Alipay has upgraded its mobile application for smartphones to a version that allows users to pay for purchases even when they are not connected to the internet. The latest version of Alipay Wallet is based on a sound-wave technology that connects users’ phones with vending machines. Sound wave payment technology uses the white noise generated by smartphones to transfer digital information to other Alipay Wallet-equipped devices in the vicinity. Users can also electronically manage their credit cards, discount coupons and air tickets. Alipay has also partnered with more than 100 banks and financial institutions to allow inter-bank transactions free of charge. Cross-bank transfers often incur hefty service fees, sparking concern among bank customers. Currently, some 200 banks and 400,000 e-commerce vendors or online units of brick-and-mortar stores accept Alipay as an online payment channel. Alipay’s mobile use is also becoming more popular. 82% of all Alipay users inject money into their virtual accounts via portable devices. An average of 25,000 customers use Alipay’s wireless payment services every minute. Installations of the mobile app are 2.5 times higher than those on desktop computers, with the amount of transfers 1.5 times higher. The platform accounts for three-quarters of the country’s wireless payment market－according to consultancy iResearch. But rival Tencent has now also included payment integration functions into its popular WeChat app. Alipay has more than 650 million registered users, support for transactions in 14 major currencies and partnerships with up to 100 financial institutions, including Visa and MasterCard. The company plans to enter Taiwan in the first half of next year, Alipay Vice President Fan Zhiming said in a report. Internet consultancy iResearch said Alipay cornered 49.2% of the CNY3.7 trillion Chinese third-party online payments market last year. Hong Kong-listed Tencent’s Tenpay was the second-largest player with a 20% market share.

NQ Mobile has joined an elite club of top Chinese web firms with a new USD172 million major bond issue. The company, formerly known as NetQin, sells security software and competes with Kingsoft and with Qihoo 360, whose free security software is becoming the subject of growing controversy. NQ Mobile is now one of the U.S.-listed Chinese tech firms with market values of over USD1 billion, which number less than 20. In the announcement of its new bond offer, NQ said it will use the money partly to fund acquisitions. Purchases could come in a number of areas, including its core security software, its expanding mobile game portfolio and also its growing international business. Short seller Muddy Waters’ called to sell shares of NQ Mobile, saying the company inflated sales. NQ Mobile’s shares plunged, slashing its market value by USD561 million, after its American depositary receipts (ADRs) had gained 279% this year. “At least 72% of NQ’s purported 2012 China security revenue is fictitious”, according to Muddy Waters and NQ Mobile’s market share in China was about 1.5%, against the about 55% it reported. Its China paying user base was less than 250,000, against the 6 million claimed, still according to Muddy Waters. NQ Mobile rejected the allegations, saying the company would respond with more details.

Hardware

• All 100,000 units of Xiaomi’s latest flagship smartphone, the Mi-3, sold out in 86 seconds online. The Mi-3 is the world’s first smartphone running on Nvidia’s Tegra 4 quad-core chipset. The 16-gigabyte version of the Mi-3 sells for CNY1,999.
• Lenovo has hired actor Ashton Kutcher to promote its computers, smartphones and tablets. Kutcher, who stars on the television show “Two and a Half Men”, has more than 15 million followers on his Twitter microblog, and had the title role in “Jobs”, a biopic on Apple’s co-founder released in August.
• Samsung apologized to Chinese consumers and promised to improve after-sales service for two smartphones after China Central Television (CCTV) alleged that the two models have “serious design flaws” that were not included in the warranty. Samsung, which has around 20% share in the Chinese smartphone market, promised to extend the warranty period by a year for the Galaxy S3 and Note 2 models produced before November 30, 2012. The problems, probably caused by a memory chip, were originally not covered by Samsung’s warranty. Some customers payed CNY800 to CNY2,000 for repairs.
• Apple will start selling its next-generation iPad – the iPad Air – in China on November 1. It will cost from CNY3,588 for the 16 gigabyte (GB) model to CNY5,688 for the 128 GB model. The iPad Mini with Retina display will be available later in November and be priced from CNY2,888 for the 16 GB model to CNY4,988 for the 128 GB model. Apple also upgraded its flagship laptop Macbook Pro. This is the first time that China has been included in the first batch of markets for a new iPad release.
• Luxury mobile phone marker Vertu launched its second Android phone, the Constellation, in Hong Kong. Vertu Chief Executive Massimiliano Pogliani also told the South China Morning Post that Vertu would develop audio devices as part of its luxury product portfolio. The mid-tier Constellation, with prices starting from HKD52,000, marks the British firm’s second major product launch this year, following the release of its top-of-the-line Ti model in February. Vertu, which has annual sales of about €300 million, counts China – the mainland, Hong Kong, Taiwan and Macao – as its biggest market worldwide.

Operators

• China Mobile, the world’s largest telephone company, posted an 8.8% profit decline – the most since 1999 – to CNY28.4 billion in the third quarter as costs to build its new fourth-generation network increased. Sales totaled CNY159.9 billion in the quarter. Chief Executive Li Yue intends to roll out commercial 4G services by the end of the year that will boost capital spending by 49% this year. China Mobile said the average monthly net additional customers for the first three quarters reached nearly 5 million and, as at September 30, the number of customers amounted to 755 million.
• China will issue 4G licenses by the end of this year as originally planned, the Ministry of Industry and Information Technology (MIIT) said. At the end of September, China had more than 1.21 billion mobile phone users, with 368 million of them using the 3G network. In the first nine months of this year, China’s telecommunications revenue was CNY870.9 billion, up 8.6% from a year earlier. The value of e-commerce transactions totaled CNY7.5 trillion in the period, a 35% jump from a year ago.
• China Unicom (Hong Kong) posted a 51% increase in third-quarter net profit to CNY3.06 billion, driven by robust 3G subscriptions. For the first nine months, net earnings soared 53.6% from a year earlier to CNY8.37 billion. “The number of 3G subscribers has reached 110 million and the growth is expected to continue”, said Ma Jun, Analyst at Hua Chuang Securities. In the first three quarters, total revenue rose 18.9% year-on-year to CNY220.17 billion, Unicom said. Unicom had 272.76 million mobile subscribers at the end of last month, of whom 111.63 million were 3G users.
• China Telecom Corp, the country’s third-biggest mobile phone company by users, achieved a better-than-expected gain of 20% in quarterly profit to CNY4.5 billion as it benefitted from an increased 3G user base and data income. Chairman Wang Xiaochu attributed the growth in net profit to 3G users and iPhone owners, who subscribe to heavy data packages and various value-added services. The telco’s revenue jumped 12% in the three months ended September 30 to CNY80.7 billion. By the end of September, China Telecom had 96.5 million 3G users, over half of its total user base of 181 million.

Radio, film & TV

• Hong Kong’s Executive Council has decided to issue just two new free-to-air TV licenses, fearing more licenses would lead to fierce competition and the closure of TV stations. PCCW’s Hong Kong Television Entertainment and i-Cable’s Fantastic TV received the new licenses, while Hong Kong Television Network (HKTV) failed to obtain one. Chief Executive Leung Chun-ying said the whole market’s sustainability was a concern.
• Shanghai Jiao Tong University plans to showcase “naked-eye” 3D technology – which puts a 3D lens onto the screen, allowing viewers to watch 3D images without glasses – at the 15th China International Industry Fair, which runs from November 5 to 9 at the Shanghai New International Expo Center in the Pudong New Area. The university will also introduce a 3D Pad for watching 3D movies and playing 3D games.
• Samsung Display said that its first LCD plant in China has started operations, joining rivals who are boosting capacity even as TV markets shrink and flat screens are in oversupply. Chinese companies such as BOE Technology Group and TCL’s LCD unit CSOT are undercutting the world’s two biggest LCD makers and winning market share with robust sales to local TV manufacturers.

Software

• The popularity of mobile phone apps differs markedly from one city to another, according to the Horizon Research Consultancy Group of Beijing. In big metropolises such as Beijing and Shanghai, navigation software is popular, while users in smaller cities tend to use smartphones more as video game machines. Social networking apps top the popularity list in big and small cities alike. Among 1,973 respondents aged 18 to 32, 53.8% of those from big cities use social networking apps often, while in third- and fourth-tier cities, the figure is about 41%.

Telecom Mfg. Co.

• Huawei has hired Serge Abou, the EU’s top representative to China between 2005 and 2011, as a consultant in Brussels to provide general strategic advice on matters relating to the global economy and political matters. The former Ambassador had to wait two years before taking up his new position, but is still not allowed to represent the Chinese telecommunications company when dealing with the European Commission. Huawei spent €3 million on lobbying the EU last year, according to the EU’s Transparency Register, making the company the eighth-biggest spender on lobbyists in Brussels.
• Huawei Technologies will invest USD200 million to set up a new research center in Britain. The center will conduct studies on photo-electrons, mobile end design and software development. Huawei will also expand the existing UK research center team to 300 engineers by 2017 from 80 now.
• Huawei Technologies said in a report on cybersecurity that it never has been asked to provide information about a citizen to any government, Huawei’s Vice Chairman Ken Hu said in a report. Huawei is the world’s second-largest supplier of telecoms network gear after Sweden’s LM Ericsson. Its 2012 profit rose 33% over the previous year to CNY15.4 billion on sales of CNY220.2 billion.
• ZTE, the world’s fifth-largest supplier of telecommunications equipment, posted a 112% jump in net profit to CNY241.6 million in the third quarter compared with the same period last year, while revenue reached CNY17.1 billion, representing a decrease of 5.6%. The company reported a net profit of CNY551.6 million for the first nine months of the year, up 132.4% year-on-year. Operating revenue was CNY54.7 billion, down 10%.
• Huawei Technologies and Dubai-based Drake and Scull International (DSI) said they agreed to work together on ICT development projects in the Middle East and North African region in building up data center technology.
• Australia’s new government has decided to maintain a two year old ban on Huawei from working on the nation’s high-speed broadband network. The previous center-left Labor Party government banned the Australian subsidiary of Huawei Technologies in late 2011 from tendering for work on the multi-billion dollar National Broadband Network (NBN) based on security concerns. Huawei Australia Chairman John Lord has maintained that his company poses no threat and complained that the reasons for the ban were never explained.

Web

• Alibaba Group plans to revolutionize China’s retail industry, investing USD16 billion in logistics and support by 2020, and open up China’s vast interior. CEO Jonathan Lu says Alibaba expects to nearly triple the volume of transactions on its marketplaces Taobao and Tmall to about CNY3 trillion by 2016, overtaking Walmart Stores as the world’s biggest retail network. Analysts predict e-commerce will account for a fifth of total retail sales in China within five years, up from just 6% last year.
• Alibaba Group has forged an anti-counterfeiting pact with French fashion house Louis Vuitton Malletier, agreeing to take down listings of suspected counterfeit goods and implementing preventive measures against the sale of fake merchandise. It marked the first time that a brand under LVMH Moët Hennessy Louis Vuitton, the Paris-based luxury goods conglomerate, has collaborated with a leading e-commerce platform in China to combat counterfeiting. U.S. luxury brand Coach, a New York-based maker of bags and accessories, had signed a deal similar to Louis Vuitton’s with Taobao Marketplace in December 2011.
• Tmall, the B2C unit under Alibaba Group, said it will offer CNY300 million worth of cash vouchers and encourage consumers to share gift coupons with friends to allow more participants at its annual shopping spree on November 11. The number of merchants involved will double to 20,000. Last year, transactions on the so-called Single’s Day recorded by both Tmall and Taobao reached CNY19.1 billion after discounts of at least 50% were promised on a massive range of goods. The company also said it aims to double the capacity of its internet servers to prepare for the large influx of visitors.
• Alibaba Group more than doubled its profit in the second quarter to USD707 million, as revenue soared 1% from a year ago to USD1.74 billion.
• Alipay, China’s largest third party payment service provider, said it will keep the partnerships with domestic commercial banks. China UnionPay, the country’s sole bank card transaction firm, last year asked all non-financial institutions to connect their payment service through UnionPay instead of directly linking to banks. Last month, the Alibaba Group formed a strategic alliance with China Minsheng Banking Corp in a bid to offer financial services to online shoppers.
• Yahoo said it would keep a larger stake in Alibaba Group than originally planned after the it goes public, hoping to profit from the company’s future growth. Alibaba is expected to file for an estimated USD15 billion IPO next year, valuing it at more than USD100 billion. Alibaba has decided not to list its shares in Hong Kong but has not yet committed to listing on any other exchange.
• Alibaba Group Chairman Jack Ma has asked each employee to collect at least 100 external contacts by the end of November on Laiwang, the company’s little-known smartphone messaging application. Ma called on the company’s employees to raise the profile of Laiwang to compete against Tencent’s extremely popular WeChat, implying that those who did not hit the target would lose their bonus. Laiwang allows users to log in using their Taobao account. However reactions to Laiwang have been disappointing since its launch, drawing only one million users, while WeChat claims to have more than 400 million users.
• Baidu Wallet’s website crashed as it was unable to process the massive number of users who tried to access the system after the company launched the sale of an asset-management product in collaboration with China Asset Management Co. Baidu said the total CNY1 billion quota was sold out in two hours after the system resumed operations. Baidu Wallet found an initial 120,000 buyers, company Spokesman Kaiser Kuo said. On average, these initial investors put CNY8,333.33 into the new financial service, which plans to achieve 8% returns on investment annually.
• Dianping, a restaurant review website, reported to police that it was deceived by an unnamed party into selling non-existing McDonald’s promotional meal deals, causing a loss of CNY2.2 million to the website. Dianping said the purchases will be refunded to consumers and they will also receive additional compensation.
• Baidu’s quarterly profit rose 1.3% to CNY3 billion as it invested to expand its fledgling mobile business. Revenue surged 42.3% to CNY8.9 billion but sales and administrative costs more than doubled, due mostly to mobile-related expenses. Development costs soared 77.5%. Baidu’s latest profit growth was below the double-digit rates of previous years but represented a rebound from the previous quarter’s rare 4.5% contraction in net earnings.

One-line news

• State-owned engineering firm Beijing Changfeng Microelectronics Technology has successfully used China’s home-grown Beidou navigation satellites to help collect upper-atmosphere weather data, another step towards ending the country’s dependence on U.S.-controlled GPS technology. The company says its radiosonde system – which collects atmospheric data – provided more accurate data than equipment using GPS alone.  Beijing Changfeng is developing civilian applications for the Beidou system.
• Haier, Sina Weibo, and ZTE all announced new foreign tie-ups. U.S. private equity firm KKR plans to take a 10% stake in Shanghai-listed Qingdao Haier; Sina concluded a deal with U.S. data mining firm Socialgist to tap the huge volume of data generated on the Sina Weibo social networking site, which has 500 million users but is still losing money; and ZTE has signed its first major product endorsement tie-up in the U.S. with the Houston Rockets of the National Basketball Association (NBA) to become their official smartphone brand.
• China’s Beidou navigation system industry is expected to be producing revenue of CNY400 billion by 2020 with global satellite coverage, wide civilian use and convergence of mobile devices. China’s Ministry of Industry and Information Technology (MIIT) expects that by 2020 the Beidou Navigation Satellite System will be adopted by more than 60% of navigation systems in the domestic market.
• Taiwan-based Foxconn has admitted some of its student interns worked night shifts and overtime in violation of company policy in its facilities on the Chinese mainland. A university in Xian forced students to join the Foxconn internship program in Yantai, Shandong province, in order to graduate. They were assigned to assembly lines to make Sony’s PlayStation game consoles instead of doing any work relating to their major and were sometimes forced to work 11 hours a day.
• IBM reported a 4% drop in third-quarter revenue to USD23.7 billion. Hardware sales declined in China, which accounted for about 5% of IBM’s business.

Time: 2013-11-21, 09:00 – 18:00 h.
Venue: The Great Hall of the People, West Chang’an Street, Beijing
Fee: CNY2,500
Type: Seminars

Event info:
The EU-China Business Summit, organized by the European Chamber and CCPIT, under the patronage of the European Commission and MOFCOM, and with the collaboration of EU China Business Association and BUSINESSEUROPE, will take place at the Great Hall of the People in the final weeks of November. The date will be confirmed after discussion with CCPIT and the European Delegation. It is likely to be scheduled for 21st November.

With limited seats available, reserve your place now.

The European Chamber expects European Commission President Jose Manuel Barroso to speak as he did last year, as well as Chinese Premier Li Keqiang. This year’s summit will gather around 700 Chinese and European attendees, including global CEOs and board members as well as many China CEOs and VPs.

The final agenda and speakers will be confirmed in the coming weeks, but expect speakers this year to be of the calibre of the 2012 Summit’s line-up, with high-level officials representing both Chinese and European ministries, like:
Mr Wen Jiabao, Former Prime Minister of the People’s Republic of China
Mr Herman Van Rompuy, President of the European Council
Mr Jose Manuel Barroso, European Commission President
Mr Yu Ping, CCPIT Vice Chairman
Mr Li Tie, Director of the China Urban Development Center at the NDRC
Mr JØrgen Buhl Rasmussen, President and CEO of Carlsberg Group
Mr Yang Yunsong, Chair of the APEC Business Advisory Council’s SME & Entrepreneurship Working Group and President of XY Group International
Mr Shi Lirong, President of ZTE Corporation
Mr Stefan Doboczky, President of DSM Sinochem Pharmceuticals
Mr Xian Wenbo, President of Sany Heavy Industry Co., Ltd
Mr Davide Cucino, European Chamber President
Mr Stephen Phillips, Chairman EU China Business Association

For registration, contact Ms. Danni You at dyou@europeanchamber.com.cn or 010-64622066 ext 54. For sponsorship opportunities, contact Ms. Betty Yin at byin@europeanchamber.com.cn or 010- 64622066 ext 23.

In the framework of the China-EU Summit in November, the Urbanization Forum and the EU-China Exhibition on urban development will be held in Beijing. A total of 800 participants are expected to attend the forum, among which 500 from the Chinese side and 300 from the EU. Representatives from Chinese central government, local governments, businesses, experts and media are welcome. On the EU side, officials from the European Commission, representatives from EU missions in China and business community are welcome. The Forum plans to invite Premier Li Keqiang and leaders of the European Commission to deliver speeches at the opening ceremony. Several sub-fora will also be held. The Forum will take place at the Great Hall of the People in Beijing on November 20 and the Exhibition will be held on November 20~22 at the Beijing Exhibition Center.

For more information, contact the Flanders-China Chamber of Commerce at info@flanders-china.be