Posts tagged ‘United States’

01/07/2015

Foreign Brands Losing Luster in China – China Real Time Report – WSJ

Move over Western brands, Chinese companies are taking over.

China’s 1.34 billion-plus consumers are filling their shopping baskets with Chinese-branded toothpaste, laundry detergent, juice, cookies and more, according to a new study from consultancy Bain & Co.

Local Chinese companies have become more competitive and are leveraging their strength in smaller cities, where growth rates are higher than in top cities like Beijing and Shanghai, according to the study, which looked at the shopping habits of 40,000 consumers.

The result is that foreign brands are losing market share in large consumer goods categories–such as personal care, home care and packaged foods– all across China, from its biggest to smallest cities, Bain said. And sales growth, which is dwindling as China’s economy slows, is going primarily to Chinese companies, such as fabric-softener maker Guangzhou Liby Enterprise and juicer Tian Di No. 1 Beverage, it said.

While that’s good news for Chinese brands, it’s nothing to cheer about for global companies, which have been banking on Chinese shoppers to boost their sales. China’s economy is also slowing, meaning that the days of easy money in China are over and tireless boardroom references to “China’s emerging middle class” as the saving grace may soon be put to rest.

Some companies, like Best Buy Co. and Home Depot Inc., have either exited or are rethinking their goals in China. Best Buy Co. sold all its remaining stores in China last year, citing online competition.

But there’s still growth for many foreign brands. Foreign makers of beer, chewing gum and hair conditioner are still gaining traction and market share from Chinese companies, according to Bain.

Below are charts from Bain & Co and Kantar Worldpanel showing how Chinese companies are standing up against foreign rivals at retail and in consumer products.

via Foreign Brands Losing Luster in China – China Real Time Report – WSJ.

25/06/2015

China says economic losses from drug abuse hit $81 billion a year | Reuters

China on Wednesday gave its first-ever assessment of the scourge of drug abuse, saying it caused annual economic losses of 500 billion yuan ($80.54 billion) and as many as 49,000 deaths last year.

China has intensified a crackdown on drugs as the rise of a new urban class with greater disposable income has fueled a surge in the numbers of drug addicts.

In its fight on drug abuse, the government arrested a string of celebrities, including the son of Hong Kong kungfu movie star Jackie Chan. Jaycee Chan, 32, was released in February, after serving a six-month jail sentence on drug charges.

China has more than 14 million drug users, Liu Yuejin, assistant minister of public security, told a news conference.

“The direct economic losses caused by drug use in the entire country have hit 500 billion yuan annually,” Liu said.

Drug abuse had killed at least 49,000 registered users by the end of 2014 and fueled a rise in crimes such as murder, abduction and rape, Liu added.

China’s share of synthetic drug users eclipsed heroin users for the first time last year, according to an annual report on the drug situation.

By the end of 2014, China had about 1.2 million users of methamphetamine, up almost 41 percent from a year earlier.

Two major overseas drug sources for China are southeast Asia’s “Golden Triangle,” where the borders of Myanmar, Thailand and Laos meet, and south Asia’s “Golden Crescent“, which includes Afghanistan and Pakistan, Liu said.

Heroin and methamphetamine are being smuggled into China’s southwestern province of Yunnan and region of Guangxi, which both border Southeast Asia, Liu added.

To fight this situation, China was strengthening law enforcement cooperation with Afghanistan, Pakistan, Myanmar and other countries, he said.

via China says economic losses from drug abuse hit $81 billion a year | Reuters.

18/06/2015

China military says two more top officers probed for graft | Reuters

China’s Defense Ministry said on Tuesday that two more former senior officers were being investigated for corruption, as part of a sweeping campaign against graft which has already felled dozens of senior people.

In a brief statement, the ministry said that Kou Tie, former commander of the Heilongjiang military region in northern China, had been put under investigation last November for suspected “serious discipline violations”. He was handed over to military prosecutors last month.

The other officer was named as Liu Zhanqi, a former communications division commander for the paramilitary People’s Armed Police, also suspected of “serious discipline violations”, common wording for corruption. He was handed to military prosecutors last month as well.

The ministry gave no further details. Neither case had been reported before.

Weeding out graft in the military is a top goal of President Xi Jinping, chairman of the Central Military Commission, which controls China’s 2.3 million-strong armed forces.

Serving and retired Chinese military officers have said military graft is so pervasive it could undermine China’s ability to wage war, and dozens of senior officers have been taken down.

The anti-graft drive in the military comes as Xi steps up efforts to modernize forces that are projecting power across the disputed waters of the East and South China Seas, though China has not fought a war in decades.

via China military says two more top officers probed for graft | Reuters.

09/06/2015

China Headlines: How is the Chinese Dream changing the world? – Xinhua | English.news.cn

On the way toward the renaissance of its ancient glory, China is inspiring its people and the world with a new concept: the Chinese Dream.

Put forward by Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, in November 2012, the Chinese Dream of Great Renewal has not only struck a chord with the Chinese people, but been, believe it or not, changing the world.

PROFOUND CHANGES IN CHINA, WORLD

The ancient Chinese civilization had a broad influence on the world. Now China is “coming back” as it is reemerging as a great power.

For this reason, many people began to read “Xi Jinping: The Governance of China”, a book that outlines the full political ideas of the top Chinese leadership.

Xi’s book has sold 4.5 million copies worldwide, with an overseas circulation of some 400,000, a record for any Chinese leader’s publication in nearly four decades.

It is becoming increasingly easy to pin down a definition of the Chinese Dream. On cabs and billboards, the Chinese Dream is described as “a prosperous country, a revitalized nation and a happy people”.

The Dream is also elaborated on as “two centenary goals” — to double the 2010GDPand per capita income of urban and rural residents and complete the building of a moderately prosperous society by 2020; and to build a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious by the middle of this century.

If the development plan comes true, it will be one of the most earth-shaking developments since the First Opium War (1840-1842), not only for China but also for global history.

In a report published last year, London-based advertising company WPP said the Chinese Dream “enjoys a much higher level of awareness than the American Dream or British Dream.”

DREAMS OF 1.3 BILLION PEOPLE

China’s population outnumbers that of theUnited States, theEuropean UnionandJapancombined, accounting for about one fifth of the world’s total.

It is unprecedented in the history of human civilization for a country of such a scale to rejuvenate.

The Chinese Dream is the dream for every Chinese individual. In the Three Gorges reservoir region in central China’s Hubei Province, 35-year-old farmer Zhou Xingliang’s dream is quite ordinary: he wants his son to grow up healthy and go to a good college, and for he and his wife to be able to take good care of their parents.

Several hundred kilometers away, in Danjiangkou City, chicken farmer Tan Yong has different aspirations. Dreaming of inventing, the 44-year-old man made a two-tonne submarine with a red star painted on the cabin door. The sub can dive 10 meters below the water surface.

For the entrepreneurial Cantonese Zhang Qinwei, his dream of a “gold rush” in Dubai came true. In 12 years, Zhang expanded his business from a four-square meter shop to a wholesale mall of Chinese products.

As president of the Guangdong Chamber of Commerce in the United Arab Emirates, Zhang now dreams of helping more Chinese companies do businesses there.

via China Headlines: How is the Chinese Dream changing the world? – Xinhua | English.news.cn.

09/06/2015

China’s greenhouse gases could peak early, easing climate fears | Reuters

China’s greenhouse gas emissions could peak by 2025, five years earlier than indicated by Beijing, a development that could help limit the mounting risks of global warming, a study by the London School of Economics (LSE) showed on Monday.

A coal-burning power station can be seen behind migrant workers as they walk carrying their shovels on the construction site of a water canal, being built in a dried-up river bed located on the outskirts of Beijing October 22, 2010. REUTERS/David Gray

The report, more optimistic about curbing the use of fossil fuels than a Chinese industry forecast on Monday, noted that China’s “coal consumption fell in 2014, and fell further in the first quarter of 2015″.

“China’s greenhouse gas emissions are unlikely to peak as late as 2030 – the upper limit set by President Xi Jinping in November 2014 – and are much more likely to peak by 2025,” the report said.

“They could peak even earlier than that,” write the authors Fergus Green and Nicholas Stern, both from the LSE’s Grantham Research Institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy.

China, the top emitter of greenhouse gases – that are linked to rising ocean levels, heat waves and downpours – said last year its emissions would peak “around 2030, with the intention to try to peak early”.

Wang Zhixuan, secretary general of the China Electricity Council, predicted in a research report on Monday that China’s emissions from the power sector would keep rising to 2030, spurred by lower prices of coal than natural gas.

The industrial association projected that coal-fired power capacity would rise next decade, to 1,450 gigawatts in 2030 from 1,100 in 2020.

The LSE authors estimated that China’s overall emissions could peak at the equivalent of between 12.5 and 14 billion tonnes of carbon dioxide a year by 2025, up from about 10 billion around 2012.

That earlier-than-expected high point would help the world get on track for limiting warming to a maximum of two degrees Celsius (3.6 Fahrenheit) above pre-industrial times, they wrote, as long as China introduced sweeping reforms from cities to public transport.

Group of Seven leaders were meeting in Germany on Monday to discuss issues including climate change and how to achieve the 2C target, which many experts say is fast slipping out of reach.

And senior negotiators from almost 200 governments are meeting from June 1-11 in the German city of Bonn to work on a U.N. deal due in Paris in December to limit temperatures.

via China’s greenhouse gases could peak early, easing climate fears | Reuters.

26/05/2015

Taiwan offers South China Sea peace plan | Reuters

Taiwan proposed a peace initiative on Tuesday to resolve territorial disputes in the South China Sea that it says will reduce tensions that have put Beijing at odds with its neighbors and the United States.

Taiwan President Ma Ying-jeou arrives at Taiwan's Mainland Affairs Council in Taipei, Taiwan, April 29, 2015. REUTERS/Pichi Chuang

The South China Sea Peace Initiative announced by President Ma Ying-jeou called on claimants to temporarily shelve their disagreements to enable negotiations on sharing resources.

Ma’s plan is similar to a 2012 proposal for the East China Sea, which allowed Taiwan and Japan to jointly fish in the contested waters.

However it appeared unlikely the plan would be accepted by China, which claims most of the South China Sea and has rebuffed earlier attempts at multilateral negotiations.

“We believe Chinese people on both sides of the Strait have a duty to jointly protect China’s territorial sovereignty and maritime rights and interests and safeguard the stability of the South China Sea region,” said Hua Chunying, a spokeswoman for China’s Foreign Ministry, when asked about the plan on Tuesday.

China views self-governed Taiwan as a renegade province.

Taiwan has so far played a marginal role in disputes between China and its neighbors in the South China Sea, through which $5 trillion in ship-borne trade passes every year.

China, the Philippines, Vietnam, Malaysia, Taiwan and Brunei all have overlapping claims in the South China Sea. China said on Monday it had lodged a complaint with the United States over a U.S. spy plane that flew over parts of the disputed sea.

Ma’s remarks in a keynote speech at an international law conference in Taipei were the most public comments by Taiwan since the United States, its biggest ally, raised concerns over the speed and breadth of China’s land reclamation in the area.

“We demand that freedom of navigation and overflight be respected in the South China Sea,” said Ma, who urged a peaceful resolution “before a major conflict breaks out”.

Taiwan normally maintains a low-key approach to such issues but has coast guard and military facilities in the area, including an airstrip and soon-to-be-completed port on Taiping Island, also known as Itu Abu, the largest natural land mass in the disputed Spratlys archipelago.

“I believe the mainland side understands the spirit and principle of our South China Sea peace initiative,” Taiwan Foreign Minister David Lin told reporters after Ma’s speech.

The rival claims by Taiwan and China go back to before they split in a civil war in 1949 after the defeated Nationalists fled to the island from the Communists.

via Taiwan offers South China Sea peace plan | Reuters.

14/05/2015

India learns to ‘fail fast’ as tech start-up culture takes root | Reuters

After ping pong tables, motivational posters and casual dress codes, India’s tech start-ups are following Silicon Valley‘s lead and embracing the “fail fast” culture credited with fuelling creativity and success in the United States.

Taking failure as a norm is a major cultural shift in India, where high-achieving children are typically expected to take steady jobs at recognised firms. A failed venture hurts family status and even marriage prospects.

But that nascent acceptance, fuelled by returning engineers and billions of dollars in venture fund investment, is for many observers a sign that India’s $150 billion tech industry is coming of age, moving from a back office powerhouse to a creative force.

“There is obviously increased acceptance,” said Raghunandan G, co-founder of TaxiForSure, which was sold to rival Ola this year. He is now investing in others’ early stage ventures.

“My co-founder Aprameya (Radhakrishna) used to have lines of prospective brides to meet … the moment we started our own company, all those prospective alliances disappeared. No one wanted their daughters to marry a start-up guy.”

Srikanth Chunduri returned to India after studying at Duke University in the United States, and is now working on his second venture. “I think what’s encouraging is that acceptance of failure is increasing despite the very deep-rooted Asian culture where failure is a big no,” he said.

“IT’S OK TO FAIL”

via India learns to ‘fail fast’ as tech start-up culture takes root | Reuters.

11/05/2015

U.S. Congressman says engagement with China has diminished under Xi | Reuters

A United States Congressman told reporters that China’s engagement with U.S. lawmakers has diminished under President Xi Jinping in a marked change from the policy of his predecessors.

Chinese President Xi Jinping speaks with U.S. State Secretary John Kerry (R) during a lunch banquet in the Great Hall of the People in Beijing November 12, 2014.     REUTERS/Greg Baker/Pool

He also said that Chinese and Hong Kong officials were looking for a scapegoat when they blamed last years’ pro-democracy protests on “foreign forces”.

“I think it has diminished,” Congressman Matt Salmon said of China’s engagement with U.S. lawmakers under President Xi. “This president has a whole different philosophy. In fact I think if anything, this president is moving in the other direction, (away) from constructive engagement from the past two presidents.”

Salmon is chairman of the subcommittee on Asia and the Pacific under the House Committee on Foreign Affairs. The Republican representative from Arizona is in the middle of his fifth term in Congress.

Salmon was in Hong Kong as the head of a U.S. Congressional delegation, which also visited Vietnam and discussed political, trade and economic issues.

Salmon said he had not been contacted by anyone from the Chinese Embassy since he became chairman of the Asia Pacific subcommittee.

“It’s kind of strange because every other embassy in the region has reached out to me, and their ambassadors have asked for an audience with me, every one of them except for China,” he said.

The United States and China are the world’s two biggest economies. Chinese President Xi is scheduled to make his first state visit to the United States in September as the countries seek to ease tensions over issues ranging from trade and human rights to Internet hacking and theft.

Salmon said he and his delegation had met Hong Kong Chief Executive Leung Chun-ying and told him the United States had not played any role in last year’s pro-democracy protests, in which tens of thousands of people occupied major highways for two and a half months to demand open nominations in the city’s next chief executive election.

Chinese and Hong Kong officials have blamed “foreign forces” for instigating the unrest, which Salmon said was “a convenient way to scapegoat someone else”.

via U.S. Congressman says engagement with China has diminished under Xi | Reuters.

07/05/2015

Corruption: Not so far away | The Economist

“THE mountains are high; the emperor is far away,” goes a Chinese saying that has always given comfort to bureaucrats who play fast and loose with the law in remote parts of the country. But often, these days, distance is not enough. Those who hanker after the added protection of a foreign jurisdiction are often called “naked officials”. The term describes people who have moved families and assets abroad in readiness for escape themselves. Now, however, anti-graft officers are trying to extend their reach beyond China’s borders.

Since late last year, as part of the most intense and sustained anti-corruption drive in the history of Communist-ruled China, officials have been stepping up efforts to persuade foreign countries to send back those who have fled with their ill-gotten gains. On April 22nd they released a wanted list, together with mugshots, of 100 such people, as part of a new operation called Sky Net. The list was compiled by a Communist Party body, the Central Commission for Discipline Inspection (CCDI), whose agents often hold suspects in secret detention and torture them. “We will apprehend them no matter where they flee to,” Fu Kui, a member of the CCDI, told state media. The operation involves other agencies such as the police, the central bank and the foreign ministry.

Among the wanted fugitives, for whom Interpol has issued arrest warrants, 48 were the most senior officials in their workplaces. One was the deputy head of a provincial construction bureau accused of fleeing to America with 250m yuan ($40m) in embezzled funds. Another was a county-level finance official who allegedly took 94m yuan to Singapore.

Officials say that Sky Net is a new phase of Operation Fox Hunt, a campaign launched by the police last year to secure the repatriation of criminals (not just the corrupt). Officials say the exercise has been a success, having secured the repatriation of 680 fugitives from 69 countries. On April 27th the state prosecutor’s office said a further 61 people suspected of “dereliction of duty” had been arrested after spending time on the run abroad. Many had turned themselves in.

But anti-corruption officials have a big problem: the 39 countries with which China has extradition treaties do not include America, Australia or Canada, which are among the favoured destinations of corrupt fugitives. China has been pressing these countries for more co-operation. After a visit to Beijing in April by Jeh Johnson, America’s secretary for homeland security, state media said America “actively” supported China’s efforts. The Americans say they have agreed to a more “streamlined” procedure for handing back Chinese nationals whom they decide to repatriate. But they insist that such cases be handled according to American law and “values”.

China says it has sent 61 agents abroad (it has not said where) to “persuade” accused fugitives to return and face justice. It has also been trying a new tactic: scaring them with horror stories. State media last month reported one fugitive in America who dared not even see a doctor, so worried was he that his identity might become known. He returned home of his own will, a broken man.

via Corruption: Not so far away | The Economist.

07/05/2015

Why China’s consumers will continue to surprise the world | McKinsey & Company

China has an awesome consumer story. Yet lately you can’t pick up a newspaper, go online, or watch television without hearing continual moaning about the country’s slowing economic growth and the need for “rebalancing.” The reality is that Chinese consumers are going to continue to increase in wealth and complexity. And if you’re worried the country’s economic importance is declining, you’re probably looking at its performance the wrong way.

Don’t worry about consumer spending as a percentage of GDP

As in most developing Asian economies, China’s early growth was based on savings, investment, and exports. You get your population to save, move to the cities, work in factories, and make stuff. This is sold, and cash is brought back home for investment. Plus, you get some foreign investment as well. This process enabled China to develop its infrastructure largely with its own cash. That, by the way, is not the norm. Developing economies typically borrow from foreigners and then default—for example, American states such as Mississippi and Florida were chronic defaulters on foreign debt as they initially developed.

One of the downsides of this investment-first approach is that it makes consumption look small and often like it’s shrinking. Chinese consumption decreased from approximately 51 percent of gross domestic product in 1985 to 43 percent in 1995, 38 percent in 2005, and 34 percent in 2013. By comparison, consumption is around 61 percent in Japan and about 68 percent in the United States. In fact, China’s small and decreasing consumption percentage is one reason why people keep talking about “rebalancing”—the need for the economy to become driven more by consumer spending than investment and exports.

Our position? Don’t worry about this stuff.

First, from 2000 to 2010, the size of the Chinese economy more than doubled.1 So consumption grew from around $650 billion to almost $1.4 trillion. Regardless of its relative percentage of GDP, China’s consumption has been growing faster than just about any other country’s in absolute terms. Second, just getting consumer spending back to 43 percent of GDP, the level in 1995, would have a huge impact on “rebalancing.” It would also create the largest consumer market in the world. Third, most of these numbers are wildly inaccurate. Consumer spending is nearly impossible to measure in such a big, complicated economy. Combining a vague number with two other big vague numbers (investment and net exports) is very fuzzy math. Until economists start putting uncertainty estimates on their China calculations, relative percentages aren’t worth paying much attention to.

Household income is what matters, and it’s great

The number you really want to keep in mind is household income. You can’t have consumption without income. And here’s where it gets really awesome. China’s household income is huge. It is now likely above $5 trillion a year. Plus, lots of income is unreported, so this is really the lower boundary for true household income. Developing economies—especially the BRIC nations of Brazil, Russia, India, and China—are frequently grouped together, but Chinese consumers dwarf all the others in terms of household income (Exhibit 1).

Rising discretionary spending is the exciting part

Discretionary spending is buying the stuff you like but don’t need. Or you only sort of need. And, fortunately, people seem to have an endless appetite for everything from entertainment to skiing to caffe lattes. Chinese citizens are now moving beyond being able to only afford the basics of life, and their discretionary spending is taking off. Growth in spending on annual discretionary categories in China is forecast to exceed 7 percent between 2010 and 2020, and growth of 6 to 7 percent annually is expected in a second category of “seminecessities.” Both of these categories are growing faster than spending on actual necessities, which are expected to grow around 5 percent a year, about the same as expected GDP growth (Exhibit 2).

Finally, an important related issue is the Chinese tradition of saving. If we compare spending and saving rates across the emerging markets, we see a spike in savings in China. That spike is fairly understandable. First, it’s cultural. Second, they are precautionary savings—no social safety net means if you get sick, it’s all on you. Third, Chinese savings are not unique. Japan, Korea, and Taiwan all hit 30-percent-plus savings rates in their early development. And fourth, without much of a consumer-finance system, it’s tough to use debt to hit truly spectacular consumption levels. After all, a vacation home or car may cost the equivalent of a year’s income.

That’s our rant on China’s macro consumer situation. Basically, we believe it remains a great story. It may be volatile. It’s also somewhat unpredictable. But you just don’t get a consumer growth story this good anywhere else.

via Why China’s consumers will continue to surprise the world | McKinsey & Company.

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