Category News of China

‘More progress lies ahead’ for FTZ

Officials say crude oil futures trading may be the next innovation in zone

Officials of the China (Shanghai) Pilot Free Trade Zone on Friday promised there would be more progress, including the launch of crude oil futures later this year, ahead of the first anniversary of the experimental area.

The Shanghai International Energy Trading Center, a new arm of the Shanghai Futures Exchange, may launch crude oil futures this winter, said Zheng Yang, head of the Shanghai Financial Service Office, at a briefing on Friday.

The trading center was established last November, and it was the largest company registered in the FTZ with registered capital of 5 billion yuan ($815 million). It aims to serve as a platform for international futures trading of oil and other resources.

According to Zheng, the energy trading center is preparing for the launch of crude oil futures.

The Shanghai Stock Exchange also plans to set up a trading platform for international financial assets, said the official.

The FTZ was officially launched on Sept 29, 2013. Its major achievement in the past year has been the streamlining of administrative procedures.

The “negative list” approach, which aims to make it easier for foreign companies to enter the Chinese market, has reduced the number of banned items from 196 to 139.

As of Sept 15 this year, there were 12,266 new companies set up in the FTZ, of which foreign companies accounted for 13.7 percent, and 283 foreign-funded projects were launched in the FTZ.

“The momentum of foreign enterprises is improving, which means the free trade zone has passed the initial evaluation,” said Ai Baojun, director of the FTZ, who is also deputy mayor of Shanghai. Ai said logistics costs in the zone have declined by 10 percent.

In late October, the FTZ management committee will release another list that will refine its power and procedures, increase transparency and broaden market access for investors in the FTZ.

When asked about Dai Haibo, the former executive deputy director of the FTZ who was removed in early September, Ai said Dai’s removal was a normal change of personnel, and Dai was still carrying out his duties in the government, such as drafting the 13th Five-Year Plan (2016-2020).

Ai did not reveal the successor to Dai.

Time-honored brands eye young consumers

More than 200 Chinese time-honored brands across the country will exhibit their classic and new products in Shanghai at a fair starting from Friday, in the hope of developing popularity among younger consumers like they did in their parents and grandparents.

The four-day exhibition has been held for seven consecutive years in Shanghai, and 237 Chinese companies from Beijing, Tianjin, Chongqing, Shanghai and provinces of Guangdong, Fujian, Heilongjiang, Jiangsu, Zhejiang, Yunnan and Shandong will set up 385 booths in an area of 8,500 square meters this year.

These time-honored brands are eager to show that they not only preserve traditional Chinese culture but also keep up with times. These brands range from food and dining, clothing and accessories, to jewelry, arts, health-care, and modern service.

Some latest products, such as Warrior shoes, Seagull’s latest digital camera, will also be shown in the exhibition, and visitors will be allowed to try some of these new products.

Net foreign exchange sales ‘no problem’

The State Administration of Foreign Exchange on Thursday sought to allay worries about potential short-term capital flight, saying that the latest foreign exchange figures partly reflect increasing bank deposits in foreign currencies.

The August statistics showed that Chinese banks, for the first time in 13 months, sold more foreign currencies than they bought.

“There hasn’t been any substantial change in China’s capital inflows or outflows. The gap in the data exists in the form of growing foreign exchange deposits,” said Guo Song, director of the capital account management department at the SAFE.

Foreign-currency deposits rose by $15.4 billion last month while loans dropped $3.3 billion, according to Guo.

“It means that companies and individuals are more willing to hold foreign currencies, which is a positive change indicating that the market outlook on the exchange rate has become more reasonable,” he said.

In August, Chinese banks sold $147.4 billion in foreign currencies and bought $146.6 billion, yielding an $800 million deficit, according to the SAFE.

The regulator also emphasized taking a “prudent” approach toward the liberalization of the capital account, signaling no imminent or bold reforms in further opening the capital market.

But Guo said the SAFE will pursue the goal of gradually removing restrictions on the yuan’s convertibility, creating greater convenience and giving the market more investment freedom.

China has reduced the number of items that require administrative approval from 59 to 20 under the capital account, according to the SAFE.

The agency is studying how to liberalize the rule that imposes a $50,000 ceiling on individuals’ annual conversion of yuan to meet the growing demand for foreign currencies.

Adobe to shut China R&D unit, lay off 300, amid poor quarterly results

Computer software maker Adobe Systems Inc will shut its Chinese R&D arm, it said Wednesday.

The California-based company will maintain its China sales offices in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan, Adobe said in a statement on Wednesday, but R&D operations will cease by the end of December.

Layoffs have already begun and will affect around 300 people, a person familiar with the matter told Reuters.

“Adobe’s presence in China will be focused on market development activities moving forward, and it will be dissolving and closing its R&D branch there,” the company said. “Adobe will maintain its sales presence in Shanghai, Beijing, Guangzhou, Shenzhen, Hong Kong and Taiwan.”

On September 17, Adobe reported its worst quarterly revenue for Asia in the last five years. For the three months ended August 29, sales in Asia fell 25 percent to $148.2 million.

Adobe’s overall net profit dropped 46 percent year-on-year to $44.7 million in the period.

Media reports Wednesday said that employees of Adobe will get compensation depending on how long they have worked at the company.

The company has been downsizing its business in the region in the past few years.

In 2012, the company closed its unit in Taiwan and said that its business in Taiwan would be moved to its Hong Kong branch.

Adobe, founded in 1982, makes popular software such as Photoshop and Dreamweaver.

Ningbo kicks off job fair to seek overseas talent

About 1,500 domestic companies have taken part in the fair, releasing more than 1,000 human talent and science projects. An estimated 8,000 new jobs will be introduced during the event.

Each year, the local government undertakes a survey to show the types of jobs that are most needed. This year, the city adopted for the first time a comparative study method to evaluate the city’s talent resources and competence in the regional market by researching the job markets in Shanghai, Hangzhou, Suzhou and Wuxi, all located in the Yangtze River Delta economic zone.

The survey concluded there were 587 urgent job needs, covering five economic sectors. It also showed the market demand for innovative talent is still high, as most companies are used to adopting rather than inventing new products and technologies.

Seven job positions stand out as most urgent for the city — new-material engineers, car components engineers, senior architects, e-commerce managers, fashion designers, pharmaceutical experts and automation equipment experts.

The job fair places a premium on attracting those who have acquired a master’s or a doctorate degree overseas. The local government will provide “mother care” services for such talents, offering them funds, welfare, houses, family settlement and healthcare.

Huawei most innovative domestic company: survey

SOEs lag behind private firms in terms of creativity

Shenzhen Huawei Investment & Holding Co, the parent of technology giant Huawei, unseated e-commerce giant Alibaba Group as the top innovative domestic company in the Chinese mainland, according to the findings of an annual survey released on Tuesday by global consulting firm Strategy&.

Tencent Holdings, the third most innovative domestic company on last year’s ranking, moved up one spot on the 2014 list, while Alibaba was ranked No.3 this year, ceding its innovation crown to last year’s runner-up, according to a report based on the survey.

Nearly 400 executives from both Chinese and foreign companies joined the survey, which was conducted this spring and summer.

“Huawei is probably seen as the Chinese company which most embodies innovation – not just in [the mainland] but also globally,” Steven Veldhoen, a Beijing-based partner at the consulting firm, told the Global Times after the release of the survey, referring to the rankings based on the input of business executives.

Smartphone vendors Beijing Xiaomi Technology Co, Meizu Technology Co, and electric-car maker BYD Co are new to the list of domestic innovators, among which, eight of the top 10 firms are in the high-tech or Internet arena, the report said, attributing the phenomenon in part to the highly open and intensely competitive nature of the sectors in the mainland market.

Chinese companies, particularly those expanding overseas, are increasingly turning to innovation as a significant driver of business growth.

The survey found that innovation is the first priority for 42 percent of domestic companies, compared to 21 percent of multinational firms.

In a sign that domestic companies are gaining traction in innovation, 65 percent of multinational respondents said that their companies are confronted with Chinese competitors that are just as or even more innovative, the survey results showed.

China is attaching greater importance to innovation in its reform-bound economy.

Speaking at the opening ceremony of the Summer Davos Forum in Tianjin on September 10, Premier Li Keqiang said the Chinese economy has maintained steady and sound growth in recent years, owing to reform and innovation.

“China’s innovation involves not only technology but more of institution, management and growth models,” said the premier, pledging stepped-up reforms to remove restraints on innovation by individuals and companies.

The survey also revealed concerns over the lack of innovation in the country’s State sector.

“State-owned enterprises (SOEs) are, on the whole, seen as lacking impetus in innovating their products and services,” Wang Jun, a research fellow at the China Center for International Economic Exchanges, a Beijing-based think tank, told the Global Times on Tuesday.

The monopoly positions of most SOEs dampen their zeal for innovation to achieve higher earnings, Wang said, noting that an ineffective incentive mechanism for innovation for SOE management also works as a drag on innovation in the State sector.

But with the deepening of SOE reform, which includes launch of pilot programs on mixed ownership, the level of innovation in SOEs is expected to rise, he believes.

A separate list that names the top 10 innovative foreign companies in the mainland market was also announced on Tuesday, placing Apple Inc, Samsung Electronics and Volkswagen Group China among the top three.

It is hardly a surprise that Apple tops the list, given “the ubiquity of Apple products and services, and its imitators,” remarked Veldhoen.

Baidu and CGB join hands

China’s leading search service provider Baidu Inc signed a strategic partnership agreement with China Guangfa Bank on Monday to provide better services to bank customers.

Under the deal, Baidu will use its advantage in big data and location-based service to support China Guangfa Bank to offer more tailor-made and smarter services to customers.

Beijing-based Baidu will use big data technology to carefully evaluate people’s individual needs in wealth management products so as to help the bank better serve its customers in the increasingly digital era.

Baidu will also use its deep knowledge in location-based service to help the bank to select good locations to expand its brick-and-mortar network.

Higher demand lifts Pearl Delta exports

Business continued to improve for small and medium-sized exporters in the Pearl River Delta in August, lifted by increased overseas demand and government policies to support foreign trade, a report said on Tuesday.

Shenzhen Onetouch Business Service Co, a subsidiary of Alibaba Group Holding Ltd, found that exporters’ confidence was positive in August.

The trade climate index stood at 102.65, with many Delta exporters reporting increased orders.

“The situation will continue to improve in the months ahead because overseas demand for Chinese goods increases at the end of each year,” said Xiao Feng, deputy general manager of Shenzhen Onetouch.

Rising orders in the past two months and stable production, labor and exchange-rate conditions helped exporters make more profits, according to Xiao.

Xiao said that government trade-boosting incentives had proven effective.

“In particular, new business models such as cross-border e-commerce and comprehensive foreign trade services have helped exporters gain more orders,” Xiao said.

The nation’s total trade increased 4 percent year-on-year to $367.09 billion in August, according to the Ministry of Commerce.

Exports to major markets including the United States, European Union and the Association of Southeast Asian Nations increased by 11.3 percent, 12.8 percent and 12.7 percent, respectively.

“The increased value of foreign trade in the past two months was mainly due to implementation of a series of government policies to support the stable growth of foreign trade,” said Shen Danyang, a spokesman for the Ministry of Commerce.

The trade increase in August followed a surge of 14.5 percent in July.

According to Shen, export procedures have been streamlined and export rebates have been improved.

“We have also introduced measures to help companies tackle financing difficulties, with credit and insurance institutes providing financial services for about 25,000 small and medium-sized enterprises,” Shen said at a press conference on Tuesday.

He said that cross-border e-commerce and comprehensive trade service business have had strong government support.

“But we are not sure that China’s foreign trade can maintain this momentum … as many uncertainties remain in the global and domestic markets and some companies face difficulties in exporting,” Shen said.

Global media’s take on Alibaba’s IPO

Alibaba’s impending IPO is one of the most talked-about stories in the world. Here is a selection of quotes from international and Chinese media.

“…at the valuation currently being discussed, Alibaba would be more expensive than more-established and better-known companies such as Google Inc. or eBay Inc.”

Alibaba IPO: a big deal, and, backers argue, a real steal

— Wall Street Journal, on Sep 12

“The most critical task Alibaba faces: Reaching the 500 million Chinese consumers who shop, chat, play games and basically run their entire digital lives on smartphones.”

Alibaba IPO: Jack Ma’s scrappy start-up takes on US

— USA Today, on Sep 12

“For Alibaba, it was part of a continuing effort to make the instant gratification of global e-commerce accessible to China’s expanding middle class. If the biggest Internet company in the world’s most populous nation succeeds, it will make everything from culinary delicacies to flashy luxury goods available with a few keystrokes.

The degree to which Alibaba can deliver on this promise will help determine how much the company is ultimately worth and to what extent it can open up the enormous Chinese market to both global retailers and small businesses in search of growth.”

Alibaba is bringing luxury, fast, to China’s middle class

— New York Times, on Sep 11

“As so is told by many brokerages, there’s always chance for [Chinese] retail investors to grab a bite of Alibaba’s IPO. To secure this opportunity, one has to be well-loaded and have some luck.

If you want to be Alibaba’s shareholder, most of brokerages will require $1 million as liquid asset in your account and a minimum subscription of $400,000. Still, no guarantee for a successful allocation.”

How could retail investors grab a bite of Alibaba shares

— Caixin, on Sep 12

“Though Chinese consumers have driven Alibaba’s financial success, they’ll largely be left out of the company’s stock offering.”

Chinese gripe at being left out of Alibaba’s $21 billion IPO

— Bloomberg, Sep 15

“Alibaba is a ‘hybrid’ under the context of globalization. It reveals the financial development in China and its immeasurable potentials, while at the same time exposes shortcomings of Chinese venture capitals and difficulties for companies to seek domestic financing. Alibaba is a real ‘multinational’ company in the internet age. It has been seeking best opportunities globally and grown into ‘first of the world’.”

— Global Times, May 8

Whirlpool gets approval for acquisition of Hefei Sanyo

U.S. appliance-maker Whirlpool Corporation received approval from the China Securities Regulatory Commission to acquire a 51 percent stake in the Shanghai-listed Hefei Rongshida Sanyo Electric Co. Ltd (Hefei Sanyo), according to a Hefei Sanyo statement released on Monday night.

It is the final approval required for the acquisition process.

The transaction will cost Whirlpool 3.382 billion yuan (550 million U.S. dollars), according to the statement.

China will become the world’s largest white goods market and is the focus of Whirlpool’s global layout. The acquisition will combine Whirlpool’s technologies with Hefei Sanyo’s local market expertise to grow its market share, according to the statement.

Michigan-based Whirlpool, with an annual sales revenues of more than 18 billion U.S. dollars, entered into the Chinese market in 1994 but has lagged behind local brands like Haier.