Archives April 2014

Top Chinese dairy company reports 84 pct growth in 2013

Yili Group, China’s largest manufacturer of dairy products, reported net profits of 3.2 billion yuan ($520 million) in 2013, up 84.4 percent from the previous year, according to its yearly report released on Tuesday night.

Yili took in 47.78 billion yuan in sales revenue last year, according to the report.

Yili’s major rival Mengniu Group had sales revenue of 43.36 billion yuan in 2013 with net profits of 1.63 billion yuan, according to its yearly report.

Yili’s strong performance was boosted by its integration of global resources and upgrade of products and research, said Chen Lianfang, a dairy industry analyst.

The company reported net profits of 1.088 billion yuan in the first quarter of this year, up 121.8 percent year on year.

Its baby milk powder plant in New Zealand, with an annual production capacity of 47,000 tons, is expected to begin operation in June, according to Zhang Jianqiu, executive president of Yili.

Yili inaugurated its research and development center at Wageningen University this February in the Netherlands, becoming the first Chinese dairy R & D center in Europe.

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China Mobile employees promote its services in Yichang, Hubei Province. With more than 780 million subscribers in the Chinese mainland, China Mobile made inroads into Hong Kong by acquiring China Resources Peoples Telephone Co Ltd in March 2006.

Mainland carrier ‘proves it can thrive’ in tough, saturated market

China’s biggest telecom carrier said its expansion to Hong Kong eight years ago has proved it can survive in one of the world’s most competitive telecom markets, according to the company’s Hong Kong chief.

State-owned China Mobile Communications Corp is the parent company of China Mobile Ltd, which has more than 780 million subscribers in the Chinese mainland. But many have said that the company’s position reflects the high barriers to entry in its home market, not its competence.

Its success in Hong Kong demonstrates that China Mobile can thrive in an environment that is full of strong rivals, said Tiger Lin, chairman of China Mobile Hong Kong Co Ltd, in an interview with China Daily.

This year “marks the eighth year since China Mobile entered Hong Kong. It was tough work to gain a foothold here and win local customers,” Lin said.

China Mobile Hong Kong, a wholly owned subsidiary of China Mobile, has seen its market share exceed 20 percent, compared with 13.6 percent in 2006. Lin said the company has become one of the top three telecom operators in Hong Kong by subscriber numbers, although he declined to provide specifics.

China Mobile made inroads into Hong Kong by acquiring China Resources Peoples Telephone Co Ltd in March 2006. Now, it has more than 1,000 employees in Hong Kong, mostly local residents, and directly runs 48 sales outlets in the city.

“Hong Kong’s telecom market is highly competitive. We have five to six players in the field, all striving to grab a share out of the city’s limited population,” Lin pointed out.

The local government is only responsible for issuing spectrum licenses and doesn’t limit new entrants. In Hong Kong, it’s easy to enter the telecom industry but hard to survive, Lin added.

PCCW Ltd, the company led by Richard Li, the son of Asia’s richest man, Li Ka-shing, holds a majority interest in PCCW-HKT Telephone Ltd, which is a dominant player in Hong Kong’s telecom service market.

Hutchison Telecommunications Hong Kong Holdings Ltd, a unit of investment conglomerate Hutchison Whampoa Ltd, operates mobile services under a branch in Hong Kong known as Three.

Not all wireless network operators enjoy sound and stable growth rates in Asia’s financial hub. Hutchison Telecommunications said 2013 net profit fell 25 percent to HK$916 million ($118.1 million) because of a weak market response to smart mobile phones and devices.

“Hong Kong’s mobile service market is pretty saturated. So it is not an easy job for carriers to maintain stable development,” said Colin Light, digital consulting leader at PricewaterhouseCoopers. It is particularly hard for smaller telecom operators to move up a notch when bigger ones have a tight grip on market share, he said.

According to the government’s Office of the Communications Authority, the mobile subscriber penetration rate in Hong Kong was 241 percent as of January 2014, more than two times that of the mainland. It indicates that everyone in Hong Kong has at least two mobile phones.

Lin said it would be quite difficult for China Mobile to overtake local competitors and gain the top position in Hong Kong, but that the market provides valuable experience for developing businesses in the mainland.

“Hong Kong’s telecom market is mature and fully competitive. We gain experience from this fierce competition and acquire in-depth understanding of product development,” said Lin.

In addition, by launching a merged fourth-generation network in Hong Kong in 2012, China Mobile was able to test a domestic 4G standard in a real commercial environment, paving the way for a nationwide commercial rollout a year later.

New player seeks to enter mobile search industry

People visit UCWeb’s stand to try out its mobile browser at a mobile Internet trade show in Beijing.

Browser firm UCWeb forms Shenma Inc in joint venture with Alibaba

UCWeb Inc, a leading Chinese browser maker and app distributor, has formed a joint venture with China’s e-commerce conglomerate Alibaba Group Holding Ltd to offer a mobile search service, a move that may become a threat to search giant Baidu Inc.

The Beijing-based UCWeb said on Monday at a ceremony celebrating the 10th anniversary of its founding that the mobile search joint venture will be called Shenma Inc.

The budget for the joint venture was not revealed, but UCWeb confirmed that it owns roughly 70 percent of the mobile search company.

Yu Yongfu, chief executive officer of UCWeb, said the time is ripe to enter the market as the booming mobile Internet offers his company a great chance to reshape its brand. “Mobile messaging, mobile search and mobile browsers are the three key demands in the era of mobile Internet,” he said.

“Since no one company has established a dominant position in mobile search, we believe we enjoy a unique advantage to build Shenma into becoming No 1 in mobile search.”

According to iResearch Consulting Group, the mobile search market will be worth $1.3 billion this year and $2.5 billion next year. Baidu currently leads the field due to its established position in the PC-based search engine sector.

Baidu saw its first-quarter revenue soar 59.1 percent year-on-year to 9.5 billion yuan ($1.53 billion).

Robin Li, Baidu’s founder and chief executive officer, said during a first-quarter earnings conference call that traffic on Baidu’s mobile search app should surpass personal computer-based search traffic this year.

Despite Baidu’s solid performance, Yu said UCWeb has great advantages in mobile search as his company has built its business on the mobile browser.

“The design of mobile search should be mobile-centered rather than personal computer-based,” he said.

Yu said that text-based search requests will be reduced in the mobile Internet era. More and more search requests are expected to be made through voice or even images.

According to the company’s statement on Monday, UCWeb has integrated Alibaba’s search department into Shenma and hired a team of experts from China’s search giant Baidu Inc as well as Google Inc.

Lu Jingyu, an analyst with iResearch, said that as a mobile browser provider with more than 500 million users across the globe, the UCWeb browser can help Shenma wrestle market share away from Baidu.

“Moreover, by integrating with Alibaba’s system, it is expected that people will search for and purchase products from Taobao.com and Tmall.com. The merchants on the two e-commerce platforms of Alibaba all can become potential advertisement buyers of Shenma,” she said.

But Shenma still has a long way to go if its goal is to surpass Baidu as a mobile search giant in China, said Lu. “As none of Shenma’s unique features have been released yet, I can see the emergence of a strong competitor but not a dominator,” she said.

Shanghai developer cuts prices

Gold Tai Yuen Group, a Shanghai-based property developer, announced over the weekend a nearly 30 percent price cut for its high-end residential project in a Shanghai suburban area, the latest sign of a property cooling down in first-tier cities.

“The price is now 36,000 yuan ($5,724) per square meter on average, and we will offer 60 apartments this time,” a staff member at the sales office, who did not give her name, told the Global Times on Sunday.

The Yulong Palace project, located in Shanghai’s Pudong New Area and still under construction, has 113 apartments for sale ranging from 220 to 300 square meters. Since sales of the project kicked off on October 26, 2013, only 7 units have been sold as of Sunday, with an average price of around 50,000 yuan per square meter, data from the Shanghai Real Estate Trading Center showed.

The price cut is to celebrate the 18th anniversary of the group’s establishment, Gold Tai Yuen said in a statement sent to the Global Times.

But analysts said the pricing of the project is still too high. In comparison, the average per capita disposable income of Shanghai’s urban residents was 43,851 yuan in 2013, according to data from the Shanghai statistics authority.

Gold Tai Yuen’s move has also strengthened views the cooling down of property prices has now spread to first-tier cities from second- and third-tier cities like Hangzhou in East China’s Zhejiang Province and Wuxi in East China’s Jiangsu Province, where some developers have been cutting new home prices since February.

“It’s just a start. I believe more developers will join in to cut their home prices in first-tier cities as a means to spur sales and recoup funds, especially those cities with large inventories of unsold apartments,” Yang Hongxu, deputy director of E-house China R&D Institute in Shanghai, told the Global Times Sunday.

New home sales have cooled down remarkably in the first quarter in Shanghai, given banks’ credit policy adjustments and potential homebuyers’ wait-and-see attitude, the local statistic authority said in a statement published on Wednesday.

Sales of new homes grew by 6.1 percent year-on-year to reach 4.185 million square meters in the first quarter of 2014, compared with a 43.3 percent year-on-year growth seen during the same period last year, the statement said.

In Beijing, growth of home prices will rise at a slightly slower pace this year compared to last year, as the municipal government plans to build 50,000 units of affordable homes, the Beijing Academy of Social Sciences said in a report released Thursday.

Yang expects the sluggish property market to have a negative influence on China’s economic growth this year.

Wal-Mart replaces CEO for China region in Asia leadership shuffle

US retailer Wal-Mart Stores Inc, the world’s largest retailer by revenue, has appointed a new chief executive for the China region, where the world’s largest retailer is battling stiff competition from local rivals.

Sean Clarke, a Wal-Mart veteran and current chief operating officer in China, will take over the China CEO role from June 1, a statement from the firm said over the weekend. The current China chief executive, Greg Foran, will become Asia CEO.

China is key to Wal-Mart’s international ambitions but it has stumbled in a market where consumers value safe and authentic food over the low prices the retailer is famed for. Wal-Mart has been in China for 17 years.

This year, Wal-Mart was embroiled in a scandal over tainted donkey meat. Workers also went on strike at some of its stores.

It is now changing its China approach, closing some big stores that never caught on with locals and focusing more on its own-brand products and imports, quality and safety.

Last week, the retailer announced a store closing in Hangzhou, provincial capital of East China’s Zhejiang Province, marking the seventh closure since March.

Clarke has been with the grocery chain for 15 years, including the last two in his current role in China overseeing areas from logistics and merchandise to marketing.

“Sean has been a key contributor to our improved performance in China. His experience and background uniquely prepare him for this role and will ensure continuity for our progress in China,” outgoing China CEO Greg Foran said in the statement.

Shanghai apartment sells for record $36.85m

A duplex at Tomson Riviera set a record in Shanghai for a single apartment when it sold for 228.5 million yuan ($36.85 million) Thursday.

The average price for the 986-square-meter unit in the heart of Little Lujiazui in Pudong New Area was about 231,000 yuan per square meter, also a city record.

The buyer had purchased an 824-square-meter duplex in the same development for 150 million yuan in November and has decided to replace it with the bigger unit, according to Oriental Morning Post, citing Bao Haifeng, director of sales at Tomson Group.

The Post didn’t say how much the buyer sold the 824-square-meter duplex for.

The city’s luxury housing segment has been stable this year. A total of 29 units, or 8,641 square meters of new homes with an average price of more than 100,000 yuan per square meter have been sold since January, according to Centaline Property.

A Sun Hung Kai Properties luxury residential project in Lujiazui saw nine units sold this year for an average price of 104,800 yuan per square meter, Centaline data showed.

The Bund House, a Greentown project in Huangpu District, recently offered a 690-square-meter duplex with an asking price of around 230 million yuan, or more than 333,000 yuan per square meter.

Chip maker targets China’s middle class

MediaTek Inc, a Taiwan-based mobile chip maker, is aiming at China’s growing middle class for increased sales of mid-price smartphones and wearable devices.

“The current market structure is about to change dramatically because of the enlarging middle class population and weaker phone subsidies from carriers,” said Johan Lodenius, chief marketing officer of MediaTek.

He estimated the number of users of mid-price smartphones in the market is set to triple in coming years as the global middle class nudges up to near 5 billion by 2030.

More than 65 percent of the population will come from China and other Asia Pacific economies, doubling from less than one-third in 2009.

Looking forward, the company will focus on more affordable mid-price devices, Lodenius said.

“Higher than $700 phone products are so expensive for customers,” he said.

Wearable devices powered by MediaTek chips are likely to be released later this year.

The company expects to release the world’s first eight-core LTE smartphone chip in the third quarter.

China is the world’s largest smartphone market followed by the US, and shipped close to 300 million smart devices last year, according to Wu Lianfeng, associate vice-president of International Data Corp China.

The Chinese market will see explosive growth in smartphone and tablet sales this year, primarily through telecom operator and online channels, according to the IDC.

MediaTek has been known as a low-end mobile chip maker. It was the world’s third-largest maker of chips in 2013 by shipment, following Qualcomm Inc and Broadcom Corp from the United States.

The company shipped more than 600 million smartphone chips in 2013, including 350 million for featured phones and the rest for smartphones and tablets.

Less than a month before MediaTek unveiled its attempt to enter a higher-end market, Intel Corp, maker of high-speed x86-based chips, announced it will provide cheaper products for Chinese original equipment manufacturers.

The move was believed to position the US company to gain market share.

Microsoft to seal takeover of Nokia’s handset business

Microsoft will complete its acquisition of Nokia’s handset business this Friday, according to a Microsoft’s statement, thus ushering a new chapter for Nokia.

In total, Microsoft will wrap up 5.4 billion euro ($7.5 billion) for the takeover this coming Friday.

“The completion of this acquisition follows several months of planning and will mark a key step on the journey towards integration,” Microsoft said in Monday’s statement.

Industry-watchers believe that this deal could open “a new chapter” for Nokia, rather than closing the book on the company.

With its market share greatly eroded, Nokia, once a giant of mobile phone business, fell victim of intense competition from its rivals Apple and Samsung.

Jobless rate 5.17 pct in march, survey says

China’s polled unemployment rate in March was 5.17 percent, slightly lower than in February, said Li Pumin, secretary-general of the National Development and Reform Commission, on Wednesday.

It was the first reference to the jobless rate since Premier Li Keqiang mentioned it in an article in the Financial Times in September.

Traditionally, the government publicizes the urban registered unemployment rate. That number has long been criticized as a biased and deflated one. It also has rarely changed, staying at about 4.1 percent since 2010.

As an alternative, the government has administered a monthly survey in 65 major cities. The number is currently available only to policymakers and has not been made public.

Premier Li said in September that China’s polled unemployment rate was 5 percent for the first half of 2013. Li Pumin did not elaborate on what the number was in February this year.

Citing the low unemployment and moderate inflation rates, Li Pumin said the economy is stable and healthy. As a result, the government does not foresee having to roll out stimulus measures.

Toyota sells more than 10 million vehicles globally in FY 2013

Japan’s Toyota Motor Corp. said Wednesday that its global group sales in fiscal 2013 gained 4.5 percent from the previous year to 10,133,000 units, becoming the first automaker whose annual sales topped 10 million units.

According to the corporation, the upbeat sales in the one-year period towards March were partly boosted by strong performances in North Korea and China. The consumption sales tax hike from April 1 also stimulated last-minute buying in domestic market.

The automaker also projects its group vehicle sales will total 10.32 million units in the next fiscal year.