Archives 2014

Xiaomi ranked world No. 3

Xiaomi Inc has become the world’s third-largest smartphone vendor and taken the lead in China since entering the market only three years ago, research firms said yesterday.

Xiaomi won over consumers by offering them inexpensive models but with high-end features and selling them online. Globally, Xiaomi had a market share of 6 percent in the third quarter, just behind Samsung Electronics and Apple Inc. Samsung dominated with 25 percent, but down from 35 percent a year earlier while Apple fell slightly to 12 percent, according to Strategy Analytics, a US-based research firm.

“Xiaomi was the star performer,” Strategy Analytics’ Executive Director Neil Mawston said in a statement.

Other research firms including IDC and IHS iSuppli also put Xiaomi as the No. 3 player in the global smartphone market, ahead of domestic rivals Lenovo and Huawei.

Beijing-based Xiaomi expects to sell 60 million smartphones with revenue of 70-80 billion yuan (US$11-13 billion) this year after selling 26.1 million units in the first six months.

Evergrande launches infant formula product

Evergrande Group, a Chinese private conglomerate involved in property development, agriculture and sports, launched an infant formula on Monday following its acquisition of New Zealand dairy producer Cowala Dairy Ltd. last month.

The Guangzhou-based group also plans to build a dairy manufacturing base in China to tap the lucrative market. Chinese consumers have preferred to buy foreign brands following a series of tainted milk scandals in recent years.

The infant formula product under the name Cowala will hit the market nationwide soon, according to an announcement at its launch ceremony on Monday.

The Evergrande Group, which runs China’s most successful football club, Guangzhou Evergrandetaobao Football Club, appointed three players to serve as global promotion ambassadors for Cowala infant formula on Monday.

The group, established in 1997, made its fortune through real estate development, but has been diversifying its business in recent years by investing in agriculture, cultural tourism, dairy, livestock and sports.

The group’s sales in 2013 reached 100.4 billion yuan (16 billion U.S. dollars), while sales in the first eight months of 2014 reached 90 billion yuan, according to its official website.

Chery Jaguar Land Rover Changshu plant fully operational

The China-made Range Rover Evoque rolled off the production line of Chery Jaguar Land Rover’s plant in Changshu, Jiangsu province.

The first China-made Range Rover Evoque rolled off the production line of Chery Jaguar Land Rover’s plant in Changshu, Jiangsu province, on Oct 21, signaling the joint venture is ready to begin full business operation. It is also the first full-scale automobile manufacturing facility of Jaguar Land Rover outside the UK.

The 10.9 billion ($1.78 billion) yuan plant, a joint venture between Chinese automaker Chery Automobile and Jaguar Land Rover, is designed to produce 130,000 vehicles each year.

China has been Jaguar Land Rover’s largest market since 2012, accounting for almost one-fourth of its sales globally, and one in five Range Rover Evoques has been sold to China since its debut in 2011.

Locally made Evoques will reach the market in early 2015 and the automaker will make public their prices at that time.

Addressing questions whether the locally produced vehicles are equally good as those manufactured in the United Kingdom, president of Chery Jaguar Land Rover Chris Bryant said quality is the joint venture’s No 1 objective.

“Chery Jaguar Land Rover remains committed to delivering excellence in its quest to lead the Chinese premium automotive industry through its historic British lineage, world-class quality and unique shared value approach,” he said.

As a major milestone for the first Sino-British premium automotive joint venture, the opening ceremony also signifies the dawn of a new era for the Chinese premium automotive industry.

Yin Tongyue, president and CEO of Chery Automobile, said, “I strongly believe that Chery Jaguar Land Rover has a promising future and will provide premium auto products that exceed every Chinese consumer’s expectations.”

Dedicated to becoming a leading enterprise that inspires excellence in the premium automotive market in China, the joint venture has taken several steps to ensure it can provide top-of-the-line quality for its customers. These include establishing an industry leading quality control system, an advanced R&D Center and a nationwide sales network.

Equipped with top international standard press, body, paint, trim and final shops – along with an engine plant – the Changshu plant is “one of the world’s most advanced and efficient manufacturing facilities”, the company said.

Among other facilities, it has 306 robots that undertake 85 percent of the welding work and 20 percent of the finished models undergo full-vehicle checks at the plant’s quality center, according to the company.

Bryant said another critical element to ensure quality is to make sure employees understand the quality the automaker wants to deliver.

“I will give you an example. Our first workers at the plant were hired in June 2013, more than half a year before we started operation, so that they can understand the quality requirements,” he said.

Workers in key positions have received three months training in the UK and 95 percent of all workers in the plant have at least five years working experience, the company said.

Bryant also said local suppliers are selected according to the same standards as those in the UK.

“The Changshu plant is a significant milestone in our commitment to the Chinese market. We are small, but China is huge,” said Ralf Speth, CEO of Jaguar Land Rover at the plant’s opening ceremony.

Success story

Jaguar Land Rover sold 92,300 vehicles in the first nine months of the year in the Chinese market, a 38.7 percent surge from the same period a year earlier.

Now that the plant is fully operational, many in the auto industry believe the British premium brand will further close its gap in sales with the three German marques.

However, Bryant said sales alone are not the joint venture’s focus. “Both volume and profit are the output of a successful business. And we will be successful when we deliver to customers what they desire and deserve. So we focus not on the sales but on improving customer satisfaction.”

Chery Jaguar Land Rover has established a superlative operation and management structure, with a highly practical and efficient management team that is fully committed to realizing the joint venture’s long-term development in China, and to fulfill consumer expectations and needs with its products and services.

Through its jointly managed Integrated Marketing Sales and Service organization established earlier this year, Chery Jaguar Land Rover will promote efficient operation of marketing, sales and after-sales service work, to ensure customers enjoy the best possible relationship with the joint venture, as well as establish its position in the forefront of the premium automotive market in China.

Zhu Guohua, deputy president of Chery Jaguar Land Rover, said the joint venture has built a network of 243 dealerships nationwide, and will add more to extend excellent sales and after-sales services to Chinese customers.

In addition to the Range Rover Evoque already in production, Zhu said that by 2016, the plant will be producing three Jaguar Land Rover models. He added the plant would also produce joint venture brand models in the future.

Therefore, the joint venture is investing in making new breakthroughs in product research and development with the construction of a research and development center.

Staffed with more than 290 experienced product development engineers, the center covers product planning, project management, process, system and engineering applications, trial production, testing for finished vehicles, product localization design, improvement of emission and engine performance as well as new energy development.

Where have China’s big group-buying websites gone?

Just five years ago, when you wanted to watch a movie you went into a cinema and bought a ticket. These days, however, you can use your Internet-connected mobile phone to group-buy a virtual ticket, which can be exchanged for a real ticket.

If that seems easy and inexpensive, it is, and the ease and possible profit margin was not lost on eagle-eyed investors and others. The situation today is something of an economic mystery.

From Sept 23 to 5:30 pm, Oct 21, a total of 17,085 people group-bought their movie tickets, together with popcorn and a bottle of fruit juice, for 31 yuan ($5) on nuomi.com, a Chinese group-buying website. The original price for a single ticket in the cinema on Fuxing Road, Haidian district, Beijing is 90 yuan (almost $15).

The arrangement, and many like it, seemed like a win-win situation. Consumers saved money, while goods and service providers, such as restaurants, hotels and hairdressers, were able to capitalize on their unused capacity, promote their brand, or expand their service area.

South Beauty, a high-end restaurant chain hit hard by China’s frugality campaign, group-sold 12,165 “dinners for four people” at a price of 298 yuan on the group-buying sub-site of Dianping.com, a website where people post their reviews for restaurants, from April 11 to 5:30 pm, Oct 21. The original price was 1,234 yuan.

Tuan800.com, a group-buying navigation site, which also releases regular data analyses, provides a general picture of the industry. According to the website, a total of 120 million people in the Chinese mainland group-bought something or some service in August, up 109 percent year-on-year. Tuan800 added that the value for all these group-buying deals for this single month reached 7.7 billion yuan, up 108 percent year-on-year.

But just as group-buying seemed ready to enter daily life for good, Chinese group-buying websites – once the darlings of venture capitalists, now face an unpredictable future with many being gobbled up by larger companies and acquired, others vanishing from the Internet all together.

The following examples beg the question: what happened to China’s major group-buying websites?

October 2014, Lashou.com

Sunpower Group announced on Oct 19 it had acquired Lashou.com, one of China’s earliest group-buying websites, but has not disclosed the deal price, according to caixin.com.

Sunpower, headquartered in Nanjing, capital of South China’s Jiangsu province, has five business focuses, including real estate, health care and retail. ?Zou Yan, spokesman for Sunpower, told caixin.com that the acquisition of Lashou.com was to help improve Sunpower’s O2O (online-to-offline) platform.

Lashou.com, which went online in March 2010, received a total of $166 million yuan from investors between April 2010 and April 2011, according to Tuan800.com. Lashou even tried to go public, the first Chinese group-buying website to launch an IPO in the United States, and was valued at $1.1 billion yuan, but it failed at last.

Group-buying deals worth 300 million yuan were made on Lashou.com in the first eight months of this year, down 1.77 percent year-on-year, according to Tuan800..

The company might now have a market share of only five percent, according to a survey cited by caixin.com.

March 2014, Didatuan.com

Didatuan.com, which went online in July 2010 as a group-buying website and once had a top-five trading volume, closed its group-buying business on March 31 and turned to develop a group-buying navigation service, according to information posted on tuan800.com on April 3.

At the moment, however, didatuan.com cannot be accessed online.

January 2014, Manzuo.com

Shenzhen-listed Suning Commerce Group Co Ltd, China’s leading retailer, announced on Jan 27 it has fully acquired Manzuo.com, which went online in January 2010 and was China’s first group-buying website, according to cnstock.com. The exact details of the deal were not announced.

Manzuo.com was integrated into Suning’s local life department and Fang Xiaohai, Manzuo’s founder, stayed in Suning to expand the conglomerate’s O2O business.

Group-buying deals worth 70.8 million yuan were made in the first eight months of this year on Manzuo.com, up by 3.74 percent year-on-year, according to Tuan800.

August 2013 to March 2014, Ruomi.com

Baidu announced in August 2013 that it would invest $160 million into Ruomi.com and would gain a 59 percent stake of the group-buying website that went online in June, 2010.

At the end of 2013, Shen Boyang, the CEO of Ruomi.com resigned and on March 6, 2014, Ruomi was rebranded Baidu Ruomi.

According to Tuan800, group-buying deals made on Baidu Ruomi in the first eight months of this year hit 727.6 million yuan, up 7.55 percent year-on-year.

January 2013, 24quan.com

Du Yinan, founder of 24quan.com, a group-buying website, said his company has been closed due to failed talks with investors, Qilu Evening News reported on Jan 14, 2013.

August 2012 to January 2013, GaoPeng.com

In August 2012, GaoPeng.com, the Chicago-based Groupon Inc’s China joint venture, merged with Chinese group-buying website Ftuan to form a new company called GroupNet.

However, on Dec 12 the same year Ftuan was renamed GaoPeng and its domain name was changed back to gaopeng.com on Jan 15, 2013.

China adds 10.82 million new jobs in Jan-Sept

China’s job market proved to be quite resilient although the economic growth slowed in the first nine months, according to data from the Ministry of Human Resources and Social Security (MHRSS) on Friday.

From January to September, 10.82 million new jobs were created, or 160,000 more than a year ago, MHRSS said.

At the end of September, the urban registered jobless rate stood at 4.07 percent, lower than the annual employment control rate of 4.6 percent targeted by the government.

However, the registered jobless rate may undercount the actual unemployment numbers as a survey among 31 big- and medium-sized Chinese cities found the unemployment rate remained at around 5 percent in the first eight months.

The new jobs created in the first nine months exceeded the government’s full-year target of at least 10 million new jobs this year.

Stocks slide as data fails to lift sentiment

China’s manufacturing sector data failed to ease concerns about capital outflows as investors continued to stay away, bringing down Shanghai shares for the third straight day.

The benchmark Shanghai Composite Index lost 1.04 percent to 2,302.42.

China’s six most active exchange-traded funds that track indexes measuring the performance of blue-chip shares have seen 5.37 billion yuan (US$877 million) of redemption this month, the Securities Times reported yesterday, citing data from the Shanghai and Shenzhen exchanges.

Analysts said the redemption indicated a bout of profit-taking by institutional investors pessimistic about the outlook of blue chips.

Fears that new share sales will divert funds from existing shares also weighed on the market as three companies started to take subscriptions for their initial public offerings yesterday. Six other companies will start taking subscriptions from today.

The stock market fell yesterday despite data showing the flash HSBC manufacturing purchasing managers’ index rose to a three-month high of 50.4 in October, slightly up from a final reading of 50.2 in September.

But the sub indexes were not as encouraging as the headline index, with new orders sub-index edging down to 51.4 from 51.5 in September and new export orders falling to 52.8 from 54.5.

Gold shares declined after gold prices eased from a six-week high on stronger US dollar. Zhongjin Gold fell 3.2 percent to 8.26 yuan. Zijin Mining Group lost 3.2 percent to 2.43 yuan.

Novelis says China plant to boost sales

An aluminum sheet processing plant in Zouping county, Shandong province. Global demand for aluminum sheets for vehicles is forecast to record a compound annual growth rate of 30 percent by the end of 2020.

Novelis Inc, the world’s largest supplier of light-weight aluminum automotive sheets, said on Tuesday that its new plant in Changzhou, Jiangsu province, would help cater the growing global demand for the fuel-efficient light metal.

The US-based company has invested $100 million on the plant that will produce 120,000 metric tons of light-weight aluminum every year. It will also help the company expand its global footprint to meet the rapidly growing market demand for automotive aluminum as automakers seek to reduce the overall weight of vehicles to enhance fuel efficiency.

Each 10 percent weight reduction can lead to fuel savings of 5 to 7 percent, said Steve Fisher, senior vice-president and chief financial officer of Novelis.

The company expects global demand for aluminum sheets for vehicles, which can be used in lightweight vehicle structures and body panels such as hoods, doors, fenders and lift gates, will record a compound annual growth rate of 30 percent by the end of 2020.

Global use of light-weight aluminum automotive sheets may reach 1.58 million metric tons by 2025.

Shashi Maudgal, president of Novelis Asia, said that in Asia alone, the use of aluminum in auto bodies by major car-making countries is around 50,000 metric tons.

Phil Martens, president and CEO of Novelis, said: “Global automakers seeking to drive fuel efficiency, higher performance and innovative design can now source locally produced Novelis aluminum automotive sheets in every major region where they make vehicles.”

Fisher said Novelis has a global market share of more than 50 percent in light-weight aluminum automotive sheets, and the plant in Changzhou will help the aluminum maker solidify its leading position in the industry.

Liu Qing, managing director of Novelis China, said that he believes the company would have a market share of over 50 percent in China also.

Novelis aluminum products are used in more than 180 models of vehicles globally, including some operating in China, and the Changzhou plant will serve domestic demand including the car-making hubs in the Yangtze River Delta, said Liu.

Novelis is planning to triple its automotive sheet capacity to 900,000 metric tons by 2015, and has invested more than $550 million since 2011 to meet the goal.

Auto sales to decelerate

Growth in China’s auto sales will likely slow to 4.6 percent this year, lower than the previous forecast of 8.3 percent, Bloomberg Tuesday quoted the head of the country’s auto association as saying.

Dong Yang, secretary-general of the China Association of Automobile Manufacturers (CAAM), noted a slowdown in sales over the past two months and said the industry body was looking into the reason for the weakness.

Auto sales rose 2.5 percent in September compared with the same month a year earlier, its slowest pace in 19 months, dragged down by sluggish sales of commercial vehicles such as trucks, the CAAM said last week. Sales rose 4 percent in August.

Shanghai financial sector buzzing

Financial innovation, market development and the globalization of the yuan have boosted the index tracking Shanghai’s financial industry by 5.3 percent in the first half of this year, a joint industry report said yesterday.

The Shanghai Financial Prosperity Index rose to 3,242 points by the end of June, up 164 points from last year, boosted by innovation activities, market development and the yuan’s internationalization, the Shanghai Financial Association and Roland Berger Strategy Consultants said in the joint report yesterday.

The sub-index measuring the general development of the city’s financial industry gained 4 percent to 4,517 points as the foreign exchange, money, fund and gold markets ranked the top four by market growth.

Another sub-index that tracks the development of the yuan’s internationalization jumped 84 percent from last year to 36,024 points.

“Financial innovation such as cross-border yuan settlement under the current account and for foreign direct investment, and yuan-denominated two-way cash pooling tools launched in the Shanghai pilot free trade zone gave a fresh impetus to the internationalization of the yuan,” Jerry Zhang, chief executive officer of Standard Chartered Bank China, said yesterday.

“Meanwhile, the Chinese currency has also gained more acceptance in overseas markets,” Zhang said.

Shanghai FTZ to hold 1st culture fair Oct 15,2014

Shanghai’s pilot free trade zone will hold its first culture licensing fair in November for cross-border trading of authorized cultural products.

The event offers a gateway for Chinese cultural enterprises to showcase their creations such as artworks, animation and online games and to expand their licensing network worldwide. It will also offer a platform for international intellectual property right holders to source for Chinese partners.

“Taking advantage of the zone’s opening-up policies, cross-border cultural trade via the zone will enjoy easier customs clearance and bonded warehousing services,” said Ren Yibiao, general manager of the National Base for International Culture Trade (Shanghai), the organiser of the fair.

More than 100 exhibitors from home and abroad will attend the fair to be held from November 13 to 15 in the FTZ.

China has widened access for foreign investors in the cultural industry in the zone. With a bonded warehouse for artworks, the FTZ also helps boost cross-border art trading by easing procedures and cutting time and costs for artworks to enter and leave the country.