Short news
August 21, 2017 Category Short news, Weekly
Automotive
- Geely Automobile Holdings’ revenue and profit more than doubled in the first half of this year amid robust sales of its sedan and sport-utility vehicles (SUVs). The company also revised upward its full-year sales volume from 1 million units to 1.1 million units. Geely Auto’s net profit surged 128% to CNY4.34 billion in the first six months, as total revenue jumped 118% to CNY39.42 billion during the first half year. Geely Auto’s sales in the first six months surged 89% from the first half last year to 530,627 vehicles.
- Ford Motor has challenged the trademark application for Geely’s new car brand Lynk & Co. Lynk & Co’s first car, a compact SUV, is set to hit the Chinese market later this year and was scheduled to reach the United States around 2018, where it is was expected to generate some 20% of Lynk’s annual global sales of 500,000 vehicles around 2020. Ford however argued that Lynk & Co sounds too similar to its premium arm Lincoln and may confuse its customers. Ford has till November 15 to formally file its opposition to the Link & Co trademark.
Finance
- Alipay, China’s biggest digital payments platform, has joined forces with San Francisco-based online review provider Yelp to bring its local content to millions of Chinese travelers through Alipay’s mobile lifestyle app. Alipay also has a partnership with U.S. payment processing specialist First Data Corp to cover a network of more than six million retailers and 4,000 financial institutions around the world.
- The world’s largest aluminum smelter, China Hongqiao Group, will get an HKD8 billion financial lifeline from Citic Group to repay bank loans, as it borrowed its way to having the world’s biggest installed aluminum producing capacity. Hongqiao agreed to sell 806.6 million new shares and USD320 million of convertible bonds to Citic and the conglomerate’s unit CNCB (Hong Kong) Investment. The sale could give Citic up to 13.3% of Hongqiao, making the conglomerate the smelter’s second-largest shareholder. Hongqiao has the capacity to produce 6.46 million tons of aluminum a year.
- China’s latest economic figures suggest the central bank is having to walk a fine line between controlling debt and supporting the government’s development plans, analysts said. The broadest measure of money supply M2 rose 9.2% in July, its lowest ever monthly expansion and far below the government’s 12% annual target. Meanwhile, the value of all loans in the economy, or “aggregate social financing”, increased by 13.2% year-on-year in July, against a target of 12%.
- China’s new loans in July fell to their lowest in eight months due to property curbs that have cooled mortgage lending and seasonal effects, reinforcing views economic activity will slow in the second half. Chinese banks extended CNY825.5 billion in net new yuan loans last month – the lowest since November 2016 – down from CNY1.54 trillion in June.
- Household loans, mostly mortgages, fell to CNY561.6 billion in July from CNY738.4 billion in June, according to Reuters calculations based on the PBOC’s data. Household loans accounted for 68% of total new loans last month, up from 48% in June.
- Foreign banks in shanghai posted a 6.4% rise in total assets to CNY1.36 trillion in the first half of the year and made progress in innovation as well as deepening cooperation with Chinese banks for the Belt and Road initiative. Their loan balances and deposit balances rose while the non-performing loan ratio fell to a two-year low of 0.51%.
- China is again the biggest foreign holder of U.S. sovereign debt after boosting its holding for a fifth consecutive month with a strengthened yuan and eased capital outflow pressures. The country purchased USD44.3 billion of U.S. treasury bonds in June, the most in six years, bringing its total holding to USD1.147 trillion, according to the U.S. Treasury Department.
- China’s credit asset quality remains generally stable, with the non-performing loan (NPL) ratio of commercial banks unchanged, quarter-on-quarter, at 1.74% as of June 30. During the same period, commercial banks in China posted a slight increase of 3.56% in the balance of non-performing loans (NPLs) to CNY1.64 trillion, according to the China Banking Regulatory Commission (CBRC).
- China’s official Xinhua News Agency has called for reining in the risks from bitcoin trading even though trading volume of the virtual currency in Chinese yuan has dropped from 95% to 15% this year in the global market, an indication that Chinese authorities’ regulatory efforts are paying off.
- China Merchants Bank, China’s first joint-stock commercial bank, posted profits for the first half of 2017 that were 11.4% higher compared to the same period last year. Pre- tax profits reached CNY39.26 billion, thanks to higher net interest income of CNY70.9 billion, up 5.1% year-on-year, and improved asset quality. China Merchants Bank’s net interest margin (NIM) was 2.5%, 2 basis points higher than at the end of the first quarter.
- China will continue to refine the value-added tax (VAT) reform pilot program to enable further economic transformation and upgrades, according to an executive meeting of the central government chaired by Premier Li Keqiang. The reform was first piloted in Shanghai in 2012, and was expanded nationwide in May 2016. China’s VAT rate structure was further cut from four to three tiers (6%, 11% and 17%) last month. The total amount of tax cuts from the pilot program has reached CNY1.61 trillion as of June.
Foreign investment
- Chinese investors will have to get special approval from Beijing to put their money in overseas property and sports clubs under tough new restrictions. Companies would also need regulatory approval for outbound investments in hotels, the film industry and other forms of entertainment. Similar restrictions apply for companies setting up overseas equity funds or investment vehicles not tied to specific projects. On the other hand, the government supports stronger tie-ups with foreign hi-tech and advanced manufacturing firms, and encourages domestic firms to set up research centers overseas. Chinese companies spent a record USD170 billion on offshore assets last year.
IPR protection
- A patent infringement lawsuit filed by an individual against the bike-sharing company Mobike is being heard at the Shanghai Intellectual Property Court. The plaintiff claimed he had designed a system allowing motorbike owners to unlock their bikes without a key so as to reduce the risk of theft. He said that under his design each user would be given an exclusive QR code that they needed to store on their mobile phone. They are required to have the code scanned by a micro-camera installed on their bike. He added he had sent his QR recognition technology to the State Intellectual Property Office (SIPO) in 2013 and was granted a patent in May last year. He claimed Mobike used the technology without authorization.
- China’s Supreme People’s Court has ruled that the two leading brands of herbal tea may both use the exact same packaging, as long as they do not harm each other’s interests. The makers of Jiaduobao and Wong Lo Kat have been locked in a five-year legal battle over the right to a trademark design: a red can with distinctive yellow lettering.
- Jewelry companies that plagiarize designs will be put on the industry blacklist if they refuse to rectify their actions after two warnings, according to Shi Hongyue, Secretary General of the Gems and Jewelry Trade Association of China. The First Forum on Intellectual Property Rights of Chinese Jewelry was held in Shenzhen, Guangdong province, earlier this month. Shi said, “jewelry designers lack awareness of IP rights protection and the value of their labor is easily stolen.” He said the association is working on solutions to these problems.
- Hangzhou-based e-commerce giant Alibaba and French luxury group Kering reached an agreement to work together against counterfeiting, both online and offline. Alibaba will use its expertise in technology to identify counterfeiters who target brands in the Kering family, such as Gucci, Bottega Veneta and Balenciaga, and cooperate with Chinese law enforcement agencies.
- The Zhejiang police announced that they have solved the nation’s largest online copyright infringement case, as pirated movies were available for online streaming and download at xiamp4.com. The website had released nearly 35,000 video works and made illegal revenue of more than CNY8 million from advertising.
- China’s first court specializing in handling internet-related cases opened in Hangzhou. The Hangzhou Internet Court handles cases such as online trade disputes and copyright lawsuits. Hangzhou is home to many internet companies, including Alibaba.
Macro-economy
- The Chinese economy is expected to remain resilient in the second half, as continued efforts to promote economic transformation will support the economy as it bottoms out, experts said. “We have made continued progress moving away from the old manufacturing model to a services-led model,” said Hu Angang, Director of the Center for China Studies of Tsinghua University.
Mergers & acquisitions
- Mergers and acquisitions (M&As) by Chinese companies in countries that are part of the “Belt and Road Initiative” are soaring, even as Beijing cracks down on China’s acquisitive conglomerates to restrict capital outflows. Chinese acquisitions in the 68 countries involved in the Belt and Road Initiative totaled USD33 billion as of August 15, surpassing the USD31 billion tally for all of 2016, according to Thomson Reuters. The largest deal in a “Belt and Road” country so far this year was a Chinese consortium’s USD11.6 billion buyout of Singapore-based Global Logistics Properties.
- Yunfeng Financial Group, a company backed by Alibaba’s Jack Ma, agreed to buy an Asian unit from Massachusetts Mutual Life Insurance Co. The buyer will pay HKD13 billion, with about 60% of that sum in cash, and the rest in Yunfeng stock. The business being acquired posted premium income of HKD6.88 billion last year. MassMutual said its operation in Japan and a joint venture in China are not part of the transaction.
Retail
- Two Chinese winemakers were among the world’s top 10 best-selling wine brands in 2016. A list compiled by UK trade publication The Drinks Business had China’s Changyu as the fourth best-selling wine brand, by volume. It sold 15 million cases. Beijing-based Great Wall was the 10th best-selling brand with 7 million cases sold in 2016. United States brand Barefoot was the best-selling product last year, selling 22.5 million cases. Chinese wine consumption rose by 7% last year.
- French high-end department store Galeries Lafayette plans to open its second location in China – an outlet in Pudong, Shanghai – next year. The company has operated in China since 2013, when it opened a store in Beijing. Shanghai Lujiazui Finance & Trade Zone Development Co has signed a letter of intent with Galeries Lafayette (China).
- According to Euromonitor International data, the revenue of China’s department stores grew from CNY943.8 billion in 2012 to CNY994 billion last year, but it forecast that the figure will slip to CNY904 billion by 2021.
- Although China’s e-commerce industry is growing at a rapid rate, industry experts point to offline infrastructure as a future bottleneck unless more investment is made in this area. Online retail sales in mainland China amounted to CNY5.156 trillion in 2016 – equal to CNY3,729 per capita – up 26.3% from the previous year. From 2007 to 2016 the sector grew at a compound annual growth rate of 67.2%. “No matter how advanced the online trade is, you always need offline support to fulfill the orders and deliver goods,” said Ted Chan, Partner and Managing Director of Boston Consulting Group (BCG).
Science & technology
- More Chinese mainland universities than ever before have been ranked among the world’s top 500 universities in terms of research capabilities this year. The annual Academic Ranking of World Universities includes 45 mainland universities, up from 18 in 2009. Tsinghua University broke into the top 50 for the first time, ranking 48th, making it the third-highest-ranking Asian university, behind Tokyo and Kyoto universities. Peking University came in 71st. Fudan University; Shanghai Jiao Tong University; the University of Science and Technology of China in Hefei, Anhui province; and Zhejiang University in Hangzhou all placed in the top 150.
- Cambridge University Press (CUP) has blocked online access to more than 300 journal articles in China at the government’s request. The articles and book reviews were published in China Quarterly, one of the leading journals on Chinese studies. CUP removed the articles to avoid blocking of the site in China.
Stock markets
- China’s securities regulator has refused 46 A-share initial public offering (IPO) applications this year, exceeding the total amount for the previous four years. The 46 vetoes represent 13.6% of the 338 Chinese IPO applications reviewed through August 15. The veto rate for each year from 2013 to 2016 was no higher than 7%. “China’s securities regulator is paying more attention to the authenticity and compliance of IPO documents as well as lowering the threshold of IPO applications,” said Dong Dengxin, a Finance Professor at Wuhan University of Science and Technology.
Travel
- Cathay Pacific Airways has suffered a loss of HKD2.05 billion in the first half of this year, putting it on course to post its first back-to-back annual loss in its 70-year history. The airline blamed the loss on punishing competition and insufficient revenue from ticket sales. Earnings were also dented by higher jet fuel costs, including losses from fuel hedging, which hit HKD3.2 billion. Passenger yield, which measures the average fare paid per kilometer per passenger, was down 5.2%.
- Domestic airline passengers in Shanghai who only have carry-on luggage can now check in with a QR code on their mobile phones at both Hongqiao and Pudong airports. It is part of the authority’s efforts to create a “smart airport community,” featuring quicker check-in procedures. Those who need to check in luggage, or are accompanied by infants, have to check in at the airline counters.
- China will operate more than five magnetic levitation rail lines with a maximum speed of 160 kilometers per hour in cities including Chengdu, Wuhan and Guangzhou by 2020, said its manufacturer CRRC Dalian Co. The maglev lines will mainly run between city centers and airports, the city and suburban areas, and the city and surrounding counties, on routes where it is often too expensive to build a metro.
- A record more than 5 million passengers traveled through Pudong International Airport this summer, up 2% compared with the same period a year earlier. August 10 was the peak day for traffic, with 125,000 passengers departing or arriving through Pudong airport. About 4,100 foreign visitors took up the option of the 114-hour, visa-free transit policy offered at the airport.
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