Chinese property developers report strong profits but credit curbs could spell trouble
Mar-27-2018 By : fcccadmin
Chinese property developers have posted strong revenue and profits for 2017, but liquidity remains a concern as the government keeps a tight lid on financing to cool the housing market. By revenue, China Merchants Land came out on top with 49% growth, while SOHO China reported the biggest increase in profit, up 420% from the previous year.
Country Garden, China’s largest developer by sales, reported CNY550.8 billion of contracted sales in 2017, up 78.3% from a year ago and beating the CNY400 billion target it set itself at the beginning of last year. Profit grew 126% to CNY26 billion. The firm expects to see sales increase again this year although it has set no specific sales target for 2018, instead choosing to “adjust sales strategies depending on the market,” according to Cheng Guangyu, Vice President of Country Garden. China Resources Land recorded contracted sales of CNY152.12 billion, up 40.8%, while China Merchant’s “profit attributable to the owners” doubled thanks to a 51% increase in its contracted sales to CNY24.16 billion.
“National property sales are slowing down, but for big listed developers it is not a problem,” said Toni Ho, Analyst at RHB OSK Securities Hong Kong. “The optimism comes from the robust contracted sales they registered during 2016-17, which can support revenue in 2018-19.” Developers’ financial results usually lag one or two years behind their current contracted sales, so the impressive 2017 results reflect strong contracted sales in 2015-16. In the past year, the 10 biggest Chinese developers by market capitalization posted an average of 56% growth in contracted home sales, according to Bloomberg, which bodes well for their earnings prospect in 2018. “Developers who have earned a large sum of money in the past couple of years are generally quite optimistic about the market,” said Alan Jin, Property Analyst at Mizuho Securities Asia.
But Jin believes developers may start to feel the strain from tighter policy constraints later in the year. China’s government has introduced a string of measures since last year to cool the property market, including restrictions on house-purchase eligibility, loans and selling prices, the South China Morning Post reports.
Analysts said even if sales slowed this year, the impact will not be seen in the company results until after 2018.
China turns cautious over expanding the Shanghai free-trade port
By : fcccadmin
Chinese authorities have turned cautious over the expansion of Shanghai’s free-trade zone (FTZ) into a free port along Hong Kong lines, concerned that unfettered flows of goods and money could pose a risk to financial stability. Shanghai authorities have yet to decide on the size and location for the free-trade port – an upgraded version of the free-trade zone (FTZ) that was launched in late 2012. Officials are still giving priority to safety and stability in reviewing the two proposals for the port. One of the concerns is that monitoring mechanisms may not be adequate to ensure that goods and money stay inside the port area and do not flow outside it without being subject to duties.
“Officials are still worried about risks as they believe large commodity and fund flows would be difficult to control in the initial stage,” one source said. “Some of the funds and commodities may flow out of the zone without approval or tariffs.” Shanghai began to draw up plans for the free-trade port last year and submitted two proposals to the central government for review and approval earlier this year. Senior government officials have previously said the port would be a fully open market in line with international standards and on a par with Hong Kong and Singapore. The port would technically be an “offshore territory” slated for reforms on a trial basis. Products manufactured inside the zone would be tariff-free, but customs would levy a tariff if the finished products were sold to clients outside the area.
According to one proposal Lingang New City, a 300 sq km area that connects to Yangshan port – a container terminal just south of Shanghai, would be earmarked for the development of the port, but the sources said the other proposal was to combine part of the Zhoushan Islands in Zhejiang province with Yangshan port.
A free-trade port should have a large geographical size for manufacturing, commercial and warehousing purposes, said Chen Bo, Professor at the Huazhong University of Science and Technology and Adviser to the Shanghai municipal government. “The Yangshan deep water port, which covers a total area of about 2 sq km, appears to be too small for a free-trade port,” he said. In Shanghai’s existing 120 sq km free-trade zone, tariffs are still imposed by customs authorities and cross-border money flows under the capital account are closely monitored and subject to regulatory approval. The Industrial and Commercial Bank of China (ICBC) said in a research report that the free-trade zone in Shanghai lagged far behind Hong Kong and Singapore in terms of trade and investment facilitation, openness of the financial market and preferential taxation policies. The central government is expected to issue guidelines for operating a free-trade port soon, the South China Morning Post reports.
Quality and sustainability of city development measured
By : fcccadmin
The China Integrated City Index 2017, developed by the National Development and Reform Commission’s Development Planning Department and the Cloud River Urban Research Institute, ranks 297 Chinese cities based on three main dimensions: society, economy and environment. The Index is an annual ranking of Chinese cities and the first edition was published in 2016. Beijing, Shanghai and Shenzhen are the top three cities in the overall ranking of 2017, followed by Guangzhou and Tianjin in fourth and fifth positions. Shanghai was the top city under the economic index while Shenzhen led the ranking in terms of environmental quality. The ranking was built on the analysis of vast amounts of original data including satellite remote sensing data, and utilized a total of 175 indicators to carry out a comprehensive assessment of the cities, according to Zhou Muzhi, Professor of Economics at Tokyo Keizai University and Director of the Cloud River Urban Research Institute.
Beijing ranked No 1 under the index of society for its capital status, international influence, quality of cultural and entertainment life and consumption level that no other cities can compare with. But in some sub-indexes of society, the capital city had a weak performance. For instance, Beijing ranked 169 under the index of population growth rate, 294 under the index of traffic safety and 290 under the index of housing price to income ratio. Chongqing is another interesting city. As an economic center and transportation hub in Southwest China, the city ranked sixth in the overall ranking. However, Chongqing is the only city among the top 30 that had population outflows.
The China Integrated City Index 2017 introduced the concept of densely inhabited district (DID), referring to districts with a population density of more than 5,000 inhabitants per square kilometer. The top 30 cities accounted for 40% of the country’s total GDP, 89.7% of Fortune 500 Chinese companies, 67.2% of the country’s listed companies on the main board and 80.7% of the country’s total imports of goods, the China Daily reports.
Baker McKenzie FenXun: China’s new era of graft-busting promises a tougher regime ahead
By : fcccadmin
On 20 March 2018, China’s National People’s Congress (“NPC”) passed the Supervision Law detailing the powers and responsibilities of the National Supervision Commission (the “New Commission”). The New Commission is China’s highest anti-graft agency and was established at the first session of the 13th NPC.
Under the new law, the New Commission provides a centralized supervisory system for anti-corruption enforcement and merges the Ministry of Supervision under the State Council and the department of anti-corruption investigation of the Supreme People’s Procuratorate (“SPP”). It will also carry out the responsibilities of the Communist Party of China’s Central Commission for Discipline Inspection (“CCDI”).
Our alert discusses the implications of this important development and some of the highlights of the reform.
What does this mean for Companies doing business in China?
The new law entrusts supervision commissions to oversee individuals across public sector entities including party organs, legislatures, governments, courts, procuratorates, political advisory bodies, as well as their own staff, executives of state-owned enterprises, management staff of public institutions and mass organizations (collectively referred as “Officials”).
Workshop Negotiating with the Chinese: Cultural Roots & Practical Recommendations – 24 April 2018 at 13h30 – Zwevegem
Mar-20-2018 By : fcccadmin
“Building a win-win partnership through the art of negotiation”
The Flanders-China Chamber of Commerce, VOKA West Flanders and the Cheung Kong Graduate School of Business have the pleasure to invite you to the workshop: ‘Negotiating with the Chinese: Cultural Roots & Practical Recommendations’, which will take place on April 24 at 13h30 at Bekaert NV, Bekaertstraat 2, 8550 Zwevegem.
Mr Bo Ji, Chief Representative Europe & Assistant Dean Global Executive Education of the Cheung Kong Graduate School of Business, will be the keynote speaker.
This seminar offers guidance to business leaders on how to leverage cultural differences, complexity, uncertainty, and conflicts during the negotiation process with their Chinese partners. It delivers direct impact on a company’s bottom line to support individuals who are doing business with a fast-changing China.
Attendees will gain a comparative understanding of the practical Chinese and Western approaches to negotiation as well as sharpen their own negotiation skills through learning from multiple case studies and real-life contexts. Furthermore, they will identify the cultural roots behind business scenarios, which will provide them with the knowledge to reshape their strategies and tactics. The attending business leaders will also learn to optimize their approach to a win-win value creation through negotiating with the Chinese to achieve a sustainable partnership.
Programme
13:30 Registration
14:00-14:15 Opening Remarks by Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce
14:15-15:00 China vs West: different cultural negotiating models
15:00-15:45 Chinese cultural roots and elements to shape the negotiating skills
15:45-16:00 Break
16:00-16:45 Strategies that lead you to a better negotiation outcome
16:45-17:00 Group discussion
17:00-18:00 Networking
If you are interested in attending this event, please register here.
Practical information
Location: Bekaertstraat 2, 8550 Zwevegem
Price for members: € 180 (excl. VAT) – Price for non-members: € 240 (excl. VAT)
Contact
Ms. Lijuan Yu – CKGSB: lijuanyu-pt@ckgsb.edu.cn
FCCC: info@flanders-china.be
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