Archive for ‘Economics’

12/01/2015

India’s industrial output likely recovers as Modi pushes reforms | Reuters

Indian industrial output probably made a tepid recovery late last year due to weak demand at home and abroad, underscoring the challenges faced in 2015 by Prime Minister Narendra Modi as woos global investors this week.

Employees work on an assembly line of Hero Motocorp during a media tour to the newly opened plant in Neemrana, in the desert Indian state of Rajasthan, October 20, 2014. REUTERS/Anindito Mukherjee

To accelerate the recovery in Asia’s third largest economy from its longest slowdown since the 1980s, Modi has pushed through a raft of economic reforms, mostly by executive orders.

But global headwinds, lukewarm domestic demand and unused industrial capacity mean capital investment has not picked up and the economy remains way below potential.

Retail inflation – still a major issue for Asia’s third largest economy though it fell to an all time low in November – probably rose sharply in December fueled by higher food prices.

via India’s industrial output likely recovers as Modi pushes reforms | Reuters.

03/01/2015

How Chinese leader Xi Jinping turned Tasmanian toy into a bear essential | South China Morning Post

When Chinese President Xi Jinping stepped on to the airport tarmac in Australia‘s smallest state Tasmania, he was handed a purple fluffy toy called Bobbie.

President Xi Jinping receives the purple bear in Tasmania. Photo: AFP

Stuffed with lavender and wheat, the teddy bear has since captured the hearts – and wallets – of Chinese consumers.

Bobbie has become an overwhelming success in China with a remarkable following – helping creator Robert Ravens, owner of the lavender farm in the state’s northeast, secure an inaugural Australia-China business award for entrepreneurship.

Tasmania has long had the nation’s weakest economy, but is hoping to boost its fortunes by using its natural resources to attract an affluent Asian market looking for quality products.

When Ravens bought the Bridestowe Lavender Estate in 2007, his first goal was to return it to the peak farming condition it was in several decades ago.

He was also keen to boost the tourism potential of the farm. “We looked to create new products which would attract young visitors, and that came through food,” Ravens said.

An early product, lavender ice cream, started to attract Chinese tourists to the 105-hectare farm, an hour’s drive from Tasmania’s second-largest city Launceston.

But it was through the bear that Ravens, a former chief executive of a leading chemicals firm, struck a winning formula.

“We were experimenting with various shapes and colours. One day, five years ago or more, we showed a bear to a young Chinese girl in a shop,” he said.

“She said ‘so cute’ and she was carrying it like a baby, and you could see the bond form. As soon as we saw that, the light went on and we knew that was the right configuration.”

Even the name was designed to attract Chinese consumers, Ravens said, adding: “You can say Bobbie phonetically in Cantonese and Mandarin.”

Ravens courted the celebrity market and when a Chinese model posted a picture of herself with the bear online last year, demand for the furry creature – which doubles as a heat pack – reached stratospheric levels.

The farm had to limit sales to one per customer, temporarily halt online shopping and even contend with fake toys piggy-backing on Bobbie’s fame.

Visitor numbers have soared from 23,000 in 2007 to more than 65,000 last year, and it now produces 40,000 bears annually.

“In Australia, you become successful and you have 26 million potential customers. In China, you have a billion. The scale is so phenomenal,” said Ravens. “The answer is to be authentic and to target the market as acutely as you can. We are aiming always to be a boutique market, not a mass market.”

via How Chinese leader Xi Jinping turned Tasmanian toy into a bear essential | South China Morning Post.

31/12/2014

Chinese diplomacy 2014

China made or re-established relationships or alliances in 2014 with 167 nations (a few multiple relationships); in:

  • January: Cambodia; Ghana; Bulgaria; Peru; Mongolia; Gulf States; Belarus; France; Taiwan; India; France; Germany; Viet Nam = 13
  • February: Fiji; Greece; Afghanistan; South Korea; Sri Lanka; Hungary; USA; Pakistan; Senegal; Afghanistan; Iraq; Vietnam = 13
  • March: Saudi Arabia; UK; Poland; Cambodia; South Korea; Netherlands, France, Germany, Belgium and EU; Kazakhstan; USA = 12
  • April: Israel; Namibia; Timor L’este; Myanmar; Laos: Australia; Brazil; Germany; Hungary; Syrian opposition leader; Malaysia; Cuba; Britain; Ghana; South Africa; Denmark; Brunei = 17
  • May: Ethiopia, Nigeria, Angola, and Kenya; Taiwan; Iran; Turkmenistan; Bulgaria; Portugal; France; Myanmar; Kyrgyzstan; Russia; Kazakhstan; Switzerland; Azerbaijan; Turkey; Pakistan = 18
  • June: Congo; Ukraine; Angola; India; Egypt; Denmark, Finland, Ireland ; Portugal; Russia; Afghanistan; Somalia= 12
  • July: Sudan; France; Azerbaijan; Switzerland; South Korea; Germany; USA; Brazil; Argentina; Venezuela; Cuba; Bulgaria; Portugal; Indonesia; Myanmar; Laos; Canada = 17
  • August: Egypt; Mauritania; at AEAN Summit (Vietnam; Korea; Myanmar; Malaysia; Thai, India); Hungary; Burundi; Uzbekistan; Mongolia ; Vietnam; Zimbabwe; Egypt; Czech; Turkmenistan; Turkey; Antigua & Barbuda; Croatia; Madagascar; Djibouti; Singapore; Croatia = 18
  • September: Russia; Romania; Poland; Malaysia; Cuba; Tajikistan; France;  Mongolia; Pakistan; Maldives; Sri Lanka; Zimbabwe; France; India; Indonesia = 15
  • October: Italy, Jordan, Kenya; France; Zambia; Afghanistan = 6
  • November: Indonesia; Pakistan; Iraq; Cambodia, Bahrain; Jordan; Australia; Finland; New Zealand; Nepal; Fiji; Slovenia; Columbia = 14
  • December: Uzbekistan; Australia; Pakistan; Maldives; South Africa; Ireland; Tonga; Cuba; Kazakhstan; Serbia; Republic of Korea; Cambodia = 12
31/12/2014

China’s Fraudbusters Crack Down on Fake Goods – Businessweek

Xu Dajiang spends at least three days a week in supermarkets in China scrutinizing products. He’s not shopping for bargains; he’s looking for any sign of flaws—an expired sell-by date, a forbidden ingredient, an exaggerated claim on a package, or outright counterfeit.

Juts Do It

Earning a living as a professional fraudbuster, Xu is a consumer turned consumer protector, searching for any wrongdoing by local and multinational companies that can be used to file a claim with a retailer and collect damages. “There will always be manufacturers who treat the law with indifference and flout it no matter how much you tighten the regulations,” he says. “That’s when fraudbusters like me have a role to play.”

Fraudbusting is flourishing in China, thanks to continued food and product safety scandals and a revised consumer protection law enacted in March that increases compensation for those who buy damaged or fake goods. The law allows consumers to try to recoup as much as three times the cost of the original product or service purchased. They can file class actions for the first time. The law also carries stiffer penalties for businesses that mislead shoppers.

via China’s Fraudbusters Crack Down on Fake Goods – Businessweek.

31/12/2014

China Adds the Equivalent of Malaysia’s Economy to its Output – Businessweek

China’s economy officially just got bigger. More important, it also became more balanced, a longtime priority of Chinese leaders and good news for the world.

China's Revised GDP Shows Rebalancing Success With Bigger Service Sector

China’s GDP revision, announced by the national bureau of statistics on its website today, shows the economy in 2013 was 1.92 trillion yuan ($303.8 billion) larger than previously thought. That’s 3.4 percent more and equivalent to adding the Malaysian economy to Chinese output, as Bloomberg News and others have noted. That puts last year’s GDP at about $9.61 trillion.

The 2014 figure will also be revised upward, although by not much, the statistics bureau says, probably early next year. And planned changes to how Beijing counts research and development costs and housing, will likely boost the size of the economy.

The revision follows the release earlier this week of data from China’s last economic census. Almost 3 million census takers polled more than 10 million companies and 60 million individual-owned private enterprises across the country for a three-month period last spring. The two previous censuses saw GDP revised up by 16.8 percent in 2004 and 4.4 percent in 2008.

“The relatively small upwards adjustment [this time], compared with previous [census] revisions, won’t make a huge difference to how the economy is viewed or to key metrics, such as China’s debt to GDP ratio,” writes Julian Evans-Pritchard, China economist at London’s Capital Economics, in a research note today. “Nonetheless, it does provide some positive news on rebalancing.”

The census revealed a bigger service sector, which in 2013 made up 46.9 percent of GDP, up from 46.1 percent before. Meanwhile, China’s often resource-wasting, pollution-generating industrial sector takes up a slightly smaller share of the economy, falling to 43.7 percent from 43.9 percent before the census.

via China Adds the Equivalent of Malaysia’s Economy to its Output – Businessweek.

20/12/2014

Chinese warm to Russia in the winter – China – Chinadaily.com.cn

Chinese travelers have been flocking to Russia in recent days to cash in on the weak rouble.

Chinese warm to Russia in the winter

Bitter weather means that winter is usually the offseason for Russian tourism, and some Chinese travel agencies even stop selling tours to the country from October to June.

But this winter, the ailing rouble has stoked Chinese traveler’s enthusiasm for heading north.

Online travel agency Tongcheng Network Technology Share Co, in Suzhou, Jiangsu province, recently launched winter tour services to Russia for the first time. The agency said it has received 113 percent more bookings in December than in November.

“The number of bookings and inquiries increased sharply as the rouble depreciated significantly,” said Liu Qing, chief executive officer of Tongcheng’s Outbound Tourism Department.

Ctrip.com International, the largest online travel agency in China, said inquiries about Russian tours rose by 100 percent month-on-month in December.

Dai Yu, marketing director of Ctrip’s Tourism Department, said winter tours to Russia are about 60 percent cheaper than summer ones and the cost has fallen further due to the weak rouble.

Group tours to Russia usually last for six to eight days, with recent prices quoted at between 5,000 and 8,000 yuan ($815 to $1,300), much lower than tours to Western Europe.

Zhang Jing, 32, from Beijing, said she plans to book a low-priced tour to Russia for her parents. “It is a good deal to go now,” Zhang said, adding that her parents will choose between leaving at New Year‘s or Spring Festival in February.

Travel industry insiders said Russia will be a popular choice for Chinese visitors during the seven-day Spring Festival holiday.

Some agencies have already sold Spring Festival tours, although most travelers will only make their plans in the next month.

Liu said, “We can’t estimate how many travelers will book tours for Spring Festival, but we have already seen a dramatic rise in bookings.”

China is the main source of tourists to Russia, with their numbers increasing by 10 percent year-on-year in the first nine months of 2014, according to the Russian tourism authority. The number of tourists from Russia, the third-largest source of inbound tourists to China, continues to fall and will worsen due to the weakening rouble.

via Chinese warm to Russia in the winter – China – Chinadaily.com.cn.

19/12/2014

What could happen in China in 2015? | McKinsey & Company

It seemed harder to prepare my “look ahead” this year. On reflection, I believe this is because political and economic leaders in China have clear plans and supporting policies that they are sticking to. You can debate the pace at which actions are being taken, but not really the direction in which the country is traveling. This means a number of the themes I highlighted for this year will remain relevant in 2015:

Improving productivity and efficiency will remain the key to maintaining profitability for many companies, given lower economic growth (overall and at a sector level) and the impact of producer price deflation on multiple sectors.

The impact of technology as it eliminates jobs in services and manufacturing will become even greater (but still not in government).

As a result, the government will keep a sharper focus on net job creation and the quality of those new positions. Companies will hire even more information technologists to keep up in the race to exploit technology better than their competitors.

The push to lower pollution, and now carbon emissions, will lead to even greater investment in domestic solar and wind farms, boosting the global position of Chinese producers.

High-speed-rail construction will continue domestically and increasingly abroad, as Chinese companies become the builder of choice for high-speed rail globally.

Beyond these, there are several additional themes that will be important in 2015. I describe them below.

via What could happen in China in 2015? | McKinsey & Company.

19/12/2014

China to construct 7 mln affordable homes in 2015 – Xinhua | English.news.cn

China will begin construction of seven million apartments under the affordable housing program in 2015, the Ministry of Housing and Urban-Rural Development (MOHURD) announced on Friday.

MOHURD minister Chen Zhenggao revealed the target at a national conference on housing and urban-rural development. He said 4.8 million such homes should be completed next year.

The affordable housing program is aimed at providing cheap homes for eligible low-income earners. China began the construction of over seven million homes and completed 4.8 million in 2014.

Chen said China will also continue to push forward the shanty town renovation program extensively as “it can not only improve people’s livelihood but also spur economic growth“.

via China to construct 7 mln affordable homes in 2015 – Xinhua | English.news.cn.

19/12/2014

Chinese Banks Lure Deposits by Offering Goodies for Cash – Businessweek

Banks in the U.S. once gave away toasters and irons to lure depositors. Banks in China are upping the ante. With customers pulling out money and putting it into higher-yielding investments, they are offering Mercedes, iPhones, and daily deliveries of vegetables to sidestep interest rate caps and get people to stash some yuan in savings accounts.

Chinese Banks Offer Goodies for Cash

“Chinese banks are hemorrhaging their deposits,” says Rainy Yuan, an analyst at brokerage Masterlink Securities in Shanghai. China’s banks lost 950 billion yuan ($154 billion) of deposits in the three months through September, the first quarterly drop since 1999. In the first 11 months of the year, new deposits were 23 percent lower than in the same period last year, People’s Bank of China data show. Offering incentives to attract money is not the solution, Yuan says: “There is no fix for this. All the efforts they made to win savers back will only push up the costs, so it’s a losing battle to fight.”

Decline in new deposits in the first 11 months of 2014 vs. the same period last year

Savers seeking higher returns have been pouring money into online money-market funds offered by the e-commerce companies Alibaba Group (BABA) and Baidu (BIDU). One fund, Yu’E Bao, started last year by Alibaba affiliate Alipay, drew 535 billion yuan in its first 15 months of existence from 149 million customers, more than the populations of France and the U.K. combined. Users simply tapped a few buttons on their mobile phones to secure an annual rate of return that climbed as high as 6.8 percent before falling to about 4 percent recently.

Savers can also earn more on their money by moving to high-yield products, the fastest-growing part of the so-called shadow banking system. Households put 12.9 trillion yuan into high-yield trust products as of Sept. 30. Trust companies pool investor capital to put money in real estate and construction projects, or make corporate loans, and promise returns of more than 10 percent. Trust companies have seen assets under management rise more than tenfold since the start of 2009.

The Shanghai Composite Index’s 45 percent surge over the past six months has led people to shift money from banks to stocks. In the first week of December, Chinese investors opened almost 600,000 stock trading accounts, a 62 percent increase over the previous week, according to China Securities Depository & Clearing.

To stimulate the economy, China’s central bank on Nov. 21 announced a cut in benchmark interest rates for the first time in more than two years. That was offset by the central bank’s decision to raise the maximum interest rate banks can pay customers to 20 percent over the benchmark from 10 percent above it. Ping An Bank (000001:CH), China Citic Bank (601998:CH), and Bank of Ningbo (002142:CH) immediately alerted customers through text messages that they would offer the highest rate allowed.

via Chinese Banks Lure Deposits by Offering Goodies for Cash – Businessweek.

19/12/2014

Forget Wal-Mart: China Cuts Out the Middleman – China Real Time Report – WSJ

Wal-Mart and Amazon have become America’s main conduits for cheap, mass-produced goods from China’s factory floors. But who needs them anymore? As the WSJ’s Dennis K. Berman reports:

I am holding in my hands a men’s down jacket with fur trim, sent four days ago direct from a warehouse 67 miles west of Shanghai.

The $52.19 jacket won’t be confused for Prada. The fur appears to be “fur.” It came out of the box smelling like plastic and solvent.

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What the jacket represents is far more interesting: It’s the final and direct link between China’s manufacturers and the global consumer. In the same way Chinese companies took over the production of goods, they are now increasingly capable of merchandizing those goods, using the Web and modern freight transport. Bentonville, you are being outsourced to China, too.

This is in part why China’s Alibaba has a $268 billion market capitalization. And it’s why United Parcel Service Inc. recently bought a company called i-parcel, to help U.S. suppliers penetrate the thickets of customs, fraud and language that still exist.

The jacket came via LightInTheBox , a Beijing company listed on the New York Stock Exchange. Run by Chinese with deep experience in America, the site can shapeshift into 27 different languages, from Arabic to Bahasa to Swedish, and ship goods piecemeal all over the world. For the 12 months ending in September, LightInTheBox sold $349 million of merchandise, a 25% increase from the year earlier. It is still far from profitable, posting significant operating and net losses. Its stock has fallen 23% this year.

LightInTheBox got its start selling wedding dresses, and it’s now selling about 800 different designs for under $200. It sells 400,000 a year. For wedding dresses, “the manufacture price in China is less than $100, but the store price in the U.S. or Europe was thousands of dollars,” company co-founder and CEO Quji “Alan” Guo said in an interview. “That was a category where there should have been better availability, but it was not there.”

via Forget Wal-Mart: China Cuts Out the Middleman – China Real Time Report – WSJ.

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