Archives 2016

Third-party payment licenses become increasingly valuable

Some see activity as way to expand overall business

The market value of third-party payment licenses, which help companies expand their business beyond online payments, will continue to grow in the short term in China, analysts said.

The People’s Bank of China (PBOC), the country’s central bank, stopped issuing new licenses in March 2015, and it has been enhancing its regulations of the third-party payment market. There are likely to be different impacts on different types of licenses, Mu Chu, an analyst from mpaypass.com.cn, a Shenzhen-based mobile payment intelligence provider, told the Global Times on Sunday.

“For example, a license for bill collection via bank cards will not be as valuable as before, as the profit margin in the bill collection business has been shrinking since the government lowered the bank card transaction fee,” he said.

The PBOC cut commission charges and fees for bank cards on September 6, according to its website.

Under the new policy, card-issuing banks can’t charge merchants more than 0.35 percent of the transaction amount for debit cards or more than 0.45 percent for credit cards, the PBC’s document showed. Previously, the transaction fee varied among sectors.

The move will drive out some small online payment companies that make profits through counterfeiting point of sales (POS) machines with different categories to avoid transaction fees, according to an article published on domestic news portal sina.com.cn in September.

A license that has multiple functions will be scarce but the most in demand, Mu noted Sunday.

“For example, a license that covers online payments, mobile payments and bill collection via bank cards that can be used nationwide will become more and more valuable,” he said.

At present, 269 third-party payment companies have licenses, and authorities have come up with more severe measures to crack down on illegal online transaction activities since 2014, according to a report by Beijing-based market consultancy Analysys International.

“Regulators will become more and more cautious in controlling existing licenses, but considering the added value that third-payment licenses can offer companies, their value will continue to increase,” Ma Tao, research director of the finance study at Analysys International, told the Global Times on Sunday.

A license cost about 50 million ($7.5 million) to 80 million yuan at the beginning of 2015, but it now costs more than 400 million yuan, the China Business Journal reported on Saturday.

Many licenses have been bought and sold repeatedly as supply is limited but demand remains high, the journal said, quoting anonymous industry insiders.

“It’s not a surprise that licenses are becoming so expensive, as they help companies access the online payment market initially then expand their business,” Li Chao, a senior analyst at Beijing-based research firm iResearch, told the Global Times on Sunday.

More and more companies are willing to pay more for licenses as they see the importance of the online payment market, and mergers between companies are aimed at offering a complete line of payment services, Li Zijian, vice president of Beijing-based third-party payment provider fullrich.com, told the Global Times on Sunday.

“Online payments enhance the connectivity between companies and customers and increase customer loyalty, which implies marketing opportunities,” Li said.

Since the beginning of 2016, 14 merger and acquisition deals have been undertaken to get online payment licenses, according to the journal. For example, Midea Group Co spent 300 million yuan to buy Shenzhen-based third-party payment service provider Shenzhou Tongfu in August, a way to enter the online payment market, mpaypass.com.cn reported in August.

However, the growth of China’s third-party payment market will slow in the near future. Total transactions in 2016 are expected to be 23 trillion yuan, representing a year-on-year growth of 52.8 percent, compared with 800 percent growth in 2013, the Analysys International report showed.

Companies should not look at obtaining online payment licenses and providing related services as an end in itself, as the market is close to saturation, Li noted. “To get more profit from the license, they should do more than offer online payment services,” he said.

China pledges to streamline administrative approval, ease rules for foreign investors

The Chinese government on Saturday decided to streamline administrative approval, delegate more power to lower government levels and loosen rules on foreign investment in an attempt to revive the economy.

Premier Li Keqiang called for efforts to cut red tape and simplify procedures for new investment projects, according to a statement issued after an executive meeting of the State Council.

Provincial governments will approve investment projects related to container terminals, vehicle engines, urban transit systems and inland water transportation, according to the new regulations.

The China Railway Corporation will be allowed to make decisions regarding railways, bridges and tunnels, the statement said.

More private investment will be encouraged in various sectors, including medical care, education, culture and sports.

China will prohibit new projects related to industries struggling with overcapacity, such as steel, coal and electrolytic aluminum sectors.

In principle, no new gasoline-powered vehicle factories will be allowed to open.

In 2013 and 2014, the central government moved a raft of administrative approval procedures, and delegated approval power, to lower government levels.

The meeting stressed measures to improve the country’s business environment. More efforts are needed to create a level playing field for both domestic and foreign companies, the statement said.

Following China’s revisions to four laws regulating inbound investment last month, the meeting agreed that some administrative approvals will no longer be necessary for foreign investors setting up businesses on the Chinese mainland.

Such investors are now only required to report business plans to local regulators, as long as their business is not on a “negative list.” The government estimates that this means more than 95 percent of procedures will be cut.

The practice has been proved satisfactory in pilot free trade zones in Shanghai, Guangdong, Tianjin and Fujian.

Despite an economic slowdown, China remains an attractive destination for foreign companies due to the country’s continued opening up as well as the improving business environment.

Foreign direct investment in the mainland during the first eight months of 2016 increased 4.5 percent year on year to 85.9 billion U.S. dollars, up from 4.3 percent in the first seven months, according to the Ministry of Commerce.

Altogether 18,538 new foreign-funded enterprises were established in the country over the same period, up 10.2 percent on a year earlier.

The government will continue to improve services and supervision to expand the country’s opening up, the statement said.

In addition, the meeting pledged efforts to modernize agriculture, encouraging diversified business models and the mechanization and informatization of the sector. Financing support will also be increased.

China will also curb agricultural pollution by adopting strict rules on the use of fertilizers and additives, and strengthen the supervision of farm produce.

The government will work to enhance farmers’incomes and guarantee their urban housing demands, the statement said.

Second Life in China English Teacher Recruitment Consultants Reveal The 4 Steps to Teach English In China

Any occupation that is associated with the learning, grooming and education of people is always highly rewarding, but along with the high rewards comes great responsibility. An English teacher in China job is similar; it involves interacting with people using engaging techniques to teach non-English speakers the English language. This is a reason why people looking to have a career as an English teacher should take a proper start to ensure a positive and rewarding career. The English teacher recruitment consultants at Second Life in China shared the 4 steps to teach English in China.

China is full of tremendous opportunities for English teachers “Demand for English teachers all over the world is growing quickly. As more countries interact with each other through business and other types of communication, the need for English speakers in foreign lands is growing. And nowhere is this need greater than in China.” – explained Second Life in China expert.

The first step of any major life altering step is to arrive to a decision about wanting to do something, similarly, when someone wants to teach English in China they should make up their minds and get ready to take a life changing plunge. By choosing to work in China, people will have an amazing chance to travel abroad and immerse themselves in the rich Chinese culture, also have the opportunity to learn new things including Mandarin Chinese and a new way of life. Additionally, English teachers in China are able to earn enough money to lead a comfortable life and also travel in China. According to experts, the salary benefits of teaching English in China include: A monthly salary of between 8,000-22,000RMB. The benefits include free flights, free housing, bonuses, airport pickup, and a Z visa, among other perks.

The second step of the process is to learn about the requirement and arrange all the necessary documents and make sure to fulfill all the requirements aid out by the Chinese State Administration for Foreign Expert Affairs before moving ahead with the plan. At this point, in the 3rd step is to contact Second Life in China, as one of the best recruitment agencies of the regions the company works with English teachers and schools to find a good fit for both parties. The consultants provide guidance and help in finding the right English teaching jobs in china and in settling down in China upon arrival.

The fourth and final step is to start enjoying the unique experience of living and working in china as an English teacher.

Huawei sees AI as mainstream strategy for solving problems

Won’t duplicate Google’s emphasis on consumer products

Chinese telecommunication giant Huawei Technologies Co sees artificial intelligence (AI) as an effective way of solving its own problems, which is a different path compared with other companies such as Google, experts said on Tuesday.

Huawei is focusing on how to apply AI to its own network to establish a global technology service to ensure network maintenance and breakdown diagnosis, which is different from what Google is doing, Xiang Yang, an industry expert at Beijing-based CCID Consulting, told the Global Times on Tuesday.

“For example, by using AI, Huawei could solve a network problem in Africa via tele-control,” he said, noting that the disruptive technology will become the company’s troubleshooter and help it increase its effectiveness.

Xiang made the comment after Ren Zhengfei, CEO of Huawei, said that the company will use “American bricks to build a Chinese Great Wall.” He made the comment during a speech at Noah’s Ark Lab, the company’s research lab, in August, according to a transcript of the speech posted on the company’s unofficial WeChat account on Sunday.

A huge global market of the network inventory is the best “stage” for AI, Ren said in the speech, noting that the company’s trillion-dollar market requires more skillful and experienced staff in maintenance. And given this situation, AI has much potential, the transcript showed.

AI could help experts save time and focus on 10 percent of all problems, leaving the rest to automation, Ren noted.

The global market scale of the AI sector will reach nearly 119 billion yuan ($17.9 billion) by 2020, and the Chinese market will reach 9.1 billion yuan, according to a report published by Beijing-based industry consultancy iResearch in February.

So far, nearly 100 start-ups are focusing on this disruptive sector, which covers industries like industrial robots, service robots, intelligent hardware and cognitive technology, the report said.

And BAT – the domestic technology trio of Baidu Inc, Alibaba Group Holding and Tencent Holdings – have already entered the AI field but with different focuses.

Huawei will focus on “a mainstream course” and not come up with some “consumer products to earn some money,” Ren said during the speech.

Applying AI to a product designed for the public is not in line with the company’s core business, Zhao Ziming, an industry expert at Beijing-based consultancy Analysys International, told the Global Times on Tuesday.

“The company is striving to use AI technologies to improve the user experience,” he remarked.

Huawei holds a positive attitude toward working with other companies in the AI sector, not only Chinese counterparts but also those overseas, Zhao said, noting that foreign companies have more advantages in this type of technology.

There is no need to compare Huawei with US tech companies like Google in developing AI, Xiang said, as the Chinese company is more focused on the application of some technologies in its own field. Meanwhile, the US company is stepping up efforts to make technological breakthroughs.

“But the two, along with many others in this field, should make AI fit into their own corporate strategies,” he noted.

“For example, Google sold its robotics division Boston Dynamics to Toyota a few months ago, which showed that the company has to first figure out the purpose of working on AI,” Xiang explained.

Domestic car manufacturers aim to become more premium than peers


A Borgward BX7 is displayed at an auto show in Haikou, Hainan province, on Sept 10.

More domestic car brands have demonstrated their eagerness for recognition as premium, although none of the Chinese peer group have yet revealed a strategy that will lead them to the top. Although there are previous failures that serve as lessons from which the industry can learn, some of them might still not find the keys to customers’ hearts.

Geely Automobile Holdings Ltd expressed its ambition to build premium lineups on its first universal platform. Meanwhile, Beijing-based Beiqi Foton Motor Co Ltd is offering an SUV carrying the originally Germany Borgward badge at a price of up to 300,000 yuan ($44,979).

When companies talk about “premium”, they usually mean a “premium pricing strategy”, setting the price of a product higher than similar products, as an attempt to seek maximum profit in a segment where customers are willing to pay extra.

Theoretically, a customer would settle the bill when he or she perceived the difference between the product and other similar ones, when there are limited alternatives, or when production costs could not be lowered.

But Geely and Borgward, which are looking to climb up the premium ladder, need a halo effect to persuade customers during their decision-making process. In the automotive field, customers’ feelings and thoughts reverse primarily due to trend-setting designs and cutting-edge technologies.

A well-known example of this comes from Volkswagen’s China business. The company shifted its mass models well away from its peers after boasting its unique “T&D” powertrain, which consists of a turbocharged engine and direct shift gearbox.

Chinese customers perceived the difference, as T&D doubled the vehicle’s fuel economy and so halved its petrol consumption. There is no comparable function in the market, at a time when the gasoline price has hit 8 yuan a liter. So, customers are willing to pay a higher amount for a compact Golf or Sagitar, as high as some other international brands’ mid-size models.

There were of course other factors that helped Volkswagen move upward, as these models and the DSG feature stepped down from the altar. But can we name one or two factors helping Geely go premium? Does Geely possess any superior difference from other premium rivals to convince customers to pay much more?

Geely’s jointly developed compact modular architecture platform and the input from a Swedish design lead team are impressive, thanks to its connection with Volvo Cars. Looking back, Geely Automobile has successfully become far more premium than it used to be. But, when we look around in the overall premium segment, at least in the eyes of the Volkswagen fans, Geely today remains in need of something new to match Volkswagen’s T&D offering.

As for the revived Borgward brand, it is already a success for Beiqi Foton, a business vehicle maker who might not have expected much. The automaker could apply a strategy to enter the passenger car market, to become as high profile as possible. After it has attracted enough potential customers that understand the brand, a later downgrade could be possible to achieve greater volumes.

Also, Borgward could learn from the Sino-Israeli joint venture Qoros Automotive Co Ltd, which cut its suggested retail prices by as much as 50,000 yuan last year after claiming to be premium since it was established in 2007.

Chinese graduates should intern instead of job-hopping


Amid the massive enrollment expansion of Chinese universities since 1999 and the global economic downturn, finding a desirable job in China is not easy for most new graduates.

Statistics show that only 62 percent of 177,000 graduates in Shanghai found jobs upon graduation in 2015, resulting in high unemployment rates in the city.

Ironically, more than half of all recent Chinese graduates in first-tier cities end up quitting their new jobs within the first two months, according to the figures released by recruitment platform 58.com.

A large percentage was said to be dissatisfied with their salaries while others sought work that would allow them to better improve their skills. A small number ultimately decided it would be easier just to return to higher education or go travel.

Analysts are trying to uncover the real reasons behind this bizarre trend of graduates giving up so soon after entering China’s job market.

Some say that post-1990s and millennial-generation Chinese are notorious for being quick to quit, and others are outright criticizing them for being spoiled, immature and impatient – hallmark personality traits of today’s young Chinese.

As a university student in my senior year, I can offer some perspective into this perplexing trend. You see, after spending our entire childhoods preparing for gaokao (the national college entrance exams) followed by four years in a university, it’s understandable that many Chinese grads would prefer time off to play, travel, party or simply rest before diving into a lifelong career.

Additionally, as my fellow intern, Zhang Qin, here at the Global Times Metro Shanghai wrote in a recent TwoCents article, “Chinese students tend to sacrifice their personal interests in order to get accepted by a better-ranked university that may not offer their first choice of majors … the decision of which major to pursue is usually influenced or wholly decided by our parents or teachers.”

This, then, is also why so many Chinese grads find themselves feeling dissatisfied or downright depressed about their new jobs. It doesn’t help that we are pushed by our families into a profession for which we may have no passion, leading to compromising our personal happiness.

Choosing a vocation and dedicating our lives to it is not as easy today as it was for our parents and grandparents. More options, along with more educated, eligible candidates, mean that most of us will have to enter a job at the very bottom, settling for minimal salaries.

Nonetheless, a few uni students I know are one step ahead of the rat race. There’s a girl in my grade who has attended six internships throughout her undergrad years in order to identify a career she will be most competent in, then narrow down which specific company she’d most prefer working for. She is a true inspiration not just to our generation but to me personally.

This leads to my own internship here at the Global Times. Originally hailing from North China, I came to Shanghai to study because it is an ever-evolving metropolis full of opportunities.

Over the past three years I have tried to take advantage of all my spare time; instead of lazing around my dorm room, I have worked a number of part-time jobs and internships. I originally wanted to be an English interpreter, but my current internship as a journalist has allowed me to expand my horizons.

Quitting a salaried job right after starting is a permanent blight on your dossier; prospective employers will see how unreliable and irresponsible you are and probably not want to take a chance spending time and money on training you if they think you are just going to jump ship.

Indubitably, more than high scores or skill sets, what recruiters seek in young candidates are loyalty, persistence and strong character.

Yes, older companies may want to consider altering their archaic business models and outdated recruitment practices to better suit the impatient mind-sets of millennials; after all, it is us who will soon be taking over those companies.

But until then, it is wholly up to undergrads to prepare themselves for today’s uncertain job market.

City acts to find jobs for college graduates


HUMAN resources authorities in Shanghai signed a contract yesterday with 51 local state-owned enterprises to help unemployed college graduates to find jobs.

Public employment agencies around the city will use the cooperation scheme to help the participating enterprises, including Shanghai Municipal Investment Group Corp, Bright Food Group Co, Shanghai Shendi Group Co and Shanghai Airport Authority, with recruitment as well as providing graduates high-quality job opportunities.

“The program is an addition to our regular recruitment methods,” said Song Haiwen, director of the human resources department of Shanghai International Airport Co.

“Students who graduated without jobs are not necessarily all incapable,” he added. Some might not have found suitable positions and some might have lost their jobs through no fault of their own. “We hope to offer them one more chance.”

The event also kicked off the month-long activities organized by Shanghai Human Resources and Social Security Bureau this month on the theme of “service for college graduates.”

The bureau’s branches in 16 districts will register students’ details and their needs, such as recruitment ads, internships, training and even psychological consultation to provide targeted services.

A total of 110 job fairs will be held this month, offering 16,000 jobs.

The annual event serving college graduates is organized to improve their employability. By the end of last June, nearly 75 percent of the 187,000 graduates of local colleges this year would have found jobs, according to local education authorities.

Xu Hongjue, director of the employment promotion center in Putuo District, said college students faced a number of problems in finding jobs.

“Many students lack the right self-positioning. They have to realize the situation that college students are no longer so rare as decades ago,” she said.

Many employers also complained that young people were less loyal than in times past and were quicker to switch jobs, she added, while some students were not skilled at communication.

Xu also pointed out that some students lacked career planning development as well as a passion for working.

Further information is available on the website of Shanghai Human Resources and Social Security Bureau. (http://jobs.12333sh.gov.cn/index.html).

Baoshan, Wuhan Steel merger to create 2nd-largest manufacturer

China’s top steelmakers will merge to create the world’s second-largest steel entity, it was announced yesterday.

Baoshan Iron and Steel Co, Baosteel’s listed company, will issue new stocks to the shareholders of Wuhan Iron and Steel Group to complete the merger, the two state-owned companies said.

Baoshan is ranked fifth in terms of world production capacity. Wuhan is 11th. After the takeover, Wuhan Steel will delist from the A-share market on the Shanghai Stock Exchange.

Baosteel Group is China’s second-largest steelmaker, and along with Wuhan Steel will have a joint annual production capacity of more than 60 million tons, making it the second-biggest producer behind ArcelorMittal.

The new entity will be called China Baowu Iron and Steel Group. China Business News reported yesterday that the state asset watchdog had given its nod and submitted the merger plan to the State Council for final approval. Once approved, the market value of the new group will surpass 108.5 billion yuan (US$16.3 billion), and its total assets will be worth 700 billion yuan.

The merger is in line with Chinese government’s efforts to overhaul its steel sector, upgrade quality and cut overcapacity. Chi Jingdong, deputy director of China Iron and Steel Association, said the central government wants to consolidate 60-70 percent of the nation’s steel output into 10 giant groups to enhance their competitiveness.

Chinese steel demand slumped as the global industry has been battling overcapacity. The crisis has seen manufacturers in Asia, Europe and the US suffer huge losses and led to accusations of dumping.

Shanghai-based Baosteel’s net profit plummeted 83 percent to 1 billion yuan last year, while Wuhan Steel lost 7.5 billion yuan, compared with a 1.3 billion yuan net profit in 2014.

An analyst said the merger between Baosteel and Wuhan Steel was “merely the beginning” of more such acquisitions in China’s steel industry.

“Restructuring in China’s steel industry is the trend and it’s an unstoppable one,” Chen Bingkun, an analyst at Minmetals and Jingyi Futures, told AFP.

Restructuring of another two Chinese steel giants, both based in northeastern province of Liaoning, Ansteel and Benxi Steel Group, is next on the agenda, Shanghai Securities News reported yesterday.

Ansteel is the world’s seventh biggest mill, and Benxi Steel ranks 21st. The listed arms of the two groups suspended trading in Shenzhen yesterday pending statements on the report. Investors in Hong Kong cheered the news, with Ansteel shares jumping 2.81 percent yesterday afternoon.

“China is now trying to cut down its steel production through policy. Restructuring is another way. Once the merged giants form a monopoly, it will start to control production,” said Minmetals’ Chen.

“The result of this restructuring is to integrate China’s steel industry and pave the way for China to export its steel capacity.”

However, another analyst did not see China having an edge over global competitors like ArcelorMittal and US Steel.

“I don’t think these mergers will be able to change the current market status of the world’s steel industry,” said Qin Jiawei, a Hangzhou-based analyst with Xinhu Futures. “China’s high-end steel products don’t have the competitiveness in the international markets. It’s not the size of the company that counts. You cannot change the global steel market by just adding them up.”

China launches cyber security talent training nationwide

Authorities from Wuhan, capital of Central China’s Hubei Province on Monday pledged to increase the number of scholarships to attract students pursuing cyber security, and run special recruitment for “maverick geniuses,” which constitutes a part of nationwide efforts to train cyber security talent.

Li Shuyong, Wuhan government publicity department head, told the Cybersecurity Technology Summit during China Cybersecurity Week that the city government will cooperate with companies to cultivate the world’s top cyber security talent.

Li said the local government will double the number of scholarships for cyber security majors and recruit top cyber security graduates in Chinese and overseas schools as well as from competitors at cyber security contests. She added it will also open a class for minors and run special recruitment for “maverick geniuses.”

She also said the city government will establish an innovative evaluation system. Instead of taking exams, cyber security majors will be evaluated based on their performance and given priority to practical and entrepreneurship training.

The Wuhan government will also offer twice the salary and research funds to the best cyber security experts than those from other fields. They will also receive 2 million yuan ($299,823) in subsidies and a high of 100 million yuan in funding if they have typical technologies and can create a significant impact on the economy. China needs at least 500,000 cyber security talents, but only about 8,000 such majors graduate each year, said an education official at the 4th China Internet Security Conference in August.

In January, a training center for cyber security and communication talent was established in Sichuan Province, aiming to provide training for students and faculty in Sichuan and Hong Kong.

In February, China launched its first special fund for cyber security with an initial capital of 300 million yuan. The fund will be used to provide financial assistance to experts and teachers who specialize in cyber security.

Demand rises for graduates

Domestic service majors from the first university in China to launch the course are so popular that many are approached by potential employers even before they graduate.

Jilin Agricultural University in Changchun, the capital of the northeastern province, which established the major in 2003, recruits about 60 students a year.

The employment rate for domestic service graduates has reached almost 90 percent and many earn decent money while still students, according to Li Lei, director of the university’s domestic service laboratory. “As interns in the last semester before graduation, many have been able to earn 3,000 to 5,000 yuan ($450 to $750) a month.”

According to a report published by MyCOS, an educational data and consulting company, the average monthly salary for graduates of the class of 2014 reached 3,487 yuan just six months after graduation.

“There is still a shortage of talent in the booming industry, so some companies come to our university to recruit,” Li said.

However, only about 40 percent of graduates choose to work in the domestic service industry. That’s because many of the original students were transferred to the major when they failed to gain entry to their preferred major, so they have no interest in the sector. However, the proportion has declined and the major is now the first choice of 50 to 60 percent of the students, Li said.

The university’s domestic service department employs 13 teachers who are experts in a range of fields, including sociology, medical science, nutrition and management science. Half of them hold doctorates. About 60 percent of courses on the major are practical subjects, including designing and making clothes.

The university receives many visitors from other universities, and at least one university in Guangdong province and another in Hunan province have also established the major, Li said.

Li Juanhui, a junior student, said she chose the course because it is “a distinctive major–new, but promising” and there is “a shortage of talent in the industry”.

She said many people still make “incorrect assumptions”, and “it will require the efforts of several generations of teachers and students to overcome prejudice against the major”.

The 21-year-old said she may begin preparing for exams for postgraduate study or to become a civil servant in the second semester.

Fellow student Dong Jian said he has come to enjoy the major, even though it was not his first choice.

However, the 21-year-old said he is confident about the sector’s future so he may undertake postgraduate study or look for work at a primary or junior school as a teacher of courses related to family life.