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Baofeng establishes new company to expand culture business

Baofeng Group Co Ltd, a Beijing-based internet entertainment and video company, announced on Thursday that it has established Baofeng New Culture Co Ltd to expand its business in culture, tourism and virtual reality, or VR.

Baofeng New culture will focus on intellectual property, or IP, investment, project incubation and operations in the fields of culture and tourism.

Working with Chongqing municipal government, the company will launch a 200-million-yuan ($29 million) fund, which will be invested in digital industry, VR content and innovation, VR experience centers and related projects.

Feng Xin, chief executive officer of Baofeng Group, said he took a rosy view of future integration between VR and the culture industry.

“In the wave of high-tech, the cultural upgrading will create richer forms of cultural tourism. And VR will play a key role in the development of cultural tourism,” Feng said.

The new company will integrate artificial intelligence, the internet of things, big data, cloud computing and other technologies to develop local cultural and historical IP.

Connecting tourists, brand owners and local tourist sites, the company aims to build a cultural geographic digital system. And the online platforms’ experiences will boost offline consumption.

In 2016, the VR industry is moving forward rapidly; tech giants, including Google, Facebook, HTC, Samsung, Huawei and Xiaomi all cultivated VR hardware.

According to industry consultancy iResearch Consulting Group, China’s VR market revenues are expected to top 5.6 billion yuan last year, and will reach 55 billion yuan by 2020.

In 2016, Baofeng Group’s revenue in the VR sector reached around 20 million yuan, Feng said at the end of December.

Hon Hai takes hit from slowing iPhone sales

Hon Hai Precision Industry Co, the manufacturer of Apple Inc’s iPhones, posted its first annual revenue decline since 1991, as it wrestled with a saturating global smartphone market.

The Taiwan-based firm said on Tuesday it recorded NT$4.36 trillion ($137 billion) in revenue in 2016, down 2.81 percent from a year earlier, after its biggest client Apple saw slowing iPhones sales.

Founded in 1974 by business tycoon Terry Gou, Hon Hai, also known as Foxconn Technology Group, is the world’s largest contract manufacturer of consumer electronics. Apple accounts for half of its business.

James Yan, research director at Counterpoint Technology Market Research, said smartphone vendors and their supply chain partners are under big pressure as the global smartphone market slows down.

“Hon Hai’s heavy reliance on Apple makes it extremely vulnerable to a single client’s sales performance,” Yan said.

Terry Gou, founder and chairman of Foxconn Technology Group.

In 2016, the global smartphone market was expected to grow by 0.6 percent year-on-year, far lower than the 10.4 percent growth rate in 2015, research firm International Data Corp estimated.

Hon Hai’s decline came after Apple reported in October its first annual revenue dip since 2001. The US tech giant finds it increasingly hard to resonate with consumers in China, the world’s largest smartphone arena where local players Huawei Technologies Co and Oppo Electronics Corp are gaining ground.

Nicole Peng, research director at Shanghai-based consultancy Canalys, said although Chinese brands such as Huawei and Oppo have also turned to Hon Hai to assemble smartphones, they only account for a small slice of the latter’s business.

“There is an urgent need for Hon Hai to diversify its revenue sources. We expect shipments of iPhones to decline by 13 percent in 2016,” Peng said.

Although Apple will see a stronger sales momentum this year, with a shipment of 211.7 million units of iPhones, it will still be far less than the 231.5 million units in 2015, Canalys forecast.

But Xiang Ligang, a smartphone expert and CEO of the telecoms industry website cctime.com, noticed a bright spot in Hon Hai’s financial report.

“In the quarter ended in December, sales were up 9.76 percent year-on-year, signaling big demand for the iPhone 7 Plus,” Xiang said.

“It is too early to predict how Hon Hai and Apple will perform in 2017, because this year marks the 10th anniversary of the iPhone and Apple may unveil a cutting-edge product to revive its sales,” he added.

China creates over 13 million new jobs in 2016: official

China created over 13 million new jobs in urban areas in 2016 as part of an effort to stabilize the slowing economy. The country has seen over 1.2 million jobs created for three consecutive years, from 2014 to 2016, according to Economic Information Daily.

Despite the economic slowdown, the Chinese government has managed to keep a low urban registered unemployment rate, partially through employment services and support for college graduates, as well as for workers laid off from industries with excess capacity.

About 5.11 million workers in urban areas were re-employed from January to November 2016, or 102.2 percent of the goal set for the year. What’s more, 1.54 million people categorized as difficult to employ found jobs, accounting for 128.3 percent of the annual target, according to reports.

Employment will remain a top priority in the next year due to lingering pressures. Experts believe 130 million new jobs will be created in 2017, as the industrial structure will be optimized and the economy stabilized. Reports indicate that approximately 25 million new jobs will be created during each year of the 13th Five-Year Plan period, among which 10 million are set aside for registered workers who have been laid off, 1.5 million are for college graduates and 3 million are for surplus agricultural laborers.

Employment will be the top priority of the Ministry of Human Resources and Social Security (MOHRSS), according to Yin Weimin, MOHRSS minister. A total of 7.95 million college students are expected to graduate in 2017, according to China’s Ministry of Education.

Chen Baosheng, the minister of Education, said the numbers of college students who secured employment or started their own businesses after graduation has increased in the last three years. A report by Renmin University showed that 89.8 percent of college students have considered starting their own businesses, and 18.2 percent indicate firm plans to do so. The Ministry of Education called for improved policies that encourage college students to become entrepreneurs.

About 1.8 million jobs in the steel, coal and mining industries may have been lost by cutting overcapacity, which is the biggest employment pressure in five years, according to MOHRSS. The ministry has reportedly issued policies redistributing laborers in more than 20 provinces.

Online car sales companies merge

Two of China’s online second-hand car trading platforms have announced plans to merge.

Companies clcw.com.cn and kx.cn agreed to work together to promote a customer-to-business model, known as C2B, to tackle the difficulty of individuals selling cars.

Clcw.com.cn has established nine branches across the country and accumulated more than 10,000 car dealers on its platform. Meanwhile, kx.cn has a strong brand influence and regional operation management.

Clcw.com has witnessed rapid growth since it was established in 2015. With 16,000 vehicles sold via its website and app last year, founder Xie Lei said its annual transactions have reached a value of 640 million yuan ($92.4 million).

Kaixin is the first online platform to adopt a C2B model to facilitate the selling of used cars from individuals to used-car dealers. With nine years of development, Kaixin became an industry giant and claims 8.8 percent of the used car dealing market in Shanghai.

“C2B can help customers sell cars at a reasonable price. It is the only model that suits China’s actual conditions and caters to Chinese car-buyers’ need,” Xie said.

Xie said the newly-merged company will establish four operation centers nationwide, and more than 300 offline stores that provide related services in finance, insurance and ancillary products selling.

The company aims to reach a turnover of 12 billion yuan with 200,000 cars sold on its platform in 2017.

Services sector expands fastest in 17 months

China’s services sector expanded at the quickest pace in 17 months in December as new orders increased rapidly in a further sign that the economy was stabilizing, a private survey showed yesterday.

The Caixin General Services Purchasing Managers’ Index edged up to 53.4 last month from 53.1 in November, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media.

It was the highest reading since July 2015 as demand in the sector picked up.

A sub index showed growth in new work at services companies quickened to a 17-month record, according to the survey.

The fast growth in the services sector echoed an increase in manufacturing activities as the Caixin General Manufacturing PMI, released on Wednesday, rose to a four-year high of 51.9 points.

“Manufacturing and services both expanded in December, showing that recovery in the economy continued,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group. “The Chinese economy performed better in the fourth quarter than in the previous three quarters” adding that he was certain the government’s full year growth target of between 6.5 and 7 percent will be reached.

In the first three quarters, China’s GDP grew 6.7 percent, within the official target of 6.5 to 7 percent. But it was 0.2 percentage points lower than the annual growth in 2015.

Services made up 58.5 percent of GDP growth, up 3.4 percentage points from a year earlier.

The Caixin PMIs, slanted toward private and export-oriented companies, indicated the private sector expanded in December and outperformed China’s official PMI.

China’s official PMI, released on Sunday by the National Bureau of Statistics and the China Federation of Logistics and Purchasing and focusing on state-owned manufacturers, dipped to 51.4 in December from November’s 51.7. But PMI stayed in the expansion zone for the fifth straight month with the reading above 50.

In the services sector, the official non-manufacturing PMI dipped to 54.5 from November’s 54.7 points.

Chinese couriers to collect 500 bln yuan in 2017

China’s burgeoning courier service sector is predicted to generate 500 billion yuan (72 billion U.S. dollars) in business revenue this year, a postal official said Thursday.

Over 40 billion express parcels will be sent in 2017, said Ma Junsheng, head of State Post Bureau (SPB).

In 2016, 31.3 billion parcels were sent, and the service created over 200,000 jobs, data from SPB showed.

The sector collected 400 billion yuan of business revenue last year, compared to just shy of 30 billion yuan in 2006, Ma said, calling the sector a “dark horse” of the economy.

China’s courier market has grown from a handful of small businesses into a vibrant market contested by industry heavyweights, expanding 50 percent annually over the past six years, he said.

Leading delivery service provider ZTO Express became an NYSE-listed company in October 2016, the biggest U.S. IPO by a Chinese company after e-commerce giant Alibaba.

The debut came after the domestic listing of Yto Express, while competitors including SF Express, STO Express and Yunda Express expect to follow suit this year in a rush to buy more land, facilities, equipment and trucks.

The couriers’ success is replicable and adaptable for the global market, Ma said.

Last year, the country’s couriers helped deliver products bought online worth over 4 trillion yuan, or 12.5 percent of total retail sales of consumer goods, he said.

Still, China wants couriers to better serve its manufacturing industry and, to this end, it has launched 322 pilot coordination projects to accommodate an annual industrial output of over 120 billion yuan.

On the agriculture front, courier services have helped expand sales channels for farm products, and facilitated the sale of products worth over 100 billion yuan in 2016 and facilitated an on-going poverty-relief campaign.

The sector is well-positioned for the task, as courier services now cover 80 percent of towns and villages, and the country plans to extend this network by 2020, according to the SPB.

The increasing heft of the sector reflects China’s solid progress in re-balancing its economic structure from manufacturing and investment to services and consumption.

Delivery and postal services are leading the growth in the service sector in China, home to the world’s fastest growing postal market, Ma said earlier.

The country aims to deliver 50 billion express parcels annually, generating 800 billion yuan in business revenue, by 2020.

December manufacturing activities expand to four-year high: private survey

China’s manufacturing sector continued to expand with the purchasing managers’ index hitting a 47-month high in December, a private survey showed Tuesday.

Caixin General China Manufacturing Purchasing Managers’ Index (PMI), a private gauge of China’s manufacturing activity, came in at 51.9 in December, up from 50.9 in November, according to a survey conducted by financial information service provider Markit and sponsored by Caixin Media Co. Ltd.

This was the index’s biggest rise since January 2013, and production grew at the fastest pace in nearly six years thanks to an increase in total new work.

Official manufacturing PMI released on Sunday stood at 51.4 in December, lower than 51.7 in November and staying above the 50-point boom-bust line for the fifth straight month.

China’s car sales growth to slow in 2017

Automobile sales are expected to slow next year after a boom in 2016, the Ministry of Commerce (MOC) said Thursday.

Growth in auto sales in 2017 could slow to an annual 2 percent to 6 percent, said MOC spokesperson Shen Danyang, citing industry estimates.

About 25 million cars were sold in China in the first 11 months this year, up 14.1 percent year on year thanks to a preferential car purchase taxation policy and other government measures.

Earlier this month, the Ministry of Finance continued its preferential car purchase taxation policy but cut the tax reduction ratio for 2017.

A high comparison base and a discounted preferential taxation policy will drag down auto sales growth next year, Shen said.

China’s VR industry tumbles after explosive growth

When Fang Wenxin founded a virtual reality (VR) firm in 2015, he never expected the industry would go bust so soon.

The boom in China’s VR industry following Facebook’s U.S.$2-billion buyout of Oculus, a U.S. producer of VR gadgets and computer games, in 2014 has declined, with about 90 percent of start-ups in the domestic market declaring bankruptcy.

“There were about 200 to 300 firms engaged in producing VR helmets in 2015, but now no more than 10 companies remain functioning,” Fang said.

During the past few months, domestic VR companies, such as Storm Magic Mirror, Miido and AlfaReal, started to downsize organizations or delay payments of employee salaries due to a diminution in venture capital.

According to the latest report issued by iiMedia Research, a third party data collector and analyst of technological digital platforms, the supply of high-end smart glasses in the domestic market has failed to lure consumers, with more than 70 percent of respondents among smart cell phone users expressing no willingness to buy one.

Taken up by gigantic tech firms, such as HTC, Facebook and Sony, the market for VR hardware has left slim chances for smaller manufacturers to slot in, so that the VR businesses of domestic manufacturers focus mostly on content production.

However, despite the increasing involvement of VR start-ups, cheap copycats have eaten up the market, blocking the channels necessary for high-end innovation to reach customers.

The slump in the VR market during the second half of 2016 in China is probably the result of deficient industrial innovations, said Wu Limei, an analyst of the iiMedia Research.

But the recent fall of the VR industry may be less ominous than a sign of industrial recession when the frenetic flows of capitals have cooled down.

Zhao Ziming, an analyst from Analysys, Ltd., an agent of data collection and analysis, said the industry will be reshuffled by the entries of big companies, like BAT and NetEase, following the bankruptcies of small companies with broken capital chains. The threshold will be elevated and the money will be spent more reasonably.

Investment in the Chinese VR industry soared to 270 million yuan (U.S.$38.9 million) in 2014, a robust rise followed by 2.4 billion yuan in 2015 and 1.54 billion yuan in the first half of 2016.

China’s industrial profit growth accelerates to 14.5% in November

Profits of China’s major industrial firms increased 14.5 percent year on year in November, up from 9.8 percent registered in October, official data showed Tuesday.

Profits of industrial companies with annual revenues of more than 20 million yuan (about 2.87 million U.S. dollars) totaled 774.57 billion yuan last month, the National Bureau of Statistics said.

In the first 11 months of the year, industrial profits expanded 9.4 percent year on year to 6.03 trillion yuan, faster than the 8.6 percent rise for the first ten months, the NBS said.

NBS statistician He Ping said the sharp growth in November was a result of acceleration in the growth of both industrial production and sales, a significant rise in producer prices and the strong performance of electronics, special equipment manufacturing and oil refining sectors.

China’s producer price index (PPI), which measures costs for goods at the factory gate, continued its growth, rising by a five-year high of 3.3 percent year on year in November.