Author: sangfundu

Singles Day Festival Brings In Millions

This week, China saw its biggest online shopping spree of the year as part of the “Singles Day” festival. This interesting tradition was started by Chinese college students in the 1990s as a Valentine’s Day of sorts for people who aren’t in a relationship.

They picked November 11 because it was “11.11” which showed four singles. The idea of the day is for unattached people to treat each other to dinner or to give gifts to try to court people that they are interested in dating and to end their single status.

Lucky for online stores – the event has turned into the biggest day of the year for online shopping and a busy day for delivery services. China’s delivery companies actually had 800,000 employees working on November 11th, including 65,000 who were hired temporarily just to help out that day.

China actually has the world’s biggest population of online shoppers; as there are 193 million shoppers in contrast to the 170 million in the US. The largest e-commerce platform in China, Tmall.com kicked off their Singles Day promotions at midnight on Monday and had 116 million RMB ((£11million) in sales. The total revenue online for the day reached 35 billion RMB (around £3.5 billion). Last year the sales total was 19.1 billion RMB (about £2 billion).

Car Sales on the Rise in China

In an interesting article recently about the global car industry, Yahoo Finance pointed out that China is showing itself to be a major growth spot for the global auto industry. As Carlos da Silva, an analyst at IHS Automotive explained, “For many years it’s been the Bric nations (Brazil, Russia, India and China) which have accounted for the growth of global sales, taking over from the more mature markets.”

Sales for cars in these BRIC countries are not all growing at the same rate. Russia may see car sales fall by 7% this year, according to IHS Automotive. In India, car sales are also expected to decline. Brazil expects their sales to remain stable at about 3.6 million cars, as IHS reports. But China appears to be the hot spot in this equation with sales continuing to rise if analysts are correct.

PwC is predicting that the sale of new cars in China may double from 2013-19. As Julien Marcilly, head of country risk with credit insurer Coface explained, Chinese houses have very little debt and the minimum wage has increased by about 20% in the country.

 

 

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New Fund: China Life AMP Asset Management Company

China’s biggest insurer, China Life, and AMP Capital will be establishing a new funds management company in China soon. The new company will be called China Life AMP Asset Management Company and AMP will have a 15% stake in the new company. The balance will be held by the China Life Asset Management Company.

As AMP said in a recent statement, “Total assets under management in China’s mutual fund industry is expected to reach $0.8 trillion in 2013 growing at 15 per cent per annum to reach almost $1.5 trillion in 2017.”

The deal is going to be China Life’s first joint venture in mainland China. Before being finalized, the joint venture will go through regulatory approval by the China Securities Regulatory Commission.

As Mr. Dunn said, “The funds management joint venture represents the commercialisation of our memorandum of understanding with China Life and is the ideal balance of our mutual strengths and capabilities.”

China Building Beyond Demand

The dream of China and the reality appear to be clashing, as China’s urbanization and construction frenzy are coming up against the reality of trying to attract businesses and residents.

The urbanization plans for China are predicted to see 250 million people move from rural areas to cities in the next 20 years, according to Premier Li Keqiang. As Li said in March in his first news conference as the premier, “Urbanization will not only drive tremendous consumption and investment demand, and create employment opportunities, but directly affect the well-being of the people.”

But the reality appears to be different from the dream. Tieling, a small city in northeastern China, for instance, has a ghost town of building waiting for someone to come and live there. Businesses in the area that were supposed to create local employment haven’t happened, and people have not moved as expected.

As Bo Yuquan, a middle-aged owner of one of the only stores in the area said, “Where are the people? There’s no one here. I’ll be out of business soon. My staff and I are discussing moving to Beijing to find work.”

Efforts from the government to draw people to Tieling have failed so far. And yet, Tieling has continued to build with plans by the municipal government to spend another $1.3 billion on projects for the new city. The saying goes, “If you build it, they will come. But in this situation, time will tell if anyone will actually do so.

China Predicts Slow Economic Growth

Four months ago, China set an official target of 7.5% for the country’s economic growth. Now, the finance minister has just announced that he expects the economy to grow 7% this year. Certainly, this is raising the ire of many and putting China’s financial stability into question.

Not only was the official announcement of the intended 7.5% growth mad during a Communist Party parliamentary meeting in March, but the target goal is usually offered with a conservative number so that the country may actually exceed that prediction.

China’s economy saw a 7.8% growth in 2012, which was actually the worst they had done in 14 years. The first quarter growth for this year has slowed to 7.7%.

As Lou Jiwei recently told reporters during a strategic and economic dialogue between China and the US last week, “Our expected GDP growth rate this year is seven per cent. Of course, it won’t be a big problem for us if we achieve growth of seven per cent or 6.5 per cent.”

Kathleen Tan Honored with Most Influential Industry Person Award

The China Finance Summit 2013 just awarded the AAE Travel Chief Executive Officer Kathleen Tan the “Most Influential Industry Person” Award. She was the first foreigner ever to be honored with the award.

The China Finance Summit 2013 awards enterprises and corporations in a number of industries with recognition for the efforts that they make in economic development and environment. There were 600 attendees at the summit, including government leaders, NGO leaders, media, industry experts and more.

Kathleen is the CEO of AAE Travel, a combined effort of AirAsia and Expedia, which is the world’s largest online travel company. She is in charge of their businesses in Southeast Asia, India, china, Japan, Korea, Taiwan and Hong Kong.

As the China Finance Summit 2013 said, “During the past eight years, Kathleen’s strategic vision, boldness, and leadership have grown AirAsia’s revenue twenty-fold to over RM 10 Billion (US$ 3.5 Billion) in 2012. Her self-motivation and passion for the work won respect and trust from many partners in China.”

As Tony Fernandes said, “Kathleen deserves this award and I am incredibly proud of her. Clearly, her commitment, energy, leadership and engaging personality have endeared her to China. She’s so passionate about the business it has won her many fans throughout the industry. Amongst them are high-ranking government officials and respected leaders from the aviation, business and media world.”

In her acceptance speech, Kathleen said, “When I took on the big mission to change China, I never dreamt that I would someday win an award for my work. I am truly humbled and honoured by this award, it is such a sweet moment for me. This award is dedicated to everyone who has supported me especially my team in China. I’d also like to share this award with my 200,000 Weibo fans and last but not least, Tony, for believing in me. I hope this will inspire more women and enterprising young individuals in China to step up, work hard and keep believing. One day, your efforts will pay off.”

Imports to America from China on the Rise

While most Americans may not be aware of it, more and more foods that end up on their tables come from China today. The US imported 4.1 billion pounds of food products from China by the end of last year, according to the Agriculture Department. The imports included half of the apple juice in the country, 80% of the tilapia and more than 10% of the frozen spinach.

These issues were recently in the news, as the largest takeover of an American company by a Chinese one just occurred. Recently, Smithfield Foods agreed to be sold to Shuanghui International, one of China’s largest meat processors.

The $4.7 billion deal has created fear among Americans about China’s expanding role in the American food supply world.

As Patty Lovera, the assistant director of the Food and Water Watch, recently said, “We are importing more and more food from China at the same time we are hearing more and more about food scandals involving Chinese companies.”

More bluntly, Jeff Nelken, a food safety expert, said “We should definitely give the Chinese an award for creativity in adulterating foods. They are a great resource for counterfeited foods, like honey products that don’t seem to have any pollen in them.”

Tensions Arise around the ASEAN Plus Three Meeting

The ASEAN Plus Three meeting in India included quite a few no-shows. Both China and South Korea skipped the meeting of finance chiefs from the Association of Southeast Asian Nations (plus Japan, China and South Korea).

The meeting was supposed to be an important opportunity for the finance chiefs of these countries to meet as they prepared for the Asian Development Bank’s annual meeting that began on Saturday.

The South Korean finance ministry official said that the chief wasn’t there because he was “busy” with internal issues in his country and “disappointed” that he couldn’t be there. The Chinese finance minister couldn’t be there because of “a domestic meeting.”

A former senior Japanese finance official in India said the Chinese and South Korean finance chiefs’ absence at ASEAN Plus Three was “apparently because of a deterioration” in Japanese-Chinese and Japanese-South Korean relations.

Chinese Immigration to Canada on the Rise

Apparently many wealthy Chinese have their eye on immigrating to Canada, according to BMO Financial Group. The number of high-net-worth people in China who have investable assets greater than $1.5 million reached 960,000 in 2011. 60% are interesting, or have already made an application to immigrate, as Gina Li at BMO Financial Group explained.

Li said that approximately 30,000 immigrants come to Canada each year from China. As Li explained, “A lot of high-net-worth Chinese are looking at diversifying investment, investing in Canada, finding homes for children while studying here and looking for global asset allocation.”

Chinese business people who relocate find many growing pains along the way. They aren’t used to how things work in China, and this becomes a process for them. As Ray Tseng, who helps immigrants with advice, training and mentoring explains, “In China, it’s different because there are so many people there, once you open the door, business just happens. Some of them may not even know how to calculate the break-even point.”

Changes in the Chinese Gaming Industry

In a recent article about the Chinese game industry, this author discussed how the companies have focused on simple mobile games and browser based computer games. Internationally, the game industry is more diverse.

As the article explains, “This has been a potential concern for investors in Chinese games companies, both in terms of international growth potential and a concern that Chinese gamers might follow a similar trend away from these simpler games. We are now seeing some signs that Chinese games companies are not just aware of this potential, but are indeed looking to develop in that direction.”

The article explains why the changes in the Chinese game industry have investors interested. As he said, “It implies potential international upside potential, and perhaps expansion plans in the not too distant future. While this may sound all well and good, investors need to take a cold hard look at whether or not they think the company’s finances can handle such a strain. Going international, while to my mind almost a necessity in the long term, is also unlikely to be free or easy. It will take some tinkering to get it right as well, as we have seen with many other Chinese international expansion efforts. Look for some stability with a decent war chest and promising free cash flow to help stave off panic responses should the first efforts fail.”