Archives 2014

Alibaba invests in online education service

Alibaba Group announced Monday that it has invested nearly $100 million in online education service TutorGroup, with two partners, Singapore investment company Temasek and Shanghai-based Qiming Venture Partners.

According to a statement sent to the Global Times, TutorGroup plans to use the funding to further growth across the Asian market, and also expand its market share in the America.

TutorGroup won a $15 million investment from Qiming Venture and CyberAgent in April 2012.

Founded in 2004, Shanghai-based TutorGroup, with more than 2,000 teachers in 60 cities across 30 countries and regions, provides real-time interactive language learning.

The company estimates the adult English language-learning market in the Chinese mainland is growing fast at 25 percent annually, and the market size will reach over $21 billion by 2016.

In the mainland alone, TutorGroup expects sales to see a triple-digit annual growth rate in the coming few years.

Last year, Alibaba launched online education platform Taobao Classmate, and this investment is regarded as another step for the e-commerce firm to explore the online education market.

Chinese private and online education has been growing in recent years with a wave of startups receiving significant financing.

In December 2012, online English training service 51Talk raised $12 million in financing from funds backed by a domestic Internet company Xiaomi.

Mismatch showed in job supply, demand

Employment seekers at job fairs want positions that aren’t available

Job seekers and potential employers left Beijing’s job fairs disappointed this weekend, as the available positions didn’t match what the prospective employees were looking for.

The four major career fairs marked the launch of the first job-searching season of 2014, as migrant workers flock to or soon will return to cities after Spring Festival, and millions of college students look for employment before they graduate in the summer.

One disappointed recruiter was Bu Chenyu, investment manager of financial firm Hua Yi Gold (Beijing) International Management Co.

Bu said he had 15 employees handing out fliers with job descriptions at the job fair at the National Agriculture Exhibition Center, but the outcome “failed to meet my expectations”.

“Most job hunters shopped around at different booths and had little patience to know more about our company or were inclined to leave a resume,” Bu said.

Bu’s company was seeking 100 investment consultants and five investment managers, offering generous benefits that include several subsidized trips home and abroad a year. But the company received only about 50 resumes, and more than half the job seekers are soon-to-be college graduates with little work experience, he said.

“I noticed that almost all companies attending the fair needed to hire sales personnel, which intensified the competition,” he said.

Also hunting for employees in the crowds on Sunday morning was Zhao Can, a recruitment agent from Future PI, a company in Beijing that provides business management services. Zhao’s company was paid to hire 36 employees for a building material manufacturer.

“I start a conversation with people I feel are suitable for our jobs and ask them what they expect of their future employers,” he said. He added he believes more recruiters than job seekers were at the fair.

Yu Hongxing, an administrative chief from Baigao Education, a training institution in architectural industry, said most job seekers came to the fair with a wait-and-see attitude even though the company offered an annual salary of 1 million yuan ($164,800) for senior sales managers.

“Most of our job vacancies are related to investment and sales, but we found out that many job hunters are not interested in such challenging jobs, but prefer office work like administration, which we don’t need,” he said.

Some job seekers also noticed the mismatch in what they want to do and the positions that were available.

Zhao Liyuan, a senior from Xingtai, Hebei province, who is majoring in communication technology, came to the job fair at about 8:30 am on Sunday before the fair opened.

However, after carefully reading the brochure that listed all the job vacancies at the fair, the 22-year-old Zhao realized that there weren’t any jobs that would enable him to become a communication technician, the position for which he has trained for three years.

Companies attending the two-day fair planned to hire 20,000 workers for 8,000 positions, according to the fair organizer, Chaoyang district’s human resources service center.

Wang Guangzhou, a researcher at the Institute of Population and Labor Economics under the Chinese Academy of Social Sciences, said the discrepancy between jobs wanted and offered shows that China’s labor market will have a labor shortage and structural imbalance in the long run.

“China’s working-age population reached a turning point in 2012 and began an accelerated decline,” he said.

“However, our education system has failed to adjust accordingly with the demographic change. Our students trained in colleges cannot meet the demand of the market, and it is hard for them to find jobs they like.”

He said it will take time for China to upgrade its economy and reform the educational system to relieve the labor shortage.

Lenovo reports quarterly revenue tops $10b

It’s the first time the PC vendor has broken through the milestone

Lenovo Group Ltd on Thursday reported its quarterly revenue broke through the $10 billion barrier for the first time because of strong global demand.

Top executives also explained to shareholders how they are going to maximize profit gains from the recent acquisitions that cost Lenovo more than $5 billion.

The world’s largest personal computer vendor said the revenue in its third fiscal quarter that ended on Dec 31, 2013, stood at $10.8 billion, a jump of 15 percent year-on-year.

Earnings also surged 30 percent compared with a year ago to $265 million.

Yang Yuanqing, chairman and chief executive officer of Lenovo, said business in PC-plus areas, including smartphones, tablets and servers, was driving profit growth.

“The Motorola (Inc) and IBM (Corp) server acquisitions are a perfect fit with our PC-plus strategy,” said Yang.

He also tried to calm investors who were questioning the company’s profitability after spending $3 billion to acquire the money-bleeding Motorola Mobility from Google Inc. Motorola Mobility makes Android smartphones and Bluetooth accessories. Yang said the business will quickly begin contributing to the company’s performance.

But Yang was hesitant to estimate his company’s earnings prospects, saying the two acquisitions are still awaiting approval from the United States government. Consequently, the effect on short-term earnings are difficult to predict.

“Buying Motorola is a quicker way for Lenovo to access the premium smartphone market with a leading Android offering than trying to do it with its existing design teams and brand reach,” said Frank Gillett, vice-president and principal analyst at Forrester Research.

“Using Motorola, just as Lenovo used the IBM ThinkPad brand, to gain quick credibility and access to desirable markets and build critical mass, makes a lot of sense,” added Gillett.

Sun Qi, vice-president of industry consultancy Sino-Market Research Ltd, also believes the Motorola unit will extend the Chinese company’s performance in global markets.

Lenovo was the second-largest smartphone maker in China last year with more than 40 million shipments, according to Sun.

Lenovo’s quick move into portable device markets has given the company an upper hand in future competition, analysts said.

In the past quarter, Lenovo’s revenue surged in Europe, the Middle East and the Americas. Sales outside China contributed more than 60 percent in revenue, according to its financial report.

“Lenovo was early to embrace Android as a tablet operating system while the likes of HP (Hewlett-Packard Co) and Dell (Inc) waited for Windows 8 and prioritized margins over volume,” said James Wang, an analyst at Canalys.

“Lenovo’s strategy has paid off, not only in its home market but worldwide. Lenovo still has the potential to grow its global notebook shipments and has emerged as a challenger in the tablet space,” added Wang.

The analyst said Lenovo shipped three times as many tablets worldwide in the past quarter as HP and Dell combined.

Lenovo CEO Yang said earlier the company will challenge Samsung Electronics Co and Apple Inc globally, using a bigger product spectrum and more affordable prices.

Will LinkedIn make it in China?

Professional networking site LinkedIn Corp appears to be making preparations to start operations in China, the country with the world’s largest Internet population.

The California-based firm has made some major moves recently that have been seen as steps towards officially expanding its service into China. The company announcedit has hired Derek Shen, founder of Nuomi.com, a Chinese website similar to Groupon, to head its Chinese operations. It also started to integrate with China’s popular mobile messaging app WeChat weeks ago.

“We believe LinkedIn is uniquely positioned to penetrate the Chinese market and could serve as one of the few sites to have a meaningful presence in both the People’s Republic of China and many Western markets,” said Blake Harper, an analyst with Wunderlich Securities.

Harper expects the company’s expansion into China to move slowly and methodically.

“We expect the company to continue to take it slow with its Chinese development efforts and any impact to the member or corporate customer base is likely longer term,” he said.

Founded in 2003, LinkedIn has grown to be the world’s largest professional network on the Internet with more than 200 million members. While LinkedIn has no Chinese-language site yet, it does have 4 million registered users from the country.

China is home to 618 million Internet users and 500 million mobile web users as of the end of last year. However, China is proving to be a tough nut to crack for some of the world’s biggest web players.

“eBay, Yahoo!, and Google have essentially failed in China and Amazon is facing stiff competition as the Chinese appear to have a preference for local, home based companies,” said Victor Anthony, an analyst with Topeka Capital Markets.

LinkedIn would be entering a market as similar local websites are racing to take advantage of the heated job-recruitment market. For instance, 51job.com, China’s leading online recruitment company, claimed it had more than 73 million registered users in 2013. Other popular Chinese recruiting agencies including zhaopin.com and chinahr.com also hold a significant share of the market.

Will LinkedIn be the one that succeeds? Anthony said that remains to be seen and much depends on whether or not a Chinese upstart enters the market with a similar and compelling offering.

“My understating is that there aren’t any compelling offerings in China today,” he said. “In that case, if past trends are consistent, then LinkedIn may face a similar difficult hurdle as its US Internet counterparts before it. If no one comes along with a serious and compelling offering, then LinkedIn has a strong chance of succeeding.”

Anthony said based on what he has seen over the past 12 years following the Internet media space and watching US based Internet companies enter China, he does believe that competition will follow LinkedIn.

“LinkedIn’s hurdle is to convince Chinese citizens – and the Chinese government – that it offers a premium solution in the professional development and recruitment space and that it is not just another US company asking Chinese citizens and corporations to open up their wallets,” Anthony said. “A healthy relationship with the Chinese government would also of course help.”

Mobile payment platform ‘will go far’ to lift consumption

China has established its first national mobile payment platform using near field communication technology as part of an effort to boost information consumption, a senior central bank official said.

People’s Bank of China Deputy Governor Li Dongrong said in an interview on Monday that the platform, which enables communication among mobile payment providers such as financial institutions and mobile network operators, began trial operations at the end of last year.

The platform has already been connected to the mobile payment branches of seven organizations, including China Construction Bank Corp, China CITIC Bank Corp Ltd, China Everbright Bank Co Ltd, China UnionPay and leading telecom operator China Mobile Communications Corp.

The platform “provides a solid infrastructure foundation to help China boost domestic information consumption and make the sector a new driver for economic growth”, Li said.

He said that mobile finance has entered an era of “standardization”, so it’s important to provide an integrated ecosystem with unified standards to help mobile payment providers cooperate.

Colin Light, China Digital Consulting Leader for PricewaterhouseCoopers in Hong Kong, said that very few countries in the world have successfully built a single platform that links financial institutions and mobile network operators.

“The biggest obstacle for banks and mobile operators to operate in a unified way is to build scale. You need a scale advantage to reach wide acceptance of payments,” said Light.

Despite the obstacles, Light said that near field communication-based mobile payments have a very promising future. The technology has the potential to replace cash, credit cards and debit cards.

NFC-based proximity mobile payment facilities allow users to make payments quickly and conveniently by tapping their phone on any NFC-enabled terminal at checkout

But proximity mobile payments accounted for just 0.8 percent of the third-payment mobile market in China in 2013 due to the scarcity of terminal devices, said consultancy iResearch Group.

Transactions in China using third-party mobile payments surged 707 percent year-on-year to 1.2 trillion yuan ($$197 billion) in 2013.

Although the PBOC has given strong support to develop NFC-based proximity mobile payments, Wang Weidong, an analyst with iResearch Group, said there are many hoops to jump through before the technology can compete with the popular Internet-based mobile payment system, Alipay.

“First, there are not many NFC-enabled smartphones in China. To promote proximity payment, you need people to buy mobile devices that are tailor-made to use this technology.

“Second, how do you educate and nurture a group of people who are comfortable using proximity payments? That’s also important because it is very difficult to change the habit of users,” Wang said.

Industry group enters fray in Qualcomm probe

Mobile phone chipmaker Qualcomm Inc may be facing tough headwinds in China after a telecommunications trade union submitted “substantial evidence” to the country’s top economic planner in the midst of an antitrust probe.

Mobile Phone China Alliance, comprising some 30 handset makers and telecommunications equipment providers, has submitted an investigative report to the National Development and Reform Commission, calling Qualcomm’s business model “detrimental to China’s mobile phone industry”.

Overcharging on patent fees and bundle-selling of services are two major accusations leveled at the world’s largest chip manufacturer, according to the alliance’s secretary-general, Wang Yanhui.

“What’s happening to China’s mobile phone industry now is like what happened to its DVD industry years back,” Wang told China Central Television on Sunday.

“Patent holders levied exorbitant licensing fees and grabbed the majority of profits,” he said.

Licensing has become a crucial revenue stream for Qualcomm, according to the report, which said it charges from 4 to 6 percent of the wholesale price of a handset. And that does not include chipset charges if mobile phone companies pay to install Qualcomm’s chips.

The US giant has even established a subsidiary exclusively for charging patent fees, said Wang, which he said “draws a thin line between proper licensing and monopolistic moves”.

Qualcomm was put under antitrust scrutiny in November as Chinese authorities vowed to lay out more assertive plans for antitrust enforcement in six emerging industries.

The government agency has yet to disclose details of the investigation, citing the sensitivity of the issue.

Qualcomm’s China-based spokesman couldn’t be reached for comment on the latest development.

Its chief executive officer, Paul Jacobs, said in January that he was “not aware of” any activity violating China’s anti-monopoly law and that his firm had handed over requested documents to the NDRC, which helps oversee antitrust issues.

A Beijing-based lawyer who is providing legal advice on antitrust issues to Qualcomm said the investigation could last at least a year, because of the complexity of the case.

The lawyer, who declined to be identified, urged the government to take into consideration the time, resources and money that the company has invested in its research and development process.

“It is for the same reason that pharmaceutical producers are sometimes allowed to receive a higher profit in the first couple of years after a new drug is produced. It is a way to protect intellectual rights and encourage innovation,” he said.

The probe and the potential fine — which could end up totaling more than $1 billion — come as China gears up for the launch of high-speed fourth-generation LTE mobile communication networks.

As the world’s largest smartphone market, China is now the single biggest source of revenue for Qualcomm, representing 49 percent of its sales in the past fiscal year.

Heavyweight smartphone makers, from Apple Inc and Samsung Electronics Co Ltd to domestic players Lenovo Group Ltd and Yulong Computer Telecommunication Technology Co (the maker of Coolpad), all have adopted its telecommunications chipsets.

According to research firm Strategy Analytics, Qualcomm maintained a 53 percent share of the global market for smartphone processors by the second quarter of 2013.

“Royalty rates are critical, notably when we are transitioning into a 4G era,” said Coolpad’s deputy general manager, Li Bin.

Shipments of 4G-enabled smartphones are expected to top a half-billion units in China by 2015, according to data collector Canalys.

Qualcomm was the star of the 3G era, but its dominant position is being somewhat eroded by companies like MediaTek, maker of cheap smartphone chipsets, said Xu Zhen, a researcher for d1net, an information technology portal in Shanghai.

Qualcomm’s current edge lies in its particularly strong adaptation in chips that communicate with both LTE and other older cellular technologies, Xu noted.

“Since the nascent 4G network has yet to be fully established, mobile phone chips should support seamless handovers for both voice and data to cell towers with older network technologies such as GSM. Such smooth transaction can only be, at least for now, realized by Qualcomm,” said an analyst with China Mobile Co Ltd, the country’s top mobile communication carrier, who declined to be identified.

Qualcomm is no stranger to substantial fines.

In 2009, South Korea’s Fair Trade Commission fined the company 273 billion won ($252 million), the agency’s biggest ever penalty against a single company, for abusing its dominant position in CDMA modem chips.

Shanghai becomes Asia’s most stylish city

Shanghai now reigns as the fashion capital of Asia, beating out Hong Kong and Tokyo, according to the latest research by Global Language Monitor, a United States-based firm that follows trends in word usage.

Survey lists it No 10 in world for residents’ focus on haute couture

Shanghai has surpassed Tokyo and Hong Kong to become Asia’s most stylish city, a new survey has found.

According to research by Global Language Monitor, a United States-based data research firm that catalogs trends in word usage, Shanghai is the reigning fashion capital of Asia, ranking 10th worldwide.

New York ranked first in the 10th annual survey on global fashion cities, followed by Paris and London.

Asia is well-represented in the top 20, with Tokyo at No 11, Singapore at No 19 and Hong Kong at No 20. Beijing didn’t make the top 55.

“As China further emerges onto the world stage, Shanghai leads the fashion charge,” said Bekka Payack, the New York-based fashion director for the outfit.

Global Language Monitor tracked more than 250,000 print media and social media channels looking for buzzwords associated with fashion and haute couture. It then traced the contextual usage and frequency of the words to set a gauge for ranking global fashion houses.

China’s commercial hub deserves to be Asia’s fashion capital, said Qi Xiaozhai, dean of the Shanghai Commercial Economic Research Center.

“Shanghai has made a triumphal return by jumping 12 places from last year’s ranking. It should return to its rightful place in the top 10,” Qi said.

Shanghai has become a hot destination for multinational brands seeking to engage a population with an increasing disposable income and craze for the latest lineups. For instance, Apple has four retail outlets in Shanghai, more than Tokyo and Singapore combined.

Besides, luxury shoppers in Shanghai continue to splurge on fancy items, with average consumer’s spending even more than New Yorkers. Shanghai residents spent an average of $1,000 on their last purchase, double the amount of their New York counterparts, according to Milan-headquartered marketing firm ContactLab.

Around 91 percent of Shanghai residents said they plan to make a similar purchase in the next six months, compared with 77 percent of New Yorkers.

Chinese account for 29 percent of the world’s luxury expenditures, a Bain & Co study found in December.

In world-class cities like Shanghai, shoppers have grown more sophisticated as they realize the only way to show their uniqueness and personality is through “fashion with personalized mix and match”, not with accessories that everybody can wear, said Brunno Lanes, a Bain partner in China and lead author of the study.

Shanghai residents have the style and figure to carry out the latest fashion trends, said Sujata Sahai, a translator and documentary writer from India who lives in Shanghai.

“I find people here are a lot more brand-conscious and spend a great amount on fashion. They all turn out very pretty,” she said.

Shanghai is ahead of Singapore and Hong Kong in terms of getting dresses properly matched, said Sahai, who has traveled extensively in the region.

The landmark China (Shanghai) Pilot Free Trade Zone is likely to gain further traction among foreign businesses lured by loosened investment curbs, said Sun Lijian, vice-dean of the School of Economics at Fudan University.

High-end retail chains, including Lane Crawford and Galeries Lafayette, have recently entered the Chinese market. Meanwhile, as mainstream Western labels have occupied nearly every street corner, domestic brands should aim to redefine China’s fashion trends, Sun said.

For instance, the biannual Shanghai Fashion Week, a festivity that once attracted the likes of Jean Paul Gaultier and Vivienne Westwood, is giving heed to local brands this year.

“Indigenous brands were given a boost after China’s first lady Peng Liyuan wore all made-in-China outfits during her foreign tour. Wealthy trendsetters will like distinctive high-end goods that require a trained eye to detect. These are opportunities for Chinese brands,” Sun said.