Category News of China

Overpriced and surprisingly popular over here, say expat coffee lovers

The world’s largest coffee chain, Starbucks, has come under fire in China for reportedly charging locals higher prices than in other markets, including the United States.

China Central Television (CCTV) analysts compared the price of a Starbucks Grande Latte (16 ounces) in four major cities around the world. Beijing came out as the most expensive at 27 yuan ($4.43), followed by London at 24.25 yuan, 19.98 yuan in Chicago and 14.6 yuan in Mumbai, India.

The CCTV report also pointed out that mugs sold in Starbucks in China are more expensive than in the US, even though they are made in China.

Starbucks responded to the report and said that the price gap between its drinks in China and the US is a result of different costs in the two markets and not because of unreasonable price settings.

Starbucks has more than 1,000 stores in the Chinese mainland and it keeps expanding rapidly. China is set to overtake Canada as its second-biggest market next year.

The issue became one of the most popular talking topics on Sina Weibo.

What do Shanghai expats think about the city’s coffee prices and the prices of other foreign products in the city?

Robin Poulet, from France, designer

“We all know that Starbucks coffee is overpriced, and not only in China. The problem here is the unfairness. I don’t think it is fair that Chinese customers need to pay more for their coffee when their average salaries are much lower.

It is interesting though that the Chinese customers don’t seem to mind the prices; most of the Starbucks’ shops I have been to in Shanghai are always full of local customers. Starbucks coffee has become something of a trend, a fashion statement, a sign of luxury for many fashion conscious Chinese while I know that many of my expat friends in Shanghai refuse to pay the higher prices here.

I splurge sometimes on a nice cup of coffee, not necessarily from Starbucks, and on other foreign products here, although I know they are much more expensive than they should be.”

Laura Grossman, from the UK, manager

“Coffee in Shanghai, not only from Starbucks, is very expensive bearing in mind the average salary in China. It is pretty outrageous that Chinese customers have to pay extra for a cup of coffee considering that pretty much everything else, rent, cost of living, labor, is much cheaper in China comparing with other markets like the UK.

What surprises me is that Chinese are still willing to pay that much for their coffee. The majority of Starbucks’ customers in Shanghai, Beijing, or any other Chinese big cities are locals. Considering the fact that China doesn’t really have a coffee culture, this really dazzles me every time I walk into a local Starbucks.

As for me, I often pay that little bit extra to get a good quality coffee, be it in Starbucks or any other foreign coffee shop in the city. I have got used to the fact that almost any foreign product in Shanghai is way overpriced.”

Grace Hamilton, from Canada, events planner

“This is not groundbreaking news for most of us. I’m aware, as are other Shanghai expats, that foreign products, including coffee, alcohol, food, clothes, shoes, or makeup, are more expensive in China than they are back home. I usually prefer to shop in local supermarkets, buy my veggies from a local wet market and eat out in local restaurants, as I know that everything that’s foreign in Shanghai is usually overpriced. I would also prefer to sit in a nice small independent coffee shop and enjoy my coffee there instead of a crowded Starbucks, but unfortunately Shanghai doesn’t have that many of them yet as the coffee culture here is still not that developed.

I still pay high prices for foreign products, from time to time, when I get homesick for a taste of home. As for clothes, makeup and perfumes, I shop in bulk when I go back home so that I don’t have to pay these ridiculous prices when I come back to Shanghai.

But surprisingly Starbucks is filled with Chinese customers. For them, it is a luxury item and they don’t mind paying the high prices.”

Returnees are ‘seed capital’ for startups

Wen Xuejun’s budding dream in the United States blossomed in China.

After staying in the US for 16 years, and holding an endowed chair professorship at Virginia Commonwealth University, Wen returned to China and set up Ryan Nanomedicine Co Ltd in Suzhou, East China’s Jiangsu province.

“I have an ambition to transfer my achievements in the lab into useful medical products, and I chose to realize this ambition in China, after careful consideration,”said Wen, who now serves as the company’s president.

Wen is one of dozens of people who took part in the latest 1,000 Plan Entrepreneurship Competition in Suzhou. The contest is especially designed for experienced entrepreneurs who have an overseas background.

It’s part of a project known as the One Thousand Talent Plan, which has been administered by the central government since 2008.

The program is China’s most ambitious specialist recruitment program in recent years. It aims to attract top international specialists in fields such as science and technology, finance and corporate management to start companies in China.

For decades, going overseas for further study was a relatively rare opportunity, and a highly desirable move for bright and ambitious people. Many of them put down roots abroad, obtaining permanent residence and building a life in a new country.

But studying abroad is becoming easier for ordinary people, and more graduates — as well as established professionals — are thinking of coming back to China, with its fast-growing economy that has become the world’s second largest.

For Wen, who had an established career and a family in the US, the biggest attraction of China was strong financial support.

After winning the championship, he received 10 million yuan ($1.6 million) in strategic funding from venture capital investors, as well as 300,000 yuan in prize money.

Wen’s lab in the US mastered a core technology to make collagen-coated medical catheters, which are more resistant to bacteria and cost less.

But the cost of commercializing the technology in the US would have been too high, Wen said.

The US Food and Drug Administration certification process is an expensive and complicated procedure, and hiring a team for the project would have cost at least 1 million yuan a year.

“However, I am much more familiar with the certification process in China, although the paperwork is much more time-consuming. What’s more, human resources are cheaper,”Wen said.

Poon Hak Fei had a similar experience. He joined Nanosolar in Silicon Valley in California after getting his doctorate in chemical engineering at Princeton University. He then co-founded an energy storage solution startup, but he still chose to set up his first wholly owned company in Suzhou.

“To be fair, the working and living environment is very nice in the States, as well as the pay. But I do not want to miss the market opportunities in China,”he said.

Poon set up a company to make conductive nanofilm last January, with $2.2 million in strategic investment from Northern Light Venture Capital. He said he expects the company to be profitable by the end of 2013.

“The logic is to make world-class products at a lower cost in China. Meanwhile, the local government is quite efficient, and the managers from the venture capital company are very helpful,”he added. He added that a cluster of nanotechnology companies has formed in the Yangtze River Delta region, which is another plus.

Talk about China losing its labor advantage is widespread these days. According to a recent report by the Boston Consulting Group, “Made in America, Again”, the cost advantage China has over the US is shrinking fast.

“Within five years, rising Chinese wages, higher US productivity, a weaker dollar, and other factors will virtually close the cost gap between the US and China for many goods consumed in North America,”the report said.

There are also reports of manufacturer such as vehicle producers moving back to the US from China.

But people like Poon believe that for technology-intensive sectors, China still has its advantages.

“China has very smart technicians and skilled workers. They are very willing to learn, very good at solving problems. They just lack some systematic training, but they cost half as much as their US peers,”he said.

So it’s possible that some blue-collar industries formerly outsourced to China will leave, but skill-intensive ones won’t, he added.

Government funds earmarked for universities and research-and-development centers were used over the past couple of decades to cultivate the first wave of entrepreneurs in China.

Banks, local governments with technology zones and industrial parks later became technology investors.

Today, the rise of China’s venture capital sector is supporting the entrepreneurial environment.

Media reports have said that VC investment in China peaked at $6.3 billion with 362 deals in 2011.

VCs are still keen on the Chinese market, although they’ve become more cautious because of a freeze on initial public offerings since late 2012, which blocked a common exit mechanism.

“You’ve got to go to the early stage to find good opportunities,”said Deng Feng, founder and managing director of Northern Light.

“In recent years, venture capitalists were like hunter-gatherers picking the low-hanging fruit.

“Now, we have to become peasants who labor together with the enterprises that we’ve invested in, to make a profit,”he said.

But that also means more opportunities for people with “hard”technology such as Wen and Poon to attract capital for their innovations.

“China has a solid base in its manufacturing industry. It’s very easy to combine the hard technology and undertake mass production here,”Deng said.

Deng himself is a “returnee executive”, who was born and grew up in China. He studied and worked in the US before returning to China and setting up his VC firm in 2005. Northern Light focuses on early-stage, technology-enabled business opportunities.

“Talented returnees are displaying explosive creativity and energy in China, and becoming fresh troops in leading China’s strategic emerging industries,”a central government said.

The report said that revenue generated by enterprises under the One Thousand Talent Plan has reached 63.2 billion yuan, generating profits and tax revenues of 3.5 billion yuan.

Even beyond this program, more young Chinese are returning home to find economic oppotunities.

“It is easier to achieve fast growth for companies in China due to the thriving economy. I plan to go back and start up my own business, although I am reluctant to leave the great technology atmosphere in the US,”said Wang Pu, 32, who works as an engineer for Google Inc in the US.

The Ministry of Human Resources and Social Security said 272,900 overseas students came back to China in 2012, up 46 percent from the previous year.

Although many returned students complain that it’s hard for them to find jobs, high-end talent is in great demand everywhere in China. Besides the One Thousand Talent Plan, local governments at all levels are wooing well-educated specialists.

For example, Pudong New Area in Shanghai released a five-year plan late last year under which it earmarked 300 million yuan to attract world-class talent in finance, shipping and other strategic emerging industries.

C China Boosts Female Entrepreneurship with Agriculture Bases

The women’s federation of Zhengzhou, capital city of central China’s Henan Province, has selected 17 new women’s agriculture model bases to help female college graduates start their own businesses.

According to the federation, the women can seek internships or find jobs at the 17 bases. The Zhengzhou Women’s Federation has also allocated 310,000 yuan (US$ 50,871) to provide technical and business skills training for the graduates and assigned mentors for their entrepreneurships.

A record high of 6.99 million Chinese students are leaving universities in 2013, a 2.8 percent increase year on year, to hunt for jobs at a time when employers are cutting down on recruitment, according to government figures.

The number of jobs for new hires this year has dropped about 15 percent year on year amid slowing economic growth in China, according to a Ministry of Education survey carried out among nearly 500 firms in February 2013.

In the midst of China’s toughest job market to date, women university graduates are finding that they are at a disadvantage due to various factors, including gender discrimination. According to several universities in central China’s Hunan Province, such as the Hunan Women’s University and Hunan Agricultural University, nearly half of their women graduates have not landed jobs as of press time.

A campaign to help women college graduates find employment and get involved in entrepreneurship was jointly launched by the Women’s Development Department under the All-China Women’s Federation (ACWF), the Beijing-based Hua Mulan Foundation and the China Federation of Hua Mulan at the beginning of 2013 and women’s federations across the country have been working out new ways to boost employment prospects for women graduates.

China to recruit 19000 national-level civil servants

China’s national-level government agencies, their affiliated public institutions and local branches will recruit over 19,000 civil servants in 2014, a slight decrease from 2013.

The 2014 public service exam for national-level governments will open to applications on Wednesday, the Organization Department of the Communist Party of China Central Committee and the Ministry of Human Resources and Social Security (MOHRSS) announced on Monday.

In 2013’s exam, 20,839 positions were open to application.

According to authorities, the 2014 public service selection will continue favoring candidates who have worked in grassroots communities.

Most positions in government agencies above provincial level will require two years of grassroots working experience. About 10 percent of all vacancies will be set aside for college graduates-turned-village-heads.

A civil servant role remains the most sought-after jobs in China, despite the country’s efforts to cool public service “fever,” such as encouraging young people to start their own businesses or to work in grass-root communities.

Statistics show that qualified applicants in the 2011, 2012 and 2013 annual national-level public service exams totaled 1.3 million, 1.23 million and 1.38 million respectively. They stood a slim chance of securing a job in the public service.

Officials and scholars attributed popularity of the public service exam to people favoring a stable job, worship of officialdom and benefits civil servants enjoy.

Yin Weimin, MOHRSS minister, said employment pressure contributed to the exam’s popularity, besides the public service exam provides an open and fair channel for job hunters.

Also, civil servants usually enjoy a stable job, social respect and handsome welfare, Yin said.

Ma Qingyu, professor with the Chinese Academy of Governance, said as many jobs become more competitive and less stable, a civil service job stands out for its stability and welfare benefits.

Chi Fulin, executive president of the China Institute for Reform and Development, believed Chinese people’s traditional worship for officialdom also plays a role behind the high popularity of civil service jobs.

The growth of the market economy has created considerable job opportunities, broadening the space for personal development, Chi said. However, if people still covet power and the benefits it brings along, it signals regression of society.

Ma said even today, many people regard climbing up the official ladder as the one sure path to success.

Zhang Yuan, a civil servant who was recruited by the Ministry of Finance two years ago, said, “To my farmer parents, being a civil servant is a glorious job. The day when I received recruitment notice, my father who never drinks gave me a toast.”

Additionally, scholars argued that extra benefits attached to a civil service job also makes it appealing, such as government-covered health care, subsidized housing, high pension rates, among other benefits.

Chu Jianguo, public management professor with Wuhan University, said only when the current health care and pension reforms for civil servants prevail and they enjoy the same welfare benefits as other social groups, will people’s career choices diversify.

Chi Fulin suggested stricter evaluation and exit mechanisms be established for civil servants so as to destroy the “iron rice bowl”, byword for stable jobs.

Shanghai Metro glitch delays morning rush hour crowds

THOUSANDS of commuters were delayed this morning as a passenger’s foot was stuck in the platform gap on the Dongchang Road Station of Metro Line 2.

Metro operator is handling the emergency and expects at least 30-minute delay for the operation between the Century Avenue Station and the People’s Square Station.

Crowds swelled at the People’s Square Station that is a hub for transfer to other lines.

It’s the second breakdown on Metro Line 2 in a week as a system glitch caused trains on Line 2 to drive at a slower speed during the rush hour last Wednesday morning.

Shanghai Disney Resort emerges from underground

The building of the Shanghai Disney Resort saw a milestone Thursday with the installation of the first steel column, company officials said.

This marks the completion of the majority of the foundation work and the official beginning of the vertical construction, said Howard Brown, senior vice president and project development executive of Shanghai Disney Resort.

“The construction team has been working very hard at the build site since groundbreaking and we are excited to see the progress every day,” Brown said.

Construction of the resort began on April 8, 2011.

With the majority of foundation work complete, work has shifted to substructure construction to support the construction of buildings and infrastructure, the company said.

Over 23,000 concrete piles have been installed, and the amount of structural steel needed for the overall resort could reach 72,000 metrics tons, Disney said.

The resort will initially include Shanghai Disneyland, a Magic Kingdom-style park, two themed hotels, a large retail, dining and entertainment venue, recreational facilities, a lake and parking and transportation hubs, the company said.
“This is a really exciting moment for everyone working on this project, and for Shanghai,” said Mike Crawford, general manager of Shanghai Disney Resort.

The resort is scheduled to open at the end of 2015.

China regulates TCM ingredients

China’s drug watchdog has acted to regulate the 17 markets of traditional Chinese medicine ingredients(TCM) and banned the opening of new markets.

At Wednesday’s press conference, the China Food and Drug Administration (CFDA), the Ministry of Agriculture and the Ministry of Industry and Information Technology, among eight central departments announced joint regulation on TCM ingredients.

Supervision of growing, processing and market management for medicinal herbs should be stepped up, said Li Guoqing, director of the CFDA’s department of drug and cosmetics sales supervision.

According to the CFDA, improper use of pesticides and fertilizers has caused harmful substances to remain in TCM ingredients. Dyeing and counterfeiting problems have seriously affected TCM quality and harmed public health.

According to a CFDA inspection in Anhui, Gansu, Guangdong and Sichuan provinces, 22 batches of TCM, including saffron, of nearly 400 batches examined have the dyeing problem.

The announcement prohibited planting in inappropriate areas and the use of certain pesticides, antibiotics and fertilizers, especially animal hormones, plant growth regulators and herbicides.

It also banned fumigating herbs with sulfur, adding the amount of sulfur dioxide residue should accord with national standards.

China rich club swells despite slowdown

China’s super rich only got richer despite the mixed news on the economic front with numbers up a record high, Forbes magazine said in Shanghai yesterday.

The magazine yesterday released the 2013 Forbes China Rich List, a ranking of the top 400 wealthiest Chinese.

Based on calculations as of September 26, the number of Chinese mainland residents with personal assets of more than US$1 billion rose to 168 — an increase of nearly 49 percent from last year’s 113.

The combined net worth of those on the list surged 35 percent to 3,475 billion yuan (US$570 million), or 8.7 billion yuan each on average.

For the top 100, the wealth growth was even faster, reaching a pace of 44 percent.

Though the rapid rise in the numbers of the wealthy individuals seems a little out of sync with the current slowing economy, it is a reflection of the earning power of some entrepreneurs, and the money-spinning power of some hot industries like the Internet, automobiles, entertainment and real estate, said Russell Flannery, Shanghai bureau chief of the magazine.

On top of the list is property tycoon Wang Jianlin, chairman of Dalian Wanda Group, with 86 billion yuan.

Last year’s richest man, beverage king Zong Qinghou of Hangzhou Wahaha Group, was second with 68.3 billion yuan.

Robin Li, founder of Baidu, China’s biggest search engine provider, was third on the list with 67.7 billion yuan.

The IT industry was led by Pony Ma of Tencent with 62.2 billion yuan, and Jack Ma of Alibaba with 43.4 billion yuan — both ranking in the top 10.

There are 87 new faces on the list.

Among the newcomers, the biggest heavyweight is Li Hejun of Hanergy, one of the world’s biggest solar panel makers, with 66.5 billion yuan in personal assets.

“Despite the continued economic slowdown, China’s current urbanization level can still bolster the pace of development of consumer products and services, pharmaceutical and health care, culture and entertainment as well as mobile Internet, making these industries key players in China’s wealth creation movement,” Zhou Jiangong, editor-in-chief of the Forbes magazine’s Chinese version, said.

Aircraft leasing business booms at N China port

The aircraft leasing industry at China’s largest free trade port in northern Tianjin Municipality has witnessed booming trade with strong business volume and market share, authorities said Tuesday.

The Tianjin Dongjiang Free Trade Port Zone is the base for five headquarters from home and abroad, as well as 242 SPV (special purpose vehicle) companies in the aircraft leasing business, the zone’s management committee said.

The zone started operating in 2007 and is China’s largest free-trade harbor area.

Since then, aircraft leasing companies registered in the zone have contracted out 246 jets, about 90 percent of the domestic market share, with business worth 10.6 billion U.S. dollars.

The committee said the development of the sector was due to preferential policies in the zone. In August 2012, China announced a pilot scheme in the zone to offer tax rebates on exports of financial leasing companies.

116 medics involved in Dumex milk bribe scandal

SOME 116 medical staff from 85 institutes in north China’s Tianjin Municipality were involved in a bribery scandal with French infant formula producer Dumex, the city government said yesterday.

From 2011, staff collected personal details of newborn babies for the company, gave presentations, distributed publicity materials and offered free introductory cans of Dumex.

In return, they received kickbacks from Dumex, part of French food group Danone, an investigation found.

Staff involved every month received sums ranging from hundreds to tens of thousands of yuan.

The cash has been recovered, the government announced on its official Weibo.com micorblog.

Thirteen people have either been sacked, had operation licences revoked or been transferred to other positions.

And another six people, who had supervisory duties, received administrative punishments, the statement said.

Tianjin government did not give details on the remaining 97 staff involved in the scandal.

It said three names published in earlier media reports — Li Yue, Wang Zi and Lu Xuezhi — were Dumex employees, rather than hospital workers.

Dumex China launched an internal investigation after media reports in September.

Over the weekend, it said the investigation has now been “substantially completed.”

Dumex blamed the scandal on shortcomings in a company-sponsored mother-and-child health education program.

These led to “practices that contradicted the purpose of the program, which violated companywide policies,” said Dumex.
In some cases, the program was not appropriately managed, said the company.

Dumex said the program has been suspended, new management would be appointed, and training carried out.

Last month, a China Central Television program claimed doctors and nurses in Tianjin were feeding babies with Dumex in return for cash payments.

Babies developed a taste for Dumex and rejected their mothers’ milk, it was claimed.

It also gave Dumex an advantage in the fiercely competition formula milk market, said the report.

Last week CCTV claimed that the bribery scandal extended to other cities, including Beijing.

In 2011, the former Ministry of Health ruled that producers were not allowed to promote formula to babies up to six months old, unless mothers suffered from serious conditions.

In 2008, the Supreme People’s Court and Supreme People’s Procuratorate said that medical staff using their positions to make money would be considered to be taking bribes.