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Industrial firms around Shanghai Disney scheduled for closure

An aerial view of Shanghai Disney Resort.

(ECNS) — A total of 153 industrial enterprises surrounding Shanghai Disney Resort are scheduled to be shut down by the end of next year, accompanied by industrial structure adjustment in the area, Jiefang Daily reports.

Most of these enterprises struggle with high-energy consumption, heavy environmental pollution, and low production efficiency.

The adjustment will involve an area of some 10 square kilometers. Following the move, ecological reclamation and public service facilities will become priority.

Shanghai has accelerated progress in industrial structure adjustment in several key areas this year. According to an unnamed director with the municipal Economic and Information Commission, when such adjustments end, some 2 square kilometers of land will be set aside and 40,000 tons of standard coal reduced annually.

Huawei edges close to Apple, Samsung

Richard Yu, head of consumer businesses at Huawei Technologies Co Ltd, presents its new smartphone, Mate S, ahead of the IFA electronics show in Berlin, September 2, 2015.

Company’s latest smartphone offering plans to take on competition with innovative features

Huawei Technologies Co Ltd has inched close to Apple Inc in the high-end smartphone market – at least in terms of pricing.

Huawei’s latest $780 flagship smartphone, Mate S, is the most expensive handset the Chinese tech giant has yet produced and is set to compete with the next-generation iPhone that Apple plans to reveal next week.

The company’s previous flagships were priced in the $500-$650 price range. The lowest retail price for the iPhone 6 Plus, also a pamphlet, is about $750.

Richard Yu, head of Huawei’s consumer businesses, said the Mate S deserves its price tag and will put pressure on Apple and Samsung Electronics Co Ltd.

“Samsung is facing great downward pressure and Apple seems to have hit a ceiling in innovation. It is the right time for Huawei to be on the offensive,” Yu said at a product launch event in Berlin on Thursday.

Huawei is increasingly becoming a threat to Apple and Samsung after it notched up the highest sales growth rate of 46.3 percent in the second quarter, thanks to strong overseas sales and 4G smartphone sales in China.

By June, Huawei was the largest local handset vendor in China, the world’s biggest smartphone market, according to research firm Gartner Inc.

But its 7.8 percent market share lags far behind Apple and Samsung, which took more than a third of the total shipments.

Huawei is striving to put on market more higher-end devices with fancy features so that it can edge out the two overseas giants someday.

In Mate S, the Shenzhen-based company has incorporated a 5.5-inch high-definition display, fingerprint security and the Force Touch display technology which allows the handset to tell the difference between a tap and a hard press on the screen.

Apple is also likely to use a similar technology for its new iPhone model, as the US company is in desperate need of innovative breakthroughs to boost sales. The model is expected to make an appearance during the company’s annual product release on Sept 9 in San Francisco.

“The phone redefines how we incorporate touch technology into our smartphones, taking a revolutionary approach to touch-screen control and ushering in a new era for human-machine interaction,” Yu said.

Xiang Ligang, an independent smartphone analyst and founder of telecom website cctime.com, said Huawei hopes more female buyers will be attracted by the new model’s elegant design and cool features.

“It is a good attempt for Huawei to bond technology with elegance and fashion as it walks into the premium market,” Xiang said.

The Mate S will be available on the Chinese market later this month, according to Huawei. The retail price in its home market could be slightly cheaper than in Europe and the United States, based on previous practice.

Factories and services in slowdown

The performance of China’s manufacturing and services firms weakened in August, with activity in state-owned industrial companies contracting for the first time in six months and that in private manufacturers falling to a 76-month low, according to surveys released yesterday.

The official Purchasing Managers’ Index, a comprehensive gauge of operating conditions in large state-owned industrial companies, landed at 49.7 last month, down from 50 in July and 50.2 in June, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

A reading above 50 is expansion, and below it contraction. The latest figure was the first contraction since February after marginal growth in the past six months.

The Caixin China Manufacturing Purchasing Managers’ Index, a similar indicator slanted toward private and export-oriented companies, landed at 47.3 for August, down from July’s 47.8 and the worst since March 2009.

The figure has been below 50 for the sixth straight month after a brief rebound in February.

Zhao Qinghe, an analyst at the bureau, said domestic demand remained weak and the manufacturing sector had insufficient growth impetus.

“The slowdown was in part related to China’s enhanced efforts on industrial upgrading,” Zhao said. “High energy-consuming companies reported faster deterioration in PMI, while the bad weather in summer, including those hot, rainy and windy days, hampered industrial production and exaggerated the weakness as well.”

The PMI’s component indexes showed industrial production lost 0.7 points from a month earlier to 51.7 in August, while new orders dropped by 0.2 points to 49.7, falling below 50 for the second consecutive month.

Liu Ligang, an economist at Australia & New Zealand Banking Group Co Ltd, said the readings reflected faltering sentiment amid sluggish economic growth and the stock market turmoil.

“China’s manufacturing activities remained weak … We now expect China’s growth to expand 6.4 percent year on year in the third quarter,” Liu said. “As more easing measures are expected, growth could rebound to 6.8 percent in the fourth quarter.”

China’s economic performance surprised the market with a 7 percent increase in the second quarter, compared with market expectations of a 6.8 percent rise.

But the data in the past two months, including trade, industrial production, retail sales and fixed-asset investment, all moderated.

China’s service firms also reported less vibrant activities. The official non-manufacturing PMI retreated to 53.4 in August from July’s 53.9, while the Caixin Services Business Activity Index posted 51.5 in August, down from 53.8 in July and signaled the slowest increase in the current 13-month sequence of expansion.

He Fan, chief economist at Caixin Insight Group, said the expansion of service activities was not strong enough to offset the contraction in manufacturing.

Earlier figures showed net earnings of manufacturing companies contracting for the second straight month in July.

“In the face of continued pressure on growth, macroeconomic stabilization policies must continue and fresh reform measures must be introduced,” He said.

“Fine-tuning should go hand in hand with speedier implementation of structural reform to release the full potential of growth and lead the market to confidence,” He said.

China manufacturing activity contracts in August

China’s factory activity continued to lose steam in August, suggesting the world’s second largest economy faces prolonged downward pressure, official data showed Tuesday.

China’s manufacturing purchasing managers’ index (PMI) came in at 49.7 in August, down from 50 for July, according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

The August reading was the lowest since August 2012.

A reading above 50 indicates expansion, while that below 50 represents contraction.

The production sub-index posted at 51.7 last month, still expanding, but lower from 52.4 for July.

The sub-index for new orders came at 49.7, down from 49.9 for July, indicating grim challenges in demand.

Youngest Chinese keener entrepreneurs: survey

The youngest generation of the Chinese workforce are more interested in starting their own businesses and are more inclined to change jobs, according to new survey results.

The survey conducted by LinkedIn and data100.com showed 82 percent of working respondents born in the 1990s harbor entrepreneurship ideas, compared with 77 percent of those born in the 1980s.

Based on over 1,000 questionnaires, the poll suggests that the cities of Shenzhen, Beijing and Guangzhou top the chart for entrepreneurship enthusiasm, and that catering is regarded as the ideal sector for starting a business, followed by e-commerce and garment trade.

The “post-1990” generation stay in a job for an average of 18.5 months, while “post-1980” workers stick around for an average of 26.5 months. And while the older of the two groups stress payment and welfare in job hunting, the youngsters care more about their career prospects.

Entrepreneurship is becoming more popular in China, under the encouragement of the government, which hopes to use a wave of startups as a new engine for growth at a time when the economy is slowing. Many cities have set up startup incubators and rolled out preferential policies to encourage youngsters into starting their own businesses.

Warner forms China tie-up

Warner forms China tie-up Pedestrians walk past a Warner Brothers studio in Shanghai. The US company is in talks to partner with China Media Capital to develop Chineselanguage films.

Joint venture with CMC will develop local language movies

Warner Brothers, the studio behind Gravity and Interstellar, is in talks to partner with China Media Capital to develop Chinese-language films for China, where a rapidly growing box office continues to lure Hollywood studios.

The joint venture would be Warner Bros’ second venture in China, after partnering with China Film Group to produce and distribute movies.

“We confirm that CMC is now in talks with WB to create a JV. The talks have been going well, but we cannot disclose more details at this stage,” a spokesperson for CMC confirmed to Variety magazine on Tuesday. Sources at Warner Bros in Los Angeles also confirmed the partnership discussions, Variety said.

Phil Contrino, vice-president and chief analyst of BoxOffice.com, said that filmmakers are trying to respond to demand from local audiences for homegrown movies, as shown by the latest Chinese box office hit Monster Hunt, which has earned $375 million in China since its July release. The fantasy adventure has become the second-highest grossing film at the Chinese box office, outranked only by Furious 7, the seventh in the fast and furious Hollywood franchise.

“Chinese filmmakers in general are still tapping into what the public there wants from their homegrown products, and we’re still getting to a point where homegrown movies are starting to really perform close to what Hollywood movies are doing. That’s crucial. Everybody’s still kind of learning, and figuring it out,” Contrino said.

There have been increasing partnerships between Hollywood and China, with many studios in the United States collaborating with Chinese companies in the hope that it will lead to film releases in China, which allows only 34 foreign films released a year.

Stan Rosen, a Chinese film expert and professor at the University of Southern California US-China Institute, said the combination of the foreign film quota and so-called blackout dates – periods during the year when only Chinese films are allowed to be released, typically around holidays like the Lunar New Year and the summer – mean that Warner Bros’ plan to make Chinese-language films is a “better strategy” for the long term.

“The China market is on track to surpass last year’s market by August this year and it’s going to be the biggest market in the world by about 2018-19, so it makes sense to make Chinese films for the China market. You can’t lose,” he said.

With the number of movie screens in China increasing almost five-fold between 2010 and 2015 – from 5,000 to around 24,000 – making more movies for the Chinese audience will benefit Warner, he said.

“China Media Capital has been very successful,” he said. “Warner is partnering with good people. A lot of details are not yet known, but certainly given the entry in the China market and the increase in film screens, local movies are favored.”

Last October, Warner Bros partnered with media company Shanghai Media Group, Chinese investment fund CMC Capital Partners and communications group WPP to create a fund that invests in Chinese and international film, television and live entertainment. It focuses on Chinese-language programming that is distributed in China and around the world, according to Warner Bros.

CMC, a State-backed entity, has another joint venture deal with DreamWorks Animation SKG called Oriental DreamWorks. Oriental and DreamWorks are currently working on Kung Fu Panda 3, the third installment in the popular animation franchise, due for release in January.

Steel firms slip into red as glut persists

Most of the steel companies listed on the A-share market have seen a sharp erosion in profits during the first six months of the year, due to the glut in domestic production.

Hongxing Co Ltd, a company whose main shareholder is Jiuquan Iron & Steel (Group) Co Ltd, was the worst-performing listed steel company as of Aug 19 with losses of 1.55 billion yuan ($242 million) in the first six months. Hongxing said the losses were mainly due to production overcapacity, a slowing economy and the significant fall in steel prices.

Beijing Shougang Co Ltd, another major producer, has forecast losses of about 200 million yuan to 300 million yuan for the first half of the year.

According to data provided by the National Development and Reform Commission, large and medium-sized steel companies earned revenue of about 1.5 trillion yuan in the first six months of the year, down 17.9 percent from the same period a year earlier. However, the steel-making business of these firms ran up losses of about 21.7 billion yuan during the period, up 16.8 billion yuan from the same period in 2014.

About 43 steel companies registered losses during the period, while only three reported growth in profits. Fushun Special Steel Shares Co Ltd saw its net profit surge to 131 million yuan, an 803 percent year-on-year growth.

Daye Special Steel Co Ltd reported net profit of 139 million yuan by the end of June this year, up 5.42 percent from the same period in 2014. According to the company, the domestic steel market is still bogged down by production overcapacity and the lack of new growth drivers. Daye attributed its profit growth to measures taken to reduce output costs.

China stocks in sharpest fall since 2007

An investor looks through stock information at a trading hall of a securities firm in Luoyang, central China’s Henan Province, Aug. 24, 2015. China stocks nosedived on Monday with the benchmark Shanghai Composite Index dropping 8.49 percent to close at 3209.91 points, the sharpest decline since Feb. 27, 2007.

The Chinese stock markets had their worst day in eight years with the benchmark Shanghai Composite Index tumbling 8.49 percent to close at 3209.91 points.

This is the steepest dive since Feb. 27, 2007, and comes less than a month after a similar plunge on July 27 this year, when the stock market lost 8.48 percent.

The astonishing loss came one day after the government’s approval to allow the state pension fund to invest in the stock market, which analysts said should boost the market.

Nearly 2,200 shares tumbled by the daily limit of 10 percent. The overall loss was narrowed to around 6 percent in the afternoon as shares in blue chip companies, such as PetroChina and China Life Insurance, rose sharply. The index quickly fell back after 2 p.m.

Asia stocks across the board dived, too. The Hong Kong Hang Seng Index slumped more than 5 percent on Monday, its lowest point in 17 months. Japan’s Nikkei 225 Index closed down 4.61 percent, hitting a six-month low. Singapore’s Straits Times Index also tumbled almost 4 percent.

Monday’s sharp decline almost wiped out all of this year’s gains, despite government intervention, such as pouring in funds and restricting sell-offs.

In its latest move to prop up the market, pension funds were given permission to invest a maximum of 30 percent of net assets in stocks and equities.

The pension fund is worth an estimated 3.5 trillion yuan, however, but it is still unknown at this moment how much the sector will decide to invest, said Industrial Securities in a research report.

The report said that this entry by the pension fund is more of a psychological move by the government to assure investors that the A-share market is not an “abandoned child,” the report said.

The future of the stock market still depends on the fundamentals. Overvaluation is one of the main factors stoking fears among investors, said Guolian Securities.

The price-to-equity ratio of the ChiNext Index has been lowered but still stands at 76, similar to the level in November 2010, the highest point before this round of bull market.

Weak economic data also dampened investor confidence. The Caixin flash China general manufacturing PMI retreated to 47.1 in August, the lowest reading since March 2009.

The flash index is the earliest available indicator of manufacturing sector conditions in China. The continuous fall in the index in recent months indicates that the economy is still bottoming out, said He Fan, chief economist at Caixin Insight Group.

As the market continues to struggle, speculation is rife over whether the central bank will cut the reserve requirement ratio (RRR), again. The China International Capital Corp. (CICC) predicts that the central bank will “aggressively lower RRR” by at least another 150 basis points by the end of this year.

On Monday, the Shenzhen Component Index fell 7.83 percent to close at 10,970.29 points. The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, lost 8.08 percent to end at 2,152.61 points.

GM China JV builds 200,000 new energy vehicle plant

SAIC-GM-Wuling Automobile Co. on Friday started construction of a new energy vehicle plant with the intention of turning out 200,000 vehicles each year.

Investing 3 billion yuan (470 million U.S. dollars), SAIC-GM-Wuling joined many rivals in the new energy vehicle sector betting on huge market potential.

China pays high subsidies on new energy vehicles to reduce pollution.

In the first seven months of this year, sales of new energy vehicles increased by 2.6 times year on year to nearly 90,000 despite weak auto sales in general.

On Friday, the automaker also started operations of an assembly plant with an annual production capacity of 400,000 conventional vehicles.

The company sold 217,000 Baojun cars in the first seven months of the year, up 424 percent.

Established in 2002, the automaker is a joint venture between General Motors, Shanghai Automotive Industry Corp. and Liuzhou Wuling Motors Co. Its sales in 2014 exceeded 1.8 million vehicles.

China increases tax breaks for small businesses

The State Council, China’s cabinet, on Wednesday decided to extend tax breaks to more small businesses, recognition of their roles in generating jobs and growth.

From Oct. 1, 2015 to the end of 2017, companies with annual taxable income under 300,000 yuan (46,900 U.S. dollars) will have their corporate tax halved, said a statement released after a meeting chaired by Premier Li Keqiang. Previously, the threshold was 200,000 yuan.

The meeting also promised tax breaks for companies with a monthly revenue under 30,000 yuan. They will be exempted from value-added tax and business tax until the end of 2017.

The move is the latest attempt to help small businesses, as they provide nearly 80 percent of urban jobs.

In the first six months, about 2.39 million small and micro enterprises in China paid reduced taxes, saving them about 8.6 billion yuan.

Wednesday’s meeting also decided promote big data processors, promising to make government data on transport, medical care, employment and social security available to the public.

The meeting also agreed to free controls on foreign investment in the logistics sector to allow them to establish purchase and distribution centers in China.