Category News of China

Wal-Mart lays off 30 execs

Retailing giant Wal-Mart Stores Inc said Wednesday it has laid off some 30 senior executives in its China unit in an effort to “streamline and simplify” its business, Bloomberg reported.

The departure of these executives is “consistent with actions taken over the last several months,” Ray Bracy, Wal-Mart’s China spokesman, said in an e-mail reply to Bloomberg.

This is not the first time Wal-Mart has decided to downsize its workforce in China. In March this year, employees at Wal-Mart store in Changde, Central China’s Hunan Province, launched a protest as they were unsatisfied with the company’s employee resettlement plan, news portal 163.com reported Wednesday.

Battle looms over mobile pay systems

China’s thriving mobile payment market will witness a new battle for dominance between Apple Inc and its local smartphone rivals, with industry insiders anticipating a direct showdown between Apple Pay and a home-grown digital wallet service in late 2015.

Analysts said the Android Pay project, which is led by Shanghai-based bankcard association China UnionPay, will have widespread support from Chinese handset vendors.

These vendors sell about 300 million Android operating system-based phones each year in the country.

Citing anonymous sources, Shanghai-based newspaper China Business News reported on Tuesday the proposed service will be launched in the third quarter of 2015 and UnionPay is seeking partnerships with local smartphone manufacturers.

UnionPay would not confirm the existence of the Android Pay project, but it did express an interest in establishing a new payment service.

In a statement to China Daily, the company said: “We have been constantly trying new technologies and business models in the mobile payment sector.”

Established in 2002, UnionPay has about 400 domestic and overseas members.

Wang Yanhui, secretary-general of the industry organization Mobile China Alliance, said in his micro-blog account that UnionPay had decided to team up with local handset makers as early as last week.

Major smartphone makers, including Xiaomi Corp, Lenovo Group Ltd and ZTE Corp, had not announced any such arrangements as of Tuesday.

Sources from Lenovo’s supply chain told China Daily that the company is developing a new phone equipped with fingerprint unlocking capability. The feature can be used as a substitute for entering passwords before transactions.

Only a handful of local smartphones support near field communication, a technology used in wireless handset payment services. Virtually no brick-and-mortar stores in China have installed cashier systems that accept NFC-enabled payments.

NFC is not popular even in the United States, where Apple first deployed its wireless payment service known as Apple Pay. The service is available only in selected stores in the US, including McDonald’s Corp restaurants and department stores run by Macy’s Inc.

Popular retailers such as Best Buy Co Inc (electronics), Wal-Mart Stores Inc and two major pharmacy chains (CVS Health Corp and Rite-Aid Corp) do not accept Apple Pay.

Over the past week, Apple announced it had started to accept online payments made through UnionPay cards at its Chinese mainland app store. The US-based company subsequently kicked off a UnionPay-customers-only promotion campaign by lowering the download price of more than 100 apps to 1 yuan (16 cents).

Analysts speculated this move meant Apple would soon launch Apple Pay on the Chinese mainland.

According to industry consultancy Forrester Research Inc, Apple Pay’s technology will accelerate payments and enable new customer experiences in the coming year.

“China and Australia will run ahead with Apple Pay on mobile (in 2015),” Forrester said.

It also said that the mobile payments landscape in China and other Asia-Pacific markets would remain fragmented over the next year. Wang said the official Apple Pay launch in China is likely in March 2015.

Li Ye, a researcher from Analysys International, said that with China opening up the bank card clearing market, UnionPay’s position as the only bank card organization is being challenged.

“Quick emergence of third-party online transaction channels forced UnionPay to find new business models suited to the mobile Internet era,” Li said.

The mobile transaction volume of third-party platforms exceeded 2 trillion yuan in the third quarter of this year, a jump of 25.6 percent year-on-year, statistics from Analysys International show.

“Although Apple Pay has yet to enter the Chinese market, it has heightened local players’ interest in mobile phone payments and NFC technology,” it said.

Shanghai vows to build international insurance center by 2020

Shanghai’s municipal government announced plans to create an advanced insurance market that meets the demand of economic and social development for the metropolis, with plans to make itself an international insurance center by 2020.

The insurance penetration rate, or premiums as a share of GDP, has goals to rise by six percent and the insurance density, the per capita premium, will reach 7,300 yuan (1,189 U.S. dollars) in the city by the year of 2020, according to the detailed enforcement proposal released on Tuesday to implement the State Council’s plans of speeding up development of the modern insurance services.

Taking advantage of the Shanghai Pilot Free Trade Zone, the municipal government pledged to accelerate system innovation and opening up of the insurance sector in the proposal.

Shanghai will also highlight the insurance sector’s functions in building an international financial center and shipping service center, and increase the role of insurance in promoting social security.

Merger plan lifts BesTV, Oriental Pearl

Shares of Shanghai-based BesTV New Media Co and Shanghai Oriental Pearl Group surged on news that the two companies would merge as part of the city’s push to reform state-owned media companies.

BesTV is merging with Oriental Pearl through a share swap with one share for every 3.04 shares of the target company, valuing the latter at 10.69 yuan (US$1.74) per share, according to a stock exchange filing yesterday. BesTV surged by the daily limit of 10 percent to 35.19 yuan.

Oriental Pearl would be delisted on completion of the deal. The company’s shares also jumped 10 percent to 12.01 yuan yesterday.

BesTV will also acquire companies such as SMG Pictures, Wings Media, Shanghai Interactive TV, and TV shopping company Oriental CJ through a private placement at 32.54 yuan per share to cement its market position and diversify revenue streams.

“Through the acquisition, BesTV now covers the whole industry including content production and Internet distribution channels, and it fits with China’s reform and consolidation in the media sector,” China International Capital Co said in a research note yesterday.

BesTV will also issue new shares to raise up to 10 billion yuan through a private placement with 10 institutional investors, including Shanghai Media Group Investment Center, the Bank of Communications Culture Investment Fund and China Merchants Fund.

Part of the capital will be used to fund Internet TV projects at the new entity after the completion of the merger.

Parent Shanghai Media Group will remain the controlling shareholder of BesTV with 45.07 percent after the merger.

Market needs say in pricing meds

The National Development and Reform Commission (NDRC) has lowered drug and medicine prices more than 30 times over recent years. Yet some drugs are still being sold at inflated prices, while other low-cost medicines are often in short supply.

As in all markets, pricing is a key factor in the sale of medicines as it naturally affects the supply and demand of various products. The NDRC’s decrees alone cannot effectively lower medicine prices because the commission’s regulations clash with the natural order of the drug market.

Regulators must give more leeway to drugmakers when it comes to setting the prices of their products. This is not to suggest that proper supervision is unnecessary with various factors affecting prices. While the government does have a responsibility to regulate prices of electricity, water, medicine and other services and commodities that are closely related to the public good, allowing the market to play its role in resource allocation is essential in coordinating the healthy development of the drug industry. Only by granting more discretion to drugmakers will efforts to reform the medical industry truly be realized.

App developers given Google platform

The Google Inc stand at a mobile Internet expo in Beijing. The search provider has started to allow app developers in China to sell items through Google Play.

Google Inc is making its most aggressive move on the Chinese mainland since a high-profile exit from the market nearly five years ago.

The Internet giant said on Thursday that it has started to allow app developers in China to sell their products through Google Play, an online app store installed in more than 1 billion Android smartphones worldwide.

Industry sources speculated that Google is preparing for a more significant move that would let Android phone users in China download apps from the store, which cannot be done at present in the world’s biggest smartphone market.

Google was careful in phrasing its app announcement because the move could potentially make available the first major Google service in China since early 2010. After months of skirmishing with local regulators over information security, Google gradually withdrew its core services from the mainland in that year.

Google’s products, including its online search engine and mapping service, are not available on the mainland.

“Today we are simply opening Google Play to Chinese developers and giving them the ability to bring their applications to a global audience?just like what we’ve done in more than 60 other countries,” Google said in an e-mailed statement to China Daily.

Developers in China will be able to sell apps via Google Play in 130 overseas markets. Google will help developers collect revenues from in-app purchase and subscription services. The revenues will be transferred to developers’ Chinese bank accounts.

App developers in China had to find an overseas agent to manage the payments in the past.

Chris Yerga, Asia-Pacific managing director of Google Play, said: “Chinese developers will be able to explore global business through the Android platform. They will have a chance to build a real international business.”

Also on Thursday, US tech website The Information reported that Google intends to introduce a version of Google Play to China in hopes of tapping into a market that accounts for about half of the global population that is using the Google-developed Android operating system.

“The company has indicated its intention to reverse a longstanding Google policy and distribute its app store with phonemakers and other potential partners in China,” said the report, citing an unidentified source.

Google declined to comment.

Wang Jun, a senior analyst with Beijing-based consultancy Analysys International, said Google has already missed the key window of opportunity to return to the Chinese app market.

“Local players are taking firm control over the Android app-distribution market. There is not much room left for Google Play,” Wang said. He said that most Chinese smartphone producers do not pre-install Google Play on their devices, making it harder for the service to reach out to customers.

Baidu Inc, Qihoo 360 Technology Co Ltd and wandoujia are the country’s top three app distributors, according to the China Cloud Degree Registration Center, an app distribution monitoring organization. The three platforms handled more than 70 percent of the country’s total game app downloads as of August, the center said.

According to Google, more than 1 billion Android devices, including smartphones and tablets, are installed with Google Play globally. The app store now has more than 1 million utility and gaming apps with total downloads exceeding 50 billion.

Apple Inc, who operates Android’s rival system iOS, is also trying to grab more revenue in China. The company teamed up with local bankcard association China UnionPay in an attempt to spur app sales and to bundle more bankcards. It is launching a promotion campaign on the mainland by lowering some of the apps’ prices to 1 yuan (16 cents).

Chinese yuan-linked financial products rise in S Korea

The Chinese yuan-linked financial products rose in South Korea ahead of the launch of a market where currencies of the two countries would be traded directly and the implementation of a bilateral free trade agreement (FTA).

Shinhan Bank, one of South Korea’s four leading banks, said Thursday that it rolled out the yuan deposit product, named China Plus Time Deposit. It has five maturities, including one month and a year, and the deposit rate was set at 3.15 percent.

Hana Bank and Korea Exchange Bank launched a joint yuan deposit product with a maturity of six months and a year earlier this month. The deposit rate was more than 3 percent.

The yuan deposit rate almost doubled the rate of the South Korean won-denominated deposits offered by local banks. The won deposit rate stays at a mid- to upper-bound of 1 percent.

The rise in yuan-related financial products came as the two countries are expected to implement the bilateral FTA next year. South Korea plans to launch the direct trading market between the yuan and the won within this year.

A South Korean news media reported that the financial regulator plans to increase the portion of yuan settlement in trade with China to 20 percent in the long term.

In 2013, South Korea and China traded 228.8 billion U.S. dollars of goods and services, among which 1.2 percent was settled with the Chinese yuan.

Wuzhen to host World Internet Conference

The World Internet Conference, which will take place in Wuzhen, a town in East China’s Zhejiang province, on Wednesday, has attracted more than 1,000 participants from across the world.

The conference, held from Wednesday to Friday, will focus on several hot issues in the cyberspace, including cyber security, online anti-terrorism crackdown, mobile network and cross-border e-commerce.

It is the first time that China is holding such a top-level conference related to Internet. Guests include government officials from various countries, cyberspace specialists and technology enterprises tycoons, such as Zhou Hongyi, head of Qihoo 360, Chinese largest security software manufacturer, and Jack Ma, the founder and board chairman of Alibaba, China’s largest e-commerce business.

According to the organizer, the Cyberspace Administration of China, the country’s top Internet watchdog, the meeting has also attracted almost 700 journalists from the world and 500 volunteers have been deputed to serve the guests.

In addition, participants can enjoy fast-speed free Wi-Fi in Wuzhen, and the town will become the permanent place to hold the conference in future.

New copyright trading base set up in FTZ

Move aims to boost cross-border transactions

A national copyright trading base was launched in the China (Shanghai) Pilot Free Trade Zone (FTZ) Thursday, with the aim of using the advantages of the FTZ to promote the copyright industry, Chinese financial news portal yicai.com reported Thursday.

The national-level copyright trading base, which is the first of its kind in the Yangtze River Delta region, was approved by the National Copyright Administration on September 28, the report said.

Xu Jiong, director of the Shanghai Copyright Administration, said that the new base will protect copyright and encourage cross-border transactions for cultural products, according to the report.

Beneficial trade policies for the FTZ and the financial reforms that have been conducted there have already been positive for copyright trade growth, it noted.

The national base can be a helpful platform for individuals to sell the copyrights for their works, Wang Qian, a professor with the School of Intellectual Property at the East China University of Political Science and Law in Shanghai, told the Global Times Thursday.

However, it may not be that effective in terms of large-scale copyright transactions, such as for foreign movies, TV dramas or literature works that the Chinese market usually buys, he noted.

The copyrights for these cultural products are mainly held by large companies. For instance, the copyrights for animated films are dominated by two US-based firms – Walt Disney Company and Pixar Animation Studios – Wang noted.

For larger transactions such as this, sellers and buyers can easily reach each other without needing any special platforms, according to Wang.

Zhao Zhanling, a Beijing-based intellectual property lawyer, agreed with Wang and said that small copyright transactions may benefit from the new base in Shanghai.

Usually, copyright transactions for more popular products such as TV shows are dominated by a small number of companies, he told the Global Times Thursday.

For example, the fierce competition among China’s online video websites for copyrights for popular US TV dramas in previous years has forced up the prices, even if the battle for copyright has been less intense since two major video websites – youku.com and tudou.com – merged in August.

The new base in Shanghai might function as more than just a platform, according to financial news portal cs.com.cn, which reported Thursday that the base will seek policy breakthroughs in fields such as tax, financing and registration for copyright trade.

The FTZ facilitates overseas art works’ entry into the domestic market with fast customs clearance, and tariff and value-added tax (VAT) payments can be delayed until after sales rather than before, Li Wei, an employee at a cultural communications firm in Shanghai, was quoted as saying in the yicai.com report. Overseas buyers do not pay the 8 percent tariff and 17 percent VAT if cultural products are purchased through the FTZ, Li said.

China’s copyright trade is still at an early stage, cs.com.cn reported Thursday.

Cross-border copyright trade revenue is decided by a country’s soft power, Wang said, noting that China does not currently export as many cultural products as it imports.

Xiaomi, Youku Tudou agree video content cooperation

TV, smartphone hardware maker might also invest $300m in iQiyi video provider

Chinese smartphone maker Xiaomi Technology Co reached an agreement with US-listed Chinese video streaming firm Youku Tudou Inc Wednesday to invest in the distribution and production of online video content, a move analysts said will be a win-win solution for the two companies.

The two companies will cooperate in online video content and technologies, according to a press release that Xiaomi e-mailed to the Global Times Wednesday. It didn’t specify how much the smartphone maker would invest in the video streaming firm.

Xiaomi announced on November 4 that it would inject $1 billion to develop its Internet TV content.

“The first batch of money (of the $1 billion) has been invested in Youku Tudou… Xiaomi will join in content distribution and production with Youku Tudou to provide favorable content to Xiaomi fans… The two companies will dedicate themselves to pushing forward the online video industry in China,” Xiaomi founder and CEO Lei Jun said on his personal Sina Weibo account Wednesday.

To expand its TV content business, Xiaomi hired Chen Tong, a former executive at Chinese Internet firm Sina Corp, to manage its TV business.

Chinese media also reported Tuesday that Xiaomi will invest $300 million in online video provider iQiyi, which China’s biggest search engine Baidu Inc owns a 96 percent stake of.

Calls to iQiyi went unanswered by press time Wednesday while Xiaomi refused to comment on this event.

Xiaomi’s moves in video content come a year after it unveiled its first 47-inch smart TV in September 2013, which has since gradually gained popularity among users.

The burgeoning TV hardware business of Xiaomi, including its TV sets and set-top boxes, “has already developed well,” and further “expansion in TV content will increase its profit space further,” Luo Lan, an analyst at Analysys International, a Beijing-based Internet consultancy, told the Global Times Wednesday.

Luo suggested Xiaomi and Youku Tudou focus on improving the quality of their TV content in the face of intense competition in the sector.

In addition to Xiaomi, other Internet companies also launched smart TVs to capitalize on the burgeoning market.

In September 2013, China’s biggest search engine Baidu’s online video provider iQiyi launched a 48-inch smart TV called “TV+” in partnership with domestic TV maker TCL Corp. In the same month, domestic e-commerce giant Alibaba launched three smart TV models in partnership with Shenzhen-based appliance firm Skyworth.

Luo noted that the cooperation between Xiaomi and Youku Tudou was “a win-win solution,” as Xiaomi will enable Yuku Tudou to get more access to the huge amount of Internet and mobile users that Xiaomi has accumulated since it was set up in 2010.

Youku Tudou’s expertise in the production of original content will also be helpful for improving the user experience for Xiaomi TV and smartphones, said Luo.

The total sales value of Xiaomi smartphones, TV, as well as its set-top box on Tmall, a leading Chinese e-commerce website operated by Alibaba group, hit 1.56 billion yuan ($254.28 million) on November 11, which is dubbed “Singles’ Day” in China, Lei Jun disclosed on his Weibo.

Xiaomi ranked third in the global top smartphone manufacturers list due to its focus on China and adjacent markets, according to the latest report by the International Data Corporation (IDC), a global market research company.

According to IDC, the global market share of Xiaomi stood at 5.3 percent, following Samsung with 23.8 percent and Apple’s 12 percent in the third quarter.