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A receptionist works at Alibaba's headquarters in Hangzhou, capital of East China's Zhejiang province, Jan 30, 2015. [Photo/Xinhua]
Chinese e-commerce giant Alibaba Group Holding Ltd is in advanced talks to invest in Indian online payment platform and e-commerce firm Paytm, two sources with knowledge of the matter said on Tuesday.
Alibaba's financial arm Ant Financial, which runs the Alipay online payment platform, is already an investor in Paytm's parent, having agreed in February to buy a 25 percent stake.
One source with direct knowledge of the matter said the new deal would see Alibaba directly invest around $600 million for a share in Paytm that could take the Chinese group's total holding to around 40 percent of the Indian payments firm.
The fresh investment would value Paytm at around $4 billion.
The sources declined to be named as negotiations are not public.
A spokesperson for Alibaba declined to comment on the development. A spokeswoman for Paytm also declined to comment, but said the group regularly engaged with investors on "various funding opportunities".
PARIS - China Construction Bank (CCB), one of the largest Chinese banks, announced on Tuesday in Paris its opening of four branches in Europe.
These branches are located in Paris, Amsterdam, Barcelona and Milan, Wang Hongzhang, Chairman of the Board of Directors of CCB said, noting that their opening constitutes an important step towards internationalization of CCB.
Wang said CCB's European branches will, in short and medium term, focus on providing services for Chinese enterprises and European companies.
Wang noted that CCB branches in Europe will, among others, cover the commercial financing, bank deposit and cash transactions.
Muriel Penicaud, head of Business France, a governmental agency for the international development of the French economy, said at the opening ceremony that the opening of CCB's branch in Paris reflects the deepening of franco-Sino relationship.
By the end of the first half of 2015, the volume of CCB's assets reached 17,480 billion yuan and its profits amounted to nearly 67.13 billion yuan.
URUMQI - More and more textile manufacturing companies are moving to Xinjiang Uygur autonomous region, in the far west of China, as support for the industry in the region is stepped up.
A 110,000-spindle plant backed by investment of 350 million yuan ($57 million) kicked off construction in Hutubi county on Friday. It is the third plant Henan Xinye Textile Co Ltd will have established in Xinjiang in the past 12 months. The three plants will employ 3,000 people in three to five years.
Understanding the potential for cotton production in Xinjiang and the vast market in central Asia, the company purchased a bankrupt textile company in Hububi county last January.
By the end of this year, the company, which is among China's top 20 textile manufacturers, will have 550,000-spindle production capacity and an output value of 2 billion yuan in the region, said Luo Rongqing, deputy general manager of Xinjiang Yuhua Textile Technology Co Ltd, the local joint venture.
Luo attributed the boom in textile investment in Xinjiang to the preferential policies offered by the central and regional government.
According to a guideline issued on Thursday by the State Council, China plans to make Xinjiang a major textile base by 2020 to facilitate exports to its western neighbors.
The regional government established a fund of 20 billion yuan last year to support textile industrial parks and clothing factories. It also subsidized local cotton and electricity in qualified textile industrial parks.
"A ton of yarn costs 3,000 yuan less in Xinjiang. Together with the tax and electricity cuts, we make 4,000 yuan in profit on a ton of yarn," said Luo.
In northwest China, home to more than 22 million people of 47 ethnicities, Xinjiang now produces about 60 percent of China's raw cotton, but most textile companies are in eastern coastal areas, far from Xinjiang.
"Boosted by preferential policies, Xinjiang's textile industry is profitable and is attracting investment from eastern regions," said Xie Qing, deputy head of the regional commission of economy and information technology.
In the first four months of this year, the fixed asset investment in the textile and clothing industry reached 1.28 billion yuan in Xinjiang, up 75.5 percent year on year. The sales-output ratio stood at 94 percent during the same period, according to the commission.
Xinjiang is the gateway to middle and western Asia but had no strong industries to support development in the past, which hindered its leading role in the Silk Road Economic Belt, a China-proposed initiative to boost cooperation with Central, South and West Asian countries, said Pan Zhiping, a professor with the Central Asia Research Institute of Xinjiang University.
The support from the central and regional governments will make the cotton-rich region a major textile and clothing manufacturing base, which will create hundreds of thousands of jobs and will be a boon to the underdeveloped region, said Pan.
A simple relocation of outdated production capacity from east China to Xinjiang should be avoided, warned Pan, who suggested the government pay attention to new technology and experienced industrial workers in the region.
BEIJING - China's foreign exchange (forex) reserves continued to drop in the first quarter of 2015 due to rising overseas investment and relaxed government controls.
Forex reserves fell to $3.73 trillion at the end of March, down from $3.84 trillion at the end of last year, data from the State Administration of Foreign Exchange (SAFE) showed on Tuesday.
Boosted by exports, forex reserves had grown for over a decade before beginning their decline in the third quarter of 2014.
Analysts attribute the decline to the "going global" of China's forex assets and the halt of compulsory forex settlement for Chinese enterprises.
Meanwhile, China's external financial assets expanded to $6.38 trillion, according to the international investment position (IIP) published by the SAFE.
The country saw $4.98 trillion of external liabilities, $1.4 trillion of net external financial assets and $985.8 billion of financial outbound direct investment.
It was the first time the agency has publish the IIP according to International Monetary Fund standards.
SAFE also said it approved $75.5 billion of investment quota for qualified foreign institutional investors, $90 billion for qualified domestic institutional investors and 391 billion yuan for RMB qualified foreign institutional investors from January to June 29.
BEIJING - China continued to see a deficit in foreign service trade in May, data from the State Administration of Foreign Exchange (SAFE) showed on Tuesday.
The country's service trade deficit reached 111.7 billion yuan ($18.3 billion) in May, enlarging from 106.1 billion yuan in April, according to SAFE.
Last month, the country spent a total of 224 billion yuan in international service trade, double the 112.3 billion yuan it gained during the period.
Distinct from merchandise trade, trade in services refers to the sale and delivery of intangible products such as transportation, tourism, telecommunications, construction, advertising, computing and accounting.
The State Council has pledged measures to accelerate the development of trade in services, including gradually opening up the finance, education, culture and medical treatment sectors.
SAFE began issuing monthly data on service trade in January 2014 to improve the transparency of balance of payments statistics. Beginning in 2015, it added monthly data on merchandise trade to the report.
In May, China saw a surplus of 359.8 billion yuan in foreign merchandise trade, data showed.
Beijing's environmental performance ranks fifth among China's 289 cities above prefecture level, making it the only city in North China in the top 20, according to a study by international experts.
Shenzhen, Xiamen and Haikou are the top three most eco-friendly cities, according to the Green China Urbanization Index, which was released by the Japan-based think tank Cloud River Urban Research Institute during the Fourth Global Think Tank Summit in Beijing in late June.
Beijing's ranking may conflict with public sentiment, however, as air pollution has become a great concern of the public.
Zhou Muzhi, president of the think tank and a professor at Tokyo Keizai University, said many other indicators should be taken into account when evaluating a city's environment.
The institute's index covers soil and water conditions, climate conditions, natural disasters, the pollution load, environmental protection efforts, resource efficiency, transportation networks and urban facilities.
Beijing's environmental load is better than the average level of all 289 cities and Beijing's level of PM 2.5 (particulates of less than 2.5 micrometers in diameter) is not the highest in China. The city is simply located too close to the areas with the highest PM 2.5 levels.
"China needs an internationalized vision and more modern dimensions to analyze its urbanization, instead of narrow-minded environmental concepts," said Zhou.
The 2015 index also contains social and economic metrics. Beijing, Shanghai, Shenzhen, Guangzhou and Suzhou were the top five.
"Digital management is a necessary step in making China's urbanization healthier. The purpose of the international collaboration is to provide digital benchmarks and references for China's urbanization in a multi-dimensional way, with hundreds of data sets," said Zhou.
More than 50 Chinese, Japanese and European planning experts, led by Yang Weimin, vice-minister of the office at the Central Leading Group on Financial and Economic Affairs, Takashi Onishi, president of the Science Council of Japan, and Italian designer Mario Bellini, participated in the project.
The study ran for nearly three years and a completed version of the report on indexes covering all 289 cities will be released in the second half of this year.
Data are very difficult to get in China and that is one of the biggest challenges facing the research team, said Zhou, adding all the data they used were publicly released.
"China's data are highly fragmented. There is a lack of consistency or standardization among data provided by different departments, levels of governments or in different years," he said.
Economic data are relatively detailed, Zhou said, while environmental data are severely distorted and social data are very insufficient.
The team adopted big data analytics to derive some relevant indicators. They even used satellite data and converted the geospatial data into accessible statistics, said Zhou.
He said the purpose of ranking is to provide a reference and direction for Chinese cities to evaluate their path to urbanization.
China aims for an urbanization rate of 60 percent by 2020. The figure was 54.8 percent by the end of 2014, according to the National Bureau of Statistics.
Last year, the State Council, the nation's cabinet, announced an urbanization plan running through 2020 that is intended to eliminate any obstacles to urbanization and expand rural residents' access to social services and education.
BEIJING - Absolute safety must be guaranteed as China considers diversifying its massive pension fund investments to bolster their value, the Ministry of Human Resources and Social Security (MHRSS) said Tuesday.
"The funding is used for retirees' daily lives and it cannot be jeopardized by big risks," MHRSS spokesman Li Zhong said at a press conference.
In China, urban employees pay for their pension before retirement and usually get a pension equal to about half of their previous salary.
Li said more than 2 trillion yuan ($327 billion) from the pension fund can be used for multifaceted investments.
An official draft guideline released Monday gave the greenlight to invest in new channels, including the stock market, but restricts the maximum proportion of investments in stocks and equities to 30 percent of total net assets.
The move comes amid concerns over the fund's low investment return in the past few years.
The 30-percent ceiling will not be reached in a short period of time and the key is the proper risk control, said Li. The fund will not handle its stock market investment directly, entrusting it to professional organizations.
Money in the fund, roughly 90 percent of the country's total social security fund pool, was previously only allowed to be deposited in banks or invested in treasury bonds, which plays an important role in safeguarding its safety, but the investment channels are relatively restricted, said Li.
The guideline stipulates that the fund can also be invested in the nation's big projects and key enterprise equities, but restricts the maximum proportion of such investments to 20 percent of total net assets.
"The fund is confronted with the challenges of diminishing value, and it is not conducive to its sustainable development. It is in urgent need of widening investment channels," he stressed.
The fund for retirees, which kicked off operation in the early 1990s, has aroused concerns as its annualized investment yield hovered as low as around 2 percent over the past several years, falling short of the consumer price index (CPI), a main gauge of inflation.
China's pension fund depreciated by nearly 100 billion yuan in the past 20 years taking inflation into account, said Zheng Bingwen, an expert from the Chinese Academy of Social Sciences.
"Now is good timing for the fund to embrace market-oriented and diversified investments," Li said, adding that China is faced with mounting challenges from an aging society.
The National Council for Social Security Fund (SSF), a social security strategic reserve for China's future aging population, played an exemplary role in enhancing its investment return, with its yearly ratio of return averaging 8.5 percent over the past 14 years as of 2014 and outpacing the CPI growth.
The SSF, with assets of 1.24 trillion yuan in 2014, has a bigger investment scope than the pension fund and is allowed to invest in domestic and overseas stocks as well as fixed income assets.
Unlike the SSF, the pension fund can only be allowed to invest in the domestic stock market, according to the guideline.
The air pollution index, which measures the atmospheric PM 2.5 concentration, once again moved into the unhealthy territory for a few days last week. The inclement weather and the all-enveloping haze made me nostalgic for the white clouds that engulfed the city's skyline two weeks ago.
But watching clouds is something of a luxury in Beijing, a city that boasts of world-class capabilities in skyscrapers, restaurants, talents etc, with clean water and air being the sole exceptions.
Even as the orange hue descended on me, I could not help wondering as to how many individuals actually consider the environment when they make individual choices like purchasing a car. Not surprisingly, automotive exhaust is the main culprit for air pollution and exceeds even the emissions from burning coal.
Driving a greener car or driving less perhaps is the easiest thing we can do to mitigate the city's pollution from a personal angle. However, until recently, a luxury car was always seen as a status symbol for Chinese consumers.
Some international luxury car producers even launched stretched wheelbase versions of their sedans specifically for Chinese consumers and they earned lots of money in the past decade. Fortunately, the lure of owning luxury vehicles is fast fading, as there are several applications like Uber which offer luxury vehicle pick-up services at affordable rates.
A colleague who bought a domestically made electric car gave me a pleasant ride last week. It was so quiet inside the car due to the lack of engine noise, while the interactive screen and the latest navigation technology made it a dream ride.
She said that it takes eight hours for her to fully charge the car at the charging station in her garage. The full charge enables her to drive for 200 kilometers, more than enough for her daily commute.
Electric cars are also exempted from the regulation that requires all cars to stay off the road for at least one day of the week in Beijing to reduce traffic jam and emission.
While it may take a long time and more government incentives for drivers to switch to electric cars, the city's automobile exhaust can be largely reduced, if city officials can provide an even distribution of public services such as education, medical care and shopping.
Meanwhile, concerted public policies and individual efforts can also work in other areas for a cleaner and nicer world.
Last week I went to an event themed "Beijing blue, my action" that aims to raise public awareness of environment protection. It calls for the public to change their lifestyle and save energy and resources.
Here are some tips: The optimum temperature to conserve energy when using an air conditioner is to set the temperature to 26 degrees Celsius; traveling with your own toiletries such as slippers and trying to reduce use of disposables; buying things with simple packaging and using energy-saving household appliances.
But some things are difficult to practice. For instance, it advises people using washing machines to use the rinse mode only when washing and then dry by airing, as the spin-off step will emit more carbon dioxide.
I think most people are unwilling to make a change like that at the cost of sacrificing efficiency or comfort. Many consumers are already model energy and resource savers. Chinese housewives or househusbands share lots of chores that dishwashing machines do in many Western families.
The average home energy use in China is much lower than in Western countries. Electricity use per person in China only accounts for half the world average and less than one-tenth of that in the United States, according to a survey by Beijing's Renmin University of China.
Public awareness is important, but clearly policymakers can do more to bring back the blue skies. In addition to shutting factories and cutting use of coal, Beijing faces an urgent need to improve its overall urban planning.
Mothers want what is the best for their children. Now, with the help of e-commerce platforms, Chinese mothers can buy imported infant products hand-chosen by the daughter of a former Australian prime minister.
Jessica Rudd, whose father Kevin Rudd was Australian PM between 2007 and 2010 and again in 2013, recently opened a store on e-commerce giant Alibaba Group Holding Ltd's platform.
The store, called Jessica's Suitcase, was set up on Tmall Global, a dedicated online platform helping overseas merchants sell to China, and mainly sells organic baby food and women's goods from Australia, including fruit purees and sanitary pads. The best-selling products for now is paw paw & honey balm with online records showing sales of at least 856 items by last Friday.
Rudd, the mother of a three-year-old, announced the opening of the store last Wednesday through her Weibo, or micro blog, account. "I hope you will like Jessica's Suitcase and find what you need in it!" she wrote.
Her father helped promote the business by forwarding and commenting on her Weibo message: "Good to see my daughter open an online store in Tmall and sell Australian specialties."
The news has also interested many Chinese Weibo users. "Competition in the daigou business (means hiring someone overseas to shop for certain products) is getting more intense," one user said.
"It seems the rule of daddy-is-the-key also works in the business of daigou," another commented.
Rudd said that she is focused on making her venture the best online store. "It doesn't matter whose daughter you are, every Tmall Global flagship store has a responsibility to their loyal customers and that is a role I take very seriously. I am honored that Jessica's Suitcase has been supported by over 19,000 shoppers already in three days, but I know I have to earn their trust. I am an online shopper too," she said in an email to China Daily.
Last year, Australian Organic appointed Jessica Rudd as "trade ambassador" to help increase organic trade between China and Australia. She has lived in Beijing for five years and is married to an immigrant from Hong Kong.
Rudd is one of the growing numbers of high-profile overseas vendors, who are seeking access to China's large and rapidly growing middle-class consumers via online channels. British soccer star David Beckham launched a Tmall flagship store for his whisky brand, Haig Club, late last year.
With Chinese consumers getting more sophisticated, they want non-standardized and customized products from all corners of the world, said Li Yang, assistant professor of marketing at Cheung Kong Graduate School of Business. Li said that with such a large demand, global procurement is taking place not just in brick-and-mortar stores but also online.
According to a recent report on cross-border e-commerce by multinational consultancy Accenture, China is expected to become the world's biggest cross-border business-to-customer market by 2020.
To capitalize on the cross-border e-commerce wave, Alibaba has been aggressively promoting the growth of cross-border online shopping with government officials and business leaders around the world. Earlier this month, Alibaba Executive Chairman Jack Ma visited the United States to talk about the company's international strategy and how small businesses can use the Web to sell directly to Chinese consumers, who are increasingly looking for high quality, imported products.
Yang Ziman contributed to this story.
German companies are looking to increase their investments in China's modern manufacturing sector as the country transitions to a more moderate phase of growth, the German Chamber of Commerce in China said on Tuesday.
Sixty-five percent of German companies are planning new investment activities in China's automotive, machinery and chemicals sectors, according to the Business Confidence Survey 2015, conducted by the chamber between May 11 and June 12.
The survey interviewed 439 companies on issues related to business outlook, investment climate and market conditions.
Lothar Herrmann, chairman of the northern division of the chamber, said this indicates that German companies are eager to strengthen their position in modern technology-driven manufacturing as China undergoes an industrial upgrading.
"Similarly, more than half of German companies which engage in global research and development, engage in such activities at their locations in China," said Herrmann.
"They are more reliant on skill-based sectors rather than low-wage and low-skill industries as China continues to modernize its economic structure."
Founded in 1999, the chamber has more than 2,600 members throughout the Chinese mainland.
After a strong performance in 2014－despite the fact that growth rates had already been adjusted to lower levels－China's continuous economic slowdown in the first half of this year has led German companies to lower their business outlook for the full year.
However, more than half of the companies still expect to achieve their business targets this year. Most German businesses continue to enjoy healthy growth in turnover and profits, indicating that rather than experiencing a sharp decline, they are easing into lower growth levels.
Alexandra Voss, a member of the chamber's all-China board, said while investment activity by German companies at their current locations has fallen slightly, the share of companies planning to invest in new locations in China has remained stable compared to previous years and there is no indication that investment is being relocated to other countries.
The survey shows that the vast majority of investment continues to be concentrated in China's three main economic centers. Nearly 90 percent of companies are located around Shanghai and the Yangtze River Delta; Beijing and the Bohai Rim; and Guangzhou, Shenzhen and the Pearl River Delta.
German investment in China amounted to $710 million in the first quarter of the year, an increase of 21 percent compared to the same period in 2014. Germany has consistently been among China's top 10 foreign investors, with direct investment flows nearly doubling from its value in 2010 to $2.1 billion in both 2013 and 2014.
Voss said a shortage of skilled employees, rising labor costs and retaining qualified staff are the top three challenges for German firms. Finding qualified staff is the biggest challenge that German companies face this year.
An investor at a securities firm in Huaibei city, East China's Anhui province on Sept 22, 2014. [Photo/Aisanewsphoto]
Bank of America Corp strategist David Cui has a laundry list of support measures that China's government might deploy to fight the steepest stock market rout since 1996.
It could halt initial public offerings, encourage insurers to buy shares, ease access to margin financing, reduce stamp duties or cut lending rates－just to name a few.
The problem for bulls, Cui said, is that none of those measures are likely to spark a sustained rally at a time when margin traders are unwinding a record buildup of leveraged bets. His year-end target for the Shanghai Composite Index implies a drop of 11 percent from Monday's close.
"The margin call, forced sale, margin call vicious cycle can quickly develop a momentum of its own," Cui, the head of China equity strategy at Bank of America, said in an e-mail on Monday.
Doubts about policymakers' ability to prop up the world's second-largest stock market are spreading after a weekend interest rate cut and speculation that regulators will halt IPOs failed to prevent the market from tumbling. The gauge would need to fall another 13 percent to match its average downturn since 1990.
The stocks, however, rallied on Tuesday, with the Shanghai Composite Index rising for the first time in four days, jumping 5.5 percent to 4,277.22 points at the close, the most since March 2009. The gauge swung 432 points between its high and low points, propelling a volatility measure to a seven-year peak.
"Any support the government can provide would be short-lived," said Chad Padowitz, the Melbourne-based chief investment officer at Wingate Asset Management Ltd. "The only real support they can provide over time is providing a reasonably balanced, growing economy. That is the best thing they can do. Anything they do short-term, decreasing interest rates to support the market or things like that, are somewhat foolish."
The increasing role of leverage in stock trading in the Chinese mainland is making it especially hard for authorities to control swings in what has become the world's most volatile market after Greece, according to Paul Chan, the Hong Kong-based chief investment officer for Asia ex-Japan at Invesco Ltd.
Margin debt on the Shanghai Stock Exchange fell for a sixth day on Monday to 1.36 trillion yuan ($219 billion), the longest stretch of declines since June 2014, while the benchmark gauge's 10-day volatility reading jumped to the highest since 2008. A five-fold surge in leveraged wagers had helped propel the Shanghai index to a more than 150 percent gain in the 12 months through June 12.
Zhang Xiaoxi, a 29-year-old designer in Chongqing, said there is nothing the government can do to convince her that stocks are a safe bet. "I've lost faith," said Zhang, who has liquidated her 20,000 yuan investment in shares.
"With the policy catalysts, the government is just creating a false illusion that the bull market has not ended. It might introduce further measures or policies, but they will not have much effect."
Not everyone is so pessimistic. Huang Haiqiao, who works in the finance industry in Hangzhou, Zhejiang province, is sitting tight on his more than 100,000 yuan of equity holdings.
"The government is clearly trying to prop up stocks," he said. Policymakers "will take further steps, including cuts in interest rates and reserve requirement ratios, allowing social security funds to invest in stocks and possibly lowering the stamp duty."
French luxury brand Chanel has opened stores in China, but smaller firms may find testing the water with a Web-based store safer. [Photo/China Daily]
US small and medium-sized enterprises face considerably less risk entering the Chinese market through e-commerce than opening a brick-and-mortar store, according to industry experts.
Yingke Law Firm assists Chinese investors with deals in the United States, Israel and Britain, and has also spent years helping overseas capital to enter China.
Yang Lin, the firm's director of international business, said few medium-sized US enterprises are entering China in the traditional way, which involves investing heavily in preparations: Renting offices, purchasing office appliances, paying personnel, and marketing and branding.
For these companies, "whether you succeed depends on your business and management levels, and the market", she said. "For any enterprise that sets up a physical branch overseas, the risks are always huge."
But e-commerce is different. Rather than having to think about the cost of land, materials and labor, foreign investors who enter the Chinese market through online shopping can simply focus on the spending power of an ever-growing middle class.
"The middle-class lifestyle requires good-quality products, which means there are huge business opportunities for good-quality foreign brands that Chinese shoppers may never have heard of before," Yang said.
Online marketplaces such as Taobao and JD.com provide international brands with smooth distribution channels, and enable consumers to quickly familiarize themselves with them, creating the potential for rapid expansion, she said. The costs are far lower than opening a physical store, as buyers can browse and buy online, while sellers can take orders and dispatch goods from the other side of the world. And if there are duties, they are usually paid by the customer. There is almost no risk, Yang said, as enterprises do not need to invest much to explore the market.
Export Now in the US has helped more than 50 overseas businesses enter the Chinese market via e-commerce in the past five years. According to Alibaba, which owns business-to-customer sites Taobao and Tmall, the company is a leading operator of online stores for foreign brands.
Frank Lavin, its CEO, said the rise of online shopping and the rise of the Chinese consumer is "perhaps the two most powerful business trends in the world today". There were two reasons why Export Now chose e-commerce as the best way for US brands to enter the China market: "First, it's the most cost-effective channel. Second, e-commerce allows for real-time feedback and adaptation, so a merchant can quickly adjust products."
In August 2012, Lavin opened Meilike, an online shop on Tmall that was intended to pave the road for US SMEs. The store, which sold US brands such as Osprey backpacks and Yummi Bears vitamins, eventually closed down. Since then, Export Now has focused on running flagship stores on Tmall for brands, such as the NFL and the Guitar Center.
"The online department store model is not always the best solution for a company," he said. "In our view, strong brands do better with a flagship online store, as it allows them to present directly to the consumer.
"It's no surprise that leading brands from Samsung to Nike have Tmall stores."
China's Xiaomi Redmi 2 smartphones are displayed to the media during their launch in Sao Paulo, Brazil, June 30, 2015. [Photo/Agencies]
Chinese smartphone maker Xiaomi has started making devices in Brazil for sale locally, promising to dramatically undercut rivals on price in the first big step beyond Asia for the world's most valuable technology start-up.
Xiaomi's global vice-president, Hugo Barra, said in an interview on Tuesday that Brazil was "stage one of our Latin America launch," pointing to Mexico and Colombia as logical next steps in the region, although he declined to say when.
Without traditional advertising or stores, China's top-selling smartphone company is betting that a tempting price tag will capture the attention of Brazilians who have become increasingly cost sensitive as their economy sours.
"We offer high-quality products at incredibly aggressive prices, so we're starting with larger developing markets where people are very price-sensitive," Barra told Reuters.
At a launch event earlier in the day, he announced that the entry-level Redmi 2 smartphone would go on sale in Brazil next week for 499 reais ($160).
The phones are already rolling off an assembly line outside of Sao Paulo run by Foxconn Technology Group, the same contract manufacturer making Apple's iPhone in the country since 2011.
An unlocked Brazilian iPhone can retail for more than $1,000 -- one of the highest prices in the world and well above what they sell for in the United States. Even more affordable options in the country remain out of the reach of ordinary Brazilians.
Just three years after selling its first phone, Beijing-based Xiaomi, dubbed 'China's Apple', is worth $45 billion, making it the most valuable start-up in the technology sector.
By choosing Brazil as its first smartphone market outside of Asia, Xiaomi keeps its focus on emerging consumer markets, working in from the edges of a global market dominated by giants such as Apple Inc and Samsung Electronics Co.
Brazil's smartphone market is also at a tipping point, with users swapping simpler feature phones for smartphones to keep up their avid social-media habits. Smartphone sales in the country jumped 55 percent to 54.5 million units last year despite stagnant economic growth, according to market research firm IDC.
Xiaomi, which is the fifth-highest selling smartphone brand in the world, aims to break into the Brazilian market with its novel business model, Barra said. Low profit margins on handsets are meant to win user loyalty for the company's software and an array of more profitable home electronics and accessories.
Alibabafounder Jack Ma (center) rings the bell to open trading at the New York Stock Exchange on Sept 19. [provided to china daily]
Analysts see potential, pitfalls in China's online shopping market, report Amy He and Paul Welitzkin in New York, and Yang Ziman in Beijing.
China's e-commerce market－specifically Alibaba's online shopping site, Taobao－isn't on Rob Wray's radar right now, but he says it might be in two years.
"China … is a low priority due to our experiences with Chinese banking and business complexity," said the Baltimore businessman, who owns Mp3Car, a small company selling electronics on Amazon and eBay in the United States. "Our focus is on building in the US, where we're based, and in other rapidly expanding markets that are less complex to enter."
It's not ideal, but Jack Ma may be happy with that.
Ma, the chairman of Alibaba, traveled to New York and Chicago this month, giving speeches and writing newspaper opinion pieces to urge small and medium-sized enterprises in the United States to consider using his e-commerce platforms, Taobao and Tmall, to reach Chinese shoppers.
"Today, China's middle class is almost the same size as the US population. We think that in 10 years more than half a billion Chinese people will be middle class," Ma told an audience at New York's Economic Club on June 9. "The demand for good products, good service, is so powerful. …We need more American products."
His target is to get 10 million SMEs from around the world using Taobao and Tmall, and China's other major e-commerce players, such as JD.com, Dangdang and Jumei, will have equally ambitious plans.
Although analysts and industry insiders agree there are terrific opportunities here for US businesses, opinions are divided on whether the potential profits outweigh the potential pitfalls.
According to Eguan, a business consultancy in Beijing, online cross-border sales were worth more than 80 billion yuan ($13 billion) in 2013, up 75 percent year-on-year. The company predicts, by 2018, Chinese consumers will spend 1 trillion yuan on purchasing products from overseas.
"The Chinese market is becoming the center of the business world in terms of how consumers are using e-commerce platforms to buy products," said Oliver Rust, managing director of Nielsen China. "E-commerce has become bigger and broader. It's a significant market."
China now has about 360 million online shoppers and a sales value of 2.8 trillion yuan, he said.
When it comes to separating the major players, e-commerce expert Wang Xiaoxing said Alibaba stands out because it is more of an intermediary. Individuals and companies have used Taobao to sell everything under the sun since it launched in 2003. Tmall, which opened five years later, is more used by companies offering relatively higher quality products.
"Alibaba doesn't own or deliver any product. It's a collection of independent stores," said Wang, an analyst for Beijing consultancy Analysys International. "Reaching out to SMEs in the US is natural for Alibaba because serving small businesses is built into its genes.
JD.com workers take part in a recent promotional event. [provided to china daily]
"It's complicated serving so many SMEs, but Alibaba has done it successfully in China. It's no surprise Ma wants to copy the model in the US now it's been listed," he added, referring to the company's listing on the New York Stock Exchange last year.
Taobao vendors are required to run their own stores: They upload photos and product descriptions, handle packing and shipping, and manage after-sales services. Like eBay, a user's reputation is enhanced－or completely destroyed－by ratings and comments left by customers.
In China, people today even use "taobao" when they mean to say online shopping.
"Alibaba is the unquestionable leader in online shopping in China," said Teng Bingsheng, an associate professor of strategic management at the Cheung Kong Graduate School of Business. "This is a big advantage when attempting to get US companies to believe they can have a bigger chance of success in the Chinese market than through similar platforms."
Last year, transactions on Alibaba's e-commerce platforms totaled $161 billion, far more than the $77.6 billion reported by Amazon.
Meanwhile, data released by New York consultants Forrester Research showed Tmall and JD.com are dominating China's e-commerce market. Tmall holds a 57-percent share of the business-to-consumer market, while JD.com holds 21 percent.
There is no denying the lure of China's e-commerce market. China will become the largest market for buying and selling products online across international borders by 2020, according to a report by Alibaba and global consultancy Accenture.
The value of products sold by online retailers to overseas consumers will reach nearly $1 trillion by 2020, with China the driving force for growth, the report said.
Yet some analysts are skeptical about the ability of US SMEs to use Chinese e-commerce platforms, citing the tough competition and barriers of entry. They suggest that small retailers may also not be equipped to deal with a customer base with differing shopping expectations.
"The smaller companies－and this is not an Alibaba point, it's not a China point－have very limited ability to manage any major undertaking," said Frank Lavin, founder and CEO of Export Now in Akron, Ohio, which advises businesses accessing China's e-commerce platforms. "If you're only a $5 million company, the entire management team is one or two people. You're asking them to work with a series of somewhat complicated issues on foreign exchange, remittance, and logistics. They just don't have the management team to do that."
Lavin, who served as undersecretary of commerce during the George W. Bush administration, said China is the easiest market for US companies to enter, but they still need capability and capacity, while smaller companies－in the $1 million to $10 million range－will have difficulty.
To get an online store up and running on Alibaba, an overseas company would need to design and build a Chinese-language website, pay a deposit to Alibaba, and pay for trademark registration, which could cost $50,000 to $100,000, he said. To advertise their brands and services, companies may need to spend another $100,000 to $200,000.
A board shows how much was spent on Tmall on Single's Day, Nov 11, a major online shopping day in China. [provided to china daily]
"In terms of value, cost-benefit for a company, that's fantastic. But again, if your total sales are $2 million and say it's $100,000 just to get in the game, that's 5 percent of your total sales," he said.
Alibaba already works with US retailers such as Costco, GNC, Forever 21, Patagonia and Under Armour. However, observers say smaller companies may be hindered by the difference in online shopping culture.
Carl Miller, managing director of San Francisco-based Global Retail Insights Network, a nonprofit organization that helps retailers go global, said Chinese consumers' expectations differ from their American counterparts. Customer service is a big part of the online shopping experience, something US retailers may have difficulty adapting to.
"Most Chinese consumers are going to be utilizing chat－text chat or talking to a customer representative－to talk about the product, to verify the authenticity," he said. "They'll sometimes want to barter, and one of my main concerns when I heard (about Ma's speech) is: How are all of these smaller companies going to actually have the time and energy to provide, or even outsource, customer service that's going to adequately represent their product?"
A case in point is Xue Chanchan, a public relations worker in Beijing, who said Taobao is her No 1 choice for shopping online because of the after-sales services. "I can see the store and talk to the owner. On other platforms, I can only call customer service instead of the store itself. This way, I feel more assured."
Zia Daniell Wigder, vice-president and research director at Forrester Research, is optimistic about small US retailers on Alibaba, especially those who would be dealing with international customers, shipping, customs, and local currencies for the first time. She said the Chinese company can help streamline these processes because of its market dominance and vast infrastructure network.
"There certainly are differences (between US and China e-commerce), but a lot of them are surmountable issues," she said. "Cross-border online shopping is growing incredibly quickly. It's not just between the US and China, but between a large number of different countries. Alibaba's opportunities in Brazil and Russia, and other places like that, have grown substantially, so they're looking to penetrate what is the other extremely large e-commerce market in the world, which is the US."
Michael Tudor, CEO of Ripen eCommerce, a consulting company, told Forbes last year that Alibaba's Tmall and Taobao, along with Alipay, its third-party online payment platform similar to PayPal, can help small businesses in the US "who don't have the resources to meet the challenges of the Chinese market".
For a small US retailer to be successful in China's e-commerce marketplace, Kosha Gada, principal at AT Kearney's media, consumer and retail practice, said they will need understand the market demand, build a brand, and have a firm grasp on logistics and operations.
"It's a different market from the US, and companies will need to accurately assess the competitive landscape," she said, warning that electronic payment is not as developed in China as in the US, raising the risk of fraud, while shipping can be a hassle due to undeveloped infrastructure outside of major cities.
Teng at the Cheung Kong Graduate School of Business offered one more piece of advice for US companies: Watch what Chinese tourists buy in bulk abroad. "Chinese are seeing the world," he added. "They know what the good products are, they aren't easily swayed by novelties."
A man walks next to a McDonald's restaurant at a shopping mall in Shanghai July 28, 2014.[Photo/Agencies]
McDonald's Corp is opening four do-it-yourself burger concept stores this year in China as the fast-food giant works to lure Chinese consumers back to its restaurants after last year's supply chain scandal.
McDonald's China Chief Executive Officer Phyllis Cheung told China Daily on Tuesday that the company is opening three "Create Your Taste" concept stores in downtown Shanghai and one in Guangzhou. The model will be expanded to Beijing and Shenzhen next year. Two have already opened in Shanghai.
Consumers can choose from 24 ingredients to make their own burgers at the restaurants. The concept store, which originated in the United States, has also been developed in Australia, New Zealand, Singapore and Kuwait.
The new restaurants in Shanghai involve the McCafe section, which itself has more than 800 outlets in China. Cheung said McCafe offers alternative options for adult members of a family when their children are eating burgers. McCafe also "elevates the in-store experience as a community store rather than a fast-food chain", she said.
KFC, a unit of the US-based Yum Brands Inc, also announced on Tuesday that it had formed a collaboration with Alipay, the financial arm of Alibaba Group Holding Ltd. The Alipay mobile payment system will be offered at more than 700 restaurants in Shanghai and Zhejiang province, and it will gradually expand nationwide.
Jason Yu, general manager of Kantar Worldpanel China, said the DIY concept will attract young customers, but is unlikely to have a big impact on the overall performance.
Last July, Shanghai Husi Food Co Ltd, a supplier to McDonald's, KFC and Pizza Hut, was found to be using expired meat in its products.
Rail tracks are laid on a route in Nantong, Jiangsu province. [Photo provided to China Daily]
Urban railway transit, modern logistics and emerging industries to be new focus areas
Major development projects launched by the government have attracted investment to the tune of 3.1 trillion yuan ($500 billion) till May, indicating that the investment pipeline is still robust, a top government official said.
China launched seven project packages in December, including transportation, clean energy, oil and gas pipelines, health and mining. About 220 projects that are part of these packages have started construction by the end of May, Li Pumin, spokesman for the National Development and Reform Commission, said during a news conference on Tuesday.
Li said the NDRC is planning four new packages to inject new momentum into the sluggish economy, including urban rail transit, modern logistics, emerging industries and competitive manufacturing.
"Infrastructure investment continues to be a major driver for investment growth," he said.
Infrastructure investment rose 18.1 percent year-on-year during the first five months. However, growth in China's fixed-asset investment fell to a 15-year low during the same period. Since May, the pace of projects that resumed construction has accelerated, said Li.
Zhang Hanya, president of the Investment Association of China, told China Daily the economy has responded to a host of policy measures taken by the government and shown signs of recovery since May.
Capital inflows into the real estate sector are expected to see further momentum thanks to the central bank's recent cuts in reserve requirement ratios and key interest rates, he said.
"Too many macroeconomic measures have been put in place and a dramatic stimulus is not necessary in the short term," said Zhang.
Investment in urban rail transit this year is expected to exceed last year's 285.7 billion yuan. Till date, 39 cities have met the stipulated criteria for building subways and the number is expected to increase to around 50 by 2020.
Li Guoyong, an NDRC official, said: "With the acceleration in urbanization process, urban transit systems will be a natural solution for easing traffic congestion, not only in first-tier cities but also in second-and third-tier cities."
The urbanization rate is expected to exceed 60 percent by 2020 and the number of cities with a population of more than 1 million will exceed 200 during that period.
The threshold for building an urban transit system includes conditions that a city has an urban population in excess of 3 million and a GDP of more than 100 billion yuan.
About 60 new jobs are created per kilometer of a new subway during the construction and operation stages. By the end of this year, China's total subway network will reach 3,500 km. The total distance will reach 6,000 km by 2020 and generate several hundred thousand new jobs, Li from NDRC said.
About 22 cities have opened city transit systems with a total operational distance of 2,754 km. Both Beijing's and Shanghai's city transit systems have already exceeded 500 km.
The cost of building a subway has increased to 700 million yuan or 800 million yuan per km from 500 million yuan a few years ago, he said. The average cost has exceeded 1 billion yuan per km in Beijing.
Fundraising is not an issue for big cities such as Beijing and Shanghai. But many second-and third-tier cities are under fiscal pressure due to the sluggish property market and slower economic growth.
The NDRC has urged local governments to raise funds for the projects by issuing bonds and through social investment by way of public-private partnerships.
The top planner released a proposed public-private partnership list with more than 1,000 proposed infrastructure PPP projects in May with an expected total investment of 1.97 trillion yuan.
Mobile phones and internet devices have become indispensable parts of our daily lives nowadays.
Forbes recently released the 2015 list of the world's largest telecom companies. Rankings are assigned on the basis of a composite score that measures sales, profits, assets and market value.
Here are 2015's top 10 largest telecom companies in the world, as ranked by Forbes Magazine.
10 China Telecom
Sales: $52.7 billion
Profits: $2.9 billion
Assets: $90.5 billion
Market value: $53.9 billion
View of an office building of China Telecom in Nanjing, east China's Jiangsu province, on April 8, 2015.[Photo/IC]
9 América Móvil
Sales: $63.7 billion
Profits: $3.5 billion
Assets: $85.2 billion
Market value: $74.5 billion
Sales: $66.8 billion
Profits: $4 billion
Assets: $148 billion
Market value: $72.3 billion
Telefonica's CEO Cesar Alierta during the general shareholders meeting held in Madrid, Spain on June 12, 2015.[Photo/IC]
7 Deutsche Telekom
Sales: $83.1 billion
Profits: $3.9 billion
Assets: $156.5 billion
Market value: $85 billion
A man holds a mobile phone next to an ad for cloud services at the Deutsche Telekom booth at CeBIT in Hanover, Germany, on March 4, 2013.[Photo/IC]
Sales: $80.6 billion
Profits: $5.8 billion
Assets: $168.8 billion
Market value: $70.3 billion
Masayoshi Son, President of Softbank Corporation speaks at the US Chamber Of Commerce in downtown Washington D.C. on March 11, 2014.[Photo/IC]
5 Nippon Telegraph & Tel
Sales: $104.7 billion
Profits: $5.2 billion
Assets: $172.2 billion
Market value: $71.5 billion
Country: United Kingdom
Sales: $66.3 billion
Profits: $77.4 billion
Assets: $200.5 billion
Market value: $88 billion
Vodafone's Germany headquarters in Duesseldorf, Germany, on May 20, 2014. [Photo/IC]
Country: United States
Sales: $132.4 billion
Profits: $6.2 billion
Assets: $292.8 billion
Market value: $173 billion
The corporate logo for AT&T is shown on the outside of one of its New York facilities on April 21, 2015.[Photo/IC]
2 Verizon Communications
Country: United States
Sales: $127.1 billion
Profits: $9.6 billion
Assets: $232.7 billion
Market value: $202.5 billion
A Verizon studio booth at MetLife Stadium, in East Rutherford, N.J.on April 7, 2013. [Photo/IC]
1 China Mobile
Sales: $104.1 billion
Profits: $17.7 billion
Assets: $209 billion
Market value: $271.5 billion
People visit the stand of China Mobile during a fair in Zhengzhou, central China's Henan province, on Nov 1, 2014. [Photo/IC]
Euronext listed its first renminbi denominated money market exchange traded fund in its Paris market on Tuesday, demonstrating another milestone of the Eurozone's growing offshore renminbi activities.
Known as the Commerzbank CCBI RQFII Money Market UCITS ETF, the new ETF is jointly created by China Construction Bank International and Commerzbank, with CCBI as its investment manager. CCBI is a subsidiary of China Construction Bank.
The Commerzbank CCBI RQFII Money Market UCITS ETF offers investors exposure to interbank bond market in China, which is otherwise not accessible to foreign investors due to China's capital market controls.
UCITS stands for Undertakings for Collective Investments in Transferable Securities. It provides a single European regulatory framework for an investment vehicle, which means it is possible to market the vehicle across the European Union without worrying which country it is domiciled in.
RQFII is the Renminbi Qualified Foreign Institutional Investor program, which allows select Chinese financial firms to establish renminbi-denominated funds in international markets for investment in the mainland.
The CCBI RQFII Money Market UCITS ETF was first listed on the London Stock Exchange in March.
On the Euronext platform, the ETF will be available for trading in both renminbi and euros and will be settled exclusively with Euroclear, the International central securities depository, in multiple currencies.
In addition, Euronext signed a Memorandum of Understanding (MOU) with CCB to develop a strategy to enhance the bank's access to European capital markets.
The MOU will explore how the two companies can further develop CCB's access to European Capital markets. Areas under discussion include the possibility of CCBI becoming a trading member of Euronext markets; easing access to Euronext products within CCB; and renminbi payment and settlement structures.
It is expected that the cooperation between the two companies will further push forward renminbi internationalization, and will enable Paris to become an offshore renminbi business centre. The MOU will also pave the way for Chinese enterprises to come to Europe for finance, investment and commodities trading.
Wang Hongzhang, chairman of the board of directors of CCB said that the cooperation with Euronext marks an important milestone in CCB's internationalization strategy.
"We believe, not only does this allow us to gain further access to the European capital markets, internationalize our operations, and provide our clients with additional channels to invest in Euronext Paris, it will also encourage an extensive use of renminbi products by French enterprises, financial institutions and investors", Wang said.
Jos Dijsselhof, Interim Chief Executive of Euronext said that the renminbi is increasingly used in cross border transactions so this is an exciting step for Euronext.
"We are very honoured to develop a new relationship with CCB to develop cooperation between the two companies and to reinforce our Euronext name in Asia," Dijsselhof said.
"As of today, with a total 200 million subscribers, China has surpassed America to become the world's number one Long-Term Evolution (LTE) market by user volume," Chang Gang, chief marketing officer of Ericsson North East Asia said on Tuesday during the launch of the Chinese-Language Ericsson Mobility Report in Beijing.
According to Chang, by 2020 China will permanently take top spot with nearly one third of the 3.7 billion worldwide LTE subscriptions.
Chang Gang, chief marketing officer of Ericsson North East Asia delivers a keynote speech on June 30, 2015 during the launch of the Chinese-Language Ericsson Mobility Report in Beijing. [Photo/Provided to chinadaily.com.cn]
"Our monthly average mobile data traffic only reaches 320 Megabytes, according to the Ministry of Industry and Information Technology, while the same volume in South Korea has up to 2.2 Gigabyte, which is nearly 10 times higher than China," Chang added.
[Photo/Provided to chinadaily.com.cn]
The report, produced by Swedish multinational IT company Ericsson, shares forecast data, analysis and insight into mobile traffic, subscriptions and consumer behavior.
According to latest information, mobile data traffic in the first quarter of this year was 55 percent higher than the same period in 2014. By 2020, 80 percent of mobile data traffic will be from smartphones.
The report also indicates that smartphone subscriptions will more than double, reaching 6.1 billion, 70 percent of the world's population will be using smartphones and 90 percent will be covered by mobile broadband networks.
[Photo/Provided to chinadaily.com.cn]
In developing regions, the growth comes from new subscribers as smartphones become more affordable; almost 80 percent of smartphone subscriptions added by year-end 2020 will be from Asia Pacific, the Middle East and Africa.
"This immense growth in advanced mobile technology and data usage, driven by a surge in mobile connectivity and smartphone uptake, will makes today's big data revolution feel like the arrival of the floppy disk," said Rima Qureshi, Ericsson's senior vice president and chief strategy officer.
According to the report, each year until 2020, mobile video traffic will grow by a staggering 55 percent annually and will constitute around 60 percent of all mobile data traffic by the end of that period.
Growth is largely driven by shifting user preferences towards video streaming services, and the increasing prevalence of video in online content including news, advertisements and social media.
BEIJING -- Construction of the Chinese section of the China-Russia East-Route Natural Gas Pipeline began on Monday, further boosting energy cooperation between the two countries, analysts said.
The Chinese section of the 3,968-kilometer east-route natural gas pipeline originates in northeast China's Heilongjiang Province and terminates in Shanghai in the east.
It is the largest China-Russia cooperation project and is conducive to diversifying both countries' energy strategy and guaranteeing energy security, Chinese Vice Premier Zhang Gaoli said at the construction commencement ceremony.
The Russian part of the east-route pipeline began construction in eastern Siberia last September. Negotiations on details for a proposed western route are still underway.
"The construction progress of the east route of the pipeline is of great strategic significance. It lifts China-Russia mutual trust and cooperation to a new height," said Professor Liu Yijun with China University of Petroleum.
China National Petroleum Corp (CNPC) and Russian gas giant Gazprom signed a deal for the East-Route Gas Project on May 21, 2014. The 30-year contract will see the east-route pipeline begin providing China with 38 billion cubic meters of natural gas annually from 2018.
Under the bilateral agreement, Russia will export 70 billion cubic meters of natural gas to China every year upon completion of both the east- and west-route gas pipelines.
Strengthening energy cooperation is of great significance to safeguarding the two countries' energy security, said Zhou Dadi, vice director of the China Energy Research Society.
Russia's energy export to Europe is under great pressure due to the impact of the Ukraine crisis, making it look to the east for a solution, said Feng.
To reduce its reliance on coal and combat pollution, China also needs to import more natural gas, he added.
The gas project is a win-win deal for both countries, said Feng Yujun, head of the Russia Research Institute of China Institutes of Contemporary International Relations.
"The pipeline will provide secure and reliable clean energy for China's economic development and a long-term stable market for the rich natural gas resources in Russia," he said.
The pipeline is also of great significance for the rejuvenation of the traditional industrial base in northeast China and Russia's development of the Far East, Feng added.
Aside from natural gas, the two countries should fully utilize the their complementarity advantages to expand all-round cooperation in oil, nuclear energy, coal and electricity.