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Guan Dongyuan, senior vice-president of Embraer and president of Embraer China. [Photo/China Daily]
Fast response to market demand key to business, says its China chief executive
Amid a slowing Chinese economy and the ongoing austerity campaign, Brazilian aircraft manufacturer Embraer SA that provides commercial and executive jets has shown resilience to adapt to the new local realities.
The company has till date delivered 28 executive jets to Chinese enterprises and individual owners. Among the company's new firm orders is one for a mid-sized Legacy 500 that is scheduled to be delivered to actor Jackie Chan by the end of this year.
As a leading manufacturer of commercial jets that can seat up to 130 passengers, Embraer, which is celebrating its 15th anniversary of entering China markets, also has big ambitions for the nation's regional aviation business.
It has delivered 126 commercial jets to China, extending its coverage of the regional aviation market to 80 percent. The latest deal was a contract for 17 E190s with Colorful Guizhou Airlines, which included 7 firm orders and 10 options with an estimated value of $834 million if all options are exercised.
Guan Dongyuan, senior vice-president of Embraer and president of Embraer China, has been in charge of the Brazilian aircraft manufacturer's business in China since 2000 when it opened a representative office in Beijing. Recently, he spoke with China Daily about the opportunities and challenges for a multinational in an ever-changing business environment. The following are edited excerpts of the interview.
Has your business been affected by the ongoing anti-corruption campaign and the transition to the "new normal"?
The anti-corruption campaign had some impact on business jet sales due to the public misunderstanding toward executive jets and treating them as a symbol of luxury. But Embraer is confident about China being the global leader in executive aviation in the coming decade.
Embraer forecasts that a total of 835 executive jets valued at $33 billion will be delivered to China by 2024. The number represents 9 percent of the global executive jet deliveries, or 13 percent in total value.
Chinese customers are also becoming increasingly aware of the commercial benefits that the executive jets can bring. This is especially so, as the globalization of business requires more convenient air transport for senior executives to maximize their time efficiency.
Can you tell us more about your new deals?
So far, we have secured 223 firm orders in the China market including 188 commercial jets and 35 executive jets.
In China, we offer two series of commercial jets－the ERJ145 family and the E-Jets family. Besides the commercial jets, we are also the world's only executive aircraft manufacturer that offers a full line of executive jets, from the entry level Phenom 100E to the ultra-large Lineage 1000E.
Our Legacy 650 and Lineage 1000E models have been well received and are the most sought after executive jets in China. We also anticipate huge potential for the Legacy 500 to become the mid-size executive jet of choice in the China market.
Who are the Chinese customers of your executive jets?
The most famous customer is the actor and philanthropist Jackie Chan who is also our launch customer in China for the Legacy 650 and Legacy 500 aircraft. We expect to deliver a Legacy 500 to him by the end of this year. Our corporate clients include Minsheng Financial Leasing Co Ltd and ICBC Leasing.
China is creating more and more high net wealth individuals, so more people will be financially capable of buying executive jets. And entrepreneurs value efficiency and business opportunities more than the cost of an aircraft.
What has been your biggest achievement in China as the CEO?
Since Embraer entered China in 2000, its local sales have been impressive, which I would credit to our teamwork. We started in Beijing with a handful of employees. Now we have around 300 people in manufacturing, marketing, sales and after-sales services.
What has been your secret of doing business in China?
First and foremost, it's about knowing the market well and aligning your business with the market demands.
Second, a global company should build a team familiar with Chinese culture and market so that it can always react quickly to the market.
What's an effective leadership for a foreign company in a Chinese environment?
Working for a Brazilian multinational company in China, I need to be deft in both Brazilian and Chinese cultures, and try to transplant the essence of the Brazilian management concepts into the local context.
The fundamental thing to manage a multinational is to localize, both in management style and in building a talent pool. Many multinationals failed to deliver this concept. Embraer China has an effective decision-making process and our communication with the headquarters is very smooth. Cultural differences always exist and the only way to cope with them is patience, persistence and constant communications.
How do you get along with your local partners?
We share interests and risks, and work toward the same goal. In 2003, we established Harbin Embraer Aircraft Industry Co with Harbin Aircraft Industry Group, a subsidiary of Aviation Industry Corporation of China. It has been doing very well.
Localization is very important for our success and good relations with local partners. To achieve this goal, we make the best use of the local talent pool, and so far, only 5 percent of the HEAI employees come from Embraer.
How do you motivate an international team?
First, we educate the team that no matter where they are from, they share the same goal－to serve our customers.
Second, we try to align the growth of the employees with the growth of the company, so that everybody can benefit from the company's development.
Third, we never differentiate the Brazilian team from the Chinese team, or from the US team, but try to unite all as an Embraer team.
How do you handle hardships and setbacks, if any?
Three words: persistence, patience, and determination.
What do you think about the Chinese Dream? What are your dreams or ambitions in China?
Chinese people have long passed the stage of seeking adequate food and warm clothing. The Chinese Dream is probably about the pursuit of a state of affluence and well-being－not only physically but also mentally.
For business ambitions, I hope more Embraer aircrafts will link the second- and third-tier cities so local people can enjoy the mobility in a comfortable and cost-effective way. There is still a big market blank to fill in. Across China, there are only 200 commercial airports in operation. In remote areas, people will need smaller, cost-effective aircraft to facilitate a convenient, sustainable transportation.
What are your hobbies? How do you spend your time off duty?
I like reading and I do a lot of thinking. Thinking really gives me peace and pleasure. And I love appreciating contemporary arts, especially paintings, and from time to time I collect them.
Which is your favorite airline?
That is hard to say. The choice obviously depends on the routes I am flying. Any airline that provides satisfying service is good for me.
Which airports do you like the most?
I like the Changi Airport in Singapore and the Dubai Airport as they are tidy and very convenient.
Guan Dongyuan's CV
Masters degree in shipping engineering from Sao Paulo University, Brazil
EMBA from China Europe International Business School
1995-2000: Chief representative of Vale in China
2000-present: Senior vice-president of Embraer and president of Embraer China
Civil Aviation Person of the Year－Aviation Weekly Magazine, Business Edition, in 2004
Top 10 Industry Achievers of Asia-Pacific 2006－Aviation Business Asia Pacific Magazine, in January 2007
Leadership Excellence Award－the 9th Chinese Aerospace Laureate Awards in September 2013
Internet and high-tech enterprises are expected to be an increasingly important force in Beijing’s real estate market, according to a report released Wednesday by Cushman & Wakefield, a New York-based international real estate adviser.
Billy Lo, the general manager of Cushman & Wakefield's Beijing office, predicted that a series of transactions that are currently under negotiation would be completed over the rest of 2015, especially in the Wangjing-Jiuxianqiao submarket.
"More and more market participants are trying out innovative financing methods, leading to the maturing of the 'Internet + finance + real estate' model," Lo said.
Real estate companies and high-tech companies co-developed and co-launched a number of innovative financing initiatives in Beijing's real estate market in the second quarter of 2015, according to Cushman & Wakefield’s report.
Property developer Greenland Group and e-commerce company Alibaba launched in April an online wealth management product dubbed "Dichan Bao", which helps fund small developers.
Mainland China's first approved real estate investment trust (REIT), Penghua Qianhai Vanke REIT, went public on June 26. In the same month, Dalian Wanda launched a REIT-like Internet-based wealth management product.
These initiatives broaden the financing channels available for the real estate industry while providing more convenient and accessible products for investors, according to the Cushman & Wakefield's report.
The "Co-working Space" policy introduced by China's State Council in January 2015 to promote mass entrepreneurship led to booming investment in co-working spaces and industrial real estate in Beijing, according to the report.
A number of developers that provide shared office space, such as UrWork, plan to launch more projects in the outlying areas of Beijing over the rest of 2015.
According to the Beijing Municipal Bureau of Statistics, investment in China's real estate market totaled 127.3 billion yuan ($20.5 billion) from January to May 2015, up 22 percent year-on-year.
Total investment in office development rose by 3.3 percent year-on-year to 21.9 billion yuan, while that in non-office commercial property development grew by 38.1 percent year-on-year to 43.7 billion yuan.
The government's lowering of the reserve requirement ratio and interest rates in the second quarter of 2015 eased financing pressure on investors and improved the overall investment climate, according to Cushman & Wakefield's report.
"Internet and high-tech enterprises will continue to be an important force in Beijing's real estate market, due to the rapid development of China's Internet sector," Lo said.
Tang Xiaotao's stock of beer in his fridge has not gone down by much this summer, thanks to frequent rain that has been keeping the weather unusually cool.
Customer behavior like his are what is keeping the beer industry worried, as sales have been slower this year because of the cool weather.
David Zhang, senior drink analyst at Mintel Group Ltd, a market intelligence agency based in the United Kingdom, said the beer industry in China is facing saturation and the market is more easily affected by outside factors. For example, the cool weather is expected to have an impact on the beer industry this year.
Zhang said Mintel forecasts that beer sales will see a decline of 1 percent in volume this year. The market shrank by 1.8 percent in volume in 2014.
However, He Yong, secretary general of the beer division of China Alcohol Drinks Association, didn't blame the temperature as the primary factor affecting beer sales last year.
2014 was not the coldest year, he said, nor does weather play a long-term effect on beer consumption.
The structures of beer consumption in China have evolved, with consumers driven by quality rather than quantity and manufacturers by product quality compared with market share.
With five leading beer conglomerates — China Resources Snow Brewery Co, Tsingtao Brewery, AB InBev, Yanjing and Carlsberg take up 80 percent of market share, it is increasingly challenging to raise market share by simple mergers and acquisitions, said He.
Zhu Danpeng, researcher with China Food Institute said the beer market depends a lot on temperature as the second and third quarter make up 80 percent of the total sales in a year.
Beer consumption can be divided into outdoors and indoors, according to Zhu. Indoors consumption are mostly medium and high end products while outdoor consumption are of medium and low end products, consumed at street vendors and night meal providers. The outdoor businesses are easily affected by the weather, said Zhu, who forecasts that the total production and sales will decline by five percent this year.
The annual fiscal report for 2014 by Yanjing Beer Co Ltd – the leader in the Beijing market – stated that the decline of the beer industry in 2014 is the result of the weather and the slowdown of consumption. Its revenue has decreased 1.78 percent to 13.5 billion compared with 2013, with the volume of sales down 6.9 percent to 5.32 million metric tons. To adjust its product portfolio in meeting customers' demands, Yanjing Beer has invested more on its medium and high end product lines, a category in which sales increased more than 30 percent in 2014.
The China Resources Snow Breweries has its 2014 revenue up 4.5 percent to 34.48 billion Hong Kong dollars ($4.5 billion), while its net profit decreased 19.3 percent year-on-year.
Snow Breweries' annual report has cited the weather as the factor dragging down their beer sector's performance in 2014. "The cool summer in the third quarter has affected the sales in the Yangtze River delta," said the report.
BEIJING - As growth has become a scarcity for world economy since the international financial crisis struck in 2008, China is harnessing global economic growth by leading regional development, promoting capacity cooperation and establishing multilateral investment institutions.
China experienced a second-quarter economic growth of 7 percent at a time when the country actively seeks a slowdown in pace and focuses more on efficiency of its economy, making it still the main driver for the world economy.
The International Monetary Fund (IMF) has estimated that China contributed to global economic growth by 27.8 percent, higher than the US contribution of 15.3 percent. The institution expects the Chinese figure to grow to 28.5 percent this year.
Shrinking demand caused by the international financial crisis has forced China to alter its traditional way of contributing to world economy mainly by foreign trade.
As a result, the world's second largest economy has changed its role from beneficiary of world trade to creator of new models of cooperation and from a commodity supplier to global market to a capital provider, innovating and upgrading the way it contributes to world economy while maintaining a stable growth in its contribution.
Connecting Asia and the world by the Belt and Road Initiative
From the Sino-Kazakhstan capacity cooperation to the China-Pakistan Economic Corridor funded by the Silk Road Foundation, the Belt and Road Initiative has since its inception in 2013 been solidly pushed forward in all aspects, forcefully fueling the economic growth of countries along the routes.
Data from the Chinese Ministry of Commerce showed that direct investment by Chinese enterprises in 48 countries along the Belt and Road routes totaled $7.05 billion in the first half of 2015, up 22.2 percent year on year.
Over the same period, Chinese enterprises signed 1,401 construction project contracts, with 60 nations along the Belt and Road routes, mounting to $37.6 billion in money terms.
Sun Zhenyu, director of the China Society for World Trade Organization Studies, said that the Belt and Road Initiative underscores financing, infrastructure building and realizing interconnectivity and intercommunication, and that it helps to promote economic growth both in countries along the routes and around the world.
Capacity cooperation reciprocates multilateral partnerships
Chinese Premier Li Keqiang has mentioned capacity cooperation in several occasions during his international trips this year, especially in his trip to Europe in June, making the term a new business card for China's diplomacy.
The strategy has not only facilitated the continuing revitalization of world economy by means of cooperation, but also followed the changing trends in the global industrial chain. It is in line with the need for upgrading the Chinese economy as well.
China currently has built 118 economic and trade cooperation zones in 50 countries worldwide, with additional ones still in progress, according to the Ministry of Commerce.
China is gaining an ever important position in the international industrial structure. On the one hand, it has elevated its level of participation in global industrial competition and cooperation, competing and cooperating with developed nations while joining hands in cultivating third-party markets.
On the other hand, Chinese enterprises have consecutively adopted the going-out strategy thanks to the advantageous technologies and experiences accumulated in several industries.
With the world economy still slowly bouncing back, the less advanced economies and the advanced economies will face the common challenge of the lack of infrastructure and investment.
Given that background, international capacity cooperation can help developing countries accelerate development in relatively low costs, promote industrial upgrade in China and seek market expansion for developed countries, thus being a remedy for driving global economic growth that will benefit all.
Poor facilities and insufficient investment in infrastructure have turned into a bottleneck for the growth of the world's major economies, especially those major developing ones.
According to the IMF estimates, every one US dollar input in infrastructure will generate three dollars extra. But the problem is that there is a severe shortage of funds in the infrastructure development worldwide, which needs as much as $1.5 trillion.
African Development Bank President Donald Kaberuka recently in Beijing praised the Asian Infrastructure Investment Bank (AIIB) for offering a new way for global infrastructure financing, saying it sets a good model for emerging financial institutions in the 21st century.
Jin liqun, secretary-general of the interim multilateral secretariat for establishing the AIIB, said that the AIIB is a bank initiated by China, but it is not a bank of China, it is a "global bank" and a bank of mutual benefit and multilateral win.
Accounting for one-third of the world economic aggregate, Asia now is the most dynamic region in the world. The AIIB will promote the economic integration of the region, and facilitate the economic integration of the Eurasia continent as well as the economic growth of the whole world, as Asian and European countries join in.
The BRICS New Development Bank (NDB) officially opened in Shanghai last week to finance infrastructure projects, mainly in BRICS countries, and K.V. Kamath from India has been chosen as the president of bank. The first batch of projects of the bank are expected to be implemented by April 2016.
The NDB, launched by Brazil, Russia, India, China and South Africa, has an initial capital pool of 100 billion dollars. The new bank, together with the AIIB, will become an important new force in the world to advance infrastructure construction and sustainable development.
Some experts studying BRICS countries said that the world now more than ever need development banks to tackle challenges faced by infrastructure and sustainable development, and China is leading the development of a series of institutions in the emerging markets in the region and beyond, to finance economic development and maintain financial and business power.
BRICS countries accommodate 42.6 percent of the world's population and share 21 percent of the world's economic aggregate. Trade value among them accounts for 15 percent of the world's total. They contribute 50 percent to the global growth.
The establishment of the NDB will greatly push ahead the South-South cooperation and help boost the rise of emerging economies as a whole in the world.
BEIJING - The benchmark Shanghai Composite Index shrank 1.13 percent on Friday to close at 3,663.73 points. The smaller Shenzhen Component Index fell 0.18 percent to close at 12,374.25 points.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 0.83 percent to end at 2,539.84 points.
A bulletin draws people's eyes in Shanghai, July 5, 2015. As the bulletin says, the firm will provide compensation to clients who sustained losses from the previous stock market. The consumers can issue IOU (I owe you) notes and then get repaid. A group of Shanghai dama (middle-aged women) who just came back from Milan, Italy are deeply trapped in the stock market, but they believe the stock market will rally eventually after a series of supportive policies being issued by the government. [Photo/CFP]
Many investors buy books about stock trading in a book shop in Shenzhen, Guangdong province, July 4, 2015. These books are very popular among investors. [Photo/CFP]
A restaurant stops offering green vegetables out of deference to stock investors' feelings in Zhenjiang, Jiangsu province, July 8, 2015. Green is regarded as an inauspicious color in the stock market because it is a sign of falling stock prices. [Photo/CFP]
Lots of people are attracted by a cute alpaca in Kunming, Yunnan province, July 29, 2015. The pet's owner is an investor whose money is trapped on the stock market. He has to sell the pet at a price of 100,000 yuan ($16,100) to pay his daughter's tuition, the man said. [Photo/CFP]
An investor plays a game called "Throw Money to Save The Stock Market" in Suzhou, Jiangsu province, July 28, 2015. He is eager to see the rebound of the stock market. [Photo/CFP]
Share prices fell suddenly in the last hour of trading on Thursday, almost wiping out Wednesday's rally and leaving investors in the dark about reasons for the moves.
The Shanghai Composite Index slumped 2.2 percent to 3,705.77 points, erasing an earlier gain of 1.5 percent. Drugmakers and technology companies led declines. A gauge of 100-day price-swings rose to the highest level in six years.
Trading volumes in Shanghai have halved from their peaks in June, while margin debt, which had fueled a world-beating rally for China's stocks, declined to a four-month low.
Thursday's trading was almost a reverse image of the previous day, when the Shanghai Composite surged in the last hour to close 3.4 percent higher. Volatility has increased this week as Monday's 8.5 percent plunge by the benchmark gauge shredded a calm induced by unprecedented government intervention.
"There were no major macro developments," said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co in Shanghai. "The disconnect with fundamentals continues making trading challenging."
The government took a spate of unprecedented measures to stop a month-long rout that wiped out almost $4 trillion of market value, including allowing hundreds of companies to suspend trading, banning major shareholders from selling and arming a State-run financing vehicle with more than $480 billion to support the market.
The Shanghai index followed up the rout with a 13 percent rebound from the lows before slumping over the past week. Average intraday swings this week were 5.9 percent.
The CSI 300 Index lost 2.9 percent on Thursday. The ChiNext index of small-cap shares declined 4.9 percent. The Hang Seng China Enterprises Index fell 1.2 percent in Hong Kong, while the Hang Seng Index slipped 0.5 percent.
All 10 industries in the CSI 300 slid more than 2 percent, led by a 4.1 percent slump in the gauge of healthcare companies. Lepu Medical Technology Co plunged 8.3 percent, while Hualan Biological Engineering Inc slid 5.2 percent. The drug sub-index has been the best performer over the past three months, falling 5.6 percent versus the 20 percent slump for the CSI 300.
PetroChina Co, long considered a favorite holding of State-linked rescue funds, snapped a three-day losing streak, adding 0.5 percent. The oil producer had been one of the biggest sources of support for the Shanghai Composite on big down days in late June and early July.
Leshi Internet Information & Technology (Beijing) Co and East Money Information Co, the largest companies in the ChiNext, both fell more than 2 percent.
The outstanding balance of loans backed by share purchases fell by 0.6 percent to 881.7 billion yuan ($142 billion) on the Shanghai Stock Exchange on Wednesday, according to bourse data. That was the lowest level since March 16.
The drop in margin debt "means people are trying to get out of their positions", said Michael Every, head of financial markets research at Rabobank Group in Hong Kong. "And if the market doesn't drop, it suggests the central bank is doing the buying. It seems they are in the market, just not everywhere at once. Usually at the end of the day, and where they seem to think it's needed most," he said, referring to the People's Bank of China.
Market volatility manageable, says IMF chief
International Monetary Fund chief Christine Lagarde on Wednesday downplayed China's recent market volatility and said the Chinese economy is resilient and the slowdown in growth is under control.
Lagarde said, from a medium-term perspective, the benchmark Shanghai Composite Index is still more than 80 percent up from a year earlier despite the recent sharp declines.
In response to China's efforts to stabilize the market, the IMF chief said that it is the Chinese authorities' duty to prevent disorderly movements in the markets. "The fact that they (Chinese authorities) want to maintain a level of liquidity as well that is commensurate with an orderly process is also quite good."
She said that the market turmoil would not derail the IMF's discussion on whether to include the yuan in its special drawing rights basket of currencies.
"We are comforted by the determination (of Chinese authorities) to deliver on the reforms, which will be conducive, one day, when the time comes, once all the signals are checked positively, to the renminbi being included in the special drawing rights basket," she said.
Consumer demand for virtual-reality games and equipment is booming, according to industry experts gathered for China's largest gaming and digital entertainment exhibition being held in Shanghai.
More than 20 domestic companies developing VR-related products took part in the ChinaJoy 2015 expo, where they introduced some of the creations that are taking the market by storm.
Also known as computer-simulated life, VR first appeared in science fiction in the 1950s, and was developed further for medical use, pilot simulation and military training in the 90s.
The industry really began capturing the public's imagination, with the launch of the United States virtual reality technology company Oculus VR's Rift headset, considered the first truly immersive VR headgear to be used with video games.
China's VR market has only really taken off, however, since Facebook agreed to buy Oculus for $2 billion in cash and stock in March last year.
Although most VR headgear is still produced by multinationals such as Oculus and Sony－which produces the Project Morpheus VR headset－the devices are yet to be put into what would be considered mass production, leaving a gap for some Oculus-like Chinese-manufactured products to enter the domestic market so far.
Baofeng Mojing, or Baofeng magic mirror, for instance, is an entry-level VR set produced by Beijing-based Baofeng Technology Co Ltd, which has already sold more than 300,000 units since its first generation debuted in September 2014.
"The cost reduction in Chinese VR products, from more than 100,000 yuan ($16,100) down to just 1,000 yuan to 2,000 yuan, is clearly one of the reasons behind their growing popularity," said Weng Dongdong, an associate professor at the center for research on optoelectronics, information technology and color engineering at Beijing Institute of Technology.
"The development of VR helmets is also likely to act as a trigger for better commercialization of the entire hardware chain of VR devices," he said.
Compared with previous military and scientific studies on the subject, which were largely unshackled by commercial constraints on R&D, Wang said the technology being demanded by VR consumers means companies are having to invest heavily in talented engineering teams with widespread abilities.
One of the first companies to work on VR content and design in China was lenQiy Ltd.
The 10-person startup is currently working in partnership with another domestic firm, 3Glasses, to produce what it claims will be the first fully immersive VR headset to be made in Asia, which will also provide game bundles to buyers.
Wang Qifan contributed to this story.
Visitors to the ChinaJoy 2015 expo check out the wearable gaming gadgets in Shanghai. [Photo/China Daily]
Instead of being too obsessed with the number of consoles sold so far, Xbox boss Phil Spencer insists the best way to boost sales is to focus on delivering great games to Chinese gamers.
The good news for many console players is that the company's biggest franchise Halo video games will be coming to Xbox One in China on Aug 13, which Spencer considers as a milestone. He is also hoping to bring its next biggest franchise Minecraft into China soon.
Tencent Holdings Ltd has already said it will be offering Infinity Blade on Xbox in China.
In fact many of the games on show on Xbox's stand during the ongoing ChinaJoy games expo in Shanghai will be available in China by the end of the year, said Spencer.
"As our game portfolio strengthens, so will the sales of Xbox consoles in China. The rest of this year will be great for games on Xbox (a company owned by Microsoft Corp)."
As well as highlighting its Western games on offer here, Spencer was also at pains to add that great efforts are being made to make Chinese-made games available too on Xbox, and said having local games that are culturally relevant to local gamers is critical to its long-term success here.
ChinaJoy is Spencer's second visit to China, and he said one of his most important missions during the exhibition will be talking to Chinese publishers and developers.
His goal is not just to make Chinese games available here, but also to help them achieve worldwide success, "and there are great partnership opportunities for us here".
"There are many gamers in China. Meeting with independent developers, I have come to know that people here have grown up playing games. It's who they are. They understand what makes a good game.
"I predict that we will see in the next couple of years a global hit that is created in China, and I want Xbox and Windows to provide the platforms to reach a global audience."
Xbox physically set up in China nine months ago in a trial started in the China (Shanghai) Pilot Free Trade Zone, where it was later joined by its long-time rival, Sony's PlayStation 4.
According to market consultancy IDC, the two companies have sold around 300,000 consoles until now.
"We are still beginning here and if we started to judge our success in China on the first nine months, that would be too short for anybody to assess if we had built our market or made all the right moves," he said.
What's more, Spencer seems not at all perplexed by what some consider the excessive time involved in approving new games or equipment created in China by the supervisory bodies, a hot debate among industry insiders.
Quite the contrary, he insisted he has found dealing with the authorities a smooth process with officials fully understanding the issues facing the industry. "After all, they are new to dealing with console approvals," he said.
Raised on an Irish dairy farm as a child, young Paddy Cosgrave followed his father's advice: 'stay in the house with the computer and away from the cows', said Cosgrove Snr, convinced technology was more likely to be the next big thing.
He was right. And today, just like his father, who also used to convince his farmer friends to use Excel instead of ledgers in the early 1990s, Cosgrave has become an evangelist for technology, by bringing the world's greatest minds together for his own tech conferences.
He founded Web Summit in Dublin in 2010, which is now one of the biggest technology conferences in Europe.
And after noticing an increasing number of web summits were being held in Asia, not the West, he was also drawn to the region by a vibrant startup scene.
So he created Rise－taking place in Hong Kong on 31 July and 1－a new tech event that Cosgrave says will give the region's new generation of tech leaders a place to congregate and demonstrate their expertise.
Calling Hong Kong "the obvious location," Cosgrave told an audience gathered at the local startup incubator StartupsHK at the start of the week, he considered the special administrative region as the prime location to be the "center of the Asian universe".
Despite his optimism, however, Hong Kong has hurdles to clear before it can truly be described as a regional innovation hub, even though the city already enjoys a flourishing startup landscape.
The obvious one is a lack of funding, and a disconnect between fund providers and startups, say insiders, and many in fledgling startups report struggling to access venture capital.
Benny Hui, founder and core member of a series of startups and now head of operations for Asian property listing platform, Spacious, said what's needed is a startup ecosystem.
He believes the local market is too small to attract major VCs, whose eyes are still fixated on Chinese mainland and the US.
Irene Chu, partner and head of the high growth tech and innovation group at KPMG China, agrees.
"One of the major complaints from startups is that getting initial funding is usually not that difficult－but once you get to the secondary round of financing, it becomes a lot trickier," she said.
However, she noted the problem often stems more from a lack of investor experience in funding local startups, than an shortage of funds or interest from the VCs.
Hong Kong is a well-established financial hub with abundant fund and investments at hand, she said, yet most of the sophisticated investors usually invest in more mature companies.
"They just don't know how they can invest," she said, especially those investing in the new economy, rather than backing older traditional types of businesses.
Donny Siu, an adviser at the Entrepreneurship Center at Hong Kong University of Science and Technology, insists that government funding, on the other hand, has been robust as the authorities continue to push for an economy driven by innovation.
He pointed out there are various government schemes and organizations, such as InvestHK, and the Labor Department, offering funding and advice, but added the landscape is "confusing".
Insufficient planning and coordination of these existing resources has now created what he describes as a chaotic scene.
Siu said the situation is so bad that many who have tried to source funding, ended up concluding that they could have actually better-spent their limited time and resources developing their products or businesses, rather than the often-tortuous process of applying for various funds.
A study by Google Inc and the Chinese University of Hong Kong Center for Entrepreneurship in late 2014 did reveal that Hong Kong's startup ecosystem has tripled in size since 2009, with notable growth in startup accelerators and incubators, as well as funding sources.
One notable example of the progress has been in the mushrooming number of venues and outlets offering shared office space, whose numbers have grown from a handful a few years back to more than 40.
An increasing number of incubators and accelerators, meanwhile, has helped boost the number of startups by also providing finance or in-kind resources that are essential to growth.
Experts encourage a joint approach
Hong Kong needs to join forces with neighbor Shenzhen to turn itself into a true innovation and startup hub, observers in the southern city in Guangdong province say.
Renowned as the heaven for hardware companies given its proximity to the huge Pearl River Delta manufacturing base, Shenzhen is already luring many entrepreneurs from Hong Kong to join its burgeoning startup scene, they claim.
Ricky Leung and Data Ng, both University of Hong Kong graduates, are among the growing group. They first set up their business in Hong Kong but have now relocated their 3-D printing business to the Qianhai Free Trade Zone, in Shenzhen.
"Hong Kong investors are mainly from a banking or financial background, while new investors from the Chinese mainland are normally second-generation, who understand the ways of the entrepreneur and his needs far better," Ng said.
Donny Siu, an adviser at the Entrepreneurship Center at Hong Kong University of Science and Technology, said mainland investors are also more willing to take risks than their Hong Kong counterparts, who generally make smaller, more cautious investments.
Deng Yongqiang, chairman of Qianhai Houde Entrepreneur Incubator, also believes the ecosystem in Hong Kong and the local government are not supportive enough to young entrepreneurs, stressing that officials often have little understanding of new innovations or the needs of startups.
"Hong Kong is not suitable for entrepreneurship. But Hong Kong people are," he said, adding he is a strong supporter of Shenzhen-Hong Kong cooperation.
Deng said good ideas and projects in Hong Kong need the support of the massive mainland market, however, as well as the funding and services on offer there.
A worker assembles a robotic arm at a factory in Foshan, Guangdong province. Provided to China Daily
High-tech production, manufacturing and Internet-related sectors to see more investment
Emerging industries will continue to play an important role in driving China's economy.
The National Development and Reform Commission underlined the policy on Thursday when it announced plans to promote new projects involving emerging industries, such as Internet-related sectors, and high-tech manufacturing and production.
By backing these industries, the NDRC hopes private enterprises will invest in emerging industries, which in turn will help stimulate economic growth.
Last year, the NDRC launched seven projects, which included oil and gas pipelines, ecological protection, clean energy, water conservation, transportation, pension services and mining.
In June, urban rail development and modern logistics were added to the list of industries being promoted by the NDRC.
By the end of last month, major projects launched by the government had attracted investment of more than 3.3 trillion yuan ($531 billion), according to Zhao Chenxin, deputy director-general of the department of policy studies at the NDRC.
Much of that investment came from private companies. "Construction involving 228 projects has already started," Zhao said.
Qi Chengyuan, director-general of the high-tech department of the NDRC, said emerging industries will become increasingly important in boosting economic growth in the country. "In promoting emerging industries, the government's emphasis should be on creating a fair market environment," Qi said.
In the past five months, profit growth from emerging industries with an annual income of more than 5 million yuan was 20 percent. This was much higher than the average national level.
In terms of competitive manufacturing, the country will step up efforts in promoting industrial robots, renewable energy vehicles, high-end ocean engineering equipment and modern agricultural machinery as well as medical equipment.
Zhang Hanya, president of the Investment Association of China, said these new packages will help stimulate the economy in the second half of the year.
SHANGHAI - Private equity firm Carlyle Group has invested 530 million yuan ($87 million) in Chinese vending machine operator Beijing Ubox Technology & Trade Co Ltd.
A press release Carlyle issued on Wednesday did not disclose the size of the purchased stake, but said it made the investment through Carlyle Beijing Partners Fund, a Renminbi fund it established with the support of the Beijing government.
"China's vending machine market is still at an early stage of development, with great potential for growth," said Eric Zhang, managing director of the Carlyle Asia buyout team.
In addition to traditional vending machines, Ubox allows customers to shop online via a mobile application and collect purchases at a vending machine.
Established in 2010, Ubox has more than 30,000 vending machines across 58 cities.
"The partnership will allow us to expand our vending machine network in China, improve our digital marketing and advertising business and explore other value-added services for customers," said Ubox chairman Wang Bin.
Wang said China's vending machine industry is expected to grow rapidly in the next 10 years as a result of urbanization and stable economic growth.
Carlyle's latest stake purchase follows a combined $235 million investment in a logistics company in Shanghai and a leasing firm in Beijing in late June.
By that point, it had invested approximately $6.3 billion of equity in 81 transactions in China.
BEIJING - China Securities Regulatory Commission (CSRC) will increase checks on program trading blamed for some of the recent stock market volatility.
CSRC spokesperson Zhang Xiaojun said Friday the agency is examining some cases, and both Shanghai and Shenzhen exchanges have restricted 24 accounts suspected of disturbing share prices or misleading other investors by frequent orders and cancellations.
Program trading usually focuses on a basket of stocks with buy and sell orders executed by a computer program based on predetermined conditions. Program trading amplifies gains and losses and increases market fluctuations.
The CSRC and bourses are verifying the real name of the accounts and analyzing their capital sources and trading strategies to assess the effect on volatility, with targeted measures planned, based on the results.
China's stock market went through a roller-coaster ride this week, with a record plunge on Monday in the past eight years and a rally on Wednesday.
The benchmark Shanghai Composite Index opened 1.35 percent lower at 3,655.67 on Friday.
LONDON - London Stock Exchange (LSE) Thursday announced it welcomes BOCI Securities Limited as its first member from Hong Kong, China.
BOCI Securities, a wholly owned subsidiary of BOC International Holdings Limited (BOCI), joins London Stock Exchange less than two months after regulatory approval was received from Hong Kong's Securities and Futures Commission allowing Hong Kong firms to become members, said LSE in a statement.
BOCI, established in 1998 and headquartered in Hong Kong, is the wholly owned subsidiary of Bank of China, which offers investment banking and securities brokerage services.
BOCI Securities is the trading bourse's fourth member from China and the first from Hong Kong, highlighting London's deep relationship with the region, and reflecting London's historic strength as a global financial centre, said LSE.
LSE membership allows major trading and broking firms to connect directly to Europe's most liquid and international order book, and to trade central counterparty cleared securities including some of the world's largest and well known companies.
Raffaele Jerusalmi, Director of Capital Markets at London Stock Exchange Group (LSEG) said that the inclusion of Hong Kong's firm underscores the unique and increasing appeal that London holds as the venue of choice for Chinese investment, trading and capital raising.
Li Tong, CEO at BOCI, said: "In addition to raising the strategic partnership between BOCI and London Stock Exchange to a new level, this membership will also enhance our customer servicing capability and further strengthen BOCI's leadership position in the market."
Since January 2014, LSEG has built considerably on its relationship with China: seven new Chinese companies have been admitted to LSE; 22 new renminbi, or Chinese yuan bonds have been issued in London and seven new RQFII ETFs (Renminbi Qualified Foreign Institutional Investor Exchange Trading Funds) have listed on the market, including the first ETF in Europe denominated in renminbi, it noted.