Archives May 2015

Alibaba to invest more abroad with globalization a priority

Alibaba Group Holding Ltd will invest heavily in existing and new ventures abroad, making its push beyond the China market a top priority, the Chinese e-commerce leader’s new CEO Daniel Zhang Yong said.

Zhang’s comments have come at a time when Alibaba aims to maintain its rapid growth even as the prospect of e-commerce saturation at home looms over the company.

“We must absolutely globalize,” Zhang said in his first speech since taking up his new post, according to a report on Thursday on Alibaba’s news and commentary website alizila.com.

The vast bulk of Alibaba’s revenue comes from its dominant domestic online marketplaces, but the company has been investing in a range of sectors abroad. It announced on Tuesday it would set up a cloud computing base in Dubai, and boosted its stake in US e-retailer Zulily Inc.

Alibaba, which handles more transactions on its platforms than Amazon.com Inc and eBay Inc combined, would continue to invest heavily in new and existing overseas operations, Zhang was quoted as saying. Those included AliExpress, a platform for overseas consumers to buy Chinese goods, and Tmall Global, a marketplace for overseas goods to be sold online in China.

Separately, Alibaba said in a press release e-mailed to the Global Times Thursday that the company has made an investment in express delivery firm Shanghai YTO Express (Logistics) Co together with Yunfeng Capital, a private equity firm partly owned by Jack Ma Yun.

The value of the deal was not disclosed in the press release.

China ranks as hub for LCD making

China has become a global hub of LCD display manufacturing as domestic firms will start mass production of liquid crystal panels and overseas giants set up facilities in the country, a research firm said yesterday.

The production of large-size LCD panels in China is estimated to reach a capacity of 232.3 million square meters this year, a 7.3 percent increase over 2014, according to Taiwan-based TrendForce.

“Backed by the huge internal demand, China-based TV brand vendors have secured their dominance over the domestic market and setting their sights abroad,” said Boyce Fan, senior research manager for TrendForce.

Major Chinese panel manufacturers BOE Technology Group, China Star Optoelectronics Technology and Nanjing CEC-Panda LCD Technology Co have begun mass production in their latest plants at the start of second quarter.

Alibaba to establish technology JV with Meraas

Aliyun, Alibaba’s cloud computing subsidiary, signed a deal to set up a technology joint venture with Dubai-based Meraas on Tuesday, in order to boost big data and cloud computing services in the Middle East and North Africa region (MENA).

The new company, to be headquartered in Dubai, will offer system integration services to help private companies and government institutions in the region to reduce IT spending.

It will build Aliyun’s seventh data center, with four others in the Chinese mainland, one in Hong Kong and one in the United States.

Neither company disclosed the investment amount or their separate stake.

The company will offer services for six key pillars including transport, communications, infrastructure, electricity, economic services and urban planning to help transform the emirate into a smart city, said Meraas Chairman Abdulla Al Habbai.

“We strongly believe that the new company will alter the information technology landscape of the region,” said Abdulla Al Habbai.

“Dubai’s advanced infrastructure and economic strength is a good match for our technology edge, and with Meraas we will be able to provide local entrepreneurs with vital infrastructure that will ignite innovation and help them to succeed,” said Jack Ma, Founder and Executive Chairman of the e-commerce giant Alibaba Group.

The Information and Communication Technology (ICT) industry in the MENA region is witnessing unprecedented growth. An International Data Corporation (IDC) report anticipates regional ICT spending to surpass 270 billion U.S. dollars in 2015.

Smartphone market falls for first time in six years

Smartphone market in China fell for the first time in six years in the first quarter of this year, with the volume reaching 98.8 million units, a drop of 4.3 percent year-on-year, said a report released by market intelligence firm International Data Corporation (IDC) on Monday.

China’s overall mobile phone shipments reached 109.8 million units, a fall of 5.6 percent compared to the previous year, according to the report.

“The key reason for the slowdown is the market saturation. How to attract more consumers is the top priority for future development,” said Kitty Fok, director of IDC China.

Statistics from IDC showed that domestic smartphone market saw intense competition in the past five quarters, as the top position witnessed frequent changes with Samsung, Lenovo, Xiaomi, Apple all occupying the spot alternatively. “Some brands experienced major slump in sales this quarter,” said Wang Jiping, chief research officer of IDC China.

“Another reason for the decline in overall sales is that customer loyalty isn’t what it used to be, and that is why we are seeing so many brands,” Wang added.

According to Wang, to compete with Apple’s iPhone 6 and iPhone 6 Plus, domestic makers are keen on improving their innovation abilities to stimulate consumption. In order to reduce the cost of distribution, some of them have developed new selling methods, such as online sales, physical stores, business to business to consumers (B2B2C), and even crowdfunding.

Tay Xiaohan, Senior Market Analyst with IDC’s Asia/Pacific Client Devices Group, told chinadaily.com.cn, that due to the market slowdown in the Chinese mainland, domestic manufactures have accelerated their plans to expand into India and Southeast Asia.

“The golden rule of success is how to depute channels of distribution and build localized marketing strategies,” said Tay.

Smartphones that are priced lower than $150 will see more growth, said Tay. The market potential will be realized as more local phone users switch to low-end smartphones.

Guangzhou to offer govt-backed ‘Uber’

(ECNS) — The southern Chinese city of Guangzhou is planning to introduce its own taxi-hailing service as business booms for private Internet-based companies like Uber and the local Didi, Southern Daily reported.

Work to develop the Ruyue (by appointment in English) app, which is supported by the city’s Traffic Committee, began in January and internal trials in February.

After participating in tests, taxi driver Chen Ming said the app has three main function options: immediate use, reservations, and a pick-up service. Ideally, the app would help users find a taxi within eight minutes.

A total of 2950 taxis, mostly from state-owned companies, have registered with the system, allowing users to book a ride via telephone, Internet or through the app itself, once it begins operation.

Su Kui, the committee’s director of passenger transportation management, said the system represents an innovation in terms of taxi management and will use medium and high-end cars while drivers as employees are free of operational risks or other fees.

It was added that more than enough time has been spent testing the system to better provide services.

An official from a state-owned taxi company said Guangzhou would ensure that cars are legal and safe, with some taxi-hailing services run by Internet-based companies not meeting such criteria.

However, it is estimated that prices obtained via the app would be three times higher than when using a taxi in the traditional way and about five times higher than when using taxi-hailing touts. Currently, taxi-hailing app operators often offer a large subsidy to drivers or users in order to expand their market share.

An insider said state-owned taxi companies have no funds to compete in the price war with Internet giants, but that their strengths lies in safety and experience of drivers.

Ding Li, a professor of economics at the Academy of Social Sciences of Guangdong Province, said the government would be better off mapping out the rules and ensuring sound development of new companies instead of jumping into the market themselves.

China sees travel boom in May Day holiday

Heavy rain in some parts of China during the three-day May Day holiday did not dampen the enthusiasm of holidaymakers, with the number of travellers by rail and road both up from a year earlier.

Some 41 million trips were taken by train between April 30 and May 3, an increase of 10.9 percent from the previous year, with 1,505 extra trains running during the period, said the China Railway Corporation.

On May 1, the first day of the public holiday, 11.9 million trips were taken by rail, setting a daily record.

The toll fee exemption during the holiday boosted travellers hitting the road, with traffic on the nation’s 10 most important highways growing 2.8 percent from the previous year, data from the Ministry of Transport revealed.

Home prices fall slightly nationwide in April

Reduced decrease in 100 big cities a sign of market recovery: analysts

Housing prices in 100 of China’s major cities dropped by 0.01 percent month-on-month in April, 0.14 percentage points lower than that in March, data showed Friday, a sign that the housing market is warming up.

The average price of a new home in the 100 cities was 10,522 yuan ($1,695) per square meter in April, data from property research organization China Index Academy (CIA) showed.

For the 10 biggest cities such as Beijing, Shanghai and Shenzhen, new home prices increased 0.12 percent month-on-month to 18,961 yuan per square meter in the month, CIA data showed.

Shenzhen recorded the highest monthly growth rate of 1.09 percent among the 10 biggest cities in April, according to the CIA.

Home transactions have been picking up after the central government loosened the housing down-payment policy on March 30, Li Zhanjun, analyst from Shanghai-based housing market research firm E-house China, told the Global Times on Sunday.

On March 30, the People’s Bank of China (PBC), the country’s central bank, together with the housing and banking authorities, announced a relaxation on loan requirements.

For home buyers with an outstanding mortgage who are applying for a mortgage for a second home, the minimum down payment was cut to 40 percent, from the previous level of 60 to 70 percent.

Meanwhile, the minimum down-payment rate for first-home buyers who use the public housing funds has been cut to 20 percent from 30 percent.

Zhang Dawei, analyst from Beijing-based Centaline Property Research Center, said that the housing market is recovering more quickly in first-tier cities like Shenzhen and Beijing, where more people plan to buy a second home and could benefit from the lowered second-home mortgage rate.

Though China’s second and third-tier cities are still suffering from oversupply in the housing sector, analysts noted that smaller cities would also see local housing market recovery after the policy boost.

“Local governments will launch more policies to support the housing market as a way to boost the economy,” Li noted.

The Bureau of Housing and Urban-Rural Development of Foshan, South China’s Guangdong Province, decided to stop reviews of home buyers’ qualifications starting on Friday, according to Guangzhou-based newspaper Nanfang Daily’s report Thursday, making Foshan the first city in Guangdong to lift the home purchase restrictions, the report said.

Also, the central bank announced to lower the reserve requirement ratio (RRR) by 1 percentage point on April 19, the second time it has cut the RRR this year. The move was also seen as a positive step in helping real estate companies obtain financing, according to the CIA’s report.

The PBC has also cut the interest rate once this year.

Zhang said the home prices will continue to rebound in the next few months under these supportive policies.