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Chinese office buildings draw international investors

International investors have a growing appetite for office buildings in China’s key cities like Beijing and Shanghai due to bullish demand, a survey from international real estate service provider CBRE showed on Thursday.

About 35 percent of investors surveyed showed their interest in office buildings in the country’s first tier cities this year, compared with 20 percent in 2015. A total of 25 percent showed their interest in the residential sector, 25 percent in the logistics sector and 12 percent in the retail sector.

“Though international investors have more competition from domestic ones, China remains one of the most popular investment destinations in the Asia-Pacific region, following Australia and Japan,” said Gran Ji, executive director of capital markets for northern China at CBRE Group,

Meanwhile, with public awareness of environmental protection increasing and green building initiatives on a clear government agenda, the green building concept is increasingly gaining the spotlight in China’s commercial building market.

In the 10 select cities CBRE observed, rental premiums of LEED-certified Grade A office space in most cities is in the range of 10-30 percent, compared to non LEED-certified samples. LEED-certified office projects enjoyed higher average rental performance and were in a better position in a weak downward market.

Tencent opens up big data platform to boost sharing economy

Tencent Holdings Ltd has announced that it will fully open up its big data platform and machine learning technology in a move to build a “sharing economy” based on cloud services.

Enterprises will be able to use a set of big data analysis tools developed by Tencent, helping them gain a better understanding of their clients and improve their products.

The Shenzhen-based internet giant, which owns instant messaging tools QQ and WeChat, has years of experiences storing and analyzing huge amounts of data.

The opening of its core technologies is part of Tencent’s efforts to develop cloud services, an area which many other big companies including Alibaba and Baidu are also tapping into.

“Development of a sharing economy is closely related to cloud services” said Ma Huateng, chairman of Tencent. “Like transportation, accommodation and many other areas, cloud services are also a kind of sharing economy.”

He said cloud computing has become one of the key areas Tencent focuses on and the company is dedicated to opening its IT resources and technological capabilities to outsiders.

“In the past, enterprises were only users of internet technology. Now, as they engage themselves in the cloud, they are becoming a part of the internet ecosystem,” Ma said at the 2016 Tencent Cloud Summit held in Shenzhen this week.

Cloud technology has achieved greater importance in recent years as more and more Chinese enterprises integrate themselves deeper with the internet. However, it remains difficult for companies, especially smaller ones, to build their own data center because it involves large capital investment and a waste of resources, said Dowson Tong, senior executive vice-president of Tencent.

Cloud services help enterprises get access to more resources while reducing their operating costs, Tong said.

According to the 2016 Internet Trends report, services provided by Tencent are the most commonly used by Chinese internet users. More than 50 percent of their time on the internet is spent on Tencent services.

“We are not offering cloud services as a separate business. Instead, it is a part of Tencent’s entire strategy. Enterprises will be able to get access to all Tencent platforms by using its cloud services,” Ma said.

Joe Weinman, a leading cloud computing strategist, said Tencent has a good background in offering cloud services. The company owns a huge amount of consumer data and knows what consumers need. This will enable it to do better in user experience and improve availability of its products, he said.

China service sector growth expands slightly in June

Business activity in China’s service sector expanded slightly in June, a private survey showed Tuesday.

The Caixin China General Services PMI (Purchasing Managers’ Index) came in at 52.7 in June, up from 51.2 in May, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co. Ltd.

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

China’s manufacturing sector remains the ‘most competitive’ for now, report says

China remains the most competitive country in the manufacturing sector, but it will be replaced by the U.S. by 2020 because of shortcomings in human resources, innovation, resources policies and infrastructure, a report released on Saturday noted.

Considering its relatively low labor costs and strong infrastructure policy, China was ranked No.1 in manufacturing competitiveness, according to a global survey of more than 500 companies, Guangzhou-based newspaper 21st Century Business Herald reported during the weekend.

The survey was part of a report released jointly by Chinese think tank ChinaInfo100 and multinational professional services provider Deloitte.

The report said China has established an ecosystem to encourage innovation, partially because research and development spending has increased significantly in recent years, according to the media report.

In some areas, China has already surpassed the U.S. — for example, the Tianhe-2, a supercomputer developed by China’s National University of Defense Technology, is the world’s fastest supercomputer, it said.

However, global economic growth will continue to slow in 2016, which will depress industrial output. China is lagging behind the U.S. in several aspects such as human resources, innovation and the legal environment, the report said.

By 2020, the U.S. will become the most competitive country in manufacturing, followed by China, the report predicted. Germany will remain No.3.

In China, labor costs have increased about 150 percent in the past decade, which has become a major concern for manufacturers, the report said, adding China’s aging society also worries many investors.

Chinese company Hisense reaps benefits from Euro 2016 sponsorship

Chinese electronics giant Hisense appears to have gotten its money’s worth out of its sponsorship of the Euro 2016 soccer championship.

Hisense signed as the 10th global partner for the UEFA EURO 2016 finals on Jan. 14, joining top brands Adidas, Carlsberg, Coca-Cola, Continental, Hyundai-Kia, McDonald’s, Orange, SOCAR and Turkish Airlines to complete the tournament’s sponsorship program.

Hisense kept its sponsorship fee a secret, while reports said it spent 370 million yuan (about 50 million euros) for its debut in the top European soccer event, a sum amounting to about 25 percent of last year’s net profit.

As the first-ever Chinese company to endorse the 56-year-old tournament, Hisense announced that its Euro 2016 exposure in China alone meant that returns exceed its investment after only the group stage.

“It has been the most successful brand marketing in the company’s 47 years of history,” said the company’s brand director Zhu Shuqin.

Hisense said its logo appeared not only on the LED screen on site in the 36 group matches, but also on the tickets and the interview backdrops.

“Hisense’s logo was caught by the cameras during the matches and seen by millions of TV viewers all over the world,” Zhu said.

In China, Hisense’s logo exposure through the live broadcast of China’s Central Television amounts to some 300 million yuan worth of advertisement on TV, Zhu said, adding that 35 million Chinese fans followed the tournament and watched the matches on TV.

Pleased with the results of their sponsorship at Euro 2016, Zhu revealed that the company may go on to sponsor the 2018 Russia World Cup while its endorsement for other UEFA national team competitions will run until the end of 2017. The competitions include the European Qualifiers for the 2018 FIFA World Cup, UEFA Futsal Euro 2016, the 2017 UEFA European U-21 Championship and UEFA Women’s Euro 2017.

European soccer’s ruling body UEFA also seems happy to have Hisense on board.

Guy-Laurent Epstein, the marketing director of UEFA Events SA, told Xinhua that the sponsorship “is something between football and the Chinese brand. As we provide a great commercial platform, I am sure that this sponsorship will give Hisense a great opportunity to grow their brand in Europe and internationally.”

“We look forward to working closely together with them in a mutually beneficial partnership that will also further promote the best of European football to millions of fans in China,” he added.

While Hisense added the first-ever Chinese flavor to the European Championship, other Chinese enterprises are also seeing potentially enormous returns from sponsoring high profile sports events.

In December last year, Alibaba E-Auto, an “internet car” brand owned by Chinese e-commerce giant Alibaba Group, reached an eight-year presenting partnership of the Club World Cup with soccer’s world governing body FIFA.

Alibaba thus became the first Chinese company to have presenting partnership with the FIFA tournament.

Months later, Chinese real estate and entertainment giant Wanda Group inked a partnership deal with FIFA which runs through the 2030 World Cup. The contract grants Wanda the highest level of sponsorship rights in the next four FIFA World Cup editions.

But Wanda’s ambition did not stop at soccer. It also ventured into basketball, becoming the exclusive partner of the Federation of International Basketball (FIBA) for their worldwide sponsorship, including the sale of licensing rights and global marketing.

“It was not a mindless splurge. We are buying our way out because the key international sports industry resources, including the marketing rights and broadcast rights can only be redistributed in this way,” said Wanda chairman Wang Jianlin. Last year, Wanda nailed a 20 percent stake in Madrid Atletico at 45 million euros, merged with World Triathlon Corp. (WTC) for 585 million euros, and acquired Swiss sports marketing group Infront Sports & Media for 1.05 billion euros.

Suning takeover of Inter Milan to enhance growth of Chinese soccer

The advent of China’s retail giant Suning Group as the majority shareholder of Inter Milan offers an opportunity for China to enhance its national soccer project, according to the management of the Italian club.

“Suning has already agreed to build its second academy in China, because now we only have one in Italy which is one of the best in Europe,” Inter president Erick Thohir said. “It is interesting to build a second project in China, which hopefully can be done by March or April next year,” he added.

The new academy, Thohir explained to Xinhua, will help talents from China become high-quality soccer players to be able to play in the Chinese national team and also in other parts of the world. “I really believe that China has the potential with its 1.3 billion population,” he stressed.

A news conference was held in Italy’s business capital Milan on Tuesday to officially unveil the Chinese shareholder to the local press.

Suning Sports, a newly established company under Suning Group, on June 6 announced the deal for 270 million euros (nearly 300 million U.S. dollars) sealing the acquisition of 68.55 percent stake of Inter Milan.

Indonesian businessman Thohir, who had previously owned the majority stake in the club, was staying on as the president with a 31.05 percent stake.

Suning, Thohir told Xinhua, will further help the financial restructuring of Inter Milan after “the debt that we had previously has being going down in the last two years, while revenues have been going up.”

Thohir explained to Chinese media on the sidelines of Tuesday’s news conference that a key reason why he chose a Chinese shareholder was because he was looking for a partner “with an entrepreneurial background, but who also loves soccer.”

He noted that Suning has already proved to be able to build a good quality soccer, when it bought Jiangsu Sainty last December and poured in more than 100 million euros (over 110 million U.S. dollars) during the winter transfer window to create a star-studded squad in the Chinese Super League (CSL).

“Suning chairman Zhang Jindong believes in the project, and this is a new era that we can take off with the new partnership,” Thohir pointed out.

The second reason why Thohir chose China was that “from 264 million fans, we have 194 million in Asia Pacific, and China is more than 100 million. It is a reality that we have to be there.”

Inter Milan, Thohir went on saying, is the number one Serie A team in China in terms of fan number. Yet, “the philosophy of Inter Milan is not only business” so that “to be present in China also means be open to work with China to develop a healthy soccer environment in China,” he added.

Inter Milan vice president Javier Zanetti also defined the entry of the Chinese shareholder as a great opportunity. “We have now to work all together in an aligned way to build a competitive team able to return to the highest level,” he told Xinhua.

Founded in 1908, Inter Milan has won 18 domestic titles and three UEFA Champions League trophies.

Zanetti told journalists he was particularly hit by the enthusiasm of Inter Milan fans during his trips to China.

“China’s football is developing and becoming increasingly important, and the relation with our club will further contribute to the growth of a sector with great potential,” he highlighted.

China’s local consumer brands gain more market share

Workers pack dog food at a factory in Qingdao, Shandong province. The growth rate in the value of fast-moving consumer goods in China was 3.5 percent in 2015.

The growth rate in the value of fast-moving consumer goods in China reached a five-year low of 3.5 percent in 2015, according to an industry report.

The fifth annual China Shopper Report, issued by Bain & Company and Kantar Worldpanel, suggests that the rise of the service sector in China and its higher paying jobs has helped boost growth among brands in premium categories, such as yogurt and pet food. It also says that foreign brands are continuing to lose battles to local brands in this sector.

Brands in categories that traditionally cater to blue-collar workers are suffering as many manufacturing jobs move to lower-cost countries. For example, in 2015, sales of instant noodles declined by 12.5 percent and beer by 3.6 percent.

Last year, local companies’ sales grew by nearly 8 percent and continue to gain share over their foreign rivals. Their biggest advance occurred in skin care, baby diapers, hair conditioners, toothpaste and shampoo.

Foreign companies generated their greatest share increase in fabric softener, infant formula, instant noodles and beer. However, foreign brands overall declined by 1.4 percent in 2015.

“Local companies have wider distribution networks particularly in lower-tier cities where growth is higher. They can make faster decisions and are more adaptable in the digital environment than their foreign peers, achieving a higher growth rate,” said Jason Yu, general manager of Kantar Worldpanel China.

For example, Shanghai Jahwa uses its knowledge of Chinese herbal beauty therapy to win over consumers.

The country’s retail landscape has also evolved with smaller formats continuing to gain momentum. Notably, convenience stores generated 13.2 percent growth in value last year, catering to cash-rich and time-poor urban consumers.

Online shopping continues to define the modern retail environment in China. Over the last four years, e-commerce in China has grown at an annual rate of about 37 percent and generated revenue of nearly 4 trillion yuan. The report has found that baby-related categories and skin care continue to dominate the e-commerce market.

Deloitte to open more offices around China

Deloitte opens more offices around China to seek greater share of lucrative market

Deloitte, a global audit and advisory firm, will continue to set up new offices and build new partnerships with companies in China’s central and western regions as the country is undergoing an industrial upgrading boom, said Gary Coleman, Deloitte’s global industry and senior client advisor, on Monday.

Eager to enhance its earning ability, the company set up two new offices in Changsha and Hefei in the first half of this year, after establishing offices in Wuhan, Chengdu and Chongqing over the past few years.

Coleman said China’s fast growing 4G network would build a solid foundation for its manufacturers. This in turn would benefit greener, more efficient and sustainable development.

Indeed, manufacturing will be a key factor in determining competitiveness. Many countries have identified digital, intelligent and green sectors in the drive to develop high-end manufacturing.

China has been implementing a plan titled “Made in China 2025”, aiming to enhance the country’s manufacturing capacity under the guidance of technological progress, knowledge-based transformation and green development. This will help the Chinese economy grow at a faster speed.

“Connected industrial operations will consume less energy, since they are organized to optimize machine usage, labor, and product and service delivery,” Coleman said. “Large Chinese manufacturers are already in an upgrading boom, while small and medium-sized companies also have the chance to benefit from this transformation.”

He said that to achieve these goals, advanced software and internet applications in the field of big data analysis have to be established so that all parts of the value chain can communicate with each other.

Deloitte will deploy more resources in China to meet fast-growing demand for these services, focusing on the country’s central and southwestern regions.

Supported by more than 13,000 employees, the financial and industrial service provider currently has 24 offices in China including Beijing, Guangzhou, Shanghai and Shenzhen.

“Such a major shift in manufacturing philosophy will affect global industry for years to come, and China will not be immune to this development,” said He Jingtong, a professor specialized in modern manufacturing management at Tianjin’s Nankai University.

Geely opts to sell interests in micro carmaker

ZD’s fully-electric two-seaters roll off the production line in the Lanzhou plant in Gansu province, Jan 11, 2015.

Geely Automobile Holding has opted to sell its interests in micro-sized electric carmaker Zhidou, to enable the company to operate as an independent entity as a prerequisite to get listed in the nation’s new energy vehicle catalog.

The Hongkong-listed Geely Automobile said in the news release on Friday that getting its products listed under the brand ZD is imperative for Zhidou’s future, and will allow it to compete independently in the market. Under current regulations and conditions, the product can only be referred to as Geely ZD.

Geely Automobile announced a framework agreement on June 22 to sell part or all of its 45 percent interests held by two subsidiaries, Zhejiang Jirun Automobile Co and Shanghai Maple Guorun Automobile Co, in Ninghai Zhidou Electric Vehicles Co to a China-listed company. Detailed terms of the agreement have yet to be determined.

Jia Xinguang, senior analyst with the China Automobile Dealers Association, said: “The move could be a strategic adjustment made when Geely found the mini-sized electric car project might not be in line with its long-term plan. Another possibility is that Zhidou is growing stronger and seeking independence.”

Zhejiang Geely Holding Group Co planned for new-energy vehicles to make up 90 percent of its sales by 2020, and about two-thirds of Geely’s new-energy vehicle sales will come from plug-in hybrids and gasoline-electric hybrids by the end of the decade, with the rest coming from battery-electric vehicles.

Geely Automobile joined with Taizhou Xindayang Group Co to establish Xindayang Electric Vehicle Technology Co in January 2015 to manufacture ZD-branded electric cars in Lanzhou, capital of Gansu province in northwestern China.

Local media reports cited industrial data which indicated that the ZD brand failed to close a single deal in the first four months of this year, after registering 25,300-unit sales in 2015.

The ZD brand was expected to achieve an annual sales volume of at least 500,000 by 2020, 20 times that of ZD’s 2015 sales, according to Hu Hesong, a partner in the venture capital fund GSR Ventures, one of the investors in Xindayang EV.

There are now two mini-sized two-seater models being offered by the ZD brand, the D1 and D2, with prices ranging from around 30,000 to 50,000 yuan ($4,600 -$7,700) taking national and local subsidies into consideration. The ZD car models are eligible for an NEV plate in cities where gasoline car sales and usage are restricted.

ZD brand’s annual production capacity totaled 300,000 units, a figure that also accounts for the integration of Xindayang Electric Vehicle Technology Co and the earlier establishing of Shandong Xindayang, according to the company.

Xindayang EV took over Geely Automobile’s Lanzhou plant after a 300 million yuan-plus upgrade in 2014, with the aim of obtaining a permit to manufacture passenger vehicles.

Huawei ‘plans to create proprietary OS’ to lower reliance on Android

Telecommunications giant Huawei Technologies Co is undertaking a confidential project to develop its own operating system (OS), domestic news portal sina.com reported on Thursday, a move expert said aims to reduce its reliance on Google’s Android OS and capture overseas markets.

Technology news sites have reported rumors circulating in the industry that Google might strengthen its control of the Android system over third-party devices or restrict original equipment manufacturers’ (OEMs’) use of functions and supporting services within the Android system.

Android OS has been a free, open-source software for years, and Google allows OEMs to customize and adjust its functions as they wish.

If Google is changing its policy on Android, then Huawei should come up with an alternative to avoid being plunged into an embarrassing situation, the sina.com report noted.

That’s a major reason for Huawei’s reported pursuit of its own OS, and it also explains why South Korea-based Samsung has released a mobile OS called Tizen.

Also, Huawei is pursuing expansion in overseas markets, especially in the US and Europe, where it faces strong competitors like Apple and Samsung in the mobile industry, expert said.

“Huawei’s increasing revenues give it the capital to develop a unique OS that is resembles neither Android nor [Apple’s] iOS, while meeting the demand of Western consumers,” Wang Yanhui, secretary-general of the Mobile China Alliance, told the Global Times on Thursday.

In line with the company’s development goals, former Apple creative director, Abigail Brody was hired by Huawei in 2015 as the chief user experience designer.

Huawei didn’t respond to an interview request from the Global Times as of press time.

Media reports indicate that the OS project is still in its infancy, with a team in Scandinavia that includes former Nokia engineers.

Although innovative strides made by Huawei make the project’s future a bright one, Wang also warned that it will take time to develop an entirely new OS.

“Any mobile OS relies heavily on its ecosystem. Currently, almost all the mobile applications have two versions – Android and iOS. But are they willing to develop a new and unique version for Huawei?” Wang said.

“So Huawei will opt to apply the OS first on its smartwatches and bands, and then gradually to other consumer electronic products like set-top boxes and finally to its mobile,” Wang noted.

In 2015, Huawei’s research and development spending increased 46.1 percent year-on-year to 59.6 billion yuan ($9.2 billion), accounting for 15 percent of its sales revenue, its financial statements show.

The company also leads in terms of international corporate patent filings with a record of 3,898 filings in 2015, topping the global list for the second consecutive year, according to the Xinhua News Agency, which cited the World Intellectual Property Organization.