Category: Finance

Those who are part of China’s factory sector could be a bit nervous at this point. The factory sector had an unexpected shrinking for the first time in almost 2.5 years in January. The Purchasing Managers’ Index (PMI) fell to 49.8 in January, according to the National Bureau of Statistics. This is a low last seen in September of 2012. Typically, Chinese factories have had a spike in business before China’s annual Spring Festival holiday which falls mid-February this year.

Read the full analysis here.

While China has lagged behind Hong Kong in salaries and hi tech opportunities, they are starting to catch up. On average, salaries on the mainland are 15-20% lower than those in Hong Kong in their financial industry according to Simon Lance. He is the regional director for recruitment agency Hays in China. The salary gap is narrowing and the higher cost of living in Hong Kong are both helping the mainland to look more attractive.

Internet finance is now begin regarded as the future industry leader by the well-educated in China.

Shanghai has been turning up the pressure, announcing its ambitions to become a global financial center by 2020. They are developing their trade-free zone as well.

Beijing is also reforming the interest-rate mechanism and introducing privately owned competitors. This should help to create more internet finance opportunties.

Interestingly, General Motors is selling more cars in China each month than it is in America, and it expects this trend to continue. As GM Executive Mary Barra told the firm at their annual shareholders meeting, “Our joint ventures in China are working to boost production capacity by 30 per cent to more than five million units annually by 2015.”

GM President Dan Ammann said, “Cadillac is already a very profitable business for us today and GM expects to see substantial growth for its luxury brand over the next few years, particularly in China where young consumers are open to new brands.”

China is the world’s largest car market and it accounts for approximately 25% of global luxury car sales. Cadillac plans to launch in China soon a new full-sized sedan and a small sports utility vehicle.

AS GM China president Matt Tsien said, “China has indeed has been a very rewarding market for GM. We’ve benefited from the tremendous growth. China has taken a very big role in GM and China’s voice is a very strong voice within GM.”

 

 

Ecuador is expecting approximately $3.6 billion from different Chinese loans in the coming year that were signed by President Rafael Correa’s administration as far back as 2010. China has become the main lender to Ecuador since they defaulted on about $3.2 billion of global bonds since 2008.

To date, Chinese money has financed the construction of large projects including hydroelectric plants. They have also funded the construction of grain silos and irrigation systems.

Just last week, President Correa submitted to the National Assembly a budget plan of $35.3 billion for next year. According to some unofficial estimates, China has committed over $11 billion in financing to Ecuador since 2009.

 

Chinese President Xi Jinping arrived in India where they will be having investment deals and signing trade agreements.

IndiGo has recently signed a $2.6 billion deal with Industrial and Commercial Bank of China (ICBC) to finance over 30 new aircraft.

ICBC will be providing IndiGo with financing for the commercial planes. This will happen through either a sale or lease back system or through a commercial lending deal, as the statement that quoted IndioGo President Aditya Ghosh said.

 

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.

 

 

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 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.

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.