Archives 2015

Dow Chemical CEO suggests more entrepreneurship in China

U.S. high-tech firm Dow Chemical’s CEO on Tuesday advised China to further encourage entrepreneurship and innovation to climb up the global value chain.

Andrew Liveris told Xinhua that China’s transition from low-end to medium and high manufacturing was the right strategy, but to this end, China needed to make more efforts.

He said the government should put in place the right policies, regulations and standards to encourage entrepreneurial innovation to invest in technology that will allow China to move up the value chain.

“You can’t go from driving a slow car in a slow lane to a fast car in a fast lane without changing lanes,” said Liveris, adding that China should go “crawl, walk, run.”

Although the transition is a gradual process, the senior executive said China must move fast as the world was changing so rapidly.

In his view, China has plenty of “brains” and it should organize the “ecosystem” to encourage them to be entrepreneurial. He said: “this is China’s opportunity.”

“To be entrepreneurial, you have to be taught that there is no boundary to taking a risk as long as you are safe and ethical,” said Liveris.

Dow Chemical expressed willingness to assist China’s transition to an advanced manufacturing economy as it would help its business.

“We are very suited to providing technology answers to environmental protection, food safety, clean water, sustainable urbanization and green technology,” said Liveris.

Amid the current economic slowdown, China is turning to mass entrepreneurship and innovation to boost market vitality.

Premier Li Keqiang said earlier this month that the government will continue to “remove roadblocks and pave the way” for entrepreneurship.

Beijing shuts two more coal-fired power plants

The 66-year-old thermal power plant of Guohua Electric Power Co in Beijing was shut down over the weekend.

Beijing has stepped up its efforts to switch to clean energy after it shut two of the large coal-fired power plants that supply power to the city during the weekend.

Prominent among them is the 66-year-old thermal power plant operated by the State-owned Guohua Electric Power Co, which will be replaced by a gas-fired plant, according to a statement by the Beijing Commission of Development and Reform, the city’s economic planner.

The 400-megawatt plant has been running since 1949 in the east of the capital’s financial district, along Chang’an Avenue, which passes Tian’anmen Square in the heart of the city.

The closure, which will cut coal consumption by at least 1.3 million tons a year, came a day after a 93-year-old thermal power plant run by Beijing Energy Investment Group closed its doors in western Beijing.

There were four major coal-fired power plants in Beijing to provide electricity as well as heating during cold winter. But the capital has charted plans to shut them down completely by 2016 as the city has been frequently clouded by dirty smog. The first plant that was shut was the 50-year-old Gaojing Thermal Power Plant operated by the State-owned China Datang Corp, which was closed in July. The fourth plant – the Huaneng Thermal Power Plant – is expected to be shuttered next year.

By replacing the coal-fired power plants with gas-fired ones, the capital hopes to cut emissions of 10,000 tons of sulfur dioxide, 19,000 tons of nitric oxide and 3,000 tons of dust every year.

He Jiankun, director of the institute of low carbon economy at Tsinghua University, said that the initiative to use more clean energy is a reflection of the government’s resolution to combat air pollution.

“Gradually, all the coal-fired power plants will be phased out in Beijing and replaced by either gas-fired or other clean energy-powered plants,” said He, who is also the vice-chairman of the national experts’ panel on climate change.

“This is a good thing for the development of clean energy, industrial upgrading and innovation on clean technologies in the field of energy,” he said.

In a clean air action plan (2013-2017), the government plans to reduce 13 million tons of coal consumption within five years. By 2014, consumption had been cut by 4.5 million tons. In 2015, the city plans to reduce coal consumption by another 4 million tons and limit the annual coal consumption to 15 million tons.

But He also cautioned that closures of large-scale coal-fired plants may lead to huge overcapacity in coal, steel and cement industries, which have already witnessed heavy losses in recent years.

Coal consumption fell last year for the first time in 14 years, sliding 2.9 percent year-on-year to 3.51 billion tons, according to the National Bureau of Statistics.

Taiwan’s jobless rate drops to near 15-year low

Taiwan’s unemployment dipped to 3.69 percent in February, marking the lowest level for the month in almost 15 years, the island’s statistics authority said Monday.

The rate was 0.02 percentage points lower than that seen in January, according to the statistics agency.

The unemployment rate for the January-February period also hit its lowest level for the same period in almost 14 years.

New jobs for February were mainly created by the service and industry sectors, which added 94,000 and 41,000 new jobs, respectively, for the month.

Hainan expands duty-free program to boost tourism

Tourists select duty-free products in Sanya, South China’s Hainan province, Oct 24, 2012.

The range of imported items available at duty-free shops in Hainan was increased on Friday in a bid to promote the island province as an international tourist destination.

An additional 17 types of product, including baby formulas, coffee and air fresheners, have been added to the duty-free program, taking the total to 38.

The revised program announced by the Ministry of Finance also eases restrictions on the amounts of 10 types of imported items that may be bought.

The change applies to popular categories such as cosmetics, perfumes and watches.

Wang Huiping, deputy director of Hainan’s Department of Finance, said the changes are in response to complaints from some tourists about the limited choice of goods available.

The initial program was launched in April 2011 on a trial basis.

It allowed individual tourists and Hainan residents age 16 or above to enjoy duty exemptions on certain types of imported goods worth no more than 8,000 yuan ($1,283) in total before flying to other destinations on the Chinese mainland.

Hainan residents can only shop at the duty-free outlets once a year, while others can purchase items twice each year.

Figures from the local customs department show that, between the launch of the program and the end of last year, Hainan’s duty-free stores received more than 4.08 million customers who spent a total of 10.9 billion yuan.

The province has two duty-free shops, one in the provincial capital of Haikou and the other in the resort city of Sanya.

A staff member at Sanya said the shop has been stocking up with the new types of goods to ensure there is an adequate supply.

Liu Deqian, a consultant at the Chinese Academy of Social Sciences’ tourism research center, said the changes to the program will make the province more attractive to visitors and help to boost its economy.

“During holidays, many Chinese tourists flock to other countries to go on shopping sprees, and this is mainly because goods sold abroad are much cheaper than the same products sold in China,” Liu said.

“The revised program may change this situation, as the items that have been added are mostly daily necessities that Chinese tourists eagerly buy overseas.”

He said the program has made such goods available in Hainan at attractive prices.

“Since the program caters to both domestic and foreign tourists, it’s possible that someday foreign tourists will flock to Hainan for the shopping,” he added.

Lenovo, Xiaomi to work on Windows phones

China’s Xiaomi Tech’s CEO Lei Jun takes a selfie with his cellphone at 2015 CeBIT Technology Trade fair in Hanover, Germany, on March 16, 2015.

Microsoft said on Wednesday that it will partner Lenovo and Xiaomi to develop smart devices that runs the latest version of its Windows operating system.

The U.S. multinational announced an initiative to deepen cooperation with China’s leading hardware and software makers to promote Windows 10 on computers, tablets and smartphones, during a two-day conference in the southern city of Shenzhen.

Windows 10 is slated for launch sometime this summer.

Lenovo, one of China’s largest smartphone makers and the parent company of Motorola Mobility, will launch Windows-based smartphones this summer, said Tong Fuyao, general manager of Lenovo China.

A separate statement from Microsoft on Wednesday said the Lenovo phone will be a contract device with China Mobile, the country’s largest telecom operator.

Chinese smartphone maker Xiaomi, now the third largest in the world, will provide feedback to Microsoft based on a test run of the operating system on Xiaomi’s flagship smartphone Mi4 later this year.

Windows Phone accounts for a meager 0.4 percent market share in China in the twelve months ending September last year, compared with more than 90 percent share between Google’s Android and Apple’s iOS, according to consultancy Kantar Research.

Microsoft’s push to expand also faces challenges from Chinese players. NASDAQ-listed Alibaba announced in February an investment in smartphone maker Meizu to promote its own mobile operating system Yun OS.

Alibaba introduces ‘Smile to Pay’ at CeBit trade fair

Chinese vice premier Ma Kai and German Chancellor Angela Merkel both attended the opening of CeBIT 2015 in Hannover, Germany, the biggest computer and software fair in the world.

One of the leading tech companies in China, Alibaba, is showcasing a new face scan payment technology called “Smile to Pay” at the fair.

Alibaba’s CEO Jack Ma pulled out his phone, bought an old stamp from Hannover on its e-commerce platform Alibaba.com, scanned his face with the front camera, and said the item had been purchased and was on the way to the Mayor of Hannover’s office.

He also says forgetting one’s password will no longer be a problem if one uses the new face scan technology, which is currently in beta mode testing.

A spokesperson with Alibaba says Smile To Pay will initially be rolled out in China in the near future but there is no fixed date for an official launch.

The Hannover computer and software fair is open till March 20.

China’s free trade zone fever spawns more regional hopefuls

Regional delegates to China’s annual parliamentary session are pushing to have their jurisdictions included into the country’s next batch of free trade zones after three new zones were approved in December. [Special coverage]

The fever to win central government’s approval to upgrade existing development areas or set up new FTZs from scratch has been evident during the annual parliamentary sessions, which closes on Sunday.

One proposal came from Zhang Qingjun, mayor of Hefei, capital of east China’s Anhui Province, who envisions a free trade zone connecting three other provincial capitals along the Yangzte River.

The rationale behind the proposed free trade zone, according to Zhang, is that the four cities situated along the middle of the Yangtze River face similar development challenges and all aspire to attract more foreign investment.

An inter-provincial free trade zone will also help break jurisdictional barriers for China’s central provinces, a move that Zhang says will create a unified market where capital and goods can move with less restrictions.

East China’s Shandong Province also wants to have a FTZ in the coastal city Qingdao, provincial governor Guo Shuqing, also former head of China’s securities watchdog, told Xinhua on the sidelines of the National People’s Congress.

In September 2013, four bonded areas in Shanghai, the country’s financial hub, were bundled together into a free trade zone that authorities billed as a testing ground for financial liberalization, allowing greater foreign participation into the country’s service sector.

The move to set up FTZs is part of China’s effort to allow market forces to play a decisive role in the economy through greater opening to foreign investments into industries and removing restrictions over capital flows.

Yet the FTZ immediately became a coveted notion for local governments looking for a renewed engine to drive economic growth and respond to the central government’s reform rhetoric.

Even before the Shanghai project was officially launched, word spread that southern Guangdong province and the coastal municipality Tianjin were also being considered for the initiatives.

By the end of 2014, Tianjin, eastern Fujian province and Guangdong were selected to be part of the second batch of free trade zones, inheriting practices already proved successful in Shanghai and tapping their unique geographical and industrial advantages for further experiments.

Authorities also expanded the Shanghai FTZ to include the city’s financial district Lujiazui, where a jungle of skyscrapers houses the country’s securities exchanges and leading financial institutions from home and abroad.

The inclusion of Lujiazui is seen as bringing more financial institutions into the game to test how the county’s financial sector handles loosening capital controls and a freely convertible yuan.

Before regional delegates flocked to Beijing this month for the country’s annual parliamentary sessions, local governments in landlocked Shaanxi, Gansu and Henan also unveiled their ambitions to apply for free trade zones at provincial lawmaking sessions.

These announcements have once again fueled speculation that more FTZs will come along, though the central government has not openly endorsed such proposals.

The rush to apply for FTZs is reminiscent of a similar craze over the past two decades to create development zones across the country to attract corporate investment.

Yet analysts cautioned against creating too many FTZs too soon, fearing that the central government’s intention to use FTZs to pioneer more daring reforms will go awry when misinterpreted by local officials as a rebranded excuse to gain more preferential policies.

“A lot of people are still under the misconception that a free trade zone will allow local governments to gain more preferential policies,” said Zong Guoying, a deputy to the National People Congress and Communist Party Secretary of Binhai New Area, a development zone that has ceded much of its land to Tianjin’s FTZ.

Zong said free trade zones should be a “highland for institutional innovations and reforms” — a popular catchphrase increasingly used by officials to refer to policies currently reserved exclusively for free trade zones but must be able to be implemented elsewhere in the country.

At the Shanghai FTZ’s one-year anniversary in September, officials claimed that the zone has pioneered the streamlining of administrative procedures for setting up new companies, eased foreign investment’s entry through a “negative list” approach and promoted cross-border use of Chinese currency.

So far little is known over how the three newly approved FTZs will further Shanghai’s experiments. Authorities have also yet to announce dates for their official launch.

Local officials said during Tianjin’s local parliamentary sessions in January that the city’s FTZ will focus on financial leasing. The Fujian FTZ wants to take advantage of its vicinity to Taiwan to boost cross-Strait trade. Guangdong wants to tap its vicinity with Hong Kong.

The three FTZs, along with the one already in operation in Shanghai, are all scattered along the country’s eastern shorelines, with ports handling a majority of the country’s trade volume and a combined economic output equivalent to one fifth of the country’s total.

“FTZs should be set up in places with economic output big enough for experiments to provide meaningful reference for future reforms around the country,” said Liu Enzhuan, a Tianjin-based economic professor who participated in drafting the plan for the city’s FTZ.

“FTZs definitely have a role to play in growing regional economies, but the whole idea of making investments within a FTZ easier is based on the premise that companies want to invest there in the first place.” Liu said.

Alibaba, SAIC say will launch Internet car in 2016

May find it hard to get favorable market reception

China’s e-commerce giant Alibaba Group Holdings and State-owned SAIC Motor Corp jointly announced on Thursday that they would launch their first Internet car in 2016.

The car is expected to adopt Alibaba’s Yun operating system, enabling drivers to obtain timely traffic information, music service and fast route options based on Alibaba’s Internet services such as cloud computing and big data, according to a press release that Alibaba e-mailed to the Global Times on Thursday.

This decision came after the two signed an “Internet Car” agreement on July 23, 2014.

Analysts said Internet cars can be a promising market, which does not just refer to a vehicle connected to the Internet, but is expected to be a next-generation tech product that can communicate with other such products and lead to better traffic management as well as self-driving.

But Feng Shiming, an executive director with Shanghai-based auto consultancy Menutor Consulting, thinks the market is far from taking off and is skeptical about the prospects for SAIC’s Internet car.

“I do not think the two companies’ first networked car will have a great market reception, because the Internet car is still regarded as a concept by most consumers, who may think about buying one only after at least 5 years,” Feng told the Global Times Thursday.

Feng also said he questioned the car’s reliability and user experience, citing the quick launch date.

Meanwhile, the two said in the press release that they will set up a 1 billion yuan ($160 million) fund that will also be open to other companies, in an attempt to further integrate their own respective advantages as well as jointly lead the development of China’s Internet car industry.

“The establishment of such an open fund will attract more companies’ participation and then fast-track the promising Internet car sector in China,” Zhang Yi, CEO of Guangzhou-based iiMedia Research, told the Global Times Thursday.

An Internet car may be something that SAIC, China’s leading domestic carmaker, can bank on to draw some limelight away from overseas auto brands, which are still widely preferred in China due to advanced technology and high brand value, said Zhang.

China sold 1.47 million domestic brand vehicles during the two months through February, while the overall sales stood at 3.43 million, according to data released by China Association of Automobile Manufacturers on Tuesday.

After the disclosure of its latest cooperation with Alibaba, SAIC’s listed arm on the Shanghai bourse saw its shares rise by 4.79 percent, closing at 24.71 yuan on Thursday.

SAIC and Alibaba came together after similar joint ventures were formed by overseas companies.

Apple Inc and carmakers including Ferrari, BMW and Mercedes-Benz introduced an in-car networking and multimedia platform, dubbed as CarPlay, in March 2014, according to information on Apple’s website. Three months later after Apple’s move, Google Inc announced on its site a similar platform named Android Auto, which is expected to be built in Audi, Hyundai, and Nissan cars.

Alibaba’s archrivals in China – Baidu Inc and Tencent Holdings – have also made similar moves. In April 2014, Baidu said it launched an in-car networking system CarNet, featuring location-based services and voice-driven navigation with the advantage of Baidu’s mapping technology. A similar product by Tencent called Lubao Box, released at the Global Mobile Internet Conference held in May 2014, offers real-time safety and maintenance information as well as discounted roadside assistance via cooperation with People’s Insurance Co of China, according to a statement e-mailed to the Global Times in August 2014.

Both Zhang and Feng think the cooperation between SAIC and Alibaba will likely allow the two to stand out from fierce competition.

Alibaba’s advantages, especially in online shopping platforms, can help SAIC’s Internet car win over female drivers, which account for a large proportion of Internet cars’ potential buyers as they seem to consider the safety and technology of cars more than male drivers, said Feng.

In addition, Alibaba’s active expansion into the navigation industry can contribute a lot to its Internet car development, he noted.

In February 2014, Alibaba announced the acquisition of AutoNavi Holdings, which iiMedia in November estimated would seize 50.6 percent of the Chinese mobile mapping and navigation market in 2014, followed by Baidu’s mapping services with 39.3 percent.

UK companies seek new opportunities in China

China’s economic “new normal” can bring more opportunities for UK companies, British business leaders said on Wednesday.

James Sassoon, chairman of the China-Britain Business Council, said China is undergoing a period of further transformation.

“It is stepping away from labor-intensive exports toward a more highly mechanized and service-originated economy, with heightened resilience on domestic demand and added emphasis on environmental sustainability,” he said at the China Business Conference in London.

Premier Li Keqiang announced a growth target of about 7 percent for this year at the ongoing National People’s Congress annual session as China moves toward a “new normal” of lower, more sustainable growth.

Sassoon added, “We should welcome and embrace these changes, and make sure we are well positioned to seize the opportunities they present.”

Attended by about 500 delegates from Britain and China, the conference is organized by the council, a leading organization helping British companies to increase and develop their business with China. The aim is to create a forum for discussion and cooperation to position business between the two countries.

David Robinson, president of Speedo International, which is based in Britain and manufactures and distributes swimwear and accessories, said China’s “new normal” will place great emphasis on fitness and healthy lifestyles.

Speedo’s products are available in most first- and second-tier cities in China, and the company is now working on increasing its e-commerce presence.

Chris Hill, development manager of Lifecycle Marketing, which provides education programs for pregnant women, said China’s “new normal” will boost the market for his business, with great emphasis being placed on healthy lifestyles and quality of living.

Hill said although China’s economic growth is slowing, the country still represents a huge market for Lifecycle, with the annual pregnancy rate in China standing at 16 million, compared with 800,000 in Britain.

The company is looking to expand into China through joint ventures and marketing strategies to attract China’s emerging middle class, Hill added.

Ni Jian, charge d’affaires at the Chinese embassy in London, explained, “China’s growing demand for brands provides great opportunities for reputable British brands with high-recognition and reputation in the Chinese market.

“The fast growth of e-commerce in China will also provide increasing opportunities for British products to enter the Chinese market.”

Exports of British cars to China have increased sevenfold since 2009, according to the British Society of Motor Manufacturers and Traders. Last year, 137,410 UK-built cars were exported to China, a year-on-year increase of 14.5 percent.

Last year saw enhanced Sino-UK economic cooperation, with bilateral trade reaching a new high of $80.9 billion, a year-on-year increase of 15.3 percent, according to the Chinese embassy in Britain.

Ni said China’s growing need for innovation is leading to a big demand for new technology, techniques and products.

Britain, with its advanced manufacturing, high-technology and clean-technology sectors is well positioned to supply this market, Ni added.

The past year also key mergers and acquisitions and China’s investment in the UK exceeded $7 billion.

“As China opens up its service industry further to foreign investment to satisfy its big domestic demand, foreign capital in finance, healthcare, education and pension sectors will have great opportunities to expand in China,” said Ni.

What’s more, the internationalization of the renminbi is providing great opportunities to the UK, as a competitive offshore renminbi center, Ni said.

Paul Rogers, author of Little Bridge World Ltd, an English language education provider, said that China’s new normal will boost the demand for English language learning because highly educated and internationally minded talents will be valued more in the market.

“As China focuses more on innovative growth and internationalization of its companies and industries, there will be a bigger market for English learning,” Rogers said.

The internationalization of Chinese firms have also provided great opportunities for Central Hall Westminster, an iconic London venue which is increasingly hosting outbound Chinese events and firms in recent years.

Examples include a conference by the Chinese telecommunications giant Huawei, and also Chinese film festivals in London, said Kevin Blackman, senior sales manager at Central Hall Westminster.

“As Chinese businesses become more international minded as a result of China focusing on international growth and innovative growth, we will have more clients from China, and we are going through a process to adjust our services to their needs,” Blackman said.

Sina Weibo sees 77% rise in revenue

China’s Twitter-like microblog platform Sina Weibo reported a 77 percent surge in net revenue to $334.2 million in 2014, said the company on Tuesday.

Weibo ended last year with a net loss attributable to ordinary shareholders of $63.4 million, which was in part due to the change in fair value of investor option liability and Alibaba’s investment in the company, said its latest earnings report.

Its stock was down 5.8 percent to $14.02 per share in after-hours trading after the company released the results.

The microblog platform reported a 78 percent year-on-year increase in advertising and marketing revenues to $264.8 million in 2014.

“On the monetization front, mobile ad revenues now make up more than half of Weibo’s total ad revenues,” said Wang Gaofei, the company’s CEO in the statement, adding that “2015 will be another high growth year for mobile and social marketing in China, and we are well positioned to take advantage of this trend.”

For the fourth quarter of 2014, Weibo reported a net revenue increase of 47 percent year-on-year to $105.2 million and a sharp decrease in net income attributable to ordinary shareholders from $21.6 million same period in 2013 to $4.6 million.

The social media projects its net revenues in the first quarter to be between $93 million and $96 million, according to the financial report.

The Beijing-based company debuted on the Nasdaq in April last year with a $286 million initial public offering. It introduced Alibaba as a stakeholder in 2013.