FCCC Chairman Bert De Graeve on “Terzake” and China Daily
Mar-31-2014 By : agxadmin
Bert De Graeve, Chairman of the Flanders-China Chamber of Commerce (FCCC) and CEO of Bekaert, appeared on the VRT TV program “Terzake” and in an interview on the pages of the China Daily.
In “Terzake” he said that when Bekaert entered China it was a big potential market with demand for many new goods. A company could enter the market and grow fast. The productivity of companies in China is very high. In China you have to get to know people. You have to visit your customers and their companies. Personal contact is very important, he said.
In an interview in the China Daily, De Graeve talked with reporter Zhang Zhao about the latest developments in business cooperation between the two countries. “Belgian companies-especially Flemish companies-are very flexible and are very accommodating in working with Chinese partners. Both sides have a pragmatic way of working. Our companies are good at analyzing problems and formulating workable solutions. In working together with Chinese partners one should not be patronizing but rather listen and work toward a common approach that will result in a win-win situation favorable to all concerned,” De Graeve said. “Belgian companies such as Bekaert, Barco, Agfa, Umicore and Picanol have their feet on the ground. They have brought world-class technologies to China in many areas that have contributed to the further development of China’s economy and society.” China and Belgium “are capable of working very well together because China is very respectful of smaller partners. Belgium tends to focus on getting business done rather than trying to score political points. Moreover, Belgium has unique access to the European market,” De Graeve added.
He remarked that “the investment climate in China is constantly improving, but there is fierce competition on the market and “to have a fighting chance you need to have a unique product, continue innovating by investing in R&D and keep ahead of the competition by listening to your customers.” Premier Li Keqiang has said that China will provide a level playing field for domestic and foreign companies. “We cannot ask for more. With a level playing field it is up to every company to work to the best of its ability to come out on top of the competition,” De Graeve said. He sees opportunities for European companies in China in the sectors of the internet and mobile communications, healthcare, environmental protection, clean energy, new materials and electric vehicles. “When Chinese companies plan to invest in Belgium it is important to get a good insight on the investment climate, investment funds, the local regulations, tax advantages, the culture and other aspects to build up a network with authorities, our chamber of commerce and our member companies,” Bert De Graeve said.
Chinese banks announce yearly results
By : agxadmin
The Agricultural Bank of China (ABC), the country’s third-biggest lender, posted a 14.6% annual increase in profit last year to CNY166.3 billion, thanks to robust growth in fee and commission income. The bank was the first among the top-five to announce earnings for 2013. Net profit growth was the slowest ever reported. Net fee and commission income rose 11% year-on-year to CNY83.2 billion, which accounted for 17.9% of operating income, 0.25 percentage points up from 2012. Net interest income rose 10% to CNY376.2 billion, but the interest margin dipped to 2.79% at the end of last year from 2.81% a year ago, as China accelerated interest rate liberalization. The non-performing loan ratio (NPL) improved from 1.33% at the end of 2012 to 1.22% in December last year. Fourth-quarter earnings fell 38.1% quarter-on-quarter to CNY28.2 billion because of slower credit growth. The bank’s capital adequacy ratio (CAR) stood at 11.86% at the end of last year, down from 12.61% a year earlier. The bank’s stock has fallen 13.5% in the past six months but is still the second-best performer among the Big Four.
The Bank of China (BOC) posted an 11% increase in fourth-quarter net profit to CNY36.7 billion, beating estimates. For 2013, BOC’s net profit rose 12.5% to CNY156.9 billion from CNY139.4 billion a year earlier. “The bank set clear priorities in a bid to comprehensively tighten risk control, paying particular attention to key fields including overcapacity industries, local government financial vehicles and real estate,” BOC President Chen Siqing said in the earnings statement. BOC’s bad loan provisions fell 15.7% year-on-year in the fourth quarter. BOC’s non-performing loan ratio was flat at 0.96% at the end of December compared with the end of September. Net interest income added 10.4% in 2013, while gains in net fees and commissions rose 17.4%. Its net interest margin was 2.24% at the end of the fourth quarter, compared with 2.22% a quarter earlier. Executives expressed confidence that the bank will get through the nation’s interest rate liberalization program with a competitive edge. As of December 31, 2013, Bank of China had extended loans of CNY853.5 billion to the real estate sector, local government financing platforms (LGFVs) and industries with severe excess capacity.
The Industrial and Commercial Bank of China (ICBC) posted a 10% annual growth in net profit last year to CNY262.6 billion, the slowest since it went public in 2006. Net fee and commission income at ICBC rose 15.3% year-on-year to CNY122.3 billion in 2013, which accounted for 21% of its operating income, up 1.11 percentage points from a year earlier. Net interest income gained 6.1% to CNY443.3 billion. ICBC’s net interest margin shrank from 2.66% in 2012 to 2.57% last year, further proof that China’s accelerating financial reforms hit its profitability. Its bad loan ratio rose to 0.94% from 0.85% a year earlier.
China Construction Bank (CCB) recorded an 11% gain in net profit to CNY214.7 billion for last year. The net interest margin stood at 2.74%, one basis point lower than 2012 but still pushing up the bank’s net interest income by CNY36 billion. The bank’s net fee and commission income grew 11.52% in 2013. The biggest increase came from bank-card fees, which jumped 28% to CNY25.8 billion. Fees from credit cards surged nearly 50%. Operating expenses stood at CNY188 billion last year, up 10% over 2012. Construction Bank’s non-performing loans (NPLs) amounted to CNY85 billion, an increase of CNY10.7 billion, while its bad-loan ratio was 0.99%, unchanged over the previous year.
Bank of Communications (BoCom) posted a 2% drop in its net profit to CNY13.6 billion in the fourth quarter of 2012. For the full year, net profit rose to CNY62.3 billion from CNY58.4 billion in 2012. The bank’s non-performing loan (NPL) ratio rose to 1.05% at the end of December from 1.01% at the end of September. The net interest margin was 2.52% at the end of the fourth quarter, down from 2.53% at the end of the third. Interest income increased by 8.76% to CNY130.66 billion for the full year, while gains in fees and commissions rose 24.4%.
China Merchants Bank, China’s sixth-largest lender by assets, said net profit grew 14.3% to CNY51.7 billion. The bad-loan ratio deteriorated to 0.83% from 0.61%, with the amount of non-performing loans (NPLs) increasing 56.7% to CNY18.3 billion at the end of last year. Deposits rose 9.5%. The net interest margin declined 0.21 percentage point to 2.82%. Merchants Bank’s tier-one ratio rose to 9.27% last year from 8.34% in 2012, thanks to a timely rights offer that raised CNY27.5 billion in September last year. China Citic Bank, which announced a 26.2% gain in net profit, also saw asset quality slightly decline last year, with the bad-loan ratio up 0.29 percentage point to 1.03% from a year ago.
More firms are waiting for late payments
By : agxadmin
More than 80% of Chinese firms selling on credit have had to lengthen payment deadlines and increasingly write off missed payments as bad debt, says a report by Coface that shows a worsening trading environment is affecting corporate profitability. The decline in settlements is having a ripple effect across small and medium-sized enterprises (SMEs) and affecting the shadow banking sector. The number of firms waiting more than 120 days for payment more than doubled from 5% in 2012 to 11.4% last year, said the report. About 81.9% of the nearly 1,000 firms surveyed experienced overdue payments last year, compared with 77.2% in 2012. Overdue payments represented an ever-higher percentage of turnover, and if a bill was not settled within 180 days, there was an 80% chance it would not be paid at all. The worst-affected sectors are household electronics, chemicals and industrial machinery. Eighteen months ago, a firm would wait an average three to six months for receivables. Now it was six to 12 months, FTI Consulting Managing Director Bill Sims said. He suggested to ask for more money in advance when selling products to mitigate the risk. Eric Sun, Managing Director of household electronics firm Kinox said department stores were doing whatever they could to delay payments, and suppliers were waiting at least four to five months for payment, the South China Morning Post reports
Cinda warns trust defaults are rising rapidly
By : agxadmin
Bad debt is on the rise, with bad-debt manager China Cinda Asset Management warning that a default peak season is approaching after years of rapid yet questionable growth. The company, established 15 years ago by the central government to buy back bad loans from big banks, is seeing buying opportunities emerging as baskets of trust products are expected to go sour and commercial banks come under greater pressure to sell non-performing loans amid liquidity pressure. “China’s trust products have been increasing by 50% annually over the past years, a pace that is problematic,” Cinda President Zang Jingfan told a press briefing in Hong Kong. “Trust defaults could explode in a concentrated period of time.” Cinda Vice President Wu Songyun said the total amount of trust products in China was CNY10.9 trillion, most of which had been built up in the past four years. UBS estimates that more than 20 trust products worth CNY23.8 billion have encountered payment difficulties since 2012. Trust companies have acted as intermediaries to arrange funding from wealthy investors for firms operating in industries that banks have spurned, such as coal, solar energy and property. China has witnessed two defaults of trust products this year. At the end of last year, Cinda was holding CNY2.9 billion worth of trust products, of which one third was available for sale, according to its annual report, the South China Morning Post reports.
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Shanghai FTZ’s negative list to be shortened
By : agxadmin
The so-called “negative list” for investment in the Shanghai free trade zone (FTZ) may be cut by 40% in 2014, meaning more sectors will be opened up to investors in the zone, according to Zhou Zhenghua, Director of the Development Research Center of the Shanghai government. The list currently includes 190 special regulatory measures, covering a broad range of activities. The list is reviewed annually. Shanghai Mayor Yang Xiong said two concerns stood out: “One concern is the list is too long. Another is how to secure its transparency”. “Further liberalization of service sectors, including senior care, architectural design, accounting and auditing, e-commerce and film production, is among the priorities for the pilot zone this year,” said Jian Danian, Deputy Director of the China (Shanghai) Pilot Free Trade Zone Administration. The Administration also plans to lower the threshold for foreign investment in emerging industries such as marine engineering equipment, aerospace manufacturing and new energy, he added. According to a note from Haitong Securities, enterprises and investors should have fresh confidence in the FTZ as policy relaxations in the zone accelerate and favorable conditions boost trade.
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