Author: sangfundu

How China Saved Apple this Year

As reported by Yahoo Finance, Apple shareholders should be very grateful that Apple struck a deal with China Mobile in January. The iPhone sales in China have allowed Apple to report results that are close to the desires on Wall Street – and it’s all because of their China connections.

iPhone sales jumped 48% in China for the three months ending June 30th. This is twice the growth of the overall market there. Apple’s total revenue in China rose 28%.

Learn about this investment and more about Apple’s role in the Chinese market here.

 

 

BMW Group Eyes China

The BMW Group has its eyes on China. China is currently BMW Group’s largest market worldwide. Here is an interesting interview that took place between the Automotive News China Managing Editor Yang Jian and Stadtler during the Beijing auto show in April. Some is quoted below and the rest can be found here.

”

How much progress have you made expanding your business in China?

We started offering financial services in China in late 2010. Now, for every three BMW cars sold in the market, one is financed by us and two are insured by us. We launched BMW Extended Warranty in China last year, and we are increasing penetration in this new business line.

Are you satisfied with your progress?

We had a good start. BMW Automotive Finance China is fully integrated within the BMW Group’s value chain by now and generates a profit. Now, it is important for us to strengthen the organization, keep developing our staff and enlarge our product portfolio to manage growth…

You worked for BMW’s auto finance unit in Germany, Thailand and Japan. What are the penetration ratios of BMW’s retail finance in other markets?

In Germany, BMW has a penetration ratio of 60 percent; in Japan, over 50 percent and in the United States, more than 70 percent. The penetration of our retail finance in China reached 30 percent; it is one of the highest among all automotive financing companies in China. But there is still much room for [expansion].

What are the things about car buyers in China that impress you most?

The customers here are definitely young and they are really keen to explore new possibilities and are open to new ideas. The strong growth in all our business lines mirrors the change of mindset among Chinese car buyers, who are becoming more sophisticated about financing and insurance.

Also, I was surprised to [discover] that there are over 500 million Internet users in China and many of them have opened Internet blogs and use WeChat (a Chinese equivalent to Twitter). I believe this massive social media community provides great possibilities for us to get the word for our products and services out there.”

 

China Expanding into Latin America

China is turning its sites on Latin America. As Gabriel Dabdoub, president of the chamber of commerce of the Santa Cruz region, said “China now acts in a different way with South American countries. It “no longer aims at only at buying raw materials, it wants to get into investing in industrialization.”

Dabdoub continued, “China is particularly attracted by industrialization projects that the country needs over the next 10 years and which cost an estimated $42 billion.”

Chinese companies have said that they are most interested in building a railway that would go from Bolivia to Brazil. Similarly, the Chinese Foreign Minister Wang Yi recently said that his country is interested in increasing investments and relationships with Latin America and the Caribbean.

Read the whole story for more information.

China and Russia Sign Natural Gas Deal

In important news for China and Russia, the two just signed a deal whereby China will by Russian natural gas worth about $400 billion. President Vladimir Putin was in China for two deals negotiating the deal and participating in an Asian security conference.

This deal allows Russia to diversity its market for gas, which until now has gone mostly to Europe. As Keun-Wook Paik, a senior research fellow at the Oxford Institute for Energy Studies said the agreement “opened the door for Russia to enter into Asia’s gas market.”

Paik continued, “Russia, and Putin, can demonstrate it’s not completely isolated because of the Ukraine crisis. Russia has demonstrated that they have a very reliable strategic partnership with China.”

Read the full story.

Internet Changing the Face of China’s Business

The financial sector is seeing major changes in China as a result of the internet. As tech hedge fund manager Richard Ji of All-Stars Investments said, “In the past, it was only the princelings that had early access to opportunities. Now ordinary people do too.”

One example offered by the Financial Times is China Renaissance with Bao Fan. His clients are tech entrepreneurs and his company is a merchant bank which invests in and provides securities services to new economy groups.

As FT said, “Indeed, companies such as Alibaba and Tencent are doing more than any edicts from Beijing to transform how finance is done in China. These technology firms are collecting money from their customers and placing it in money market funds that can command high rates because of the volume. Less than a year after it started taking deposits, one single online money market fund – Alibaba’s Yu’e Bao (“Leftover Treasure” in Chinese) now has more depositors than the total number of equity investors in China. They are also disrupting the traditional (and under-developed) bank payment systems, and killing the fees the banks have gleaned from such services.”

Read the entire article here.

France, China Solidifying Agreements

The visit between Chinese leader Xi Jinping and French President Francois Hollande has proved quite fruitful. Wednesday, they signed a number of deals worth 18 billion euros ($25 billion). The meeting marks the 50th year of full diplomatic ties between the two countries.

As Hollande said during a joint press conference, “Eighteen billion euros of contracts — that is jobs, growth and, most of all, significant prospects for the coming years.” The largest of the deals was a Chinese order for 70 Airbus planes that will be worth $10 billion. This will include 43 mid-range A320 planes and 27 long-haul A330s.

 
In addition, Airbus Helicopters and China’s Avicopter are creating a deal to jointly produce 1000 civilian helicopters over the next 20 years. While France has lagged behind many of its European neighbors in trade and investments with China, they are using this as an opportunity to catch up.

Hollande told Xi on Wednesday that Paris had a “duty… to re-balance trade between our two countries”.

For more details, see the complete story.

 

LinkedIn Comes to China

LinkedIn just launched their Chinese version, which will have to contend with strict censorship issues and other complications. China actually has the world’s largest online community with over 618 million users. Users, however, can’t use Facebook or Twitter, and they are confronted with a Great Firewall that blocks online forums or sensitive materials.

The new LinkedIn allows users to post public comments, but no group discussions are allowed. As chief executive Jeff Weiner said, “As a condition for operating in the country, the government of China imposes censorship requirements on internet platforms.” He promised that “government restrictions on content will be implemented only when and to the extent required” and that it “will be transparent about how it conducts business in China”.

He continued, “LinkedIn strongly supports freedom of expression and fundamentally disagrees with government censorship. At the same time, we also believe that LinkedIn’s absence in China would deny Chinese professionals a means to connect with others on our global platform.”

The English-language version of LinkedIn has already been available in China and has four million users. Now, the Chinese version hopes to attract more than 140 million Chinese users.

According to the China Internet Network Information Center, China’s online population (defined as anyone who has used the internet at least once in the past six months) is the largest in the entire world. Time will tell how LinkedIn does in this location.

China Adding 5 Privately Financed Banks

China’s banking regulator has recently announced that they will create as many as five privately financed banks to support economic growth. The goal is to promote “modernization of governance.”

China’s economic growth took a turn for the worst in the second quarter of last year with a low of 7.5%. In the third quarter, growth did rebound to 7.8% and the Cabinet is expecting growth for the full year of 7.6%. This would end up being the weakest performance since 1999.

The Chinese banking authorities will be supervising the new institutions, although they will be funded through private enterprise. As described in a recent article, “The new move is part of an effort by CBRC to ease to flow of foreign capital into the Chinese banking sector. According to Xinhua, the regulator will also be investigating the possibility of lowering the threshold required for foreign banks to enter the country.”

Apple and China Mobile Teaming Up

Apple and China Mobile have just teamed up and will soon announce a deal. The deal will allow Apple to get into the massive Chinese market. This includes China Mobile’s 760 million subscribers.

With the agreement, iPhone 5s and 5c models will be available at China Mobile and Apple retails stores throughout mainland China from January 17th.

As China mobile Chairman Xi Gouhua said, “We know there are many China Mobile customers and potential new customers who are anxiously awaiting the incredible combination of iPhone on China Mobile’s leading network.”

Apple chief executive Tim Cook said: “China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world’s largest network.”

David Cameron Set for Trip to China Next Week

All eyes will be on China next week as David Cameron prepares for his visit. He will be leading the UK’s largest trade delegation yet as he goes for a two day visit. While there, he will attend dinners with President Xi Jinping and Premier Li Keqiang.

London’s main goal is to reopen routes into Beijing after they were closed when Mr. Cameron met with the Dalai Lama, an event that infuriated China. He is now hoping the trip will “turn the page” after that fight.

Mr. Cameron has focused on the importance of the UK-China trade relationship for years, first promising in 2010 that he would double British trade to China by 2015 to £62bn.

Trying to enhance the trading partnership, Mr. Cameron will take 120 businesspeople with him next week. The delegation will include: Ralf Speth (chief executive of Jaguar Land Rover); George Weston (chief executive of Associated British Foods); Jorma Ollila (chairman of Royal Dutch Shell); Xavier Rolet (London Stock Exchange chief executive) and others.

As Stephen Crisp, the JLR global director of government affairs said, “It shows the UK’s long-term commitment to the country. But also the prime minister will be followed by Chinese politicians wherever he goes, and that will make sure they notice us.”