra pressure on pork prices, although the authorities would also take measures to intervene, he said.

With all these factors taken into consideration, he said, pork prices may hover at high levels until March 2020 and start to moderately fall starting from the second quarter of 2020.

"Given the expected increases of supply and high base effect, pork prices may decline sharply in the third quarter of 2020," he said.

If that happened, China's consumer inflation measured by CPI may peak in the first half of 2020 and fall sharply in the third quarter, which would provide room for China to cut its interest rates to boost growth, Zhang said.

While falls in pork prices, which are expected to happen after the summer of 2020, will benefit consumers and the country's inflation controls and monetary policy maneuvers, they will not be good news for pig farmers.

"For pig farmers, the profit margin is high, but things are not always so promising," said Zhu.

This year, following price rises, profits are on the rise. "But costs are also rising," Zhu said, adding that the salaries of his workers rose by more than 30 percent this year. "As prices rose, there are more investors building new pig farms and they hire new hands, which leads to a shortage of labor."

Although he made a lot of money this year, the profits cannot cover his losses last year, when prices were extremely low, Zhu said, adding that if the current high prices continue, his profits would cover losses by January 2020. "We sold live pigs at about 6 yuan per kilogram at the lowest level last year and the more we sold, the more losses we suffered."

Before this round of pork price surges, China's pork prices had flattened out at low levels for more than two years and farmers were forced to reduce the scale of hog raising because it was not profitable.

"This round of pork price rises has also come from external factors that pig farmers and enterprises cannot control," said Zhang, referring to the spread of African swine fever and the environmental control policies by some local governments. "The combination of the two factors has led to sharp decreases in the numbers of pigs and sows."

As African swine fever spreads, pig farmers and enterprises have become more alert and taken measures to prevent it.

"The government, industrial associations and ourselves have taken time to learn how to control the spread of the disease and now we are more experienced and more capable, both in terms of methodology and equipment, to control it," said Wang of the Jilin University pig farm.

Wang said his farm has increased frequency of disinfection and keeps more disinfection equipment in store so that the procedure will not be interrupted by dysfunctional equipment.

Many newly built pig farms have had equipment, such as that used for ventilation and automatic dung clearing, installed so that the improved living environment would help improve the immune systems of the pigs to help prevent infection, Wang said.

Some local governments that had forbidden pig raising in the name of environmental protection, meanwhile, are revising their policies, Zhang of the CASS said.

 

Employees walk hogs at a pig farm in Fusong, Jilin province. XINHUA

 

 

An employee monitors the environment of a pig farm in Fusong, Jilin province, on June 14. XINHUA

 

 

A farmer feeds pigs at a hog farm in Hunchun, Jilin province. XINHUA

 

 

 

 

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2019-12-31 00:00:00
<![CDATA[Realme seeks to maintain edge in Indian smartphone market]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530835.htm Realme, a rapidly emerging Chinese smartphone brand in India, is ratcheting up resources to accelerate offline expansion, as it seeks to maintain strong momentum in the world's second-largest smartphone market.

Though Realme is still relatively new to the smartphone game, its meteoric rise has been raising eyebrows. It was created by employees from Chinese smartphone vendor Oppo in the middle of 2018 to take on rivals, including Xiaomi, in smartphone markets like India.

Now, as an independent brand, Realme is the fourth-largest smartphone vendor in India. Riding on its instant popularity with young online consumers, the company is eyeing a bigger offline presence with plans for more brick-and-mortar retail ventures. The company plans to expand offline sales to 150 Indian cities this year.

Wang Shuo, head of marketing at Realme India, said in an interview with China Daily that the company already has made significant progress in shifting from the online-sales model. Currently about 30 percent of its sales come from offline stores.

"We will tap more resources to accelerate our offline expansion next year. Demand for upgraded smartphones is burgeoning in third-and fourth-tier cities of India. That is a huge opportunity," Wang said.

According to him, the company will soon offer tailor-made smartphones for offline consumers. "Users buying smartphones online are highly sensitive to technical parameters. They demand the latest processors and the best image pixels. They assess all the differences through data," Wang said, "But when it comes to offline sales, aspects like retailing, design, selfie capability and storage matter more, because consumers can feel and touch the smartphones with their own hands before they decide to buy or not."

Realme is currently the world's fastest growing smartphone brand. Six months after its launch, the brand became the No 4 vendor in India during the fourth quarter of 2018. Little over a year since its inception, Realme said it has joined the big league with more than 10 million units shipped. To be more accurate, 10 million smartphones in 14 months, which translates to 22,000 units sold per day since its debut.

During the third quarter of this year, Realme continued to be the fastest growing vendor in India with a 401.3 percent year-on-year growth in sales. The company now controls 14.3 percent of the smartphone market in India, according to data from market research company International Data Corp.

Wang attributed Realme's rise partly to its accurate product positioning strategy. "We sensed an unmet demand. Online consumers also have desire for smartphones that can combine good performance, design and quality. But back then, no one was here to offer such an option, so we came," Wang said.

In 2018, the Indian online market was dominated by Chinese smartphone brand Xiaomi, which prioritized cost-effective products. Other players including Huawei Technologies Co's Honor brand started to lose traction online, which created a market vacuum that no alternative player can fill, said Xiang Ligang, CEO of telecom industry website Cctime.

"When companies put heavy emphasis on lower prices, they have to make sacrifices on the performance of the smartphones to some extent," Xiang said.

Wang said Realme, overtook Chinese smartphone company Vivo as the No 3 player in India in terms of smartphone shipments in September this year.

To resonate with the younger generation and better build its brand image, Realme has hosted a string of campus concerts and activities for fans. In October, the company hosted four multicity music concerts with famous Indian singers and 11 campus festivals.

During India's festive season, Realme sold more than 5.2 million smartphones between Sept 30 and Oct 31.

Madhav Sheth, CEO, Realme India, said; "We are delighted to once again emerge as the No 1 preferred choice on Flipkart during festive days. Our 5.2 million smartphone sales figure is an actual and credible sellout data that is different from the usual sell-in numbers, which the other brands have been promoting. Realme offers the most blockbuster products that are high on features, style, and performance and is available across price segments."

Recently, Realme unveiled its new payments platform, Realme PaySa, which is designed to help individual customers and small-or medium-sized businesses financially. It is also part of the company's broader push to offer more internet services and direct more revenue from a growing pool of consumers who use its smartphones.

The move came after Xiaomi announced its Mi Credit lending service (and Mi Pay) to make its mark in the fintech space a few months ago. Another Chinese smartphone vendor OnePlus also revealed its plans to get into the payments services next year.

Clearly, the competition in India is still intense, with Xiaomi maintaining the leading position among smartphone vendors and Samsung the second position.

But Wang from Realme said, "Our biggest edge always lies in our products."

 

Consumers check out the latest smartphones introduced by Realme in Beijing on Oct 15. ZHANG YU/CHINA NEWS SERVICE

 

 

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2019-12-31 00:00:00
<![CDATA[TCM herbs may replace antibiotics to improve animal health]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530834.htm China has vowed to stop adding routine antibiotics to animal feed, starting in 2020, to reduce the ill effects of overuse, and some Chinese livestock companies are exploring the potential of traditional Chinese medicine to promote healthy development of animals.

Antibiotics have long been used to kill harmful bacteria in both animals and people. But the continued overuse of the drugs has led to the serious problem of resistance. The European Union decided in 2006 to eliminate antibiotic growth promoters from animal feed and China has announced that it will follow suit starting from next year.

The move is in line with the requirement of the 19th National Congress of the Communist Party of China held in October 2017, that China should "push green development" and "implement food security strategy to ensure people have access to safe food".

Statistics from the Chinese Academy of Sciences show that in 2013, China used more than 16 million tons of antibiotic products, and half are used for animals, leading to the release of 5 million tons of antibiotic residues into water and soil.

"The State will no longer allow the use of antibiotic growth promoters next year and what we can do is improve the immune systems of animals in a more healthy manner," said Zhang Jing, an animal science professor of Jilin University.

To that end, some provinces, such as Jilin, Liaoning and Guangdong, have formed industry associations to promote use of feed free of antibiotics.

Meanwhile, to solve the problem of disease prevention and treatment, some researchers and enterprises are experimenting with using traditional Chinese medicine to meet the requirements not to use antibiotics.

"Many livestock farms and enterprises want to find products to promote animal growth without antibiotics, but it is a challenging task," said Du Yunsheng, head of the Kangfa Animal Drug Institute in Changchun, capital of Jilin.

"We have been experimenting with TCM to improve the immune capability of animals and prevent and cure animal diseases for 15 years and have achieved satisfactory results," said Du.

Du said he became a veterinarian in 1993 after graduating from an agricultural school, and at that time, antibiotics were widely used.

"I felt that antibiotics had been overused and had become harmful, and therefore I began thinking about ways to replace them," he told China Daily.

He later formed a research institute for companies testing and promoting the use of TCM in animal treatment.

By 2016, Du had developed 10 corporate standards and 11 patents on use of TCM in raising livestock.

"National standards are yet to be established in this respect," Du said.

The local government has also selected 40 pig raising farms with more than 10,000 sows to promote his TCM-based solution.

Du's solution mainly involves the combination of different TCM herbs in accordance with different growth stages of the animals.

"We conducted experiments on tens of thousands of pigs, chickens and other animals over a period of 15 years," he said.

Correctly used, TCM herbs are effective and quick in curing diseases and promoting growth of animals."

The use of TCM herbs can reduce stress and inflammatory response, increase feed intake and weight, reduce mortality, and increase feed conversion, he said.

The cost of TCM herbs is the main bottleneck for many livestock farmers and enterprises that want to use them to replace antibiotics. But Du said costs are high due to incorrect selection of herbs.

"There are numerous herbs in nature and many of them can work to solve the same problem; so we can select herbs that are seldomly used to treat people to form our low-cost herb combinations," he said.

Since those types of herbs are not used to treat people, generally they are not in tight demand and are therefore not expensive, he explained. "Actually, the herbs we use are cheap and will not increase costs for livestock farmers much."

Through improving the immune systems of animals, TCM herbs may hopefully provide some clue for preventing and curing the spread of the African swine fever virus, he said. "Research should be conducted to find out whether TCM herbs can play a role."

 

 

 

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2019-12-31 00:00:00
<![CDATA[Tide changes for US pecan growers after phase-one agreement]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530814.htm NEW YORK-Pecan growers in the United States are optimistic that the China-US phase-one trade deal would bolster their fortunes, especially at a time when most of the growers are struggling to make ends meet by selling pecans at a discounted price in the domestic market.

Most of the pecan growers in the US had suffered substantial losses since the start of the US-initiated trade friction against China, the largest market for the US pecan industry.

Randy Hudson, a pecan grower in Irwin County, Georgia, said he and his fellow pecan farmers were "encouraged" by the fact that leaders of the two countries are working on the tariff issue.

The Chinese side announced on Dec 13 that China and the US have agreed on the text of a phase-one economic and trade agreement based on the principle of equality and mutual respect.

While waiting for the details of the trade deal, Hudson said, "we would have hoped that all tariffs would be removed, at least back to the original level."

China was the top market for US pecans. In 2017, US in-shell pecan exports reached more than $300 million, and a staggering 76.37 percent were sold to China, according to pecanreport.com.

Hudson was among the first pecan growers to enter the Chinese market and has maintained a close business relationship with his partners in China.

Since he brought the nuts to the Chinese market in 1999, Hudson and his fellow pecan growers and exporters, as well as their Chinese partners, have managed to grow the business in China, with an increasing number of consumers interested in the nuts' health benefits and rich flavor.

Before the latest trade tensions, Hudson's company exported 4,500 to 9,000 tons of pecans every year, accounting for about 20 to 30 percent of Georgia's total annual output of pecans.

To satisfy Chinese demand, the company bought pecans from other growers. The Chinese market accounted for 90 percent of the company's total sales revenue.

However, increased tariffs had been eroding Hudson's business expansion in China, costing him tens of thousands of dollars in losses and the whole pecan industry more than $10 million.

Irwin County exported nearly $50 million' worth of pecans to China in 2017, but the volume dropped to zero after US-China trade tensions began. In 2018, the county's pecan exports plunged to a record low of less than $10 million.

Pecan prices declined about 40 percent due to oversupply caused by trade tensions, according to Hudson's estimation. This means the local industry suffers more from trade tensions than from damage caused by hurricanes.

The US government provided pecan growers subsidies equal to $146 an acre to help them recover from losses due to trade friction. But that was far from enough.

"It's been very, very difficult to be able to balance our income with our expenses under the burden of the tariff," said Hudson.

Like many of his fellow growers and exporters, Hudson still tries to maintain a good relationship with his Chinese clients.

Although business has paused for the moment, both sides exchange information and keep each other updated about their businesses, hoping to resume cooperation soon. Keeping the relationships afloat is key and often personal.

"We are friends first," he said.

 

Randy Hudson, a pecan grower in Georgia, the United States, shows his pecan trees. XINHUA

 

 

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<![CDATA[International trade to get RCEP boost]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530813.htm Participating countries are expected to sign the Regional Comprehensive Economic Partnership, a mega trade bloc, in November next year, a senior Chinese official said on Monday.

Related countries are expected to complete legal reviews by June next year, Zhang Shaogang, director-general of department of international economic and trade affairs, said at the Ministry of Commerce's year-end meeting.

The RCEP, a proposed free trade agreement among 16 nations, is hailed as what would be the world's largest trade bloc.

During the meeting, Zhang identified three steps to advance RCEP consultations. "The first step is to finalize the remaining talks. At present, what remains are bilateral negotiations, and most of them are technical details that won't affect the final conclusion of the agreement," Zhang said. "Relevant countries will complete legal reviews by June next year."

For the second step, governments or parliaments of related countries may take about three to four months to review the pact, Zhang said.

Finally, the parties are expected to sign the agreement at the RCEP leaders' meeting in November next year. "China is confident about the official signature as planned," he said.

The RCEP is a proposed free trade agreement between the 10 member states of the Association of Southeast Asian Nations: Indonesia, Thailand, Singapore, the Philippines, Malaysia, Vietnam, Brunei, Cambodia, Myanmar and Laos, as well as Australia, China, Japan, New Zealand, India and the Republic of Korea. Negotiations were formally launched in 2012.

On Nov 4, 15 member states of the RCEP essentially concluded all negotiations on market access. India did not sign the agreement on that day. Analysts said India was worried that opening its economy would undermine its already fragile domestic manufacturing base.

Zhang said all parties of the RCEP understand the concerns of India, and the door was always open to the Asian country for consultations. "China is willing to resume talks with India at any time and at any place, in an effort to reach a mutually satisfactory agreement," he said.

Liang Xi, an analyst with Haitong Securities, said: "Once the RCEP is signed, tariff and non-tariff barriers will be removed, which will help stabilize foreign trade and investment."

The move will be beneficial for many enterprises, for instance textile manufacturers, as material costs would decline, Liang said.

In another development, the ministry said that China's foreign trade volume is likely to hit a new high of over 30 trillion yuan ($4.3 trillion) for the whole year.

Li Xingqian, head of the ministry's foreign trade department, said China's export growth rate is higher than the overall level of major global economies.

Private enterprises have played a prominent role, with the proportion of exports going up by 3.5 percentage points to 51.5 percent in the first 11 months, Li said.

China's trade with the Belt and Road economies accounted for 29.3 percent of the total, according to Li.

While external uncertainties are likely to persist, he said the ministry is confident in ensuring steady and quality development of the country's foreign trade.

 

 

 

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2019-12-31 00:00:00
<![CDATA[Yields of listed companies expected to improve]]> http://www.chinadaily.com.cn/kindle/2019-12/31/content_37530812.htm The stepped-up registration-based reform across the whole A-share market has the potential to increase long-term market returns, but the divergence in stock performances may deepen next year, analysts said.

The comments came after China adopted the revised Securities Law over the weekend and made systemic amendments to enable a phased-in replacement of the approval-based system by the registration-based system for initial public offerings across the whole market.

The revised law, set to take effect on March 1, has signaled a faster capital market reform agenda, especially in terms of implementing the registration-based system in Shenzhen's innovation-enterprise heavy ChiNext in the first half of next year at the earliest, they said.

Higher reform expectations have boosted investors' confidence in securities firms, whose investment banking business should benefit from the registration-based reform that is expected to quicken the pace of IPOs.

A subindex tracking the sector rose by 5.72 percent on Monday, while the benchmark Shanghai Composite Index went up by 1.16 percent to close at 3040.02 points, according to market tracker Wind Info.

"The registration-based reform entails not only enabling more firms to get listed, but a series of reforms in fundamental market institutions," said Wang Tingting, an associate professor of finance at the Central University of Finance and Economics.

"If it succeeds, it will strengthen the market's role in resource allocation and help companies with strong competence to thrive and get the weak out of the market, leading to higher quality of listed firms and market returns," he said.

In the short term, less administrative controls on the pace of IPOs and therefore more financing activities under the reform, however, may put some pressure on market liquidity and lead to a divergent stock performance, Wang said.

Particularly, the market value of "shell companies"-or dormant, low-value listed firms that have the potential of being acquired by a nonpublic company seeking to get listed through the deal-may decline as more companies may choose IPOs as a handier channel to go public, said Wang.

A report from Sealand Securities said that the valuation of large-cap companies may rise in 2020 but that of small-caps may drop.

More small-cap firms may get listed under ChiNext's registration-based reform, while money flowing into the market may instead favor large-cap industry leaders, because the money will mainly be foreign capital and funds from the social security system that pursue long-term stable returns, it said.

Stock connect programs between mainland and Hong Kong bourses have seen net foreign inflows into mainland stocks for 30 consecutive sessions of over 110 billion yuan ($16 billion) in total as of Monday, according to Wind Info.

"The market in 2020 will test investors' ability to select stocks and manage risks. To elevate investors' awareness of risks, as well as of their rights and obligations, is a crucial part of the registration-based reform," Wang said.

 

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2019-12-31 00:00:00
<![CDATA[Three tasks can deliver high-quality development in 2020]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530697.htm The real estate sector may be one critical area that China's policymakers should closely monitor in the next year to ensure that the country will win the tough battle of forestalling major financial risks.

We should bear in mind that the period from 2018 to 2020 marks a peak of debt redemption faced by Chinese borrowers, which means an adequate supply of funds must be ensured to shield any risks of large-scale defaults and even a financial crisis.

Conditions of the housing market, meanwhile, have significant impacts on the supply of funds and the overall financial situation. Sharp rises and drops in property prices could both be dangerous.

If property prices rise so much that more money floods the real estate sector through trusts and other financial instruments as well as individuals' speculative investments, the sector will strain the supply of funds for other sectors.

On the contrary, if property prices drop too sharply, real estate developers may see weaker solvency and individuals may default on mortgages, let alone other potential chain effects.

Therefore, if property prices can be stabilized so that the real estate sector can tide over any potential financial stress, the world's second-largest economy may face a much easier situation of financial risks in 2020.

Beijing's pre-owned home market seems to be facing a trend where prices remain high but people are reluctant to buy. When I worked at a real estate agency last year to observe the attitude of property sellers and buyers, I found that though property owners asked high prices on agency platforms, they mark the prices down when it finally comes to a deal.

This phenomenon has alerted me to a question: who will pay for the highly priced properties?

Whether or not drops in property prices could be within a tolerable range-that will be a crucial issue in 2020. If property prices fall too quickly, the authorities should postpone policies to curb the property price bubble, such as the real estate tax, to ensure a stable financial situation.

Given the significance of the property sector for financial stability, we can understand the tone-setting annual Central Economic Work Conference's requirement of property sector policies: to stabilize land prices, home prices and market expectations, and carry out policy adjustments based on each city's actual market condition.

Another important precondition for adequate supply of funds in 2020 is a stable stock market, which in turn entails a better rule of law in the market. Given the current speed of law-based reforms, China's A-share market may welcome an inflection point, or upside potential, in 2020.

The stock market matters in terms of guaranteeing supply of funds because many listed companies have outstanding loans using their stocks as collateral. This means that, on deep stock price declines, listed firms may be forced to sell their stocks to redeem the loans, which will constrain funds available for normal uses.

To prevent such risks associated with stock price plunges, regulators should promote improvements in fundamentals and governance of listed firms, reduce administrative controls, and encourage more mid-to long-term funds such as those from insurers and the social security system to enter the market.

The Central Economic Work Conference called for efforts to improve fundamental institutions governing the capital markets and to improve the quality of listed companies, as well as to complete delisting mechanisms, which will get more low-quality listed firms out of the market.

From the perspective of economic growth, a slowdown in the property sector also mirrors the contraction of old engines of China's economy. I expect that 2020 will still be a key year of economic restructuring, so it is necessary to boost emerging industries, to counter downward pressure from weaker old engines.

Besides the real estate sector, traditional manufacturing sectors such as auto and construction may continue to see contraction and adjustments in 2020.

Meanwhile, strategic emerging industries such as new energy and new materials, the services sector, and modern manufacturing industries such as aircraft and high-speed train manufacturing will strengthen their role of new growth engines in the next year. We need to promote development and even breakthroughs in all the three sectors to maintain a reasonable economic growth.

Also, it is necessary to speed up optimizing the business environment and continue reducing taxes and fees charged on enterprises, to re-vitalize enterprises by reducing all kinds of burdens on them.

Based on our estimations, the government has cut 1.5 trillion yuan ($214 billion) worth of value-added tax and 500 billion yuan worth of fees on enterprises in total for 2020. This could ease the pressure of rising costs on many businesses.

But more could be done. I suggest that the government continue the tax cut campaign in 2020 by reducing number of the value-added tax brackets from three to two.

I would argue that downward pressure in 2020 will mainly arise from domestic factors, especially restructuring, while the trade friction with the United States may exert a weaker negative impact on the Chinese economy.

This is not only because that the two countries have agreed on the text to the much-anticipated phase one trade deal, but because that a large portion of impacts of the trade friction on the Chinese economy has been digested.

In the longer run, external uncertainties may remain, but this should not obstruct China's pace toward a steady and quality development if the three tasks discussed below could be completed.

First, the country should strengthen its advantages of manufacturing and large-scale market by addressing weak links in its manufacturing sector and opening its markets of production resources, services and investments.

Second, China needs to further facilitate technological innovation and motivate more people to engage in innovation.

Third, a more comprehensive trade and investment system, including better financial and legal frameworks, is needed to serve the Belt and Road Initiative.

 

 

 

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2019-12-30 00:00:00
<![CDATA[China's film exhibitors begin to think outside the box (office)]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530746.htm It's hard for me to imagine going to the latest blockbuster without popcorn and soda. Perhaps, that's exactly what China's film exhibitors would like me, and hundreds of millions of moviegoers, to do.

Popcorn, a variety of snacks, beverages, plush toys, on-screen and off-screen advertisements… believe it or not, such products and services are generating more (non-box office) revenue than ticket sales for some, if not all, cinemas.

Non-box office revenue is the new growth point for cinema chains in China. It is not uncommon for some cinemas to turn profitable in a sluggish market on the back of non-box office revenue.

According to a report from consulting firm Forward the Economist, revenue from non-box office sales is driving growth of cinema companies in China. Among all sectors of non-box office businesses, ads shown before a film's screening is a major revenue earner, and is expected to hit 20 billion yuan ($2.86 billion) by 2020.

Wanda Film Holding Co Ltd reported the operating cost of the box office business accounted for more than 80 percent of Wanda's total, but its profit margin ratio was only 6.07 percent in the first half of 2019. However, Wanda's merchandise sales and dining contributed 67.43 percent profit margin in the first half of 2019. That was followed by ads, which had a 65.43 percent profit margin in the same period.

Chen Shaofeng, head of the Fenghuo Cultural Research Center at Peking University, said: "An increasing number of Chinese cinema chains are betting on non-box office revenue to boost growth amid a market slump."

Among all categories of non-box office revenue streams, film-related derivatives are likely to generate long-term profit, Chen said.

"On-screen appeals, accessories, conventional toys, and plush toys are important revenue sources as they can be sold even after a film's theater release. China is still at a very early stage in the business. Most Chinese cinemas are still betting heavily on ads aside from box-office receipts.

"But take a look at the world's leading film studios. Sales of film-related derivatives can contribute up to 70 percent of their annual revenue."

Chen said Disney's revenue from studio entertainment, including box-office sales, was only $9.99 billion in 2018, accounting for only about 17 percent of its total $59.43 billion revenue.

Instead, Disney earned a large part of its business from media networks, parks and resorts, and consumer products. Among those, revenue of consumer products and interactive media was $4.65 billion, and parks and resorts netted $20.3 billion in 2018.

"Film-related derivatives' development is on the rise in China with the success of animation hit Monkey King: Hero is Back and Ne Zha. It is also a good thing that Chinese audiences have increasing awareness of intellectual property of film-related derivatives," Chen said.

My friends and I can relate to that. Despite many merchandise stores on Taobao starting to sell Ne Zha-related products at very low prices after the film's success, my friends and I would tend to buy only from authorized merchandise sellers.

"There is a great potential for the development of Chinese cinemas' non-box office businesses," Chen said.

 

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2019-12-30 00:00:00
<![CDATA[High-tech magnifies cinemas' scope]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530743.htm For someone who has been waiting for an owl carrying an admission letter to a magic school, here's a chance to experience the wizard idea of the Harry Potter world at a cinema in China.

Farfetched as it may sound, such an experience could soon be reality, given the fast-evolving technologies like virtual reality and 5G that are "coming soon" to a cinema near you, promising to enhance viewing experiences of moviegoers and boost revenues of film exhibitors in a sluggish market.

"An increasing number of cinemas in China are betting on advanced technologies to attract filmgoers, as Chinese audiences today spend more money on tech-embedded film watching experience," said Chen Shaofeng, head of the Fenghuo Cultural Research Center at Peking University.

A film trade report from PwC said tech-embedded auditoria top the priority list of Chinese cinema companies. The latter are struggling with a range of challenges. For one, fewer tickets were sold this year. For another, rapidly developing online streaming services and rising number of home cinemas are offering stiff competition.

China's cinema companies boast over 60,000 screens in all, which generated almost 61 billion yuan ($8.7 billion) in revenue last year. But this year, box-office receipts slumped, sparking concerns as well as moves to reverse the industry's fortunes.

Data from the National Radio and Television Administration showed box-office revenues in the first half of this year were 31.17 billion yuan, down 2.7 percent year-on-year. Total visits to cinemas also fell 10.3 percent year-on-year to 808 million in the same period.

But not so long ago, moviegoers' demand had outstripped supply of cinema screens. However, supportive government policies and subsidies encouraged film exhibitors to expand rapidly. But, an unintended consequence of that frenetic expansion was that supply exceeded demand.

Combined with fewer blockbusters, weakening consumer spending on entertainment due to slowing economic growth, and super-cheap film tickets on mobiles apps becoming rare, overall box-office receipts as well as profits fell.

Take Wanda Film. The cinema company saw its net profit drop by 57.25 percent year-on-year to 829 million yuan for the first three quarters this year. Jinyi Media's net profit was down by 24.17 percent year-on-year to 105 million yuan.

This prompted cinema owners to explore various ways of luring back moviegoers, with focus on high-tech, although almost all film exhibitors are also actively exploring nonbox office revenues.

At the 28th Golden Rooster and Hundred Flowers Film Festival, which closed on Nov 23 in Xiamen, Fujian province, telecom carrier China Mobile's entertainment branch Migu announced cooperation with the film festival. The two decided to launch an innovative service with technologies like 5G, 4K (screening with high-definition images and sound), VR, and AR (augmented reality) embedded in it. The goal is to provide immersive viewing experience to viewers at the festival.

Although there is no full-length film that has used VR technology yet, a few cinemas have adopted the technology to screen short videos, to give a taste of emerging technologies to moviegoers in some first-and second-tier cities.

Chen said further research and development are needed to adopt the technology in cinemas. Aspects like how to avoid dizziness while watching VR content need to be sorted out. As a trend though, VR cinema has the potential to reshape filmgoers' viewing habit, he said.

Details on adapting 5G to cinema operations are still sketchy but many exhibitors have already taken their first step in that direction.

Cinemas are also embracing the latest technologies in conventional projection systems and acoustics, besides investing in upgrades of revolutionary viewing experiences like Imax.

Richard Gelfond, CEO of Imax Corp, Imax China's parent company, said Chinese audiences' demand for Imax experience has never been stronger as it is now, prompting the company to expand its footprint in China.

Imax China reported box-office revenue of $236 million on the Chinese mainland for the first half of this year, up 24 percent year-onyear.

That contrasts with the Chinese mainland's sluggish box-office performance in the same period.

The market-defying success of Imax has encouraged more cinemas to bet on advanced technologies to boost their profits.

Korean cinema chain CJ CGV Co Ltd partnered with Imax China earlier this year to open 40 new Imax screens. Till Sept 30, the Imax screens were installed at 666 cinemas across China.

Since cinemas are all about audiovisual wizardry, film exhibitors are paying equal attention to sound. For instance, US audio technology company Dolby Labs saw steady expansion in China with the growing uptake of the company's imaging and sound technologies.

Dolby partnered with local cinema giants like Wanda Film. By July, ahead of the release of The Lion King, the number of Dolby-fitted cinemas expanded to 51 across the country.

"Dolby cinemas' rapid expansion ... and the ongoing release of new cinema products reinforce the strong demand for spectacular cinema experiences," Doug Darrow, senior vice-president of Dolby's Cinema Business Group, was quoted by a Xinhua report as saying in July.

Chinese cinema chain Wanda Film Holding Co Ltd, which reportedly has about 13-percent market share in China's cinema business, owned or operated 595 cinemas that had in all 5,279 screens by the end of 2018. Wanda has since set up its premium film viewing cinema chain Prime to attract tech-loving, experience-conscious moviegoers.

Huaxia Film Distribution Co Ltd, another Chinese cinema chain, introduced CinemaCon's Cinity Cinema System earlier this year. Oscar-winning director Ang Lee used the system to produce his latest film Gemini Man in 4K stereoscopic 3D at 120 frames per second (which is considered superior to the standard of 24 frames per second).

Domestic firms Guangzhou Jinyi Media Corp, Bona Film Group Ltd and Wanda have agreed to install 20 Cinity Cinema Systems in their cinemas across China.

In addition to high-tech, popular technologies like smartphone apps are boosting box-office receipts in China. Moviegoers find it convenient to pick and choose their seats and book combo deals online in advance at cheaper prices, although such discounts appear to be ebbing of late.

A film industry report from iiMedia Research said online film ticketing now accounts for 85.7 percent of the total film ticketing market. In the first quarter of this year, Maoyan mobile app alone accounted for 42.6 percent of total film tickets sold, while its competitor Taopiaopiao had 31.5 percent.

Now that they have stopped offering deep discounts on film tickets, thus contributing to slack box-office sales, which in turn added to the factors that squeezed profits of cinema firms, film exhibitors can no longer expect to boost profits merely by setting up more cinemas, Chen of Peking University said.

Agreed Neil Wang, president of consulting firm Frost & Sullivan China. He said in the past, whenever cinema companies found demand outstripped supply of screens, their reflex was to simply set up more cinemas. But that strategy would not work in the current market situation. For, as Chen explained, profits and policy support had enabled rapid expansion in the past.

"Now, the market is heading to saturation. Fewer cinemas are betting on filmgoers' habitual visits to boost profit. Instead, they are seeking new revenue growth through technology-embedded film screenings," Wang said, adding such shows can help attract big audiences even if tickets are priced higher.

"Many leading Chinese cinema chains are shifting their focus from box office-led revenue to non-box office-led revenue."

Chen of Peking University said many cinema companies have started seeing derivatives as a new revenue stream, though the sector still lacks a well-developed industry chain. "Intellectual property protection, copyright licensing… these are all challenges that need to be tackled to develop film derivatives into a sector.

"Going forward, there might be more tech innovations for cinemas to better deliver film content. Tech advancement has always been important to boost China's film market."

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Moviegoers wait outside an Imax cinema at Joy City in Nankai district, Tianjin. HU LINGYUN/FOR CHINA DAILY

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A woman watches a VR version of a film at the Qingdao International VR Image Week of the International Film Festival in June last year. WANG HAIBIN/FOR CHINA DAILY

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2019-12-30 00:00:00
<![CDATA[Building civilization, fighting poverty in rural China]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530733.htm China has set itself the challenge of eliminating extreme poverty throughout the nation by the end of 2020.

Widespread rapid economic growth has raised more than 750 million people out of poverty during the 40 years of reform and opening-up. But, the last group of extremely poor people still are located in some rural villages, often in remote mountainous regions, who were not able to participate in the general economic transformation.

In 2013, during a visit to Hunan province, President Xi Jinping announced a strategy of "targeted poverty alleviation" that focused on providing the specific infrastructure, education and social support needed by these rural villages. The new programs also shifted focus from the regional and county levels to villages and households.

Especially since 2013, there has been great progress in reducing poverty in rural areas. The number of rural people living in poverty declined from an estimated 99 million rural poor in 2012 to 16.6 million in 2018.

A further 10 million-plus of the remaining extremely poor people are estimated to have been lifted out of poverty this year. The government allocated 91 billion yuan ($13 billion) to poverty alleviation funds this year and the China Development Bank has allocated 400 billion yuan.

Annual income in impoverished rural areas rose from less than 5,000 yuan in 2012 to 10,371 yuan in 2018, which is an inflation-adjusted average annual growth rate of 8.3 percent. Rural areas are slowly narrowing the large disparity in incomes versus city dwellers.

Still more work needs to be done, especially in areas suffering the most intransigent poverty. The two-day Central Rural Work Conference in Beijing on Dec 20-21 concluded that, in order to achieve the goal of eliminating extreme poverty in rural areas by next year, emphasis needs to be put on improving the living environment in those areas-including infrastructure, water supplies, sanitary toilets, education, medical services, social security, cultural activities and ecology.

I recently had the opportunity to visit a small village of about 60 families, mostly of the Yao ethnic group, in mountainous rural Yunnan province to see the ideas of targeted poverty alleviation put into practice.

Hebian Village in Mengla county, Xishuangbanna Dai Autonomous Prefecture of Yunnan province, about 40 kilometers from the border with Laos, is in a fantastically beautiful location-surrounded by mountains and rainforest. But, this isolated location has, until recently, condemned its people to extreme poverty.

Villagers said that earlier they often did not have enough to eat, their health was bad, and their houses lacked modern sanitation, water, and heat. With only an often-muddy dirt track to the outside world, children had to walk at least half a day to school, so many got only a primary education or less.

An all-weather concrete road to the village, completed in 2017, has been one key part of transforming people's lives.

Zeng Kaijun, an official with the Yunnan provincial department of transportation, in a 2018 interview with Xinhua, said: "For years, poor infrastructure has impeded development in several mountainous areas in Yunnan province … All-season roads bring more exchanges with the outside world for people living in remote areas. They also bring health, education and information services to them."

Since the 18th National Congress of the Communist Party of China in 2012, President Xi has often called on government at all levels to ensure rural roads are well-constructed, well-managed, well-maintained and well-operated. From 2012 to 2017, China built or renovated 1.28 million km of rural roads, with 99.24 percent of the townships and 98.34 percent of villages connected by asphalt or cement roads by 2017.

Xi said it was important for poverty-hit areas to improve their transportation conditions and infrastructure in order to shake off poverty and set out on a road to prosperity. Governments at all levels should increase support in this regard.

Villagers in Hebian say that similar roads have been built to all the villages in the area, so the lives of all the people in the surrounding areas have also been greatly improved.

Poverty was earlier greatly reduced in the United States by similar infrastructure programs. For example, the farm-to-market road system started in 1949 by the state of Texas was instrumental in transforming that state from a poor region into what is now the nation's most dynamic economy.

And, the Tennessee Valley Authority, a federal government program to build dams and provide electricity to rural areas, helped raise much of the South out of poverty and backwardness.

A team of researchers from Beijing's China Agricultural University, led by Professor Li Xiaoyun, has lived and worked in Hebian since March 2015 to help the villagers and to demonstrate and research programs that can succeed in reducing poverty in Hebian and similar villages. The team helped villages build new houses with modern facilities, to improve agricultural techniques, and to develop businesses consistent with the comparative advantage of the village. Their work was all under the auspices and leadership of the local government.

Li, who is a well-known national-level advisor for poverty reduction policy, said that CAU's work in the village is part of the ongoing national poverty reduction program. Most of the funds for the project come from the national government, with additional funding from local government and charities-partnered with university technical experts.

He has worked closely with the local government to use the poverty reduction funds and resources more effectively. It was a combined effort of local government, experts, NGOs and philanthropists, and involved partnership with university technical experts.

Some relatively simple steps have transformed lives. For example, the CAU team taught the villagers to separate pigs and chickens from the human houses. An elderly villager said that since this change was made he gets sick much less often.

Hebian is located adjacent to a national forest reserve and is also in the national elephant reserve. So, great care had to be taken to find business opportunities that protected environment.

So the people of Hebian built gorgeous traditional-style houses, designed by Li, each of which has a high-quality guest room. The village business strategy concentrates on becoming a venue for conferences and meetings. For example, a conference of ASEAN village officials recently met in Hebian. For weeks each summer, children from around China come to the village to enjoy the environment and to form bonds with local children.

The people of Hebian, who only recently escaped extreme poverty and isolation, still have a long way to go to take advantage of all their opportunities.

The December Central Rural Work Conference stressed that industries capable of increasing rural people's incomes should be developed and all kinds of skilled workers should be encouraged to set up businesses. Local officials are barred from merely handing out State benefits to farmers. Instead, they are required to set targeted measures to develop local industries and create jobs.

However, the villagers of Hebian have very little experience building businesses. "The villagers are very far away from real market-oriented activity. They don't have any concept, they have no capacity, nor technical skill, and no idea how to proceed," said Li.

They need help from the government and from expert teams. The infrastructure and help provided to them are just the first steps on a longer road to building capacity and prosperity.

Yet, much has been accomplished in just a few years. Huang Yuanzhou, a former village leader in Hebian who is 65-years-old, said that he has dreamed all his life of seeing a civilized rural life. Now, his dream is finally coming true.

 

CAI MENG/CHINA DAILY

 

 

 

 

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2019-12-30 00:00:00
<![CDATA[Insurance for artwork ready for take-off]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530732.htm Insurance for fine arts, though nascent in China, has great potential as demand for protection for invaluable art from damage or theft is high, while relevant financial products are in short supply, experts said.

In November, jewelry pieces valued at more than 1 billion euros ($1.1 billion) were stolen from the Green Vault of Dresden Castle in Germany.

In April, the oak-framed roof of Notre Dame Cathedral in Paris was burned to the ground in a blaze, causing immeasurable loss.

China also reported several fires at some historic relic sites in Sichuan, Fujian, Jiangxi and Zhejiang provinces in the first half of this year.

Art pieces, while in storage, transit, exhibition, loading and unloading, face multiple risks, from natural disasters to accidents such as fire, explosion, flood, robbery, collision and breakage.

Art insurance is regarded as the most direct and efficient way to control such risks and help policyholders gain economic compensation afterwards, according to Yang Hongbo, general manager of property insurance business of TK.cn, a subsidiary of Chinese major insurer Taikang Insurance Group.

Last year, China had more than 5,000 museums, which organized over 26,000 exhibitions that attracted about 1.1 billion visits, data from the National Cultural Heritage Administration showed.

China was also mentioned in a report of the Hurun Research Institute as the second-largest artwork auction market in 2018 with 29 percent market share globally, trailing only the United States.

The frequent exposure and trade of art suggest a strong demand for related insurance services.

"It's a promising business. Besides museums, galleries, agents, logistic companies and individual collectors are potential clients for artwork insurance," said Wang Guojun, a finance professor at the University of International Business and Economics in Beijing.

"China's artwork market develops fast. It is no exaggeration to say that insurance for fine arts is in high demand."

However, only a few insurers in China have provided such services so far due to the high premium, ordinary awareness levels among art collectors and lack of related talent, laws and regulations, experts said.

Besides, to do such business, insurers have to be able to tell the authenticity of the artwork, asses its value, review risk factors, assess the loss and give solutions for restoration and compensation, which makes the entry barriers high, said Yang.

That's why, some policyholders seek the help of foreign insurers, and some give up on the idea of getting their artworks insured, he said.

TK.cn released its artwork insurance product in late 2018 to target both companies and individuals, according to Yang.

The services include delivery of exhibits, tracking of transportation, survey of the exhibition hall and training of the audience to observe the artwork in a proper way, to conduct risk assessment and control from the preparatory stage of the exhibition, he said.

It provided services to British artist David Hockney's first exhibition in China, which was held in Beijing from August and will be concluded in January; exhibitors and collectors of the 2019 Guardian Fine Art Asia, one of the top antique and design art fairs in China; and the Jupiter Museum of Arts in Shenzhen, which displayed 104 works from 60 modern Chinese artists from December this year to April.

In November, the horse head bronze statue from Beijing's Old Summer Palace was exhibited at the National Museum of China. Wang Lu, manager of non-automobile insurance underwriting department of the Beijing branch of Huatai Insurance Group, told Beijing Youth Daily that the company's insurance products covered risk during the transportation of the exhibit and the exhibition period.

He Hongkai, head of underwriting of cultural relics and artworks of Switzerland-based insurance company Chubb, said as China is actively participating in the global artwork development, more Chinese collect and invest in artworks, and the fine arts insurance is being accepted by more people.

Wang said the business, though with high premium and revenue, carries high risk. He suggested insurers should employ more experts in both insurance and art, and adopt technological tools to enhance risk management.

"The circumstances for each artwork can be quite different. For example, porcelain is susceptible to damage from vibrations; calligraphy and painting should be protected from water or improper lighting; sheepskin is affected by coldness and dryness," he said, adding insurers need to have a professional team to provide targeted services each time.

He said premiums for art insurance policies are defined by the value of artworks and the difficulty involved in safeguarding them.

 

A visitor takes photographs of an artwork during an exhibition in Hangzhou, capital of Zhejiang province. LONG WEI/FOR CHINA DAILY

 

 

 

 

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2019-12-30 00:00:00
<![CDATA[BeiGene protects the world with affordable Chinese therapies]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530716.htm BeiGene Ltd, a Chinese biopharmaceutical company focusing on cancer therapeutics, is basking in the glory of receiving the approval of the United States Food and Drug Administration in November for its independently developed new cancer therapy. It is the first-ever Chinese drug company to have received such an approval.

It's a big deal because the US market is massive. And BeiGene's achievement could inspire many other Chinese drug companies to confidently go global.

Wu Xiaobin, 58, BeiGene's president, is aware of the implications. As one who oversaw the rise of BeiGene to global spotlight, he feels he is on the right track to realize his career dream-contributing to the rise of innovation forces in the Chinese pharmaceutical industry.

The USFDA's accelerated approval for BeiGene's Brukinsa (zanubrutinib) capsules, for the treatment of adult patients with mantle cell lymphoma who have received at least one prior therapy, received positive media coverage in China and elsewhere.

For, it marked a milestone in the Chinese pharmaceutical industry. The drug is the first compound discovered in China to have received the FDA's Breakthrough Therapy designation, representing a significant milestone for not only BeiGene but China's pharmaceutical industry.

Wu said the company decided to focus on independently developed therapies because it does not make much sense any more to be on the sidelines as the forces of innovation gather momentum across industries, especially in innovative drugs and biomedicine.

The fillip for this trend, Wu recalled, came from China's medicine regulatory reforms that started in 2015.

In Wu's view, foreign companies' entry into the China market on the back of the reform and opening-up policy changed the landscape of the Chinese pharmaceutical and healthcare industry.

The policy brought in new concepts and practices to the academic, clinical and business communities, and helped ignite pharmaceutical innovation and boosted generic drug quality in China.

However, China must rely on innovative and patented drugs independently developed by its own pharmaceutical companies to ensure that its people could have easy access to affordable and high-quality medication, he said.

"It is okay for a small country to rely on drug imports, but (it's) not okay for a big country as China with 1.4 billion people," he said, adding he is very excited about the latest developments in China's pharmaceutical industry, which is evolving at a high speed, surprising everyone.

"Both the medical community and the regulators are quite open-minded to changes and reforms," he said.

"From the central government to different levels of local governments, and to industry, people are very keen to develop China's own innovative drugs."

Although China started from almost scratch to establish an industry chain for innovative drugs, it is catching up very fast in related fields such as basic research, clinical trial, factory production, commercialization, and quality control.

Chinese innovative drug companies have been developing very fast with increasing innovation capabilities, he said.

In 2017, China became a full member of the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, an organization that standardizes global drug regulations.

In a recent report, global consultancy McKinsey also concluded China's pharmaceutical industry is undertaking a critical transformation toward high-quality and innovation-focused development, as reflected by the explosion of new drug and clinical trial approvals in recent years. An increasing number of approvals are for drugs or therapies from Chinese companies.

Since late 2018, Chinese biomedicine companies have shown the world their capabilities in PD-1/PD-L1 inhibitors with two homegrown treatments, which is a field where both domestic and foreign pharmaceuticals are still in a race. The emerging therapeutics revolutionize cancer treatment as they help the immune system to target and kill tumors.

The two drugs were approved only six months later as two foreign anti-PD-1 treatments entered the China market, and followed shortly by a third domestic PD-1 treatment early this year.

BeiGene's anti-PD-1 treatment is also pending approval from the Chinese drug regulatory authorities.

The company has been also implementing about 20 clinical trial programs globally on Brukinsa's efficacy on other types of blood or lymph tumors, with high hope to get more market approvals in the near future.

The company, which has nearly 10 new drug candidates in pipeline, is a partner in a global strategic oncology collaboration with Amgen, a California-based biopharmaceutical company that is a global leader in this niche.

Chinese biotech firms are increasingly offering China-developed high-quality treatments to Chinese patients, which will help challenge the expensive prices of imported drugs, Wu said.

With innovative drugs such as anti-PD-1 and Brukinsa, Chinese drug companies also have the ability to offer treatment options for patients abroad, especially those in the Belt and Road economies, he said.

Wu joined the Beijing-headquartered company in 2018 from Pfizer China, which he headed since 2009.

His jump to the Chinese biotech startup founded in 2010 surprised many as he had more than 26 years of rich experience in the pharmaceutical industry, including 17 years leading China operations of big-name multinational pharmaceuticals such as Wyeth and Bayer.

He returned to Beijing in 1996 to co-build Bayer's China branch as marketing head. Prior, he was in Germany where he received a master's degree in molecular biology and a PhD in biochemistry and pharmacology from the University of Konstanz. He started his career at Bayer's sales and marketing in 1992.

In 2004, he rose to general manager of Wyeth China. In 2009, as Pfizer acquired Wyeth, he was named head of the combined group.

He also served as vice chairman of the R&D-based Pharmaceutical Association Committee of the China Association of Enterprises with Foreign Investment since 2008.

Under his belt are numerous industry awards, including the "Person of the Year" in Healthy China Awards 2017, "2017 Top 10 Most Influential Persons in the Chinese Healthcare Industry" and the "2017 Social Responsibility Eminent Person Award".

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A BeiGene employee operates a filling machine at the company's facility in Guangzhou, capital of Guangdong province. CHINA DAILY

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2019-12-30 00:00:00
<![CDATA[Massive financial fillip awaits cultural industry]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530730.htm Financing and investment firms can further facilitate the high-quality development of cultural products and services, thereby helping cope with the downward pressure exerted by the slowing economic growth, experts said.

Traditionally, the cultural products industry had been ridden with high uncertainty, risks and low level of stability. Hence, investors tended to steer clear of it.

But, as the country is mulling more supportive policies to give a fillip to the cultural products industry, a host of sectors are now looking at it. They include investors, financiers, insurers, consumer finance providers and tax policy experts.

The draft first cultural industry promotion law, which began to take shape with a request for public opinion this month, suggests more opportunities may be awaiting the sector, they said.

The cultural industry has wide scope spanning fields like news, publishing, televisions, films, performance, animation, online games, music, relics, crafts and design.

As per-capita GDP of China is about to surpass $10,000 this year, the consumption structure of Chinese people is expected to see a significant change, increasing the demand for spiritual products as people pursue a better life, in line with the all-round consumption upgrade, said Fan Jianping, chief economist of the State Information Center.

He made the remarks at a forum organized by the PBC School of Finance at Tsinghua University and Dongcheng district of Beijing.

Zhou Yanli, former vice-chairman of the China Insurance Regulatory Commission, said at the forum that most of the cultural firms are small and micro players with less than 50 employees or annual revenue of less than 5 million yuan ($710,000), while some are no more than personal studios or individuals.

"They are asset-light and rely much on creativity, which means they don't have a stable profit model and life cycles are relatively short," he said, adding more financial support should be given to such small and micro businesses.

Mature financial tools can help de-risk investments in, and other forms of association with, cultural companies.

Insurance, for example, can provide risk management and economic compensation services, as well as enhance their credit to get more financing elsewhere, he said.

It is common for Hollywood filmmakers to apply for bank loans by cooperating with insurance and guarantee services providers, he said.

Financial technologies, or fintech, can also help reduce uncertainty of returns on investments, so that the cultural field can attract more capital. Blockchain, for example, can help in authentication of artworks, Zhou said.

Wang He, former vice-president of the People's Insurance Company of China, said finance firms tend to expect their clients to be controllable and whose value can be specifically defined, but the cultural industry is full of uncertainty. "We can only know the value of a film through its box-office data after its release.

"Financial firms should understand, accept and respect the nature of the cultural industry, and enhance risk management by various technological methods."

Wang further said such services are already available in the market. Beijing-based tech company Trinity Earth, for instance, is able to assess a play or film and predict its popularity in advance using big data.

He said cultural content producers can also use the intellectual property as mortgage.

At the event, Dongcheng district of Beijing was approved by the Ministry of Culture and Tourism, the Ministry of Finance and the People's Bank of China to construct a national demonstration zone for cooperation between the cultural industry and finance.

The district will work on establishing a credit rating system for cultural enterprises, expanding direct financing and innovating in related financial products and services, to ease the difficulty and lower the cost of financing for private, small and micro cultural firms, according to Ma Feng, deputy director of the industrial development division of the Ministry of Culture and Tourism.

Zhao Lei, deputy director of Beijing municipality's publicity development, said culture and finance are two pillar industries of the city economy. Revenue of the cultural industry in Beijing grew 11.9 percent to reach 1.07 trillion yuan in 2018, data from the local government showed.

Su Zhong, chairman of Daye Transmedia Group, a Beijing-based firm specializing in film, TV opera and animation, said investors often show more interest in tangible assets and the lack of funds has hindered the development of culture.

"Intangible assets are of great value, which has huge potential and will benefit the whole society in the long run," he said.

Liu Shaojian, director of Beijing's State-owned cultural assets administration center, said the city is working on establishing a cultural development fund, a risk compensation fund, a credit rating system and appraisal system for intangible assets, to help more cultural companies get financing and lower the risk of investment firms.

 

 

 

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2019-12-30 00:00:00
<![CDATA[Imax projects bright picture of China cinemas]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530729.htm Film technology leader Imax Corp, which witnessed a box-office boom in the first half of this year, said it will double down on its operations in the Chinese market.

Jim Athanasopoulos, chief financial officer of Imax China, said: "We are continuing to push the envelope, differentiating our (film screening) experience, and to offer consumers something different.

"A growing number of Chinese consumers are seeking premium film-watching experiences, and we are working to deliver quality and differentiated content-things Chinese audiences want to see and enjoy … and we see that continuing in the future."

To date, Imax has introduced some of its advanced technologies, including Imax Film Camera, Aiexa Imax Camera, and Imax with Laser, in China.

According to the company, an increasing number of Chinese filmmakers are using Aiexa Imax Camera. It is a two-dimensional digital camera with a high level of digital image capture and playback, producing lifelike images defined by enhanced clarity, details, colors and a higher dynamic range for contrast.

The upcoming Detective Chinatown, which will be released during the Spring Festival peak movie-going season, was shot entirely with Aiexa Imax Camera, Imax China said.

Imax with laser is a laser projection system with 5.1 or 12.1 channel sound system. The technology is designed to offer an immersive cinematic experience with Imax's big screen to moviegoers.

"We are continuing to roll out our theaters. We give guidance to around 90 percent of new theaters this year," Athanasopoulos said.

"We saw strong demand (for technologies) in (shooting and screening) blockbusters, not only those (from) Hollywood but films in Chinese language, which are increasingly welcomed by Chinese audiences."

His remarks follow Imax China's strong box-office performance in a sluggish market.

Imax theaters earned $236 million in ticket sales on the Chinese mainland in the first half of this year, up 24 percent year-on-year.

While China's overall market sales were lower than expected, data from the National Radio and Television Administration showed box-office receipts were 31.17 billion yuan ($4.46 billion), down 2.7 percent year-on-year.

"The contrast shows audience's growing interest in quality content and enhanced watching experience, despite China's box-office receipts and total cinema visits both dropping in the first six months of this year, a possible result of consumers' weakening spending," said Wang Yi, a senior analyst from the Maoyan Research Institute, which tracks box-office trade.

Despite the market downturn, Athanasopoulos said Imax China will continue to focus on expanding in the Chinese market.

Imax China has partnered with South Korean cinema chain company CJ CGV Co Ltd to open up to 40 new Imax theaters featuring Imax with laser projection systems in July.

Till Sept, Imax has 666 commercial theaters in China.

 

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2019-12-30 00:00:00
<![CDATA[Giving world clear images, convenience by innovation]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530726.htm Chinese home appliance maker Hisense Group Co Ltd is ramping up efforts to expand its presence across the globe, especially in Europe, and boost its brand awareness via sponsorship of major sports events.

The company has been implementing a "brand globalization" strategy since 2006, and maintained a rapid development worldwide, with its compound annual growth rate reaching over 20 percent in overseas markets.

"Hisense is counting on overseas markets for future growth," said Zhou Houjian, the company's chairman, adding it is targeting the middle and high-end segments of the market.

Zhou noted the revenue from overseas markets rose 30 percent year-on-year to 37.8 billion yuan ($5.4 billion) last year. Sales of its self-owned branded products in the United States and Canada increased by 57.5 percent and 106 percent year-on-year, respectively.

The European market is a key area for Hisense's internationalization layout, the company said in a statement. Its sales in the European market increased 19.4 percent from January to July this year, compared with the same period of last year, and the growth rate in some key markets such as Germany and the United Kingdom surpassed 20 percent.

Meanwhile, the Qingdao, Shandong province-based company has accelerated its entry into Europe through mergers and acquisitions. In August 2018, Hisense completed the acquisition of Slovenian appliances producer Gorenje.

Founded in 1950, Gorenje had been one of the leading manufacturers of home appliances in Europe and owned high-end brands such as Atag and Asko. It had about 30 percent market share in the household appliances market in East Europe. With Gorenje, Hisense has established full-scale products portfolio and a complete system covering research, production and sales.

Apart from the traditional home appliances sector, Hisense is tapping into the mobile phone industry in Europe. The company launched two new types of smartphones to lure consumers from Russia.

"Russia is of great significance in Hisense's international push. We will continue to expand our presence in overseas markets, with a focus on Europe, Africa and the Americas," said Fang Xueyu, deputy general manager of Hisense Communications Co Ltd.

The company's overall sales surged 274.4 percent year-on-year during the 2018 FIFA World Cup in Russia. In Europe, Hisense has built a sales network covering Spain, Italy, the UK, France and the Czech Republic, with its regional head office in Germany.

In addition, Hisense has announced its global partnership deal with the Union of European Football Associations for men's national team football competitions ahead of the UEFA Euro 2020.

The company will engage in various global marketing and advertising activities. Hisense will be the official television supplier to the competition. It is expected that the partnership will see the brand reach over 200 territories and greatly enhance its international brand exposure.

This is the second time the Chinese giant has filled the position of a global partner among other UEFA sponsors. The company's brand awareness has already increased significantly in Europe through sponsorship of the UEFA Euro 2016 and 2018 FIFA World Cup. It is also a team supplier to Red Bull Racing and sponsor of the Australian Open in 2014.

Zhou said sponsorship of such top sports events will increase the brand's awareness and influence, and let the consumers recognize the products more quickly.

Being at the forefront of electronics and the home appliances industry, Hisense is banking on new technology, which will fuel business growth and power its global brand awareness.

It is doubling down on the cutting-edge laser TV and has unveiled several large-sized and hi-tech TV products at the IFA Electronics Show in Berlin and the Consumer Electronics Show or CES in Las Vegas.

It started to actively lay out the laser display field in 2007, and officially launched the first ultra-short laser TV globally in 2014. Currently, Hisense has more than 600 international patents related to laser displays.

Founded in 1969 as a small radio factory in China, Hisense has grown into a multibillion-dollar global company with a workforce of over 75,000 worldwide.

Its sales revenue in the overseas markets reached $37.9 billion in the January-October period this year, an increase of 28.71 percent year-on-year, according to the company.

It has established 54 overseas branches in Europe, the Americas, Africa, the Middle East, Australia and Southeast Asia; has five overseas production bases to ensure it has its own supply chain and 12 research and development institutions worldwide.

In 2015, Hisense purchased Sharp's TV business in Mexico and acquired Sharp America's TV line for the North and South American markets. In 2017, the company acquired a 95-percent stake in Japan's Toshiba Visual Solutions Corporation, as part of its efforts to expand globally.

"Acquiring local companies is the easiest way for Chinese household appliances producers to expand their presence in the global market," said Zhang Yanbin, an independent researcher in the home appliance sector, adding the European market is of great significance to Chinese appliance manufacturers.

The Chinese home appliance market is almost saturated, so domestic makers are looking overseas to find new business growth points, Zhang explained. "The acquisition will allow the Chinese company to obtain local customers quickly and reduce production costs."

Industry data showed sales of Hisense refrigerators in South Africa ranked first in both 2017 and 2018, while its market share of TVs in Japan reached 20 percent in the first half of this year and ranked third, surpassing Japan's local brand Sony.

 

A technician works on the production line at Hisense's Rosarito plant in Rosarito, Mexico. LI WENQING/FOR CHINA DAILY

 

 

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2019-12-30 00:00:00
<![CDATA[Chinese investment and wisdom rescue Kentucky's fisheries]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530725.htm WICKLIFFE, the United States-As New Year 2020 nears, 62-year-old Angie Yu is marketing her fish products harder than usual. The Chinese American businesswoman views the holiday season as a prime opportunity for the delicacies to gain wider popularity.

"We are processing the fish head with newly-introduced fresh-freezing equipment to cater to the Chinese community, and we are also developing items including fish patties, dumplings and sausages to target US customers," said Yu, president of Two Rivers Fisheries, a company dedicated to carp processing located in Wickliffe City, county seat of Ballard in the US state of Kentucky.

The lineup of fish products, ranging from fish meat to fish sausages, is her answer to the invasive Asian carp-a radical plan to battle the notorious carp plague with knives, forks and chopsticks.

Following their introduction to the United States in the 1970s for algae and waste treatment purposes, the Asian carp have multiplied rapidly and have been crowding out indigenous fish species in the Mississippi River and surrounding waters.

US authorities and the fish industry fear that the Asian carp's northward proliferation, if not curbed, spells disaster for the $7 billion fish industry of the Great Lakes region.

Yu, who has been in the seafood business for over 15 years, acutely sensed opportunities when she read reports about the troublesome fish back in 2010.

She then relocated from California to the obscure Kentucky county on the Mississippi River to start her business in 2012. "Our mission is to reduce, reuse and redefine Asian carp," said Yu, whose operation hires more than 20 local people.

The entrepreneur prides herself on her choice of location. As the name Two Rivers Fisheries indicates, her plant sits on the confluence of two rivers-the Mississippi and its major tributary, the Ohio. Unlimited supply of Asian carp and agreeable climate in middle Mississippi the whole year round have guaranteed her company's smooth operation.

After receiving carp from local fishermen, the plant processes, flash-freezes and boxes up the fish before shipping them out to destinations across the globe.

"The yield varies a bit with the season. We have seen rapid growth in production recently, with about 1 million pounds in October alone," said Yu, adding about 80 percent of the output was exported to Eastern Europe and the Middle East.

Over the past seven years, the company has taken 10 million pounds (450,000 metric tons) of Asian carp out of the Mississippi River, which were sold to a total of 11 countries.

While making headway in fulfilling her business ambition, Yu said the journey has never been without challenge. A lack of commercial fishermen used to be one of them, as most locals deemed there was no market for carp.

Because of the complex bone structure, US consumers showed little appetite for the fish, according to Yu. However, the growth of her business, driven by an export-oriented vision as well as a bold attempt at innovation, has been helping transform the landscape.

"When we first came here, there were only three groups of fishermen in the neighborhood. Now, the number has jumped to some 60 groups," she said.

Yu said purchasing carp from the fishermen, hiring staff and transporting the products account for a large share of her costs.

Yet, the forward-looking entrepreneur is quite bullish about the prospects as she believes in the potential of a robust fish processing chain along the Mississippi River due to its abundant aquatic resources.

This April, Yu, together with multiple Chinese investors, launched the International Fisheries Industrial Park in the county area.

The 72-acre industrial park dedicated to Asian carp harvesting and processing has attracted about 10 Chinese companies to land by far, said Yu.

The new industrial park, designed for vertical processing integration, aims to produce value-added products with the Asian carp.

Yu wishes the park to be a success in exploring new opportunities while mitigating the "carp crisis."

Todd Cooper, judge-executive of Ballard County, praised Chinese wisdom as well as business acumen in developing the project.

He is also hopeful that the new business cluster would help bring in more Chinese companies to establish their presence as economic development and job creation are crucial to the local community, which had experienced years of business slack. "We had lost jobs for 12 straight years at one point," said Cooper, adding the county has started to reverse that trend since 2018, "and I will say it's because of the Chinese investment."

The International Fisheries Industrial Park is expected to create at least 150 full-time jobs and plenty of indirect and part-time work for fishermen and construction companies, according to estimates by the Kentucky Cabinet for Economic Development.

Statistics from local economic authorities showed that Chinese-owned companies operating in Kentucky currently employ nearly 9,000 people.

Xinhua

Two Rivers Fisheries' employees unload fresh carp from vehicles in Kentucky. The Asian carp business is expanding rapidly with products sold in 11 countries across the world. LIU YIFANG/XINHUA

 

 

 

 

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2019-12-30 00:00:00
<![CDATA[Amorepacific mines beauty from e-commerce, charity]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530717.htm What slowdown? The cosmetics industry, notably people's craving for foreign beauty brands, is in the midst of an apparent boom, bucking the slowing economic growth.

Eclipsing lackluster spending tides in sectors like food and beverages, makeup sales revenue from imported lipsticks to eyeliners this year rose 28 percent year-on-year, outstripping the nearly 10 percent growth rate of the overall fast-moving consumer goods sector, according to latest figures by consultancies Bain and Kantar Worldpanel.

Charles Kao, 58, China president of South Korean cosmetics group Amorepacific, will likely welcome the trend: the company recorded staggering sales during the Nov 11 online shopping carnival.

Ten of its brands participating in the gala saw sales surge 62 percent from a year ago, with its Sulwhasoo, Laneige and Innisfree brands each netting over 100 million yuan on that day.

But in the eyes of Kao, who has worked with major international beauty brands for over 20 years, the 11-11 extravaganza represents more than product discounts-it is a unique opportunity to tap into the vast Chinese consumer market that has seen increasing sophistication in the past few years.

"It is an occasion where brands find their positions and enhance customer engagement," he said, referring to the 2.6 million new customers the company enlisted, thanks to the 24-hour e-shopping festival.

China accounted for about one-fifth of Amorepacific's 6.78 trillion won ($5.84 billion) revenue last year, and a lion's share of its overseas sales outside of home turf. The shifting needs and preferences of local digital-savvy consumers found reflection in their product research and purchases done online.

Kao, embraced China's burgeoning e-commerce back in 2013 when he took the helm of Amorepacific's China business. He oversaw the opening of the official online stores of its multiple brands at a time when digital shops were not perceived as a prerequisite to success but seen as potentially eroding the premium image of established brands.

"Digitalization has been an ongoing area of investment for us in the past several years," said Kao. "E-commerce is an avenue we value a lot and will be our business focus from now on."

Today, Amorepacific's digital push isn't confined to registering record sales-it aims to implement the "In China for China" ethos through customized product co-creation powered by consumer insights.

This is best exemplified by the recent setup of a dedicated office with Chinese internet giant Alibaba in Hangzhou. The aim is to incubate new products tailored to the Chinese market, facilitate online-to-offline sales, gain precise consumer insights and explore opportunities in overseas markets.

"For new product launches in China, we are moving from 'intuition-driven readiness' to the employment of data that depicts the clear preferences of customers," said Kao, under whose leadership the group has seen nearly 30 percent of revenue generated through online channels.

Ideally, the Amorepacific-Alibaba office is designed to shorten the average length for new product introduction to six to nine months, from the typical 24 months taken by many Japanese and South Korean cosmetic companies, said Hu Weixiong, general manager of fast-moving consumer goods practice at Alibaba's Tmall site.

"In the early stage, the office can enhance coordination between Alibaba and Amorepacific's headquarters and hopefully speed up the decision-making process for the introduction of new products in China," said Hu.

Under such an initiative, the first batch of two co-created skin care products, banking on data feeds that track people's favored formula and packaging, is scheduled to debut in China early next year, Kao noted.

Navigating the world's second-largest consumer market has never been easy. The CEO highlighted the dual focal points for the next phase of growth: deployment of both high-end and mass market products.

A divergence of customer preference is clearly emerging. Young Chinese consumers are willing to pay more for high-quality items and services. "Therefore, we are investing heavily on enhancing immersive experience in the premium product line, such as the spa services in our Sulwhasoo storefronts," he said.

At the same time, small-town youngsters form a new growth point for the industry with 7.8 percent year-on-year growth in spending in 2018, according to consultancy Kantar Worldpanel.

Online sales of beauty products, including cosmetics and personal care, in small towns soared 38 percent in 2018, double the growth rates in big cities.

To harness such a trend, Amorepacific has enhanced its mass market offerings both online and offline. It is also looking to leverage a wide array of social media apps from Douyin, Kuaishou to Bilibili, to tap into the emerging consumer group who generally have more spare time watching content streamed online.

"Emerging beauty trends normally debut online. In the foreseeable future, companies in other sectors are likely to follow suit and invest in the marriage of digitalization and customization," said Jason Yu, general manager of consultancy Kantar Worldpanel China.

Kao doesn't feel like being shackled to his brightly-lit office in downtown Shanghai, making decisions purely based on data and research reports. Rather, he embarks on trips to the country's inland cities and talks to beauty assistants and local shoppers for first-hand feedback and insights.

That's his guiding principle for not only business operations but philanthropic endeavors. Under a project dubbed "Make Up Your Life", Kao led his team to seven impoverished townships across five provinces, overseeing free cervical and breast cancer screening examinations for more than 70,000 women.

Joining hands with the China Women's Development Foundation, the company, since 2016, has spent 38 million yuan so far not just conducting checkups and health-related lectures, but hosting regular charity sales, fund-raisers, and classes teaching skin care and makeup skills to those who had undergone surgeries.

Kao said he is mulling introduction of more diverse corporate social responsibility programs in China, such as a women empowerment project aiming to equip those with relatively low income with professional capabilities in training, career path, and even financing.

Asked about the secret of staying refreshed in light of his packed schedules, Kao said: "It's the magic of the beauty industry."

 

An Amorepacific employee addresses queries from visitors during the second China International Import Expo in Shanghai in early November. LIU YING/XINHUA

 

 

 

 

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2019-12-30 00:00:00
<![CDATA[Fung to digitalize supply chains in BRI economies]]> http://www.chinadaily.com.cn/kindle/2019-12/30/content_37530731.htm Fung Group, the Hong Kongbased multinational specializing in supply chain management, plans to expand its presence in both the domestic market and economies participating in the Belt and Road Initiative.

Such expansion is necessary to maintain robust growth over the next three years, said a senior executive of Fung Group.

With its business covering trading, logistics, distribution and retail sectors, the company will adopt more digital solutions to upgrade the entire supply chain management system and establish a global smart supply chain to shorten the response cycle.

"Over the past few decades, Asian countries exported consumer goods to the Western markets, but not the other way around. However, twoway trade has deepened of late because Chinese consumers started looking for high-quality products or services from outside the national market," said Stephen Fung, the group's president for the Chinese mainland market.

He said the retail growth rate driven by the Asian market is twice that of others, and the Chinese market has gradually grown into the largest in Asia. The purchasing power of Chinese consumer has also contributed to the global inclusive economic growth and sustainable development.

Since the establishment of Fung Group in Guangzhou of South China's Guangdong province back in 1906, the Chinese mainland market has always been a valuable asset to the group's business strategy and development, he said.

Nearly half of Fung Group's global sourcing currently comes from the Chinese mainland. With its plan of expanding the consumer market, the firm predicted that its revenue and profit from the Chinese mainland will keep growing notably over the next three years.

Supported by over 42,000 employees in more than 40 countries and regions, the company also believes that the Guangdong-Hong Kong-Macao Greater Bay Area will serve as the basis for economic development that "provides ample space for the company to grow".

Fung, who previously studied and worked in the United States and Japan, stressed that the emerging digital technologies are driving innovation and creating new opportunities, which companies in supply chain management cannot fully optimize if they work alone.

So, Fung Group and JD Group signed an agreement to boost mutual cooperation in March. The company launched the first AI-enabled checkout system for retailers in Hong Kong. It uses image recognition technology and advanced AI algorithms. The checkout counter can identify up to five products in one second with over 97 percent accuracy, which can reduce the overall checkout time by 30 percent.

It also formed a partnership with Alibaba Group Holding Ltd in 2018. The two parties started to leverage their online and offline channels to initiate new opportunities that can help more lifestyle brands enter the Chinese mainland market.

With the support of its partners, the company has digitalized all key fields in supply chain, including product development, material costing, design, sampling, production and delivery to further compete with other established competitors in the market, Fung said.

"Take 3D design. It shortens the time from sampling to application (from hours to weeks) as well as cuts unnecessary sampling and traffic, which will increase the overall speed, improve the supply chain efficiency, and help its partners gain additional profits," he said.

Apart from investing more on digitalization, the company established the group's head office for the Chinese mainland in Shanghai this year, to forge a closer bond with local exchanges, as well as create a better connection with local business partners, in order to integrate resources and diversify sales channels.

Fung said the group will further exploit potential in markets participating in the Belt and Road Initiative and build platforms for many Chinese companies seeking to go global. This should help them to boost exports, and support small and medium-sized enterprises to grow in global markets.

Fung Group plans to bring a variety of products to Belt and Road economies, and introduce the right products to meet the growing needs of local consumers.

Yu Jianlong, secretary-general of the Beijing-based China Chamber of International Commerce, said the tangible development brought about by the BRI will offer Chinese companies more opportunities to enhance their earning ability in global markets, given the massive population base, growing demand for infrastructure, and movement of resources in the BRI footprint.

"From a long-term perspective, population determines economic growth. Even though it will take a certain amount of time, the number of consumers will determine the potential of economic development in both developed and developing economies," he said.

Yu said China's consumption upgrade is not only creating new demand in China but facilitating rapid development of e-commerce, transportation and logistics sectors in many BRI markets. This has also led to profound restructuring of supply chains of daily necessities, industrial goods, foods and beverages.

 

A Fung Group employee transfers cargo at the company's logistic facilities in Thailand. CHINA DAILY

 

 

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2019-12-30 00:00:00
<![CDATA[Proactive policies to boost fiscal growth]]> http://www.chinadaily.com.cn/kindle/2019-12/29/content_37530675.htm China will launch proactive fiscal policies next year to improve the efficiency, quality of government investment and stabilize the economy amid a possible slower fiscal income growth, said Finance Minister Liu Kun.

"The fiscal policy should strengthen countercyclical adjustments and meet the fiscal balance requirements next year," Liu said in a work report, which was issued on the ministry's website on Friday, after the two-day annual meeting in Beijing.

Tax and fee reduction will be the key measures for a proactive fiscal policy, through which more resources can be transferred from the government to market entities, and is another way of increasing fiscal expenditure, said Liu. "We will reduce the taxes and fees that need to be reduced."

Experts said no new tax and fee cuts will be announced in the near term and the government will instead focus on implementing existing policies.

Full-year tax and fee reductions for this year is expected to be more than 2 trillion yuan ($286 billion), and the manufacturing industry, as well as the small and micro enterprises will benefit the most. For instance, about 70 percent of the value-added tax cuts happened in the manufacturing sector, according to finance ministry data.

Fiscal and taxation system reform will continue next year, along with the accelerated tax legislation process and strengthening fiscal expenditure management, the minister said in his speech.

Maintaining a balance between fiscal income and expenditure will be more difficult next year, the minister said, predicting a slower increase in revenue growth for central and local governments. That may limit the space for implementing an expansionary fiscal policy, said experts.

"How much the government can spend is determined by how much the income is", which is a key principle for setting next year's fiscal budget.

Government spending will focus on reducing poverty, environment protection, improving education and supporting small-and medium-sized enterprises, according to the work report.

The government will encourage local governments to expand the scale of financing guarantee business of small and micro enterprises in the real economy to reduce the financing guarantee rate. Local governments will be urged to repay the debt borrowed from private and small companies. A pilot program to deepen financial services reforms for private, small and micro enterprises will be launched, the report said.

In terms of fiscal and tax reforms, the legislation on value-added tax law, consumption tax law and tariff law is in the pipeline, and the finance ministry plans to expand the water resources tax pilot.

At the two-day annual meeting, the Ministry of Finance asked local officials to carry out the debt dissolving plans in a practical and detailed way, accelerate the market-oriented reform of local government financing platforms-most of which are indebted State-owned companies guaranteed by the local governments, and strengthen supervision to curb the growth of implicit debt.

The Finance Minister suggested to "make good use of the local government special bonds" in 2020, a debt instrument that collects funds for infrastructure construction, which usually has relatively lower financing costs compared with corporate bonds. "The scale of projects using special bonds should be expanded, and a mechanism for reserving, assessing and selecting special bond investment projects is needed," said Liu.

The local government special bonds will be an important fiscal tool next year to expand investment and stabilize economic growth, Li Yang, director of the National Institution for Finance and Development under the Chinese Academy of Social Sciences, said at the 2019 China Bond Market Forum on Friday.

This year, some local governments have already taken measures to reduce the implicit debt, but further efforts should be taken to prevent debt risks, which calls for tighter supervision of local governments' budget performance, he said.

Another task is to step up reforms for managing State-owned funds and enterprises, to push for the establishment of a company, which is in charge of investing and operating the State-owned capital, as delegated by the State Council. The introduction of regular rules for capital owned by State-owned financial institutions will help accelerate, streamline and centralize the fund management, said Liu.

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2019-12-29 12:12:25
<![CDATA[Briefly]]> http://www.chinadaily.com.cn/kindle/2019-12/28/content_37530676.htm Wealth management regulations tightened

China's banking and insurance regulator issued draft rules on banks' cash-related wealth management products on Friday, part of ongoing regulatory efforts to further strengthen regulation of commercial banks' wealth management business to resolve financial risks. The draft rules clarified the definition and regulatory requirement of cash-related wealth management products sold by the country's commercial banks and their wealth management subsidiaries. Friday's rules are a supplementary regulation after the regulator released rules to strengthen regulation of banks' wealth management business in July to prevent shadow banking risks.

Sixth C919 prototype completes test flight

The sixth and last prototype of the C919, China's first home-built narrow-body passenger jet, completed a successful test flight in Shanghai on Friday, marking a milestone in the model's development as it moves to gain airworthiness certification before entering the market. The jet took off at 10:15 am on Friday from Shanghai Pudong International Airport, and flew for two hours and 5 minutes, before returning to the airport. So far, all of the static tests of the C919 have been completed, and its manufacturer Commercial Aircraft Corp of China said it has started manufacturing the first batch of aircraft that are set to be delivered to customers.

Tarim oilfield output increases in 2019

The Tarim oilfield branch of PetroChina, China's largest oil and gas producer, said it has produced more than 28 million tons of oil equivalent of crude oil and natural gas in 2019. The output, which was about 1.76 million tons more than that of 2018, included about 5.67 million tons of crude oil and about 28.05 billion cubic meters of natural gas. The oilfield's output is expected to reach 30 million tons of oil equivalent by 2020 and 36 million tons by 2025, the company said. Located in the Xinjiang Uygur autonomous region, Tarim Basin is one of the most difficult to explore due to its harsh ground environment and complicated underground conditions.

]]> 2019-12-28 00:00:00 <![CDATA[China unveils rules for corporate bond default disposal to cut risks]]> http://www.chinadaily.com.cn/kindle/2019-12/28/content_37530666.htm China's financial authorities released a notice on the disposal of corporate bond defaults on Friday in an effort to resolve financial risks and step up punishment for debt evasion and other illegal activities in the country's bond market.

The notice underscored the authorities' intent to steadily push the disposal of corporate bond defaults through market and rules-based approach and to effectively contain financial risks amid slower economic growth.

Financial authorities have pledged to raise the efficiency of bond default disposal by introducing more market-oriented mechanisms and vowed to strengthen regulation on intermediary agencies including bond underwriting and credit ratings agencies and ordered them to effectively carry out due diligence, according to a statement jointly issued by the People's Bank of China, the National Development and Reform Commission and the China Securities Regulatory Commission.

The regulators also ordered bond issuers to strictly fulfill their obligations including information disclosure and to actively pay off their debts.

The rules also highlighted the necessity to improve the regulatory coordination and step up law enforcement and punishment of illegal activities including debt evasion.

The issuance of the notice came as China's economy is facing growing headwinds from domestic and external uncertainties. The financial regulators have been paying close attention to the development of the country's corporate bond market to fend off financial risks as there are chances of a rise in corporate debt defaults next year.

Liu Guoqiang, vice-governor of the PBOC, said at a recently held meeting that regulators will push market liquidation, maintain order in the bond market and work to ensure that the bond market plays a better role in providing funding for companies.

Zou Lan, head of the financial market department at the PBOC, said at the meeting that default cases may continue to rise next year and the risks are higher in low-quality private firms, property developers that are highly reliant on unconventional financing channels and local government financing platforms.

Zou said that China's overall debt default rate is not high but it is growing at a faster pace, and it is necessary to raise the efficiency of default disposal as the low efficiency has hurt investors' confidence and weakened their investment enthusiasm in the bond market.

China has the world's second largest bond market with its total value reaching nearly 100 trillion yuan ($14.3 trillion). The value of the Chinese corporate bond market has exceeded 20 trillion yuan, according to regulators.

Yi Huiman, chairman of the China Securities Regulatory Commission, the country's securities watchdog, said earlier that the regulator will strengthen the regulation on corporate bond issuance, prevent excessive financing and strictly control risks.

A pedestrian walks past the headquarters of the People's Bank of China in Beijing. WANG YUELING/FOR CHINA DAILY

]]> 2019-12-28 00:00:00 <![CDATA[Dutch energy firm deepens cooperation with Chinese partners]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530546.htm The contracts signed between SBM Offshore, a Netherlands-based company engaged in the offshore energy industry, and its Chinese partners on two more floating production storage and offloading (FPSO) hulls will further enhance their ties and thus help the company to expand its presence in China, said company's top official.

SBM Offshore signed contracts with Shanghai Waigaoqiao Shipbuilding and China Merchants Industry Holdings earlier this month on building the two new multipurpose hulls, also the company's fourth and fifth hulls, bringing its building tally to five in the country.

An FPSO vessel is generally used by the offshore oil and gas industry for the production and processing of hydrocarbons, and for the storage of oil.

Short for floating, production, storage and offloading, an FPSO vessel is designed to receive hydrocarbons produced by itself or from nearby platforms such as a subsea template, process and store the oil until it can be offloaded onto a tanker or, less frequently, transported through a pipeline.

The two hulls built for SBM Offshore will also be using the company's Fast4Ward standardization program, same as the previous three hulls the shipyards are building for them, a senior executive of the company said.

SBM Offshore's new build hulls will have a storage of up to 2.3 million barrels, as well as a daily production capability of up to 250,000 barrels of oil.

Srdjan Cenic, SBM Offshore's China general manager, said the multipurpose floaters have a large volume of work in steel and welding.

SBM Offshore has been helping its partners in developing supply chains, financing and improving quality and efficiency, as the company has been focused on expanding presence in China since its entrance in China in 1973, he said.

The company is expected to have about 80 vendors in China by the end of this year, and is targeting 250 by 2021, according to the company's plan.

"We see China and its partners as important enablers in our strategy for potential growth and expansion in deepwater projects," said Bernard van Leggelo, managing director of strategic growth of SBM Offshore.

The demand for FPSO projects is on an upturn given the fact that the oil price hovered around $62.8 per barrel in 2019, which is 11.5 percent below the 2018 average of $71 per barrel.

FPSO industry revenue is expected to hit $117 billion by 2024, growing at a rate of 19 percent over the period of 2016-2024, according to Global Market Insights Inc.

Poised to reach over $77 billion by the year 2025, FPSO will bring in healthy gains as it adds significant momentum to global growth, said a report by ResearchAndMarkets.

The report suggested that China, as the world's second largest economy and the new game changer in global markets, has shown the potential to grow at 19.1 percent in this sector over the next couple of years.

"The FPSO market is full of opportunities where Chinese industrial players should exhibit their strengths to vie for orders. It is worth noting that demand for construction of large, deepwater and complex FPSO projects has been increasing in recent years, but as an emerging sector, there exist many challenges which require concerted efforts of the domestic FPSO operators, shipyards, offshore engineering companies, financial institutions and equipment producers," Yu Hua, a general manager from a subsidiary of CNOOC Energy Technology & Services Ltd was quoted as saying by China Energy News.

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2019-12-27 00:00:00
<![CDATA[Trade friction fails to dent Chinese public offerings on US bourses]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530600.htm Trade friction between the world's two largest economies has not deterred Chinese companies from pursuing listings in the US capital markets owing to capital requirements and the necessity for United States investors to diversify investments.

Most of the US-listed Chinese companies are technology titans and much younger than some of their US peers. Most of these companies are in potential maturation stage for initial public offerings (IPO) and pursuing their next steps.

According to BNY Mellon, the New York-based custodian bank and asset servicing company, about 15 to 20 Chinese companies listed their shares on US bourses this year to raise $3 billion, compared to 20 companies that collected $7 billion to $9 billion in funding last year. The IPO pipeline outlook for 2020 looks robust, it said.

Although there were media reports in September that the US government is considering delisting Chinese stocks in the US and limiting US government pension funds' investments in Chinese companies, US bourses are still a favorite listing destination for Chinese technology companies.

"The US market has significant potential peers, seasoned investors and sheer size of assets under management. At the same time, US investors are seeking exposure to what is unique in Asia-Pacific-the demographics that you cannot replicate in other parts of the world," said Francis Giglio, head of Asia-Pacific Depository Receipts at BNY Mellon.

"Chinese companies listing in the US can have unparalleled access to knowledge capital in the US market, a market where investors are aware of the intrinsic value. Enterprises will continue to evaluate each market based on its unique characteristics to find the best fit for them," Giglio said.

For example, OneConnect Financial Technology Co-the online financial services platform of insurance giant Ping An Insurance Group Co of China-in December raised $312 billion after slashing its IPO target price by half.

Giglio reiterated that it is possible that some Chinese companies which have issued ADRs in the US could seek another listing on the Hong Kong stock exchange. "It is a viable option for companies based in Asia to access both the capital markets of the US and Hong Kong to fund their strategies."

In November, technology giant Alibaba Group's IPO in Hong Kong created a record for the largest IPO of this year by raising about $11.2 billion in a float that was larger than Uber Technologies Inc's $8.1 billion IPO in April, and about twice the size of Budweiser Brewing Company APAC's $5.76 billion deal in September.

The global e-commerce behemoth listed its shares in New York five years ago in the world's largest public offering, raising $25 billion in 2014 after the Hong Kong stock exchange refused Alibaba's IPO application since it did not allow dual class share sales at that time.

Chinese enterprises usually list their shares in the form of American Depositary Receipts (ADR) in US stock exchanges, representing a feasible and liquid way for US investors to invest in overseas companies. Foreign firms also benefit from issuing ADRs as they come without the hassle and expenses involved in listing on US bourses.

As at February this year, 156 Chinese companies were listed on US bourses and had a total market capitalization of $1.2 trillion, according to the US-China Economic and Security Review Commission.

 

 

 

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2019-12-27 00:00:00
<![CDATA[Steel industry entering fresh phase of slower output, higher quality focus]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530597.htm China's steel industry is entering a new development phase of slower output growth but higher quality, industry experts said.

Latest data from the Ministry of Industry and Information Technology showed China's crude steel output reached 904 million metric tons over the January-November period, increasing 7 percent year-on-year-nearly 3 percentage points lower than the year-on-year crude steel output growth rate for the first half of 2019, which stood at 9.9 percent.

The China Metallurgical Industry Planning and Research Institute predicted in a recent report that both China's crude steel output and demand will fall in 2020 from 2019.

Crude steel output in 2019 and 2020 is expected to reach 988 million tons and 981 million tons, respectively, said the report released earlier this month.

Steel consumption is estimated to hit 886 million tons this year, while demand forecast for 2020 is expected to be 881 million tons, down 0.6 percent from the level in 2019.

Chen Kexin, chief analyst of industry information provider Lange Steel Research Center, estimated that increasing crude steel output growth over the past few years is likely to come to an end soon.

"Capacity is the foundation of output growth. As most of the advanced steel capacity built in the past years has already come into use, there will be little new capacity coming into operation in the future, which means less steel output," Chen said.

Li Xinchuang, president of the institute, came to a similar conclusion, although from a different perspective.

"As the Chinese economy is transitioning from high-speed growth to high-quality development, consumption is to play a bigger role in driving economic growth, while the economy will no longer excessively depend on investments," Li said.

"That is to say, investment in fixed assets will remain at a relatively low level and steel demand will no longer be as high as in the past."

He estimated steel demand is likely to decline slightly over the 14th Five-Year Plan (2021-25) period, although the total amount will still be considerable.

Qu Xiuli, deputy head of the China Iron and Steel Association, said at an industry forum in November that the industry will continue to rein in unwanted steel capacity, and pursue green development with less energy consumption but higher product quality.

Also, the industry will make efforts to increase market shares of leading companies through industrial upgrade and mergers and acquisitions, so that the steel market will become more orderly, she said.

Over the Jan-Oct period, the top 10 steel companies only accounted for 34.6 percent of the total crude steel output, a 0.7 percentage point decline compared with last year, which was the opposite of the industry's expectations, according to her.

Li said mergers and acquisitions are becoming key for quality industry players to have more market influence so that the industry can better avoid disorderly competition, amid the industry's pursuit of high-quality development, since remarkable progress has been made in overcapacity removal and environmental protection.

As the largest steel producer in the world, China's top 10 steel companies account for less than 40 percent of domestic capacity, far off the goal of 60 percent if the industry wants to avoid disorderly competition, while the top four mines in the world control about 80 percent of global iron core output, he said.

However, as there is consensus in the industry for increasing concentration-or the market share and influence of the top companies-efforts have been made with some achievements, experts said.

A recent example is China Baowu Steel Group's stock acquisition of Maanshan Iron and Steel Co Ltd, which took the former one step closer to becoming the global leader.

Li predicted there will be more market-oriented, cross-region and cross-ownership mergers and acquisitions among Chinese steel companies.

Hopefully, there will soon be a fleet of national and regional steel giants, and a slew of small-scale but specialty steel companies, including three to four steel companies with capacity above 80 million tons, and six to eight steel companies with capacity above 40 million tons, he said.

 

An employee checks the placement of billets at a factory of Dongbei Special Steel Group in Dalian, Liaoning province. WANG YANG/FOR CHINA DAILY

 

 

 

 

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2019-12-27 00:00:00
<![CDATA[Tencent unit banks on cloud video conferencing for bigger market share]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530596.htm Tencent Cloud, the cloud computing arm of Chinese internet titan Tencent Holdings Ltd, has unveiled its cloud video conferencing product as it sees big growth potential in the blossoming smart office market.

The new product relies on the cloud and is dubbed Tencent Meeting. It offers a way to maintain strong communication with coworkers, clients, partners or anyone who uses the system, which will help enterprises save costs and improve efficiency.

Wu Zurong, vice-president of Tencent Cloud, said Tencent aims to be a co-builder of the video conferencing ecology.

"Entering the video conferencing sector, we will not offer any hardware products. Instead, we will focus on providing the platform and standard software as a services, dedicated to connecting people, devices, conference rooms and maintaining strong communications," Wu said during the launch event on Wednesday in Beijing.

"Tencent hopes to work with both software and hardware partners to expand the smart office market, helping Chinese companies reduce costs, increase efficiency and accelerate the digital transformation," Wu added.

Given the blossoming mobile internet, cloud computing and other new technologies as well as the rise of millennials in the workforce, the smart offices sector is booming globally, along with the rise of video conferencing businesses.

A recent report released by consulting firm Frost & Sullivan said 32.8 million video conferencing related devices, infrastructure and cloud services seat licenses were shipped, generating a total revenue of $7.8 billion in 2018. The market is on a high growth trajectory and is estimated to expand at a compound annual growth rate of 12.1 percent to hit $13.82 billion by 2023.

"User demand for video communications has been booming," said Roopam Jain, an industry director within Frost & Sullivan's information and communications technologies business unit. "The proliferation of mobile devices combined with an unending appetite to consume video in all its forms has been a major factor in breaking traditional barriers to adoption."

Jain added the consumerization of video has also led to a growing need for hassle-free video conferencing that empowers users to connect from any device with a simple click of a button.

Seeing the growing demand for an easy-to-use option, Tencent's new product can be deployed on mobile phones and personal computers. Users also can access the service via Tencent's WeChat mini programs and the Enterprise WeChat that targets corporate clients. Users can sync the notes across multiple devices.

To cater especially to the growing young generation and provide a service that can be used anywhere, Tencent Meeting offers functions that include blurring the background and putting in beauty effects.

With more than 20 years of experience of audio and video technologies and over one million servers, Tencent is getting serious about carving out a stake in the burgeoning video conferencing market.

So far, Tencent has gained 1.1 billion WeChat users, 800 million QQ service users and 2.5 million corporate clients on its Enterprise WeChat platform.

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2019-12-27 00:00:00
<![CDATA[5G footprint widens in China]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530557.htm China will see large-scale construction of 5G networks next year, with more interesting applications of the superfast technology rapidly emerging and more than 3 million consumers signing up for 5G mobile data packages by the end of this year, experts said on Thursday.

The comments came as a new report forecast that China will have more than 700 million 5G users by 2024, accounting for more than half of the global 5G population by then.

Wang Zhiqin, deputy director of the China Academy of Information and Communications Technology, a government think tank, said in 2020, China's telecom carriers will build 5G networks on a large scale, laying down a sound infrastructure for widening the use of cutting-edge technology.

By the end of this year, there will be more than 3 million 5G users in China, Wang said. The numbers will mark a significant rise from the data in late November when the country had only 870,000 5G mobile subscribers.

China kicked off the commercialization of 5G on October 31, with the country's telecom carriers rolling out their 5G data package plans. China Mobile, the world's largest telecom carrier by mobile subscribers, plans to have more than 50,000 base stations by the end of this year.

China Telecom and China Unicom, two smaller players, have also announced plans to work together to build a nationwide 5G network as the country's second-and third-largest telecom operators join hands to reduce construction costs. As of December, the two companies have already shared 27,000 5G base stations, Wang said.

The comments came after the government think tank published a report which forecast that the commercialization of 5G in China is expected to generate a direct economic output of 10.6 trillion yuan ($1.5 trillion) from 2020 to 2025, and an indirect economic output of about 24.8 trillion yuan.

Yang Jie, chairman of China Mobile, said that: "The 5G butterfly has already fanned its wings and will have a broader economic and social impact."

The company plans to attract 70 million 5G subscribers, and sell 100 million self-brand and third-party 5G smartphones next year.

Yang also said the State-owned company will invest 20 billion yuan ($2.8 billion) next year to build a robust ecosystem for the commercialization of 5G technologies.

Xu Zhijun, rotating chairman of Huawei Technologies Co, said earlier that China has the right conditions to build the world's best 5G network and the global telecom industrial chain can benefit from the country's development.

"China has the best resources in frequency spectrum and base stations. Local consumers and enterprises have some of the highest enthusiasm and willingness to embrace 5G. And the governments have rolled out favorable policies," Xu said.

Xu said that China is likely to have more than 200 million 5G mobile subscribers by 2020, and the fast deployment of 5G tech in the country will benefit global telecom and semiconductor industries.

 

A visitor tries a 5G-enabled device of China Mobile during an industry expo in Nantong, Jiangsu province. XU CONGJUN/FOR CHINA DAILY

 

 

 

 

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2019-12-27 00:00:00
<![CDATA[Stocks on cusp of strong 2020]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530592.htm The benchmark Shanghai Composite Index stood above the psychological benchmark of 3000 points on Thursday as the year is drawing to a close, and investors believe this may herald a positive outlook for the market's performance in 2020.

The Shanghai Composite Index gained 0.85 percent for the session to close at 3007.35 points on Thursday, while the Shenzhen Component Index also climbed 0.72 percent to end at 10303.72 points. Year-to-date, the Shanghai Index is on track to post a gain of more than 21 percent.

Securities firms were the major drivers for the Thursday advance. According to Shanghai-based market tracker Wind Info, A-share listed securities firms reported an average daily price increase of 3.3 percent. Other public financial service providers also saw their prices rise 2.34 percent on average on Thursday.

Yang Delong, chief economist of First Seafront Fund, said that securities firms that are seen as market indicators have shown robust growth over the past few weeks. As the Chinese financial market is further opened up to foreign security firms, domestic companies are seen improving their competitiveness.

Looking forward to the new year, Yang said that the Shanghai Composite Index will likely stand firm around the 3000-point area, while pointing to the possibility of a 20 percent increase, he said.

The State Council announced on Wednesday the removal of the household registration limits for cities with a population under 3 million people and relaxation of the limits for those between 3-5 million, in the hope of facilitating the free flow of the labor force.

Boosted by this latest policy, the property developers who are heavyweights of the A-share market reported a 1.9 percent average price increase on Thursday, which could provide a push to the market's upward momentum.

Analysts from Jufeng Investment wrote in a note that financial service providers, companies sensitive to economic cycles, and technology companies have become the major drivers for the A-share market since November.

Fluctuations seen last week were largely due to an expansion in the trading volume registered on Dec 17 as investors adjusted their positions with the end of the year in sight.

But as the adjustments ended and the market started to rebound again, the follow-through buying is expected to spill over into the new year, the market analysts said.

Zhang Yanpeng, head of the mutual funds investment department at Rosefinch Investment, said that investing in the A-share market will be more profitable than investing in commodities and bonds in 2020 as there will be four major reasons for the A-share market to climb.

Overseas capital inflows are expected to increase given a rise in the allocation to equity assets. Another source of attraction for investors would be the increased return on equity rate in public companies since the third quarter of this year.

Free cash flow of industry leaders will be largely improved in 2020. More importantly, the A-share market is still undervalued based on historic numbers, Zhang said.

Gao Yuncheng, general manager of Shanghai Greenwoods Asset Management, said that companies specializing in the new sectors of consumption, services and manufacturing will show strong growth in 2020. Mobile internet and medicine will continue to show room for solid gains, he said.

 

Investors check stock prices at a brokerage in Chengdu, capital of Sichuan province. LIU JUNZHONG/CHINA NEWS SERVICE

 

 

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2019-12-27 00:00:00
<![CDATA[Security firm gets Winter Olympics mandate]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530579.htm Chinese security company Qi An Xin Group said on Thursday that it has become an official sponsor of the Beijing 2022 Olympic and Paralympic Winter Games and will provide cybersecurity and anti-virus software solutions for the global sporting event.

Han Zirong, secretary-general of the Beijing Organizing Committee for the 2022 Olympic and Paralympic Winter Games, said the association with Qi An Xin will help reduce the cybersecurity risks for the event.

"The events offer enterprises a giant opportunity to accelerate their brand building and enhance their competitive advantage," Han said during a media briefing in Beijing.

Due to the advent of technologies like mobile internet and internet of things, new cybersecurity risks are emerging due to the new era of pervasive connectivity.

Compared with the 1G to 4G era, the next-generation superfast 5G tech will serve various industries and foster a wide range of applications, thereby allowing people, devices and organizations to better connect with each other.

Qi Xiangdong, chairman of Qi An Xin Group, said cybersecurity has become not just an important but a necessary step for the Olympic Games.

"Hacking attacks will pose great threats to the safety of the event," Qi said. "We are committed to investing time and resources, as many as 3,000 people, to avoid such risks during the upcoming Winter Olympics."

Qi said due to the complicated Olympic system, the company does not have the right to transform its working system or screen the network services providers, thereby posing greater challenges to the company's security capabilities.

"We will work closely with previous information and network providers to keep a safe and sound cyber environment," Qi added.

To better serve the global sporting event, Qi An Xin has established the Beijing Winter Olympics network security operation center. It will continue to collect information on competition venues and accelerate the push for the safe design of the overall network services.

In May this year, Qi An Xin Group announced a strategic partnership with the State-owned China Electronics Corp, marking a key step for the company to join the national network security sector. With nearly 8,000 employees, the company claimed its technologies have been adopted in 90 percent of the government departments, State-owned companies and large banks.

As of now, the Beijing Winter Olympic Committee has signed on 10 official partners, eight official sponsors and five official suppliers.

 

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2019-12-27 00:00:00
<![CDATA[Regulatory norms for foreign banks revised]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530577.htm China has revised the measures to implement regulations on the administration of foreign banks, in an effort to further accelerate the opening up of the country's financial sector to foreign investors.

The revision of the measures, issued by the China Banking and Insurance Regulatory Commission on Dec 18, became effective since the day it was released.

The main focus of the revised measures of implementation, according to experts, is to ensure that the revised regulations on the administration of foreign banks, which was issued in October, will be implemented effectively.

The CBIRC has allowed foreign banks to establish subsidiaries and branches simultaneously in the country and set requirements for the relevant banks.

It removed the $10 billion asset threshold necessary for foreign banks to set up locally incorporated banks and the $20 billion asset cap for branches.

After gauging public opinion for a draft of the implementation measures earlier this year, the regulator lifted the restriction that limited the scope of business of foreign bank branches to wholesale banking, which refers to the provision of services by banks to larger customers or organizations such as corporates and institutional clients, if the foreign banks choose to set up branches and subsidiaries in China simultaneously.

The revised implementation measures, on the other hand, allow foreign bank branches to choose their business direction based on a clear functional positioning, said the CBIRC in a note posted on its website on Wednesday.

Zeng Gang, deputy director-general of the National Institution for Finance and Development, said the abolishment of rules that limited foreign ownership of Chinese commercial banks was the most noticeable change of the revised regulations for foreign banks.

Previously, the caps on foreign holdings in domestic banks were 20 percent for a single foreign-invested bank and 25 percent for group investors.

"Taking both efficiency and steadiness into account, China will further open up its banking sector in an orderly way and ensure stability of the financial system at the same time.

"China should control the overall pace and order of the opening-up of its financial sector, comprehensively assess the likely impact of foreign banks' access to the China market, and make differentiated regulations according to the different types of banks and their modes of entering the China market," Zeng said.

He advised Chinese regulators to tighten regulations on cross-border funding operations by foreign-invested financial institutions to prevent financial risks, strengthen the isolation of risk associated with a foreign-invested parent bank and its subsidiary bank in China, and actively explore the construction of regulatory institutions for foreign financial institutions that adopt a mixed operation model in the country.

Dong Ximiao, chief analyst at Zhongguancun Internet Finance Institute, said: "Further opening-up will enhance the business philosophy and management approaches of China's financial sector, increase market efficiency, boost market vitality, and further improve financial institutions' competitiveness."

The removal of restrictions on market access and foreign ownership and the introduction of a larger number of foreign-invested financial institutions will largely enrich financial products and services provided to Chinese consumers, Dong said.

By relaxing requirements for foreign-invested financial institutions on setting up branches and subsidiaries in the country and expanding their scope of business, China will encourage healthy competition between foreign and domestic financial institutions, improve consumer experiences and better protect consumer interest.

Besides, compared with their Chinese counterparts, foreign-invested financial institutions are more globalized and have richer experience in wealth management and private banking. They will help China's middle class and high net worth individuals improve their global asset allocation, he said.

 

An ATM machine is seen inside a branch of Citibank in Beijing. REUTERS

 

 

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2019-12-27 00:00:00
<![CDATA[Silicon Valley of China makes dreams a reality]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530565.htm BEIJING-Jamie Salter grew up in London and studied in Cambridge. But it was Shenzhen, a city in south China's Guangdong province known as the "Silicon Valley of China" that made his dream a reality.

"I don't just stay in London or go to San Francisco" because "if you care about speed and you need quality, then Shenzhen has the supply chain and the network and experience already," said Salter, a vice-president with hardware startup Carv.

Once a small fishing town, Shenzhen, after four decades of reform and opening-up, has gradually become a global hardware center and hub for scientific and technological advances, where skyscrapers appear commonplace and the population has surged past 13 million.

Like Salter, every foreign resident living in Shenzhen has their reason for staying.

When the young British entrepreneur came to Shenzhen for the first time, he was blown away by the heightened differences compared to home.

"Crazy new technology is moving around and there are loads of people, and it's always busy," he said.

His destination upon arrival was HAX, an American company investing in hardware startups based in the city and San Francisco.

The workshop is divided up into open-plan offices where young entrepreneurs like Salter are hard at work developing their first prototypes, using components from the electronic market just downstairs.

Nikita Iliushkin, another HAX protege from Canada, who is currently working on a new type of drone, pointed out the advantages of Shenzhen for fledgling companies.

"Here all the various suppliers work much, much faster," Iliushkin said. "We are able to iterate so much faster being here."

"One week in Shenzhen is like one month everywhere else," he said.

Today, Shenzhen is known for its hardware expertise, thanks to its huge number of factories and resellers. It also has one of the world's most developed hardware industry chains and abundant intellectual capital.

"As a hardware startup, you don't have much money, and partly because of that, you do not have much time, you need to get to market quickly," Salter said. "So the best place to do that is, without a doubt, Shenzhen."

His company now has devised a digital sports coach that analyzes skiing techniques in real-time providing feedback on the slopes.

With China's successful bidding for the 2022 Winter Olympic Games and the country's plans to encourage"300 million people to join in ice and snow sports", Salter dreams bigger in China.

"Chinese skiing would offer real potential for us," he said.

Wolfgang Egger, a world-famous German car designer, is also building his dreams with BYD, a Shenzhen-headquartered electric vehicle maker.

Sitting in the BYD global design center, Egger, who proposed building the center, said that as a designer with experience in different companies and brands, "to have this opportunity to create something like this from nothing is a big challenge that I need."

That is the main reason why he joined the Chinese car manufacturer three years ago.

At that time, the "electric car trend in the rest of the world was not so strong" while China was a leader, Egger said.

"I was looking to really do a project on the identity and on the electrical future," he said. "BYD is the best option I could have."

At the Shanghai International Automobile Industry Exhibition in April, BYD debuted its E-SEED GT electric concept car with a "Dragon Face" design.

Such details as "dragon-scales" feature on the car's door panels, headlights resembling "dragon whiskers," and a "dragon ridge" on its roof and tail, were inspired by a symbol of dragons in China's Hongshan culture that dates back thousands of years.

Behind the eye-catching design is Egger and his team's desire to "look for inspiration for the brand's identity in Chinese culture".

A voracious reader of Chinese traditional tales, BYD named several of its car lines after dynasties in Chinese history.

Shenzhen was also designated as a United Nations Educational, Scientific and Cultural Organization City of Design in 2008, the first of its kind in China.

"The concept of modern Chinese design was gradually created in Shenzhen and has increasingly become a part of the city residents' lives," UNESCO said on its website.

"From my point of view, Shenzhen could be, (and) should be the design capital in China," Egger said, adding all the elements are present, including technology, young people and emerging trends.

In August, Shenzhen, the trailblazer in China's reform and opening-up, received a new mission: to create a pilot demonstration area of socialism with Chinese characteristics.

The southern Chinese city, one of China's first special economic zones set up in 1980, has since been widely dubbed the "Miracle of Shenzhen".

Official data showed that Shenzhen's GDP was only 196 million yuan ($28 million) in 1979, one year after China initiated reform and opening-up. In 2018, it soared to over 2.4 trillion yuan.

Shenzhen's embrace with the world has helped the city grab the tail of globalization.

The first Walmart-owned Sam's Club store on the Chinese mainland, which was opened in Shenzhen in 1996, has become the top Sam's Club store globally since 2008.

Globalization also enables international talent to work and live in such fast-developing cities like Shenzhen.

At least five Nobel laureates have set up their research institutes in Shenzhen. Among them, Arieh Warshel, a Nobel laureate in chemistry in 2013, said, "Shenzhen has a lot of high technologies which allow you in principle to innovate and collaborate, (and) a lot of resources which help innovation."

James Corner, a landscape architect and urban designer who once participated in planning the city, said Shenzhen is moving to "create a modern 21st-century city, a city that combines new technologies and dense forms of buildings and programs with human-scale streets and blocks, integrated with green natural systems, parks and open spaces."

Shenzhen is attracting more capital and talent, becoming a model of development for other Chinese cities and even the world.

In the first three quarters of 2019, Shenzhen's foreign investment increased by nearly 90 percent year-on-year.

This year, multinational companies including European aerospace giant Airbus, global management firm Boston Consulting Group, and tech-minded professional services firm Accenture, have set up shop in Shenzhen.

Shenzhen is also expected to play a global role in creating standards for institutional design, particularly in Qianhai, a Shenzhen-Hong Kong pilot cooperation zone in Shenzhen. Qianhai in September launched a pilot program to reduce the approval time for setting up businesses from one day to less than a minute.

With such fundamental innovations, Shenzhen could set global standards for years to come.

 

A bird's-eye view of Shenzhen. MAO SIQIAN/XINHUA

 

 

Visitors check out specially equipped drones at a recent industrial expo in Shenzhen. XUAN HUI/FOR CHINA DAILY

 

 

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2019-12-27 00:00:00
<![CDATA[What's news]]> http://www.chinadaily.com.cn/kindle/2019-12/27/content_37530593.htm GOVT AND POLICIES

PBOC skips reverse repos as liquidity improves

The People's Bank of China, the country's central bank, skipped reverse repos on Thursday. "Rising fiscal expenditure near the end of the year keeps the banking system liquidity at a high level," the PBOC said on its website. With 30 billion yuan ($4.3 billion) of reverse repos maturing Thursday, that led to a net withdrawal of 30 billion yuan from the market. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

China makes steady progress in fiscal fixes

China has almost addressed all the fiscal irregularities from 2018 identified in an audit report, according to the country's top auditor. Such rectifications involved about 310 billion yuan ($44.33 billion), said Hu Zejun, head of the National Audit Office. Many local governments have rolled out measures to push forward related rectifications, and different departments have enhanced coordination to improve rectification efficiency, Hu said. The NAO would continue to follow up on the rectification progress, Hu said.

Local government bond issuances drop in Nov

China's local governments issued fewer bonds in November, official data showed. The value of local government bonds issued in November totaled 45.789 billion yuan ($6.55 billion), down from 96.46 billion yuan in October, according to the Ministry of Finance. In the first 11 months, local governments issued bonds valued at 4.32 trillion yuan, including 2.55 trillion yuan worth of special-purpose local government bonds aimed at providing financial support for public-interest projects. MOF data also showed outstanding local government debts amounted to 21.33 trillion yuan at the end of November, below the official ceiling of 24.08 trillion yuan set for the year.

Freight train service to Poland commences

A new freight train service has opened linking northwest China's transport hub of Xi'an with Slawkow, Poland, in the hinterland of Europe by way of the Alataw Pass in the Xinjiang Uygur autonomous region. The first train left the station in Xi'an, capital of Shaanxi province, on Tuesday for the 9,478-km trip, which is expected to take about 10 days. After crossing China's border through the Alataw Pass, the train will pass through Kazakhstan, Russia and Ukraine to reach Poland. Compared with the traditional shipping route, the rail service takes less time and involves fewer changes in trains during the long journey.

COMPANIES AND MARKETS

Central SOEs report strong profit growth

China's centrally administered State-owned enterprises saw strong profit and revenue growth in the first 11 months of the year, according to the State-owned Assets Supervision and Administration Commission. Despite downward pressure on the economy, the net profits of central SOEs expanded 9 percent year-on-year and their combined operating revenue rose 5 percent during the January-November period, SASAC data showed. The supply-side structural reform of central SOEs has deepened, with a total of 14,000 legal persons removed and the overcapacity-cutting of steel and coal completed, Hao Peng, chief of the SASAC, said at a meeting. During the period, central SOEs' spending on research and development jumped 24.6 percent from a year earlier, with firms in petroleum, steel and automobiles industries notching a year-on-year growth of over 30 percent.

New intercity trains start services in Hunan

A new model of high-speed trains designed for intercity transportation was put into operation on Tuesday in Central China's Hunan province. With a design speed of 160 kph, the CJ6 trains were jointly developed by an intercity railway company in Hunan and CRRC Zhuzhou Locomotive Co Ltd. The new trains are versatile, as they can run in four-car formations during non-rush hours and eight or 16-car formations during rush hours, said Zhou Qinghe, chairman of CRRC Zhuzhou Locomotive. Using lightweight materials and equipped with a braking system powered by recycled energy, the new model is also energy-conserving and environmentally friendly, according to Zhou.

AROUND THE WORLD

Budget balance rises to 1% of GDP in Portugal

Portugal's budget balance reached 1 percent of gross domestic product in the first three quarters of 2019, better than the forecast of a government deficit of 0.1 percent for the whole year of 2019, according to the latest data from Portuguese National Institute of Statistics (INE). "In the first three quarters of 2019, the balance of General Government (GG) was positive, corresponding to 1.0 percent of GDP," compared with 0.4 percent in the same period of the previous year, said the INE. The INE pointed out that the GG balance was nil in the year ending in the third quarter.

Belarus cuts oil product shipments by 14.5%

Belarus reduced the export of oil products by 14.5 percent in the period from January to October this year, local media reported. In the first 10 months of 2019, Belarus exported 8.79 million metric tons of oil products, which is 14.5 percent less compared with the same period last year, the country's statistical committee was quoted as saying. Exports of oil products amounted to $4.44 billion, which is 19.7 percent less compared with the first period of 2018, the committee said. In October 2019, oil product exports totaled 750 thousand tons against 950 thousand tons in September and August, 900 thousand tons in July and 680 thousand tons in June.

Saffron output soars to record in Afghanistan

Saffron production in Afghanistan has soared to record levels in 2019, with a 22 percent increase compared to last year, Afghan Ministry of Agriculture, Irrigation and Livestock said on Wednesday. "The latest statistics showed that saffron or so-called 'red gold' production increased 22 percent, reaching 19,469 kg this year, which is about 20 metric tons," the ministry said in a statement. The statement added that more than 7,557 hectares of land were for cultivated saffron across the country this year. The country produced 16 tons of saffron last year, according to the statement. Nearly 90 percent of saffron production is exported abroad.

Albania GDP up 3.81% on quarterly basis

In the third quarter of 2019, Albania's gross domestic product increased by 3.81 percent year-on-year, Finance and Economy Minister Anila Denaj said at a news conference. Denaj referred to the latest data published by the National Institute of Statistics. Denaj said that the sector of trade, transport, accommodation and food services was the main contributors to the economic growth. "This sector registered a growth of 6.69 percent and gave a contribution of 1.3 percentage points to the GDP in the third quarter," she said.

 

 

 

 

 

 

 

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2019-12-27 00:00:00
<![CDATA[High-speed railway firm to raise $5b]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530321.htm The operator of the Beijing-Shanghai high-speed railway started its initial public offering on Wednesday, a move that will boost the opening-up and marketization of State-owned enterprises, industry insiders said.

After receiving the IPO approval from China Securities Regulatory Commission on Friday, Beijing-Shanghai High-Speed Railway Co Ltd, a unit of the State-owned China Railway Corp, plans to sell 6.3 billion new shares on Shanghai Stock Exchange, or 12.8 percent of its enlarged capital, according to its prospectus.

The company submitted its application on Oct 22. Industry experts estimated that the financing of the Beijing-Shanghai high-speed rail line operator will exceed 35 billion yuan ($5 billion), making it one of the largest IPOs in years.

The company's prospectus said it plans to acquire a majority 65.08 percent stake in the Anhui branch of the Beijing-Fuzhou High-speed Railway. It will also proceed with the mergers and acquisitions of companies in the same industry to better connect the other key lines between Beijing and Shanghai.

Sun Zhang, a professor at the Institute of Rail Transit of Tongji University, said the listing of the Beijing-Shanghai high-speed rail line operator will help to introduce private capital and advance the mixed-ownership reform of SOEs.

Upon its successful debut on the stock market, the company can adopt methods such as a debt-equity swap to lower the liability rate of China Railway Corp, he said.

As the most profitable rail line in China, the Beijing-Shanghai High-Speed Railway reported a sales revenue of 25 billion yuan for the first three quarters of this year, with the net profit amounting to 9.52 billion yuan. On that basis, the daily net profit of the rail operator is expected to be as high as 34.87 million yuan.

The profitability of the line operator is even more impressive when it comes to the fact that the company has only 67 employees. Considering its net profit of 10.25 billion yuan in 2018, the net profit generated by each employee may top as much as 153 million yuan. The asset managed per capita amounted to over 2.79 billion yuan by the end of September.

But that small head count and large asset size raised concerns from the CSRC.

In feedback provided on Nov 4, the CSRC questioned its prime operation and asked for an explanation to define the issuer as an asset management company or a high-speed train passenger transport service provider.

In a reply provided a week later, the company explained that the prime operation of Beijing-Shanghai High-Speed Railway Co is providing high-speed train transportation services.

"It does not have any asset management businesses, nor income from asset management activities," the reply said.

Professional service provider E&Y predicted in its latest report that up to 200 companies will have completed their IPO at the A-share market by the end of this year, up 90 percent from a year ago. The total financing is expected to reach 252.8 billion yuan, up 82 percent year-on-year.

Statistics from Wind Info showed that the total IPO financing recorded at the A-share market had reached over 248.3 billion yuan by Dec 21, having hit a record high and the loftiest since 2012.

Deloitte forecasts in its latest survey that between 140 and 170 companies will be listed on the main board, SME board and ChiNext board in 2020. The total financing will range between 180 billion yuan and 220 billion yuan. The STAR Market in Shanghai can attract up to 150 IPOs, with the financing raised likely reaching 160 billion yuan.

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Technicians examine the exterior of a high-speed train before departure at a railway station in Beijing. XING GUANGLI/XINHUA

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2019-12-26 00:00:00
<![CDATA[Mastercard banks on AI-driven edge]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530380.htm Mastercard is planning to embed AI-driven data analytics in the day-to-day workflow of its retail and banking customers in China, to improve the quality and efficiency of data analytics and boost returns from this technology.

A research conducted with 2,000 executives found that only 20 percent of them were getting adequate returns on the data analytics they did.

The executives gave four reasons for the surprising outcome of the research, which was jointly conducted by Mastercard and Harvard Business Review earlier this year.

"First of all, they said today's analytics is happening in silos, meaning various parts of the company are running their own analytics, and tend to produce conflicting results sometimes," said Dimitrios Dosis, president of Mastercard Advisors, during a recent interview in Beijing.

"Second, there is a big time lag between the moment you need the data and the moment you get them. Sometimes it can take weeks. Third, data analytics is not really embedded in the workflow. When people need it to make decisions, they are not getting it. And fourth, they said sometimes you need a PhD degree to understand the software and the results, which means it is not really intuitive."

The fact that data analytics is not embedded in the day-to-day workflow is one of the primary concerns of Dosis who heads Mastercard Advisors.

Offering information, consulting and implementation services to merchants and financial institutions worldwide, this unit of Mastercard helps customers cleanse and understand the data they have, including anonymized and aggregated transaction data from Mastercard, to derive recommendations for customers based on data insights and advanced analytics.

Before fully rolling out the recommendations and executing them, consulting teams from Mastercard Advisors test the recommendations through the application of a test-and-learn technology.

"What we do is identifying a concrete opportunity based on our data, specifying the targeted segments where this opportunity primarily exists and then identifying the offer, and testing and executing it. This is a classical end-to-end service we provide for many banks, including Chinese banks," Dosis said.

Right now the company is developing a technology for this end-to-end service so that data analytics will become an effective part of the day-to-day work process. That means people do not need to do specific analytics while it is happening in the background.

"Imagine that for a cards manager of a bank, when she comes in the morning, instead of her logging in and running analytics, she gets a message on her device that says, 'Looking at the data from last week, we believe you have an untapped opportunity in the mass affluent segment.'

"Automated recommendation engine provides her the right offers for the right audience and asks, 'Would you like to test it?' She says yes. Six weeks later, she gets the results, chooses the best campaign and rolls it out. The analytics is happening in the background, and she is just there to make decisions. This is the technology that is going to come next," Dosis said.

So far, deriving recommendations has been a manual process, with consultants looking at the data regularly.

Companies have a lot of data and customers would like to interact with them, but the data are not cleansed. As data cleansing takes a lot of time, artificial intelligence could be applied in the process, Dosis said.

"Normally, it took us 80 hours to analyze the data and come up with recommendations. By applying artificial intelligence and having a more automated recommendation engine, we have been able to reduce this to 10 hours," he said.

 

Dimitrios Dosis, president of Mastercard Advisors

 

 

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2019-12-26 00:00:00
<![CDATA[Healthcare companies ramp up their digitalization efforts]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530375.htm As businesses in China increasingly tap the internet to boost services, healthcare companies are following suit, ramping up efforts to optimize resource distribution, improve service efficiency, reduce costs and meet increasing demand.

Earlier in December, German conglomerate Merck signed a strategic collaboration with China's Ping An Good Doctor, a one-stop healthcare online platform, to jointly explore integrated solutions to advance intelligent healthcare in the country.

The tie-up will leverage Ping An's extensive experience in artificial intelligence medical technology, insurance provision and online and offline healthcare resources and Merck's medical expertise, high-quality medicines and innovative solutions to develop an integrated one-stop healthcare solution.

According to a joint news release, the duo also pledged to tear down the barriers between online and offline healthcare through innovative retail models that connect pharmacies, hospitals and primary healthcare institutions in rural areas.

"As part of our digitalization strategy, we are seeking out innovative solutions that will offer the highest possible benefits to patients, with the mission of transforming the lives of 40 million patients in China by 2025," said Rogier Janssens, managing director and general manager of Merck's Biopharma Business in China.

The tie-up is not a water-testing endeavor for either party, though: Merck entered into an agreement with Chinese internet giant Tencent in developing intelligent digital healthcare services by populating public knowledge of diseases, whereas Ping An built an internet healthcare platform for the government of Guangxi Zhuang autonomous region.

China's online healthcare market exploded from an insignificant 1.5 billion yuan ($214 million) in 2012 to a projected 23.5 billion yuan next year, according to data from Statista Research Development.

China has unveiled a multilayered grand plan called "Healthy China 2030" to boost people's livelihoods and longevity. Given the imminent struggle to contain rising healthcare costs, much focus will be placed on delivery of primary care and health promotion to empower both patients and physicians.

Digital solutions can address the critical issue of how the industry uses data analytics to drive efficiencies and deploy resources in a smart way, according to Kings Wang, senior director for strategic planning and head of marketing at IQVIA China, a US company serving the combined industries of health information technology and clinical research.

"Internet, AI, and other suites of personalized services will allow premium health resources to revolve around users and actively facilitates the precise implementation of the Healthy China 2030 initiative," said Wang.

Making medical products and services accessible to patients is a top priority. Guided by a so-called omni-protection concept, French vaccine maker Sanofi Pasteur unveiled in December a string of smart and standardized vaccination procedures in China to help users access immunization information, track vaccine data, and manage the vaccination process through the internet and big data technologies.

During the second China International Import Expo in November, Sanofi Pasteur inked a pact to establish cooperation with Chinese internet giant Alibaba Group's healthcare arm to build a vaccination cloud platform, offer related information online and location-based vaccine search services.

"The common thread running through the entire vaccination cycle is data, the sharing and smart deployment of which will assist authorities to keep track of disease prevention and data accumulation nationwide," said Mike Zhang, general manager of Sanofi Pasteur China.

What digital technology can do is to "create that closed loop so that people can be reminded about their second or third vaccine, and using other digital formats for them to be informed about their health," said Joseph Romanelli, senior vice-president of MSD and president of MSD in China.

The US-based company has joined hands with Ali Health to create a preventive health management system combining healthcare knowledge and technologies so that users can get to understand the burden of diseases and where they can get vaccinated.

"The digital platform that we have in China is probably second to none. What's great about China is that all of our customers, whether they are physicians or patients or potential patients, are online," he said.

Li Jinhui, general manager of the oncology and rare disease business of Pfizer China, said internet plus healthcare, which enables top-notch doctors with diverse expertise to be accessible to patients from all over the country, will bring significant benefits to patients prompting them to seek diagnosis and medical treatment instead of staying undiagnosed.

"Such accessibility provides patients with another choice to access high-quality medical services, other than lining up at the country's best hospitals, and helps them save travel costs. It will obviously accelerate medical service development in smaller cities and remote areas," said Li.

Physicians also stand to benefit from the digitalization wave.

Li pointed to big-data analysis, which will also play an important role in elevating diagnosis and treatment standards in the areas of oncology and rare diseases in smaller cities and rural regions.

A tumor patient database can be established and the most standardized models of diagnosis and treatment of certain types of cancer will be formed, Li said, thus establishing a system to guide every step in a doctor's decision-making process when making a diagnosis.

"Such a system will definitely empower medical institutions at a grassroots level and gradually help achieve equal availability of high-quality medical care," she said.

Others are rolling out medical devices backed by technological leaps. Siemens Healthineers, the healthcare unit of German conglomerate Siemens, unveiled in November its latest 5G-powered ultrasound solutions. The locally developed gadget is expected to help physicians in remote areas and county-level clinics better diagnose people with the real-time aid of seasoned doctors thousands of miles away.

"Currently, China lacks physicians especially in entry-level healthcare institutes, primary hospitals and rural healthcare institutes. Also, it is difficult for ultrasound physicians to improve their skills," said Jerry Wang, general manager of Siemens Healthineers China.

"Most 5G applications are in place to help higher-level hospitals to connect with lower-level hospitals. So limited physician resources will be utilized in a much better way," he said.

The company has also rolled out a one-stop stroke solution center, which has fast CT scanning and an angiography system in one room.

Despite all the perks, experts have called for prudence in the marriage of technology and medical care.

Zhang Meng, vice-president of Tencent Medical, said that the internet focuses on speed and pushing forward novel ideas, but the medical care industry is where safety is prioritized.

"Therefore it's difficult to totally change the industry using the internet and attempts may come step by step and slowly," he said.

 

A visitor experiences Ping An Good Doctor's one-minute diagnosis service during a healthcare industry exhibition in Zhengzhou, Henan province, on Nov 22. LIU XU/FOR CHINA DAILY

 

 

 

 

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2019-12-26 00:00:00
<![CDATA[Hongqiao area strives to become mega medical hub]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530374.htm Advanced medical technologies and facilities are helping Shanghai's greater Hongqiao area to become a mega medical hub in the Yangtze River Delta region to better serve the growing number of domestic and foreign talents.

Five of the seven hospitals benefiting from social capital investment totaling more than 12 billion yuan ($1.7 billion) in the phase-one project of the New Hongqiao International Medical Center are scheduled to open by the end of next year. All patients visiting the hospitals specializing in different areas, including tumors, plastic surgery, pediatrics, obstetrics and gynecology, will be able to access a shared facility center with cutting-edge technologies for medical examinations.

The Shanghai Concord Medical Diagnostic Imaging Center, part of the shared facility center, will offer access to internationally leading PET-MRI equipment used for the physical examination of patients suffering from tumors in their livers, breasts and heads, experts said.

"A patient needs to be injected with only one-third of the amount of a certain drug before taking the PET-MRI examination compared with that required by a PET-CT checkup, which makes it safe even for pregnant women and young children," said Zhang Xiaojian, a doctor from the imaging center.

There are only three such devices in Shanghai and no more than 20 nationwide, he added.

There is also an advanced digital radiography system, which can eliminate the effect of overlapping tissue information and thus enhance the ability to detect a lesion, at the center.

"It can also strengthen the display of the spine as well as tissue behind the heart and the diaphragm, which is important for patients suffering from congestive heart failure," Zhang said.

The shared facility center comprises medical technologies and supportive services, including labs, an imaging center, and a pharmacy.

The Hongqiao branch of Huashan Hospital affiliated with Fudan University, which boasts strong medical strength and facilities in neurosurgery and trauma treatment, was put into use in the Hongqiao area, which is located in the western part of Shanghai bordering the municipality's neighboring Zhejiang and Jiangsu provinces, in June last year.

More than 50 percent of the 12,000 inpatients in the past year and a half came from areas of the delta region outside Shanghai, according to the hospital.

A development plan regarding the Yangtze River Delta region unveiled in December by the country's central government announced that the overall layout of first-class medical and healthcare resources in large cities would be promoted to expand the coverage of high-quality medical institutions.

The plan aims to boost vitality in the region, which is about the same size as Germany and encompasses Jiangsu, Zhejiang and Anhui provinces as well as Shanghai and contributes roughly a quarter of the country's GDP and one-third of foreign trade and investment.

A McKinsey report showed that 300 million people from 15 nodal cities, 55 medium-sized cities and more than 1,000 towns can reach the New Hongqiao International Medical Center, which is a 10-minute drive from the Hongqiao transportation hub, within three hours.

 

Receptionists welcome customers at the Shanghai Concord Medical Diagnostic Imaging Center in the Hongqiao area. CHINA DAILY

 

 

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2019-12-26 00:00:00
<![CDATA[Alibaba sets up eWTP liaison office in Hangzhou]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530363.htm Alibaba Group Holding Ltd said on Wednesday that it is setting up the secretariat for its electronic World Trade Platform in Hangzhou, so that the permanent liaison office could help boost the initiative's footprint at home and abroad.

As an eWTP institution, the secretariat is responsible for the daily operations, international cooperation, training and exchange programs, achievement displays and the release of rules and models, according to company officials.

The secretariat, located in the Xixi National Wetland Park close to Alibaba's headquarters, is slated to be operational from October next year.

"As the initiator of eWTP, Alibaba is a pioneer in combining business services with technology capabilities," said Eric Jing, a partner of Alibaba and chairman of Ant Financial Services Group, its payment arm. He said that the secretariat is on course to establishing similar platforms with other eWTP hubs in Malaysia and Belgium.

The secretariat is likely to play a pivotal role in constructing eWTP, which is aimed at lowering trade barriers through technological empowerment, and pushing ahead with some of the world's best digital economy practices in Hangzhou, according to the city's vice-mayor Hu Wei.

"We hope the secretariat will … enhance our connections with international organizations and institutions like the World Economic Forum and United Nations Conference on Trade and Development, organize high-level training with relevant government agencies and companies, and promote the sharing of 'Chinese experience' on digital economy with the rest of the world," he said during the launch ceremony.

In a parallel development, a public service platform under the auspices of eWTP will also debut in Hangzhou, allowing small-and medium-sized enterprises engaged in cross-border business to access a unified electronic "operating system", the company said.

SMEs thus stand to benefit from a one-stop solution for online customs clearance, settlement exchange, tax refunds, as well as logistics and financial services.

Hangzhou Customs completed in September tests on a cross-border e-commerce bonded area, paving the way for SMEs to realize the "Buy from the Globe and Sell to the Globe" vision, said Zhang Yi, vice-director of Hangzhou Customs.

Since it was first proposed by Alibaba founder Jack Ma in 2016, the eWTP has been recognized by the G20, and adopted by cities in China, Malaysia, Rwanda, Ethiopia and Belgium.

In the latest attempt, Ethiopia joined the eWTP last month to develop a multifunction digital trade hub to serve as a gateway for Ethiopian products to China, a center for cross-border e-commerce and trade within Africa, and a training center.

The drive also included implementing the capacity building and training, which consists of a number of programs, including specialized programs for Ethiopian entrepreneurs, business leaders and university lecturers.

At home, Yiwu, a city in Zhejiang province known for manufacturing and exporting small commodities, agreed to join eWTP on digitizing trade infrastructure and developing additional trade flows for the city. The venture also plans to work on innovations in trade finance and establish a smart logistics hub there.

 

A cargo train leaves Yiwu, Zhejiang province, for Liege, Belgium. XINHUA

 

 

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2019-12-26 00:00:00
<![CDATA[What's news]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530329.htm GOVT AND POLICIES

Enthusiasm for savings up on quarterly basis

China's urban residents are more enthusiastic about depositing more savings in the fourth quarter (Q4) of this year, said a central bank survey. Among the 20,000 urban bank depositors surveyed in 50 cities across China, 45.7 percent responded with a willingness toward more savings in Q4, 1.2 percentage points up from the previous quarter, according to a survey conducted by the People's Bank of China. Meanwhile, their willingness toward investment shrank, with 26.3 percent of the respondents planning for more investment in Q4, down by 1.5 percentage points from a quarter ago. Respondents who are willing to increase consumption in Q4 accounted for 28 percent, up 0.3 percentage points from Q3.

Alcohol firms see stable growth in first 10 months

China's alcohol enterprises above designated size saw a total revenue of 681.98 billion yuan ($97.4 billion) in the first 10 months, according to the Ministry of Industry and Information Technology. The reading was up 8.7 percent compared with the same period last year, the ministry said. During the period, the profits of 2,126 alcohol makers with an annual revenue of over 20 million yuan grew 17.9 percent year-on-year to reach 130.88 billion yuan, the ministry said.

COMPANIES AND MARKETS

Smart sensor industrial park starts in Jiading

Shanghai on Tuesday launched a smart sensor industrial park in Jiading district, which has been striving to develop intelligent internet of things (IoT). The industrial park contains a core industry cluster exploring IoT-oriented applications of smart sensors, as well as two others that focus on intelligent manufacturing and automotive electronics. A total of 32 enterprises signed to settle in the park, investing 24.8 billion yuan ($3.5 billion) on projects ranging from the design, testing, packaging and massive production of sensor chips.

Cargo throughput increases in Qinzhou

The port of Qinzhou, a major link between southern China and Southeast Asia, saw its cargo throughput rise 17.9 percent year-on-year in the first 11 months of the year thanks to increased traffic on a new land-sea trade route. The port handled 108.6 million metric tons of cargo in the January-November period, according to the publicity department of the city of Qinzhou in the Guangxi Zhuang autonomous region. Meanwhile, the port handled 2.69 million standard containers, an annual increase of 33.2 percent. Since a new land-sea freight route was launched in 2017, an increasing number of trains have carried goods to and from the Qinzhou port, connecting many western Chinese regions with Southeast Asia.

Crowdfunding used to promote more brands

Chinese tech giant Xiaomi's premium e-commerce platform Youpin has teamed up with global crowdfunding platform Indiegogo to promote Chinese products and brands overseas in its latest move to expand globalization. The two platforms announced a strategic cooperation on Monday, leveraging their crowdfunding services and other resources to cooperate on the introduction and promotion of products and market development, among others. The two sides also plan to establish a project dedicated to promoting Chinese brands via crowdfunding. The two parties have made several successful attempts before the official announcement. Youpin has introduced Pamu Slide, a popular wireless earbuds product on Indiegogo, to China, while launching Walking-Pad, a foldable treadmill, and an electric toothbrush on Indiegogo.

Kweichow Moutai eyes high-quality progress

China's top liquor brand Kweichow Moutai on Tuesday launched 12 new projects with a total investment of 15.8 billion yuan ($2.25 billion) for high-quality development. The projects include a packing plant with a capacity of 80,000 metric tons of Moutai liquor, a warehouse that can store up to 30,000 tons of alcohol, and an organic sorghum planting base in Guizhou province. "We aim to build a batch of infrastructure projects with long-term benefits, boost the growth of Moutai and achieve high-quality development," said Li Jingren, general manager of Kweichow Moutai Group.

Alibaba pilots nonprofit elderly care service

Alibaba Group is testing a new model of elderly care through its "time bank," which makes every hour people spend advancing public welfare exchangeable for services for seniors, the company said on Tuesday. According to a memorandum of understanding on cooperation signed between Alibaba Foundation and the bureau of civil affairs of Binjiang district in Hangzhou, capital of Zhejiang province, online Alibaba users will have a unified quantitative standard to evaluate their public welfare acts. Alibaba also unveiled a set of criteria, the first in China to measure the value of voluntary service hours and philanthropic behaviors, with its basic unit named "public welfare hours."

Spanish firm to invest in Australian company

Spanish energy giant Iberdrola has announced that it will invest hundreds of millions of dollars in renewable energy in South Australia. Xabier Viteri, Iberdrola's head of renewables, said that the company will invest A$500 million ($344.9 million) in the Port Augusta Renewable Energy Park (PAREP), a proposed wind and solar farm, according to Guardian Australia. He said that Australia was an ideal renewable investment opportunity because of its high consumption and stable energy market. "It's a place where renewables are going to play a much more relevant position in the coming years, clearly," he said.

Kalanick severs ties with ride-hailing giant

Travis Kalanick, who built Uber into a ride-hailing giant, is cashing out. Kalanick disclosed on Tuesday that he has sold off all his Uber stock-estimated at more than $2.5 billion-and is resigning from the board of directors, severing ties to the company he co-founded a decade ago. "Uber has been a part of my life for the past 10 years. At the close of the decade, and with the company now public, it seems like the right moment for me to focus on my current business and philanthropic pursuits," the 43-year-old entrepreneur said in a statement.

AROUND THE WORLD

South Korea's retail shipments rise in Nov

Retail sales in South Korea grew last month as a year-end shopping festival buoyed both online and offline sales, a government report said on Wednesday. The combined sales of 26 major online and offline retailers increased 7.5 percent in November from a year earlier, according to the Ministry of Trade, Industry and Energy. It came as the Korea Sale FESTA, a South Korean version of Black Friday, ran for three weeks from Nov 1. Consumers raised the purchase of discount products during the country's biggest shopping season. Offline sales rose 2.4 percent in the month, marking the first increase in three months. Online sales advanced 14.8 percent, keeping a double-digit expansion for four straight months.

Supermarket sales in Japan fall by 1.4%

Japan's supermarket sales in November decreased 1.4 percent from a year earlier on a same-store basis, down for the second straight month, continuing to be affected by a consumption tax increase on Oct 1, the Japan Chain Stores Association said on Tuesday. According to the association's figures, sales at 10,538 supermarkets operated by 55 companies totaled 996.8 billion yen ($9.1 billion). The industry body's figures also showed that sales of food items, which were generally exempted from the 2-percentage-point tax hike from 8 percent, dipped 0.2 percent, with demand for alcohol subject to a 10-percent tax not recovering after being pushed up in September on last-minute demand.

 

 

 

 

 

 

 

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2019-12-26 00:00:00
<![CDATA[AI tech helps doctors make more efficient, accurate decisions]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530352.htm Artificial intelligence was arguably the most popular term for those attending the 2019 Radiological Society of North America's annual meeting-a heavyweight trade fair-in Chicago, the United States, in early December.

For Chinese AI startup firm Shukun Technology, the participation confirmed that its footprint in AI-backed medical imaging and diagnosis is on the right track and has huge market potential.

Together with bigger international medical names, Shukun is showcasing two of its products: CTAs for coronary arteries and the head and neck.

"We use software, database and machine learning algorithms to make diagnosis more accurate," said Anne Ma, Shukun's co-founder and CEO. "We hope the products will help doctors make better diagnoses and plan surgery faster than they can now."

According to the 2017 Report on Cardiovascular Diseases in China by the National Center for Cardiovascular Diseases, the country had more than 290 million cardiovascular disease patients, and 3 million die each year.

Founded two years ago in Beijing, Shukun's specialty is in the diagnosis of cardiovascular-related disease. It uses data, along with software and algorithms, to model human hearts and diagnose heart disease.

Shukun has accelerated the commercialization of its technologies to assist cardiovascular diseases diagnosis in more than 42 cities in China, and claimed to have the largest market share in the number of products installed in Chinese hospitals-particularly in 200 top-tier hospitals-among medical AI companies in the cardiovascular disease sector.

But Ma admitted that cardiovascular disease diagnosis requires a much more sophisticated technological process, together with a complex data collection process, due to the lack of data access from open sources. This will inevitably retard the machine learning process.

The key to Shukun's work, and what Ma said sets it apart from others in the field, is its world leading original medical AI neural network with more than 1 billion neurons.

A recent study conducted by University Hospitals Birmingham NHS Foundation Trust in the United Kingdom found that AI is on a par with human experts when it comes to making medical diagnoses based on images. The biggest benefit comes from the potential easing of strain on resources, freeing up time for doctor-patient interactions and even aiding in the development of tailored treatment.

Also joining RSNA's dedicated AI Showcase exhibition session was Japan's Fujifilm. The company displayed its latest solution bringing diagnostic radiology, mammography and cardiology together on the server-side, enabling immediate interaction with these modality imaging data sets through a single AI-enabled platform.

"We are showing our commitment to progressing AI technology to empower physicians to make more efficient and impactful care decisions," said Bill Lacy, vice-president, medical informatics, Fujifilm.

Belgium pharmaceutical company UCB, which has mature therapies in epilepsy and osteoporosis, is considering designing such products for screening osteoporosis and forecasting possible epileptic seizures for use in hospitals or as smart phone apps for patients.

"The diagnosis rate of some diseases is low or it may take years before a correct diagnosis. We feel the responsibility to help patients and doctors achieve a better and earlier diagnosis," said Taco van Tiel, vice-president and head of international markets at UCB.

Zhou Wenting contributed to this story.

 

A view of Chinese AI startup firm Shukun Technology's booth at the 2019 Radiological Society of North America's annual meeting in Chicago in early December. CHINA DAILY

 

 

 

 

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2019-12-26 00:00:00
<![CDATA[TV makers see bright future for OLED screens]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530351.htm Chinese television manufacturers are banking on the cutting-edge organic light-emitting diode (OLED) TVs whose sales witnessed robust growth this year, with the aim of seeking new growth points and driving the upgrading of the traditional TV industry.

Data from market consultancy All View Cloud or AVC showed that TV sales reached 36.33 million units nationwide from January to October this year, down 3.1 percent compared with the same period last year.

However, the accumulative sales of OLED TVs rose 21.8 percent to 154,000 units in the January-October period, with Skyworth topping the list in OLED TV shipments in the domestic market, according to AVC.

Market research firm IHS Markit said the shipment of OLED TVs is expected to reach 455,000 units next year and 693,000 units in 2021.

OLED is a relatively new technology and part of the recent innovations in display. It has a fast response rate, wide viewing angles, super high-contrast images and richer colors. It is much thinner and can be made flexible, compared with traditional LCD display panels.

Tang Xiaoliang, chief brand officer of Shenzhen Skyworth-RGB Electronic Co Ltd, which is a subsidiary of the Skyworth Group, said the company plans to invest 200 million yuan ($28.5 million) in a marketing campaign during the spring's peak season as part of a broader drive to bolster the transformation and upgrading of the whole TV industry.

Skyworth is transforming itself into a high-tech and innovation-driven company, having invested heavily in OLED technology, self-developed chips that are used to improve the quality of the image, and the big-screen AIoT ecosystem, Tang said.

AIoT, which means artificial intelligence of things, is the combination of AI technologies with the internet of things infrastructure to improve human-machine interactions and enhance data management and analytics.

The company has been producing OLED TVs in partnership with South Korea's largest panel maker, LG Display, since 2013.

Statistics from AVC showed sales of Skyworth OLED TVs accounted for 46 percent of total OLED sales in the Chinese market in 2017, followed by LG with 16 percent and Sony at 14.9 percent.

LG Display is the only company capable of mass producing large-sized OLED screens globally. In August, the company's production plant began operations in Guangzhou, the capital of Guangdong province.

With an investment of 46 billion yuan, the plant will be able to manufacture 60,000 glass substrates per month at the preliminary stage. That will be used for 4K ultra-high-definition large-sized OLED TVs in sizes of 55 inches, 65 inches and 77 inches.

Another home appliance giant, Hisense Group, has jumped on the bandwagon and launched its own 55-inch and 65-inch A8 series OLED TVs in March.

Yu Zhitao, general manager of the group's listed arm in Qingdao Hisense Electric Co Ltd, said the company will adhere to presenting a high-quality picture and large-sized screens this year, as well as promoting continuous innovation in graphics chips, laser displays and artificial intelligence technologies.

"The traditional TV market is almost saturated and companies need to seek new growth points," said Dong Min, an independent researcher in the home appliances sector, adding new display technologies such as OLED TVs, curved screen TVs and laser TVs are all good choices and in line with ongoing consumption upgrades.

The OLED TVs will be the future development direction of the TV industry and present an opportunity for TV manufacturers to expand their profit margins, said AVC President Wen Jianping.

Li Yaqin, general manager of Sigmaintell, said the 65-inch TV will become the mainstream screen in people's living rooms in the future, but that OLED TV will not be able to immediately trigger customer purchases at this time although most current consumers are technophiles and high-end users.

 

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2019-12-26 00:00:00
<![CDATA[Uruguay plans concerted efforts to boost beef exports to China]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530337.htm MONTEVIDEO-Uruguay is redoubling its promotional efforts in China to boost its beef brand, as the Asian country has become a priority market for this top beef producer in South America, an industry official said.

Developing brand recognition among Chinese consumers is a "topic that interests us very much," said Federico Stanham, head of the National Meats Institute (Inac).

"Countries that have positioned their brand, such as Australia, achieve 25 percent higher sales in meats than we do," he explained. "Led by Inac, Uruguay has since April of this year launched a strong promotional campaign in China on social networks, at points of sale, and at food distributors and producers."

The campaign is designed to make the "Uruguay brand" better known in China, a destination for about 60 percent of Uruguay's beef exports. The campaign should "continue for several years to make us recognizable," said Stanham.

The campaign "has been seen more than 100 million times on social networks. That's very significant," the industry official said.

In China, "people shop online and also navigate shopping sites, and Uruguay having a presence there helps to make us more recognizable," he added.

For producers and exporters, "China as a market has several advantages: it has so many different regional cuisines and Chinese consumers find ways to prepare all of the parts an animal can supply," said Stanham.

When it comes to beef, for example, the Asian market "demands all of the various cuts. That's very beneficial because all of the production can be placed in China," he said.

To satisfy China's growing appetite for beef, Uruguay "has diverted its trade flow from traditional markets such as Europe, Chile, the United States, Israel and Russia," said Stanham.

"Today, it's more convenient to place your production in China rather than those markets. In several countries, the volume (of product) placed has decreased, but in China it has increased significantly," he said.

The Asian market is seeing "a rise in beef consumption," while the traditional markets are either holding steady or seeing a decline, he added.

So far this year, Uruguay has exported 446,000 metric tons of beef, generating revenue of $1.724 million. Of that total, China purchased 294,000 tons worth $1.012 million.

Uruguay's meat industry is eagerly anticipating a free-trade agreement with China to gain a competitive edge over rivals from Australia and New Zealand, both of which enjoy benefits from tariff reduction programs.

Xinhua

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2019-12-26 00:00:00
<![CDATA[Toy manufacturers in US crave for more certainty after narrow escape]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530335.htm BOCA RATON, United States-The US toy industry narrowly escaped potentially disastrous tariff hikes before Christmas, thanks to the "phase-one" economic and trade deal between the United States and China.

Admitting that the deal was a big relief, Jay Foreman, president and chief executive officer of Basic Fun, a Florida-based toy business, said the threat of tariff hikes was akin to a "sword" over his head and had cast a shadow on business operations, planning and development.

"Of course I will feel great that I don't have impending disaster raining down on me," Foreman told Xinhua News Agency in a recent interview. "I would have really felt a lot better if I never had it in the first place."

For months, Foreman and his colleagues had been concerned that the toys his company imports from China would be slapped with additional 15-percent tariffs, previously scheduled to take effect on Dec 15.

"It's a direct tax on our merchandise and profits," Foreman said of the tariffs. "If somebody is trying to take and reduce our profits, it becomes a nightmare."

Facing the threat, Basic Fun, most of whose products are manufactured in China, has closely followed the trade negotiations between the world's top two economies and constantly held meetings to discuss the situation.

"Are the tariffs on? We have a meeting. What do we do? Are the tariffs off? We have a meeting. What do we do? So it really becomes difficult to plan," Foreman said.

The anxiety kept growing until two days before the deadline when China and the United States announced the "phase-one" agreement, followed by the White House's decision not to proceed with the planned tariffs targeting Chinese imports, including phones, computers, holiday ornaments, clothing and toys.

Steve Pasierb, president and chief executive of the New York City-based US Toy Association, said he welcomes the deal.

"With the uncertainty removed, toy companies can move forward and focus on planning, product development and providing joy for kids through the toys and games they make," Pasierb said in a statement.

Foreman said he understands that the deal will not fix all the trade issues between the two nations, but "it's a goodwill gesture to show the market and the world that the US and China can work together."

Since trade friction between the two sides began over a year ago, US businesses relying on China's manufacturing prowess were frequently asked why they did not relocate their production to other countries or regions.

Most said they could not or would not, including Basic Fun, which lists safety as its primary concern. Over the past few decades, Basic Fun and many other US toy companies have worked closely with their Chinese partners. Together they have developed the best supply chain and the highest safety standards in the toy industry.

"It's a really efficient, fantastic and most importantly, safe production and supply chain … It's really important for toys to be made safely," said Foreman. "You hardly ever hear an issue of a toy being unsafe anymore that's made in China."

The entrepreneur also weighed in on China's strength in manufacturing. "We really rely on the Chinese productivity a lot because the factories and the workforce are extremely efficient."

"They really know how to set up production lines," he said. "They are motivated. They are hardworking. They are diligent. And they have been a really important part of the growth of the US toy industry."

As for Basic Fun, moving production out of China would take 12 to 24 months and cost millions of dollars, not to mention posing certain risks.

"I can say that I have no interest in moving out of China … There is no good option for our industry," Foreman said.

The past two years for the US toy industry have been tough. Toys "R" Us, once the country's leading toy retailer and Basic Fun's biggest customer, filed for bankruptcy in 2017, resulting in the closure of hundreds of stores and the elimination of tens of thousands of jobs.

Partly because of Toys "R" Us' downfall, the US toy industry is expected to be hit with a decline of 3 to 5 percent in sales in 2019, Foreman said.

The waning of brick-and-mortar retail in the United States comes amid a rise of online sales and shopping, which has brought both challenges and opportunities for Basic Fun and other toy brands. "All of us in the toy industry are slowly, with many challenges, learning the best way to sell and market our products online," Foreman said.

In addition to competing against each other, US toy makers also face fierce competition from console games, mobile gaming and social media. Clearly, no one wants more tariffs or the threat of them.

"We work in a business that has a long development cycle. We are selling and we are showing our customers products now for next Christmas," he said. "When there is uncertainty about the price you are going to charge your customers, you really can't plan effectively."

But the US toy industry might consider itself lucky, given how plenty of imports from China still remain subject to extra tariffs by Washington, which are taking a toll on the national economy, company profits and the public.

Pasierb said he wants to see an end to the trade friction, urging the administration to "seize this opportune point in time to also eliminate tariffs that remain in effect".

Xinhua

A consumer and his daughter greet the Toys "R" Us mascot, Geoffrey, at the new Toys "R" Us store at a mall in Paramus, the United States. AP

 

 

 

 

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2019-12-26 00:00:00
<![CDATA[Draft tariff law likely to be published soon]]> http://www.chinadaily.com.cn/kindle/2019-12/26/content_37530362.htm China is likely to publish the draft of the country's first tariff law for public opinion in the near term, experts close to the Ministry of Finance told China Daily on Wednesday, a further indication that the country is speeding up the tax legislation process.

"Work on publishing of the draft tariff law is likely to be pushed in the near term. And we expect a breakthrough in tariff legislation next year," said Li Xuhong, a senior researcher with the Beijing National Accounting Institute and a consultant to the State Taxation Administration, which is tasked with drafting tax laws.

The tariff law is a significant legislative work for China next year as it is closely related to the international trade and economic opening-up, Li told China Daily.

Shi Zhengwen, director of the Center for Research in Fiscal and Tax Law at China University of Political Science and Law, said earlier that the tariff legislation process will be accelerated, as the country is planning to complete the entire process by the end of next year.

In the upcoming tariff law, experts said, the existing tax framework and overall tax burden level will remain unchanged so as to stabilize market expectations, amid a complex and uncertain external environment.

During the first 11 months of this year, total tariffs reached 263.8 trillion yuan ($37.7 trillion), down by 2.2 percent from a year earlier, according to data from the Ministry of Finance.

The government decided on Monday to lower tariffs on a broad range of imported goods, including frozen pork and high-tech products, to satisfy domestic consumption and reduce production costs, starting Jan 1.

Temporary tariff rates, which are set for a specified period, will be applied to 859 items. Designated items will enjoy import tariffs that are lower than the existing most-favored-nation rates in 2020.

The tax legislation process in China started in 2013, targeting to transform all existing tax regulations into laws. By the end of November, nine tax laws had been formulated across 18 tax categories. The 13th Five-Year Plan (2016-20) plans to finish the entire legislation process by the end of next year.

The tax legislation process needs to be in coordination with the overall tax and fee reduction plan so as to improve the efficiency of the macroeconomic policies to support economic growth and guarantee tax levy increases, said Li.

China's largest tax contributor-the value-added tax (VAT), is currently ready for the legislation process. A draft VAT law was released by the Ministry of Finance for public opinion on Nov 27.

PwC China National Indirect Tax Leader Robert Li said: "Considering the tax reduction trend in the last couple of years and the guidance of the State Council on simplifying the VAT rate brackets from three to two, it is important to monitor closely whether adjustment and simplification of VAT rate brackets will be included in the final draft VAT Law to be submitted to the National People's Congress for review and discussions."

The finance ministry also released the draft of the consumption tax law last month for public opinion, which seeks to reduce the frequency of tax payments for the convenience of taxpayers.

Finance Minister Liu Kun submitted the drafts of the two tax laws to the ongoing bimonthly session of the Standing Committee of the NPC for review on Monday.

In the draft laws for deed tax and urban maintenance and construction tax, the existing tax rates will remain unchanged, and their current tax administration framework and overall tax burden level will remain stable, said Liu.

Cao Yin contributed to this story.

 

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2019-12-26 00:00:00
<![CDATA[Lenders asked to assess forex, hedging risks of borrowers]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530172.htm Commercial banks in the country, which provide foreign exchange loans to the nonfinancial private sector, must evaluate the borrowers' foreign exchange risks and their hedging capabilities, according to an official of the State Administration of Foreign Exchange (SAFE), the country's foreign exchange regulator.

For foreign currency debt without hedging arrangements (including natural hedging and financial hedging), the banks may need to reserve more capital as a cushion to prevent defaults, in accordance with the Basel III requirements.

"Risks from overseas debt issuance of property companies without any foreign exchange income, and local government financial vehicles, should be monitored and notified, to avoid a currency mismatch," said Sun Tianqi, chief accountant of SAFE, at the recent annual meeting of the China Financial Forum.

Measures are also being studied to discourage companies from investing in sophisticated foreign exchange derivative products that are beyond their professional capabilities, according to Sun.

Meanwhile, the government's implicit guarantee on companies' cross-border debt should be controlled, to reduce moral hazards, he said. "We should pay more attention to the foreign exchange and foreign currency interest rate risks of companies that are related to their overseas bond issuances."

Some international organizations, including the International Monetary Fund, have warned about the risks due to a currency mismatch, which exists when a borrower funds its operations in one currency while the earnings derived from these operations accrue in another currency.

Developing the local currency-denominated bond market can help China reduce its reliance on foreign-currency financing, said experts. They said the country should consider further opening up to foreign direct investment as it is a more stable mechanism for foreign capital inflows than debt.

Improving the exchange rate mechanism and increasing its flexibility are other measures that the country can adopt to reduce the risk of currency mismatch, said Sun.

To prevent exchange rate risks, the SAFE official suggested that in case of companies that rely on raw material and equipment imports but have no foreign exchange income to repay their foreign exchange loans, banks should take account of the foreign exchange rate and commodity price fluctuations, foreign currency interest rate risks and the companies' hedging arrangements.

Government departments, including the central bank and other financial regulators, should build a mechanism under which they can share data related to international balance of payments, foreign investment in domestic bonds, stocks and derivative markets, as well as information about commercial banks' foreign exchange risk regulation and monitoring indicators (such as cumulative foreign exchange exposure and foreign exchange liquidity), Sun said.

Zhu Min, head of Tsinghua University's National Institute of Financial Research and former IMF deputy managing director, said that the yuan exchange rate is likely to remain stable in 2020, while large capital inflows will continue and a strong monetary policy will continue to boost high-quality, steady economic growth.

China's foreign exchange market maintained a basic equilibrium in October, according to SAFE data, indicating a balanced supply and demand relationship. Cross-border capital flows also remained stable, including an equilibrium of foreign exchange settlement and sales by banks-a deficit of $4.4 billion in October, lower than the average of the first nine months.

Foreign-related receipts and payments by banks for their customers represented a surplus, official data showed. The non-banking sector, including companies and individuals, registered a surplus of $10.9 billion in foreign-related receipts and payments, versus a slight deficit in the March-to-September period.

Foreign exchange supply through major channels of inflows rose steadily, and cross-border capital inflows from foreign direct investment and securities investment continued growing on a yearly basis, said Wang Chunying, spokeswoman of SAFE.

"Despite the complex and challenging external environment, China's economy has shown great resilience, potential and vibrancy. The economic performance remains within a reasonable range and the high-level opening up is advanced, laying a solid foundation for the stability of the foreign exchange market," said Wang.

 

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2019-12-25 00:00:00
<![CDATA[What's news]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530228.htm GOVT AND POLICIES

PBOC skips reverse repos as liquidity improves

China's central bank skipped reverse repos on Tuesday, citing sufficient liquidity in the banking system. The banking system reports a sufficient level of liquidity at present, the People's Bank of China said in a statement. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

Curbs on deboned Japanese beef lifted

Chinese authorities recently announced that the country would remove a ban on imports of Japan's deboned beef under 30 months old starting Dec 19. The ban was imposed amid outbreaks of mad cow disease in 2001, according to a statement jointly released by the General Administration of Customs and the Ministry of Agriculture and Rural Affairs. Inspection and quarantine requirements would be made separately, said the statement. The authorities also unveiled another statement to lift import restrictions imposed on cloven-hoofed animals and products, removing a ban placed in 2010.

Trademark applications swell to 7.12m in China

From January to November, 7.12 million trademark registration applications were filed in China, according to the trademark office of the National Intellectual Property Administration. China's total number of effective registered trademarks has reached 24.78 million, with every 4.9 market entities owning one registered trademark on average. The public services related to trademarks have become more efficient and convenient. The period needed to review trademark registration in China has been shortened to five months on average.

Foreign trade volume rises by 12.7% in Hebei

The foreign trade volume of North China's Hebei province rose 12.7 percent year-on-year to 364.23 billion yuan ($52 billion) in the first 11 months of the year, local authorities said on Tuesday. The province's exports totaled 214.71 billion yuan during the period, up 6.4 percent, while its imports rose 23.1 percent to 149.52 billion yuan, said the customs in the capital city of Shijiazhuang. The province's trade with economies along the Belt and Road rose 18.9 percent to 116.78 billion yuan, and its trade with the Association of Southeast Asian Nations grew 33.7 percent to 39.54 billion yuan. Its trade with Australia and Brazil saw double-digit growth from January to November, up 61.9 percent and 24.6 percent, respectively.

COMPANIES AND MARKETS

Business climate sees steady improvement

Chinese firms reported an improving business climate in the fourth quarter of this year, a central bank survey showed. The business climate index stood at 55.5 percent in the fourth quarter, 2.2 percentage points higher than in the third quarter, according to a report from the People's Bank of China, whose results are based on surveys of over 5,000 industrial firms. Respondents also reported improving profitability, with the index rising 2 percentage points from the previous quarter to 57.3 percent. About 60.5 percent of surveyed entrepreneurs said the macroeconomy was running smoothly. Sentiment for product selling prices and raw material purchasing prices both improved quarter on quarter, edging up 1.9 percentage points and 0.8 percentage point, respectively.

Ito-Yokado sustains momentum in Sichuan

Japanese retailer Ito-Yokado has shared benefits from consumption upgrade in west China, said Tomihiro Saegusa, president of Japanese retailer Ito-Yokado. Saegusa arrived on Sunday in Chengdu, capital of Southwest China's Sichuan province. Nine of 10 Ito-Yokado stores in China are situated in Chengdu's downtown and surrounding area. Ito-Yokado entered the Chinese market in 1996.

Cambodian carriers expand flights to China

Two Cambodia-registered airlines have announced new routes connecting Phnom Penh, capital of Cambodia, to destinations in China, an English-language daily newspaper reported on Monday. Carrier Cambodia Airways will launch a regular nonstop flight between Phnom Penh and Shenzhen in southern China on Dec 27, the Khmer Times reported, citing an airline's statement. The same company will begin flying to Chengdu, the capital of Southwest China's Sichuan province, from Phnom Penh on Jan 2. Shenzen and Chengdu are important transportation hubs.

AROUND THE WORLD

Thailand central bank expects 2.8% growth

In a seminar held in Bangkok on Monday, the Bank of Thailand (BoT) governor said he predicts the Thai economy to expand by 2.8 percent next year as a result of government budget disbursement and investment in mega infrastructure projects. "The economic growth rate would be higher at 2.8 percent, comparing to 2019's GDP at 2.5 percent," said BoT Governor Veerathai Santiprabhob, "The 2020 budget bill would pass the parliament, megaprojects are already making progress so as many investment projects; also 5G communication networks will begin and projects related to financial institutions will emerge." The governor said Thailand could do better than a 2.8 percent growth projection.

S. Korea plans more treasury bond sales

The South Korean government's treasury bond sale would rise in double digits next year, the country's finance ministry said on Monday. The Ministry of Economy and Finance said that 130.2 trillion won ($111.8 billion) worth of government bonds planned to be issued in 2020. It was up 28.0 percent, or 28.5 trillion won, from this year, marking the fastest yearly growth since 2009 when the global financial crisis rattled the economy.

Iran boosts commodity exports to Uzbekistan

Iran exported $152 million worth of commodities to Uzbekistan during the first eight months of the current Iranian year (March 21-Nov 21), Eghtesadonline news website reported on Monday. The figure registered a 60 percent rise compared with last year's corresponding period, the Chairman of Trade Promotion Organization of Iran Hamid Zadboum was quoted as saying. Stone-cutting machines, cement, propane, glass sheets, construction stones and furniture were Iran's main exports during the period under review. Iran mainly imports cotton, yarn, potassium chloride, phosphate fertilizer and pinto beans from Uzbekistan.

Singapore's CPI-All Items inflation surges

Singapore's Consumer Price Index for all items (CPI-All Items) grew 0.6 percent year-on-year in November, compared to a 0.4-percent growth in October, according to a joint statement issued by two government authorities. The Ministry of Trade and Industry (MTI) and Monetary Authority of Singapore (MAS) said in the joint statement that the CPIAll Items inflation increased in the month because of an increase in private road transport inflation and smaller declines in the costs of retail goods and accommodation, even as services inflation eased. In November, the MAS core inflation, which excludes the costs of accommodation and private road transport, was unchanged at 0.6 percent from October as lower services inflation was offset by a smaller decline in the cost of retail goods.

China Daily - Agencies

 

 

 

 

 

 

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2019-12-25 00:00:00
<![CDATA[Demand for fresh homes may decline next year]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530227.htm New housing demand is expected to wane in China during the first quarter of next year, as a growing cross-section of people are wary of further price hikes, according to a central bank survey.

Only 20.7 percent of the survey respondents were willing to make fresh home purchases during the next three months, the lowest level since 2017. It also came against the 21.5 percent demand seen during the third quarter of this year, said the report published by the People's Bank of China, the central bank, which tracks housing demand on a quarterly basis.

The survey covers 50 cities and 20,000 residents and most of the questions are about the participants' income level, employment situation, inflation expectations and willingness for consumption, deposits and investments.

The latest results showed that residents are now less interested in buying new houses. About 11 percent of the participants expect new home prices to decline in the first quarter of 2020, higher than the 9.8 percent seen in the third quarter of this year, the report said.

Policy makers have repeatedly stressed that, "housing is for living in and not for speculation". A similar stance was seen at the annual Central Economic Work Conference held earlier this month, when it was decided to keep the tone unchanged for next year. It also highlighted the need for "keeping property prices stable and rationalizing expectations".

Song Yu, chief economist of Beijing Gao Hua Securities Co Ltd, said the idea of "keeping property prices stable" can be interpreted as a measure to prevent abnormal price swings.

According to data released by the National Bureau of Statistics, property investment growth weakened to 8.4 percent year-on-year in November, down from 8.8 percent in October. Growth in land sales by volume fell to negative 0.8 percent in November from 12.8 percent in October.

A report from Nomura Securities said that growth in land sales by volume is expected to tumble further in the coming months, given the headwinds including the recent tightening in financing for property developers.

From an entrepreneurial perspective, indicated by a separate PBOC report released on Monday, 37.9 percent of the managers from 5,000 companies were of the view that China's macroeconomy remained "cool" in the fourth quarter, compared with 36.3 percent in the July-to-September period.

Policy makers have recognized that downside pressures on economic growth are increasing in China, influenced by the expected global economic slowdown next year and existing trade friction between China and the United States. Economists said this will lead to more rational and cautious consumption, investment behavior from Chinese people next year.

Instead of putting more money into property or other types of financial assets, a larger number of people are keen on increasing deposits, said the PBOC survey. About 45.7 percent of the respondents were keen to put more money in banks, up from 44.5 percent in the third quarter survey, the PBOC said.

According to the survey, about 27.5 percent of the participants planned to increase spending on healthcare in the first quarter of 2020, up from 25.8 percent a quarter ago. About 28.3 percent of the respondents plan to spend more on travel, down from 30.6 percent in the third quarter.

In face of the economic challenges, analysts expect the main policy objectives for next year to be on maintaining growth and stability. At the same time, economic rebalancing is making steady progress, with private consumption and services playing a much bigger role in the overall growth.

"China's policy focus continues to shift between three-at times competing-policy objectives of ensuring sustainable growth, maintaining financial stability and implementing reforms to rebalance the economy, with the current focus primarily on growth and stability in the face of slowing GDP growth," said Michael Taylor, managing director of the Asia-Pacific region at global credit ratings agency Moody's.

 

House sellers introduce property projects at an industry expo in Taiyuan, capital of Shanxi province. WEI LIANG/CHINA NEWS SERVICE

 

 

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2019-12-25 00:00:00
<![CDATA[Major company events in China in 2019]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530225.htm Editor's note: This year, China witnessed several corporate milestones that made global headlines. As the year 2019 draws to a close, we present here a round-up of the top 10 stories, based on the most accessed business content on China Daily's official website www.chinadaily.com.cn.

1. Alibaba makes Hong Kong debut

Alibaba Group Holding Ltd debuted on the Hong Kong stock exchange on Nov 26, five years after the Chinese internet giant first went public in New York in 2014. Alibaba's Hong Kong-listed shares jumped 6.25 percent above its issue price of HK$176 ($22.60) per share in the morning before hitting an early intraday high of HK$189.5. They closed 6.59 percent up at HK$187.60. The company said it raised HK$101.2 billion by selling 575 million new shares to investors.

2. Telecom majors roll out 5G data plans

China's three major telecom operators on Oct 31 launched their long-awaited 5G service plans. China Mobile, China Unicom and China Telecom, in simultaneous moves, unveiled their monthly 5G plans with prices ranging from 128 yuan ($18.26) to 599 yuan. The move means consumers can now pay to access superfast 5G speeds as more than 86,000 5G base stations have already entered service in China, covering 50 cities nationwide, including Beijing, Shanghai, Guangzhou and Shenzhen.

3. Alibaba chairman Jack Ma steps down

Jack Ma, founder of e-commerce giant Alibaba, retired as Alibaba's executive chairman on Sept 10, one year after he announced his resignation plan. Ma, a former English language teacher, co-founded Alibaba with 17 partners in an apartment in Hangzhou. This year marks the 20th anniversary of the company's founding. Alibaba said Ma would remain on the board of directors until 2020. Daniel Zhang, 47, who had been acting as chief executive officer since 2015, took the helm.

4. Costco opens first store on Chinese mainland

The world's second-largest retailer, Costco Wholesale Corp, opened its first brick-and-mortar store on the Chinese mainland in Shanghai on Aug 27. The 14,000-square-meter store was inundated on its first day, with customers spending up to two hours queuing at checkouts or waiting three hours to find a spot in the 1,200-bay parking lot. Costco membership costs 299 yuan a year.

5. Huawei unveils its own operating system

Huawei Technologies Co unveiled its much-anticipated in-house operating system Harmony OS on Aug 9. Harmony will be able to support a wide range of application scenarios, including smart TVs, automobiles and wearables, said Yu Chengdong, CEO of Huawei's consumer business group. The senior executive said Harmony can be used in its smartphones. But Android is still Huawei's preferred choice for handsets if the company is allowed to use it. "But when Android is not available, Harmony can be applied immediately to smartphones. Harmony is ready," Yu added.

6. China State Railway Group inaugurated

China Railway Corporation has been renamed China State Railway Group Co Ltd, a wholly State-owned enterprise with registered capital of more than 1.73 trillion yuan, according to a statement from the company on June 18. The company is run by the central government, and the Ministry of Finance performs investor duties on behalf of the State Council. The company will be responsible for the national railway system's operation, construction and safety, as well as nonprofit transport jobs.

7. Tesla breaks ground on Gigafactory in Shanghai

Tesla's 50-billion-yuan Shanghai Gigafactory broke ground in the Lingang Special Area on Jan 7.

The plant is the company's first factory outside the United States and the first automobile production project wholly owned by foreign capital in China. With an initial weekly production of about 3,000 Model 3 electric vehicles, the factory is designed with an annual capacity of 500,000 electric cars.

8. World's largest shipbuilder sets sail

China Shipbuilding Corp was officially unveiled on Nov 26 in Beijing as the world's largest shipbuilder. The giant corporation was created through the merger of China State Shipbuilding Corp and China Shipbuilding Industry Corp, the country's two biggest shipbuilders by production capacity. The new company has about 310,000 employees, 147 subsidiaries, including manufacturing complexes nationwide and 35 institutes as well as total assets worth 790 billion yuan.

9. Websites suspended for multiple violations

The websites of Visual China Group and IC Photo, which provide visual content, were required to suspend services for rectification on Dec 10 due to multiple violations.

The websites were engaged in internet news information services without obtaining authorized licenses, according to the Cyberspace Administration of China. They also carried out cooperation involving internet news and information services with overseas enterprises without security assessment.

10. National oil, gas pipeline firm unveiled

China officially launched its long-planned national oil and gas pipeline network company on Dec 9, as part of the country's ongoing oil and gas reforms to help meet the nation's increasing energy needs.

Combining the pipeline assets of the country's big three State-owned energy giants-PetroChina, Sinopec and CNOOC-the creation of the new company will help foster a more competitive environment for all players in the sector.

 

Alibaba Group Holding debuts on the Hong Kong Exchanges and Clearing Market on Nov 26. HE GUANG/FOR CHINA DAILY

 

 

A saleswoman (center) introduces newly released 5G mobile phones to customers at a China Mobile brick-and-mortar store in Beijing on Oct 31. XINHUA

 

 

Jack Ma (center), founder of e-commerce giant Alibaba, participates in a gala marking the 20th anniversary of the company's founding in Hangzhou, Zhejiang province, on Sept 10. NIU JING/FOR CHINA DAILY

 

 

The logo of Visual China Group.

 

 

A photo shows an exterior view of the Shanghai Costco store. IC

 

 

Yu Chengdong, CEO of Huawei's consumer business group, unveils Huawei's own operating system Harmony OS in Dongguan, Guangdong province, on Aug 9. XINHUA

 

 

A bullet train is seen in Harbin, Heilongjiang province. VCG

 

 

An aerial view of Tesla's factory in Shanghai. SU XIAOZHOU/FOR CHINA DAILY

 

 

China Shipbuilding Corp is officially unveiled on Nov 26 in Beijing as the world's largest shipbuilder. CSSC.NET.CN

 

 

A worker checks facilities at an oilfield in Daqing, Northeast China's Heilongjiang province. XINHUA

 

 

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2019-12-25 00:00:00
<![CDATA[Tourism efforts help Guizhou reap poverty eradication rewards]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530223.htm Guizhou is banking on its tourism industry to provide a cutting edge for poverty eradication, as the southwestern Chinese province strives to be a role model for China's anti-poverty efforts.

By September this year, the tourism industry provided employment opportunities for 986,400 people in the province, which in turn helped 897,000 of them to come out of the shadow of poverty, according to data provided by the provincial authorities.

Guizhou has developed 19,495 tourism spots in 66 poverty-stricken counties, with 4,490 of them in 16 counties that are suffering from deep poverty. During the first three quarters of this year, Guizhou's rural tourism attracted 423 million visitors, up 21.7 percent on a yearly basis. Total rural tourism revenue surged 30.6 percent year-on-year to 256.2 billion yuan ($36.5 billion).

During the same period, total tourism revenue in Guizhou reached 1 trillion yuan, up 28.3 percent year-on-year, according to the Guizhou Provincial Department of Culture and Tourism.

"In recent years, Guizhou has attracted tens of thousands of tourists with its unique landscape and rich culture. Promoting the development of the tourism industry is an important approach for targeted poverty alleviation. Through tourism, we hope to bring more people out of poverty," said Wang Wenxue, deputy head of the Guizhou Provincial Department of Culture and Tourism.

Xijiu, a northern town in Guizhou, is an ideal example of tourism-driven poverty alleviation in the province. As a town famous for producing baijiu, the town attracts tens of thousands of baijiu lovers every year. Guizhou Xijiu, the largest baijiu producer in the town, regularly organizes baijiu discovery tours. The tours include learning brewing techniques at the factory, visiting liquor collection museums, as well as baijiu tasting parties guided by liquor professionals.

According to the company, in November, over 900 batches of tourists, or 13,400 visitors, experienced its liquor tourism.

Lou Bihua, Party secretary of Xijiu town, said that in 2014, there were 4,628 villagers facing poverty. Through the active poverty alleviation efforts, the town managed to reduce the incidence from 13.86 percent in 2014 to 1.02 percent in 2018. This year, Xijiu town has managed to eliminate poverty, said officials.

Xiang Chengqiang, Party secretary of Xishui county, which Xijiu town belongs to, said: "Xishui county has beautiful natural scenery, a pleasant climate, and rich history and culture. More tourists are now coming to Xishui. We will continue to give full play to the role of the tourism industry in poverty alleviation, and realize high-quality development."

According to Xiang, during the first six months of 2018, Xishui attracted 3.02 million tourist visits, up 51 percent year-on-year. Its total tourism revenue surged 53.8 percent on a yearly basis to 3.48 billion yuan.

Tongzi county, in northern Guizhou, is another example of tourism-driven poverty alleviation. With the support of the government, the county transformed from a poverty-stricken area to a national 4A-level scenic spot.

The income from the scenic spot is mainly through tourism entrance tickets, parking fees, village-level labor service income, village-level housing rental and village-level land transfer.

According to the local government, currently, there are 1,822 village guesthouses in Tongzi. In 2018, the scenic spot attracted 19.39 million visits, lifting nearly 4,000 poor villagers out of poverty.

The annual Central Economic Work Conference held in Beijing from Dec 10 to 12 has called for resolute efforts in targeted poverty alleviation, as one of the "three tough battles". It also underscored the importance of using industry development for poverty alleviation.

Li Jinzao, vice-minister of culture and tourism, said tourism-driven poverty alleviation work can bring positive results to both the economic and civil enhancement sectors. Rural tourism has become the strongest force to lift villagers out of poverty, he said.

 

Tourists watch a drum performance in Tucheng Ancient Town in Xishui county in Southwest China's Guizhou province. LUO LIFEI/FOR CHINA DAILY

 

 

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2019-12-25 00:00:00
<![CDATA[Province seeks next major leap in manufacturing industry]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530183.htm GUANGZHOU-South China's Guangdong province has approved a three-year action plan for Guangzhou, its capital city and a major manufacturing hub, as the province looks to move up the manufacturing ladder.

With both its past and present dependence on labor-intensive industries such as apparel and toys, the city in recent years quickened its pace to move up the industrial chain and by 2021, it aims to increase the value added of high-end manufacturing to more than 300 billion yuan ($42.9 billion).

The plan also called for the creation of two world-class manufacturing clusters in automobiles and ultra-high definition videos, as well as four other national clusters in industries that include new materials and high-end equipment.

The city's manufacturing shift is emblematic of the broader trend in China as the "world's workshop" built upon low labor and production costs will be taking on new forms.

Apart from the traditional "Made in China" tags found on store shelves, high-speed trains and semiconductors are becoming the new symbols of Chinese manufacturing.

Across the nation, provinces such as Sichuan, Shandong, Zhejiang and Jiangsu have invested huge amounts to push high-quality development in their manufacturing industries.

Over the past year, as overall manufacturing investment was losing steam, investment in high-tech manufacturing showed resilience.

Data from the National Bureau of Statistics showed investment in high-tech manufacturing surged 14.8 percent year-on-year in the first 11 months of the year, far outpacing the sector's average growth of 2.5 percent.

At the Central Economic Work Conference earlier this month, top policymakers promised to step up the upgrading of equipment to optimize traditional manufacturing and increase long-term financing support for the sector.

China will work to build a number of advanced manufacturing clusters with international competitiveness, a statement released after the key economic meeting said as it charted the course for economic work in 2020.

The meeting also called for promoting industrial and consumption upgrading, fully tapping into the advantages of China's considerable market, and giving play to the vital role of consumption alongside the pivotal role of investment.

The emphasis on concerted monetary, fiscal and regional support for advanced manufacturing highlighted the industry's key role in China's economic transformation, said a research report by Shenwan Hongyuan Securities.

Investment in high-tech manufacturing will not only help prop up investment demand in the short term, but also spur technological progress at the supply end in the long run, the report noted.

Wang Yiming, deputy director of the Development Research Center of the State Council, said the meeting sends a signal that more investment will flow to areas such as high-end manufacturing which could stimulate upgrades at both the supply and demand end to achieve a dynamic balance.

In addition to rising investment, the Chinese government has launched across-the-board tax cuts and fee reductions to enable enterprises to focus more on research and development, which is key to driving the upgrading of China's manufacturing.

Considering China's existing advantages, the tremendous domestic market and its wide adoption of frontier technologies, the country's manufacturing sector will be ready for another big leap forward, analysts said.

Xinhua

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2019-12-25 00:00:00
<![CDATA[AliExpress gains traction overseas]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530208.htm Smartphone maker Xiaomi Corp has a track record of inspiring the fierce loyalty of its domestic fans using social media. As business expands overseas, the Chinese company is taking that secret abroad.

Together with AliExpress, an e-commerce site under Alibaba Group selling to overseas markets, Xiaomi conducted massive content marketing campaigns and leveraged local internet influencers to endorse a mobile phone model that debuted exclusively on the platform.

Sales were brisk, with 20,000 devices snapped up during the launch day, said Zhu Long, operating director for the brand's AliExpress channel.

"We've clearly drawn marketing experience from the domestic e-commerce gameplay," Zhu said. "This is among the major thrusts for us to achieve $20 million during this year's Nov 11 sales, which is a quite remarkable single-day record for overseas sales."

Equipping Chinese merchants with capabilities from branding, sales to logistics and payment in a foreign market is on the priority list of Wang Mingqiang, general manager of AliExpress.

"A primary task for next year is to invest more heavily in local resources," said Wang. "Our success is based on the empowerment of our merchants."

The 9-year-old platform now sells to 150 million customers in over 200 economies worldwide. It started out as an obscure online avenue where budget items largely dominated but has quickly turned into a must-go site where overseas buyers purchase mid-to-high-end products.

Wang said more emphasis will be put into the deployment of overseas warehouses and enhancing its logistics prowess. This is achieved through a tie-up with sister company Cainiao Network, whose footprint is in over 224 countries and regions.

The more than 300 overseas warehouses have effectively helped trim cross-border logistics from 70 days to the current 10 working days, according to the company.

Based on big data analysis, AliExpress also trained its sights on setting up pre-storage warehouses so that sought-after items can be preemptively deployed to shorten delivery time.

"During the promotional period, a user in Madrid received his parcel five hours after placing the order, which was unthinkable before," he said.

AliExpress also pushed ahead with mobile payments by either enabling transactions in local currencies or collaborating with local payment agencies. Wang said more efforts will be put into introducing local payment methods through partnerships.

"Logistics and payment are arguably the biggest challenges compared with a domestic online business," said Yang Wanli, who oversees cross-border business at Chasha Pinguan Leather Trading Co Ltd. "Our online sales experience at home surely helps us crack the code but more concerted efforts are needed between vendors and the platform."

Years of operating on Taobao, the Chinese customer-to-customer site, have taught Yang the importance of attractive display pictures, which are crucial to enhancing the click-purchase rate.

Functionalities that are popular at home, like image search and celebrity livestreaming, have proved to be game-changers to excite customers abroad, said Gary Toppe, who is responsible for Eastern and Central Europe business at AliExpress.

The company will continue to bank on a network of internet celebrities to promote different merchandise to users of various nationalities. Social media personalities will become skilled at converting their influence into cash while helping to boost the revenue of merchants, Wang explained.

 

A customer uses an AliExpress self-service machine in Santiago, Chile. XINHUA

 

 

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2019-12-25 00:00:00
<![CDATA[China to step up pace of SOE reforms]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530207.htm China will accelerate the pace of mixed-ownership reform, reorganization and asset securitization of its State-owned enterprises next year to create a group of world-class, role-model companies for spearheading high-quality development, experts said on Tuesday.

The remarks came against the backdrop of the annual meeting of the centrally-administered SOEs being held by the State-owned Assets Supervision and Administration Commission on Tuesday and Wednesday in Beijing.

Aside from setting out the priorities for SOE reform next year, the meeting will discuss ways to optimize the use of State-owned assets and spur innovation, while analyzing the hits and misses of this year's reform measures.

China is expected to unveil a three-year action plan on SOE reform in the first quarter of next year and these measures are set to instill fresh momentum in the country's capital market, invigorate the real economy, cut overcapacity and SOEs' administrative functions, said Li Jin, chief researcher at the China Enterprise Research Institute in Beijing.

"In addition to conducting strategic reorganization in areas such as shipbuilding, equipment manufacturing and chemical engineering this year, China will deploy more resources to restructure industries such as power, non ferrous metals, high-end offshore manufacturing equipment, environmental protection equipment and duty-free sales next year," he said.

Last week, a number of customized programs for mixed-ownership reform began at subsidiaries of central SOEs, including China Railway Rolling Stock Corp, State Power Investment Corp and State Grid Corp.

Among them, Huanghe Hydropower Development Co, a subsidiary of SPIC, gained eight strategic investors and raised funds of 24.2 billion yuan ($3.45 billion).

To better compete with global rivals, the mixed-ownership reform in sectors such as information technology, new energy and high-end equipment manufacturing has notably surged this year, indicating the country's policy requirements for optimizing the State-owned capital layout and resources, said Zhu Ge, president of China Beijing Equity Exchange.

He said several controlling stake transfers were implemented this year in sectors with full competition. The investor mix was also enriched with capital from the private sector. In addition, supportive government policies enabled greater nonpublic capital participation in the mixed-ownership reforms.

Since the beginning of this year, more than 50 percent of equity has been released by 47 mixed-ownership reform projects in both centrally-and locally-administrated SOEs, up 20.5 percent year-on-year, according to data released by the SASAC.

Liu Xingguo, a researcher at Beijing-based China Enterprise Confederation, believes that next year, the SOE reforms will focus on aspects like the upcoming three-year action plan for SOE reform, the role of SOEs' leading research institutes, optimizing and adjusting the layout of Stateowned assets.

SOEs should also boost their incentives in the field of science and technology innovation and use stock options, dividends and other such measures to gain new technology breakthroughs and financial support, he said.

Eager to enhance central SOEs' earning strength, China Reform Holdings Corp has invested 200 billion yuan in 180 innovation and high-tech related projects in select companies in the past three years, according to Zhou Yubo, chairman of China Reform Holdings Corp.

Of this, about 110 billion yuan was invested in over 70 projects for which China was heavily dependent on imports in the past.

China has also taken a series of measures to invigorate its SOEs this year including the mixed-ownership reform and the comprehensive reform of pilot areas in Shanghai, Shenzhen and Shenyang.

The combined profits of China's SOEs rose by 5.3 percent on a yearly basis to 3.2 trillion yuan between January and November, while the profit gained by central SOEs amounted to 2.09 trillion yuan, up 7.7 percent from the same period a year ago, according to the Ministry of Finance.

 

 

 

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2019-12-25 00:00:00
<![CDATA[Vivo to spend $570m for second plant in India]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530206.htm Vivo is investing 4 billion yuan ($571 million) to set up a second manufacturing plant in India, which is likely to double its local factory employee head count to about 20,000 in the next five years, as the Chinese tech company eyes a bigger presence in the world's second-largest smartphone market.

Chen Zhiyong, CEO of Vivo's Indian branch, said the company has acquired land for the new factory, adjacent to its existing facility in the Greater Noida area of Uttar Pradesh. Work on the new facility has commenced and will be put into operation phase by phase over the next five years.

"The first phase of the new plant is scheduled to start production in May or June next year," Chen said.

Vivo's new investment comes at a time when the Dongguan-based company, which is already the third-largest smartphone vendor in India, is locked in intense competition with rivals like Xiaomi Corp and Samsung.

Vivo has been in India for five years and started manufacturing handsets by the end of 2015. Its existing plant employs more than 9,900 workers and has an annual production capacity of 25 million units.

According to Chen, the first plant has already reached a saturation point in terms of production, and the second factory, once completed, will also make handsets for other countries like Indonesia.

Vivo CEO Shen Wei unveiled the company's strategy for the next five years in India during his visit earlier this month. During his trip, he indicated that Vivo is not just a smartphone vendor but a tech company, people familiar with the matter told China Daily.

"We will also unveil the internet of things devices for local consumers as well as finance services to meet local people's demands in the future," Chen said.

According to Chen, the company is also considering to launch iQOO, a new brand in India, but refused to disclose more details. The iQOO brand has been doing well in China.

India's smartphone market saw shipments of over 46.6 million units in the third quarter of this year, up 26.5 percent quarter-over-quarter and 9.3 percent year-over-year, according to data from market research company International Data Corp.

Vivo registered strong year-on-year growth of 58.7 percent in the third quarter of this year on the back of its affordable Y series. The newly launched exclusive online Z/U series accounted for more than 20 percent of its overall shipments, thus, making it the third-largest online vendor with a market share of 8.2 percent in the quarter, IDC said.

Xiaomi saw the highest ever smartphone shipments in a quarter with 12.6 million units, growing at 8.5 percent year-on-year. Upasana Joshi, associate research manager of IDC India, said: "The continued aggression by the online platforms with attractive cash-back and buyback offers as well as affordability plans like financing options were key in taking the share of the online channel to a record high of 45.4 percent."

 

A man cleans a screen displaying a phone model of Chinese smartphone maker Vivo inside a shop in Ahmedabad, India. REUTERS

 

 

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2019-12-25 00:00:00
<![CDATA[Manufacturing centers to boost China, ASEAN trade]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530191.htm With the 10-member Association of Southeast Asian Nations surpassing the United States to become China's second-largest trading partner this year, its member economies are rushing to establish more trade promotional and manufacturing facilities across China to seek new growth opportunities.

Pan Sorasak, Cambodia's commerce minister, said the country will open its sixth trade center in China by the end of this month to further promote bilateral ties in trade, investment, culture and tourism.

The new trade center will be located in Kunming, capital of southwestern China's Yunnan province, he said, and Cambodian Deputy Prime Minister Yim Chhay Ly is scheduled to attend its opening ceremony.

"The center will exhibit Cambodian products and documents related to cultural and tourism sites, the business environment and investment potential in Cambodia," he said in a speech at the ministry's annual conference.

The minister noted the five existing Cambodian trade centers in China are in Guangzhou in southern Guangdong province, Xi'an in northwestern Shaanxi province, Haining in eastern Zhejiang province, the Hong Kong Special Administrative Region, and Yantai in eastern Shandong province.

Cambodian Ministry of Commerce spokesman Seang Thay said Cambodia saw China as a huge market for its products, particularly for agricultural ones.

"Cambodian trade centers in China are useful in promoting Cambodian products, investment potential, investment law and regulations, tourism attractions, and culture to Chinese investors and tourists," he said.

China is the biggest source of both foreign direct investment and tourists to Cambodia, and a key trading partner of the nation.

According to Cambodian government data, the Southeast Asian nation attracted a total investment of $21 billion from China from 1994 to date.

On the tourism side, the country gained 2 million Chinese tourists during the first 10 months of 2019, up 24 percent over the same period last year.

And for trade, the bilateral trade volume totaled $6.6 billion last year and is projected to hit $10 billion by 2023.

China has remained ASEAN's top trading partner for a decade. Bilateral trade volume reached $578.04 billion between January and November this year, jumping 7.5 percent year-on-year. With promising trade prospects, both sides aim at a joint target of two-way trade of $1 trillion and $150 billion in investments by 2020.

Asia Pulp & Paper Co, the Indonesia-based paper product manufacturer, pledged to raise its investment in China as the country's demand for baking paper, oil-proof paper, packaging paper, baby care and biodegradable paper products has notably surged due to strong purchasing power in major cities and the fast urbanization pace throughout the nation.

Supported by more than 70,000 employees globally, the group, with 25 million metric tons of annual production capacity for various paper goods, invested 45 billion yuan ($6.43 billion) in Rudong county, Jiangsu province, to build a plant producing high-end paper-made items in July. Once the facility becomes operational, it will be able to produce 3.96 million tons of paper products annually.

At last year's China International Import Expo, the company received $170 million worth of orders from clients both in China and globally. It also sealed import deals with a number of Chinese companies in Zhejiang and Guangdong provinces during the first CIIE.

Zhang Ge, CEO of the household paper unit at APP's China branch, said China's second-child policy has also brought new momentum to the mother and child care area, giving the company a clearer view of consumer demand, such as safety, purity, zero stimulation and softness.

Li Yong, deputy director of the China Association of International Trade Expert Committee, added that China and ASEAN will see sustained trade growth in the future after the upgraded protocol of the China-ASEAN Free Trade Area came into effect in October. In comparison with the previously goods trade-focused agreement, the upgraded CAFTA covers more areas including trade in goods and services, investment, and economic and technological cooperation.

To better confront protectionism, he said ASEAN and China both export a large amount of manufactured goods, agricultural and commodity products to global markets annually. They have been upholding a rules-based multilateral trading system and promoting regional integration.

Xinhua contributed to this story.

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Visitors pass the Cambodia booth during the 16th China-ASEAN Expo in September in Nanning, the Guangxi Zhuang autonomous region. XINHUA

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2019-12-25 00:00:00
<![CDATA[Livestreaming platforms gearing up to expand game companion business]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530189.htm Lin Hao, a 22-year-old college student, has found a way to beat his online competitors in popular mobile game King of Glory.

For about 8 yuan ($1.14) per round, master players will keep Lin company and help him get higher rankings in the game.

"I've got a more dedicated gaming experience," Lin said. "I hate getting matched with bad teammates. Master players will not only share their superior skills but also talk to me. That really relaxes me a lot."

Lin is just one among the increasingly growing group of young tech-savvy people who are interested in this new business, which is gaining traction in China.

Seeing this growing trend, major livestreaming apps are gearing up to expand the game companion business, as they attempt to diversify the offerings and generate new revenue streams.

Hangzhou-based Chushou TV, a popular livestreaming platform specializing in mobile games, is an early bird that has caught on to the new opportunity.

Chushou launched its game companion business in June. By the end of November, the platform had attained more than 5,000 game companions, with a total of 80,000 orders.

Yang Shuyu, chief marketing director of Chushou, said the game companion market is huge and one where the company sees continued growth.

"The market will be worth more than 10 billion yuan," Yang noted. "With a number of forward-looking investors and the emergence of several game companion apps, game companion services are gaining huge popularity among Chinese players."

Yang said a survey conducted by Chushou found that many users are interested in finding game companions.

"Basically, livestreaming users are also willing to pay for game companion services. Therefore, it's a good time for livestreaming platforms to enter the market this year," Yang added. "Compared to game companion platforms, livestreaming platforms have more paid users, which translates into a higher starting point for the number of companion orders and turnover.

"It is much easier for livestreaming platforms to gain those skill-sharers, as we have a large number of gaming hosts and it's not hard for us to hire new ones. Actually, we also can create a new way for those hosts to make money. For users, they can gain a better understanding of their required game companions via the livestreaming content."

Games, especially the esports sector, are now becoming mainstream in China, buoyed by strong government support and the growing number of young tech-savvy people.

Chinese gamers' rising enthusiasm has created a highly lucrative market worth 233 billion yuan this year, up 8.7 percent on a yearly basis, said a report released by Chinese gaming database Gamma Data Corp.

According to the report, revenues generated from the esports industry jumped 16.2 percent to 96.96 billion yuan in 2019.

Wu Xiaoyan, a researcher from Qianzhan Industry Research Institute, said game companions are a derivative industry of the gaming sector, which helps lower the skill barriers for novice players allowing them to enjoy the games.

"Although the success of professional esports is driving the esports boom in China, most master players have limited means to make money, such as producing original content," Wu said. "The game companion business allows them to share their skills. And it also brings novice players closer to the master players they admire, offering a new way to enhance gaming experiences and skills."

Yang from Chushou said the company will offer a higher linked set of livestreaming and game companion business.

For instance, Chushou launched a game companion voting event, where winners will join the ranks of popular hosts to attend Chushou's annual ceremony.

"As the market gradually matures, game companion services will likely become one of the main sources of revenue for livestreaming platforms," Yang added.

 

 

 

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2019-12-25 00:00:00
<![CDATA[Bigger farms expected to boost agricultural drone maker's earnings]]> http://www.chinadaily.com.cn/kindle/2019-12/25/content_37530222.htm BEIJING-China's largest agricultural drone maker XAG Co Ltd expects to double its sales next year as the government pushes for the creation of bigger farms that will require more of the technology.

XAG forecasts domestic sales volumes to rise to 50,000 drones in 2020 from about 25,000 this year, said Justin Gong, co-founder of the Guangzhou-based company, adding the drones are used for seeding, fertilizing and spraying pesticides.

"More farmers are transforming their small plots of land into large farms," Gong said. "That makes drones more popular."

The Chinese government is encouraging smaller farmers, which make up the majority of the rural landscape, to consolidate and become part of large-sized collective farms in a bid to improve efficiency in food production.

The shift follows some 288 million farmers that have moved to cities to seek better paying jobs, leading to some empty villages, Agriculture Minister Han Changfu said last month.

"We've seen a big decrease in the rural population, especially as the younger generation are leaving the countryside for cities," Gong added. "We have to find a solution for farmers to produce better food for our urbanization demand."

XAG is also launching a self-driving utility vehicle, which is about 20 percent cheaper than drones, and aims to expand its business to villages where small household farmers can easily learn to use the vehicles. The ground vehicle can be used in fruit gardens and crop fields in North China where the land is flatter, said Peng Bin, the company's CEO.

DJI, the world's largest commercial drone manufacturer by market share, is also devoting a great deal of attention to agricultural drones, with the goal of helping farmers improve the efficiency of spraying pesticides and increasing the use ratio of intelligent agricultural equipment.

The company announced it plans to further invest 10 million yuan ($1.4 million) in agricultural drones and on cultivating drone operators in 2019, open 1,000 brick-and-mortar retail stores, train over 20,000 professional drone operators and establish more than 600 training branches across the nation.

"We don't focus only on profits but also on training people to operate the agricultural drones in the short term, as well as helping them develop a business model, which is in accordance with our corporate culture and medium-and long-term strategies," Luo Zhenhua, president of DJI, said in an earlier interview.

Last month, DJI launched its latest agricultural drone, the T20, which features a more dynamic system to increase working efficiency and accuracy. It is bullish about the prospects for agricultural drones as the demand for such gadgets is huge and the whole industry is still in exploration mode.

The Chinese government has also issued policies to promote the use of modern agricultural machinery, such as offering subsidies to encourage the use of drones in agriculture.

With the modernization of agriculture, the demand for advanced farming devices has been growing significantly. Data from the Shenzhen-based Qianzhan Industry Research Institute said the value of the domestic agricultural drone market will exceed 12.8 billion yuan by 2021, at an annual compound growth rate of 38 percent.

Bloomberg - China Daily

 

 

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2019-12-25 00:00:00
<![CDATA[Japan's Takeda banks on new product launches to shore up growth in nation]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530081.htm Japan-based Takeda Pharmaceutical Co Ltd aims to launch at least 10 innovative medicines in China and become a top 10 multinational company in the nation's pharmaceutical industry by 2023, according a senior executive from the company.

The company, which aims to reach another 10 million patients in China by 2023, has invested more than 1,500 million yuan ($215 million) in the past five years in research and development to support its new developments in China, said Costa Saroukos, CFO of Takeda, during a recent interview with China Daily in Shanghai.

"China is one of our top-priority markets with product launches and potential growth," Saroukos said, adding that the company, which ranked 16th among multinational pharmaceutical companies in China, currently has a window of opportunity due to government healthcare reforms.

"Our strategy of bringing in innovation for Chinese patients' unmet needs is consistent with the healthcare reforms, and that comes with continuous long-term investment in China," he said.

The China market continued to show strong year-on-year revenue momentum of 40-percent growth for the first six months of Takeda's 2019 fiscal year, said Saroukos, making the country the fastest growing market for Takeda, whose key business areas touch upon oncology, gastroenterology, neuroscience and rare diseases, and the area of plasma-derived therapy.

The company's revenue growth in emerging markets globally-around 50 countries and regions including China-was around 14 percent year-on-year, he added.

China's healthcare market is expected to reach 8 trillion yuan by 2020 and double that figure by 2030, according to the Healthy China 2030 blueprint.

In March, the company invested a further 110 million yuan in expanding its Tianjin facility to strengthen its manufacturing final step for the China market.

"Such investments enabled faster and smoother development and launches of innovative therapies in China and therefore benefit more Chinese patients," said Saroukos.

The growth of the China market for Takeda was mainly driven by new product launches, which benefited from increasing patient access to innovative medicines through accelerated approval timelines and reimbursement listing in healthcare reforms, the company said.

Sean Shan, president of Takeda China, said that an innovative therapy treating multiple myeloma, the second most common malignant tumor in the blood system, obtained regulatory approval in April last year and was launched on the market in July 2018, a year in advance from the company's estimated timeframe thanks to the healthcare reforms. The product was included into the National Reimbursement Drug List in October 2018.

Shan said that seven of over 10 products that the company planned to introduce to China are going through the approval process and three of them are included in the list for accelerated approval.

The therapies included the company's star product treating inflammatory bowel disease and an innovative therapy treating hereditary angioedema, a rare disease that can cause attacks of swelling in body parts and effective medical treatment is unavailable in China so far, Shan said.

Takeda Development Center Asia was moved from Singapore to Shanghai in 2017 and it has initiated more than 50 clinical trials in Asia, including 30 in China, to accelerate the company's new product development. The company said such programs are mostly driven by Chinese patients' unmet needs but can also benefit patients in other parts of Asia and globally.

 

 

 

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2019-12-24 00:00:00
<![CDATA[Gatwick Airport seeks more partners in nation]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530133.htm Gatwick Airport is looking for partnerships with more Chinese airlines as the number of tourists to the UK is expected to grow further in the years ahead, a senior executive of the facility said.

Stephen King, vice-president of Gatwick's airline relations, said the airport is stepping up efforts to facilitate Chinese airlines efficiently and tailor services for an increasing number of Chinese passengers since the facility is part of a major network in Europe.

"At Gatwick, airlines will be able to operate efficiently, with sufficient landing slots. And passengers will have a very China-friendly experience," King said in an interview with China Daily.

Gatwick Airport, also known as London Gatwick, is the second-busiest airport by total passenger traffic in the UK. It serves 46 million passengers annually. Chinese passengers now account for a small proportion of those passengers, King explained.

"I expect the number of Chinese travelers to continue to grow. And I do expect them to keep choosing London as a destination, and therefore also London Gatwick," he said.

The innovative use of technology is one of Gatwick's advantages over other airports, King said. He cited the fact Gatwick introduced the UK's first airport electric car sharing service and self-boarding technology.

To meet the ever-increasing demand from Chinese travelers, Air China started a new service that flies directly from Gatwick to Shanghai earlier this month. China Eastern Airlines will increase its direct flights to a daily service this winter from three times weekly. In total, 11 weekly flights are now available from Gatwick to Shanghai.

The airport is discussing cooperation with other Chinese airlines and cities, King said. He did not elaborate further.

Gatwick's enthusiasm for the China market has been fueled by the burgeoning number of tourists to the UK. Figures from travel data firm ForwardKeys showed that the number of tourists visiting the UK from China climbed almost 20 percent year-on-year this summer.

Cargo volume is also expected to rise. This factor is a vital part of the profitability of a long-haul flight, King said.

"As the volumes of long-haul passenger flights increase, then so too will the volumes of cargo growth," he said, adding that Gatwick will ensure an efficient cargo process.

Gatwick's cargo volumes grew 24 percent year-on-year in 2018.

In the January-October period this year, China-UK trade volume reached 488.6 billion yuan ($69.5 billion), up 13.3 percent year-on-year, data from China's General Administration of Customs showed.

King said China remains one of the largest growing economies in the world when asked about its prospects going forward. He said: "Although there may be a small softening of the Chinese economy, we still expect to see more Chinese passengers visit the UK in the next few years."

Dai Bin, director of the China Tourism Academy, said the rising incomes of Chinese people coupled with their strong willingness to travel abroad would drive growth in the tourism market.

He said the number of Chinese traveling overseas reached 81.29 million in the first half of 2019, up 14 percent year-on-year.

 

 

 

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2019-12-24 00:00:00
<![CDATA[Draft rule to strengthen, regulate export controls]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530117.htm A draft law on export control was reviewed at the Standing Committee of the National People's Congress, the country's top legislative body, on Monday.

In addition to including dual-use items which can be used for civilian and military purposes, military and nuclear items, the proposed law also covers other goods, technologies, services and items related to the fulfillment of international obligations and national security, to achieve full coverage of controlled items.

Commerce Minister Zhong Shan explained the draft law, submitted by the State Council earlier this month, at the bimonthly session in Beijing on Monday.

The minister said to strengthen and regulate export controls, many countries have attached great importance to the establishment and improvement of export control legal systems.

For instance, the United States has long had an export control regime that regulates trade globally in products which may contain US-origin technology and is subject to the Export Administration Regulations even beyond the US border.

China has formulated regulations for chemicals monitoring, nuclear export control, military export management, nuclear dual-use supplies and related technologies export control, missiles and related nuclear technology export control, and biological dual-use supplies and related equipment and technology export.

However, Zhong outlined that China's six export control legislations are relatively decentralized, as the overall coordination mechanism of export control work is not perfect, the scope of controlled items and control measures are not completely equal and balanced in comparison with other countries.

As the situation has changed, it is necessary to sum up the implementation experience of the current regulations, and draw on internationally accepted practices, and formulate a law governing overall export control, he said.

If enacted, experts said the law will be the first set of comprehensive and unified export control legislation in China.

Ren Qing, a partner at Global Law Office, a Beijing-based law firm, said the draft is aimed at upgrading the nation's existing regime consisting of various administrative regulations and rules, and to further interface with international standards.

To better prevent risks in other parts of the world, the draft stipulates that the government can evaluate a country or region where the items are exported, determine the risk level and take corresponding control measures, said Cai Kaiming, a senior partner at the Beijing office of Dentons, a global law firm.

It also stipulates that the authorities can formulate control lists in accordance with export control policies, and clarify the formulation and adjustment mechanisms of dual-use items, military products and nuclear export control lists, he said.

 

Employees process scallops for export at a food firm in Rushan, Shandong province. XINHUA

 

 

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2019-12-24 00:00:00
<![CDATA[What's news]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530114.htm GOVT AND POLICIES

Central bank injects $7.13b into market

China's central bank pumped 50 billion yuan ($7.13 billion) into the financial system on Monday. The People's Bank of China injected 50 billion yuan into the market through 14-day reverse repos at an interest rate of 2.65 percent. With no reverse repos maturing on Monday, this led to a net injection of 50 billion yuan.

Cargo throughput up in first 11 months

China's cargo throughput at ports climbed 8.3 percent year-on-year to 12.7 billion metric tons in the first 11 months, official data showed. Foreign trade cargo throughput amounted to 3.96 billion tons in the January-November period, up 4.7 percent year-on-year. Meanwhile, container throughput at ports registered a 4.5-percent increase to around 239.5 million TEUs (20-foot equivalent units) in the same period. At the beginning of the year, the Ministry of Transport expanded the statistical range from major ports to all ports across the country. The cargo throughput growth at ports came amid the steady expansion of China's waterway freight volume, which increased 6.3 percent year-on-year to 6.8 billion tons in the first 11 months.

Gourmets make a beeline to green food expo

From French red wine to American ham, Malaysian bread and China's hot-selling farm produce, the 12th China Green Food Expo that opened on Friday in the East China city of Nanchang, capital of Jiangxi province, is an occasion for gourmets. The expo co-sponsored by the Ministry of Commerce and the Jiangxi provincial government will run through Monday. It offers 40,000 square meters of space for more than 2,000 exhibitors from home and abroad. According to the organizers, exhibitors came from more than 30 countries as well as from 13 Chinese provinces and municipalities.

Smartphone shipments to increase in 2020

China's smartphone shipments will rise in 2020, buoyed by the increasing popularity of 5G phones, according to the global market intelligence firm International Data Corporation (IDC). Shipments of smartphones in China are estimated to edge up 0.7 percent year-on-year in 2020, as 5G phones spread across the market and give hesitant consumers the final nudge to switch models, said the IDC. The IDC expects 5G phone shipments to lead 5G network users in the short term, while one in every five phones will be connected to the faster and stabler network by 2021.

COMPANIES AND MARKETS

EY expects A-share IPOs to remain robust

Management consultancy EY expects IPOs on China's A-share market to remain robust in 2020, as proactive fiscal policies and flexible and appropriate monetary measures will drive the capital market upward. EY said in a newly released report that 5G technology is also expected to drive the IPOs of innovative tech companies. In 2019, 200 companies are expected to be listed on the A-share market, raising 252.8 billion yuan ($36.1 billion), with deals and proceeds up 90 percent and 82 percent year-on-year, respectively, according to the EY report. EY attributed the record-high proceeds since 2012 to the early success of the science and technology innovation board (STAR) and mega IPOs which have raised more than 10 billion yuan in funds.

Xiaomi expands presence in Kenya

China's smartphone maker Xiaomi expanded its presence in Kenya over the weekend by opening its second retail shop. Kevin Zheng, manager for the Africa region, said in Nairobi that the Mi Home shop will make available to local consumers smartphones and smart digital products from the Xiaomi brand. "In the future, we plan to open more retail outlets both in Kenya and the rest of Africa in order to meet the growing demand for quality electronic products," Zheng said. Zheng added that its retail stores are ideal for consumers looking for affordable products because they stock a wide variety of Xiaomi products ranging from laser projectors, robot vacuum, cameras, TVs and many other ecosystem products.

Bonds worth $557b issued in November

The value of bonds issued in China last month totaled 3.9 trillion yuan ($557 billion), up from 3.1 trillion yuan in October, official data showed. Treasury bond issuance stood at 402.2 billion yuan, while local government bond issuance was 45.79 billion yuan, according to the People's Bank of China. Financial bonds issued last month were valued at 600 billion yuan, and corporate debenture issuance was 908.4 billion yuan. By the end of November, total bonds outstanding reached 97.6 trillion yuan, showed the data.

BMW Brilliance set to recall 312,281 vehicles

BMW Brilliance Automotive Ltd, a joint venture between the BMW Group and Brilliance China Automotive Holdings Ltd, will recall 312,281 vehicles in China due to defective fuel tanks, China's market regulator has said. The recall involves models including the series of 316i, 316Li, 318i, 318Li, 320i, 320Li, 328i, 328Li, 330i, 330Li and 335Li, which were manufactured between April 22, 2011 and July 31, 2016. The flaw with the fuel tanks could cause oil leaks and increase risks.

AROUND THE WORLD

Latin America to post slow growth next year

The Latin American economy will accelerate slowly in 2020 due to decreased concerns over global political and commercial risks, according to experts. After showing almost zero growth in 2019, the region's economy could grow between 1.0 percent and 1.3 percent next year, said Alfredo Coutino, director of Latin America Economic Research at Moody's Analytics. "The big risks that could change regional prospects are external, like the intensification of the tariff war," Coutino said, pointing to US President Donald Trump's tweets earlier this month saying that the United States would "restore" the tariffs on steel and aluminum imports from Brazil and Argentina.

South Korea sees fall in ICT product exports

South Korea's export of the information and communications technology (ICT) products fell for 13 straight months in November on weak demand for locally-made chips, display panels and mobile phones, a government report showed. The ICT exports tumbled 21.8 percent from a year earlier to $14.31 billion in November, continuing to dip for the 13th consecutive month since November last year, according to the Ministry of Trade, Industry and Energy. Imports in the ICT sector reduced 6.9 percent to $9.09 billion, sending the trade surplus to $5.22 billion.

Cuba banks on tourism for economic uptick

Cuba is looking to increase exports by 3.7 percent next year, Cuban Minister of Economy Alejandro Gil said. Gil made the remarks during the fourth session of the ninth National Assembly of People's Power, Cuba's single-chamber parliament. He said that the government plans to grow exports in a number of sectors including tourism, the country's economic engine, which brings in $2.5 billion a year. The government's strategy for 2020 is to attract 4.5 million visitors for a growth of 4.7 percent.

China Daily - Agencies

 

 

 

 

 

 

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2019-12-24 00:00:00
<![CDATA[Digital healthcare moves foster medical industry transformation in China]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530113.htm China's next digital platform to have a transaction volume of more than 1 trillion yuan ($142.9 billion) will probably occur in the healthcare sector, as digital healthcare will be the most applied area in internet in the future, said an industry expert.

Liao Jieyuan, president and CEO of global leading digital healthcare company WeDoctor, said that Alibaba is currently China's first digital platform with a transaction volume of more than 1 trillion yuan. Considering the fact that China's pharmaceutical market volume surpassed 2.2 trillion yuan in 2019, the next trillion-yuan-level digital platform will probably occur in the healthcare industry.

In October, the World Health Organization integrated the concepts of medical information, telemedicine and digital medical treatment into digital healthcare, arguing that digital healthcare will upgrade the whole process throughout medical treatment and healthcare management.

It also issued a global digital healthcare strategy (2020-24), to prioritize digital healthcare and affirm the potential of digital healthcare in supporting the development of the medical industry in all countries.

According to a recent report issued by market research consultancy Investank, China is expected to become the largest digital healthcare market in the future.

Compared to the United States and European countries, China, as a newly emerged market, has few existing enterprises and limited infrastructure, which means digital healthcare companies will encounter fewer obstacles when developing new products and services, said the report.

The report also noted that there is a high internet penetration rate among China's large population base, which is fundamental to creating digital healthcare products and services.

A report on digital healthcare issued by Royal Philips Electronics NV showed that China is already taking a lead in digital healthcare application, way ahead of the US.

According to the report, currently, 94 percent of medical professionals in China are using digital healthcare technologies or mobile healthcare apps, while the ratio for the US is 76 percent.

In addition, compared to other countries, Chinese medical professionals are doing a better job in encouraging patients to use digital healthcare technologies or mobile healthcare apps to monitor their physical condition. For example, 60 percent of patients have been advised to monitor blood pressure using digital healthcare technologies, while 51 percent have been advised to monitor body weight using healthcare apps.

As early as 2017, China was recognized as one of the top six digital healthcare innovation centers by The Economist magazine. It was the only developing country in the top six. The other five countries were the US, Belgium, Finland, Israel and Singapore.

In April 2018, the State Council issued a guideline on promoting "internet plus healthcare". Specifically, the guideline underscored the importance of improving the digital healthcare service system, enhancing the support system, as well as guaranteeing industry supervision.

Enterprises in this niche are stepping up efforts to shape the country's healthcare industry.

In April, WeDoctor started construction of a drug purchase platform, which enables drug purchases, price negotiations, transactions, settlement and supervision. Once put into operation, the platform can cut national financial budget by 600 billion yuan per year.

It is also helping cities in China build a healthcare support system, using its cloud platform to connect the data of medical services, drugs, insurance and healthcare management.

"The healthcare support system aims to improve the physical condition of the public, increasing medical efficiency, as well as controlling the financial budget," said Liao from WeDoctor.

According to the company, at present, its healthcare support system is being used in more than 10 cities including Tianjin, Tai'an and Dezhou in Shandong province, and Pingdingshan in Henan province, covering a total of 25 million people.

"From online registration, online consultation to the construction of a digital healthcare community, we are striving to focus on the most important and urgent issues of the country's medical care, so that patients can obtain medical and healthcare services more conveniently and efficiently," Liao said.

 

Visitors pass the WeDoctor booth during the Flex Future Life Expo 2019 in Hangzhou, Zhejiang province. LI ZHONG/FOR CHINA DAILY

 

 

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2019-12-24 00:00:00
<![CDATA[Construction firm steps up mixed ownership reforms]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530082.htm The Second Construction Co Ltd of China Construction First Group has made considerable progress in deepening mixed ownership reform, equity diversification, market-oriented operations and employee incentives as part of the overall efforts to optimize corporate governance, boost innovation and enhance competence.

As a key subsidiary of China Construction First Group Co Ltd, a central State-owned construction enterprise, the company has been adjusting its business layout proactively in the past few years to meet new development demands, and has made real estate and infrastructure the two cores of its business, supported by overseas business, and investment and financing.

In 2018, it was selected to take part in the "double-hundred action", a campaign led by the Leading Group for State-Owned Enterprises Reform of the State Council to select more than a hundred subsidiaries of the central SOEs, and more than a hundred local SOEs to implement reforms between 2018 to 2020.

The campaign constitutes part of Chinese authorities' efforts to deepen SOE reforms to boost productivity and make the enterprises more marketized.

Statistics from the State-owned Assets Supervision and Administration Commission showed that revenue of the enterprises monitored by it reached 46.7 trillion yuan ($6.67 trillion) during the first 10 months of this year, with total profit of 2.8 trillion yuan, up 7 percent and 6 percent year-on-year respectively.

From 2013 to 2018, the total assets of the enterprises under the supervision of the SASAC surged from 85.4 trillion yuan to 180.7 trillion yuan, with an annual growth rate of 16.2 percent, Xinhua News Agency reported.

During the period, their combined profits jumped from 2.2 trillion yuan to 3.4 trillion yuan, an average annual growth of 9.3 percent.

As for the Second Construction Co Ltd of China Construction First Group, its construction value in 2018 soared to 28 billion yuan from 20.5 billion yuan in 2016, with revenue increasing to 10.52 billion yuan from 7.72 billion yuan, while profits more than doubled over the period, from 145 million yuan to 362 million yuan.

The company estimated its contract value and revenue would reach 32 billion yuan and 12.5 billion yuan respectively for this year, with its competence, innovation, market influence, and risk resistance capability growing continuously.

"We hope to provide referable experiences to other SOEs by making reform breakthroughs in the Second Construction Co Ltd of China Construction First Group, to help deepen SOE reforms nationwide," said Luo Shiwei, chairman and Party secretary of China Construction First Group.

Thanks to the central government policy that encourages market-oriented debt-to-equity swaps for quality enterprises to boost their capital strength, reduce debt risks, and improve risk tolerance, the company has been attracting strategic investors through debt-to-equity swaps, and such strategic investment it obtained have totaled 300 million yuan.

Such moves have helped strengthen the company's financial capability to support the development of its main business, improve its corporate financial structure and corporate governance, and eventually helped preserve and increase the value of State-owned assets, the company said.

The company has also been implementing reforms in the corporate structure, to spur innovation and vitality of its affiliates and business units, in order to make breakthroughs in enhancing market-oriented corporate operations.

Rather than taking direct control, the company has been pushing forward classification-based authorization for subsidiaries to have different levels of autonomy in financing, personnel, and operations, so that the subsidiaries become independently accounting entities with self-governance in operation and development, and with sole responsibility on profits and loss, and risk management.

The company has accomplished such authorization reforms in four subsidiaries in Jiangxi, Guangdong, Jiangsu and Sichuan provinces, and two business units-the mechanical and electrical engineering business unit and the infrastructure business unit.

Together, these subsidiaries and business units account for 67 percent of the company's contract value.

The company has been exploring steps to cooperate with private enterprises across the entire length of the industrial chain through capital bonding. It also has decided to undertake market-oriented reforms in personnel management and recruitment.

Luo said the company will continue its efforts to advance related reforms and make the subsidiary a role model for the parent company in SOE reforms.

 

China Construction First Group workers use a spirit level at an indoor basketball stadium in the Tibet autonomous region. XINHUA

 

 

 

 

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2019-12-24 00:00:00
<![CDATA[New revision of Securities Law looks to promote capital market reforms]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530087.htm The latest draft revision of the Securities Law will set the legal basis for registration-based reform across the whole A-share market, an indication that deeper market-oriented reforms are in the pipeline, experts said on Monday.

The draft has formulated new share sales arrangements with the aim of implementing the registration-based system across the whole market, according to the Constitution and Law Committee of the National People's Congress, the country's top legislature.

Arrangements regarding the approval-based system were deleted in the draft, while the section of general arrangements on new share sales was merged with the special section for the registration-based system on the sci-tech innovation board, or the STAR Market.

The committee submitted the draft revision to the Standing Committee of the NPC for the fourth review on Monday.

All A-share submarkets, except for the STAR Market in Shanghai, have implemented the approval-based system for new share sales. Policymakers have also said they would speed up the registration-based reform of ChiNext, Shenzhen's innovative enterprise-heavy board.

"The fourth version clarified that the registration-based system will be gradually implemented across all boards of the A-share market, and not merely the STAR Market and ChiNext," said Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology.

"If the draft is adopted, its endorsement of the registration-based system would be the biggest breakthrough and make it the most significant revision of the Securities Law in history," he said.

It could pave the way for deeper and wider market-oriented reforms under the registration-based system, ranging from letting the market decide the pricing and pace of initial public offerings to reducing administrative controls on trading, all conducive to elevating the market's capacity to serve the real economy, Dong said.

The draft said that the State Council, China's cabinet, will decide the scope and steps of the registration-based reform, allowing a flexible and step-by-step agenda of the reform.

Also, the draft has changed the requirement of issuing new shares from "capable of continuous profitability" to "capable of continuous operation", authorized stock exchanges to review public offering applications, and made information disclosure requirements stricter.

Another major change in the fourth version will be the stringent crackdown on illegal behavior in the securities market, as it not only stipulates the confiscation of illegal proceeds but also increased administrative punishments.

For instance, the draft said if a firm indulges in say fraudulent public offerings, and does not issue the securities, it would face fines of between 2 million yuan ($285,000) and 20 million yuan. This contrasts with the currently effective standard between 300,000 yuan and 600,000 yuan.

Individuals responsible for fraudulent offerings will face much higher punishments of between 1 million yuan and 10 million yuan, according to the latest draft.

In February, China's top leadership called for efforts to address the current situation where the costs of legal and regulatory breaches in the financial sector, especially in capital markets, are too low.

Dong said that administrative punishments stipulated in the fourth version, with heavier fines on both institutions and engaged individuals, would be much more effective in deterring legal branches and safeguarding investors' legitimate rights.

The draft also set a general framework of the much-anticipated system for securities class action lawsuits with Chinese characteristics, but details about how the system will work are not disclosed and await further discussions, Dong said.

"The system should focus on mechanisms to encourage small, individual investors-the vast majority of A-share investors-to take the initiative in class action lawsuits," he said.

Liu Junhai, director of the Business Law Center at Renmin University of China, called on introducing punitive damages into the securities legal system, or ordering listed firms and intermediaries that engage in intentional fraudulent conduct to compensate injured investors more than the amount of incurred losses.

This will help ensure the costs of securities legal breaches are higher than induced benefits and boost investor confidence, Liu said.

"Investor confidence is the key to capital market development, while confidence comes with an investor protection legal system that is sound, handy and considerate," he said.

The previous three readings of the revision of the Securities Law took place in 2015, 2017 and April 2019. China's top securities regulator said earlier this year that the authorities are trying to adopt the revision by the end of this year.

Li Xiang and Cao Yin contributed to the story.

 

 

 

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2019-12-24 00:00:00
<![CDATA[Industrial output growth pegged at 5.6%]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530086.htm Industrial output is forecast to grow about 5.6 percent year-on-year this year, hitting its annual growth target range of 5.5 to 6 percent, despite the growth pressure and global uncertainties, the nation's top industry regulator said on Monday.

Minister of Industry and Information Technology Miao Wei said in the face of significantly bigger risks and challenges at home and abroad, the ministry has fulfilled the objectives and tasks of the whole year in a relatively good manner.

According to him, the software and information technology service industry will see revenue growth of 15 percent year-on-year, while the internet sector will grow by 20 percent in revenue this year.

"Revitalizing the real economy, especially manufacturing, has become a consensus. Concrete steps have already been made to promote the high-quality development of manufacturing, and industrial management capabilities have been honed to better safeguard risks and better pounce on opportunities," Miao said.

Next year, the ministry will ratchet up resources to ensure the industrial economy grows in a reasonable range, with focus on stabilizing the investment into manufacturing.

More efforts will be made to attract money into advanced manufacturing, infrastructure and other areas that can have multiplier effects. The ministry will also pour more resources into boosting the industrial and consumption upgrade, Miao said.

China kicked off the commercialization of 5G in late October and so far, more than 126,000 5G base stations have entered services across the country. In accordance with the wider use of 5G across the country, more efforts will be made to popularize the application of technologies including 4K/8K TVs as well as virtual reality and augmented reality goggles, the ministry said.

The commercialization of 5G in China is expected to generate a direct economic output of 10.6 trillion yuan ($1.5 trillion) from 2020 to 2025, plus an indirect economic output of about 24.8 trillion yuan, while directly creating more than 3 million jobs, according to a report from the China Academy of Information and Communications Technology, a government think tank.

Qin Hailin, a senior industrial economy researcher at the China Center for Information Industry Development, said progress has been made to stabilize growth, optimize its structure, promote integration of the real economy and digital economy, and to create a good business environment during the year. The efforts have laid out a relatively sound foundation for growth next year.

"We are still facing strategic opportunities and have a unique edge to fuel high-quality growth. We have the world's most complete industrial systems, a super-scale domestic market, sprawling talent pool, and competitive industrial and digital infrastructure," Qin said.

The ministry said next year, it will cultivate another four national manufacturing innovation centers to achieve breakthroughs in core technologies. It will also call on enterprises, entrepreneurs, industrial associations to make a joint push to solve the problems of weak industrial foundations.

Cao Zejun, vice-president of Huawei Technologies Co's China branch, said the country's IT industry still faces huge pressure, with domestic operating systems and chips having very low market share in the world.

But with joint efforts, the domestic IT industry can make progress to solve these problems in the long term, Cao said.

 

A technician checks out fluid control equipment at the production line of a manufacturer in Lianyungang, Jiangsu province. GENG YUHE/FOR CHINA DAILY

 

 

 

 

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2019-12-24 00:00:00
<![CDATA[US nod for BP medicine showcases China's pharma prowess]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530085.htm The market approval by the United States of high blood pressure medicine Conjupri developed in China marked the fast-growing research and development capabilities of Chinese drug companies and their increasing presence abroad, industry analysts said.

CSPC Pharmaceutical Group Ltd announced on Friday that the US Food and Drug Administration had granted market approval to its independently developed Conjupri (levoamlodipine maleate) tablets for the treatment of hypertension in adults and children 6 years and older. The company is based in Shijiazhuang, Hebei province.

That makes Conjupri the first innovative drug from the Chinese mainland which has been granted full approval following a standard review by the FDA.

It also paves the way for the Hong Kong-listed company to market the drug in other parts of the world, said Cai Dongchen, chairman of the company, who stressed it is important for Chinese pharmaceutical companies to grow stronger by taking part in global competition.

The news inspired a strong advance of the firm's shares in Hong Kong. The company's stock ended at HK$18.62 ($2.38) on Monday, up 2.08 percent for the day.

"The FDA approval reflects the international pharmaceutical community's higher recognition of Chinese drug quality," said Shi Lichen, founder of medical consultancy Beijing Dingchen Consultancy.

"China used to have few self-developed original or innovative drugs, especially in new chemical compounds. But things are changing due to the improved regulatory environment and the stronger play of market mechanisms."

China's medicine reforms in recent years are driving Chinese companies to focus more on new drug R&D and innovation to optimize product portfolios toward medium-to-high end returns, instead of simply profiting from the production and sales of low-quality generics, he said.

China joined the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use, or ICH, in 2017.

The group is an international organization to standardize scientific and technical aspects of pharmaceutical product development and registration. China's participation makes it easier for foreign new drugs to gain entry into China, and for Chinese companies to be marketed outside the country, Shi explained.

In line with ICH requirements, Chinese pharmaceuticals can file new drug applications to the regulatory agencies of multiple countries and regions under the same technical requirements, greatly saving on the costs of R&D and registration, he said.

Shi predicts more high-quality Chinese drugs will be going abroad, improving the Chinese pharmaceutical industry's image overseas given the increasing R&D and innovation capabilities of those companies.

In November, Chinese biomedicine company BeiGene Ltd's cancer treatment Brukinsa (zanubrutinib) capsules gained Accelerated Approval by the FDA under a Breakthrough Therapy designation to treat Mantle Cell lymphoma. The treatment was also granted Orphan Drug designation, "which provides incentives to assist and encourage the development of drugs for rare diseases", the FDA said in a statement.

It was the first time the agency approved a drug based on efficacy data that came predominantly from China. The approval set a milestone that an innovative therapy from China is allowed to enter the US market.

Levoamlodipine maleate tablets have been marketed by CSPC Pharmaceutical as Xuanning in China since 2003, and the US regulator's review of the drug was based on the safety and efficacy data collected in China over a five-year period.

The FDA raised little follow-up inquiries on the clinical data, and also exempted on-site investigation of the company's Chinese factory before approving the drug.

That showed the US regulator has faith in the company's drug quality management and control system, as quality standards in China's pharmaceutical industry fully met the highest international standards, said Wang Xide, a senior executive of CSPC Pharmaceutical's US arm.

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2019-12-24 00:00:00
<![CDATA[Trading in stock index options starts]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530084.htm Trading in China's first stock index options started on the China Financial Futures Exchange in Shanghai on Monday, further enriching the derivative products in the market and offering more risk hedging tools for investors.

The underlying asset of the option contract is the CSI 300 Index which tracks 300 large-cap and most liquid stocks traded on the Shanghai and Shenzhen stock exchanges. The two bourses also launched trading in CSI 300 exchange-traded fund option contracts from Monday.

The introduction of the three option products came after China launched trading in the country's first equity option contract, the SSE 50 ETF option contract, in 2015.

Monday's listing of the new products highlighted the steady development of China's financial derivative market since the country first introduced stock index futures in 2010. The development also underscored the regulatory intent to provide more trading products and risk management tools to attract long-term and sophisticated institutional capital in the Chinese equity market which is still dominated by retail investors.

Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, said the launch of the equity and stock index options holds far-reaching significance for China's efforts to improve the fundamentals of its capital markets and expand product coverage.

"The simultaneous launch of the CSI 300 stock index option contract and CSI 300 ETF option contracts will help optimize the market mechanism, improve the multilayered capital market and promote its healthy development," Fang said at the launch ceremony in Shanghai.

The trading in option contracts will help draw more overseas institutional investors as it offers them an important risk management tool and allows them to enrich their trading strategies and adjust their investment portfolios with greater flexibility, analysts said.

Under the current regulations, individual investors must have at least 500,000 yuan ($71,300) in their stock accounts to be qualified for the trading of the options contracts. They are also required to have past experience in financial derivatives trading.

Analysts at Industrial Futures Co Ltd said in a research note that Monday's listing is an indication that China's financial derivative market has entered a new stage and investors could obtain more risk hedging tools and risk management services which will substantially boost their long-term confidence in the nation's stock markets.

The trading of the new products also means more business opportunities for the country's securities and futures companies and will boost their earnings through their brokerage and market-making services for clients, analysts said.

Wang Jianjun, chief executive and president of the Shenzhen Stock Exchange, said the bourse has been researching and studying derivatives since 2004 and the CSI 300 ETF option, as the bourse's first derivative product, plays a significant role in its development.

Wang said the option trading will strengthen the exchange's direct funding capacity and improve its asset allocation and risk management abilities.

 

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2019-12-24 00:00:00
<![CDATA[Japanese firm dreams big in China]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530083.htm Japanese lifestyle megastore Niko and … is launching a foray into China, banking on digital channels from e-commerce to customer engagement to ensure the its largest flagship store in global market, which is located in Shanghai, would be a huge success.

Opening its doors to customers over the weekend, the three-story shop, which sells everything from clothes to furniture to appliances, is a "water-testing" endeavor for the fashion label to penetrate into other Chinese first-tier cities, said Kitamura Yoshiaki, board member and general manager of the sales division of Adastria Co Ltd, the owner of the brand.

"Shanghai has risen quickly up the global fashion ladder, making it a flag-bearer to host new entrants like us," Yoshiaki told China Daily ahead of the opening. "Lifestyle megastores are still a rarity in China. We decided to choose Shanghai-possibly the fiercest battleground-as the starting point (in the country)."

Located on the busy thoroughfare near the edge of pop-culture obsessed Huaihai Road, Niko and … sells up to 4,000 types of merchandise. It ranges from preppy-casual men's and women's separates, perennial offerings of tote bags, plants, as well as limited-batch soaps and holiday-inspired decor.

It also has a sun-drenched third-floor restaurant, set up as cosmopolitan bar and food chain, and serving everything from pizzas to salads.

Yoshiaki said what sets the brand apart from rivals is its commitment to constant change. A majority of products will be swapped with new offerings on a regular basis, with the pace of updates synchronized at the same rate as its sister shops in its home market of Japan.

A major thrust is the digital footprint it mapped out together with Chinese internet giant Tencent Holdings Ltd, which offers a wealth of services from WeChat mini-programs to public accounts and related advertising services.

The e-commerce-enabled online shop in China set foot on a namesake mini-program, which is an app-like service embedded in the WeChat ecosystem. It enables a user to circumvent the hassle of downloading a stand-alone app.

To be rolled out early next year, the mini-program sells the most iconic and eye-catching items online and gets a clearer picture of customer tendencies based on their shopping history.

"The mini-program serves as a bridge between the brand and consumers that ensures a smooth and convenient shopping experience," said Jimmy Zhang, director of Tencent's Smart Retail unit. "In the future, we will deepen our cooperation in areas like consumer insights, exploration of potential clients and store expansion."

Yoshiaki attributed the tie-up with Tencent to the latter's "holistic cycle of customer engagement", which means not just the e-shop but other functions like a status-sharing function Moments, public accounts where brands push their content to subscribers, as well as customized ads pinpointing certain customer groups.

"Because residents in China are largely digital savvy, we have a higher expectation of online sales to account for more than 20 percent of total revenue in China," he said.

Tencent has invested heavily in its "Smart Retail" initiative since a special business unit dedicated to empowering brands with technologies was founded in 2018.

The company said it has served over 80 leading brands in areas from shoes and apparel, supermarkets to cosmetics and maternity, helping them more than double their daily gross merchandise volume.

"Data are the most important element in redefining retail," said Wu Weijia, an equity analyst who focuses on internet-based businesses at ICBC International Holdings Ltd.

"With big data, multi-dimensional digital marketing can help increase the monetization rate of advertisements as well as the conversion rate of the online and offline merchants with the platforms."

 

Employees stack Niko and ...'s reusable bags ahead of its Shanghai outlet opening on Saturday. CHINA DAILY

 

 

 

 

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2019-12-24 00:00:00
<![CDATA[10 events that influenced China business in 2019]]> http://www.chinadaily.com.cn/kindle/2019-12/24/content_37530102.htm Editor's note: Against the downward pressure on the global economy this year, China achieved stable growth on both the demand side and the supply side. The country has seen positive performance in imports and exports, stronger infrastructure investment, and growth in the service industry. Below are 10 major events in China this year based on the most accessed business content on China Daily's official website www.chinadaily.com.cn.

 

1. China unveiled a prototype magnetic-levitation train with a maximum speed of 600 kilometers per hour in Qingdao on May 23, filling the gap between aviation and high-speed rail transport in the country, according to its manufacturer.

The engineering prototype is planned to roll off the production line in 2020 and go through comprehensive tests to conclude integrated verification in 2021.

The high-speed maglev transportation system is one of the key projects under the Ministry of Science and Technology's 13th Five-Year Plan (2016-20) to promote an advanced rail transit system.

 

2. The Ministry of Industry and Information Technology on June 6 officially rolled out commercial 5G licenses, a crucial step for next-generation 5G commercial use.

The ministry granted licenses to the nation's three major telecom carriers-China Mobile, China Telecom and China Unicom-as well as the State-owned China Broadcasting Network Corp.

The move marks an accelerated push by China in 5G application. Its previous plan was to commercialize the technology in 2020.

China is set to become the world's largest 5G market by 2025, with 460 million users, according to a forecast by industry group Global System for Mobile Communications Association.

The country's telecom carriers are forecast to spend 900 billion yuan to 1.5 trillion yuan ($134 billion to $223 billion) in total on 5G network construction from 2020 to 2025, according to a report from the China Academy of Information and Communications Technology.

 

3. China's STAR Market, or science and technology innovation board, a new stock venue for technology companies, started trading on the Shanghai Stock Exchange at 9:30 am on July 22.

The Nasdaq-like STAR Market was officially launched on June 13. The SSE accepted listing applications by July 4 from 141 companies, of which 118 received their first round of inquiry from the exchange.

The launch of the STAR Market in Shanghai was seen by analysts as a milestone event in the development of China's capital market. The board in the long run will likely have significant impact on the A-share market's valuations and investment choices.

 

4. In August, the price of pork increased 46.7 percent year-on-year, raising the consumer price index by 1.08 percentage points.

In October, pork prices rose 101.3 percent year-on-year, contributing nearly two-thirds of the CPI growth over the same period.

The national pork price slumped by 23 percent in November compared to late October, statistics from the Ministry of Agriculture and Rural Affairs showed.

Pork prices have risen due to three major reasons. First, the culling of pigs to prevent the spread of African swine fever seriously reduced stock. Second, the country was at a low level in the pig production cycle. Third, some inappropriate local administrative interventions have had a negative impact on pig breeding.

The price drops followed the introduction of multiple government measures to boost supply, including those to restore hog production.

 

5. Beijing Daxing International Airport saw its first flight take off after a China Southern Airlines' A380 left the airport at 4:22 pm on Sept 25 headed to Guangzhou Baiyun International Airport.

The flight signaled the beginning of operations at the facility after five years of construction, according to the airport authority.

According to the airport, 66 domestic and overseas carriers including China Southern Airlines, China Eastern Airlines, British Airways, Finnair and Ethiopian Airlines plan to operate out of the Daxing airport. Starting in the winter and spring seasons, the airport will serve 116 routes and 112 domestic and foreign destinations.

With four runways, 268 parking bays and a vast terminal building covering 700,000 square meters, the new airport is expected to handle 45 million passenger trips a year by 2022 and 72 million by 2025, with international flights accounting for 20 percent and 40 percent of the total respectively.

With more runways planned, the new airport will ultimately handle more than 100 million passengers annually. It's aiming to become the busiest airport in the world in the future and lead Beijing to become an international transit hub.

 

6. Market regulators decided to ban online sales and advertising of e-cigarettes amid growing health concerns that vaping and a fledgling online market may have a detrimental impact on minors, according to a statement released by the State Tobacco Monopoly Administration and the State Administration for Market Regulation on Nov 1.

The ban took effect immediately.

There are more than 300 million smokers in China, and 28.1 percent of people aged 15 years and older smoke. The country is aiming to slash the percentage to 20 percent by 2030.

 

7. More than $71.13 billion worth of intended deals were reached during the second China International Import Expo, held in Shanghai from Nov 5 to 10, up 23 percent from the first expo, according to the CIIE Bureau.

The second CIIE attracted more than 3,800 companies from all over the world, with a total exhibition area exceeding 360,000 square meters. By noon Nov 10, the exhibition had received more than 910,000 visitors.

The number of registered professional visitors to the second CIIE exceeded 500,000, among whom more than 7,000 were overseas buyers. Up to 32 percent of professional visitors specialized in manufacturing, while another 25 percent were from the wholesale and retail industries.

During the three-day demand-and-supply matchmaking meetings during this year's CIIE, up to 1,367 exhibitors from 103 countries and regions and 3,258 buyers reached a total of 2,160 purchase intention agreements.

 

8. China's Singles Day online payments hit 1.48 trillion yuan ($211 billion) on Nov 11, according to data released by the People's Bank of China, the central bank, on Nov 12.

The Double 11 shopping spree, which falls on Nov 11 every year, saw 1.779 billion online payment transactions totaling 1.48 trillion yuan, with year-on-year growth rates of 35.49 percent and 162.6 percent respectively, according to the central bank. These transactions were handled by Chinese online payment clearinghouse NetsUnion Clearing Corp and UnionPay, the country's largest bank card payment processor.

The payment figure is the equivalent of having every Chinese person order about 1,000 yuan worth of merchandise, 21st Century Business Herald said in a repot on Wednesday.

Alibaba, the initiator of the Double 11 shopping carnival in 2009, achieved sales of 268.4 billion yuan this year, an increase of 26 percent compared to 2018.

 

9. The United States Food and Drug Administration announced on Nov 15 Beijing time its accelerated approval of the drug for treatment of adult patients with mantle cell lymphoma.

The FDA's approval for Chinese biomedicine company BeiGene Ltd's Brukinsa (zanubrutinib) capsules marked a breakthrough for Chinese drug developers. It is the first time an innovative therapy from a Chinese mainland drug developer will enter the US market, while the majority of new drugs, especially cancer therapies, from the Chinese market are imported, industry insiders said.

The accelerated approval is based on overall response rate, or how many patients experience a complete or partial shrinkage of their tumors after treatment.

Mantle cell lymphoma, or MCL, is a rare, aggressive form of non-Hodgkin's lymphoma, which is a cancer developing from lymphocytes, a type of white blood cell. It usually responds well to initial treatment but eventually returns or stops responding, and cancer cells continue to grow.

 

10. China launched a mobile number portability program across the country on Nov 27, allowing cellphone subscribers to switch service carriers without changing phone numbers, according to the Ministry of Industry and Information Technology.

Technology, systems and rules for services related to the program have been implemented after a nationwide trial operation, it said.

The ministry has asked related enterprises to rectify problems exposed during the trial, such as some carriers creating obstacles for the service switch, said Lu Chuncong, an MIIT official, noting that the program will promote benign competition among enterprises.

The country's three major telecom companies-China Telecom, China Mobile and China Unicom-have promised to improve the transparency of their services.

As of Nov 26, about 3.16 million subscribers have completed number porting in five pilot provincial-level regions, MIIT data showed.

 

A prototype magnetic levitation train with a top speed of 600 km/h is unveiled in Qingdao, East China's Shandong province, on May 23. CHINA DAILY

 

 

The Ministry of Industry and Information Technology releases four commercial 5G licenses in Beijing on June 6. XINHUA

 

 

The listing ceremony of the first batch of companies on the Shanghai Stock Exchange STAR Market is held in Shanghai on July 22. SHI JING/CHINA DAILY

 

 

Citizens buy pork at a local supermarket in Zhengzhou, capital of Henan province. IC

 

 

A bird's-eye view of Beijing Daxing International Airport. VCG

 

 

E-cigarettes. IC

 

 

Jinbao is the mascot of the China International Import Expo. VCG

 

 

A giant screen shows Tmall's sales reaching 10 billion yuan ($1.4 billion) in one minute and 36 seconds on 2019 Singles Day shopping festival on Nov 11. XINHUA

 

 

A technician carries out a test at a pharmaceutical company in Beijing. XINHUA

 

 

A ceremony is held in Beijing to mark the launch of the mobile number portability program on Nov 27. XINHUA

 

 

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2019-12-24 00:00:00
<![CDATA[Germany's Covestro to up polymer ante in China for bigger market share]]> http://www.chinadaily.com.cn/kindle/2019-12/23/content_37529906.htm Covestro AG, the German manufacturer of high-tech polymers, will expand production capacity and establish new research facilities to further compete with other established rivals.

It will bank on China's fast-growing industries, including electronics, construction, automotive and transportation, for future growth.

As China has entered a new phase of economic development, with focus on quality rather than quantity, Covestro's products and solutions fit in, said Michael Friede, global head of the company's coatings, adhesives and specialties segment.

"Durable and environmentally friendly chemical products are a key enabler for the development of many downstream industries," he said.

He stressed that consumers in China, no matter where they are from and how old they are, are always seeking a better life and are forward-looking. This is the fundamental driving force for the country's strong domestic consumption for various industrial goods.

In addition to supplying various coating raw materials to domestic automobile makers such as Chongqing-based Chang'an Automobile Co Ltd, Covestro wishes to provide more water-based coating products to China's high-speed trains, as they can work under both low and high temperature conditions, and offer better scratch and big chip impact resistance.

The Leverkusen-headquartered group expanded its open innovation with various partners. In October, it started its new concept of "Open Innovation Hub" at its Asia-Pacific Innovation Center in Shanghai.

The move came as the multi-industry ecosystems in China had evolved via open innovation principles that push both the boundaries of the traditional industries and the upgrades in manufacturing and consumption.

As China is setting the pace for technologies and solutions in many areas that address future trends, Friede said new trends are emerging in electronics.

"5G is going to be a big player in both China and the world, it will create more growth points for global companies such as Covestro to engage with different innovation partners across the country," he noted.

Covestro showcased the world's first soft-touch cheongsam made using 3D printing. It marked the latest attempt to push the boundaries of 3D printing in commercialization and mass production. Covestro contributed its expertise in materials and technology.

The dress can be customized in multiple aspects like pattern and texture, as well as material properties, shape and the size.

Friede believes that 3D printing technology opens up freedom in creative design and allows complex structures with a seamless appearance.

For instance, manufacturers can create fully functioning shoes in the size that perfectly fits each individual consumer. It also presents the opportunity to individuals, designers and artists to customize their shoes within only the limits of their imagination, according to Friede.

Under such circumstances, Covestro's 3D printing laboratory in Shanghai aims to serve customers and partners in Asia-Pacific with a comprehensive range of filaments, powders and liquid resins for all common 3D printing methods. The company has accelerated commercialization and serial production development for the application of 3D printing technology.

With sales of 14.6 billion euros ($16.31 billion) in 2018, Covestro's business covers areas such as automotive, construction, wood processing and furniture, and electrical and electronics industries.

Other sectors include sports and leisure, cosmetics, health and the chemical industry itself. It has 30 manufacturing sites globally and employed 16,800 people by the end of 2018.

Supported by more than 3,000 employees in China, Covestro's sales totaled 3.1 billion euros in China last year, accounting for around 21 percent of Covestro's global total and making it the largest single market to the company.

Its cumulative investment in China exceeded 3.3 billion euros by the end of 2018. It currently runs seven production sites, one regional innovation hub and six offices throughout the nation.

Zhao Ying, a researcher at the Beijing-based Institute of Industrial Economics, which is part of the Chinese Academy of Social Sciences, said China's automotive market is still the largest in the world, with an annual production of some 20 million cars, which is a key market for major chemical product manufacturers such as Covestro, BASF and AkzoNobel.

He said many home and global automakers are already in the process of pushing major technological breakthroughs. Newcomers to the business are also willing to adopt the latest technology and new solutions to survive and develop in the market.

"If you look at the automotive mega trends of connected, autonomous, shared and electric, all these trends are driven by leading technologies and strong innovation power," he said. "That is why, multinationals are expanding their local research and development setup to develop and launch solutions together with their local customers."

 

A Covestro employee checks production equipment at the company's facility in Dormagen, Germany. CHINA DAILY

 

 

 

 

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2019-12-23 00:00:00
<![CDATA[Gold ETFs shine amid uncertainties]]> http://www.chinadaily.com.cn/kindle/2019-12/23/content_37529953.htm Gold-backed exchange-traded funds, or ETFs, in China are surging as global economic uncertainties and interest rate cuts are spurring investment demand.

Data from the World Gold Council showed that assets under management in Chinese gold-backed ETFs totaled 16.9 billion yuan ($2.4 billion) by the end of the third quarter of this year, a record high. That followed China's approval for its first gold-backed ETFs in six years in August.

Chinese funds, primarily Huaan Yifu Gold ETF and Bosera Gold Exchange Trade Open-End Fund ETF, accounted for most of the growth in China, the WGC said in its recent Gold Demand Trends report.

Wang Lixin, managing director for the WGC's China operations, said the country's gold-backed ETFs also contributed a major part of the 14.3 metric tons growth of Asian-listed funds in the third quarter.

Wang said nearly half of investors who bought WGC-launched gold ETF products were individual investors, with the rest being institutional investors.

"Gold remains a safe haven amid global economic uncertainties, and it is emerging as an investment with possible higher returns as central banks are cutting interest rates," said Huo Songling, secretary to the executive board of leading China National Gold Group Co Ltd.

Compared with physical gold and futures, gold-backed ETFs also have lower transaction costs. This is another reason why they are popular among investors, according to media reports.

In contrast to the rising demand for gold ETFs among Chinese investors, gold bars and coins, which are also an important source of gold investment, saw a 51-percent year-on-year drop to 42.8 tons in the third quarter, a three-year low.

Investors have put off buying gold bars and coins due to surging gold prices, the WGC report said, adding many investors are holding off purchases in anticipation of a possible price fall.

According to the WGC report, gold prices continued to rally and reached new multi-year highs. During the third quarter, gold prices rose by 5 percent. On Friday, the price of physical gold hit $1,478 per ounce.

The surge in gold prices was due to ongoing geopolitical tensions, concerns of a slowdown in economic growth, lower interest rates, and the level of negative debt yields, the WGC report said.

Alistair Hewitt, the WGC's head of market intelligence, said the factors underpinning inflows into gold-backed ETFs, including looser monetary policy and global economic uncertainties, will continue.

Chinese consumers' need for gold jewelry also tempered due to rising gold prices, Wang said.

In the third quarter, people bought 156.3 tons of gold jewelry, down 12 percent year-on-year.

 

A sales woman of Longfeng Gold Shop displays a "golden mouse". WANG JIANKANG/FOR CHINA DAILY

 

 

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2019-12-23 00:00:00
<![CDATA[Why prudent monetary policy is better than QE]]> http://www.chinadaily.com.cn/kindle/2019-12/23/content_37529952.htm The Central Economic Work Conference report issued on Dec 12 said that China will focus on economic stability, maintaining its proactive fiscal policy and prudent monetary policy.

Yi Gang, governor of the People's Bank of China, in an article published in Qiushi Journal in November, explained why the central bank will not use quantitative easing or QE-which is very large, rapid infusions of money into the system by having the central bank buy many types of financial assets. The PBOC will instead maintain a prudent, normal monetary policy-not too tight or too loose.

QE should be an extreme emergency policy-it's a way for a central bank to pour funds into an economy to raise the prices of specific target assets. However, it causes many long-term problems and economic distortions.

The Chinese economy is slowing as part of a long-term transition to a higher value-added production model. But, the slowing is far from an emergency.

Unemployment rose to 5.1 percent in November. This is low by international standards and is unexpectedly low during a structural transition. And, the inflation rate rose to 4.5 percent year-on-year in November, up from 2 percent last year. However, according to National Bureau of Statistics data, 2.6 percentage points of the inflation rate was due to a rapid rise in pork prices due to African swine fever. It does not reflect a systemic problem.

Three episodes in American history illustrate the problems caused by loose monetary policy and loose banking regulation: 1) The stagflation, combined inflation and slow growth, of the 1970s. 2) The savings and loan bank default crisis of the 1980s. 3) The debt-driven boom of the 1990s and 2000s that resulted in the global financial crisis of 2008, which in turn compelled the US government to use QE to escape from a possible great depression.

From November 2008 through 2012, the Federal Reserve, the central bank of the United States, bought more than $4.5 trillion of home mortgage-backed securities, commercial bonds, and other assets-about 30 percent of annual GDP. In effect, the Fed was printing money to boost asset prices and to keep the interest rates on US Treasury bonds low.

One key problem with QE is that it transfers wealth to richer people away from average and poor people. In practice, this means that QE drives up housing prices and the prices of stocks, and drives down the interest rate depositors and other savers can get on their savings. This is great for asset owners, but terrible for average savers or young people trying to buy a house.

QE rewards banks and money managers for taking high risks-they get the upside if the bets pay off, but the government bears the downside risk because bank deposits are insured.

Loose monetary policy increases the prices of a limited number of assets instead of financing real investment opportunities. Companies and people are rewarded for their ability to manipulate financial assets rather than for real productivity increases.

The US economy slowed sharply in the early 1970s in the aftermath of the war in Vietnam. Throughout the 1960s and 1970s, many economists and policymakers believed in a theory called the Phillips curve, which stated that the unemployment rate could be permanently lowered by loose monetary policy. So, the Fed continuously pumped more money into a slowing economy. This worked for short periods, but soon the economy returned to high unemployment and slow growth with even higher rates of inflation. By 1980, the inflation rate reached an all-time high of 13.3 percent with an unemployment rate of 8 percent.

In this desperate situation, new Federal Reserve chairman Paul Volcker, who died recently, sharply raised interest rates, causing what was by far the steepest recession in post-WWII US history. Many businesses failed and unemployment rose steeply. Many people lost their homes because of the incredibly high interest rates, which reached 18 percent on home mortgages. Only very stimulative fiscal policy and large tax cuts saved the country from greater disaster.

The second episode shows the dangers of loose banking regulation that encourages banks to invest in risky assets. The US had long had a special kind of small, local bank, called a savings and loan bank, that received local deposits. Such banks were restricted to making very safe investments, primarily in local home mortgages. George Bailey's bank in the movie It's A Wonderful Life was an S&L bank.

By the mid-1980s, banking deregulation had allowed a few big city banks to outbid the small S&L banks for deposits, so the old, safe S&L business model was no longer viable. Regulators decided the way out of this dilemma was to allow the S&L banks to invest in riskier and riskier assets-primarily large suburban shopping centers and other commercial property in out-of-the-way areas.

As should have been expected, this bet on risky investments did not work and many S&L banks went bankrupt. Since the deposits were insured by the government, the taxpayers were on the hook to pay for the S&L banks' losses, which amounted to more than 2 percent of GDP.

You might think that banks can make reasonable judgments about the riskiness of their investments. The problem is that they are not risking their own money. They are risking their depositors', and ultimately the government's, money.

In the S&L banks case, a successful bet on a risky investment led to a very high return for S&L bank owners and managers. An unsuccessful bet stuck taxpayers with the bill.

In the late 1990s into the 2000s, the US appeared to have a magnificent economy. First, stock prices boomed. After the NASDAQ collapse in March 2000, housing prices soared. The problem is that these booms turned out to be bubbles, driven by loose monetary policy and low interest rates.

The money flowing into the economy had to go somewhere. It drove up the price of assets, mostly housing and stocks-largely to the benefit of upper-income people.

Most disastrously, low interest rates meant that banks could not make money from safe loans, so they turned to riskier investments, especially sub-prime housing loans. Regulation of banks was very loose and little attempt was made to control the immense risks. Any bank employee who did not want to approve the risky investments, which were highly profitable in the short run, was simply replaced.

Naturally, this led to a huge mess, culminating in the crisis in the fall of 2008, and the taxpayers were again stuck with the bill.

QE probably was necessary to prevent an economy-wide disaster after the banking collapse in 2008. The week beginning with the Lehmann collapse on Monday, Sept 15 was certainly scary.

There were very legitimate fears that this could be the start of a new great depression. Any policymaker at the time certainly would have done everything possible, including QE, to help the economy survive in the short term.

But it is much better to adopt prudent monetary policy and strong banking regulations, as China is now doing, to prevent such a crisis from ever arising.

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CAI MENG/CHINA DAILY

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2019-12-23 00:00:00
<![CDATA[Niche financial services could be casino-rich Macao's next big bet]]> http://www.chinadaily.com.cn/kindle/2019-12/23/content_37529907.htm When you think of Macao, what's the first thing that comes to mind? Dazzling casinos? Nostalgia-evoking buildings? Exotic delicacies? Portuguese links? To be sure, all these contribute to the charm of Macao, but they don't tell its whole story.

As a city with an area of only 30 square kilometers, Macao has to choose its pillar industries carefully, retain its attractiveness as a city, present itself to the world's tourists in its best shape.

In the past 20 years, Macao's gambling industry had taken on a central role in the local economy, but it also brought about some socio-economic problems at the same time. After many years of casino-fueled growth, it's time to consider which industry will be a good diversification choice for Macao. The answer maybe finance.

Let's first look at the location of Macao. It is southeast of the Chinese mainland and backed by China's Pearl River Delta, one of the wealthiest regions of China connecting Hong Kong, Macao and Guangdong province. The per-capita income is high in these areas, and the accompanying purchasing power laid the foundation for Macao tourism.

What's more, the inland areas are known for their abundant resources, strong manufacturing capacity, widespread logistics and sales networks. All these mean it's unnecessary for Macao to establish a complete industrial structure. Regardless of its past, Macao seems to have a comparative advantage in some unconventional but at the same time indispensable industries.

Let's now also look at Macao from a larger geographical perspective. Facing Vietnam, the Philippines, Malaysia, Singapore, Indonesia and other ASEAN countries across the sea, Macao is an ideal start for travel and business in Asia. In fact, from ancient times, there were frequent trade and other exchanges between Macao and ASEAN countries, and migrants foster common cultural traditions among Macao people and Southeast Asians.

In addition, Macao maintains close ties with Portuguese-speaking countries, and through these ties, Macao extends its relations with other countries in different continents, including Europe, Asia, Africa and South America. If the Spanish-speaking countries are also knit together as close friends, Macao lives up to its reputation as the integrating hub of Eastern and Western cultures.

With casinos and tourism as its key industries so far, and given the advantage of its geographic location, Macao's economic performance can be described as "small but beautiful" over the past few decades. In 2018, Macao's GDP per capita ranked third in the world, and the Macao Special Administrative Region's government revenue from casinos was 113.5 billion Macao patacas ($14 billion), the accumulated fiscal reserves were 505.6 billion Macao patacas.

But as the old saying goes, one coin has two sides. Macao's economy may lose growth momentum if the growth rate of the casino industry declines. Actually, this potential downtrend has emerged in recent years.

Diversification could not only be the source of happiness but a driver of economic growth. When Macao applies this rule to its industrial policy, many potential diversification directions can be evaluated and weighed against each other. Based on Macao's resources and endowments, its existing industrial structure, its positioning in China and neighboring regions, we come to the conclusion that serving the capital flows into and out of the Chinese mainland may be a good choice for Macao, and help maximize the city's economic growth.

Our logic is that economically, China has shifted from a trade-motivated country to a capital-motivated one. Over the past three decades, China has gained revenue from trade activities, boosted economic growth through trade, and accumulated huge foreign exchange reserves.

Now, as a net creditor, China desperately needs to invest its accumulated capital to obtain high investment returns. China's asset allocation will also shift from foreign government bonds to more direct investment and, in the future, more portfolio investment.

This means, on the one hand, there is an urgent need to establish a platform for Chinese enterprises to go global.

On the other hand, China is opening up wider to the world, especially in the finance industry. Macao is one of the most open economies in the world. It is also an independent customs zone with a simple and low tax system. There is no foreign exchange control. Capital can move in and out of Macao freely, and a large capital pool has already formed in Macao.

These features can reassure international investors, especially those who want to share China's economic growth dividend, but still have doubts about China's opening-up policy.

Macao has many reasons for setting up an offshore financial center for two-way capital flows.

The first reason is Macao's capital endowment, including its strong foundation for the financial industry, close relations with Portuguese-speaking countries and other European countries, capital collection capacity and low cost of capital.

The second reason is, the offshore financial industry does not require much space and resource, but usually generates higher profit margins, which can suit a well-connected city like Macao as it has limited land resources.

The third reason is that offshore financial centers can provide services to Chinese and global capital flows, which are increasing quickly and constitute a huge demand. In terms of specific business, Macao can start from investment services, fund raising, wealth management and part of offshore financial services, and gradually expand to other.

However, Macao should limit its services to specialized fields, instead of establishing a global offshore financial center and providing comprehensive financial intermediary services. It may be a bad strategy for Macao to aim to replace or undermine an established global financial powerhouse such as next-door Hong Kong.

 

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2019-12-23 00:00:00
<![CDATA[Alliance promises to transform travel]]> http://www.chinadaily.com.cn/kindle/2019-12/23/content_37529923.htm Today it is no rarity to navigate a Chinese city with no wallet but a mobile phone. Now, Chinese technology powerhouse Tencent Holdings Ltd wants to extend such domestic convenience overseas.

WeChat, Tencent's homegrown social media to payment app, has formed a travel alliance in Beijing to call on tourism agencies from various nations to jump on the mobile-centric bandwagon among Chinese tourists.

The bloc, called "Welcome with WeChat Alliance", has an initial 30-plus members, including country-level tourism boards like those of Germany and Sweden, as well as city-and region-level agencies from Dubai to Los Angeles.

The overarching goal is to encourage the greater use of the app, which now boasts 1.1 billion global users, and to co-develop new functions to help travelers better explore foreign destinations.

China is the world's largest outbound tourism market, with some 150 million overseas trips made last year, up 14.7 percent compared with 2017, according to the China Tourism Academy. But the market is maturing as more tourists seek independent travel to explore local experiences, said Zhang Yang, a researcher with the academy.

"When people travel abroad now, they find information on social platforms including WeChat. In the past, they traveled with travel agencies, but now they like to plan their trips themselves," said Zhang.

WeChat has already teamed up with tourism agencies from Dubai, Malaysia, Singapore and New Zealand's Auckland since January, which helped lay the foundation for its new overseas expansion plan. The alliance will support members in digitalizing their content and services, offer training on effective practices, and finance innovative solutions.

It also allows for mini-programs, which are essentially built-in sub-applications that don't require separate installation, and can be customized for various purposes, such as buying coupons, travel insurance or serving as travel guides.

Li Zhaohui, China director with the German National Tourist Board's Beijing Office, said social media is playing an important role in attracting tourists. He hoped more Chinese tourists would be drawn to the European country, following the service empowerment via the alliance.

A research report released by homestay service portal Airbnb in September found that the Chinese are increasingly keen to visit offbeat, unusual or little known destinations.

Those born in the 1990s or later are expected to account for half of the new outbound traveler community, and the group appears to be more enthusiastic about venturing into new territories, the study said.

"As 'trend followers', they tend to follow popular routes on social media apps such as Douyin and Instagram," said Peng Tao, Airbnb China's president.

Chinese are also dispelling stereotypes of visiting mostly landmarks and partaking of luxury goods, and are gradually turning to more experience-driven items. Sales of intra-Europe railway tickets surged 35 percent from the same time last year, according to travel portal Fliggy, whereas satiating palates for durians helped increase trips to Thailand and Malaysia by 59 percent year-on-year.

WeChat's initial overseas expansion could be traced back to 2016, when it launched a "WeChat Go "solution encouraging foreign merchants to accept WeChat as a form of payment. It soon disclosed bolder ambitions: to provide comprehensive solutions from tourist guides to online reservations.

Early adopters of a comprehensive WeChat solution included Japan's Fuji-Q Highland amusement park. Last year, the park introduced a mini program that offers introductions to facilities in Mandarin Chinese, provides special entrance offers and supports mobile payments settled in renminbi.

WeChat has since been looking to work with more smart solutions and service providers, or SSPs, as it seeks to deepen its mobile wallet business' overseas presence.

According to Fan Wei, overseas business director of WeChat Pay, the idea is to make its WeChat app payment function run as smoothly in a foreign market as it does at home, by incorporating more app programming interfaces and payment-to-marketing tools developed by third-party providers.

"The introduction of the SSPs serves to better connect with merchants, users and licensed payment providers," he told China Daily in an earlier interview. "They stand to bring to life a variety of smart commerce solutions inspired by local merchants."

To make it more accessible to Chinese travelers, WeChat has got involved in the tax-refund business. It has partnered with Swiss company Global Blue to offer an instant tax refund service for Chinese tourists departing from Madrid airport.

Called We Tax Refund, the service is a real-time refund mini-program, which easily helps to refund users' money back to WeChat Wallet. To date, it enables users to refund at 85 airports and three harbors in 21 economies, the company said.

Users can receive their rebates in yuan, which are sent to their WeChat Wallet account immediately once their tax refund forms are approved. It is not a default WeChat function, but needs to be processed via the mini-program.

WeChat is also offering instant in-store refunds overseas. For instance, Global Blue and WeChat Pay have joined forces to offer in-store refunds, which means that Chinese tourists no longer need to line up to get their tax refund forms processed at the airport.

 

A tourist uses his mobile phone to scan the QR code of the Malaysian Consul Service at the Chinese Embassy in Kuala Lumpur. ZHANG WENCHAN/FOR CHINA DAILY

 

 

 

 

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2019-12-23 00:00:00
<![CDATA[On the move]]> http://www.chinadaily.com.cn/kindle/2019-12/23/content_37529908.htm Xia to lead Evonik's local unit from Jan 1

Evonik Industries AG, the German specialty chemicals producer, appointed Xia Fuliang (pictured) as president of its China unit. He will take office on Jan 1. Former president Claas Klasen will retire at the end of this year. The company said Xia's appointment can help promote localization in the Chinese market. Xia has more than 20 years' experience in specialty chemicals and cross-cultural region management.

Wong Chi-fai to drive research at JLL China

Real estate consultancy JLL announced that Wong Chi-fai took up the position of head of research for JLL China earlier this month. He will work closely with JLL's team of over 60 researchers across China, to drive synergy and collaboration in the firm's research output. He joined Jones Lang Wootton, now known as JLL, in 1997 in Hong Kong as a regional economist, before he was appointed as the firm's head of research in 2000.

Liu lands key roles at China Energy Investment

Liu Guoyue, 56, was appointed general manager, deputy Party chief and a board member of China Energy Investment Corp in late November. In the past, Liu served as manager of the Shijiazhuang branch of China Huaneng Group in Hebei province, head of its power plant in Dezhou, Shandong province, and deputy general manager. He also worked as deputy general manager of State Grid Corp of China.

 

 

 

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2019-12-23 00:00:00
<![CDATA[Ireland courts more Chinese investments]]> http://www.chinadaily.com.cn/kindle/2019-12/23/content_37529947.htm The recent surge in Chinese investment in Ireland is a testimony to the promising outlook for bilateral investment cooperation, a senior Irish official said.

A number of Chinese enterprises see Ireland as an ideal gateway to the European market and a solid base for technology innovation, said Martin Shanahan, CEO of the Industrial Development Agency Ireland, or IDA Ireland, the country's inward investment promotion agency.

In the first half of this year, Chinese direct investment in Ireland rose 75 percent year-on-year to $142 million, contrasting with a 26-percent decline in Chinese direct investment in Europe, according to law firm Baker McKenzie.

This surge comes at a time when headwinds that are riddling global cross-border investments are expected to continue.

"We see more and more Chinese companies internationalizing. We want to ensure that if they are thinking about Europe as a destination, then Ireland is the first location they think of," Shanahan said.

In the post-Brexit landscape, the IDA Ireland's value proposition for foreign direct investment, especially Chinese investment, is extremely attractive, he said, citing the solid mandate received by Leave campaigners in the United Kingdom's general election on Dec 12.

"As the only English-speaking country in the (post-Brexit) EU with access to talent across the region and the common law system, Ireland will be uniquely placed to assist Chinese investors," he said.

Once Chinese enterprises set up establishments in Ireland, a stable European Union member, they can operate without impediment within the whole EU market, Shanahan said.

What makes Ireland different from other EU member economies are its "extraordinary" pro-business environment and being an English-speaking country. These factors make it easier for many Chinese investors good at English to do business, he said.

Policy stability, talented labor force, especially in the tech and pharmaceutical sectors, and consistent and transparent taxation regimes are the key ingredients of Ireland's pro-business environment, Shanahan said.

According to IDA Ireland's report Facts of Ireland released in September, the country has a young and educated population, about one-third of whom are under 25 years old. In Ireland, 56.3 percent of people in the 30-34 age-group have tertiary educational qualifications, versus 40.7 percent for the EU on average, the report said.

Moreover, in terms of ease of paying taxes, Ireland ranked fourth among the 190 economies that PWC and the World Bank Group surveyed for the Paying Taxes 2020 report.

"The track record that Ireland has in the area of foreign direct investment gives great confidence to investors in Europe that Ireland is the right place to set up and do business," Shanahan said, adding Ireland is home to many multinational corporations' EU headquarters, such as Apple and Google.

In late November, Chinese biomedical company Wuxi Biologics announced its subsidiary Wuxi Vaccines was planning to invest $240 million to build a vaccine production facility in Dundalk, Ireland. This followed Wuxi Biologics' $359 million greenfield project announced last year.

Wuxi Biologics exemplifies how Chinese investors and Irish stakeholders could achieve win-win cooperation, Shanahan said.

Wuxi Biologics could leverage Ireland's strength as one of the world's largest pharmaceutical exporters to build its vaccine plant and gain access to the whole European market. For its part, Ireland has attracted a fast-growing Chinese company, he said.

Looking ahead, the biggest growth potential for Chinese investors looking at Europe lies in Ireland's pharmaceutical and technology sectors, particularly medical technologies, Shanahan said.

"Our technology sector spans all aspects: hardware, software and the internet. So I think Chinese companies looking at Europe can consider Ireland for any aspect of technology."

Attracting more Chinese investment is strategically important for Ireland to diversify its inward investment portfolio, as China will be an even more important source of foreign investment as the country keeps growing steadily, Shanahan noted.

He said IDA Ireland would encourage Chinese enterprises seeking to expand in Europe to look at the country. His agency, he said, would support their investments.

Throughout the life-span of foreign businesses, IDA Ireland provides them with both "soft supports" such as introducing agencies and research centers they to need to work with, and "hard supports", such as subsidies for hiring more local people, to make doing business in Ireland as easy as possible, he said.

 

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2019-12-23 00:00:00
<![CDATA[Formula behind Macao's success praised]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529816.htm Macao is a great success in the implementation of "one country, two systems", a principle whose practice has brought about "precious opportunities" for other countries, including the United States, Chinese Ambassador to the US Cui Tiankai said on Thursday in Washington.

Macao has put China's Constitution and the Basic Law into "full and faithful" practice and struck a proper balance between upholding the power of the central government and ensuring the high degree of autonomy of the Special Administrative Region government, Cui said at a reception marking the 20th anniversary of Macao's return to the Chinese motherland, which fell on Friday.

Since 1999, five elections have been held for the chief executive, and six for the Legislative Assembly of Macao. The legislature, the executive branch and the judiciary fulfill their duties according to the Basic Law, Cui said.

"Hong Kong and Macao host thousands of US companies and tens of thousands of US citizens," the envoy said.

The wide international community, including many United States citizens, supports the policy of "one country, two systems", and they are all "stakeholders" in the long-term prosperity and stability of Hong Kong and Macao, Cui said.

He again warned "some forces" in the US who have "kept meddling in Hong Kong in clear interference in China's internal affairs".

He said the Chinese government stands firm on implementing "one country, two systems", and no attempt that goes against the trend of the times or the will of the people will ever prevail.

Macao has become a booming city with a stellar economic performance since the Chinese government resumed the exercise of sovereignty 20 years ago, Cui told a hall of more than 500 attendees, including diplomats, business executives and representatives of international organizations based in the US.

Macao's GDP has increased by more than 7.5 times in aggregate terms and almost 4.6 times in per capita terms, with the unemployment rate dropping from 6.4 percent in 1999 to 1.8 percent now, and the average life expectancy reaching 83.7 years, he said.

"Facts have proved that Macao's prosperity and stability is grounded on the principle of 'one country' and ensured when the unique strengths of 'two systems' are brought into full play," Cui said.

The envoy noted that "one country, two systems" is a pioneering undertaking of socialism with Chinese characteristics, conducive to the long-term stability and prosperity of Hong Kong and Macao and to the peaceful reunification of China.

"We have full confidence in this policy and will stay committed to it," he said.

US-China Business Council President Craig Allen said he had been to Macao many years ago, and today's Macao is a very different place.

"The progress of Macao since the end of colonization is truly amazing," Allen told China Daily. "I would like to see that with my own eyes."

There are many US companies in Macao, and its economy is booming, and therefore these companies are growing with a rapidly expanding economy.

"The success in Macao will attract more business, and I expect trade and investment to Macao to continue to expand," Allen said. "We want to work with Macao as a steppingstone between the United States and China."

Ambassador Cui Tiankai (middle) talks with US-China Business Council President Craig Allen at a reception in Washington on Thursday. CHEN MENGTONG/CHINA NEWS SERVICE

]]> 2019-12-22 14:19:23 <![CDATA[JPMorgan Chase gets regulatory nod for securities joint venture]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529745.htm US bank JPMorgan Chase & Co said on Wednesday that its securities joint venture in China had received the necessary regulatory approvals to start operations, a further indication of the increasing foreign investment in the rapidly opening-up Chinese financial sector, analysts said.

The bank said in a statement that its securities venture in China will provide a comprehensive set of financial products and services for its Chinese and international clients including securities brokerage, securities investment advisory, and securities underwriting and sponsorship.

JPMorgan became the first US bank to gain majority control of its securities entity in China after Japanese financial group Nomura obtained the regulatory permission to start business operation of its securities JV last month.

The expansion of foreign banks' investment in the onshore securities business highlighted the importance of the Chinese market in their global business strategy as China's regulators have accelerated the opening of the Chinese financial markets to draw more foreign capital, analysts said.

China will remove foreign ownership restriction in the securities, fund management and futures business next year, meaning that foreign financial institutions can have 100 percent control of their business entities in China.

Jamie Dimon, chairman and CEO of JPMorgan, said in a statement that the bank will continue to invest in and support its business in China, which has become a critical market for its domestic and global clients.

"The establishment of our new securities company further strengthens JPMorgan's domestic platform and our onshore capabilities at a time when China's financial markets continue to evolve and the requirements of our clients continue to develop," said Mark Leung, CEO of JPMorgan China.

Zhang Deli, chief macroeconomic analyst at Yuekai Securities in Guangdong province, said that foreign financial institutions could leverage their strength in the global network, professional expertise and strong capital position to gain a competitive edge in the Chinese market and their presence could lead to industry consolidation in the Chinese securities sector.

"Foreign firms tend to have extensive international experience and they are strong in business areas such as principal securities trading (where the securities firms use their own capital for capital market investments to realize higher profits), capital and fixed-income, foreign exchange and commodities markets. Their presence will bring more competition and force local securities firms to accelerate development, which will help energize the Chinese market, and boost the regulator's goal to further open the financial industry," Zhang said.

Analysts at GF Securities said that foreign securities firms in China have the advantage in areas including derivative trading, asset management and wealth management services over local players. But it is challenging for foreign firms to compete in the onshore securities brokerage and underwriting business in the short run given that they may face limited market channels and higher capital constraints.

China's securities sector will likely see a bigger wave of foreign investment next year as more global financial institutions will seek control of their joint ventures and their participation will bring more competition which is beneficial for the long-term development of China's securities industry, analysts said.

US banks Goldman Sachs and Morgan Stanley have submitted their applications to the Chinese regulator to acquire majority stake in their securities JVs in China. Swiss investment bank Credit Suisse is also in the process of raising the stake in its China securities JV to 51 percent.

Last year, Swiss bank UBS Group became the first foreign bank to gain majority control of its securities business in China.

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2019-12-22 14:19:23
<![CDATA[Online payment service launched between mainland and Macao]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529733.htm An online cross-border payment service between Macao and the Chinese mainland was launched in Zhuhai, Guangdong province, on Thursday, a day ahead of the 20th anniversary of Macao's return to the motherland.

The service was jointly launched by the Bank of China, Netsunion Clearing Corp, Union-Pay International and the Macao Pass SA. It would allow residents in the special administrative region to easily pay in their travels to the mainland without having to open a bank account in China.

Zheng Guoyu, deputy president of the Bank of China, said the service would be first implemented in Zhuhai, which borders Macao.

"The service, covering major areas in transportation, dining, shopping and daily consumption, would be expanded later to the entire Guangdong-Hong Kong-Macao Greater Bay Area and the whole mainland," said Zheng.

Macao residents could use the BOC's app and MPay, a mobile payment service developed by Macao Pass, to pay for services in the mainland, Zheng said.

Su Qinglong, chairman and general manager of Zhuhai Jiuzhou Holdings Blue Ocean Tourism Development Co, said the online cross-border service would help boost the company's business with its Macao counterparts.

"A growing number of Macao residents have developed interests in visiting the mainland, and we have seen more business revenue generated from Macao tourists," said Su.

Based in Zhuhai, the company is constructing an international sailing and yacht terminal and developing an uninhabited island to attract more international tourists.

"Our business is targeting tourists from the Greater Bay Area, mostly from Hong Kong and Macao. We are expecting a business surge after more online payment interaction between the mainland and the two special administrative regions," said Su.

Su's company was one of the first batch of businesses in Zhuhai that are allowed to adopt the cross-border payment service.

Official statistics showed the number of travels from Macao residents to the mainland reached 25.15 million in 2018.

 

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2019-12-22 14:19:23
<![CDATA[Key cooperation projects between regional partners]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529724.htm 1. Traditional Chinese Medicine Science and Technology Industrial Park of Cooperation between Guangdong and Macao

The first cooperative project between Guangdong and Macao based in Hengqin, it has 159 companies including 39 from Macao.

2. Hengqin-Macao Youth Entrepreneurship Valley

Also known as InnoValley, it is a national business incubator with 374 projects under incubation, 219 of which are initiated by Macao companies.

3. Hong Kong and Macao Young People Startup Space

Located in the Zhuhai Hi-Tech Industrial Development Zone, it was set up to industrialize technological results developed by young Hong Kong and Macao people.

4. Hong Kong and Macao Teenagers Internship and Communication Center

Launched in June, it provides internship programs for the youth from Hong Kong and Macao.

5. Huafa-University of Macau Joint Lab

Sponsored by Zhuhai Huafa Group, the lab will have six centers for incubating high-tech projects with core competitiveness and growth potential.

6. Demonstration centers of University of Macau and Macau University of Science and Technology in Hengqin

New centers will be established for production, education as well as R&D purposes.

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2019-12-22 14:19:23
<![CDATA[China has leeway to tackle economic risks, says World Bank]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529723.htm Chinese authorities have the policy space to tackle economic downside risks, but the counter measures need to be consistent with the structural rebalancing of the country's economy in the longer term, the World Bank said on Thursday.

The bank maintained its prediction that China's economy will grow at a rate of 6.1 percent this year, before moderating to a projected rate of 5.9 percent in 2020 in its updated research released in December, unchanged from the previous forecast in October.

The moderate industrial growth and external risks may add to the pressure of a growth slowdown in the short term, the December edition of China Economic Update, said a brief report released by the bank.

China's GDP growth slowed to 6 percent year-on-year in the first three quarters of 2019, down from 6.6 percent in 2018. The slowdown featured a deceleration in investment growth and weaker investor confidence amid heightened trade policy uncertainty.

The "Phase One" trade agreement between China and the United States has boosted market confidence, and analysts expect the good news can avoid further escalation of trade disputes and lead to higher trade flows.

A permanent resolution of bilateral trade tensions would be essential to reduce the negative impacts on the world's second largest economy, said the World Bank.

Other external risks include a sharper-than-expected slowdown in major economies, particularly in parts of Europe, and weaker global trade and investment, it said.

Domestically, growth may suffer from the potential adverse effects of financial de-risking in the short term, given its asymmetric impact on private sector financing and the risk of a disorderly unwinding of excessive leverage, the bank explained.

"Policies need to be carefully balanced to reduce cyclical risks to growth while staying the course on the necessary deleveraging of the economy," said Martin Raiser, World Bank country director for China. "This may require tolerating slower but safer growth in the short term."

"If downside risks lead to a sharp reduction in growth, the authorities have policy space to act, but this needs to be done in a way that is consistent with the desired rebalancing of the economy toward consumption, services, and private investment and with reducing financial and corporate sector risks," Raiser said.

The annual Central Economic Work Conference has just concluded last week, which set the basic policy tone for next year. It leaves plenty of flexibility in terms of actual policy implementation and the growth target is still highly important, said Song Yu, chief economist of Beijing Gao Hua Securities Co Ltd.

Infrastructure investment, as Song mentioned, is expected to be the major driving force to support the economy and avoid a sharp slowdown.

 

 

 

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2019-12-22 14:19:23
<![CDATA[Guangzhou Development District bets big on nano tech]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529721.htm Guangzhou Development District, located in South China's Guangdong province, is focusing its attention on developing nanotechnology in order to become a world leader in the technology with independent intellectual property rights.

"At present, China's basic research on nanotechnology is at the forefront of the world, with up to 210,000 nanotechnology patents, however, China's transformation rate of the technological results is still very low," said Zhao Yuliang, director at the National Center for Nanoscience and Technology and an academician of the Chinese Academy of Sciences. "Translating these basic research findings into the productivity of our country is a challenge before us."

Relying on the advantages that the Guangdong-Hong Kong-Macao Greater Bay Area has in talented professionals and advanced industrial capability, Guangzhou Development District is aiming to transform research results in nanotechnology into applicable and marketable technologies and products, Zhao added.

To foster the development of nanotechnology, the district introduced a series of new incentive policies on Tuesday, in Guangzhou.

"The policies are targeted for the nanotechnology industry and provide the strongest industrial support and most complete coverage in China. They are also the only local industrial policies led by academic research," said Xia Jian, director of the science and technology bureau of Guangzhou Development District.

The policies will help the district build an all-around nanotechnology ecosystem and realize high-quality development, Xia added.

Offering multiple supportive incentives and rewards, the policies can grant enterprises up to 170 million yuan ($24.27 million) each.

The policies support the construction of public nanotechnology service platforms, and offer rewards to entities establishing each platform, with a maximum award reaching 50 million yuan.

The public technology service platforms include those focused on nano processing technology, nanotechnology pilot plant testing and application promotion, nanotechnology testing and analysis, nano biological effects and safety research.

According to the policies, if a newly established nanotechnology enterprise with a registered capital of more than 10 million yuan rents property for offices, Guangzhou Development District will offer the enterprise a subsidy equal to 50 percent of the rent for three years, with an annual maximum subsidy of 1 million yuan.

As for companies with a registered capital of more than 10 million yuan that purchase property for offices, the district will provide a one-time subsidy amounting to 10 percent of the purchase price, with a maximum subsidy of 5 million yuan.

The policies also allocate subsidies for high-level nanotechnology industry summits, forums and academic exchange activities.

After the approval of the departments of science and technology of Guangzhou Development District, event organizers can receive a subsidy equal to 30 percent of the event's costs. The maximum subsidy for each event is 1 million yuan.

The incentive policies also support small, medium- and micro-sized nanotechnology enterprises.

The district will select a maximum of 10 small, medium-and micro-sized companies among those with revenues of more than 10 million yuan in the previous year, and offer equity investment. The maximum equity investment for each enterprise is 5 million yuan.

To forge a world-renowned center of high-end nanotechnology industry and a hundred-billion yuan industrial cluster, Guangzhou Development District is committed to promoting the construction of a national institute of nanotechnology innovation and a nanotechnology innovation industrial cluster, or the China Nano Valley, according to local officials.

"To name it (the nanotechnology industrial cluster) as 'China Nano Valley' is to hope to gather and serve nanotechnology research institutions and enterprises nationwide," Zhao said. "In the future, the China Nano Valley will be capable of transforming not only the nanotechnology achievements made in the Guangdong-Hong Kong-Macao Greater Bay Area, but also the ones in any other regions of China."

With a planned construction area of 1.1 square kilometers, the China Nano Valley will have four industrial parks with different focuses of intelligent technology, life and health technology, energy and environment and composite materials.

Nanotechnology can not only help improve the quality of development and efficiency of existing pillar industries, but also help empower emerging industries and cultivate future industries, proving to be strong technical support for Guangzhou Development District to establish a modern industrial system with international competitiveness, said local officials.

At the event on Tuesday, where the incentive policies for the nanotechnology industry were released, 19 nanotechnology cooperation projects were also inked, out of which 15 were signed between the district's national institute of nanotechnology innovation and enterprises from sectors including new material, new energy, intelligent technology, medical treatment and finance.

The national institute of nanotechnology innovation will provide enterprises with research and development platforms and technical resources, which is expected to bring new development opportunities to these enterprises, said a senior official at the event.

 

Zhao Yuliang, director of the National Center for Nanoscience and Technology, and an academician of the Chinese Academy of Sciences, answers questions about nanotechnology at a recent conference in Guangzhou. CHINA DAILY

 

 

 

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2019-12-22 14:19:23
<![CDATA[More US products exempt from tariffs]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529719.htm More US products will be exempt from China's first round of additional tariffs starting Dec 26, the Customs Tariff Commission of the State Council said on Thursday.

It is the second set of US goods to be excluded from China's first round of tariff countermeasures. The move is part of the broader efforts to further ease China-US trade friction following the much-anticipated partial deal between the two sides.

China's exclusions on some US chemical products, such as white oil, will apply for a year starting Dec 26, the commission said in a statement. Duties that have already been imposed will not be refunded.

The remaining US products subject to China's first round of additional tariffs will not be excluded for the time being, the commission said.

The commission said it will continue the exemption process and release the exclusion lists of US goods subject to the second round of additional tariffs in due course.

Last week, the world's two largest economies reached an agreement on the text of their phase-one trade deal on the basis of equality and mutual respect. The US promised to eliminate extra tariffs on Chinese goods phase by phase, Chinese officials said.

Speaking at a weekly briefing on Thursday, Gao Feng, spokesman of the Ministry of Commerce, said the economic and trade teams of the two sides are communicating closely about the follow-up work like the signing of the agreement.

The contents of the deal will be released after the official signatures, Gao said.

Earlier reports said the deal will cover intellectual property rights, technology transfer, food and agricultural products, financial services, exchange rates and transparency. Both nations have agreed to accelerate legal approvals for the deal.

Analysts said the phase-one agreement will benefit both countries and the whole world. But uncertainties still exist, they said.

Ma Jun, a researcher at the Tsinghua National Institute of Financial Research, said that one positive significance of China and US reaching an agreement on the text of the phase-one deal is to avoid losses for both economies, lay the foundation for their relatively steady economic development next year and reduce uncertainties facing the global economy.

Lower uncertainties will help boost the confidence of global consumers and investors, Ma said.

Yang Yewei, a macroeconomy researcher with Southwest Securities, said in a study that the recent moves showed that "China-US trade disputes are developing in a positive direction, and reflected the two countries' willingness to de-escalate risks".

However, uncertainty persists, Yang said, as the details of the preliminary trade pact have not yet been released, and there are several procedures to be completed before brokering the deal.

Zhu Jianfang, chief economist with CITIC Securities, said: "Tariff removal and China expanding imports from the US will have positive impact on trade in electronic products, agriculture and related financial products and services."

 

A US cargo ship docks at the Qingdao Port, Shandong province. YU SHAOYUE/FOR CHINA DAILY

 

 

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2019-12-22 14:19:23
<![CDATA[Oppo unveils $145m investment to build shared mobile ecosystem]]> http://www.chinadaily.com.cn/kindle/2019-12/22/content_37529717.htm Chinese smartphone vendor Oppo said on Thursday that it will invest another 1 billion yuan ($145.7 million) to support mobile application developers in its latest push to build an open and shared mobile ecosystem.

The move, which came after the firm invested 1 billion yuan into the same efforts last year, aims to encourage app developers to create gaming, video and other forms of quality content as well as help them go abroad.

The spending speaks for itself. Over the past year, the company has offered such resources to more than 2,000 apps and over 120,000 developers are active in its platforms, said Duan Yaohui, Oppo's vice-president.

Through leveraging its huge presence abroad, the firm's mobile operating system ColorOS has accumulated more than 320 million monthly active users in over 140 countries and regions, Duan added.

At its developer conference on Thursday, the handset maker announced that it will launch its first smart watch in the first quarter of next year. It will also open its system capacities in smartphone function, network, video, media and augmented reality to developers and partners by 2020.

"A new round of technological revolution is coming with 5G and artificial intelligence. With the opening of these capacities, we want to cooperate with app developers in building a world that is connected with everything and mixed with both virtual and real scenarios," said Wu Henggang, vice-president and president of software engineer business at Oppo.

The opening of the platforms shows the smartphone vendor's ambition to boost its technological prowess in the 5G-enabled internet of things era. Just as its CEO Chen Mingyong suggested earlier, Oppo is aiming to be more than "just a smartphone maker".

According to a report from market consultancy IDC, China will be in the driver's seat with respect to the adoption and use of IoT technology. By 2020, the country is expected to spend $300 billion annually on IoT and surpass the United States as the world's largest IoT market.

Tom Morrod, research director at market research company IHS Markit, noted that 5G will give some new impetus to IoT devices in an era where infusion will be omnipresent.

Amid the fierce smartphone competition in the nation, Oppo's rivals including Huawei Technologies Co and Xiaomi Corp have all geared up efforts in developing IoT for new growth engines.

Xiaomi, for instance, has become a consumer IoT titan from a smartphone maker. By end of last year, it had connected over 132 million smart devices excluding mobile phones and laptops.

 

Duan Yaohui, Oppo's vice-president, delivers a speech at the Oppo Developers Conference in Beijing. CHINA DAILY

 

 

 

 

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2019-12-22 14:19:23
<![CDATA[BRI lays 'egg road' to Madagascan prosperity]]> http://www.chinadaily.com.cn/kindle/2019-12/21/content_37529948.htm ANTANANARIVO-"Still broken eggs, fortunately not many this time," grumbled Anjaraniainina Randriamananjara, who got off his truck to check the condition of thousands of eggs packed in the cargo area before he arrived at his destination in Antananarivo, Madagascar's capital.

He had just finished driving for more than an hour on a bumpy and muddy road, which kept him on tenterhooks. Transporting eggs to Antananarivo from his farm in Mahazaza, a town some 30 km north of the capital, is a daily headache for the 26-year-old poultry farmer.

More than 10 percent of Randriamananjara's eggs are broken every day due to jolts while traveling on the poorly maintained road, he said.

Safidy Andriamisaina, another poultry farmer in Mahazaza, said eggs were always sold at half price when damaged, and vehicles have to be repaired frequently due to the bad conditions of the area's roads.

In Mahazaza and the neighboring towns of Mahitsy and Ampanotokana, roughly 30,000 residents rely on the route for their daily travels. Among them, 80 percent are involved in poultry farming, and supply 40 percent of the eggs consumed in Madagascar.

They saw the light when news came two years ago that the Chinese government would provide funding and expertise to build a new road for egg producers in the suburb.

The 19.25-km-long "egg road "consists of a main axis and five branches, and is expected to secure the transportation of 150,000 eggs per day, according to official data.

China's Jiangxi Zhongmei Engineering Construction Company kicked off the project in October 2018. The road is scheduled to be completed in three years, as a five-month-long rainy season every year in the country hinders such projects.

"We hope that the renovation work will be completed as soon as possible," Randriamananjara said.

Project manager Lei Dongsheng said that thanks to the help of local residents, construction has been running smoothly since March, and"70 percent of the earthworks and bridge construction will be completed by the end of the year."

After completion, traveling the 7 km between Mahazaza and Mahitsy will only take 15 minutes, compared to the current journey of 90 minutes. This drastically shorter travel time will bring many new benefits, residents said, citing an example that the sick will be able to reach hospitals a lot sooner.

The arrival of Chinese workers has brought jubilation to local people, said Louis Firmin Rakotomenjanahary, mayor of Mahazaza.

Madagascar's rainy season, which runs from November to April each year, makes roads extremely slippery and causes serious traffic problems. Rakotomenjanahary recalled that when vehicles at times broke down in the mud recently, "it was the Chinese who brought out their equipment to offer help and solutions."

The project has enabled many young people to find jobs as stonemasons, porters, security guards, and truck drivers, among others, he said.

Zhongmei, pledging to recruit about 300 local employees, has already made visible changes to the daily lives of residents.

"My life has changed since I've been with this company, and my children's school fees are paid on time. We have savings at home now," said Michel Randrianasolo, a construction manager at the Chinese company.

The road project demonstrated the efforts made to integrate Madagascar into the China-proposed Belt and Road Initiative, which aims to build trade and infrastructure networks, connecting Asia with Europe and Africa, both on and beyond the ancient Silk Road routes.

So far, the BRI has become a platform of opportunities and a road to prosperity for all its participants.

Egg producer Randriamananjara said locals were grateful to the Chinese people who offered help to them.

"Chinese like to communicate with us. Many kids here can speak some Chinese," he said with an engaging smile.

 

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2019-12-21 11:03:42
<![CDATA[Qatar Airways lands in Daxing to boost transfers]]> http://www.chinadaily.com.cn/kindle/2019-12/21/content_37529945.htm Qatar Airways said it will move to the new Beijing Daxing International Airport in the summer of next year.

Qatar's national carrier also said it is actively expanding flights to more Chinese cities as it has seen strong travel demand from China.

The carrier said the brand-new gigantic airport would bring more convenience to passengers. It hopes to have deeper cooperation with its partner, the Guangzhou-based State-owned China Southern Airlines, which will gradually move all of its flights to Daxing airport and will command a 40-percent share at the new airport.

Qatar Airways said the move to Daxing airport would not have an impact on its flight ticket prices, as most of its passengers are transfer passengers.

Among those who fly to Doha, capital of Qatar, 90 percent of them will transfer flights and then fly to their final destinations. China has been an important transfer passenger source, and the number of transfer passengers has been growing steadily, the carrier said.

In Qatar Airways' global network, China has the third-largest number of flights, just behind India and the United States. Every week, the carrier operates 45 flights connecting seven Chinese cities: Beijing, Shanghai, Guangzhou, Chengdu, Hangzhou, Chongqing and Hong Kong with its Middle Eastern hub in Doha.

"Chinese consumers play an important role in today's global tourism market. China has been a critical market for us," said Joshua Law, vice-president of Qatar Airways' North Asia operations.

"We are confident about future growth potential, and plan to launch more flights to China and add frequencies to the current flights. We are also open to cooperate with more Chinese partners in the future."

Qatar has been providing visa-free policies for Chinese citizens. This year, the flights connecting Hangzhou, Zhejiang province, and Doha have changed to the B777-300ER aircraft model from the A330 model. The B777-300ER has higher seating capacity.

This year, the airline has launched several new flights from Doha to Lisbon, Portugal; Malta; Rabat, Morocco; Davao, the Philippines; Izmir, Turkey; Mogadishu, Somalia; Langkawi, Malaysia; and Gaborone, Botswana. By 2020, Luanda in Angola, and Osaka in Japan will be added to the airline's growing network.

"Many of the new flights we have launched would help the growth of the economies involved in the Belt and Road Initiative, and provide more convenience for passengers from those countries and regions and the people who go there. We also expect to embrace more business growth opportunities," Law said.

On the other hand, at a time when many domestic carriers have reduced their investment in in-flight catering services, Qatar Airways has elevated the flying experience of its economy-class passengers.

It has launched new dining services, including healthy seasonal ingredients and localized menus on the flights to and from China, in addition to other global international long-haul flights with a duration of over five hours. The carrier said it has recognized the emerging trend of travelers being more aware of their dietary needs and interested in healthier food options.

The new meal services in the economy class increase portion sizes by 20 percent for appetizers, 25 percent for the main course and 50 percent for desserts. In addition, some foods and beverages such as Godiva chocolate, sparkling wine and cocktails, that were served only in the business class and the first class, have been extended to the economy class.

Foreign airlines are being encouraged to launch international flights at the new Daxing airport, with an option to operate at Beijing's two airports, according to the Civil Aviation Administration of China.

So far, British Airways, Finnair and Polish Airlines are some of the prominent names that figure among the carriers that have moved their operations to the Daxing airport.

US carrier Delta Air Lines said it would move to the new airport in March next year.

 

A Qatar Airways air hostess serves a passenger on a flight. CHINA DAILY

 

 

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2019-12-21 11:03:42
<![CDATA[Liquor makers on a high as profits heady]]> http://www.chinadaily.com.cn/kindle/2019-12/21/content_37529935.htm Fat profits are encouraging distillers of baijiu, a Chinese white spirit distilled from fermented sorghum, to continue their investments in the sector, ahead of the busy sales season spanning Christmas and the Chinese Spring Festival in the second half of January.

Baijiu is the most competitive consumer goods in China. This year, listed companies that make baijiu are expected to achieve total sales revenues of more than 220 billion yuan ($31.4 billion), according to Guotai Junan Securities.

Kweichow Moutai Co Ltd, an iconic baijiu distiller from Maotai town in Southwest China's Guizhou province, said it will establish its own e-commerce platform next year and further promote overseas sales of its products.

"We will speed up the research and development of new products based on market demand, and optimize the market layout and our distribution networks," said Li Baofang, president of Kweichow Moutai.

"Next year, we will provide more specific sales guidelines for our dealers nationwide, and continue to reform our sales and marketing system. The company will be committed to regulating and standardizing the market environment effectively."

Li said Moutai products are in short supply in the overseas market this year, and the demand-supply gap is widening, suggesting that Moutai has become very popular abroad.

This year, Moutai sales started in overseas markets such as Chile, Argentina, Peru, Tanzania, Kenya and Ethiopia. In addition, sales continued in major overseas markets such as the United States, Russia, Germany, Italy and Australia.

Next year, Kweichow Moutai would further expand its overseas footprint, especially in the countries and regions involved in the Belt and Road Initiative, the company said. A promotional push is likely in Dubai. To brighten its brand image, it also plans sponsorship of corporate events at home and overseas, like the China Daily-hosted Vision China series of public talks and discussions.

Moutai products, which have often been in tight supply because of strong demand, have sparked speculative transactions in the China market. On some e-commerce platforms, buyers had to reserve products in advance and complete purchases as soon as the products became available, to avoid a potential out-of-stock situation.

The Shanghai-listed company's market capitalization exceeded 1.4 trillion yuan this year. In June, it became the first stock to see its share price exceed 1,000 yuan after 27 years. It also became the most expensive stock in the A-share market, boosted by continuously growing consumer demand for the company's products and good corporate earnings.

"Baijiu embodies Chinese culture in a sense. It boasts distinguished core competitiveness. Foreign companies are hard to compete with Chinese liquor makers in this regard," said Zi Meng, managing director of Guotai Junan Securities.

"The net profit margin of high-end baijiu makers can exceed 40 percent, higher than the 35-percent gross profit margin of most consumer products. In the future, baijiu distillers may grow further using their strong brand image, popular products and efficient sales channels."

Meanwhile, a number of major middle-end and high-end baijiu distillers in China have raised their product prices. Earlier this year, higher-end spirit makers such as Sichuan-based Wuliangye Yibin Co Ltd and Luzhou Laojiao Group raised their prices.

In early November, baijiu maker Sichuan-based Shuijingfang Liquor Industry Co Ltd announced it would raise the prices of four of its higher-end products. The price of one variety of 500-ml baijiu bottle rose 60 yuan to 1,039 yuan. For three other varieties, prices rose 20 yuan per bottle, according to the company.

"With the hot sales season of Spring Festival fast approaching, many people will buy baijiu for family and business banquets. So, some white spirit makers aim to burnish their brand image by raising prices," said Cai Xuefei, a white spirit industry analyst.

Zi of Guotai Junan Securities said there is a growing trend of people investing in high-end liquors to compile vast personal collections. Liquor bottles as collectibles has become a fad. High-income consumers are not price-sensitive, leading to a continuous rise in prices of high-end baijiu products.

On the other hand, sales of wines, a newcomer in the array of alcoholic drinks in China, have been surging in the past few years, prompted by a growing demand from young consumers who would like to pursue healthy and trendy lifestyles.

China has eight major wine producing areas, including Xinjiang Uygur autonomous region, Ningxia Hui autonomous region and Gansu province. Red grape varieties make up about 80 percent of the total wine market in China, and white wines take the rest.

In the past two years, both the number of online wine buyers and sales grew at an annual rate of 40 percent. Supermarkets and liquor stores still remain the major distribution channels for wines, according to data from consultancy Frost& Sullivan.

Wine consumers aged between 18 and 35 accounted for more than 80 percent of the total, and the proportion of youngsters joining the wine consumption group has been rising, it found.

In the past five years, wine sales in China grew from 66.5 billion yuan to 90.22 billion yuan, at a compound annual growth rate of 7.9 percent, buoyed by the increasing recognition of wines by Chinese consumers. In the next five years, with the wine-drinking culture expected to become even more popular, sales will continue to grow steadily, said Frost& Sullivan.

"Last year, the global average consumption ratio of spirits and wines was equal, while in China, the proportion was about 7:1. The annual consumption volume of wines per capita in China is less than 1.5 liters, while the corresponding number in the United States has exceeded 10 liters," said Neil Wang, president of Frost & Sullivan's China unit.

To tap the significant growth potential, especially among young consumers, more and more domestic wine producers are focusing on adjusting their product structures. They have introduced more wine varieties in smaller (200 ml or 375 ml) bottles.

"Besides, with demand for high-quality and differentiated products growing, the advantages of local and distinctive small-scale production areas have become more prominent. Wines made from small-scale and niche production areas are gradually recognized and favored by an increasing number of Chinese consumers," Wang said.

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JIN DING/MA XUEJING/CHINA DAILY

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2019-12-21 11:03:42
<![CDATA[Innovating materials to serve society]]> http://www.chinadaily.com.cn/kindle/2019-12/21/content_37529934.htm Alexa Dembek accepted the job of chief technology and sustainability officer at DuPont because she loves chemistry and was in search of a better life.

So, a senior management job with an industrial group seemed appropriate, more so because it involved a lot of work relating to China, the world's second-largest economy that has been switching its emphasis from exports to consumption, supported by high-end technologies and services in various fields.

A DuPont veteran with 28 years of service under her belt, Dembek said that the technology-strong material and ingredients manufacturer will focus on several businesses, including transportation, safety, electronics, water, health and wellness to develop the Chinese market in the long run.

"We will focus on the key trends impacting the society and how our innovative technologies and materials can best help meet those needs," she said.

These trends, she said, also include advancing smart cities and devices, key components for autonomous vehicles, industrial protection materials, providing clean water and healthy food, improving energy efficiency and reducing waste.

"DuPont is thrilled about the fact that China has been encouraging domestic companies to create more high added-value in their product lines, as well as promote sustainable development," said Dembek, who is also the group's senior vice-president, noting the nation's demand for high-end materials therefore will remain attractive for global players.

To better understand local customers' needs and challenges, the Delaware-headquartered company expanded its Shanghai Innovation Center this year. Established in 2014, this innovation facility is a communication and demonstration platform for use with local and global clients, scholars and institutions.

After announcing a significant investment in a new manufacturing hub in Zhangjiagang, Jiangsu province, to support its transportation and industrial businesses in 2018, the company also expanded the manufacturing capacity of its transportation and industrial facility in Shenzhen, Guangdong province, this year.

After entering China and establishing its first office in Beijing in 1984, DuPont grew over the years, and now has around 3,500 employees, two research and development centers and one innovation center across China. Its businesses span nutrition and biosciences to transportation and advanced polymers.

Dembek stressed that China has always been an important part of the company's global strategy. The country's 40 years of reform and opening-up is a process of continuous improvement for the business environment, regulation of business rules and strengthening of business governance.

"We have discovered notable changes in the consumption and manufacturing sectors with evolving patterns and steady expansion," said Dembek.

For instance, more than 400 million of China's population are in middle-income groups, seeking a broader range of dietary options and showing a growing concern for the quality and safety of food, domestic appliances and daily items.

She said the company is benefiting from China's offer of favorable conditions to multinational companies and this in turn enables global businesses to envision future development in a flourishing Chinese market with confidence, working in partnerships and seeking opportunities across the value chain.

Eager to seize more market share and promote brand awareness in China, DuPont showcased a portfolio of products focused on four key themes: connectivity and mobility, healthy living, urbanization and safety, and environmental protection during the second China International Import Expo held in Shanghai in November.

Joining DuPont as a research chemist and a technical manager, and having worked at various posts in areas such as supply chain, operations, sales and marketing, Dembek said that firms don't innovate, their people do. She believes one of the practical ways to motivate people is to make sure they are engaged and excited about the work they are doing.

"At DuPont, we encourage continuous, lifelong learning among our employees and strive to create an environment where employees are empowered to take control of their jobs," she said.

Zhao Ying, a researcher at the Beijing-based Institute of Industrial Economics, which is part of the Chinese Academy of Social Sciences, said demand for high-end manufacturing in China is among the world's fastest-growing. Many domestic companies are seeking new materials and solutions to get products to market faster with decent prices, to improve their asset utilization and cut associated risks.

While large companies are making notable strides in terms of digital transformation, many global technology and material providers have also begun to allocate financial resources to innovation and marketing channel expansion for small and medium-sized enterprises. They are keen to restore their core strength, as well as forming new cross-industry partnerships with other players, he said.

Dembek leads business and innovation strategy alignment to make the most effective portfolio choices for DuPont. Her goal is to make every investment dollar count. Besides, she strives to quickly drive innovation to market. Dembek also serves on the dean's advisory board for the Eberly College of Science at Pennsylvania State University.

 

A DuPont employee (middle) introduces the company's products to a visitor during the second China International Import Expo held in Shanghai in November. CHINA DAILY

 

 

Alexa Dembek, chief technology and sustainability officer of DuPont

 

 

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2019-12-21 11:03:42
<![CDATA[Rise of Spanish cured ham proof of consumption upgrade in China]]> http://www.chinadaily.com.cn/kindle/2019-12/21/content_37529930.htm When I went traveling in Spain more than three years ago, every morning, the buffets of different hotels in different cities all offered various kinds of cured ham for breakfast. I loved the salty taste of cured ham, while some of my friends said they were not used to eating it everyday, especially for breakfast.

Back then, cured ham was a common food in Spain but an exotic and niche product in China. I couldn't imagine it would go on to become popular and widely recognized among Chinese meat lovers.

Well, 2019 marked the year of the pig according to the Chinese zodiac. Eating more pork, already a staple in China, has become something of a habit for consumers.

Chinese consumers' huge demand for Spanish gourmet cured ham has encouraged the European country to further increase production of the meat product, industry reports found.

Production of pork peaked in Spain this year, partly driven by the significant demand from the China market. In the past five years, output grew by an annual rate of 20 percent, according to Spanish newspaper El Confidencial.

By the end of last year, Spanish cured ham makers received green signal to export more varieties of pork such as ham with bone to China, and thus further increased their exports to China.

Pork topped the list of Spain's agricultural export items to China. Spain has also become one of the largest sources of imported pork in China, according to the Ministry of Commerce.

African swine fever earlier had resulted in a shortage of at least 20 percent of China's total pork output this year, and China looks to further boost pork imports.

Despite being relatively new in China, cured ham products carry expensive price tags. For instance, a 70-gram cured ham pack sells for 389 yuan ($55.6) on Tmall, a major e-commerce platform from Alibaba Group. Yet, it has been quite well received among Chinese consumers with sophisticated tastes and willingness to try different foreign foods.

Spanish producers of cured ham attended the Shanghai import expo for two consecutive years now, which has helped them to expand sales channels, fueled by the strong consumption power of the Chinese people and their pursuit of high-quality and healthy lifestyle.

Cured ham appears on the menus of many high-end restaurants and Spanish restaurants in metropolises like Beijing and Shanghai. In addition, it can be seen on the shelves of supermarkets and major e-commerce platforms. I'd even say it has become as distinguished as other imported foods like varieties of cheese and wines.

 

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2019-12-21 11:03:42
<![CDATA[Samsung adjusts investments in nation]]> http://www.chinadaily.com.cn/kindle/2019-12/20/content_37529715.htm Samsung Electronics Co Ltd is making a strategic adjustment in China and beefing up investment in 5G related technologies and equipment, as the South Korean technology giant is reportedly planning to close a high density interconnect (HDI) production unit in Kunshan, Jiangsu province, and invest an additional $8 billion into its memory chip plant in Xi'an, Shaanxi province.

Samsung Electro-Mechanics Co, an electronic components maker affiliated with Samsung Electronics, said it will shut down one of its Chinese units that produces HDI, a type of printed circuit board used in electronic devices including smartphones and laptops, due to low profitability, a report by Yonhap news agency said.

Samsung Electro-Mechanics said Kunshan Samsung Electro-Mechanics Co in Jiangsu will halt production and sales, adding it plans to sell assets of the Chinese unit, the report noted.

Samsung Electronics did not respond to requests for comment on the closure of the HDI production unit.

The South Korean tech heavyweight will invest an additional $8 billion into its memory chip plant in Xi'an, Shaanxi province, Xi'an Daily reported.

The company has invested $7 billion in the second phase of its chip plant in Xi'an, which will primarily produce advanced flash memory chips and is expected to begin mass production in the first quarter of 2020.

The first phase of Samsung's plant in the Xi'an Hi-Tech Industries Development Zone went into operation in May 2014, with a total investment of $10 billion.

Despite being the world's biggest smartphone maker, Samsung's sales are close to negligible in China.

Statistics from market consultancy Strategy Analytics showed that in the second quarter of this year, Samsung's sales accounted for 0.7 percent of the Chinese market. The company had a market share of about 20 percent in China around 2013.

Hwang Deuk-Kyu, president of Samsung China, said during the second China International Import Expo that the company always attaches great importance to investment, cooperation and exchanges in China, especially in the 5G era.

"The reason for Samsung closing its HDI manufacturing factory lies in its poor business performance in the Chinese market amid mounting competition from local rivals," said James Yan, research director at Counterpoint Technology Market Research.

Yan added the company also entrusted its smartphones to Chinese factories for production, using the original design manufacturer or ODM form to save costs.

"The flash memory chip market is expected to pick up next year, along with the rising demand, so it is reasonable that Samsung steps up its production of such chips," said Huang Yangqi, an analyst at the research institute of integrated circuits under CCID Consulting, a leading Chinese think tank.

Huang added the expanded production capacities will help shore up Samsung's market share and leading position in the NAND flash memory chips sector, while noting the Xi'an plant will further drive the development of the downstream storage industry in the domestic market.

Samsung is currently the world's leading manufacturer of NAND flash memory chips for smartphones, computers and many other devices. 

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2019-12-20 00:00:00
<![CDATA[China's pharma market to gain 30% global share]]> http://www.chinadaily.com.cn/kindle/2019-12/20/content_37529744.htm China's pharmaceutical market has been constantly growing in recent years, and is estimated to reach $161.8 billion by 2023, taking a 30 percent share of the global market, said an industry expert.

Fu Xudong, senior vice-president of global pharmaceutical giant Bristol-Myers Squibb, said during the recently concluded World Innovators Meet 2019 held by Equal Ocean, that China has become the world's second-largest pharmaceutical market, following the United States. In 2018, its pharmaceutical market totaled $127.9 billion, growing 2.4 percent on a year-on-year basis. The market is expected to maintain the growth momentum with an average annual growth rate of 5 percent in the coming five years.

"This can be attributed to the improvement of treatment concepts, the optimization of medical measures, the acceleration of new drug access, the improvement of medical service quality, and the dynamic adjustment of medical insurance access," he said.

China's new drug development has begun to catch up in the fields of tumors, diabetes, and antibiotics, Fu added.

In recent years, the Chinese government has introduced a series of policies to narrow the pharmaceutical innovation gap between China and other leading countries. The policies include developing multinational clinical centers, sharing clinical data globally, accelerating the approval process of special medicine, and enhancing the protection of clinical data.

Industry data showed that after the acceleration of innovative drug access, the drug approval speed increased by 62 percent. In terms of biologicals, newly approved biologicals in 2018 surged by 450 percent compared to that of 2017. The process from material submission to final approval now only takes six months.

And the capital market also favored the sector. A recent report from Equal Ocean showed that in 2018, China's medical startups attracted a total investment of $2.7 billion, taking up 7.14 percent of global investment. The figure doubled to $4.5 billion in 2019, accounting for 11.61 percent of global investment.

"China's traditional drug research and development pattern, which was dominated by generic drugs, is undergoing transformation, and new drug development has ushered in new opportunities. From the perspective of supply and demand, the pharmaceutical industry will continue to be one of the main driving forces for investment in China's primary market," said the report.

In recent years, China's demand in the pharmaceutical market has boomed. According to data issued by industry research website chinabaogao.com, in 2018, the terminal market volume of China's pharmaceutical market reached 1.7 trillion yuan ($242.9 billion), 6.3 percent higher than the same period in 2017.

"In the future, demand, policy, and capital will serve as the troika of China's pharmaceutical development," Fu from Bristol-Myers Squibb said.

On Nov 28, the National Healthcare Security Administration announced a total of 70 new drugs that will be included in China's national medical insurance catalog, with their prices slashed by 60.7 percent on average. During the negotiation process, for the first time, there was a situation where Chinese and foreign companies competed on the same stage for innovative drugs in multiple therapeutic areas, such as anti-HIV and anti-hepatitis C.

Market insiders said that because of the rapid rise of local innovative drugs, the monopoly position of new drugs imported exclusively from overseas in the past had been challenged.

Vivian Chen, vice-president of Corporate Affairs at Ascletis Pharma Inc, said that to transform from generic drug-dominated to innovative drug-driven pharmaceutical market, Chinese innovative drug companies should make efforts in the areas of product, capital, talent and policy.

"The implementation of the value-based strategic purchase of the national medical insurance program is the future trend of the pharmaceutical industry. The clinical research of new drugs must not only take into account market demands, the policy direction of market access should also be considered," she said.

  

 

 

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2019-12-20 00:00:00
<![CDATA[Marketers to leverage 5G for brands]]> http://www.chinadaily.com.cn/kindle/2019-12/20/content_37529732.htm As the superfast 5G communications network is set for scaled commercialization next year, marketers are looking to leverage the technology to revolutionize how brands engage with customers.

The technological leap people will see with 5G lies in the kind of connectivity it brings, according to Gordon Domlija, Asia president and China CEO of media agency Wavemaker.

"I would say in the coming year that 5G changes how we work with manufacturers to create communications and engagement opportunities, which are relevant, targeted, and more beneficial to consumers," said Domlija, whose company is in charge of media purchasing for 120 clients in China.

In the past two years, he has witnessed a "democratization" of digital channels where brands stand to allocate their resources. While the likes of Baidu, Alibaba and Tencent-the so-called tech trinity in the Chinese internet lexicon-used to take the lion's share of online traffic, today roughly 30 to 40 percent of digital engagement is happening outside of the top five players.

Domlija predicted that 5G, due to its high connectivity and low latency, is poised to disrupt the current interactive mode and could potentially even make some of the currently trending channels obsolete.

Paul Cha, head of Media and Digital at Kantar China, agreed that the marketing and communications industry will be one of the key beneficiaries of the 5G era, enabling far greater capabilities to reach and engage with consumers.

In a report predicting media trends in 2020, Kantar identified three key factors poised to bring changes. Increased connectivity means the network can handle far more devices providing the opportunity for anything to be connected to the internet, and lower latency indicates that data transfers will be almost instantaneous, a prerequisite for the takeoff for the likes of autonomous cars.

"Finally, download speeds up to 20 times higher will facilitate advancements in data-heavy technologies such as virtual reality," Cha noted.

These changes will have major implications for "on the go" media consumption, with brands equipping themselves with the ability to connect with customers at any time, in any location, using richer content.

"The 5G era will support the internet of things devices such as smart product packaging, as well as connected technologies like sportswear and facilitate hyper-personalized brand experiences," he said.

The advent of 5G and other technological leaps like artificial intelligence will exert a bigger impact on smart marketing through a more thorough and stratified analysis of user preferences based on algorithms that decode customer activities, said Maggie Wang, president of data marketing technology firm AdMaster.

Based on a survey of 221 brands spanning more than 20 industries, AdMaster and its sister company Miaozhen Systems found in a recent study that digital marketing spending in China is forecast to surge 14 percent year-on-year in 2020.

That is 6 percentage points lower than last year and marks the first spending slip in three years since annual tracking began in 2017.

To be more specific, only 18 percent of surveyed marketers said they plan to increase their budget by 30 percent and more in the coming year, a staggering 11 percentage points lower than a year ago. Almost 60 percent reported their digital marketing budget will grow less than 10 percent.

"Among the majority of the companies we've spoken to, digital marketing budgets take up somewhere between 30 percent and 60 percent of the entire marketing expenditure, which already represents a considerable proportion," Wang said.

Three quarters of the newly allocated marketing budgets will go to mobile devices, with only 9 percent going to personal computers.

"In the 5G era, the distinction between online and offline will become increasingly obsolete, making omnichannel and multimedia marketing (in the forms of video) a business necessity," she said.

Rosy prospects come with challenges. According to Cha, more devices mean there will be even more fragmented datasets to be integrated and consolidated, to gain a holistic consumer view for marketers.

"Additionally, walled gardens will need to connect with other platforms to achieve a complete picture of the consumer, and this is no small task," he noted.

Domlija from Wavemaker also suggested brands should avoid the temptation of being purely data-driven, given the changing mindsets of the younger generation of consumers who uphold brand values.

"Most big Chinese brands and local companies are defining who they are, what their purposes are, and giving something back to the customers ... and that will create much more brand value."

 

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2019-12-20 00:00:00
<![CDATA[Zhuhai, Macao work together for diversified development]]> http://www.chinadaily.com.cn/kindle/2019-12/20/content_37529735.htm Beijing-based Pachira Information Technology, a leading artificial intelligence technology developer, launched a new investment in the Hengqin New Area of Zhuhai, South China's Guangdong province, earlier this month in support of the AI industry in the Guangdong-Hong Kong-Macao Greater Bay Area.

Founded in 2009 by Kouk Tou Ho from Macao, Pachira Information Technology is a pioneer in speech recognition, natural language processing and voiceprint recognition, and is a service provider for many Fortune Global 500 companies.

The company said it will continue investing in AI, big data, autonomous driving and smart city construction to support the development of Zhuhai's smart sector in the upcoming years.

Ho and his team first arrived in coastal Zhuhai in 2018. Their AI project, focused on the development of core components on smart vehicles, won first prize at the inaugural China (Hengqin) Scientific and Technological Entrepreneurship Competition. Since then, Ho has established close business ties with Zhuhai.

"We gained strong support from the Macao, Zhuhai and Hengqin governments in terms of registration, policy consulting, business negotiation and relevant business arrangements. They bolstered us in business expansion, promotion, strategic partnership, and fund raising and investment," Ho said. "All those strengthened our resolve to settle."

Separated from Macao by just a narrow stretch of water, Hengqin has become a gathering hub for young people from Macao, who are keen on seizing opportunities in the Bay Area.

At a news conference on Monday on Hengqin's development in the past decade, Yang Chuan, head of the administrative committee of the Hengqin New Area, said that 2,157 businesses from Macao have settled in Hengqin with their investments totaling $18.83 billion.

As of Monday, there were 745 newly registered businesses run by people from Macao in the Hengqin New Area this year, signaling a rapid inflow of investment from the special administrative region.

Zhuhai, one of the first special economic zones in China and the only city on the Chinese mainland with bridge links to both Hong Kong and Macao, has long helped Macao moderately diversify its industrial development and has become a preferred destination for Macao businesses.

There are 4,111 businesses funded by Macao investors in Zhuhai, with total investment worth $28 billion, and a total of 943 businesses from Zhuhai engaged in multiple industries in Macao.

Zhuhai and Macao signed another batch of agreements for 20 cooperative projects worth more than 19.8 billion yuan ($2.81 billion) on Oct 21 at the Macao-Zhuhai Entrepreneur Summit 2019. They cover areas such as creative-cultural tourism, finance, cross-border commerce and trade, and healthcare.

A demonstration zone focused on promoting financial cooperation between Guangdong province and Macao was unveiled at the event.

"The Zhuhai special economic zone was founded to support Macao's development, and the Hengqin New Area is thriving during the expanding partnership between Zhuhai and Macao," noted Guo Yonghang, Party secretary of Zhuhai, during a press event on Dec 10 in the celebration of the 20th anniversary of Macao's return to the Chinese motherland.

"Macao's matter is Zhuhai's matter," he said. "Zhuhai regards it as the No 1 project to help Macao moderately diversify its industrial development in the city's involvement in the Bay Area."

Looking ahead, some demonstration projects between Zhuhai and Macao that cover technological innovation, finance, healthcare, cross-border trade, culture, tourism and exhibition as well as other professional services will be carried out to jointly build up a globally competitive modern industrial system for both Macao and Zhuhai, the official said.

Zhuhai will work on its urban planning in such a way as to leave sufficient space for the diversified development of Macao, be it urban development or industrial development.

In 2019, Zhuhai implemented a series of measures including removal of some limitations on legal services, cross-border finance, practice of doctors from Macao and access for Macao people to the mainland's pension system, and enrollment of Macao and Hong Kong kids at schools on the Chinese mainland.

New rules for the qualification of professionals in Macao construction companies were also released this year.

"Zhuhai has a strong industrial foundation, preferential government policies and enough physical development space, while Macao has capital resources, innovation results and global platforms. The two can be complementary to each other," said Wang Fuqiang, director of the department of industrial planning at the China Center for International Economic Exchanges.

Wang added that Macao has the potential to establish partnerships with Portuguese-speaking and Spanish-speaking countries and regions. The two can explore international markets together and attract more technologies to Zhuhai to build an innovation hub in the Bay Area.

 

The Hengqin New Area in Zhuhai is being developed as a model zone for Guangdong-Macao cooperation. CHINA DAILY

 

 

 

]]> 2019-12-20 00:00:00 <![CDATA[Luxury hotel with a local flavor opens its doors in Changchun]]> http://www.chinadaily.com.cn/kindle/2019-12/20/content_37529734.htm The first Wanda Vista hotel in Changchun, Northeast China's Jilin province, officially opens on Friday to provide quality service with oriental charm and local characteristics for customers.

Wanda Vista is the luxury brand of Wanda Hotels and Resorts. Located on Hongqi Street, Chaoyang district in Changchun, Wanda Vista Changchun's decor integrates local film culture and the industrial elements, designed by the Wanda Hotel Design and Research Institute.

The institute draws upon the profound industry experience of the proprietor, a high-level internationalized design team and a full-range design philosophy unveiled in 2012.

According to the designers, the design of the hotel lobby was inspired by Tianchi Lake, or Heaven Lake, on Changbai Mountain in Jilin province. One of the most famous scenic attractions in Jilin, Tianchi is a crater lake on the border between China and North Korea. It lies within a caldera on top of the volcanic Changbai Mountain.

In the hotel lobby, there is a huge gold leaf lacquer painting showcasing the spectacle of Tianchi Lake. The crystal chandelier that lights the lobby was inspired by a kaffir lily, the flower of Changchun city. There are also many bronze sculptures and mural paintings.

The hotel offers 235 guest rooms and suites, including 45 luxury apartments. Guests can enjoy delicious food and drink in two elegant restaurants and a stylish lounge in the hotel, where chefs express the art of gourmet dining with exquisite skill and perfect dishes, and convey the delicacy of the four seasons.

Covering more than 2,000 square meters, the meeting venues in the hotel will satisfy all guests' different demands. It has a 958 sq m pillar-free grand banquet hall and five multifunctional conference rooms. The hotel is also equipped with a 90 sq m LED display screen.

Wanda Vista Changchun is equipped for hosting new vehicle launches, weddings and other events, providing one-stop event management service for customers.

On the sixth floor, guests can enjoy wine, snacks, desserts and afternoon tea from around the world at the contemporary bar. The hotel's Shui Spa offers rejuvenating treatment and therapy from ancient India, the West and traditional Chinese medicine.

There are also KTV facilities on the same floor, with three separate rooms featuring modern audio equipment and exclusive musicians.

Wanda Hotels and Resorts has three core business sections: hotel design, hotel construction and hotel management. Currently, the group has six hotel brands: the ultra-luxury hotel brand Wanda Reign, the luxury hotel brand Wanda Vista, the premium hotel brand Wanda Realm, the select-service hotel brand Wanda Jin, the premium mid-scale brand Wanda Moments and the cooperative brand Wanda Allegroitalia. The company manages 79 hotels in 60 cities around the world.

With its combination of international influence and competitive overseas hotel management, Wanda Hotels and Resorts has a unique position in the industry. 

 

 

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2019-12-20 00:00:00
<![CDATA[Tiffany opens biggest Asian store in Shanghai]]> http://www.chinadaily.com.cn/kindle/2019-12/20/content_37529743.htm Tiffany & Co unveiled on Thursday its largest Asian flagship store in Shanghai, vowing to bring the full assortment of its jewelry and an experience-driven shopping venue to bolster growth in China, which is the firm's second largest market across the globe.

Located in the city's downtown Huaihai Road, the renovated two-story, street-facing shop almost doubles in space compared to its previous footprint.

It also introduced the first Tiffany Blue Box Cafe in the Chinese mainland, offering guests all-day menus while being immersed in the world of gemstones.

The idea is to offer a one-stop shop for a permanent lineup, limited-edition items, as well as an experience-led journey to Chinese guests closer to home, said the company's CEO Alessandro Bogliolo.

"You see higher spending in China than the rest of the world," Bogliolo told China Daily on the sidelines of the grand opening. "This is because the young generation customers in China-the millennials-are knowledgeable about jewelry and value it as a means of self-expression."

In its latest earnings report released earlier this month, the New York-based jewelry brand reported "strong, double-digit growth" for the quarter which ended in October. Bogliolo confirmed the robust trajectory has been sustained for the past several years.

Bogliolo identified China's rising young professionals, rather than the super-rich, as the backbone fueling exponential growth.

"And they have shifted from buying for the brand per se to delving into the intrinsic value through indigenous researches and the consequent deeper understanding of its propositions," he noted.

Chinese consumers at home and abroad spent 770 billion yuan ($109.9 billion) on luxury items, equivalent to one-third of the global spend last year, according to McKinsey& Co.

The consultancy predicted that their outlay is set to almost double to 1.2 trillion yuan by 2025, when 40 percent of luxury purchases will be conducted by Chinese.

"The China luxury (market) remains driven by the rising upper-middle-income group who desire to premiumize and see luxury goods as 'social capital' to stand out," said Daniel Zipser, a senior partner at McKinsey.

He noticed a rebound in purchasing luxury at home in the past two years due to a combination of exchange rates and relevant tax reforms the Chinese government introduced to spur consumption.

To fuel business acceleration, Tiffany launched its own Chinese language e-commerce platform several months ago to expand the reach of clients on top of its 34 physical stores on the Chinese mainland.

"The objective is to provide the full Tiffany experience rather than having 100 smaller stores where you have fewer assortments, smaller sizes and less experience," Bogliolo said. "So I prefer to keep the number (of stores) as it is... at the same time as having the website."

Zipser said the purpose of a flagship store is not just to drive domestic sales but more importantly as a showroom for brand building and an avenue to forge ties with customers.

"So brands should consider working with China's digital platforms to better engage with consumers and deepen understanding of their attitudes and arising trends," Zipser said.

 

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2019-12-20 00:00:00
<![CDATA[Chartered flights make Chilean cherries more accessible in China]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529553.htm ZHENGZHOU-Chartered flights carrying Chilean cherries are arriving every week at the Central China air hub of Zhengzhou, capital of Henan province, from where the fruits are distributed to Beijing, Shanghai, Guangzhou and other second-tier cities.

Chilean cherries used to take regular passenger and cargo flights with transits to reach China, spending more than 100 hours on a single trip. The high logistics cost made the exotic fruit expensive in the Chinese market. With chartered flights, air transport only takes 30 hours.

The logistics efficiency has been further boosted by the entry port of Zhengzhou, which offers fast track customs clearance services for fruit imports, allowing Chinese customers access to fresh Chilean cherries, said Huang Xianhua, deputy secretary-general of the fruit branch of the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA).

"Our company tested two chartered flights in 2014, and now the number of chartered flights has reached 140," said Huang, who is also the general manager of the Shanghai Oheng Import and Export Co Ltd.

The Fushun Fruit SpA has been exporting Chilean cherries to China for three years. Alonso Xu, general manager of the company, said the firm's total export volume is expected to reach 1,000 metric tons this year.

He attributed the swift rise in trade to the China-Chile Free Trade Agreement, which came into effect in 2006. An upgraded version of the agreement which became effective in March this year granted Chilean cherries zero-tariff market access to China.

At a fruit stall in downtown Zhengzhou, Chilean cherries are priced at 40 yuan ($5.7) per kilo, compared to more than 200 yuan per kilo two years ago.

Winter in China is summer in Chile.

On a cherry plantation owned by Nativa Foods, 50 km from Chile's capital Santiago, cherry trees are basking in the hot sun. Workers are handpicking cherries from the branches.

The 30-hectare plantation produces 150 to 200 tons of cherries each year, with 95 percent of the output exported to the Chinese market.

Nativa Foods Export Director Pablo Morales said the Chinese market has kept expanding, with growing quality requirements for the business.

"We are constantly adjusting the cherry varieties, based on Chinese consumers' appetite," said Morales, adding he hopes to introduce advanced agricultural drones from China to reduce losses from bird peckings in the orchards.

In Chile, fruit growers know that cherries are a lucrative cash crop.

Chile's exports of cherries to China have been growing rapidly, with the amount increasing to $1 billion in 2018 from $1 million in 2006. The exports total 180,000 tons in volume and account for 88 percent of Chile's total exports of cherries.

The planting area of cherries in Chile now exceeds 40,000 hectares.

"Chile's cherry production is expected to double in four to five years. Only the Chinese market can have such a big demand for cherries," said Huang.

He said many Chilean fruit growers have paid attention to the Chinese lunar calendar to better understand Chinese food habits and customs.

 

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2019-12-19 00:00:00
<![CDATA[Proactive fiscal policy to be key economic priority, say experts]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529615.htm Implementing a proactive fiscal policy will be one of the top six tasks for the central government in its 2020 economic agenda, experts said.

The thrust of the fiscal policy, however, should not be confined to supporting economic growth through investments, but instead focus on boosting the overall quality and efficiency, guaranteeing salary payments, ensuring administrative operations in local government departments and boost people's livelihoods, said the experts while sharing their insights on the recently concluded annual Economic Work Conference.

The basic tone of next year's policies would be to maintain stability, meaning the key economic indicators including GDP growth, employment rate, inflation and other indexes "need to avoid big ups and downs", said Liu Wei, president of Renmin University of China and a member of the central bank's monetary policy committee.

China's policies to counter an economic slowdown have already started taking effect, as seen in the average 9.4 percent annual GDP growth during the past four decades with very moderate volatility, Liu said at a forum held by the National School of Development of Peking University on Saturday.

"Stability is a key gauge to assess the quality of economic growth, other than only focusing on the speed," he said.

To achieve the targets, a "too-large scale" of new tax cuts is not suitable for next year and policymakers may instead focus on implementing the existing tax cut policies, said Chen Changsheng, director-general of the department of macroeconomic research under the Development Research Center of the State Council.

Fiscal deficit is expected to expand next year as strong support from the local government special bonds will help stabilize infrastructure investment. But the funds should be used more for the new types of infrastructure projects, instead of injecting too much into traditional projects, said Chen, without explaining the definition of "new infrastructure".

A statement issued after the three-day policy tone-setting conference had said that proactive fiscal policies should focus on structural adjustments, while government expenditure for general administrative purposes needs to be reduced.

The high-level economic conference stressed that fiscal policy should work in conjunction with the prudent monetary policy, and coordinate with consumption, investment, employment, industrial and regional policies.

The policymakers have emphasized that macroeconomic policies should lead capital into areas of advanced manufacturing, as well as in projects that can improve people's livelihood and infrastructure construction. Both industrial production and consumption should be upgraded, the statement said.

In the face of some uncertainties, especially when the world is still undergoing in-depth adjustments due to the global financial crisis, the basic function of fiscal policy should be to "inject certainties" and reduce the level of public risk, so that the cost of production and living can be lowered, said Liu Shangxi, head of the Chinese Academy of Fiscal Sciences, a research institute under the Ministry of Finance, during the Saturday forum.

The Ministry of Finance said on Tuesday that from January to November, the country's total tax income was 14.97 trillion yuan ($2.14 trillion), with the tax income declining by about 3 percent on average in October and November.

Individual income tax collections fell by 26.8 percent as tax reforms changed the taxation threshold and the tax rates. Value-added tax on imported goods and consumption tax decreased by 8.7 percent during the same period, according to official data.

The central government's fiscal revenue increased by 3.8 percent to 17.90 trillion yuan in the first 11 months, much slower than the growth of 6.5 percent in the same period last year, mainly due to the reduction of taxes and fees. Fiscal spending rose by 7.7 percent year-on-year to 20.65 trillion yuan, up by 6.8 percent over a year earlier, the ministry said.

Falling land prices in some cities and lower income from land sales could be headwinds for China's growth in 2020, said Lu Ting, chief economist of Nomura Securities.

He said the government may need to increase the fiscal deficit and increase the quota for local government special bonds next year to deliver a "truly expansionary fiscal policy".

 

 

 

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2019-12-19 00:00:00
<![CDATA[Nation leads the world in applications for AI patents]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529602.htm China has outpaced the United States in the number of worldwide artificial intelligence-related patent applications, according to a new report issued by the China Industrial Control Systems Cyber Emergency Response team, a research unit under the Ministry of Industry and Information Technology.

China-based companies have applied for a total of more than 440,000 AI patents as of October. Internet search giant Baidu Inc filed 5,712 AI-related patent applications, ranking first in China for the second consecutive year, followed by Tencent (4,115), Microsoft China (3,978), Inspur (3,755) and Huawei (3,656).

The report showed that Baidu is the patent application leader in several key areas of AI, including the deep learning (1,429), natural language processing (938) and speech recognition (933).

The tech behemoth also leads in the highly competitive area of intelligent driving, with 1,237 patent applications, a figure that surpasses leading Chinese universities and research institutions, as well as many foreign automotive companies.

With the launch of the Apollo open source autonomous driving platform and other intelligent driving innovations, Baidu has been committed to pioneering the intelligent transformation of the mobility industry.

"We retained the top spot for AI patent applications in China because of our continuous research and investment in developing AI, as well as our strategic focus on patents," said Victor Liang, vice-president and general counsel of Baidu.

"In the future, we will continue to increase our investment in securing AI patents, especially for high-value and high-quality patents, to provide a solid foundation for Baidu's AI business and for our development of world-leading technology," he added.

After years of research, Baidu has developed a comprehensive AI ecosystem and is now at the forefront of the global AI industry.

It will continue to conduct research in the core areas of AI, contribute to scientific and technological innovation in China, and actively push forward the application of AI into more vertical industries, the company said in a statement.

So far, AI-enabled technologies have been applied in several sectors, such as finance, healthcare, transportation and education. Global consultancy PwC forecasts that AI's contribution to the global economy will leap from $2 trillion in 2018 to $15.7 trillion by 2030.

China has placed great emphasis on tech development, with AI being a key field. The government has laid out plans aimed at building a 1 trillion yuan ($142.1 billion) AI core industry by 2030, which is expected to stimulate related businesses by around 10 trillion yuan.

The report pointed out that AI is taken as an important direction for industrial upgrading, and the country's strategic plan for AI offers a broad space for the research and development of AI technologies and related industries. Moreover, from the perspective of applicants, enterprises such as Baidu and universities have become the main force in driving AI technologies.

It suggested more efforts are needed to strengthen basic AI research and establish intellectual property systems related to AI, as well as introduce high-level talents, in an attempt to grasp the opportunities brought about by AI.

Tech heavyweight Tencent Holdings Ltd launched an AI Lab in April 2016, which places an emphasis on the basic research of computer vision, speech recognition, natural language processing and machine learning.

The tech giant also works to put fundamental research to practical use, applying AI to its key businesses, such as medical, social interaction, online games and cloud computing. It also operates Youtu Lab, which has developed advanced technologies in the fields of facial and image recognition and voice identification.

Zhang Lijun, vice-president of Tencent, said at the sixth World Internet Conference in Wuzhen, Zhejiang province, that the company has filed over 3,000 AI patent applications and has published more than 300 high-quality academic papers on AI.

"China is fast becoming a global hub for innovation, particularly in the field of AI," said Zhu Wei, senior managing director and chairman of Accenture China, while noting Chinese companies have demonstrated great determination to digitize their organizations amid the current complex business environment.

People should not only see China's advantages in AI patent application number, but also give full play to the value of AI, said Hong Jing, founder of Gaocheng Capital, who indicated that AI can be applied in all walks of life, and create true commercial value.

Kai-Fu Lee, chairman and CEO of Sinovation Ventures, a leading venture capital firm, said China and the US are leading the fourth industrial revolution brought by AI that has shown huge growth potential and created value for traditional industries.

Lee noted some traditional industries in China are still relatively backward, but it is the right time to embrace AI. "Traditional companies which embrace AI will win, otherwise, they may disappear."

Global spending on artificial intelligence will reach $35.8 billion in 2019, a 44 percent increase over 2018, according to the consultancy International Data Corporation.

 

 

]]> 2019-12-19 00:00:00 <![CDATA[Healthcare companies see growing appetite among Chinese consumers]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529601.htm Spurred by rising health consciousness and Chinese consumers' pursuit of a high-quality lifestyle, some multinational companies are witnessing strong sales and further promoting their products in China via new growth channels such as e-commerce platforms.

US dietary supplement manufacturer D-Cal has witnessed rapidly growing sales revenues in China, especially in the children's calcium market, boosted by the huge market growth opportunities brought by the consumption classification and upgrading trend, the company said.

D-Cal noted that young mothers prefer to shop online, so it has been critical for maternal and baby brands to make efforts on both e-commerce platforms and brick-and-mortar stores.

"Chinese mothers who were born after 1990 have become the main consumers of maternal and baby products, and they are more willing to pay for professional and quality-guaranteed products and services. The traditional product-to-store model cannot adapt to the new development trend," said Zhang Yuan, brand representative of D-Cal.

"With the increasingly powerful impact of social media, key opinion leaders on online social media are playing an important role now. D-Cal has cooperated with a number of key opinion leaders in the maternal and baby products market, and we have seen positive results," she said.

She added that the company would continue to provide more kinds of calcium products for different consumer groups in China, such as babies, toddlers, pregnant women and adults.

D-Cal said it also plans to expand in third-and fourth-tier Chinese cities, as well as in rural markets, as they boast significant growth potential, and development in major cities has been relatively mature.

Last year, sales of imported calcium in China reached 3.05 billion yuan ($436 million), up 7 percent year-on-year. D-Cal achieved its highest sales for three straight years, and its market share was higher than the aggregate of the second to fifth-placed companies, according to market research company Euromonitor International.

Meanwhile, Herbalife Nutrition, a Los Angeles-based nutrition company, is promoting healthy lifestyles and increasing public awareness of health and nutrition in China. Herbalife said China is its third-largest market and is also one of its fastest growing markets.

The company said it is bullish on the long-term growth prospects of the healthcare market in China, its core strategy market, and it hopes the nation will become its biggest market.

"We will provide more tailored and personalized products in China, and offer different solutions to different consumer groups, such as those who would like to lose weight, fitness enthusiasts and people who are generally pursuing a higher-quality life," said Woody Guo, managing director of Herbalife Nutrition China.

"Our consumers have become increasingly younger, and we have launched more attractive sales and marketing methods such as brand flash shops. We also sponsored the Spartan Race to attract more young consumers," he said.

Besides, with an investment of 100 million yuan, Herbalife will open a product innovation center in Shanghai by the third quarter of next year, which will be the first of its kind globally.

The center will strengthen its local R&D capabilities to deliver more science-backed quality products, and it plans to double the number of products and development speed in the market in the next five years.

Meanwhile, Herbalife partnered with Tencent Holdings Ltd, China's major internet and technology company, to help independent distributors more effectively sell products online.

Yang Yuexin, director general of the Chinese Nutrition Society, said the incidence of chronic diseases caused by poor dietary habits and an unhealthy lifestyle has been on the rise in China in recent years.

Chinese families are paying increasing attention to their health and more people tend to choose imported nutrition products, Yang said. 

 

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2019-12-19 00:00:00
<![CDATA[Shenzhen takes the high road to growth]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529554.htm Shenzhen in Guangdong province inked 128 new projects worth 560 billion yuan ($80 billion) on Wednesday as part of its ongoing efforts to unlock high-quality and sustainable growth potential in the city.

Dozens of companies, including Siemens AG, Fosun International Ltd, China Gas Group, ByteDance Co Ltd and Xiaomi Group, signed agreements with the district governments in the city during an investment promotion conference for setting up global headquarters, manufacturing bases, data centers and research and development laboratories.

More such deals are expected in the next few days as city officials announced at the meeting that they would offer 36 land plots spread over 30 square kilometers for outstanding global enterprises. Most of the projects that have been inked meet with city's goals of developing sectors such as 5G communication, advanced manufacturing, biomedicine, artificial intelligence, ocean industries and financial services.

A series of preferential policies in these areas have been released this year, including a sum of 7 billion yuan to attract talents and more than 20 billion yuan to reward technology firms.

The move comes as the city, a cradle of tech giant Huawei and drone maker DJI, is stepping up to shrug off concerns about a slowing economy amid the rapidly changing international environment and the city's high-quality development efforts.

Shenzhen's GDP growth rate during the first three quarters of this year fell to 6.6 percent from 8.1 percent during the same period a year ago. However, the ratio of advanced manufacturing in industry and advanced service sector in the overall services domain exceeded 70 percent. In addition, the total profit of large-scale enterprises rose by 18.5 percent during the period.

Shenzhen Party secretary Wang Weizhong said the figures show that the characteristics of high-quality growth has emerged and the city is now on the road to high-quality and sustainable development.

Speaking about the city's future, Wang said he was confident of continuous growth through continuous reform and opening-up and urged global enterprises to be part of the journey.

Wang said Shenzhen, the nation's best economic zone, had transformed from a small fishing village to be window for China to showcase its reform and opening-up achievements.

 

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2019-12-19 00:00:00
<![CDATA[Gaming sector showing signs of healthy rebound]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529596.htm China's gaming sector has shown strong signs of a robust recovery this year despite tighter regulations, a new report said on Wednesday.

The highly lucrative market generated revenues of 233 billion yuan ($33 billion) this year, up 8.7 percent on a yearly basis, said a report released by Chinese gaming database Gamma Data Corp.

Mobile gaming was the key driving force for growth, accounting for more than 150 billion yuan of revenue and for over 60 percent of the Chinese games market. Mobile game revenues grew by 13 percent on an annualized basis this year, compared to the 15.4 percent increase in the same period a year ago.

"China's gaming industry enjoyed rapid development during the past five years, on the back of an explosive growth in mobile games," said Lu Xiaoyin, chief executive officer of the games segment of Perfect World Co Ltd, a Chinese entertainment firm.

"Due to the slower growth in the number of mobile game players, the gaming market is gradually reaching a saturation point."

Against the backdrop, gaming companies need to shift their focus from rapid expansion to refined management, paying more attention to high-quality games and catering to players growing demand for new genres such as casual games, Lu said.

According to the report, China is now the global leader in mobile gaming and accounted for more than 30 percent of the world's overall mobile gaming market this year. Gamma Data expects to see a growing number of Chinese gaming companies expanding their business to more overseas markets.

Lu from Perfect World said that while the Chinese market tends to be saturated, the overseas mobile gaming markets are still poised for rapid growth.

"Personal computer games and console games were previously the main segments in the global gaming market," Lu said. "Due to the rising popularity of smartphones globally, the number of mobile gamers has been growing steadily in overseas markets."

In fact, overseas markets are now an important revenue earner for several Chinese gaming companies. Driven by strong increase in export earnings, gaming revenues from domestic market and export incomes jumped 10.6 percent to over 310 billion yuan, the report said.

This year, Chinese developers earned $11.19 billion from their self-designed online games in overseas markets, up 16.7 percent year-on-year, according to Gamma Data.

"With the disappearing demographic dividend in the domestic market and the rapid development of overseas markets, Chinese gaming companies are gearing up to expand their businesses globally," the company said.

In fact, many Chinese gaming companies have already been reaping the rewards.

According to the report, the self-designed mobile game turnover of Chinese companies is growing faster than that of the local market in countries like the United States, Japan, South Korea, the United Kingdom and Germany.

"Taking into account the competitive advantages of their self-developed products, we expect Chinese gaming companies to gain more revenues and development opportunities in the global market," Gamma Data said.

 

A cosplayer plays games on her mobile phone during an industry expo in Shanghai. CHEN YUYU/CHINA NEWS SERVICE

 

 

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2019-12-19 00:00:00
<![CDATA[New aluminum park to boost green strides]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529594.htm Work on a green aluminum industrial park being set up by the Yunnan provincial government and Shandong Weiqiao Pioneering Group Co Ltd, a Fortune Global 500 company, commenced in Wenshan autonomous prefecture of the province on Wednesday.

Being set up with an investment of 40 billion yuan ($5.72 billion), the project has already attracted nine enterprises across the aluminum industry value chain. When fully operational, its annual sales and industrial output are expected to reach 100 billion yuan and 30 billion yuan respectively and will create 12,000 jobs for local people.

The commencement of work at the park also marked the beginning of Shandong Hongqiao's two-phase relocation of 30 percent of its smelting capacity, totaling 2.03 million metric tons annually, from Binzhou city, Shandong province, to the hydropower-rich prefecture bordering Vietnam, in pursuit of green capacity and more presence in the Belt and Road related markets. Shandong Hongqiao is a sister company of Weiqiao Pioneering.

The phase one capacity of 1 million tons will be in position in late 2020. Currently, the company mainly relies on coal-fired power for the electricity-intensive smelting process, and the capacity in Yunnan will use cleaner hydropower.

"The capacity to be relocated amounts to 5.4 percent of China's total aluminum capacity, and we want to affirm that they are not new capacity, but what is being swapped from coal-power to hydropower," said Yang Congsen, deputy general manager of Shandong Weiqiao Pioneering.

The company wants to demonstrate to the world Chinese manufacturer's commitment and determination regarding green and sustainable development, he said.

"As China's manufacturing and consumption industries upgrade, utilization of aluminum is expanding to more sectors very fast, especially in new energy vehicles, smart home appliances, construction, and commercial aviation, while aluminum consumption per capita in China is only about one third of the global level," he said.

"That creates huge growth opportunities for Chinese aluminum enterprises, but also prompts us to be increasingly aware of the importance of green and sustainable development, and to capitalize on green technology and clean energy, because more customers are buying environmental-friendly aluminum products."

He said Yunnan province's agreeable business environment and gateway position to South Asia, Western Asia, and Southeast Asia, attracted the company, apart from its rich clean energy resources.

Planning to spend 3 billion yuan on the two-phase capacity relocation, the company is also eyeing the related markets in the next 10 years, although currently there are few aluminum factories in the area due to small-scale aluminum demand, he said.

Yunnan province, with its rich hydropower electricity resources and green energy development policies, has become a top destination for Chinese aluminum companies to relocate their capacity in the past two years, according to a recent report from Guotai Junan Futures.

Such relocation was driven by the industry's production restructuring and upgrading, and the quest for lower costs, the report said.

The province has nearly 2.6 million tons of operational aluminum capacity, with a projected capacity of 4 million tons to 6 million tons in the future, according to the report.

Several Chinese aluminum companies, including Aluminum Corp of China, the largest aluminum company in the world, and Shenhuo Group, based in Yongcheng city, Henan province, have been drawn to the region.

Hu Jiachun, a nonferrous metals analyst with Tianfeng Future Research Institute, said China is the world's largest aluminum producer, and must strictly rein in new capacity construction for the sake of environment protection.

Under such circumstances, Chinese aluminum companies are urged to expand up and down the industrial chain proactively to make up for weakness in deep processing capabilities, if they want to keep afloat in face of fierce competition amid the upgrading of the industry, she said.

The abundant hydropower resources in Yunnan, and the local government's coordinated-development policies for hydropower and aluminum, which help speed up the establishment of a high-quality aluminum industrial chain, and reduce electricity costs, a major cost contributor in aluminum production, are the main factors attracting companies such as Weiqiao Pioneering, she said.

Besides, the industrial park's special location, having ample transportation channels to the Pearl River Delta, the Chengdu-Chongqing area and economies in Southeast Asia, makes it easier to access related markets, Hu said.

 

An aluminum processing plant of Shandong Hongqiao in Zouping county, Shandong province. TANG KE/FOR CHINA DAILY

 

 

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2019-12-19 00:00:00
<![CDATA[Alibaba travel arm forms alliance]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529580.htm Fliggy, Alibaba Group's online travel arm, forged a hotel alliance on Tuesday bringing together independent budget hotels and arming them with technologies to streamline operations.

In one year's time, Fliggy aims to draw the country's 40,000 independent hotels that don't belong to any proprietors and are independently run, and give them a uniform digital makeover, company executives said.

A three-month trial run that ended early December has seen the recruitment of 15,000 such hotels to the bloc. An overarching goal is to raise their average occupancy rate by 10 percent, said Zhuang Hai, who oversees the initiative and also heads the FlyZoo Future Hotel, Alibaba's indigenous, tech-driven hospitality prototype.

"The core of the alliance is to empower these scattered hotels with a shared client pool and help them build up their brands through online traffic injection," he said.

The roughly 920,000 independent hotels, each of which typically hosts 80 hotel rooms or below, claimed over 85 percent of China's hospitality market. The market value stood at nearly 1 trillion yuan ($142.7 billion), the China Hotel Industry Report published in June said.

However, common pain points lie in its weak brand power, lack of membership system and the consequent deficiency in service standardization, the report said.

Zhuang said participating hotels stand to enjoy more prioritized positions on the search page, as each of them bears a conspicuous logo under the bloc.

Other incentives include a performance-based commission rebate system, as well as a membership card system that can give guests an 8 percent discount and conduct personalized marketing based on customer profiles.

In China, the vast yet immature hospitality market is coveted by like-minded players from H Chain Hotel backed by Huazhu Hotels Group to India-headquartered Oyo.

For instance, since its entry into China two years ago, Oyo has penetrated into more than 2,000 cities and townships in the country, signing over 19,000 hotels and boasting some 780,000 rooms, the company said last month.

"Competition is definitely fierce," said Zhao Huanyan, chief analyst at Shenzhen-based hospitality consultancy Huamei. "For platforms like Fliggy, scaling by gathering more hotel resources is a prerequisite before technology can make a difference and generate profits."

Alibaba has long trained its sights on the hospitality market. Apart from inking strategic deals with global industry gurus like Marriott hotel chain in the US and French hospitality firm Accor, the company stepped up efforts in building its own hotel brand where technology meets hospitality.

Run almost entirely by robots that serve food and fetch toiletries and other sundries as needed, Alibaba's Future Hotel eschews traditional check-in and key card processes. It instead allows guests to manage reservations and make payments entirely from a mobile app, sign in using self-service kiosks, and enter their rooms using facial-recognition technology. 

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2019-12-19 00:00:00
<![CDATA[Ethiopia teams up with China on mushroom project]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529568.htm ADDIS ABABA-Ethiopia and China officially launched a mushroom project, dubbed "Ethiopia 1550 Mushroom Program," which enables the East African country to develop the sector with modern technology and scientifically.

Situated on the premises of the Technology Institute of the Addis Ababa University (AAiT), the Ethiopia 1550 Mushroom Program incorporates Ethiopia's national mushroom spawn resources development center and Ethiopia's national mushroom technology training center.

A tripartite project involving the AAiT, China Aid, and the Ethiopian Ministry of Agriculture, the mushroom project has established a standard mushroom spawn production, preservation and technology training center that is primarily responsible for mother spawn production and technology training.

Starting on a small scale, the project is designed to be scaled up with more project sites and involving more mushroom farmers for training across the country, promoting Ethiopia's mushroom production and productivity, thereby securing improved benefits from the sector.

The program will develop five mushroom project sites in the capital city and surrounding areas to produce next grade spawns, and of the five sites two have already been built.

Speaking at the project's official opening ceremony on the premises of AAiT, Esayas Gebre-Yohannes, executive director of AAiT, noted that the program would have multifaceted benefits to Ethiopia, promoting mushroom production and productivity, creating job opportunities, as well as knowledge and technology transfer as well as research and development.

In his remarks on the occasion, Abdulsemed Abdo, adviser to the Ethiopian minister of agriculture, said consumer preferences and perceptions has not been studied though mushrooms are an important commodity worldwide in general, and in Ethiopia in particular.

Stating that investing in improved mushroom varieties and associated modern inputs is a critical step toward increased yields, the adviser said the project would help the country address some of the critical challenges in the area of technology development it has faced in the area.

"Some of the specific challenges associated with mushroom production include the limited capacity and lack of role clarity of the different actors, the focus of the system on very few varieties, mismatch between supply and demand resulting in shortage and excess inventory, and quality issues due to inappropriate production, storage, and transport practices and facilities," he said.

Liu Yu, the economic and commercial minister counselor at the Chinese Embassy in Ethiopia, expressed her firm belief that more Ethiopian farmers would produce edible mushrooms under the guidance of the center and earn a better incomes and enjoy better lives.

Alene Admas, an industrial biotechnologist and mushroom expert at AAiT, said that the project would make a significant contribution to the development of the mushroom technology in Ethiopia.

 

 

 

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2019-12-19 00:00:00
<![CDATA[China, UAE to boost their high-tech ties]]> http://www.chinadaily.com.cn/kindle/2019-12/19/content_37529598.htm Companies from China and the United Arab Emirates are expected to have closer ties in promoting the application of artificial intelligence, as the two countries have a strong desire to be fast adopters of the emerging technology, analysts and company executives said.

The comments came after a string of Chinese tech giants and startups inked deals with their UAE counterparts to advance the use of AI in education, transportation, finance, governance and other sectors.

Xiang Ligang, an independent tech commentator, said the UAE sees AI as "new oil" and aims to be a fast adopter of the emerging technology. China boasts some of the world's most pioneering AI companies, which can help the UAE deploy AI in a wide range of aspects.

As the richest country in the Middle East, the UAE has vigorously promoted the development of AI in recent years. In 2017, the UAE appointed its first Minister of State for Artificial Intelligence. And this year, the UAE government officially launched its strategy for AI 2031, which has laid out a vision to become a world leader in AI by 2031, creating new economic and social opportunities for citizens, governments and businesses.

Such strong eagerness to embrace AI has unleashed big opportunities for Chinese tech companies. Recently, Chinese artificial intelligence unicorn UBTech Robotics inked a deal worth $362.4 million to step up AI teaching labs for students in the UAE.

UBTech, backed by Chinese internet giant Tencent Holdings, inked the deal with Royal Strategic Partners, a unit of Abu Dhabi Capital Group. ADCG is a large-scale investment company that manages assets of $20 billion.

Another Chinese AI pioneer SenseTime Group Ltd is also setting up a hub in Abu Dhabi, the capital of the UAE, as its regional research and development center for expansion in Europe, the Middle East and Africa.

The Chinese facial recognition firm, which counts Alibaba Group Holding Ltd as an investor, has started work on the research and development center this year and has built AI capabilities across seven industries including healthcare, remote sensing and education. The Abu Dhabi Investment Office, which seeks to attract businesses to the country, will provide a support package as part of the partnership.

Elham Al Qasim, CEO of ADIO, said: "SenseTime's AI capabilities and developments will be of great value to businesses across the region. It will not only provide large companies across the region with AI technologies, but will also benefit from partnerships and collaborations with early-stage tech startups that are being established out of Abu Dhabi's Hub71."

Xu Li, co-founder and CEO of SenseTime, said: "The opportunity to build a significant operation in Abu Dhabi will allow us to continue to advance the development of our technologies and increase the adoption of AI across the world. Abu Dhabi offers us the ability to focus on innovation in key sectors, opens up a new customer base and importantly, a new talent pool."

China's Sogou, known for its search engine and Pinyin input method, also worked with Abu Dhabi Media (ADM) in developing the first Arabic-speaking AI News Anchor.

Abu Dhabi has been actively investing in the tech sector, especially focusing on AI development. One of its largest state-owned investment funds, Mubadala, invested in Sense-Time and Chinese ride-hailing company Didi Chuxing in 2017. One subsidiary of the Abu Dhabi sovereign wealth fund also backed Megvii, another Chinese AI company.

In October, the Dubai Chamber of Commerce and Industry also revealed an expansion plan in China with the opening of a new office in Shenzhen, Guangdong province.

The new office will be tasked with exploring business potential in the fast-growing technology and innovation hub and attracting innovative Chinese companies to Dubai, according to news website Arabian Business.

Hamad Buamim, president and CEO of Dubai Chamber of Commerce and Industry, told Arabian Business: "Since Dubai Chamber opened its first China office in Shanghai in 2016, the number of Chinese member companies has surged by more than 50 percent to exceed 3,200 today."

 

 

 

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2019-12-19 00:00:00
<![CDATA[Bosideng gears up its global ambitions]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529411.htm By partnering with French fashion designer Jean Paul Gaultier, China's largest down clothing company, Bosideng International Holdings, is trying to boost sales of its high-end offerings as part of its strategy to compete with global upmarket players like Canada Goose and Moncler.

The announcement of the partnership in November was marked by a star-studded fashion show in Shanghai. The show featured some of China's A-list celebrities and fashion bloggers wearing the bomber jackets and down capes created exclusively for the Chinese brand by the 67-year-old designer, who is known for creating Madonna's controversial conical bra and as the former creative director of luxury house Hermes.

To keep up the momentum, weeklong ads on Sina Weibo followed, with slogans like "when the naughty boy of fashion meets Bosideng".

"We plan to first consolidate our hold on the Chinese market over the next three years, enter the international market in four to six years, and then become a global industry leader within the decade," said Mei Dong, CEO of the Shanghai-based company, at a recent news conference to announce its strategy.

Having started as a clothing manufacturer in the 1970s in Changshu, East China's Jiangsu province, the now Hong Kong-listed company repositioned itself as a dedicated down jacked maker in 2017 after years of unsuccessful attempts to expand into menswear.

The move was inspired by the more generous budgets Chinese consumers now have for winter coats due to the increasing efforts of foreign brands, who have transformed the traditionally functional attire into a fashion accessory like bags for women or watches for men.

"Down jackets used to be an immensely seasonal and regional product in China. They were such a marginalized category in department stores that they shared space with swimwear when it was out of season," said Ye Qizheng, co-founder of DFO Showroom, one of the largest fashion showrooms in China connecting buyers and designers.

"But today, down clothing brands enjoy prime locations in the top shopping malls in Shanghai and Beijing. What's more, the most surprising thing is that in Shenzhen, a southern city with an average temperature of 23 C, Moncler has a store," said Ye.

According to the National Bureau of Statistics, the number of down jackets sold in China has fallen for three consecutive years since 2016. In 2018, 190 million jackets were sold in the country, down by 32.8 percent from the previous year and the lowest level in the past five years.

However, the average retail price has been increasing steadily, up by 20.8 percent in 2018. As a result, the main price range has grown from 600 yuan ($85) to 800 yuan to more than 1,000 yuan.

The China Garment Association estimated that the total value of China's down jacket market reached 106.8 billion yuan last year, exceeding 100 billion yuan for the first time in history. It is projected that by 2022, the sales value will surpass 162 billion yuan.

China is the world's largest manufacturer, exporter and consumer of down and feather products. Statistics from the Food and Agriculture Organization of the United Nations showed the number of ducks raised in China accounted for 74.2 percent of the world's total, and the number of geese accounted for 93.2 percent. As a byproduct of the duck and goose farming industry, China supplies more than 70 percent of the world's feather and down material.

Yao Xiaoman, director-general of the China Feather and Down Industrial Association, said while the rising cost of down jackets has partly contributed to the increase in retail prices, a key driver is changing perceptions of consumers, which have encouraged them to spend more.

"While the change was started by foreign brands and companies, it's also a good time for domestic players to upgrade to meet the new demands by taking advantage of the opportunity and our expertise in the industry," said Yao.

Bosideng, for example, has lowered the percentage of its products sold below 1,000 yuan from 47.5 percent in 2016 to 12.5 percent in 2018, while raising those above 1,800 yuan from 4.8 percent to 24.1 percent over three years, according to Business of Fashion.

Meanwhile, it has also had collections displayed at the likes of New York and Milan Fashion Weeks in recent years to boost the brand's image as a trendsetter, rather than a mere clothes maker.

In October 2018, it announced the opening of 100 stores in China on the same day, with the largest one occupying 2,000 square meters in Shanghai. Designed by a French team, the Shanghai flagship store features a facade made up of 28 windows, each separated by a LED wall, while inside customers are invited to try on the products in a room kept at minus 15 C to simulate freezing conditions.

But sales recorded on Bosideng's Tmall e-commerce store show its efforts to upgrade are yet to bear fruit.

Among the e-store's Top 10 bestselling products, none is priced above 1,000 yuan. The collection designed by Gaultier, which mostly retails at between 3,000 and 4,000 yuan, has a sales performance similar to the brand's other high-end offerings, with fewer than 100 pieces sold in one month. The bestselling product is a kid's down vest priced at 79 yuan, with 12,000 pieces sold in 30 days.

 

Workers are busy at the factory of Bosideng International Holdings in Suzhou, Jiangsu province. XU CONGJUN/FOR CHINA DAILY

 

 

 

 

 

]]> 2019-12-18 00:00:00 <![CDATA[Opening-up at core of policy moves]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529462.htm Policymakers' emphasis on high-quality and innovation-driven development at the recently held Central Economic Work Conference underscores the country's commitment to continued structural reforms and further opening-up to drive growth, experts said on Tuesday.

"The conference reiterated the country's plan for structural reforms and continuous opening up of its economy. These plans have coincided with the application of governance models for responsive and responsible political and economic leadership which insists on the need to promote sustainable socio-economic development," said Christopher Bovis, professor of international business law at the University of Hull.

China's top policymakers gathered at the annual Central Economic Work Conference held from Dec 10 to 12 in Beijing. The meeting stressed the importance of stabilizing the country's economic growth and maintaining the proactive fiscal policy and prudent monetary policy to ensure high-quality growth.

The meeting also acknowledged that China is at a pivotal stage of transforming its growth model, improving its economic structure, and fostering new drivers of growth. It called for sustained vigorous efforts in deepening supply-side structural reform, and ensuring reasonable growth and steady improvement of the economy.

Bovis noted that China will continue to embrace its reform agenda to put the economy on a more sustainable growth path and to restructure the role of the government and the function of market with the emphasis of make financing more accessible to and affordable for the private sector and small businesses.

"By strengthening its small-and medium-sized enterprises, China will further open its economy by enhancing the regime of intellectual property protection of foreign companies and by lowering tariff on strategic sectors such as the auto manufacturing industry," he said.

"Economic reforms enacted in China have prioritized opening up China's economy to foreign investors in order to boost innovation and competitiveness by attracting more advanced industries and services," he said.

Alan Barrell, director of studies at Cambridge Innovation Academy, said it is encouraging to see that China remains steadfastly committed to innovation as plans for continued opening-up are consolidated at the heart of future policies.

"We can clearly see that the Chinese government's drive for innovation is backed up by real actions and investments. And China's interest and willingness to… export its innovation and import innovation too is all good news for the world," he said.

David Glattstein, a former innovation adviser in Silicon Valley and current chief representative in Israel for Zhongguancun Development Group, said that it is refreshing to see China is grounding its economy in science, entrepreneurship, innovation and openness while the global economy is facing volatility and challenges.

"China's government, as always, promotes sustainable development, but more and more it realizes that this sustainability can only be reached by creating new innovation that both grows new markets and addresses changes to the external environment," he said.

Wilson Lee Flores, an analyst and columnist of the Philippine Star and Pilipino Star Ngayon, said that China's economic policies have been pragmatic, stable and balanced in priorities while responsibly upholding globalization principles.

"This sustainable growth path is based on domestic consumption, services, private enterprises, green energy and increased technological innovations, instead of past reliance on export trade, fixed investments, energy-intensive and high-polluting industries," he said.

Lia Zhu in San Francisco andGeorge Ng in Hong Kong contributed to this story.

 

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2019-12-18 00:00:00
<![CDATA[Lower-tier cities sustain consumption momentum]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529461.htm Demand for cosmetics and household products, pet, and maternal and infant products witnessed robust growth this year with residents from lower-tier cities and counties leading the purchases and adding new vitality to China's economic growth, a new report said on Tuesday.

The report, released by JD Digits, a leading Chinese digital technology company, said sales of pets, beauty makeup and skin care products surged 50 percent year-on-year, while spending on household products, books, maternal and baby products, medicine and healthcare goods as well as clothing and underwear saw 20 percent to 40 percent growth this year, faster than that in 2018.

It is noteworthy that the consumption growth from fourth-and fifth-tier cities is higher than that from first-and second-tier cities, showing huge potential, as residents in these cities are pursuing high-quality lifestyles along with the improvement in living standards and rising disposable incomes, the report said.

As China's economy is transforming from a phase of rapid development to a new stage of high-quality growth, consumption is playing an increasingly important role amid the pressure of an economic growth downturn.

"In order to bolster consumption, more efforts are needed to increase residents' incomes and expand the scale of middle-income consumers," said Shen Jianguang, vice-president and chief economist at JD Digits.

Shen called for the primary and secondary distribution of incomes to be improved via multiple channels and diversified tax adjustment mechanism. "We should also further enhance consumer's acceptance of credit products in counties."

The per capita disposable income of China's rural residents continued to grow at a faster pace than that of the country's urban dwellers in the first three quarters of 2019, according to the National Bureau of Statistics.

"We expect consumption in lower-tier cities to surge from $2.3 trillion in 2017 to $6.9 trillion in 2030," said Robin Xing, Morgan Stanley's chief China economist in a research note. "Further, these smaller cities could be the engine driving China's overall private consumption market of $11.8 trillion over the same period."

Xu Feifei, associate partner at global consultancy Prophet, said while lower-tier cities are previously less brand-conscious and place more importance on economic value, rising disposable income and diversification of spending behavior will slowly change that.

Xu added in hope of an increased demand for high-quality goods and premium services, brands are establishing their presence early in burgeoning markets in China to capture their market potential before they fully mature.

Statistics from global data analytics company Nielsen show that there are 953 million people living in third-tier cities and below, far surpassing the 427 million people in the first-and second-tier cities. It shows that smaller cities have huge untapped consumption potential.

 

Visitors look at tissue products for pet use during an industry expo in Beijing. CHEN XIAOGEN/FOR CHINA DAILY

 

 

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2019-12-18 00:00:00
<![CDATA[Down coat brand Orolay finds fame on Amazon]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529458.htm Qiu Jiawei, founder of down coat brand Orolay, was astonished when the brand name went viral on the internet overnight among some of the most fastidious buyers in the world.

The last week of February was the most grueling time since Qiu founded the brand in Jiaxing in East China's Zhejiang province seven years ago. Bombarded with phone calls and messages, Qiu said he received interview requests from more than 20 media organizations.

The company's signature garment-an olive green paneled down coat priced under $100-has been given a special moniker by consumers: the Amazon coat. Qiu estimates Orolay's annual sales revenue will hit $40 million this year, while the figure was only $5 million in 2017.

The internet, especially social media, was responsible for Orolay's instant fame and profitability. A news story that appeared in New York magazine in late March 2018 first revealed the passion of buyers in New York's Upper East Side for the down jacket. Lauren Epstein, a Chinatown-based stylist, told the magazine that the Amazon coat reminded her of the Italian luxury clothing brand Moncler or The North Face's black puffy coat that first appeared in the 1990s. The coat even stole the heart of Ana Maria, the fashion director at the US luxury department store Neiman Marcus, who described the coat as a near ubiquitous item.

Apart from its own hashtag, the coat even has its own Instagram account under the name "the Amazon coat", which has registered more than 260 posts since January, showing pictures of people of all ages and from all professions wearing the viral consumer hit.

One year later, the Financial Times described the Orolay down jacket in an op-ed column as "a crucial distinction from past fashion sensation" that would possibly pose disruptive threats for the luxury goods industry.

Overseas buyers have continued to show a preference for the jacket this winter, spurring the company to raise the price from under $100 to nearly $140.

To date, the coat has won more than 7,000 four-star and above reviews on Amazon-its major distribution channel. At the Amazon Global Selling summit held in Shanghai on Dec 11, Jiaxing Zichi Trade Co Ltd-the parent company of Orolay-was named the most innovative seller for 2019. The affordable price, the quality comparable to luxury brands and the interest among global consumers were the reasons that Orolay won the award together with big industry names such as Chinese electronics giant Xiaomi Corp.

When Qiu first launched the brand on Amazon in 2013, he never imagined that Orolay would become the top-seller in North America among all of the 150 million products sold on the platform. During the first year, the company only sold 400 pieces.

With a production base in Jiaxing, the independent design center established in 2016 is key to Orolay's success in the US market, according to Qiu. Over time, the company has built a 20-person design team, the majority of whom have grown up with the brand. As Qiu explained, it is quite difficult to find experienced designers who know the preferences of US and European consumers. Therefore, training designers based on market response is the best approach.

"Most of the down jackets or coats sold in North America have features such as waterproof materials. Fashion elements are less stressed, which is the signature of Orolay down coats," said Qiu.

While the company also produces chairs, storage cabinets and bar stools, more than 80 percent of its annual sales revenue now comes from down coats. Although the exact number could not be released, Qiu said that the annual growth rate was more than 200 percent since 2017. The success in North America helped Orolay move into the European market in 2018. Now, Europe is the fastest growing region for Orolay down coats, he said.

At present, Orolay down coats are only available in overseas markets. During the early days, Qiu tried to set up business on Alibaba's platform. But the intense competition on the domestic e-commerce platforms as well as the continually increasing costs prompted him to choose another trajectory: cross-border e-commerce.

The global selling service launched by e-retailing juggernaut Amazon in 2012 came just in time. A total of 13 overseas sites including those in the US, Canada and Italy are open to Chinese sellers, on which products made in China can be sold directly to overseas buyers in those countries.

A survey from global consultancy Accenture released in April showed that the annual sales revenue growth rate of cross-border e-commerce was double that of domestic platforms. Up to 20 percent of the global e-commerce turnover is contributed by cross-border e-commerce.

Cindy Tai, vice-president of Amazon China, said at the summit on Dec 11 that Chinese companies, which have shown competitive edge in manufacturing and industrial chain mapping in the past, have seen their innovation capability enhanced over the past few years, making an important contribution to the global industrial chain. While Amazon is more competitive in import and export business in China, its focus will remain unchanged for the upcoming year, she said.

After the successful experience with Amazon, Qiu is dreaming big.

"We would like to create a fashion brand loved by people all over the world," he said.

 

A model wears a signature garment of down coat brand Orolay-an olive green paneled one priced under $100-which has been given a special name by consumers: the Amazon coat. CHINA DAILY

 

 

 

 

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2019-12-18 00:00:00
<![CDATA[Emerging tech firms face tighter scrutiny]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529446.htm Regulators are expected to adopt a tough stance on emerging technology in the financial sector and extend supervision of technology giants in an effort to curb systemic risks, central bank officials said on Tuesday.

Over-innovated financial products with lagging regulation may lead to financial instability and potential losses for investors, said the People's Bank of China, the central bank. China will tighten regulations on all types of institutions doing financial businesses so as to protect investors who are unable to recognize potential risks, PBOC Vice-Governor Pan Gongsheng said in a speech that was read out at the Third China Internet Finance Forum in Beijing.

"Financial activities for the public, whether in the name of technology or not, should be strictly regulated, and we should safeguard residents' money," he said in his speech.

Proper use of financial technology can help reduce financing difficulties for small and micro enterprises, but activities, which lead to funds circulating within the financial system to boost speculative investment should be controlled, said Pan.

The annual Central Economic Work Conference, which was held last week, highlighted prevention and control of financial risks as one of the "three tough battles" and a key task that needs to be carried out next year.

The PBOC established a special work group in 2016 to tackle risks rising in internet financing businesses. In 2017, the government banned so-called "initial coin offerings" or ICOs, a way for startups to raise funds by selling off newly-created digital currencies. All trading platforms for such virtual assets have been closed in the country.

"We have avoided the risk of a massive virtual asset bubble," said Pan. The regulators will build an online financial risk supervision mechanism to improve the disposal of cross-market risks by taking advantage of new technology, he said.

Financial regulators around the world are working on a set of global regulatory standards, and countries standing at the leading edge of financial technology will have more advantages to dominate the rules. Thus China, as one of the global fintech pioneers, should proactively participate in the international rule-making process, said experts.

The development of financial technology is more like a competition among countries. For instance, the PBOC is still in the process of developing its own digital currency, in a race with some other countries. This competition of government-backed cryptocurrency can be seen as a key feature of the "digital era", Wang Xin, head of the PBOC's research bureau, said on Tuesday.

A recent report from US-based CNBC said that China's support for financial technology, represented by blockchain, "could put other countries behind, to the point where the world's second-largest economy could dominate the technology and the way it's developed".

But it is not easy for the private sector to win the digital fiat money making competition. "The right to issue money is important for the government, as it is one of the fundamental measures for the government to raise funds and implement macroeconomic adjustments," said Wang.

In a financial crisis, the central bank can inject liquidity and stabilize the financial system through flexible adjustments such as money supply, a function that privately-issued money, such as Facebook's Libra, may find it hard to implement, he said.

Some large financial technology companies, which have a broad business scale involving a large group of investors, should be regulated as systemically important financial institutions, said Xiao Gang, former chairman of the China Securities Regulatory Commission.

Higher regulatory standards for capital adequacy ratio, asset liability ratio and information disclosure should be introduced to these large companies, including the financial holding groups, according to Xiao. "New regulatory standards are needed, not just copying the supervision system for traditional banks."

 

A customer pays using a facial recognition device at a supermarket in Beijing. ZOU HONG/CHINA DAILY

 

 

 

 

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2019-12-18 00:00:00
<![CDATA[Nation has valuable growth lessons for Africa to emulate]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529412.htm An African minister said in Beijing that China probably has enough experience to help African countries diversify their economies and overcome existing problems by replicating its success on those nations.

"In all African countries we have almost the same scenario: The economies are not diversified. We have a young unskilled population, untapped natural resources, a deficit in basic services such as electricity, water and telecommunications," said Vera Daves, Angola's minister of finances.

Considering that China once faced the same kind of difficulties until the early 1980s, she said it can capitalize on all existing opportunities through its solid financial resources, technological advancement and scientific knowledge, and by transferring some of its potential to African countries.

"The Chinese authorities have been helping us since the end of our civil war for the national reconstruction process," she said, adding the country located in the western part of southern Africa with some 30 million people is a huge market for China.

Since the two countries established diplomatic ties in 1983, Sino-Angolan trade has shown how important bilateral cooperation can be, she said.

"We export more than $3 billion worth of oil and China is also our main import market. We import a lot of equipment, construction material totaling above $2 billion per year," Daves stressed in an exclusive interview with China Daily during her recent trip to China.

She added: "We are expecting the Chinese private sector to join us in the new era of the Angolan economy, and want them to help us in exploring the potential of Angola in the fields of agriculture, fisheries, mining and tourism for the mutual benefit for both countries."

Angola boasts abundant natural resources. It is the third largest producer of oil in Africa, natural gas and is the fifth biggest producer of diamonds in the world. Angola is China's second largest trade partner in Africa.

Angola's mild climate, fertile soils, plentiful flora and fauna also make the country rich in agricultural resources, the minister said, adding that this is an area Chinese investors can help explore.

With a coastline of about 1,650 kilometers extremely rich in fish, mollusks and shellfish, Angola also has unique and diverse aquatic products awaiting Chinese partners to develop.

She noted: "There is huge economic potential in Angola and there is a huge know-how and technology potential in China and these factors can be mutually advantageous for both countries."

Angola has set up an attractive business environment which will help attract more Chinese enterprises and investors, the minister said.

In this regard, Angola has two important initiatives.

"As from September this year, we have listed 195 state-owned companies to be privatized. Meanwhile, we have identified 54 products in agricultural, fisheries and mining that can be produced in Angola and be exported," she said.

"We are expecting an active participation of Chinese investors to get the ownership of some of the listed companies and help us in developing other spheres," she said. This will help turn Angola into a productive country and export more nonoil products to other countries.

"We have a long ocean coastline and we are in a region whose surrounding countries have huge trade potential. So Angola can be seen as an import hub for China to expand its business, investment and partnership in Africa," she said.

 

 

]]> 2019-12-18 00:00:00 <![CDATA[Petting zoos warm up 'capital winter']]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529439.htm The huge demand related to spending leisure time with children during the weekend is creating opportunities for indoor petting zoos in China, a new form of business that has received wide attention from investors amid the "capital winter" this year.

As a mini version of a traditional zoo, the indoor petting zoo mainly houses aquatic animals and animals such as pigs, rabbits and lizards. With an average area of 800 square meters, they are usually located in shopping malls in cities.

"It is just a fantastic way to achieve two things. Kids just naturally love animals while we parents feel relief as we don't need to prepare a lot to go to a big zoo that is usually far away," said Zhao Qinghua, a 31-year-old mother from Shanghai.

It was the third time within a month that Zhao had taken her four-year-old daughter to visit an indoor petting zoo near their home.

"She (her daughter) doesn't seem to get bored because she can feel and touch and even play with some animals there, which is much more interesting than any of the entertainment downtown during the weekend," Zhao noted.

Lin Zhonghang, an investment manager from Cambrian Venture Capital, said: "The traditional way of such science popularization cannot meet the diversified demands from parents and children currently."

"The traditional way boasts less density, services and personalized experience, and thereby needs a more diversified product and solution to meet such new demand," Lin said.

Currently in China, at least 20 indoor petting zoo companies are competing for the big cake with more than 100 such zoos emerging nationwide.

Though most firms have encountered difficulties in raising funds amid the "capital winter", Shanghai-based Mr Zoo has finished three rounds of fundraising this year.

The total funds raised have fallen by 10 percent on a yearly basis to 1.08 trillion yuan ($153 billion) during the first 11 months of this year, according to a report from venture capital and private equity research firm Zero2IPO.

"As we now stand at a turning point of family consumption, Mr Zoo has removed the reliance on location which was the case with traditional zoos. It has found new growth engines," said Liu Fangwei, a partner of Fosun RZ Capital.

To gain more profits, Mr Zoo has found new growth points besides traditional admission fees. The firm has developed derivative products and more learning services.

Zuo Qiang, founder of Mr Zoo, said that such revenue already accounted for over half of the firm's total revenue.

"We have paid more attention in verifying the content. Also, we hope to make parents more engaged in such a process," Zuo said.

The new mode speaks for itself. The company has already five stores and six upcoming stores in Shanghai and Suzhou and plans to open 40 to 50 stores in Nanjing and Beijing next year.

Zhu Lin, managing partner of investment firm Gobi Partners, pointed out that the combination of mall, zoo, parent and child is a brand new business model and is set to have great potential in the future.

 

 

 

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2019-12-18 00:00:00
<![CDATA[Financial burden on firms eases]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529438.htm More enterprises feel their financial burden has been reduced this year as the country continues efforts to cut the operating costs of companies and create a good business environment, a new report said on Tuesday.

About 26 percent of more than 6,100 surveyed companies said they feel less of a financial burden this year, compared with a figure of just 14 percent feeling that way last year, the report released by the China Centre for Promotion of SME Development said.

At the same time, 45 percent of the surveyed companies said they have a relatively heavy financial burden this year, but this is down from 57 percent last year, the report showed.

Luo Junzhang, deputy head of the China Centre for Promotion of SME Development, said the nation's unprecedented tax and fee cuts have reduced the burden on companies and boosted their profits.

About 70 percent of surveyed companies said the amount of value-added taxes has dropped significantly, the report said.

At the same time, 90 percent of surveyed companies said they are satisfied with the business environment. Specifically, they are very satisfied with streamlined registration procedures for companies, easy access to affordable electricity, and better protection of intellectual property rights.

The results came after China put in place plans to reduce the tax burden and social insurance contributions of enterprises by nearly 2 trillion yuan ($285.8 billion) this year.

In the first three quarters of 2019, the country has already cut taxes and lowered the costs by 1.78 trillion yuan in total for enterprises, data from the Ministry of Finance showed.

But in the face of economic downside risks and external uncertainties, more efforts are needed to create a pro-business environment and implement all of the tax reduction plans, officials said.

There are also structural differences among the different regions in China.

For instance, the western region boasts low-price electricity supplies. But it is difficult for local enterprises there to access financing and they have to contend with higher financing costs, the report added.

In comparison, companies in eastern China have easier access to financing, but the tax burden and electricity bill are far heavier than their western counterparts, the report explained.

Among the 6,100 surveyed enterprises, some 70 percent are private companies, about 20 percent are State-owned firms, and 2 percent are foreign-owned.

Xin Guobin, vice-minister of the Ministry of Industry and Information Technology, the country's top industry regulator, said as the downward pressure on the economy growth continues, enterprises will face more challenges and they will have a stronger desire for lower operating costs and a better business environment. There is still a long way to go to reduce the financial burden on the country's enterprises. 

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2019-12-18 00:00:00
<![CDATA[Qingdao Port takes lead in automation]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529427.htm A new automated container terminal employing hydrogen energy and 5G technology in Qingdao, Shandong province, represents the future trend of port operation with highly efficient and environmentally friendly features, industry insiders said recently.

The second project of the fully automated container terminal at Qingdao Port was officially put into use on Nov 28 and its handling capacity is expected to reach 1.7 million TEUs (20-foot equivalent units) per year, according to port operators.

"Along the 660-meter shoreline, the terminal owns two berths and has high-end automated facilities including nine ship-to-shore cranes, 38 automatic high-speed tract cranes and 45 automatic guided vehicles," said Yang Jiemin, executive deputy general-manager of Qingdao Port Automated Container Terminal Co.

It took only one year and a half to build this terminal, five times faster than it usually takes, with six self-developed innovative solutions at the forefront of relevant fields across the world, said Yang.

The rail-mounted gantry cranes at the terminal are driven by a hydrogen battery pack, which Qingdao Port claimed was the first used in the port sector worldwide.

Lyu Xiangdong, an engineer of the company, said the new energy replaced coal and oil and produced more electricity with zero carbon dioxide emissions.

"What's more, the new method reduced the weight of the facility by 10 metric tons and lowered its complexity as well as maintenance costs," said Lyu.

Lyu added that the hydrogen is mainly leftover from chemical enterprises in Shandong province and it is a perfect way to turn waste into a resource.

The port operators estimated that the hydrogen energy could reduce electricity consumption by 3.6 percent for carrying every container and save about 20 percent of the cost of purchasing every unit of power equipment.

If this terminal handles an annual throughput of 3 million TEU, it would reduce 20,000 tons of carbon dioxide emissions and 697 tons of sulfur dioxide discharges.

The automation at the terminal has been enlarged by application of 5G technology, "which has covered every corner of the terminal", said Li Yongcui, a deputy general manager of Qingdao Port Automated Container Terminal Co.

Qingdao Port started to use the 5G technology early this year, an advantage of which is that the quay cranes could automatically move containers. It is considered to be the first case of 5G-based technology applied in remote-controlled cranes in the world.

The port also joined hands with China's tech giant Huawei and major telecom company China Unicom to give a special solution to communication between different facilities in the port.

"Compared with optical fiber and other means of traditional communication, the 5G technology features flexibility, low costs of construction and maintenance and scalability.

"Earthwork is usually needed before we install optical fiber to connect different facilities, while the 5G network is not confined to a geographical position and numbers of facilities, some of which will be added later," said Li.

Currently, 5G technology has been applied in the operation of quay cranes and rail-mounted gantry cranes, container movement as well as high-definition video data transmission.

The first project of the fully automated container terminal at Qingdao Port was put into commercial operation in May 2017, which was believed to be the first of its kind in Asia.

The project reduced 80 percent of labor work and improved efficiency by 30 percent. The loading and unloading efficiency reached an average of 36.2 containers per hour from 24.2 when the terminal was operated at the beginning. Its peak efficiency reached 43.8 containers per hour, 50 percent higher than in similar terminals in other countries. It has been considered the first automatic terminal to surpass any human-labor dominated terminal in terms of efficiency.

Zheng Qingxiu, an official in charge of waterway management with the Ministry of Transport, said that Qingdao Port has made its way to becoming an intelligent and green port, setting an example for other domestic ports.

Qingdao Port reported its cargo handling capacity as 540 million tons and 19.32 million TEUs in 2018. Qingdao Port merged with its neighbor Weihai Port in July and then become a subsidiary of the consolidated Shandong Port Group in August.

China has been leading in terms of automated port construction with its considerable number of automated container terminals in the country, according to a report on intelligent shipping development in late October.

Another two examples are Xiamen Ocean Gate Automated Container Terminal in Fujian province, the first intelligent green terminal in China, and the Yangshan Deep-Water Port in Shanghai, the world's largest automated cargo terminal. 

 

 

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2019-12-18 00:00:00
<![CDATA[Travelers expected to hit the road for Spring Festival from Jan 10]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529424.htm With less than 30 days to Spring Festival, which falls on Jan 25 next year, a large number of Chinese people, including huge number of elderly people and children, are expected to hit the road starting from Jan 10, a travel agency said.

Traditionally, most people choose to go back to their hometowns and reunite with their families.

Next year, many young people who were born in the 1980s will choose to spend the festival in their own homes and bring their parents and children to the cities where they work, according to Qunar, one of China's largest online travel agencies.

Of the total, nearly 40 percent of Chinese will choose to spend the holiday in a different place. This would be divided into 30 percent who will opt to stay in the country and 10 percent who will travel abroad.

In fact, it would be much cheaper to buy airplane tickets from smaller cities to go to Beijing and Shanghai, compared with flights starting off from major cities.

For instance, on Jan 22, 2020, an economy class flight from Beijing to Harbin, Heilongjiang province, will cost 1,600 yuan ($229). A flight on the same day from Harbin to Beijing will only cost 340 yuan, Qunar found.

"Now, more people don't care about going back to their hometowns for Spring Festival, as long as they are with the family. It would be a reunion no matter where they go," said Ren Tian, a product manager of Qunar.

During the travel period for Spring Festival next year, the number of flights booked by passengers who are aged 60 or above jumped 19 percent year-on-year, including a significant number of senior citizens who plan to travel alone.

The bookings from children who are aged 12 or below climbed 27 percent year-on-year, Qunar found, although it did not disclose specific numbers.

Haikou and Sanya in tropical Hainan province remain two of the hottest destinations. People who travel there mainly come from Shanghai and Beijing, as well as Guangdong, Heilongjiang and Sichuan provinces.

Compared with the previous Spring Festival, the number of people who have booked flights to go to Haikou and Sanya increased by 20 percent and 40 percent respectively.

Warm overseas destinations like Bangkok and Phuket in Thailand, Kuala Lumpur in Malaysia, and Bali in Indonesia continue to be one of the most popular go-to places for the Spring Festival revellers. The number of bookings for Phuket and Kuala Lumpur from Chinese each surged by 50 percent year-on-year.

"Chinese tourists are seeking more personalized experiences while traveling abroad. They are more willing to slow down the pace of life and enjoy in-depth and tailored trips, encouraged by their growing spending power and evolving tastes," said Dai Bin, director of the China Tourism Academy.

 

 

 

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2019-12-18 00:00:00
<![CDATA[Risk elimination efforts bearing fruit in China, say experts]]> http://www.chinadaily.com.cn/kindle/2019-12/18/content_37529445.htm China has demonstrated considerable success in tackling and eliminating risks amid ongoing efforts to curb financial risks, analysts said.

Government support will remain strong for major banks in China, given authorities' overriding objective of maintaining financial and social stability, global credit ratings agency Moody's Investors Service said in a recently released report.

The introduction of regulations for domestic systemically important banks will tighten supervision of larger banks and help maintain financial system stability, Moody's said. The ratings agency expected the People's Bank of China, the central bank, to continue maintaining ample bank funding through accommodative policies.

China's banking and insurance regulator urged relevant financial institutions to take multiple measures to dispose of and mitigate the risk of banks' nonperforming assets, in addition to classifying bank loans strictly according to their inherent risks as "pass, special-mention, substandard, doubtful and loss" to truly reflect their risk level, Xiao Yuanqi, chief risk officer and spokesperson of the China Banking and Insurance Regulatory Commission, said at a news conference on Oct 21.

Till that date, China's banking sector had disposed of 4.9 trillion yuan ($701 billion) bad loans since the beginning of 2017, he said.

The banking and insurance regulator has effectively contained irregularities concerning financial institutions, businesses and transactions by undertaking remedial measures for almost three years, Xiao said.

China Cinda Asset Management Co Ltd, one of the "big four" State-owned asset managers, has played an active part in the mitigation of credit risks of large private companies with the aim of maintaining regional financial and social stability, as Chinese leaders called for solid efforts to win a tough battle against financial risks.

Xiang Dang, assistant president of China Cinda, said credit risks occurred in some large companies in certain provinces and cities due to various reasons. Some were exposed to the risk of maturity mismatch, which led to liquidity crises. Some pursued an excessively large-scale business without making judgments on business quality and efficiency scientifically. Some overtly diversified their business, and some were lagging behind their competitors in terms of technology.

"We paid high attention to private companies which had the above problems and tracked their problems for the long term … Following the principles of marketization and institutionalization, we pushed ahead with mitigation of potential regional financial risks through a package of solutions," Xiang said at a recent news conference in Beijing.

The asset manager either helped these companies increase the value of their assets and clear up inefficient assets through multiple measures, such as introducing strategic investors, restructuring, and implementing debt-for-equity swaps, after the companies encountered crises or helped the companies resolve liquidity crises by intervening in their business before crises happened.

In 2017, a capital chain rupture occurred at Hongye Chemical Group Co Ltd, a large Shandong-based private company whose business segments include chemical and pharmaceutical industries, trade and small loans, because of overexpansion and its irrational structure of financing.

The crisis affected a number of large local companies which formed a mutual credit guarantee scheme with Hongye, involving debt totaling more than 20 billion yuan. Once a wider crisis occurs, it could have an enormous impact on regional economic, financial and social stability.

China Cinda introduced industrial investors to Hongye. They set up a restructuring fund to dismantle and dispose of the group's assets by business segments, realized asset value maximization of each segment, eliminated outdated production capacity, and cleared up loss-making "zombie" subsidiaries of the group, Xiang said.

"We also broke the chain of debt guarantee of Hongye through combined efforts of reorganization under the bankruptcy law and acquisitions of secured claims, in order to give rebirth to the group and reduce hidden financial risks, on the basis of protecting the interests of its employees and small creditors to the greatest extent," he said.

 

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2019-12-18 00:00:00
<![CDATA[Pork shortages set to ease by next year]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529285.htm Rising domestic production, growing imports and new measures to prevent African swine fever in pig farms will help China overcome pork shortages during the second half of next year, the Ministry of Commerce said on Monday.

The Department of Market Operation and Consumption Promotion under the ministry said China will continue to release frozen pork reserves into the market to curb rising pork prices and ensure that there are adequate supplies during the New Year's Day holiday on Jan 1, and the seven-day Spring Festival holiday in late January.

In addition to encouraging companies to expand their import channels via platforms such as the China International Import Expo, the ministry will work with other government branches to prioritize to imported pork and chilled meat in customs clearance inspections and release at various ports across China.

The ministry said China's meat imports are expected to exceed 6 million metric tons this year, and pork and its by-products will surpass 3 million tons.

Attracted by the country's big population base and spending power, over 1,000 global pork suppliers have registered as importers with the Ministry of Commerce to date this year, about 30 percent higher than in 2018.

China imported 1.58 million tons of pork from global markets in the first 10 months of 2019, mainly from the European Union, South America and the United States, data from the Ministry of Commerce show.

The African swine fever has resulted in a shortage of more than 10 million tons of pork, or at least 20 percent of China's total pork output this year. China produced a total of 31.81 tons of pork in the first three quarters this year, down 17.2 percent on a yearly basis, according to the ministry.

The surging pork prices have also boosted the country's Consumer Price Index to 4.5 percent in November, the year's highest.

Li Guoxiang, a researcher at the Rural Development Institute of the Beijing-based Chinese Academy of Social Sciences, said pork shipments ordered by domestic companies after June had arrived at Chinese ports in November and December, and will help to tackle price rises during the holiday seasons in January.

Moreover, the phase one trade deal reached by the Chinese and US governments last Friday will create new options for China to purchase more US pork and other agricultural commodities to meet its domestic requirements, he said.

Under such circumstances, Li believes that pork prices will not cause any further inflation in the first half of next year if the government continues to release pork reserves, enhances matchmaking between sales and production in global markets, and discloses market information in a timely manner.

Earlier this month, the Ministry of Agriculture and Rural Affairs urged local authorities to provide financial support as soon as possible, guide pig farmers to restore production, and honor subsidies offered to pig farmers who have slaughtered pigs to prevent and control the swine fever.

Under the government plan, China will also build another 120 high-quality standardized pig farms within three years, to improve standardized production of pork.

 

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2019-12-17 00:00:00
<![CDATA[Home prices stabilize in top Chinese cities]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529352.htm Housing prices continued to stabilize in major Chinese cities during November, with fewer cities reporting price spikes as nationwide curbs continued to bear fruit, experts said on Monday.

Out of the 70 major cities tracked by the National Bureau of Statistics (NBS), 44 cities reported higher prices for new homes, compared with 50 in October. It was also the lowest recorded figure in the last two years, according to the NBS.

Local governments continued to implement tightening measures in accordance with their requirements in November, while the long term mechanisms have helped ensure stability in the real estate market, said Kong Peng, chief statistician of the NBS.

In November, new home prices in the four first-tier cities rose by 0.6 percent on a monthly basis, with Beijing seeing an increase of 1.7 percent, followed by Shanghai (0.3 percent) and Shenzhen (0.2 percent). Guangzhou, however, saw prices drop by 0.5 percent from October, according to the NBS data. Compared to last year, the four top tier cities saw a 4.9 percent growth in their new home prices in November on a yearly basis.

"Beijing's growth in new home prices may be due to the newly completed Beijing Daxing International Airport and the ongoing development work in Tongzhou. The promising development outlook has supported price hikes in the two regions," said Yan Yuejin, research director at the E-House China R&D Institute.

New home prices of 31 second-tier cities monitored by the NBS rose 0.2 percent on a monthly basis, while the 35 third-tier cities saw new home prices go up by 0.5 percent, down 0.3 percentage point and 0.1 percentage point from the previous month.

On an annualized basis, home prices in second-tier cities grew by 7.9 percent, down 0.8 percentage point from October, marking the seventh month that the growth rate has fallen. In third-tier cities it was the eight consecutive month of flat or slower growth rates.

"No matter whether it is on a monthly or an annual basis, the 70 cities' growth ranges have narrowed in comparison with the October data, which indicates that home prices are seeing slower growth rates, and in some cases even a downward trend due to the tightening measures," said Yan.

The secondary market is usually seen as a better reflection of the property market in China. In November, it hit a four-year low as just 32 cities reported monthly price hikes, while 33 cities reported price declines.

Average prices of pre-owned homes in the four top-tier cities rose by 0.2 percent from October. In Shenzhen, prices jumped 1.4 percent while in Beijing they weakened by 0.4 percent. In Guangzhou, prices edged down by 0.2 percent while Shanghai stayed unchanged, according to NBS figures. Transaction prices in the four cities in the secondary market rose by 1 percent on average from a year ago.

Prices of pre-owned properties rose by 0.1 percent in second-tier cities on a monthly basis, the same as in October, while in third-tier cities it went up by 0.3 percent, down 0.2 percentage point on a monthly basis.

The growth rate of used home prices in second-tier cities has declined for seven months in a row, and that of third-tier cities for eight consecutive months.

"Prices of pre-owned homes fell in more than 30 cities during October and November, indicating a turning point for the property market," said Zhang Dawei, chief analyst at Centaline Property Agency Ltd. The tendency will continue into December if the existing tightening policies continue, Zhang said.

According to Centaline data, as many as 160 tightening measures targeted at the property market were announced in the fourth quarter to date, and in the first 11 months there were some 554 real estate restriction policies, 30 percent more than the same period of 2018.

 

Potential homebuyers look at a property model in Nantong, Jiangsu province. XU JINBAI/FOR CHINA DAILY

 

 

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2019-12-17 00:00:00
<![CDATA[Short videos, livestreaming help boost poverty alleviation]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529351.htm Short videos and livestreaming applications are playing an increasingly important role in helping users in poverty-stricken areas to gain extra income by creating social e-commerce businesses and bolstering local economies as the country aims to eliminate poverty by the end of 2020.

Su Hua, founder and CEO of Kuaishou, said more than 19 million people earned income through livestreaming videos, e-commerce, knowledge payment and advertisement on Kuaishou this year.

This included over 5 million people from national-level poverty-stricken counties, the CEO said.

Empowering residents from the most underprivileged regions in China, the company has launched a series of rural entrepreneurship incubation programs that educate participants on how to set up and run businesses, as well as help rural residents sell locally made products.

According to Kuaishou, the company has helped its users from impoverished rural areas in China generate $2.8 billion in revenue in 2018.

Jiang Jinchun is a Kuaishou user who preferred recording and uploading videos about local specialties and gourmet items from his hometown in Hengfeng county, Jiangxi province. In 2018, he sold more 1,000 kilograms of tea and arrowroot powder, and helped 200 rural households increase their incomes.

Song Tingting, vice-president of Kuaishou, said the company has made substantial efforts in poverty alleviation, including providing data flows whose value could reach 500 million yuan ($71.4 million) for online content creators that sell high-quality agricultural products in poverty-stricken counties.

Song added that the number of short videos from poverty-hit counties uploaded to Kuaishou has so far surpassed 1.1 billion.

In addition, Kuaishou has cooperated with third-party e-commerce platforms such as Taobao and Tmall, both of which are run by Alibaba Group Holding Ltd, mobile e-commerce platform Youzan, which is backed by Tencent Holdings Ltd, JD and online discounter Pinduoduo Inc.

So far, the company has more than 200 million daily active users and over 400 million monthly active users, with more than 200 million content creators recording and sharing their videos on the platform last year.

Short videos are seeing explosive growth in China. The revenue of the short video industry reached 14.01 billion yuan in 2018, up a blistering 520.7 percent year-on-year, and the figure is expected to surpass 55 billion yuan in 2020, said market research company iResearch.

Founded in 2011, Kuaishou allows users to upload short videos of 10 seconds to a few minutes each, with the content ranging from cooking to physical exercise, dancing and family gatherings.

Official figures showed that China's poverty relief achievements have contributed more than 70 percent to global poverty alleviation work in the past 40 years. The China aims to eradicate poverty by 2020, amid its drive to finish building a moderately prosperous society in all aspects.

"The method of publicizing products through short video platforms can greatly solve the lagging sales of agricultural products caused by a lack of resources and channels," said Zhang Xintian, an analyst from iResearch.

Users could learn about high-quality agricultural products through short videos, and further improve their awareness of rural life, Zhang explained.

Zhang added that cooperation between short video and e-commerce platforms is an explosive commercial model as the former can drive online traffic to the latter. Short video platforms could build their own e-commerce platforms and logistics infrastructure in the future, he said.

 

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2019-12-17 00:00:00
<![CDATA[State Grid to buy stake in Omani power utility]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529340.htm The State Grid Corp of China has agreed to acquire a 49 percent stake in Oman's Electricity Holding Co, a landmark deal that marks a new step for China and Oman to jointly pursue cooperation under the Belt and Road Initiative.

The State-owned grid operator said on Monday that it has signed an agreement with Oman's Nama Holding, the holding company of Omen Electricity Holding Co, without giving any financial details.

State Grid President Xin Baoan termed the steps as a significant one that will deepen the strategic partnership between the two countries and expand bilateral economic, trade exchanges.

"As a long-term investor in the global power industry, State Grid will give full play to its comprehensive advantages in technology, management, construction and capital. We will work with Omani partners to ensure safe and reliable power supplies for Oman's economic prosperity and social development," Xin said.

Chinese Ambassador to Oman Li Lingbing said the deal is the largest single investment by a Chinese company in Oman and will help expand power and energy cooperation between the two countries.

Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, said going global is a practical measure for the State Grid as there are ample opportunities to invest and operate in the BRI-related economies.

State Grid has strong management capabilities and has the ability to turn loss-making overseas projects into money-spinners, he said.

"SGCC's modern and efficient management ensures that it is able to undertake BRI projects with promising profitability," he said.

Another factor contributing to SGCC's profitability and increasing presence in overseas projects is that Chinese companies have low construction costs, he said.

State Grid supplies power to over 1.1 billion people in 26 provinces, autonomous regions and municipalities in China. It has invested and operated backbone energy networks in countries like Brazil, the Philippines, Portugal, Australia, Italy and Greece.

In recent years, China and Oman has been actively embracing the Belt and Road Initiative and has already made considerable progress.

Chinese companies have carried out a number of projects in Oman with cumulative turnover of more than $6 billion, covering fields such as oil and gas resources exploration and development, electricity, communications, deep-sea fishing and processing sector, ambassador Li said in a recent interview with Xinhua News Agency.

China has been Oman's largest trading partner for several years, while Oman is China's fourth-largest trading partner among Arab countries. Bilateral trade volume between the two countries reached $21.7 billion last year, up 40 percent year-on-year, Li said.

 

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2019-12-17 00:00:00
<![CDATA[Integration essential for development]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529337.htm The Yangtze River Delta region, which accommodates one of the most economically vibrant urban agglomerations in China, will become a key conduit for the country's new round of opening-up, experts said.

At the beginning of December, a new master plan was unveiled by the central government to advance the integrated development of the Yangtze River Delta region. As the plan specifies, cities in this region should make joint efforts to promote opening-up at a higher level.

The China International Import Expo, which has been held in Shanghai for two consecutive years, should serve as an important gateway for companies in this region to explore more business opportunities in the world, according to the plan.

Tong Jisheng, chairman of Shanghai-based conglomerate Orient International (Holding) Co Ltd, said the company has helped to build the Hongqiao imported goods exhibition and trading center, which will allow exhibits at the CIIE to take priority when entering the trading center's bonded warehouse. This will help to build Shanghai into an import goods center that serves not only the Yangtze River Delta region, but also the rest of the country.

According to the recently released master plan, the 358,000-square-kilometer Yangtze River Delta region is about the same size as Germany and encompasses Shanghai and parts of Zhejiang, Jiangsu and Anhui provinces. The region accounts for a quarter of China's GPD and a third of foreign trade and investment.

Hu Jiangyun, director of the foreign economy research department at the Development Research Center of the State Council, said the Yangtze River Delta region should not only lead China's economic development, but more importantly become a role model globally in terms of coordinated development of an area.

"China's opening-up has entered a new stage, for which the Yangtze River Delta region should play a key role," he said.

According to Xu Hongcai, deputy director of the economic policy committee of the China Association of Policy Sciences, Shanghai has always been a pioneer regarding China's openingup. Innovative efforts such as the free trade zone, which was first introduced in Shanghai, are now radiating out though the rest of the Yangtze River Delta region. Therefore, the neighboring cities should work even more closely with Shanghai to seek higherquality development.

The Yangtze River Delta region should aim to build a first-rate business environment and a new high standard mechanism for opening-up.

To this end, innovation in human resources management should be introduced initially as this is a prerequisite of industrial upgrading and transformation, as well as for the development of modern high-tech industries.

In this sense, the household registration and social security systems in cities in the Yangtze River Delta region should be connected to facilitate the free flow of human capital, Xu suggested.

The integrated development of the Yangtze River Delta region, especially the smoother exchange of talents, is essential to German industrial giant Bosch's operations in China, said Chen Yudong, president of Bosch China.

About 75 percent of the annual turnover of Bosch China, which has its regional headquarters in Shanghai, is contributed by operations in the region, Chen said.

According to Chen, three-quarters of Bosch China's work force are based in this area. Among the 10,000-plus employees in its Suzhou factory, nearly half are engineers who frequently travel between Suzhou and Shanghai.

"As the development of the cities in this area will be further coordinated, it is our hope that there will be free flow of people, which will benefit companies of our kind," he said.

Shanghai has always been a stronghold for multinational companies in China. So far, a total of 710 multinational companies have set up their regional headquarters in Shanghai, while another 453 firms have built their R&D centers in the city, according to the Shanghai Municipal Commission of Commerce.

The Shanghai facility of German heating and sun roof solutions provider Webasto now works as the company's regional management headquarters and R&D center.

Zhang Lihua, deputy president of Webasto Roof Systems China Ltd, said the production function of the Shanghai venue will be gradually moved to neighboring cities in the Yangtze River Delta region.

"Shanghai, working as a hub for both management and technology talents, is one of the major reasons for establishing the regional headquarters here," he said.

 

A visitor looks at a model of an industrial logistics network made by Bosch during the second China International Import Expo in Shanghai on Nov 8. XINHUA

 

 

 

 

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2019-12-17 00:00:00
<![CDATA[Road map prioritizes innovation as key to world-class city cluster]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529336.htm With the recent release of a new development plan on the integration of the Yangtze River Delta region, all eyes are on how industrial upgrades will be ramped up in the nation's most affluent region.

Under the latest road map, the region will prioritize enhancing innovation capabilities by achieving a number of key, indigenous technological breakthroughs and building major infrastructures on promoting science and technology development.

A noteworthy point in the guideline is to actively turn academic and scientific fruits into concrete products and solutions, as well as create an effective mechanism to facilitate such translation.

The key to achieving high-quality and integrated growth is to strengthen industrial development in a coordinated fashion, said Wang Ronghua, former vice-chairman of the Chinese People's Political Consultive Conference Shanghai Municipal Committee.

"The world-class city cluster we are aiming to build in the Yangtze River Delta region should first and foremost be a global leading science and technology hub. Institutional arrangements should therefore be in place to support its development," he said.

The plan clearly draws on global experience of regional development, such as that of New York Bay or Silicon Valley, specifying respective roles of different cities in driving development, said Petrel Tang, a China-based partner at professional service firm PwC Strategy&.

"The new plan has made explicit the pioneering role of Shanghai in the Yangtze River Delta region-to be a globally renowned science and technology hub and allow China to compete on a global scale," she said. "So relevant policies are highly market force-driven and industry-focused."

The road map said the region should give full play to the role of the technology trading market to promote interconnection and interoperability within the region, constructing a global distribution hub for innovative achievements.

According to Tang, three factors are in place to bolster the goal-the Lingang expansion of the Shanghai Free Trade Zone, the emphasis on strategically emerging industries, and the establishment of the STAR Market, a technology innovation board for listing promising startups.

"These existing mechanisms and policies are critical prerequisites for fostering and accelerating new technological breakthroughs," she said. "The next step is to form concrete mechanisms to give technology exchanges a green light."

According to the plan, policy support will be rolled out for collaborative innovation, including the formulation of a pilot plan for comprehensive innovation reform to spark more inter-regional synergies.

Ma Yanmin, head of the China Private-owned Science and Technology Promotion Association, believed the plan addresses the three keys to a genuine innovation hub-ability to make technological breakthroughs, effective aggregation and allocation of resources, and a business environment conducive to the growth of startup companies.

Another case in point is the establishment of an artificial intelligence technology association earlier this month in Shanghai, bringing together 300 AI firms in the Yangtze River Delta region to share resources and assist each other.

CraiditX, a Shanghai-based company specializing in empowering the finance industry using AI, believed the integrated development plan will help proliferate its unique industrial strength to a broader reach within the area.

"Shanghai's goal of building itself into a global financial center is conducive to our business in gathering data and tapping new frontiers, allowing us to accumulate some novel practices and invaluable experience," said Zhu Mingjie, CEO of CraiditX.

"Thanks to the new plan, we are more likely to bring our technologies and know-how to other cities in the Yangtze River Delta region and improve the overall intelligence level of the financial sector," Zhu said.

Entrepreneurs like Gu Jie, founder and CEO of Fourier Intelligence, are looking to the fast adoption of innovative products in a regional pilot demonstration zone.

"We also hope more policies will be unveiled to facilitate the flow of high-end talents, such as the further relaxation of the household registration system," said Gu, whose company is a domestic leader in rehabilitation robotics.

 

Newly produced cars are ready to be uploaded onto ships at a port in Lingang, Shanghai. XINHUA

 

 

 

 

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2019-12-17 00:00:00
<![CDATA[Baidu bets big on knowledge-sharing sector]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529288.htm Chinese internet search giant Baidu Inc is banking on online paid knowledge services and speeding up its layout in the video content sector in an attempt to entice a new breed of users and grab a bigger slice of the booming knowledge-sharing market.

"Online users have an increasing demand for knowledge, as the average daily search volume for knowledge and content at Baidu's platforms has reached 1.54 billion, and people spent over 630 million minutes browsing content every day," said Ruan Yu, general manager of Baidu Knowledge.

Ruan said she is bullish about the prospects of online paid content and will give top priority to Baidu Wenku, which was launched in 2009 and serves as an online platform allowing online users to read, share, upload and download files, books and documents.

Baidu Wenku has announced plans to invest 500 million yuan ($71 million) in improving knowledge services and supporting premium content creators next year. The platform began to run the paid knowledge business in 2013 and has already obtained membership fees, she explained.

Ruan said they are doubling down on knowledge videos and high-quality content, and planning to incubate 10,000 video creators, buoyed by the knowledge consumption upgrade in the hope that vivid and interesting short videos could make it easier to obtain knowledge.

So far, Baidu's knowledge-sharing platforms own 220 million content creators, along with over 50,000 scholars and experts as well as 60,000 partners. Its knowledge and content products serve more than 230 million people every day. Market research and consulting group iResearch said China's online paid knowledge industry is expected to witness explosive growth in the next three years. Its revenue is expected to skyrocket to 23.5 billion yuan in 2020 from 4.91 billion yuan in 2017.

The Beijing-based tech heavyweight has showed its ambition to expand its presence in content. In August, it poured money into question-and-answer website Zhihu. The financing allows Baidu to add more than 100 million of Zhihu's Q&A posts to its mobile app and distribute the content to different users though the application of artificial intelligence technologies.

The company has also invested in NetEase Cloud Music, one of China's major music livestreaming services, and a series of video-sharing platforms such as Baidu Video, Qingting FM, Pear Video and Renren Video.

Baidu is engaged in a fierce battle with Beijing Bytedance Technology Co Ltd, which is moving beyond its core businesses in news and video and into workplace messaging and music streaming, entering a sector currently dominated by Baidu.

Bytedance owns news aggregator Jinri Toutiao and streaming platform Douyin. It has launched a new search engine In China.

"At present, more and more white-collar workers, college students and other young groups pay more attention to personal development under the existing material conditions, so they have greater willingness to pay for an experience and accept such kind of consumption patterns," said Huang Guofeng, an analyst at Beijing-based internet consultancy Analysys.

Yu Bin, an independent commentator on the internet industry, said the knowledge-sharing industry should be focused on high-quality content and vertical industry, exploring more forward-looking knowledge to attract users.

 

 

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2019-12-17 00:00:00
<![CDATA[Anti-hair loss products show growth potential]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529314.htm When he woke up at 6 am, Zhao Dong, a 27-year-old programmer in Beijing, looked at the hair on his pillow and sighed. He reached for his phone, and placed another order for anti-hair loss shampoo online.

Zhao has been suffering from hair loss for over a year. Apart from anti-hair loss shampoo, he has tried hair growth serum, a hair growth comb, and a hair growth machine, which cost him 6,000 yuan ($853).

The potential value of China's anti-hair loss market is over 400 billion yuan, and the millennial generation is turning into a major driving force, with the increasing life pressure, and the rising purchasing power of young people, market insiders said.

Chen Qiaoshan, a medical analyst at Beijing-based market consultancy Analysys, said: "The young generation stay up late, and usually eat unhealthy food. In addition, they pay more attention to their appearance, so they spend a lot of money on anti-hair loss products."

Data from Alibaba's e-commerce platform Tmall showed that during the Singles Day shopping festival in November, the post-1990 generation became the largest consumption group for hairpieces, taking up 42.41 percent, making them the generation to suffer most from hair loss among Chinese.

The 1980s and 1970s generations also ranked high, accounting for 25.88 percent and 14.28 percent respectively, according to transaction volume on Nov 11. Shanghai, Beijing and Shenzhen in Guangdong province were the top three cities when it came to the purchase of hairpieces.

"The data released simply rubbed salt into my wounds. Increasing work pressure, staying up late and erratic hours are causing my hairline to recede. I would spend money on whatever makes my hair grow back," Zhao said.

Data from market consultancy iiMedia Research showed that from 2017 to 2018, those suffering from hair loss aged between 26 and 30 took up 41.9 percent, becoming the largest among all age groups.

As is shown by research company CBNData in Shanghai, in 2019, the online consumption volume of anti-hair loss products has been growing, and the number of consumers surged by 40 percent year-on-year. The post-1990 generation turned into a major consumption power, taking up over 40 percent of online transactions.

Specifically, their anti-hair loss choices are diversified. Young female consumers favor hairline filling powder, while male consumers tend to buy hair fiber powder. In the past three years, young consumers' anti-hair loss consumption have experienced structural changes, and they are now more willing to buy relatively expensive products, such as scalp essence and high-tech hair growth machines, according to CBNData's report.

Anti-hair loss shampoo, the most traditional choice for those suffering from hair loss, also showed potential growth. Industry data showed that in 2018, the market volume of anti-hair loss shampoo reached 1.13 billion yuan, up 15.3 percent on a year-on-year basis. It is estimated that the market will surpass 1.5 billion yuan by 2020, and the young generation is estimated to be the main consumption power.

And enterprises are adjusting their marketing strategies to target young consumers. Traditional Chinese herbal anti-hair loss shampoo brand Bawang Group launched an intellectual property (IP)-protected cartoon "Bawang elf family", which was drawn on the product package to attract young consumers. It also teamed up with gaming companies to launch crossover-brand products.

In 2018, it replaced its endorser Jackie Chan with singer Mao Buyi, who is popular among the post-1990 generation, making its brand image look younger.

This year, Bawang held an advertising idea collection activity in universities in China, further enhancing its influence among young adults. Through the activity, the company collects young consumers' thoughts on issues including hair loss anxiety, secrets to make hair denser, as well as their recommended advertising slogans for Bawang.

Luo Tianxiang, public relations manager at Bawang, said: "In recent years, we have been stepping up efforts to revitalize the brand, by focusing on the demands of young people and helping them resolve hair loss problems. As a traditional Chinese herbal brand, we are demonstrating a younger image."

Chen from Analysys noted that the anti-hair loss market among young consumers will continue to expand in the future, as they care a lot about their appearance, but are unwilling to change their unhealthy lifestyle.

"They continue to stay up late, eat junk food, and when their hair falls out, they simply buy more anti-hair loss products," she said.

 

 

 

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2019-12-17 00:00:00
<![CDATA[Intesa allowed to offer fund sales service]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529312.htm China further opened up its financial sector for foreign investment by allowing Intesa Sanpaolo Group, a leading banking group in Europe, to become a fund sales agent in the country.

The Italy-based banking group will offer fund sale services through Yi Tsai (Italian talent), its fully-owned subsidiary, after the unit completed a pilot project in the coastal city of Qingdao, Shandong province, China's designated pilot zone for wealth management initiatives.

This is the first fund distribution license given to a foreign financial institution since China decided to further open up its financial sector in 2017 as part of the overall opening-up process, said Ye Tan, an independent financial analyst.

"It shows the confidence of the European financial community in the Chinese market," said Ye.

"With Yi Tsai, we have taken an important step forward in developing Intesa Sanpaolo's wealth management business on an international scale," said Carlo Messina, CEO of the Turin-headquartered Intesa Sanpaolo in a statement.

Messina said that their objective would be to offer high-end clients a full range of advisory services geared toward long-term wealth management and financial planning.

"After the full launch in Qingdao, we will focus on expanding into other provinces in China with dedicated branches and on developing an attractive product mix for the Chinese market with the support of best-in-class partners," Messina said.

Established in 2016, Yi Tsai is now fully operational in the Chinese market. Besides, Intesa Sanpaolo also holds a 13.85 percent stake in Bank of Qingdao, the second largest shareholder of Yi Tsai.

Under the terms of the fund distribution license, Yi Tsai will distribute public and privately distributed funds, which have been carefully selected from the Penghua product range, an affiliate of Intesa Sanpaolo's Eurizon Capital, and from other asset management companies in China. Distribution will be carried out by Yi Tsai's network of financial advisers.

Antonello Piancastelli, chairman of Yi Tsai, said that with the gradual opening of market access and investment channels, foreign financial institutions are taking up a more active role in China.

"The company is increasing investment in capital and talents, and taking concrete action to express its long-term confidence in China's capital market," said Piancastelli.

Zeng Linghua, a fund analyst at howbuy.com, a third-party investment consulting firm, said foreign investors were attracted by the huge growth potential in the wealth management market for Chinese individuals although the parent companies of wholly-owned foreign enterprises are still not familiar with China's capital market.

Foreign investors are likely to stick to providing services with special features to high net-worth individuals, including mutual funds and private funds, said a person who works for a medium-sized fund sales platform in Shanghai.

 

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2019-12-17 00:00:00
<![CDATA[ESG investment expected to gain traction in China]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529306.htm ESG investment, which emphasizes sustainable development, is gaining increasing popularity in China as industry experts believe it will have large room for growth given the country's transformation to a high-quality development model and the ongoing internationalization of A-share companies.

ESG (environmental, social and governance) investment is a new kind of strategy that evaluates the comprehensive value of a company's impact on the environment, its social and governance policies rather than focusing largely on its financial performance.

"With China's economic transformation and internationalization of Chinese A shares, ESG investment will have vast room for development," said Wan Qiong, the manager of fund management company Bosera Funds.

"It will not only help avoid 'Black swan incidents' brought by non-financial factors, but could also bring excess earnings to investors."

Financial data provider Wind said ESG investment funds made an average profit of 30.33 percent as of Dec 13, with the highest rate hitting 80 percent.

Compared with Western countries, ESG investment began late in China.

Chinese A-share listed companies have so far insufficient disclosure data on their reports for social responsibility. But Wan believes the increasing inclusion of A shares into MSCI benchmark indexes will improve the situation.

"If Chinese listed companies want to build a good image in MSCI's criteria system, gain attention from overseas investment institutions and enhance their global competitiveness, they will work more actively on social responsibility and attach more importance to the disclosure of related reports. That will, in return, promote the development of ESG investment," she said.

More Chinese listed companies have already realized the importance of ESG in their development and have been making efforts in the field. According to a recent MSCI report, 11 percent of Chinese listed companies scored higher on ESG criteria over the past year.

ESG investment has seen remarkable growth across the globe in recent years. Data from investment research firm Morningstar showed that newly-added capital of ESG exchange traded funds reached a record 4.3 billion euros ($4.79 billion) in the third quarter of 2019.

Financial institutions have also spotted the opportunity and are moving to grab a share of the market.

A number of fund management companies such as Bosera Funds, Hwabao WP and E Fund among others have set up or issued ESG funds. Bosera Funds issued an ESG fund on Monday that tracks the performance of 100 listed companies on the benchmark CSI 300 Index.

Liu Wei, deputy general manager of the investor services department at the Shanghai Stock Exchange, said ESG investment plays an important role in enhancing the quality of Chinese listed companies and promoting further opening-up of the Chinese capital market.

ESG-themed ETFs will inject more vitality into the innovative development of China's capital market, Liu said at the China Sustainable Finance Forum 2019 in Shanghai earlier this month.

 

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2019-12-17 00:00:00
<![CDATA[Coordinated steps needed to establish robust nodes]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529291.htm International think tanks have suggested that a coordinated approach is needed to build small-and medium-sized cities in the Yangtze River Delta region as robust nodes with distinguished characteristics.

Many such cities have failed to become strong and reliable nodal cities, which may hinder the long-term growth of the region, which is at the forefront of international collaboration and competition, the think tanks said at the 2019 Shanghai International Think Tank Summit earlier this month.

Many of the cities are focusing on their own development, which is resulting in repetitive competition, they said at the summit held by the Development Research Center of the Shanghai municipal government.

The summit followed the unveiling of a master plan regarding the Yangtze River Delta region's development this month by the central authorities to boost vitality in the region, about the size of Germany.

They gave the example of the new energy vehicle industry in the delta region, which produced 2.38 million units last year, accounting for nearly one third of the country's entire production, while only 530,000 such vehicles were sold.

"It revealed obvious overcapacity. There are at least seven new energy vehicle manufacturing towns in Zhejiang cities including Hangzhou, Huzhou, Ningbo and Jinhua, which mainly came into being due to the country's preferential policies since 2010. But some have encountered problems, defaulting on payments to employees and suppliers and laying off employees," said Zhu Hui, a global partner at Boston Consulting Group.

Alex Xu, global senior partner and vice-president of Roland Berger China, suggested that governments in the delta region establish an economic development and innovation road map to make similar resources in the region more visible.

"The German government has set up a map integrating enterprises, research institutes, universities, testing facilities and factories involved in industry 4.0 to contribute to a more coordinated plan for the entire nation," he said.

Japan's experience of building its city clusters through layout of diversified industries from the entire region offers lessons, they said.

"For example, Kawasaki, which is in Tokyo's metropolitan area, has been ranked top in the country for technological service, and Utsunomiya has been forged into a research, development and manufacturing base for robots and precision machinery in the area," said Zhu.

 

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2019-12-17 00:00:00
<![CDATA[Digital platform to support cross-border e-commerce]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529290.htm Cities in the Yangtze River Delta region will work together to construct a digital trade platform allowing cross-border e-commerce to play a vital role in driving economic development.

According to a guideline issued earlier this month, the region will speed up the construction of comprehensive cross-border e-commerce pilot zones in selected cities including Shanghai, Nanjing, Hangzhou, Hefei, Ningbo, Suzhou, Wuxi and Yiwu, which will work together to build a global digital trade highland.

Besides, the region will promote the transformation of foreign trade business processes and data sharing, and promote the digital transformation and facilitation of trade supervision.

In addition, new models, rules and standards of global e-commerce will be formulated to strengthen the construction of digital platforms and promote innovation in international trade systems, management and services.

This marks a substantial step forward in combining experiences from some of the region's major trial zones to see what possible synergies can be generated to form new best practices, said Petrel Tang, a partner at professional service firm PwC Strategy&.

"Shanghai has initiated the first nationwide FTZ, and its array of duplicable experiences in negative list, trade facilitation and financial innovation can be referenced by other cities," she said.

Meanwhile, other pilot zones can share their strengths in their respective areas of focus, such as in the field of cross-border online merchandise settlement, she said.

For example, Yiwu, a city in Zhejiang province known for manufacturing and exporting small commodities, is being highlighted in the guideline for its role in promoting free trade and helping Chinese products gain more exposure worldwide through digital sales channels.

The city has taken the initiative to join the so-called electronic World Trade Platform with Alibaba Group, with an aim of lowering barriers to global trade for small and medium-sized enterprises.

Under the agreement, the tie-up will focus on digitizing trade infrastructure and developing additional trade flows for the city. The venture will also focus on innovations in trade finance and establish a smart logistics hub there.

"The signing of the agreement shows that the two biggest markets, online and offline, are joining hands to create new trade rules, together with SMEs and micro businesses around the world," Lin Yi, secretary of the Yiwu Municipal Committee of the Communist Party of China, was quoted by Xinhua News Agency as saying in June.

This is likely to spark cooperation with other like-minded initiatives such as year-round exhibition of imported goods by Donghao Lansheng Group, under the auspices of the China International Import Expo.

Both physical and digital exhibitions have gone online to connect merchants and buyers via logistics, custom clearance, foreign exchange, insurance and payment services, according to company chairman Wang Qiang.

Dora Liu, innovation lead at Deloitte China, believed the traceable flow of information online will facilitate matchmaking of resources by mining relevant data, therefore making cross-border trade easier and more attainable.

 

Customers shop at a brick and mortar store of a cross-border e-commerce firm in Yiwu, East China's Zhejiang province. XINHUA

 

 

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2019-12-17 00:00:00
<![CDATA[Energy giant inks deal with strategic investors]]> http://www.chinadaily.com.cn/kindle/2019-12/17/content_37529326.htm Energy giant State Power Investment Corp signed an agreement with eight strategic investors on Monday to raise 24.2 billion yuan ($3.46 billion) from the China Beijing Equity Exchange for its subsidiary Huanghe Hydropower Development Co Ltd.

In exchange, the investors, including China Life Insurance Group Co, Industrial and Commercial Bank of China, and Agricultural Bank of China, will get a 34.97 percent stake in the subsidiary.

The fundraising is the largest among all the mixed ownership reform programs for State-owned enterprises so far, and also is the largest equity financing project in domestic energy and electricity sector, said Qian Zhimin, chairman of SPIC.

The move reflects the company's unwavering efforts to deepen mixed ownership reform and to contribute to China's commitment to build a clean, safe and efficient energy mix, he said.

Zhou Lisha, a researcher at the research division of the State-owned Assets Supervision and Administration Commission, said the transaction demonstrates win-win cooperation from the participants in mixed ownership reform based on market mechanisms.

"Clean energy development needs large amount and long-term investments, and through equity financing, SPIC's equity shares of the subsidiary are transformed into capital it needs through fair and market-based pricing," she said.

"At the same time, modern corporate management experiences from the investors are brought into the company, and once clean energy projects are on stable track, they will provide steady, lasting cash returns to investors."

The company said money raised through the transaction will be invested in several photovoltaic and wind power projects in Qinghai province with capacity totaling 4.05 million kilowatts, which is close to new clean energy capacity the subsidiary had in the past 10 years.

It will also accelerate the integration of high-quality clean energy assets in related regions and strengthen utilization of capital markets after the equity transaction, to boost its presence as a world-leading clean energy player, the company said.

Data from SPIC showed clean energy capacity accounted for 50.07 percent of its total energy capacity by the end of November, hitting 73.5 million KW. The company's solar electricity generation and clean energy capacity have topped in the world and China respectively.

It has 324 subsidiaries with mixed ownership, which have brought in 25.2 billion yuan of private capital. Through mixed-ownership, the company has built an additional 253 new energy projects, using 6.7 billion yuan of investment from the private sector.

 

The booth of State Power Investment Corp at an industry expo in Beijing. DA WEI/FOR CHINA DAILY

 

 

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2019-12-17 00:00:00
<![CDATA[O2O model heralds hospital-to-home medical care]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529186.htm Medical treatment in China will increasingly evolve from the current model of patients seeing doctors exclusively in physical hospitals into a combination of initial offline consultations with online follow-up consultations, or the offline-to-online (O2O) model, providing improved efficiency and convenience, industry experts said.

Xie Fangmin, CEO of Jianke.com, China's leading business-to-consumer pharmaceutical e-commerce platform, believes that it is well-positioned to support healthcare providers to embrace this online future.

Jianke's telemedicine software provides each registered doctor with a unique QR code. After an initial offline consultation, patients scan this code using their mobile phone to establish a doctor-patient relationship through Jianke's platform, which facilitates online follow-up consultations and electronic prescriptions and prescription refills.

During its 2019 Partnership Summit, the Guangdong-based company announced its strategic plan for 2020 and beyond, aiming to develop a smart hospital of the future, and expanding from its original "services plus pharmaceutical products" operating model into a true "Hospital to Home", or H2H enabler.

"By leveraging technological advancements, common medical services, drug services and chronic disease management can move from hospitals to patients' homes. This will improve the patient experience, enhance the availability and accessibility of medical services and medicines, thereby providing patients with an improved quality of life," said Xie.

He noted that the H2H model has the potential to break down traditional barriers to healthcare access in China, where medical care is still largely delivered offline at physical hospitals. At the same time, it can also help transform the entire healthcare paradigm from disease treatment to preventive care and comprehensive health management.

"We believe that our model can be especially beneficial to patients suffering from chronic illnesses, such as liver disease, diabetes, cardiovascular and neurodegenerative diseases," he said.

According to a report from Beijing-based market consultancy Analysys, in 2019, the online transaction volume of prescription drugs is estimated to grow by 42.1 percent year-on-year, while that of offline hospitals and retailers will only increase by 4.3 percent.

Meanwhile, data from the National Health Commission showed that in 2017, China's online healthcare market reached 32.5 billion yuan ($4.6 billion), 45.87 percent higher than that of the previous year. Industry experts estimated the market will grow to 90 billion yuan by 2020.

Cheng Ji, deputy secretary-general of the Life Oasis Foundation of the China Primary Health Care Foundation, said that with the help of internet-based healthcare, prescription drugs that would have originally taken over 10 days from prescription to delivery to a patient's home now take only three days.

"Once a patient has purchased medicine from physical hospitals or offline retailers, they can obtain prescription refills online afterward," Cheng said.

Xu Jiawei, China business unit head for Cialis and retail distribution at Eli Lilly and Co, said that e-commerce healthcare has transformed the nature of the digital media.

"Using the communication power of the internet, information can be conveyed to patients directly. E-commerce links hospitals and pharmacies to form a complete healthcare ecosystem, which includes online consultation, offline referral, electronic prescription and drug delivery," he said.

In April 2018, the State Council, China's Cabinet, issued new guidelines to promote internet-based healthcare, encouraging medical institutions to leverage internet-based technologies to improve the efficiency of medical services.

In August 2019, the National People's Congress released an amendment, offering further guidance to expressly permit the sale of prescription drugs online.

Xie from Jianke noted that the H2H model enables doctors to serve patients with greater precision. "In the future, we believe that the H2H model will continue to develop in coordination with changes to social insurance and pensions, while creating value for all stakeholders."

By the end of October, 100,415 doctors were registered on Jianke's telemedicine platform, growing 2,500 percent year-on-year. Jianke's H2H business unit also partnered with 114 pharmaceutical enterprises, ranking first in the industry, while facilitating 1.6 million online electronic prescriptions.

 

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2019-12-16 00:00:00
<![CDATA[Tourism event in Kunming showcases prospects]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529236.htm KUNMING-Vivian Wu, an experienced online travel business professional from the United States, has been busy meeting her Chinese suppliers and seeking opportunities at the 2019 China International Travel Mart or CITM, which concluded on Dec 1 in Kunming, capital of Southwest China's Yunnan province.

Wu has been working in the online hotel business for the China market since 2004 and began to expand her career in the online tour business segment in 2015 for TripAdvisor, an online travel platform.

"In the past 15 years, China's online travel industry has grown rapidly. The China market has huge potential no matter if it's from the perspective of local tour operators or the consumer booking behavior," said Wu, regional manager of Greater China, TripAdvisor Inc.

In early November, TripAdvisor Inc reached a strategic partnership with Trip.com Group Limited, China's largest online travel agency, to expand global cooperation, including a joint venture, global content agreements and a governance agreement.

The strategic partnership will expand TripAdvisor's global reach and help outbound Chinese travelers plan more meaningful trips, said Wu, who has participated in the CITM many times.

"I am here to look for potential targeted suppliers and to understand the latest market trends of China's tourism. Of course, it's also a great opportunity to catch up with many of my existing suppliers from all over China," she said.

Wu said she found that traditional offline tour operators are starting to pay much more attention to online business. They also have a strong desire to cooperate with online travel agencies.

Founded in 1998, the CITM has grown into one of the largest and most influential tourism fairs in the Asia-Pacific region.

The three-day event, sponsored by the Ministry of Culture and Tourism, the Civil Aviation Administration of China and the provincial government of Yunnan, attracts representatives and exhibitors from 75 countries and regions.

Tourism has become an important engine to power global economic growth with the total number of inbound and outbound tourists in China reaching 291 million in 2018, up 7.8 percent year-on-year, according to Luo Shugang, minister of culture and tourism.

China's cultural and tourism departments at all levels will continue to expand the industry, promote international cultural and tourism exchanges and cooperation, and provide more opportunities for all countries, he said.

Jacob Iwikua, journey coordinator of Scenic Luxury Cruises and Tours, an Australian company, said it was his first time to travel in China and participate in the CITM. But he has worked in China's inbound tourism industry for years.

"We send about 3,000 tourists from Australia, the US and the UK to China each year. The top destinations on their list include Beijing, Shanghai, Lijiang and Shangri-La," Jacob said, adding that he will visit some scenic spots in Yunnan this time to find more business opportunities.

"There is certainly a lot of potential in China's tourism market. It's an ever-growing market, especially for Australian guests," Jacob said.

 

 

 

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2019-12-16 00:00:00
<![CDATA[Corporate China sets tone in global digitalization]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529230.htm Corporate China is embracing in-depth digital transformation, and has led the world in the digitalization of consumer-oriented products or services, backed by its strong market vitality and large talent pool, experts said.

E-commerce, mobile payments, retail, finance, entertainment … China's corporate sector has made significant progress in such segments in terms of digitalization, driven by the internet-savvy consumers, said Jeongmin Seong, senior fellow at the McKinsey Global Institute, a consultancy.

In 2005, the country contributed only 1 percent to global e-commerce sales. But, by last year, that figure skyrocketed to 46 percent, according to McKinsey research. The penetration of mobile payments in China is three times higher than that of the United States, it said.

Seong said China has a large market for digital consumption with its 850 million netizens and over 200 million "data natives"-those 25 years old or younger, who were born and grew up with the rapid development of the internet. They are more willing to pay for new digital services.

Besides, piles of digital companies spring up every year, which creates fierce competition and cutting-edge innovations. The government also provides free space for companies to make early-stage market trail, all resulting in the boom of the digital economy, he said.

Last year, China's digital economy reached 31.3 trillion yuan ($4.45 trillion), accounting for 34.8 percent of the country's GDP, data from the China Academy of Information and Communications Technology showed.

"It is no secret that digitalization has become one of the main arteries powering the pulse of the global economy and also a strong driver of the ongoing, comprehensive transformation of China's economy," said Wang Yanping, general manager of public affairs at LinkedIn China, an online social network for professionals. He was speaking at the release of a report co-published by the School of Economics and Management of Tsinghua University and LinkedIn China in October.

Digital transformation of industries can also be reflected in talent flow from information and communications technology (ICT) industries to various fields, according to the report.

According to another report released by the two institutes in November, by then, the proportion of digital talent in non-ICT industries was higher than that in ICT industries globally. Among non-ICT industries, those with the highest proportion of digital talent were manufacturing, healthcare, finance, corporate services, consumer goods, education and social media.

"This is a promising indication that digitalization is expanding into traditional industries beyond ICT," said Chen Yubo, Party chief of the School of Economics and Management of Tsinghua University.

Shanghai and Shenzhen are among the world's top five most attractive cities for digital talent, together with Dublin, Santiago and Bangalore, the report showed.

The scale of the digital talent pool in the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area-three major city clusters in China-has also grown rapidly in recent years, though the proportion is still relatively low at around 20 percent, compared with other overseas regions with developed digital economy like the Boston-Washington city cluster, the San Francisco Bay Area and Bangalore, it said.

Industries with the largest proportion of digital talent in the above three Chinese city clusters include manufacturing, finance and consumer goods, which conforms to the orientation of industrial development of the regions, Chen said.

Besides, China's digital transformation has also begun to shift from the consumer side to the supply side, as more digital talent is hired by traditional industries, the report showed.

"The continued growth of the digital economy remains primarily dependent upon the digital transformation of traditional industries, and this part of the integrated digital economy has also become the driving force behind China's economic growth," Chen said.

Jia Jin, head of the technology group at Accenture China, said digital transformation is also of key importance to companies to survive in the fiercely competitive market.

The automobile industry, for example, experienced an overall drop in sales in the Chinese market last year. But, three companies-SAIC Motor Corp, BYD and Geely-saw an over 20-percent increase in revenue in 2018, thanks to their effort to adopt digital tools in production and marketing, he said.

"Digitalization helps reduce costs, improves clients' experience and helps brands to differentiate themselves from their counterparts, which helps revenue to grow," Jia said. "It's possible for any company to become a leader in its industry if it advances in digital transformation."

He suggested companies should incorporate a comprehensive digital strategy in their operations from marketing and supply-chain to product design and production, to provide differentiated experiences to consumers.

 

 

 

 

]]> 2019-12-16 00:00:00 <![CDATA[3D printing injects future into medical industry]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529222.htm Artificial ... no, not intelligence ... artificial skin, anyone?

Specialized application of 3D printing is spawning a multibillion-yuan business segment in the medical and healthcare industry, making customized, even personalized, health and wellness solutions possible in China.

From surgical preparation and guides to manufacturing of dental and orthopedic implants, and medical tools and devices ... all are now products of 3D printing, a term for additive printing that applies successive layers of materials to make a three-dimensional object from a digital model.

The development is part of a global trend. Research firm International Data Corporation or IDC expects worldwide spending on 3D printing to be nearly $22.7 billion with a five-year compound annual growth rate of 19.1 percent by 2022.

As spending by the healthcare industry rises, dental objects and medical support objects will become the fourth-and fifth-largest use cases in 2022.

The fastest spending growth will be seen in tissue, organ and bone (42.9 percent CAGR), and dental objects (33.1percent CAGR), IDC predicts.

Although no reliable reports are available on 3D printing in China's medical industry, Chinese 3D printing companies are making their mark on the medical sector nevertheless. In some areas, they even lead the global pack as the cutting-edge technology is being adopted in China at a rate higher than that in most countries, industry people said.

Medprin Regenerative Medical Technologies Co Ltd, a Guangzhou-based medical device producer, has made biological 3D printing a core technology to develop high-end medical products and devices for precisive medicine.

The company said it is developing a dozen of human tissue repair products, including personalized skull and maxillofacial (relating to the jaws and face) repair system, artificial skin, blood vessels and ligament among many others, to lay the technical foundation for the future development of more advanced artificial tissues and organs.

"Medical 3D printing is developing very fast in China, and in the field of biological 3D printing, our technologies are almost as advanced as international leaders," said Deng Kunxue, director of the company's medical research and development department, and chief technology officer.

"3D printing of cells is the basis for bioprinting functional organs, and we just need more support from government regulation to realize clinical use.

"In the future, organ transplantation may become as easy as changing a component."

The company, one of the top world players in medical 3D printing, has more than 130 patents granted from regulators in the United States, Russia, Japan and China. And more than 130 patent applications are pending approval at home and abroad.

Its flagship 3D-printed biological dura mater (ridge) membrane, called ReDura, a replica of tissue covering the brain, has been used in more than 70 countries and regions benefiting more than 300,000 patients, Medprin said.

The product is closest to patients' autologous cells with the best repair effect, because of a special 3D printing technology applied, the company said.

Only 0.2 millimeter thick, the membrane has multiple and interweaving pore structures formed by numerous microfibers, which is very conducive to the migration and growth of cells, so that new tissues can grow very fast to repair the defective meninges.

Guo Zheng, deputy chief of the digital orthopedics department of the Chinese Medical Association's medical engineering branch, said Chinese companies will be able to design and produce all that is needed in 3D printing within two to three years, from printers, materials, to software, because of their rising R&D investments, although China still needs to import certain printing materials and core printer components.

"Some domestic companies are already capable of producing 3D printers that have even higher precision than imported ones," he said.

"As for clinical research and use of 3D printing technologies, China is already among the pioneers, driven by spirited innovation."

Applications of 3D printing in surgical preparation, and surgical guides and implants design and manufacturing, can maximally customize surgeries to meet individual patients' needs, he said.

China's 3D printing-related clinical research, design and applications caught up fast in the past few years although the technology was first invented in the US, mainly because China's more flexible 3D printing medical research and application regulatory policies, compared with many other countries, give enough room for innovation, he said.

Guo, who is also deputy president of the orthopedics branch of Xijing Hospital in Xi'an, Shaanxi province, said his team has been conducting research on new biodegradable materials to 3D-print orthopedic cages, and their research findings are to be tested by clinical trials soon.

AK Medical Holdings Ltd, a medical device company in China's orthopedic joint implant market, started to apply 3D-printing technology in orthopedic joint and spine replacement implants design and manufacturing in 2009.

In 2015, its first 3D-printed hip implant product was commercialized. Now, it has three 3D-printed orthopedic implant product series in the market, and has become the largest 3D-printed implant providers in Asia-Pacific.

A Hong Kong-listed company, its financial reports showed that sales of 3D-printed products reached 51 million yuan ($7.25 million) in the first half of this year, soaring from merely 10 million yuan in 2015.

Li Zhijiang, chairman and CEO of the company, said the spurt in domestic 3D-printed implants, from an increasing number of Chinese companies eyeing 3D printing market, has become an important force to challenge foreign companies' dominance in the high-end implants market in China, including helping lower high prices of foreign products.

The company's 3D products, approved by Chinese regulators as standardized implants, have already entered some Belt and Road economies, such as Indonesia, Pakistan, and Saudi Arabia.

The company plans to replace imported materials and devices with domestic ones in the manufacturing of its 3D products as soon as the authorities concerned approve them.

It is also co-developing customized 3D-printed implants with top Chinese research institutes, which will have higher compatibility and stability than standardized ones.

The newly released government guidelines on supervision and management of personalized medical devices, which will come into effect in January, will further boost medical application of 3D printing in China, because the new regulation exempts review and approval process for customized medical devices that treat rare conditions or meet unmet clinical needs, Li of AK Medical said.

Kang Xuan, general manager of Becoming Digital Dental, a Shenzhen-based startup specializing in digital dental applications, said 3D-printing technology is reshaping China's dentistry industry.

The world's most populous nation, China faces severe shortage of dental professionals, especially in rural areas, and 3D printing can help ease the situation, because it provides more cost-efficient solutions, she said.

From fabricating customized and accurate dental devices like braces, bridges, and implant guides, helping doctors simulate procedures on special software and 3D-printed models, to training young doctors, 3D printing technology can speed up diagnosis and treatment, minimize risks, and standardize procedures. It can thus help enhance dental care service quality, especially in underprivileged areas, she said.

However, 3D printing applications in the medical field could harm patients if they are not properly used or regulated, said Wang Xudong, a reputed oral and maxillofacial reconstruction specialist with Shanghai Ninth People's Hospital, which is affiliated to the Shanghai Jiao Tong University School of Medicine.

Chinese authorities have approved several standardized 3D-printed medical implants for market use, but personalized 3D-printed medical implants can only be used in clinical trials under current regulation, he stressed.

Although the newly released guidelines on personalized medical devices only ask for registration of some customized products, they still require review and approval of the rest of personalized medical devices. An integrated policy on review and approval of 3D-printed medical devices is expected soon.

With companies plunging into the industry without complete understanding of 3D printing's medical applications or restraint, there could be medical incidents. Even scandals that could damage the healthy development of the sector can't be ruled out, he warned.

 

MA XUEJING/CHINA DAILY

 

 

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2019-12-16 00:00:00
<![CDATA[Chinese economy transitions to higher value-added model]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529187.htm China is currently in the midst of a long-term transformation of its national business model. Earlier growth was based on the nation's comparative advantage at the time-low-cost labor combined with good infrastructure and a business environment that was acceptable for low-wage manufacturing. This business model enabled China's growth for more than 30 years and allowed it to raise almost all of its people out of extreme poverty.

Using this growth model, the country has reached the status of an upper middle-income country. But it is crucial not to get stuck in the so-called middle-income trap.

The Central Economic Work Conference last week, a gathering of China's top leaders to discuss economic issues and reform plans in detail, decided China will deepen supply-side reform and will maintain its proactive fiscal policy and prudent monetary policy.

Contingency plans are prepared to deal with "rising downward economic pressure amid intertwined structural, institutional and cyclical problems."

There has been a lot of breathless talk in the press about the decline of the GDP growth rate in the third quarter of 2019 to 6 percent, which is the slowest in 27 years. And, next year's GDP growth rate numbers are expected to be at around 6 percent or lower.

But this decline in raw GDP growth is to be expected and should be considered a sign that Chinese macroeconomic policymakers are allowing the economy to make the transition to slower but higher quality growth. This is much better than if they were using excessive monetary stimulus to try to maintain the old growth model.

Trees don't grow to the sky and no country can grow at 7 or 8 percent forever. China's 40-year run of growth at that level is unprecedented. Such growth is possible only in a situation where large inputs of capital are needed and where the country is a follower using well-known international technology. China has outgrown that stage and now has to focus on leading-edge technology and on efficiency improvements.

In order to enable the transformation to an economy based on higher value-added production and sustainable demand, the government has emphasized structural reforms and is taking a large number of systematic steps to enable the economy to move up the value scale.

Recently, the government has focused on improving the business environment for both domestic and foreign companies. In the World Bank's latest Doing Business 2020 report, which traces how world economies are implementing reforms to encourage efficiency and support freedom to do business, China's overall ranking climbed 15 places to number 31 in the world.

The October 28-31 Fourth Plenary Session of the 19th Communist Party of China Central Committee explicitly set, for the first time, "promoting modernization of the country's governance system and governance capacity" as the overall goal of comprehensively deepening reform. This stress on the rule of law in economic and other affairs is hugely important in that it provides a level and predictable playing field for competitive companies.

Also, this year, taxes on the private sector were cut by about 2 trillion yuan ($286 billion). The Central Economic Work Conference signaled that these tax cuts will continue or be increased. Furthermore, banking reforms are encouraging banks to make capital available to small businesses.

Recent reforms also encourage international companies to compete in the Chinese domestic market. For example, the government has switched to a negative list-meaning that foreigners can invest in any sector not explicitly prohibited.

Plus, in many sectors, foreign companies are now allowed 100-percent ownership and are treated the same as domestic companies. This foreign competition will increase the competitiveness of the already highly competitive Chinese economy by forcing all companies to compete at the highest international standards.

Investing in scientific and industrial research and development allows China to move to the leading edge of science and technology. Building the infrastructure to take advantage of the coming fourth industrial revolution based on artificial intelligence, 5G, and the internet of things is preparing China for the economic opportunities of the 2020s.

No transition is painless. As new higher value-added industries develop, some of the old industries will have to move or go out of business. Some companies that had business models dependent solely on cheap labor will not be able to keep up with the upgrading process. It is important not to try to preserve zombie companies that cannot compete in the new economy.

The success of many companies in making the transitions is confirmed by the data showing that profits of the high-tech manufacturing sector rose 7.5 percent year-on-year from January to October. Companies are being rewarded for real improvements in product quality or productivity.

Some people will lose their jobs, but that is to be expected and is normal. It is actually good, provided that most of them are able to find other, often better-paying jobs, in rising industries. In recent years, the government has strengthened the social safety net to make the transition easier for workers.

How do we know the transition is working? Though not mentioned as often as metrics such as the topline GDP growth rate, the growth of real average wages is actually the best measure of how well an economy is doing. After all, the whole purpose of economic growth is to make a nation's people better off.

Companies cannot pay workers more unless they are producing and selling more valuable products. Average yearly wages increased from 37,143 yuan in 2010 to 82,461 yuan in 2018, according to the National Bureau of Statistics. Adjusting for inflation, this means that real wages have more than doubled. This would not be possible unless both the value-added of products has gone up and the skill-level of the workers has gone up.

It's also a good thing that workers are able to move out of low-skilled jobs to higher-paying, higher-skilled ones. A list of 100 professions that have major workers shortages recently issued by the Ministry of Human Resources and Social Security found that vacancies for sales positions, cashiers, restaurant waiters, security guards and custodial workers topped this list. Of course, this demand for low-skilled labor will drive up wages-making average people better off.

There is also strong demand for skilled manufacturing professionals, including lathe operators, and porters, according to the ministry.

Some stimulative macroeconomic policy may help smooth the transition and make it easier for companies and workers to adjust. It is crucial that stimulus will not be used to halt the transition to slower but higher quality growth. Instead, enabling China's transition to a higher income, higher tech, higher value-added economic model is the key goal of policy.

 

 

]]> 2019-12-16 00:00:00 <![CDATA[Services sector is key to maintaining job growth in the long run]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529220.htm Reviewing China's employment data in the first three quarters, 10.97 million new jobs had been created in cities and towns, meaning that 99.7 percent of the annual target had been achieved, which slightly slipped from 11 million new jobs in the same period last year.

In general, employment in the manufacturing sector may be under pressure due to the downward economic cycle, but the overall employment situation in China remains stable.

Since 2010, China's economic growth has been slowing, but it did not increase unemployment. US economist Arthur Okun propounded a theory in the 1960s that the relationship between unemployment and GDP growth rate varies by country. It means higher growth reduces unemployment, while lower growth can make more people lose jobs.

But clearly, that didn't happen in China. The contradiction between the current slowdown and the continuous improvement in the employment level is obviously not in line with the "Okun's Law".

Let's look at the steady increase of new jobs in the urban areas. In theory, during an economic downturn, the unemployment rate will rise because of weaker demand and lower capacity utilization.

But the truth is, in China, instead of seeing any signs of deterioration in the level of domestic employment, the government raised the target of new employment in the urban areas from 9 million to 10 million in 2014. It increased it again to 11 million in 2017. According to 2018 economic data, 13.61 million new jobs were created in cities and towns, 100,000 more than the previous year.

Data from the Ministry of Human Resources and Social Security showed that from the fourth quarter of 2011, the supply-demand relationship in China's labor market has been reversed, and the supply could not meet the demand any longer.

According to Okun's Law, the relationship between the unemployment ratio and the GDP growth rate is this: when unemployment increases by 1 percent higher than the natural rate of unemployment, the real GDP will fall by 2 percent lower than the potential GDP, or the "output gap".

Therefore, if the potential GDP growth rate of a country does not change in the short term, the size of the output gap is directly determined by the real GDP growth rate, which also determines the employment level of the country to a large extent. However, if the potential GDP growth changes, the situation will become more complex.

Thanks to the great contribution of the vigorous services sector in the past few years, an important feature of China's economic development has been the structural reform and industrial transformation and upgrading. The driving forces of economic growth are shifting from exports and investment to consumption, along with the rising share of the services sector.

In 2013, the share of the services sector exceeded the manufacturing sector for the first time, and then exceeded 50 percent for the first time in 2015. As of the first three quarters of this year, the proportion of services had exceeded 54 percent. While the proportion of services has increased, the labor force of the whole society has also been flowing into the services sector.

From 2012 to 2018, labor in the services sector accounted for 46.3 percent of the total amount, up by 10.2 percentage points, but the proportion of labor in the secondary industry (including the industrial sector and the construction sector) decreased by 2.7 percentage points to 27.6 percent in the same period.

So, we believe that the slowdown in economic growth and the stability of the employment market in China are largely attributable to the vigorous development of the services sector in the process of economic transformation in recent years.

Compared with manufacturing, services are labor-intensive. Especially in the initial stage of the economic transformation, the relatively low-end consumer service industry (related to food, clothing, housing and transportation) developed fast, and the features of its labor-intensive nature were more obvious.

The development of the labor-intensive services sector will bring two results: on the one hand, effects of absorbing the surplus labor force are obvious. Even when the surplus labor force is exhausted, there is a situation of competing for labor with manufacturing, resulting in the labor flows from manufacturing to services.

On the other hand, compared with capital-and technology-intensive industries, the labor-intensive services sector always has lower productivity, which will average down the potential growth rate of the whole economy. And this effect will gradually increase along with the expansion of the services sector's share.

China will maintain medium to high economic growth in the future. For, in the process of economic transformation, the central line of China's potential economic growth rate may continue to drop, due to the continuous increase of the proportion of the services sector.

If the government still hopes to maintain the real GDP growth rate at a relatively high level, through the counter-cyclical adjustments of monetary and fiscal policies, it will lead to higher inflation and asset price bubbles.

On the contrary, if the goal of monetary and fiscal policies is to drive the growth rate of real GDP closer to the potential growth rate, the real GDP may remain at a relatively low level, or even continue to decline.

In fact, we have seen that the government will focus more on promoting the structural reforms in the future to improve the quality of economic growth. At the same time, for making the macroeconomic policies, both monetary and fiscal policies should be targeted and more attention should be paid to their effectiveness, while avoiding a deluge of strong stimulus policies.

So, do we need to worry that in the process of transformation, the continuous expansion of the services sector's proportion will endlessly pull down the potential economic growth rate? The answer is "not necessarily".

A large number of studies showed that, in fact, the proportion of labor force in the services sector and the proportion of outputs of service businesses are not necessarily linear with the real GDP growth.

After reaching a certain point in time, the services sector can accelerate economic growth, so it shows a "U-type" relationship between the proportion of the services sector and the economic growth rate, especially when the services sector is the intermediate input of production.

In view of the rapid development of the consumer service industry related to the daily "food, clothing, housing and transportation" of residents during the transformation process, the overall labor productivity of the services sector has declined. But at present, the services sector's production-oriented segments such as finance, communications and business services have also begun to speed up.

These production-oriented segments not only have a large growth space of their own labor productivity but as intermediate inputs of the manufacturing sector, the improvement of their labor productivity will directly promote the improvement of manufacturing labor productivity.

If the development of production-oriented services segments is fully developed in the future, China's economic growth will maintain a medium to high growth in the long run after the current slowdown is ridden out.

 

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2019-12-16 00:00:00
<![CDATA[Making markets near, far glow with clean power]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529216.htm LONGi Green Energy Technology Co, one of the world's largest manufacturers of monocrystalline silicon photovoltaic or PV products by market share, will continue to expand the production capacity of its overseas plants and add branches in economies participating in the Belt and Road Initiative.

Opportunities come from many countries' demand for clean energy products that can help in coping with climate change, achieving emission cut targets and saving on energy costs for their residents, said Li Zhenguo, LONGi's president.

The Xi'an-headquartered group operates a manufacturing base with over 4,000 employees in Malaysia. Now, as it moves to the next development stage, LONGi has plans to build branches in other countries, including India, Australia and Brazil, to further compete with other established rivals. It provides solar-related products from raw materials to monocrystalline silicon PV products to clients across both China and the rest of the world.

Li said China's clean energy revolution has generated a decisive influence on the economies participating in the BRI, and the development of PV technology has made clean energy no longer a luxury power source but an affordable commodity.

The PV industrial chain includes five major components, to wit: silicon materials, silicon wafers, cells, modules, and surface power stations. In the past decade, Li said the cost of PV modules has dropped from about 40 yuan ($5.68) per watt to less than 2 yuan per watt with a drop of more than 90 percent.

The cost reduction refers to the cost reduction of all links in the whole industry chain. It can directly reduce the per-watt investment cost of the power station.

Unlike some developed countries which already have mature power generation infrastructure, facilities in many countries or regions are at the early stages of development, which means more opportunities for Chinese solar power manufacturers, Li said.

Thanks to the growing demand of global markets and trade globalization, LONGi built a plant in Kuching city, Malaysia, the company's first overseas manufacturing facility for monocrystalline silicon wafers, in 2016.

The company expanded its operations in Malaysia by building a 1-gigawatt monocrystalline cells plant, at a cost of 840 million yuan in February this year. The move helped the company to cope with rising operational costs and minimize the effect of the ongoing China-US trade dispute.

The group currently ships 60 percent of its solar products overseas, including to the US, India, Japan, Germany and other countries in Europe and Southeast Asia.

Established in 2000 by Li and his partners, LONGi initially focused on technical innovation in the semiconductor sector. It seized the opportunity in raw material supply of silicon wafers and forayed into monocrystalline silicon wafers in the next few years.

Supported by more than 21,000 employees and years of technology evolution, LONGi today has developed a number of business segments from PV power generation equipment to solar power station systems, as well as a monocrystalline industrial chain.

Its sales revenue in 2018 was 21.99 billion yuan. Sales revenue jumped 54.68 percent year-on-year to 22.69 billion yuan in the first three quarters of this year.

Confident about the future prospects of the PV sector, Li went to Paris to attend the 2019 Fortune Global Forum in mid-November. There, he shared his views that PV power plus energy storage will be the mainstream energy supply solutions in the future.

As a representative of China's private companies, Li said China's ongoing industrial upgrading boom will push innovative companies to seek bigger space in the market.

With the global green transformation on, and led by China's acknowledgement that natural environment is an invaluable asset, new energy, especially PV power, has drawn surging attention at both home and abroad.

Along with the evolution of technology, the cost of energy has been dropping accordingly and PV power generation will shake off the impression of being expensive, said Li.

The National Energy Administration issued a notice on the Publication of the Results of the National Subsidy Bidding for 2019 PV Power Generation Projects in July, announcing that based on the principle of fairness, 3,921 projects with total installed capacity of 22.79 GW in 22 provinces, autonomous regions and municipalities such as Beijing and Tianjin have been included in the 2019 national bidding subsidy, initiating the first step of the marketization of China's PV industry.

Li believes that the entire PV industry in China will usher in fully market-oriented opportunities, after achieving the grid parity, without any need for government subsidies. Fewer subsidies in the overseas markets correspond to the market-oriented practice.

"Therefore, as the cost of establishing PV stations becomes much lower, there is no need for subsidies in China, and the world will also enter the growth phase of demand explosion," he stressed.

Agreed Sun Fuquan, a researcher at the Chinese Academy of Science and Technology for Development in Beijing. He said China's ability in cost control, in terms of unit production cost, will continue to provide companies with an advantage if they bid for projects in overseas markets.

He said the terminal electricity prices in many countries remain relatively high, and the development of renewable energy sources such as PV and wind power offer competitive alternatives.

Apart from the energy cost, it is critical to take steps to deal with climate change. China is willing to continue cooperating with global partners to advance emission cuts, climate adaptation and sustainable development. The country will also push for global free trade and a rule-based multilateral trading system, Sun said. 

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2019-12-16 00:00:00
<![CDATA[UL plans to increase safety certification facilities as Chinese companies expand]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529199.htm UL, the Illinois-based safety certification company, plans to add more facilities in China's central and western regions over the next three years, having built a solid presence in the country's coastal regions, said a senior executive.

Boris Feng, vice-president and managing director of UL China, said internet-connected technologies, supply-side structural reform, industrial and consumption upgrades will present more opportunities for testing, inspection and certification services in China.

UL invested in its first global battery laboratory for power storage in Changzhou of East China's Jiangsu province in July. The Changzhou laboratory is expected to be operational in April 2020.

Feng said the group will build more labs in China's inland areas as domestic companies' demand for both exports and digital technologies to improve production efficiency has notably surged in recent years.

Under the plan, the Changzhou lab will provide a clutch of safety tests and solutions. These will include the following: battery safety design, battery performance and reliability verification, battery management system, functional safety, vehicle-to-grid charging solutions, grid integration, battery echelon utilization, energy storage systems and functional safety services to China's new energy vehicle manufacturers and power battery makers.

"China's industrial upgrade was inevitable," said Feng. "Even though many people these days are saying that manufacturing is shifting outward, this is a positive signal, because China's development has reached a certain level and it is reasonable to conduct international industrial capacity cooperation."

He said more digital solutions and sensors are being used on a large scale in Chinese factories. Carried out by industrial robots, the manufacturing process does not require human intervention.

"Our operation in China has to keep attempting to integrate global experience with local demands, and pay more attention to those emerging industries," he said, noting the country's upgrades across both software and hardware platforms must keep pace with manufacturers' high demand for innovative services.

Supported by nearly 3,000 employees in China, UL runs six labs across Suzhou, Shanghai, Guangzhou, Dongguan and Shenzhen. With its certification services and expertise in different fields, it assists domestic manufacturers from different industries exporting their products to global markets

With a growing number of Chinese companies shipping products to various overseas markets, securing foreign certificates has become popular and necessary. Therefore, if these Chinese companies want to expand their businesses abroad, they have to meet other countries' standards for product safety and compliance, he said.

In addition to providing testing and certification services to fire safety and consumer electronics products, the firm has entered the areas of consumer and industrial goods in China, including automobiles, clothes, toys and groceries, as well as non-physical products, such as software and driverless security.

Zhao Ying, a researcher at the Beijing-based Institute of Industrial Economics, which is part of the Chinese Academy of Social Sciences, said that rising incomes, accelerating urbanization and diversified food options in China are further driving demand for safer food and industrial products, as well as quality consumer goods, such as furniture, vehicle parts and cosmetics.

Attracted by China's population base, more manufacturing and consumer goods are now produced and sold in China than anywhere else, he said, adding Chinese shoppers are also keen to know the quality of the products they purchase.

UL's Feng said the Belt and Road Initiative will lead to notable prospective benefits to both China and other parts of the world as it has proved to be a strong force linking people and economies via cross-border activities with the potential that many regions can achieve social prosperity.

Because of the improvement in infrastructure, transportation, and healthcare, digital-related manufacturing in economies is able to restore strength of the global economy, he said. UL will continue to work with its partners such as the Saudi Arabian Standards Organization to provide services for businesses participating in the BRI in the long run.

UL entered the Chinese market in 1980, and has so far provided testing and certification services to over 22,000 local manufacturers across the country.

The US company currently has over 14,000 employees globally, distributed across its connected technologies business unit, and the retail industry business unit. 

 

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2019-12-16 00:00:00
<![CDATA[A blessing in tech disguise?]]> http://www.chinadaily.com.cn/kindle/2019-12/16/content_37529221.htm The first time I heard about 3D printing's medical application in China was in 2013, when the orthopedics department of Peking University Third Hospital, a top hospital in China, announced promising results of a clinical trial using enhanced titanium implants produced by a 3D printer.

Since 3D printing can virtually produce implants in any shape as a digital model instructs, 3D-printed implants match better with the bones around them than traditionally manufactured ones, which are usually geometric patterns and cannot attach to bones firmly without additional cement, screws or fixing plates.

In 2016, the hospital doctors implanted 19 centimeters of 3D-printed spine parts to replace a patient's cancer-riddled vertebrae, saving his life. The hospital co-developed those lifesaving 3D-printed implants since 2009 with AK Medical Holdings Ltd, a domestic leader in orthopedic joint implants market. In 2015, the company became the first in China to receive market approval for 3D-printed metal implants.

However, the printer used at that time was imported.

Six years on, the company has grown to co-develop with Tsinghua University China's own version of 3D printers and printing materials for orthopedic implants, which are currently under manufacturing validation, and probably will be used in production lines next year, I was told.

That reflects the bigger picture of how fast 3D printing develops and applies in China.

It is no longer seen as a geek technology to print novel tools or models, but something that can upgrade manufacturing and can make people's life better.

Its medical applications are a good example.

Before surgeries, the technology can be used to replicate patient-specific organs for doctors to design and simulate surgeries. Such preparation, more accurate than the traditional way of using two-dimensional medical images, can help speed up procedures, minimize patient trauma, and enhance treatment outcomes.

The use of 3D-printed surgical guides, and the medical device that helps doctors during surgeries to increase the accuracy of implant placements, make doctors' operation even more accurate, while 3D-printed implants and prosthesis, shaped to fit perfectly with a patient's anatomy, are more stable and comfortable than traditional ones.

3D printing can also be used to produce precisive medical devices and gadgets, and help with new drug development.

Perhaps that is one of the reasons why Xi'an Bright Laser Technologies Co Ltd, a leading 3D printing solutions provider in China, is so widely recognized.

The company was among the first batch of companies to receive the regulator approval to list on the Shanghai Stock Exchange's sci-tech innovation board, commonly known as the STAR market.

It boasts a complete technical solution of metal additive manufacturing and repairing for customers, including customized products, equipment, raw materials, software and technical service.

Most importantly, with strong independent research and development capabilities, it has invented a dozen of metal 3D printing equipment sets, taking a lead in domestic market.

In the world, researchers also are making efforts to push forward the development of 3D printing technology.

As technology evolves, perhaps bioprinting functional organs, one of the most exciting applications of 3D printing, is not that far away.

Not a day passes without some news about breakthroughs in 3D printing using living cells.

A few days ago, 3DBio Therapeutics, a New York-based biologics and bioprinting company, announced its AuriNovo, an investigational combination product using patients' own auricular cartilage cells to 3D-bioprint living, full-sized ear construct, received Orphan Drug designation from the United States Food and Drug Administration, a status assigned to treatments developed for rare conditions.

In October, scientists in Austria were reported to have developed a high-resolution 3D printing technique that uses a novel bioink to embed cells in a 3D matrix.

In April, Israeli scientists in Tel Aviv reportedly 3D-printed an artificial heart using a patient's own cells. The artificial heart was complete with cells, blood vessels, ventricles and chambers, although only of the size of a rabbit's heart.

Think about this: 3D-printed organs, which are customized and constructed with patents' own cells, are transplanted into patients in dire need, saving typical problems related to traditional organ transplants, such as lack of donor sources and immunity resistance.

Perhaps, in the not too distant future, this could well prove a blessing for patients suffering from organ failures.

 

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2019-12-16 00:00:00
<![CDATA[Need for stable land, home prices stressed]]> http://www.chinadaily.com.cn/kindle/2019-12/15/content_37529151.htm The annual Central Economic Work Conference, which ended on Thursday, has set the tone for the real estate market for the coming year, stressing the need to stabilize land and home prices as well as market expectations to ensure the steady and healthy development of the property market, which analysts see as a signal that China's economy will further trim its heavy reliance on property.

"To make sure the property market develops steadily and healthily, we must uphold the principle that 'housing is for living in, not speculation', and implement policies in accordance with each city's requirements whilst the long-term mechanism for stabilizing land prices, home prices and market expectations is being created," noted the Central Economic Work Conference.

Despite slower economic growth, the central authorities reaffirmed that property speculation will be strictly controlled, leaving little room to maneuver for local policies to make any adjustment in this regard, said Yan Yuejin, research director at the EHouse China R&D Institute.

Since the Central Economic Work Conference held in 2016 raised the principle that housing is for living in, not speculation, the country has reiterated the principle, especially during the second half of this year, when several local governments relaxed their restrictions on home purchases.

More than 20 cities announced measures to attract talents in November alone, including Foshan and Zhongshan in Guangdong province, Nanjing in Jiangsu province, Chengdu in Sichuan province, and Shanghai, which have all lowered requirements for talents buying homes, with some of them even offering special subsidies, according to a research report by Centaline Property.

The ban on property speculation has signaled that home prices will remain stable, and measures will be rolled out to address market fluctuations.

The relaxations on first-time buyers and high-end talents purchasing homes are only allowed within particular regions, as the country has no intention of comprehensively relaxing property policies, said Wang Tao, chief China economist with UBS AG.

"Compared to statements from previous years, this year's meeting made it clear that stable home prices will be a priority of any local measures. As such, we will not see continuous house price rises in a single market in the future," said Zhang Bo, chief analyst of Anjuke.

The respective property measures of Chinese cities will further promote stability in the property market, according to a report by the China Real Estate Chamber of Commerce.

"Along with the rising contribution of consumption and emerging economies to GDP, China's economy will hopefully overcome its heavy reliance on real estate and infrastructure for good, which will make the nation's growth and development more resilient," Bian Quanshui, an analyst with Sinolink Securities, wrote in a report.

The Central Economic Work Conference made it clear that work will be focused on increasing supply of homes for low-income workers through renewal and regeneration of existing residential projects and urban communities, and significantly increasing rental housing, according to Xinhua News Agency.

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2019-12-15 14:17:34
<![CDATA[Greater emphasis likely on capital market reforms]]> http://www.chinadaily.com.cn/kindle/2019-12/14/content_37529140.htm China is expected to attach greater importance to capital market reforms next year and focus on improving institutional arrangements to boost the quality of listed firms as a key part of its pursuit of high-quality development, officials and analysts said.

Their comments came after the tone-setting annual Central Economic Work Conference concluded on Thursday and the meeting prioritized capital markets in financial system reform. This signaled the critical role of capital markets in serving the nation's real economy.

The meeting outlined specific reform measures, including refining fundamental institutions of capital markets, improving listed firm quality, and completing delisting mechanisms, according to Xinhua News Agency.

These requirements are reflected in the recently introduced action plan to improve the quality of listed firms, the top securities watchdog said.

"We will promote the improvement in listed firm quality to lay the foundation for elevating the adaptability, competitiveness and inclusiveness of capital markets," Yan Qingmin, vice-chairman of the China Securities Regulatory Commission, said at a forum on Friday.

By improving market rules, the plan aims to attract more industry leaders to go public, to get companies with low efficiency out of the market, and to encourage listed firms to upgrade themselves through mergers and acquisitions, Yan said.

The high-level meeting also pledged to steadily push ahead with reforms of the ChiNext as well as the National Equities Exchange and Quotations system-which are submarkets established for the financing of innovative enterprises and small-and medium-sized enterprises, respectively.

Yan said securities regulators will learn from the experience of the scitech innovation board, which piloted registration-based reform, and pushed through reforms of the two submarkets. The reforms will help make financing more inclusive to small businesses and high-tech companies as capital markets could satisfy their financing needs more efficiently than the banking system.

The stock market leaped on Friday after the meeting further endorsed the role of capital markets in high-quality development and after investors become more optimistic about Sino-US trade talks. The benchmark Shanghai Composite Index went up by 1.78 percent to close at 2967.68 points, recording its biggest gain in almost four months.

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, said as the capital markets become inclusive to a wider range of companies, it is important to strengthen oversight over information disclosure and crack down on fraudulent floats to protect the legitimate rights of investors.

]]> 2019-12-14 00:00:00 <![CDATA[High-quality to be new growth focus]]> http://www.chinadaily.com.cn/kindle/2019-12/14/content_37529121.htm Steps to support strategic industries, the creation of several advanced manufacturing clusters with international competitiveness and measures to support the growth of digital economy will be the key objectives in China's ongoing efforts to bolster high-quality development, according to a statement issued after the annual Central Economic Work Conference.

Analysts said China is now transforming from the phase of rapid development to a new stage of high-quality development and shifting its focus to nurturing technological innovation and further opening up its economy.

More efforts should be made to increase investment in equipment upgrading and technical reform, reinforce the optimization and upgrading of traditional manufacturing industry, with a focus on promoting the modernization level of the industrial chain, the statement said.

The conference also underscored vigorous efforts in accelerating transformation of scientific and technological achievements, enhancing enterprises' technological innovation capacities, and improving the mechanism of discovering, cultivating and motivating technology talent.

Wang Yuanhong, an economist at the State Information Center, a government think tank, said it is a long-term key task to boost high-quality development. "It is more necessary to rely on such a development approach to transform the growth pattern, optimize the economic structure and address deep-seated structural problems in economic growth, as the country is facing downward economic pressure," Wang said.

Wang said the high-quality development path is beneficial for continuously improving the share of scientific and technological innovation in overall economic growth.

"After years of high-speed development, China is now following a medium to high growth track, paying more attention to the quality and benefits of development," said Tang Jianwei, chief researcher at the Bank of Communications' Financial Research Center. "During this process, there is no need to focus on headlong pursuit of quantity growth, which may bring uncertainties such as an increase in leverage and high risks."

Looking forward, China should continue to follow the new development approach and the strategy of innovation-driven development, Tang said.

"As China's old growth models gradually slow down, we should gradually reduce reliance on old growth drivers like investment, exports and consumption. Instead, we need to develop high-tech and emerging sectors, such as digital economy and advanced manufacturing, to inject fresh impetus into economic development," Tang said.

China's economy has maintained overall stability. The country's GDP expanded 6.2 percent year-on-year in the first three quarters of this year, data from the National Bureau of Statistics showed.

]]> 2019-12-14 00:00:00 <![CDATA[Telefonica brings in Huawei for 5G edge]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528931.htm Huawei Technologies Co has secured an important vote of trust, with one of Germany's biggest telecom companies selecting the Chinese company as a key telecom equipment supplier for its 5G network.

Telefonica Deutschland, which operates Germany's second-largest wireless network, has chosen Huawei alongside Finland's Nokia Oyj for supplying equipment to its 5G network.

The move came as French and German officials have said publicly that the two countries would not follow the United States in excluding Huawei from its 5G network rollout.

Telefonica Deutschland's decision showcases that mutually-beneficial business partnerships would not be derailed by political interference, and Washington's intensified efforts to ban Huawei on groundless accusations will fail ultimately, analysts said.

A part of the Spanish Telefonica group, Telefonica Deutschland said in a statement that the deal has to be approved by German authorities, who are currently finalizing the security rules for telecom equipment suppliers.

Telefonica Deutschland said it is taking into account the ongoing political process of establishing these security guidelines, but does not want to delay the start of the 5G expansion.

The company has followed in the footsteps of Switzerland's Sunrise which has launched its Huawei-powered 5G network. Sunrise has so far rolled out 5G services in more than 262 Swiss towns and cities, and over 50 percent of telecom equipment in its 5G core and radio networks is provided by Huawei.

On Thursday, Chinese foreign ministry spokeswoman Hua Chunying denied media reports that the Chinese government threatened to cancel a trade deal with the Faeroe Islands if it does not agree to use Huawei's equipment

Hua said the claims "are completely false and have ulterior motives". Huawei, the world's biggest maker of mobile network gear, said it "was not aware of any meeting between the Chinese ambassador and Faeroese politicians in November as reported".

Bai Ming, a senior research fellow with the Chinese Academy of International Trade and Economic Cooperation, said the growing list of Huawei's 5G contracts shows that the US efforts to mix politics with normal business cooperation would fail ultimately, as facts would speak louder than Washington's groundless accusations.

An increasing number of European countries are taking an unbiased approach toward the use of Huawei equipment in their 5G network rollout. French Junior Economy Minister Agnes Pannier-Runacher recently said in an interview with local media that France will not exclude Huawei in 5G.

Germany also said that it would not single out any telecom player, including Huawei, in its 5G build-out.

In late November, German Chancellor Angela Merkel called on European countries to agree to a common approach toward China and Huawei in the rollout of the superfast wireless technology.

Jeremy Ghez, an affiliate professor of economics and international affairs at HEC Paris, a French international business school, said a common attitude toward Huawei is in the common interests of European countries.

All the comments came as the US government has been accusing Huawei of posing security risks but so far it has failed to provide any factual evidences. Washington has sought to ban federal agencies and US rural telecom carriers from buying Huawei's equipment and services.

Huawei CFO Meng Wanzhou is currently detained in Canada following a request by the US. She was arrested at Vancouver International Airport by Canadian authorities at the request of the US on Dec 1, 2018, and has been held under house arrest since then.

Recently, more detailed evidence about Meng's case has emerged, and many media outlets pointed out that the case is driven by political forces.

Canadian newspaper The Globe and Mail revealed in a recent article that "When Washington needed Canada's help to apprehend a top Huawei executive, officials in the White House, Congress and diplomatic corps were informed of what would happen hours before politicians in Ottawa."

Simon Tisdall, columnist for The Guardian, said geopolitical and economic rivalry between China and the US is what's really behind Meng's arrest.

Meng's arrest is not an isolated incident, but one of many actions taken as part of the US government's systematic campaign against Huawei, said Xiang Ligang, CEO of telecom industry website Cctime.

Huawei said in an earlier statement that the company has confidence in Meng's innocence, and it believes that her arrest was an unlawful abuse of process-one guided by political considerations and tactics, not by the rule of law.

 

Visitors test devices at the booth of Huawei at the IFA consumer tech fair in Berlin, Germany, in September. REUTERS

 

 

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2019-12-13 00:00:00
<![CDATA[Embraer hopes smaller cities can drive its China expansion]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528988.htm Brazilian aircraft manufacturer Embraer SA, one of the largest plane makers in the world, is eyeing the fast-developing regional aviation market in China's smaller cities to further drive its growth.

The plane maker, which produces commercial aircraft with fewer than 150 seats, plans to introduce its latest and largest-ever jet, the single-aisle E195-E2, to China, its second-largest market after the United States.

By early next year, the aircraft model is expected to receive certification from the Civil Aviation Administration of China. In April, it received airworthiness certificates from the Brazilian Civil Aviation Agency, the US Federal Aviation Administration and the European Aviation Safety Agency.

Embraer is now in discussions with major domestic carriers, including State-owned and private airlines, about potential purchases of its latest E195-E2 aircraft.

Guo Qing, vice-president of sales and marketing at Embraer China, said Embraer attaches great importance to the China market. The regional aviation market is a short board in China. It will have a significant increment of regional aircraft in the next few years, faster than the United States, and the company is confident in the growth potential.

"Many domestic airlines now use mainline aircraft to operate regional flights, which may cause a waste of resources. With the high capacity of mainline planes, airlines prefer to offer fewer flights, which restrains the development of regional aviation markets," Guo said.

"Right-sized jets allow airlines to offer cheaper flight tickets to small market routes with smaller passenger flows. Carriers will become more profitable compared with using mainline aircraft. Domestic airlines should make use of the rich flying rights and time slot resources on regional routes, and launch more such flights," he said.

In October, the E195-E2 conducted its first commercial flight in Brazil operated by Azul Brazilian Airlines. Embraer said the aircraft model, with fewer seats, is suitable to complete trunk line fleets in slack seasons. It is also good for regional flights that connect second-, third-and fourth-tier cities in China.

Currently, Embraer accounts for more than 70 percent share of the regional aviation market in China. Bombardier Inc from Canada, and China's first homebuilt regional passenger jetliner ARJ21 produced by Commercial Aircraft Corp of China account for the remainder.

Last year, China had 169 regional airports, accounting for 72 percent of the total number of airports nationwide. Yet, the number of regional flights available is small. For instance, Guangzhou-based China Southern Airlines owns 852 aircraft, while the number of planes that fly regional routes account for just 2.58 percent of the total.

By Sept 30, airlines on the Chinese mainland operated 3,583 aircraft, including 189 regional aircraft, which made up for 5.27 percent. Now, there are a total of 10 carriers including Xiamen Airlines, Tianjin Airlines, Chengdu Airlines, China Express, Colorful Guizhou Airlines, and Guangxi Beibu Gulf Airlines that operate regional aircraft, according to aviation industry reports.

In comparison, major US carriers serve 37 percent of US airports and regional airlines reach 93 percent of the airports, according to the Regional Airline Association. Meanwhile in the US, the passenger fleet will maintain modest growth in the long term, according to the FAA.

"Carriers must connect as many small cities as possible to their hub airports to remain competitive. The sustainable growth of regional aviation is the core competitiveness of the Chinese airline industry," said Li Guijin, a professor at the Civil Aviation Management Institute of China in Beijing.

"The central and western areas of China have the largest number of high-altitude airports, and it is an area with rich opportunities to develop regional aviation. There should be more types of aircraft that are suitable to fly in high-altitude regions," he said.

 

A visitor takes a photo of an Embraer E195-E2 Jet during the 53rd International Paris Air Show at Le Bourget Airport near Paris, France. GETTY IMAGES

 

 

 

 

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2019-12-13 00:00:00
<![CDATA[Lendlease eyes senior living market opportunities]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528987.htm China's efforts to further open up the senior living market in the country for foreign investment has attracted attention from Lendlease, Australia's largest operator of retirement living communities.

Last month, the National Development and Reform Commission (NDRC) and the Ministry of Commerce jointly published the latest shortened negative list for foreign investment, in which the investment is given access to more new items compared to the version of the list in 2018.

According to Xinhua News Agency, the list permits the establishment of senior living organizations and social welfare institutions.

"We applaud the government really setting positive policies, and giving us certainty around the direction so that is helping our investment confidence in investing here in China," said Tony Lombardo, chief executive officer of Asia with Lendlease.

David Hutton, the managing director of development in Asia for Lendlease, added the policy is terrific because it really improves the living options for senior people in the country.

Chinese culture respects senior people, but modern couples have little time to take care of their family elders, Hutton added.

Given this background, Lendlease is going to welcome the first batch of clients in its first senior living project in China in the suburban Qingpu district of Shanghai in 2021.

About 10 years ago, Lendlease made the decision to be an investor in China for the long term. After years of market research and study, communications with local Chinese real estate developers, along with witnessing policy changes by the government, the company finally decided to focus on the area where it has an advantage and expertise, senior living.

"(It is) the Chinese government's pro-active policy that gives us the confidence to make the investment," Lombardo said, adding the shorter negative list will create more development opportunities for investors from all over the world.

The World Health Organization said the proportion of people over the age of 60 in China will increase to 28 percent of its total population by 2040 from 12.4 percent of the total in 2010.

The Chinese Academy of Social Sciences (CASS) also forecast that the Chinese population aged 60 years old and above will reach 483 million by 2050.

The grey boom has created a problem for the country on how to take care of older people, while at the same time the senior living business is showing huge potential.

With the nation's first batch of middle-income people about to reach retirement age, China's senior living industry is projected to grow sharply in the coming years.

By 2020, China's senior living sector is about to reach a market scale worth 7.7 trillion yuan ($1 trillion), and further balloon to 22.3 trillion yuan by 2030, a report published by CPIC Allianz Health Insurance Co Ltd said.

"The government policy reflects there is an aging demographic, which is important. We feel we could make a contribution and create a differentiated and special product here," said Hutton, who explained how Lendlease decided to expand its presence in the China market by combining its international experience with oriental business practices.

After securing its first project, Lombardo said Lendlease wants to accelerate its growth in China as the company expects to complete and operate several projects in the years ahead.

"The importance for China being in our business is long term," said Lombardo. "Hopefully in the future we can manage and complete five projects. That's our strategy."

He explained that the company will focus on the Yangtze River Delta region, especially Shanghai.

The first project, named Ardor Gardens, looks to provide quality resort-like services and a healthy lifestyle for 1,300 residents in over 850 apartments. The community will include a complete range of facilities and recreational areas, health and wellness facilities such as a spa, swimming pool, restaurant and a large community clubhouse.

 

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2019-12-13 00:00:00
<![CDATA[What's news]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528974.htm GOVT AND POLICIES

Digital economy to be half of GDP by 2023

About 51.3 percent of China's GDP would be digitalization-related by 2023 as the country's enterprises step up digitalizing their businesses, global market intelligence firm IDC predicted. The research firm estimated that by 2025, at least 80 percent of China's new corporate applications would use artificial intelligence technologies. Chief information officers would play bigger roles within companies by planning for innovative development, while there would be rising demand for professionals in ensuring digital security and compliance, IDC said. China is on fast track for digitalization, while firms should take future-oriented strategies to prepare for related changes, said Kitty Fok, IDC China's managing director.

China takes green path in power generation

China took a green path in power generation during the 2014-18 period, with the continuous expansion of clean energy production, the fourth national economic census showed. In 2018, the country's power generation hit 7.1 trillion kilowatt-hours (kWh), up 31.3 percent from 2013, according to a report on the fourth economic census released by the National Bureau of Statistics. The growth of power generation in China's western region led all regions in the five-year period, increasing 42.3 percent from 2013, thanks to the exploitation of clean energy and the construction of power transmission channels, said the report.

COMPANIES AND MARKETS

Volkswagen vehicle deliveries grow by 3.9%

The Volkswagen brand delivered 586,400 vehicles worldwide in November, an increase of 3.9 percent year-on-year, the German carmaker announced on Wednesday. "The Volkswagen brand continues to demonstrate its capabilities even in an overall economic situation that remains challenging," said Juergen Stackmann, Volkswagen sales board member. In Germany, Volkswagen's core brand recorded "significant growth" of more than 20 percent and handed over 54,800 vehicles to customers in November. The brand also increased its market share, according to Volkswagen. "Significant growth" in vehicle deliveries was also recorded in the United States with an increase of 9.1 percent and Brazil with an increase of 12.3 percent, according to Volkswagen.

TUI reports 42.8%drop in group profit

Group profit attributable to shareholders of Europe's largest tourism company TUI declined by 42.8 percent to 416.2 million euros ($461.79 million) in fiscal year 2019, the German company announced on Wednesday. According to Fritz Joussen, chief executive officer of TUI, the company delivered a "successful financial year 2019." At the same time, underlying earnings before interests, taxes and amortization (EBITA) of the company which has registered offices in the German cities of Berlin and Hannover declined by 21.8 percent to 893.3 million euros. The main reason for the "drastic decrease of EBITA" was the grounding of TUI's Boeing 737 MAX fleet. The company's 15 such aircraft were taken out of operation and replacements had to be rented to maintain services.

Boeing 737 Max may not get regulatory clearance

Steve Dickson, chief of the Federal Aviation Administration, said on Wednesday that aviation regulators won't likely clear Boeing's troubled 737 Max airplanes for flight until 2020. "Like I said there are a number of processes, milestones, that have to be completed," Dickson told CNBC, "If you just do the math, it's going to extend into 2020. "Dickson said there is no clear timeline for when the 737 Max will be re-certified and that there are 10 to 11 milestones left to complete before it can be approved. "We're going to follow every step of the process, however long that takes," he said. "I've made it clear that I'm going to support my people and that means they are going to take whatever time it takes to get this process completed and to do it the right way."

AROUND THE WORLD

Consumer prices rise by 0.3% in November

US consumer prices rose moderately in November, which could reinforce the Federal Reserve's intention not to cut interest rates in the near term. The consumer price index (CPI) increased 0.3 percent last month after rising 0.4 percent in October, the US Labor Department said on Wednesday. In the 12 months through November, the CPI rose 2.1 percent. The so-called core CPI, which excludes the volatile food and energy categories, increased 0.2 percent in November and 2.3 percent over the past year, in line with the previous month. The firmer inflation figures would give Fed officials more confidence to keep interest rates unchanged after concluding a two-day policy meeting later on Wednesday, analysts said.

Business sentiment declines in Japan

Business sentiment among large Japanese companies dropped to its lowest level in three years in the October-December quarter, owing largely to a consumption tax hike coming into effect at the beginning of October, the government said in a report on Wednesday. According to a joint survey by the Finance Ministry and Cabinet Office, the confidence index reflecting sentiment at companies capitalized at 1 billion yen ($9 million) or more, stood at minus 6.2 for the reporting period, dropping from 1.1 logged for the previous quarter. The confidence index reflects the percentage of companies surveyed reporting that conditions have worsened subtracted from companies reporting improving conditions.

Brazil cuts benchmark interest rate to 4.5%

Brazil's central bank will cut its benchmark interest rate from 5 percent to a record low of 4.5 percent, the bank's Monetary Policy Committee (Copom) announced on Wednesday. It was the fourth interest cut in a row, after it remained stable from May 2018 to June 2019. With the latest reduction, the rate has accumulated a fall of 2 points this year. The Copom stated that recent economic data indicate that the Brazilian economy is growing, and that they believe this recovery will continue in a gradual pace. Copom put the inflation rate at 4 percent for 2019 and 3.5 percent for 2020.

South Korea banks' bad debt ratio steadies

South Korean banks' bad debt ratio stayed below 1 percent for the fifth straight quarter, financial watchdog data showed on Wednesday. The ratio of bank loans, overdue at least three months, stood at 0.86 percent of the total as of the end of the July-September quarter, down 0.10 percentage point from a year earlier, according to the Financial Supervisory Service. It hovered below 1 percent since the third quarter of last year. From three months ago, the third-quarter ratio fell 0.05 percentage points.

S&P downgrades Romania's outlook

Standard& Poor's has downgraded the outlook for Romania's rating from stable to negative due to rising deficits, local media reported on Wednesday, citing the latest statement released by the rating agency. The agency affirmed the eastern European country's long-term and short-term foreign currency debt rating at "BBB" and that of local currency debt at "A-3". The constraints on ratings include low economic prosperity, relatively poor administrative capacity, unpredictable economic environment, and only medium-level monetary flexibility compared to other countries with similar ratings.

Albania's FDI inflows up in first 9 months

Foreign direct investment (FDI) in Albania increased by 7.3 percent in the first nine months of 2019, compared to the same period last year, Finance and Economy Minister Anila Denaj said on Wednesday in a post on Facebook. According to Denaj, in January-September 2019, FDI in Albania amounted to 810 million euros ($ 898.6 million), reaching the highest historical level of foreign investments for the country. Denaj said this increase in FDI confirms the government's projections that in 2019 FDI will exceed 1 billion euros in total.

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2019-12-13 00:00:00
<![CDATA[Chinese excavator makers build on solid foundations]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528972.htm Chinese excavator makers posted robust year-on-year sales during the first 11 months of the year on the back of growing fixed asset investment and device replacement requirements, experts said.

Twenty-five leading manufacturers in the construction machinery equipment sector sold 215,538 excavators during the period, a year-on-year increase of 15 percent, according to data released by the China Construction Machinery Industry Association.

The figure in the first 11 months has already exceeded the annual sales of 203,420 units in 2018 and the full year numbers will set a record.

Excavator sales are usually seen as an indicator for economic vitality, because demand for the digging machines is associated with property and infrastructure development.

Zhang Dongming, a researcher on the machinery sector with Bohai Securities, said: "There has been steady sales growth of excavators and other construction machinery products since the beginning of this year."

He attributed such a growth to the uptick in investment in fixed assets like real estate and infrastructure, a strong need for replacing old devices, and strong overseas demand thanks to the Belt and Road Initiative.

Zhang Cheng, a researcher at Huatai Securities, said the excavator industry will witness steady expansion, thanks to the modest recovery in infrastructure investment growth and resilient real estate investment.

Leading companies have witnessed improved competitiveness with good long-term development potential, he said.

From 2012 to 2016, the construction machinery manufacturing sector in China saw a recession of sorts as market demand slipped. After a nearly two-year rapid expansion, the segment's growth started to slow last year.

Earlier this year, China rolled out measures to support infrastructure investment. The local governments' special bond issuance helped promote investment in infrastructure and support economic growth.

Zhang from Bohai Securities said the next five years will be a vital period of opportunities for the construction machinery industry to improve its quality and efficiency, and to transform and upgrade its development.

He said the efforts to boost insufficient infrastructure are expected to continuously increase, as the economy is undergoing downward pressure.

At the same time, construction related to the Belt and Road Initiative, rising labor costs and stricter requirements for environmental protection will continue to underpin the steady sales increase of construction machinery such as excavators, Zhang said.

In November, major excavator producers sold 19,316 units, an increase of 21.7 percent year-on-year, according to the industry association. Sales in the domestic market stood at 17,159 units, up 21.2 percent, the association said.

 

A China-made excavator is displayed during an industry expo in Shanghai. LONG WEI/FOR CHINA DAILY

 

 

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2019-12-13 00:00:00
<![CDATA[Steel output to taper off in 2020]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528932.htm China's steel consumption is expected to hit a record in 2019, and this would then be followed by a slight decline in demand in 2020, a new report by the China Metallurgical Industry Planning and Research Institute released on Thursday said. The report added that the country's crude steel output is also expected to fall in 2020 from 2019.

The country's steel consumption is estimated to hit 886 million metric tons this year, higher by 7.3 percent year-on-year, while demand is forecast for 2020 is seen at 881 million tons, down 0.6 percent from the level in 2019.

Crude steel output in 2019 and 2020 are expected to reach 988 million tons and 981 million tons, respectively.

"The unexpected steel consumption growth in 2019 is mainly due to an increase in real estate and infrastructure investments, while downstream industries such as machinery, energy, and home appliance also contributed to the growth under the background of a stable growing domestic economy," said Li Xinchuang, president of the institute.

In 2020, demand from some downstream industries including construction, automobile and shipbuilding is seen to likely fall. Demand from the machinery sector is likely to remain stable, while demand from the energy and home appliance sectors is seen rising, he said.

The report predicted steel consumption in the construction industry would be 475 million tons in 2020, down 0.6 percent from this year. The figure for 2019 is seen hitting 478 million tons, up 11.2 percent year-on-year.

The automobile industry is expected to consume 50 million tons of steel in 2019, down 7.4 percent from 2018. Demand in 2020 is seen slipping further to 48.2 million tons, down 3.6 percent year-on-year.

Demand from the shipbuilding sector is expected to see the sharpest year-on-year decline of 11.5 percent. The industry is expected to consume 11.3 million tons of steel this year, up 3.7 from last year, but the figure is expected to slide to 10 million tons in the following year due to the impact of trade disputes and geopolitical uncertainty.

The machinery industry is estimated to consume 142 million tons of steel in 2019, an increase of 1.4 percent year-on-year, and is forecast to maintain that demand in 2020.

The home appliance sector's demand for steel, however, is estimated to climb 3.7 percent year-on-year to reach 14 million tons next year. Consumption this year is estimated to increase 8 percent from last year to stand at 13.5 million tons.

Demand from the energy industry is also forecast to grow about 1.5 percent year-on-year to reach 34.5 million tons in 2020. The estimated consumption of the sector in 2019 is 34 million tons, higher by 3 percent year-on-year.

The report predicted iron ore demand in China at 1.225 billion tons in 2020, compared to 1.264 billion tons in 2019. Pig iron output in 2020 and 2019 is seen at 775 million tons and 800 million tons, respectively.

Qu Xiuli, deputy head of the China Iron and Steel Association, said at an industry forum in November that China will continue to rein in unwanted steel capacity, especially metal that is substandard and contributes to pollution.

 

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2019-12-13 00:00:00
<![CDATA[Guangdong upgrade gets new impetus]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528949.htm A tramcar using hydrogen energy was finally put into use in Gaoming district of Foshan, Guangdong province, at the end of November, after the local authority announced a plan to develop the hydrogen energy sector in 2014.

"Hydrogen energy will be widely used in buses, trams, trains and ships in the near future, demonstrating the emerging technology development in Foshan," said Mao Zongqiang, a professor at the nuclear energy and new energy research institute of Tsinghua University.

Equipped with six hydrogen tanks, the tram can travel 100 kilometers, with a top speed of 70 kilometers per hour.

Foshan's plan to develop the hydrogen energy industry was part of efforts by cities on the west bank of the Pearl River to facilitate the advanced equipment and manufacturing industry over the past few years.

"We are introducing a number of new industrial leaders to settle down in Gaoming, aiming to develop the district into a world-leading hydrogen energy center in the years ahead," said Xu Dongtao, Party secretary of Gaoming.

As of October, a total of 768 vehicles powered by hydrogen energy had been put into use in Foshan, with six hydrogen energy filling stations already established, according to local government sources.

According to an industrial development plan issued by the local government in 2018, Foshan's industrial output value for the hydrogen energy sector is expected to reach 100 billion yuan ($14.2 billion) by 2030.

In addition to hydrogen energy development, Foshan has also established an intelligent manufacturing technology park in its Shunde district, collaborating with leading robot manufacturer Kuka and Chinese home appliance maker Midea.

With an area of 800,000 square meters, the technology park consists of four areas centered on intelligent manufacturing, logistics, healthcare and smart home.

"The technology park aims to show intelligent technology application scenarios in manufacturing, living, commerce and healthcare," said Fu Shengbin, head of Kuka's operations in Shunde.

The annual output value of the park is expected to reach 240 million yuan by the end of 2019, and 650 million yuan in 2020.

Traveling to the west from Foshan, cities on the west bank of the Pearl River have been also gearing up for development of the advanced equipment and manufacturing industry.

Yunfu, which is about one hour by high-speed train from Guangzhou, the capital of Guangdong, is now home to 24 companies related to the hydrogen energy resources, involving a total investment of more than 5 billion yuan.

Cities on the west bank of the Pearl River include Foshan, Zhuhai, Zhongshan, Jiangmen, Zhaoqing, Yunfu and Shaoguan.

Official statistics showed that the advanced equipment and manufacturing industry grew quickly on the west bank of the Pearl River in the past few years, with the added industrial value growing annually by 11.8 percent from 2015 to 2018 to reach 1.15 trillion yuan.

"There has been an obvious trend of industrial agglomeration on the west bank of the Pearl River, with the strengthening development quality of the advanced equipment and manufacturing industry," said Wu Yuguang, deputy director of the Guangdong Provincial Industry and Information Technology Department.

According to Wu, a total of 345 equipment products reached the provincial-level or above technology standard between 2015 and 2018, after leading companies in the region had been encouraged to facilitate innovation and core technology research and development.

In addition, patents related to advanced equipment and manufacturing industry in the region increased annually by 75.5 percent between 2015 and 2018, according to Wu.

According to an action plan to facilitate the advanced equipment and manufacturing industry on the west bank of the Pearl River, the output value of the industry is expected to reach 2 trillion yuan by 2020.

"The west bank of the Pearl River Delta aims to develop into one of the world's influential and competitive regions in the advanced equipment and manufacturing industry," said Wu.

According to the plan, the region will give priorities to the development of machine tools, robotics, new energy automobiles, advanced ocean engineering and offshore wind power equipment, railway traffic equipment, general aviation and satellite application.

 

An industrial robot is displayed at the fourth China (Guangdong) International Internet Plus Expo in Foshan, Guangdong province. XINHUA

 

 

 

 

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2019-12-13 00:00:00
<![CDATA[Carlsberg banks on Anhui craft beer plant for bigger presence]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528943.htm Carlsberg China's first craft beer production center started operations on Wednesday in Anhui province in East China as part of the Danish brewery's plan to further invest in the country's high-end beer market, given the sharp increase in consumption of the beverage here during the past few years.

Carlsberg has invested 110 million yuan ($15.6 million) for the Craft and Specialty project in Tianchang city, Anhui. The hub has an accumulated investment of 187 million yuan, with production lines for its Draught Master products, craft brewing and packaging.

The brewing and fermentation capacity of the brewery is 100,000 hectoliters. The center is designed to produce products including Draught Master beer, the 1664 series and Tuborg.

The craft beer produced from the hub in Anhui will also be sold to markets in Southeast Asia.

Carlsberg China has grown 6 percent in terms of volume in the third quarter and 20 percent in net revenue, its third quarter report said.

In China, the revenue for its premium products increased 8 percent, driven by expansion in big cities and the successful premium development of local brands.

Globally, the brewery's organic revenue growth is 3.1 percent year-on-year. Its operating profit growth is around 10 percent.

"We're pleased that we've been able to deliver solid revenue growth for the quarter despite tough comparables from last year. In particular, the Asia region continued its very good performance," Carlsberg CEO Cees't Hart said in a statement.

He added: "The top line in Western Europe was solid in spite of challenging comparables from the very warm and dry summer last year, while we had difficult comparables in Russia and faced challenges that negatively impacted our market share year-over-year."

The CEO said the company's earnings upgrade earlier this week is further proof of its improved geographical footprint, "as solid earnings performance in China and Western Europe more than offset the challenges in Russia."

The National Bureau of Statistics said beer production volumes in the country in the past five years since 2014 have declined. Beer imports though have risen to 821,141 kiloliters, up 14.7 percent, according to Qianzhan.com.

Though craft beer only takes up about 1 percent of the consumption volumes in China in 2018, its annual growth has reached 40 percent. It is estimated there are nearly 800 craft beer brands nationwide.

Zhu Danpeng, a food and beverage analyst, said the rising incomes in China encouraged the development of a big market for craft beer in the country.

"Craft beer is expected to see fast growth at 40 percent at least in the next five years," said Zhu. Therefore, it is crucial for Carlsberg to get into the craft beer category in China and expand its high-end beer presence, he said.

Carlsberg's high-end product 1664 Blanc and medium range beer brand Tuborg have posted quick growth in China in the past few years.

Zhu said: "The new investment in production capacity has shown Carlsberg's confidence in speeding up its presence and penetration in the medium and high-end beer sector in the country."

 

A Carlsberg employee works at the company's production facility in Hanoi, Vietnam. REUTERS

 

 

 

 

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2019-12-13 00:00:00
<![CDATA[Growth trends offer fresh chances for LatAm]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528941.htm BUENOS AIRES-Trends in China's development offer rising opportunities to Latin American countries with ties to the Asian country, said Argentine-Brazilian academic Santiago Bustelo.

To make the most of bilateral ties, regional governments need "to understand the current stage of China's development process", said Bustelo, a research professor at the Argentina-China Studies Center of the University of Buenos Aires.

Today, China's development is marked by urbanization, middle-income group expansion, rising consumption, and trends that could potentially boost cooperation and trade through economic complementarity, especially between China and Argentina, Bustelo said in a recent interview with Xinhua News Agency.

"China's process of urbanization will continue to demand natural resources and promote the integration of the two economies," he said.

"In addition to the growth of major cities, internal migration from the countryside will spark the growth of medium-sized cities," said Bustelo, noting that Argentina could "take advantage of the huge opportunities that will arise in terms of extracting minerals, such as copper and lithium."

Given the right conditions between the two countries for exploring these ongoing changes, Argentina could not only continue to grow its exports to China, "but also diversify them", said Bustelo.

"In the food sector, we hope that the emergence of a new Chinese middle-income group generates opportunities for agricultural exports," he said.

China's growth coupled with a policy of further opening up its market to foreign goods generates concrete opportunities for countries like Argentina, Bustelo said, citing the recent second China International Import Expo held in Shanghai in November.

Looking ahead, "the Chinese people's expected rise in income will open up a series of opportunities in niche markets" for a range of Argentine products with high degrees of differentiation, including wine, sustainable goods, fashion, design and audiovisual production, said Bustelo.

"However, to spur this potential, Argentina needs a clear strategy for inserting itself" into the international market, Bustelo said.

While underscoring the strong cooperation that already exists between China and Argentina through numerous joint infrastructure projects, Bustelo said "it's true that in Argentina there is still a lot of ignorance about China, which sometimes leads to a lack of understanding of the opportunities and potential of having China as a strategic partner".

"I think both countries can work together to improve mutual understanding and create chances for dialogue, greater knowledge and cultural exchange," he added.

 

 

 

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2019-12-13 00:00:00
<![CDATA[Citi sees ample room for growth in nation]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528933.htm Further opening-up of the financial market in China will create opportunities for US-based Citigroup Inc or Citi to garner new business and profits in the country, according to Christine Lam, chief executive officer of Citi China.

"We are definitely looking forward to obtaining new business licenses," said Lam during an interview in Beijing on Wednesday.

The bank is interested in many areas including custody and futures businesses, she said.

Citigroup Inc has agreed to sell its 33.33 percent stake in Citi Orient Securities Co Ltd to Orient Securities Co Ltd for 476 million yuan ($68 million). The securities joint venture will be wholly owned by Orient Securities after the transaction is completed.

"It was one of the most successful JVs. The two parties agreed amicably for Orient Securities to take the full ownership. We are actively evaluating how we could best take advantage of the new rules which allow majority or even 100 percent foreign ownership of a securities entity," Lam said.

The China Banking and Insurance Regulatory Commission issued 19 measures this year to further open up China's banking and insurance industries, following announcements of 15 measures in 2018. The policies created sound institutions and a market foundation for the financial sector to improve international competitiveness and its capacity to serve the real economy, the regulator said in a post on its website on Monday.

These efforts are bringing both direct and indirect benefits to foreign banks, Lam said.

"The opening-up of China's capital market is attractive to foreign institutional investors. As the custodian bank and cash management bank for these clients, we have seen increasing flows of capital into China's interbank bond market, and this trend is obvious," she said.

Citi China received the Type-A license to act as a bond settlement agent in China's interbank bond market in 2017. The industry-wide ranking of its business in this segment improved from 17th back then to seventh this year, showing significant progress.

On July 20, the Office of the Financial Stability and Development Committee under the State Council issued a set of measures to further open up the financial industry, including a measure to lift the foreign ownership limits on securities, fund management and futures companies by 2020, a year ahead of schedule.

"With the announcement of these measures, many international companies accelerated their steps to participate in the China market and enlarged the size of their business in the country, which in turn increased the volume of our business with them as a global bank," Lam said.

"The external environment in China has been more challenging this year. The transformation of the Chinese economy and China-US trade friction did impact business sentiment to a certain extent. But we are prepared for these challenges and have adjusted accordingly to actively managing risks and assisting our clients to navigate through the environment."

Over the last three years, Citi China achieved double-digit growth in its new economy and private companies related business. The bank has set up a team dedicated to the new economy segment and targeted niche clients including online travel agencies, and e-commerce, new energy and healthcare companies.

It has also made full use of its global network to offer banking services to new economy companies that are interested in doing business overseas. Citi provides financial services in more than 160 markets, holding a local banking license in 98 of them.

With a network covering over 90 percent of the markets related to the Belt and Road Initiative, the relevant business of Citi grew by more than 20 percent this year, Lam said.

 

Christine Lam, chief executive officer of Citi China

 

 

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2019-12-13 00:00:00
<![CDATA[JPMorgan to increase China investment]]> http://www.chinadaily.com.cn/kindle/2019-12/13/content_37528957.htm JPMorgan Chase & Co is looking to substantially increase investment in the business of securities, asset management, and futures and options in China and hopes to gain full ownership of its joint ventures "when the timing is right" to take advantage of the further opening of the Chinese financial sector, the US bank's China CEO said.

Mark Leung, chief executive officer of JPMorgan China, said he welcomes the opportunity presented by the country's new regulation, which allows for 100 percent foreign ownership and the bank will fully leverage its strength in its global network and resources to operate its onshore and offshore China business.

"We think this is the best time for JPMorgan to involve much deeper and invest much broader across our product and service platforms (in China)," Leung said during an interview with China Daily.

The bank has finished all the preparatory work for its securities JV in China in which it owns a majority stake of 51 percent. It is now waiting for final permission from the China Securities Regulatory Commission to officially launch the business.

It has hired a strong team for its securities JV in China and it will engage in business activities including investment banking, research and securities sales, according to Leung.

JPMorgan is also planning to further invest in the growth of China's asset management industry. Its asset management unit, JPMorgan Asset Management (JPMAM), is poised to become the first foreign asset manager to hold a majority stake in a Chinese mutual fund company, after winning an auction bid of 2 percent stake in its mutual fund JV, China International Fund Management, in August.

The bank's asset management business has also formed a strategic partnership with China Merchants Bank. Under the partnership, JPMAM will serve as a preferred product provider for CMB's asset management subsidiary, offering access to its offshore and onshore solutions that are complementary to CMB's investment capability.

"We complement very well with strong local financial institutions. Actually, JPMorgan has long been known as the bank for other banks. Many Chinese banks and financial institutions are either our clients or our partners and we support them to achieve their domestic and global ambitions," Leung said.

"We have various partnership with local financial institutions including Industrial and Commercial Bank of China on cash management, Bank of China on RMB internationalization, Postal Savings Bank of China and many other banks and securities houses to foster partnership, knowledge and experience sharing," he said.

China will further open the financial industry to foreign companies by removing ownership restrictions in the securities, funds, futures and insurance sectors next year.

Leung said that rules and relations are becoming more favorable for foreign banks in China along with the further opening of the Chinese financial sector including the launch of the stock connect programs between the mainland and Hong Kong, the inclusion of Chinese equities and bonds in global indexes and the increase of foreign ownership of Chinese assets.

"We believe this is a very different backdrop against which foreign players can operate. While it depends on the speed of the opening up, I think the conditions are more mature now," Leung said.

Leung said that the trend of the renminbi internationalization, the development of the Belt and Road Initiative as well as the increasing two-way capital flows will enable JPMorgan to better serve as bridge that helps Chinese firms going abroad and global investors coming into the Chinese market.

Meanwhile, the US bank is also interested in getting licenses for securities financing and derivatives trading in the future as China plans to further open the derivatives market to foreign players and offer more hedging and risk management tools for global investors.

"We are working actively with the local regulators to share our experience ... in enhancing derivatives trading and securities financing to help speed up foreign participation into the local markets and to provide onshore investors with the best derivatives and securities financing capability that JPMorgan has provided offshore," Leung said.

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Mark Leung, chief executive officer of JPMorgan China

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2019-12-13 00:00:00
<![CDATA[Belt and Road helps build lasting economic and trade relations]]> http://www.chinadaily.com.cn/kindle/2019-12/12/content_37528816.htm Economic and trade cooperation between China and related economies under the Belt and Road Initiative has flourished over the past six years, boosting China's highlevel opening-up and further opening up of the global economy, according to senior commerce ministry officials.

Qian Keming, vice-minister of commerce, said the BRI has made significant contributions to the global economy and humanity development, and has been receiving positive responses from an increasing number of countries and international organizations.

"Based on the principle of achieving shared growth through dialogue and collaboration, BRI upholds the 'Silk Road spirit' of peace, cooperation, openness, inclusiveness, mutual learning and mutual benefit," Qian said.

"It has created a new space for the world economy, built a new platform for international trade and investment, raised up new practices in global economic governance, made new contributions to the well-being of people in the world, and contributed China's wisdom for building a community with a shared future for humanity."

Chu Shijia, director-general of the comprehensive department at the commerce ministry, said trade between China and the BRI economies has been expanding, with two-way investments increasing and key projects progressing. And establishment of overseas economic and trade cooperation zones have accelerated, and cooperation mechanism enhanced.

Currently, China has inked 198 cooperation documents with 167 countries and international organizations under the BRI and established working relations with seven countries on unimpeded trade and with 44 countries on bilateral investment cooperation, to quickly resolve the problems in bilateral economic and trade cooperation.

The country has also established e-commerce cooperation mechanisms with 22 countries and signed third-party market cooperation agreements with multiple countries.

Economic and trade cooperation has been a cornerstone of the BRI with data from the past six years proving the success of the mechanism, said Chu.

Latest data from the General Administration of Customs showed that the growth in China's trade with the BRI economies was higher than the overall growth during the first 11 months this year, as imports and exports with the BRI-related economies reached 8.35 trillion yuan ($1.19 trillion), up 9.9 percent year-on-year, and accounting for 29.3 percent of China's total foreign trade.

The cumulative trade volume between China and BRI economies has exceeded $7.5 trillion and China is the largest trading partner for 25 of these economies, Chu said.

The accumulated investment of Chinese enterprises in BRI-related areas stood at $110 billion, with the value of newly signed overseas contracted projects exceeding $750 billion.

During the first 10 months, China's nonfinancial direct investment in BRI economies surpassed $11 billion, and the value of newly signed overseas contracted projects amounted to more than $110 billion.

Direct investment into China from BRI-related countries and regions stood at $50 billion, with more than 21,000 foreign enterprises being set up. In the first 10 months of this year, BRI-related countries directly invested $6.1 billion into China and established nearly 4,500 foreign enterprises.

Chinese companies have invested $34 billion in overseas economic and trade cooperation zones in related countries, and about 4,500 Chinese companies have established operations in the cooperation zones. They have paid $2.8 billion as taxes and fees to local governments and created more than 300,000 jobs for local people.

Key projects involving construction and operation of ports, railways, highways, and bridges among many other projects along the Belt and Road area have also been making achievements as expected.

The country also has signed five free trade agreements with 13 BRI economies. This year, China has upgraded free trade agreements with the Association of Southeast Asian Nations, Singapore and Chile, signed an FTA with Mauritius and concluded negotiations with New Zealand for an upgrade of the FTA between the two countries.

The protocol of the second phase of China-Pakistan Free Trade Agreement also came into effect this year, and 15 member countries of the Regional Comprehensive Economic Partnership also have accomplished conclusion of negotiations as a whole.

Both of the officials made the remarks at a book release function in Beijing last week. The book-A Bright Shared Future ... Stories Along the Belt and Road-is the first in a series of stories related to the Belt and Road Initiative. The book has been compiled by the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce and a second volume will be launched soon.

 

Chinese construction workers perform soldering operations at a construction site of China-Laos railway project. XINHUA

 

 

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2019-12-12 00:00:00
<![CDATA[UBTech set to ramp up overseas presence]]> http://www.chinadaily.com.cn/kindle/2019-12/12/content_37528851.htm Chinese artificial intelligence pioneer UBTech Robotics said it will step up efforts to further expand its overseas presence. The company is backed by internet heavyweight Tencent Holdings Ltd.

The plan came about after the Shenzhen-based company inked a deal worth $362.4 million to increase the number of AI teaching labs for students in the United Arab Emirates.

Zhong Yong, senior vice-president of UBTech, said the company now operates services in about 40 countries and regions. Its services and education philosophy are recognized by foreign companies and governments.

"The lack of talents is a big challenge for the development of AI and robotics, so we devote tons of resources to developing a complete AI education system to nurture talents," Zhong said.

The company said it has already established an AI curriculum system covering the primary, junior and high schools, as well as colleges. It held a string of robotics competitions to cultivate the competence and team-building capabilities of students.

Some of the company's curriculum and robots programming learning equipment have been purchased by the United Arab Emirates.

In November, UBTech announced the $362.4 million deal with Royal Strategic Partners, a unit of Abu Dhabi Capital Group. ADCG is a large-scale investment company that manages assets of around $20 billion.

UBTech said it will build AI teaching labs for 1,310 primary and secondary schools in the seven emirates of the UAE over the next four years.

The Shenzhen-based company said in the future, it will work together with the UAE to further promote the localization and development of AI education solutions.

The related courses in primary and secondary schools and universities will provide a steady stream of fresh blood for the AI industry.

Before the deal, UBTech signed agreements on AI education with companies, organizations and government agencies in Russia, Indonesia and Uzbekistan.

It recently reached a strategic cooperation deal with the UNESCO Higher Education Innovation Center on nurturing AI talents and promoting high-quality education.

UBTech said it will step up efforts to tap into overseas opportunities and explore ways to better offer localized products and services in each market.

The company's services are increasingly popular in China, with local students showing mounting enthusiasm toward programming and robotics technology.

Liu Yunjia, a mother of a primary school student, said her son was attracted a few years ago by an advertisement for programming learning at a shopping mall and bought a learning package immediately. Since then, her son has devoted most of his time to learning programming skills.

The coding industry for Chinese children is a market worth up to 4 billion yuan ($558 million) and is forecast to increase about tenfold in the next five years, according to market research and consulting group iResearch.

 

 

 

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2019-12-12 00:00:00
<![CDATA[Tech shares set to steal the thunder]]> http://www.chinadaily.com.cn/kindle/2019-12/12/content_37528818.htm Chinese technology shares may continue to offer considerable upside potential next year, on the back of profit gains from 5G commercialization and deepening capital market reforms, analysts said.

"We expect policy support for technological industries will only strengthen next year. Technology sectors should still be a key focus for next year's A-share investment," said Zhang Xia, chief strategist with Shenzhen-based China Merchants Securities.

This policy stance was signaled by a recent high-profile meeting that stressed the need to improve scientific and technological capabilities and innovation capacity in 2020, Zhang said.

In terms of company fundamentals, the communications technologies sector has entered a new uptrend of its business cycle after China had granted 5G licenses to telecom carriers in June, according to Zhang.

The same may be the case for semiconductor and other tech sectors as 5G commercialization is fueling various new technologies and applications, he said.

Tech shares have been in the limelight recently on expectations of stronger profitability, better investor sentiment and accelerating capital market reforms, analysts said.

"This year marks an inflection point in China's capital market reforms, which had pressed the accelerator of fundamental reforms aimed at quality market development, instead of scale expansion," said Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology.

Last month, the top securities regulator assigned an action plan to improve the fundamentals of listed firms, after allowing reverse mergers on the ChiNext board in October, which could encourage mergers and acquisitions involving listed firms in the innovative enterprise-heavy board.

This followed the debut of the sci-tech innovation board in July, which shows greater inclusiveness to tech firms than older peers and pilots the registration-based new share sales system.

The ChiNext index went up by 5.57 percent as of Wednesday since the beginning of the fourth quarter, outperforming a 0.66 percent increase in the benchmark Shanghai Composite Index over the same period.

On Wednesday, the ChiNext index went down by 0.91 percent to close at 1718.26 points, after ending at an eight-month high in the previous session, according to market tracker Wind Info.

Looking ahead, China's capital markets will become more supportive for tech firms to raise funds, as part of the nation's efforts to boost high-quality capital market development, Dong said.

One major goal of improving listed firm quality-the key to quality market development-is to enhance their research and development capacities and ensure that they are the cutting-edge players in their respective industries, he said.

Cheng Shi, managing director and chief economist at ICBC International Holdings, said sectors that lie on the intersection of advanced technology and consumption upgrade would rank among the most valuable investment opportunities in 2020.

"With the basis of 5G communications equipment, a new series of consumption scenarios and niche markets may emerge and focus on the areas of culture and entertainment, medical care, education, and housekeeping services," Cheng said.

Zhang said that virtual reality, augmented reality, as well as cloud gaming, computer and smartphones, may be the tech segments that have the highest possibility of strong market performance, given their shorter timeline to realize higher margins.

 

 

 

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2019-12-12 00:00:00
<![CDATA[Innovation zone in Dubai eyes Chinese companies]]> http://www.chinadaily.com.cn/kindle/2019-12/12/content_37528834.htm Dubai wants Chinese companies to explore opportunities in a dedicated innovation zone in the city that is positioned to be a "powerful enabler" of the Belt and Road Initiative.

District 2020, the legacy site of the six-month Expo 2020 Dubai, is looking to attract Chinese enterprises that fit into its technology-driven innovation system and leverage the cosmopolitan Middle Eastern city as a springboard for international push, said Nadimeh Mehra, vice-president of Legacy Development and Impact at District 2020.

"China and the United Arab Emirates share a long and fruitful history of economic collaboration that we are eager to help continue through the platform of growth that District 2020 will provide," she said.

District 2020's vision is to support the continued development of the UAE's knowledge and innovation economy, with a focus on key growth industries of technology, travel and tourism, logistics and transport, education and construction.

Mehra said Chinese companies are already leaders in a lot of different technologies like blockchain, artificial intelligence to the internet of things, all of which fit into the agenda of District 2020.

And potential investees are not just confined to the technology circle but a broader portfolio of companies in the hospitality, tourism and real estate sectors.

"Because the zone is not only a technology hub but … where technology collaborates with enterprise," she said. "So if a typical tourism company benefits from the technology, it allows the technology to scale much faster."

Apart from incentives like the provision of digital infrastructure and preferential policies like zero corporate and personal tax, District 2020 has an entrepreneur program dubbed Scale2Dubai, aiming to draw startups and small-and medium-sized enterprises to upscale and enter the Middle East and North Africa markets.

"Successful applicants of the program will benefit from free business setup, two years subsidized urban living, a two-year entrepreneur visa, and two years free workspace," she said.

Earlier this year, Sheikh Mohammed Bin Rashid Al Maktoum, vice-president and prime minister of the UAE, reiterated the country's support for Belt and Road Initiative with the announcement of a $3.4 billion Chinese investment in Dubai.

Some Chinese technology powerhouses have entered the nation. For instance, Huawei Technologies has launched over 100 initiatives and deployed over 1,000 smart devices in less than three years to facilitate the Smart Dubai 2021 initiative.

Fliggy, the tourism arm of Alibaba, signed a memorandum of understanding with Dubai's tourism agency to enhance travel experiences for Chinese travelers, while gaming giant Tencent chose Dubai Internet City as its regional headquarters in June.

The Belt and Road Initiative guarantees further access to what is now the world's second-largest economy. In return, Chinese businesses in the UAE gain an important platform from which they can access vast emerging markets in the Gulf region, according to Simon Pluckrose, a Dubai-based director at consultancy firm Brunswick.

 

 

 

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2019-12-12 00:00:00
<![CDATA[Swiss firm sets up center for special medical foods]]> http://www.chinadaily.com.cn/kindle/2019-12/12/content_37528819.htm Nestle Health Science has invested in a product innovation center in Taizhou, Jiangsu province, as it joined several nutrition health brands in tapping the country's growing demand for clinical nutrition.

The center will operate in parallel with Nestle Health Science's product innovation centers in the United States and in Switzerland, sharing global advanced core R&D technologies, localized innovations for China's national standards and consumer needs, and enriching the firm's product systems of Foods for Special Medical Purpose (FSMP) in China.

Nestle Health Science is a subsidiary of Nestle, the biggest food company in the world whose headquarters is in Switzerland.

Having been in the Chinese market for the last three years, Nestle Health Science has posted double-digit in the country, with its products being locally manufactured. It has 11 approved formula products in China, including five for babies and infants and six for FSMP.

The center being built in China reflects the firm's confidence and commitment to the Chinese market but will also serve the Asia-Pacific region.

Products manufactured in its factory in Taizhou serve consumers on the Chinese mainland, Hong Kong and Taiwan, said Cecily Gu, regional business head of Nestle Health Science China.

The first liquid whole protein nutrition formula developed by the Product Innovation Center of Nestle Health Science China called Nutren Novasource GI has successfully obtained registration as a food for special medical purpose in July 2019.

"This innovation will trigger a new era of high-quality FSMP in China and lead the Chinese clinical nutrition to a new level," Gu said.

"Nestle Health Sciences will provide cutting-edge technical support and experience for developing high quality FSMP suitable to Chinese consumers," said Gregory Behar, the global CEO of Nestle Health Science Group.

The Nestle Health Science Taizhou Factory is the first approved liquid full-nutrition FSMP factory in China. It will introduce internationally advanced production technologies and formulas, such as Nutren Novasource GI, into China and has greatly promoted the process of localized production in the Chinese FSMP market.

Gu said: "I believe that FSMP will release great vitality and bring more opportunities for enterprises and consumers in China. The Product Innovation Center will continue to carry out localized innovations, develop formulas according to Chinese tastes and nutritional diet characteristics, and enable more patients to receive nutritional treatment. It also helps to further narrow the gap in clinical nutrition treatment."

She said the factory and innovation center will consider adding more locally adapted flavors for recovering Chinese patients such as dates.

An aging society and the steady improvement of consumption levels meant awareness of nutrition and health practices by the Chinese people has constantly risen.

Michel Gardet, the global business head for Medical Nutrition of Nestle Health Science, believes that "China's FSMP market may face a long-term incubation period. For NHS, we not only must meet the production thresholds required by regulatory authorities, but also understand the health of different consumers through a large amount of research and develop the corresponding formula."

In the future, Nestle Health Science will continue to deepen its presence in the Chinese market. The future of China's FSMP industry is seen as particularly promising.

Another company in Illinois-based Abbott is looking at more market opportunities in the special medical purpose food sector in China.

Its nutrition product Ensure 3 is part of the firm's first batch of products that are registered as food for special medical purpose in China in June this year.

Abbott said it can meet the nutritional demands of people over the age of 10 who suffer from diseases including food intake disorder, digestion and absorption obstacles, and metabolic disorders. Abbott also has special medical nutrition products for patients with diabetes.

Abbott's third quarter report in 2019 showed its worldwide adult nutrition sales increased 3.8 percent to $1.87 billion. The sales performance in the quarter was led by the strong growth of its Ensure nutrition brand, and Glucerna, its diabetes-specific nutrition brand.

The Healthy China Initiative (2019-30) said national nutrition has been raised as an issue to be a part of the national strategy. Chinese consumers have great demand potential for quality FSMP.

The plan pointed out there has been a rise of nutrition-related diseases in recent years, while the Health Promotion For the Elderly will be carried out soon.

China is home to the largest number of senior residents in the world. By the end of 2018, the number of people aged 50 and above reached 249 million, accounting for 17.9 percent of China's population.

Nearly 180 million elderly people in China suffer from chronic diseases, data provided by Abbott showed. The proportion that suffer from one or more chronic diseases is as high as 75 percent.

At the same time, the life span of aging people has grown rapidly, with the expected life time per capita expected to reach 79 by the year 2030.

In its 2018 report of healthcare statistics, China's top health authority revealed that the number of in-hospital patients reached 250 million last year. It will become necessary to provide effective and quality medical nutrition support to this group of patients along with old people as a whole going forward.

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<![CDATA[Tencent Cloud ramps up AI efforts with slew of new products]]> http://www.chinadaily.com.cn/kindle/2019-12/12/content_37528849.htm Tencent Cloud, the cloud computing arm of internet giant Tencent, is stepping up its artificial intelligence focus with an eye on the burgeoning growth, profit opportunities for the sector in China.

The cloud computing service provider on Wednesday launched a series of new AI products that seek to lower the skill barriers for enterprise customers.

"The blossoming AI, big data and other digital technologies over recent years strongly point toward an inevitable trend of intelligent upgrade of industries," said Wang Long, vice-president of Tencent Cloud. "Companies yearn for more sophisticated AI application scenarios to generate new momentum for industrial development."

Wang said against this backdrop, companies need to offer end-to-end comprehensive AI solutions that can truly generate value and help clients embrace digital transformation.

Tencent Cloud's new products include technologies to identify fake facial images, a language model self-learning tool, graph computing engine as well as a big data platform to help enterprises fend off risks.

The cloud service provider also announced on Wednesday that it has upgraded all its AI and big data products, as part of the larger efforts to reinforce its leading position in the market.

Currently, Tencent Cloud serves data scientists, application developers and business managers, offering big data and machine learning tools and services to help lower the skill barriers. It has also worked with partners to offer digital solutions for various industries such as retail and finance.

With the booming new technologies and supportive government policies, China is fast becoming a fertile market for the development of AI technologies and the applications, powered by leading tech giants such as Alibaba, Tencent and Baidu.

By the end of last year, China had 3,341 AI companies and was ranking second behind the United States, said an AI development report released in May by the Ministry of Science and Technology.

The report said the US, China and the United Kingdom are at the forefront in AI. From 2013 to 2018, global scientists published more than 300,000 papers in AI research, with China leading in the number of published papers at 74,408, followed by the US at 51,766.

According to a national plan released in 2017, China is set to become the world leader in AI by 2030. By 2020, China's AI industry is expected to be worth 150 billion yuan ($21 billion).

"Both AI adoption and spending are picking up fast," Andrea Minonne, a senior research analyst with International Data Corp, said in a recent report. "AI is the game changer in a highly competitive environment, especially across customer-facing industries such as retail and finance, where AI has the power to push customer experiences to the next level with virtual assistants, product recommendations, or visual searches," said Minonne.

 

The booth of Tencent Cloud during an industry expo in Hong Kong. ZHANG WEI/CHINA NEWS SERVICE

 

 

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