Posts tagged ‘Beijing’

07/11/2016

China and Taiwan struggle over Sun Yat-sen’s legacy | The Economist

FOR decades Taiwan’s rulers have paid their respects from afar to Sun Yat-sen, also known as Sun Zhongshan: “father of the nation”, founder of the Kuomintang (KMT) or Nationalist Party, and first president of the Republic of China.

In a ritual called yaoji, they face towards Sun’s mausoleum in Nanjing, 800km (500 miles) to the north-west in China, and offer fruit, burn incense and recite prayers.

Now that links across the Taiwan Strait are better, Sun-worshippers may make the pilgrimage in person. On October 31st it was the turn of the KMT’s chairwoman, Hung Hsiu-chu. But not only do some Taiwanese adore Sun. Museums in his honour also exist in Hong Kong, Macau, Singapore and Penang. He has a memorial park in Hawaii, where the great republican spent his teenage years, and a plaque in London, where he lived in exile from 1896-97. Most striking of all, he is admired by the Chinese Communists, who “liberated” China in 1949 from KMT rule.

In the Communist telling, Sun is the “forerunner of the democratic revolution”. As one visitor to his mausoleum put it this week: just as one sun and one moon hang in the sky, “there is only one father of the country.” There may be more Zhongshan Streets in China’s cities than Liberation Avenues. To mark this month’s anniversary of Sun’s birth 150 years ago, the state is minting a set of commemorative coins, including 300m five-yuan (75-cent) pieces that will go into circulation. It is a signal honour for a non-Communist. The party views Sun as a proto-revolutionary.

He makes an unlikely hero. Sun spent much of his life not in the thick of action but abroad. Half-a-dozen revolts that he helped organise against an ossified Qing dynasty were failures. As for the Wuchang uprising of October 1911, the catalyst for the end of three centuries of Manchu domination, he learnt of it from a Denver newspaper. He was back at the head of China’s first republican government early the following year, but merely as “provisional” president. Lacking the military strength to pull a fractured country together, he said he was the place-warmer for a strongman, Yuan Shikai. The nascent republic soon shattered and Yuan crowned himself emperor. Pressure from Western powers and Japan exacerbated China’s bleak situation. By 1916 Sun was back in exile again, in Japan.

For all that, Sun had brought down a rotten empire. For years he had raised the alarm over China’s direction, denouncing the Manchus and the rapaciousness of external powers. All his life, Sun had strived for a new republican order to turn a stricken China into a modern nation-state.

His ideas were hardly systematic, but he never deviated from the priorities of fostering national unity among Chinese, promoting democracy and improving people’s livelihoods—his “Three Principles of the People”. While railing against foreign depredations, he called for Chinese to embrace Western freedoms and rights (Sun’s messianic drive may have derived from his version of Christianity). His was an astonishingly more cosmopolitan world-view than that displayed by today’s Chinese leaders.Yet the longest-lasting impact of Sun on Chinese political life derives from something different. In the early 1920s he listened to advisers from the Soviet Union, which had won his admiration by renouncing territorial claims in China. He reorganised the KMT along Leninist lines, giving himself almost dictatorial powers (in Leninspeak: “democratic centralism”). The immediate effects were striking: an alliance between the KMT and the young Communist Party and a northward military advance in 1926 under Chiang Kai-shek, Sun’s heir, that toppled the warlords who were then wreaking havoc. Sun had died of liver failure the year before. He did not live to experience the brief national unity that Chiang imposed, nor the parties’ fatal split and descent into bloodshed, nor their struggle over Sun’s mantle.

Follow the Sun

And his legacy today? Consider that among his three principles, the two 20th-century dictators, Mao Zedong in mainland China and Chiang Kai-shek on Taiwan, gave a damn only about the first, national unity, on which, by their standards, they must be judged poorly. Sun’s Leninist party organisation—never one of his hallowed principles—had a far more profound impact on the two autocrats, and still does on China’s rulers today.

In Taiwan dictatorial KMT rule began crumbling a few years after Chiang’s death in 1975. Democratic development since then, including within the KMT, and the growth of a prosperous civil society, seem in line with Sun’s second and third principles relating to democracy and prosperity. But as for the first, a Chinese nationalism: forget it. Sun’s portrait still hangs in schools and government offices, and looks serenely down on the frequent fisticuffs in Taiwan’s parliament. But after resounding defeat in elections early this year, the KMT struggles for relevance on an island that is proud of its separateness from China. If there is any echo of Sun’s idealism, it is in the student “Sunflower Movement”, which wants to keep China at bay. For many Taiwanese, the Republic of China, Taiwan’s official name, is a figleaf for independence; Sun is an old ineffectual ghost. The current president, Tsai Ing-wen of the pro-independence Democratic Progressive Party, performed no yaoji this year.

And China? Democratic centralism still prevails—exemplified by the party’s monopoly on power, Xi Jinping’s autocratic rule and the suppression of dissent. Were Sun to speak from his tomb, he might remind Mr Xi how, under the Communist Party, national unity, real democracy and even broad-based prosperity remain elusive. He might point out, too, that when Sun adopted Leninism it was to advance rather than trump his beloved principles. In his final will, Sun wrote: “The work of the revolution is not done yet.” “Blimey,” he might now say: “Couldn’t you think of trying something different?”

Source: China and Taiwan struggle over Sun Yat-sen’s legacy | The Economist

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04/11/2016

Xi Jinping gets a new title | The Economist

COMMUNIST leaders relish weird and wonderful titles. Kim Jong Il, the late father of North Korea’s current “Great Leader”, was, on special occasions, “Dear Leader who is a perfect incarnation of the appearance that a leader should have” (it doesn’t sound much better in Korean). China’s rulers like a more prosaic, mysterious epithet: hexin, meaning “the core”.

Xi Jinping—China’s president, commander-in-chief, Communist Party boss and so forth—is now also officially “the core”, having been called that in a report issued by the party’s Central Committee after a recent annual meeting.

The term was made up in 1989 by Deng Xiaoping, apparently to give his anointed successor, Jiang Zemin, greater credibility after the bloody suppression of the Tiananmen Square protests. Just as Mao had been the core of the first generation of party leaders and Deng himself of the second, so Mr Jiang was of the third. (Hu Jintao, Mr Xi’s predecessor, was supposedly offered the title of fourth-generation core but modestly turned it down.)

Being core confers no extra powers. Mr Xi has little need of those; he is chairman of everything anyway. Status, though, is what really matters in China (Deng ruled the country for a while with no other title than honorary chairman of the China Bridge Association). And Mr Xi seems to be finding that all his formal power does not convey enough. Early this year, in what looked like a testing of the waters, a succession of provincial party leaders kowtowed verbally to Xi-the-core. But the term soon disappeared from public discourse. Its revival makes it look as if Mr Xi has won a struggle to claim it.

That may augur well for him in his forthcoming battles over the appointment of a new generation of lesser officials (the peel?) at a party congress next year. Mr Xi wants to replace some of the 350-odd members of the central committee with his own people, while keeping as many of his allies as he can. In a sign that he might be able to do that, officials have started dismissing as “folklore” an unwritten rule that members of the Politburo have to retire at 68. The rule is commonly known as “seven up, eight down” (qi shang, ba xia), meaning 67 is fine, 68 is over the hill. Getting rid of it would seem to open the way to the non-retirement of several of Mr Xi’s close allies, notably 68-year-old Wang Qishan, who is in charge of fighting graft. It might even pave the way for Mr Xi’s own refusal to collect his pension when his second (and supposedly final) term as party chief is up in 2022, and he will be 69.

There is another parallel between political language now and in 1989. The recent meeting eschewed the party’s usual practice of tying current events to the triumphs of earlier Communist history and instead set the scene by referring mostly to the congress in 2012, when Mr Xi became leader. Another time when the party ignored history in this way was after the Tiananmen killings, when it wanted to draw a veil over what had just occurred and signal a fresh, dictatorial start. Mr Xi seems to be saying, implicitly, that a new era has begun with him, core among equals.

Source: Xi Jinping gets a new title | The Economist

13/10/2016

China tops US in numbers of billionaires – BBC News

Property magnate Wang Jianlin of Dalian Wanda tops the list of 594 billionaires in the country, ahead of 535 billionaires in the US.

Alibaba‘s Jack Ma was second, with his wealth having risen 41% from last year.

The annual list is compiled by Shanghai publishers Hurun and often compared to the Forbes list in the US.The Hurun Report’s rich list is one of the most closely-watched and accurate assessments of wealth in China. The annual report has been published for the past 18 years.

Earlier this year, the publisher released a separate, global list, showing that the number of billionaires in China outnumbered those in the US for the first time.

However, none of China’s super-rich make it into the global top 20.

Global reach

At the top of the China rich list is Wang Jianlin, who sits on a personal fortune of $32.1bn (£26.4bn).

His company Dalian Wanda has made headlines throughout the year with a number of high profile forays into the US movie markets. It has taken over Legendary Pictures, as well as stepping into US and UK cinema chains and striking an alliance with Sony Pictures.

Alibaba’s Jack Ma is a close second with $30.6bn, and Pony Ma of internet and online gaming giant Tencent comes third with $24.6bn.

Image copyright REUTERS

The biggest increase came from Yao Zhengua of investment and real estate firm Baoneng Group, whose wealth jumped by 820% to $17.2bn, putting him in fourth position.

Hurun chairman Rupert Hoogewerf said Mr Yao’s rise illustrated a shift in China’s maturing economy.

“Yao’s financial investment model represents the new wave of wealth creation in China,” he explained. “The first money made in China 20 years ago came from trading, followed by manufacturing, real estate, IT, and today it is about using the capital markets for financial investments.

“Robin Li and Melissa Ma of search engine Baidu have a fortune of $14.7bn, ranked eighth while founder of smartphone makers Xiaomi, Lei Jun, dropped out of the top 10 to number 14 as competition in China’s smartphone market intensified.

Most of China’s billionaires live in Beijing, followed by Shenzhen, Shanghai and Hangzhou.

Globally, the Forbes rich list is topped by Microsoft founder Bill Gates with $75bn, followed by Amancio Ortega of Zara and legendary investor Warren Buffett.

Source: China tops US in numbers of billionaires – BBC News

08/10/2016

Chinese consumers: Revisiting our predictions | McKinsey & Company

In 2011, we tried our hand at predicting the ways in which, in the decade to come, Chinese consumers would change their preferences and behaviors.

This article takes stock of those predictions.

Why check in now? One reason is we’re about halfway to 2020. Another is a comprehensive new McKinsey survey, which follows nearly ten years of previous research that includes interviews with more than 60,000 people in upward of 60 cities in China. Along the way, we’ve bolstered our own team’s data on consumer preferences and behavior with a number of complementary analyses and models, including McKinsey’s macroeconomic and demographic studies of Chinese urbanization and income development. We’ve also interviewed academics to draw out the major trends shaping the course of the Chinese economy, such as its rapidly aging population, the growing independence of women in society, and the postponement of critical life milestones, such as marrying and having children.

We’ve done it all with the abiding belief that companies getting ahead of the trends can build their brands and offerings to fit a rapidly evolving set of consumer needs in China. Deeper and more nuanced understanding of Chinese consumers can help reveal fresh opportunities—for new entrants and incumbents alike—and signal those areas where established players may need to be more wary.

Looking back nearly five years on, it is plain that Chinese consumers are evolving along many, though not all, of the lines we’d predicted. While geographic differences persist, Chinese consumers are, on the whole, more individualistic, more willing to pay for nonnecessities and discretionary items, more brand loyal, and more willing to trade up to more expensive purchases—even as their hallmark pragmatism endures.

Evolving geographic differences

Much of the research we described five years ago highlighted the vast differences we found among consumers in China’s various cities and regions. Just as it was then, generalizing about Chinese consumers continues to be almost as difficult (and maybe as foolish) as it is to generalize about European consumers.

We predicted these differences would remain—and even grow more significant, especially in the consumption patterns and tastes that relate to discretionary items. To help companies better tailor their go-to-market approach, we grouped most cities in China into clusters based on their similarities, including their geographic proximity and the transportation infrastructure that connects them.

As the economic structure in each of the 22 biggest city clusters has evolved—and as each of them has been affected differently by the recent slowdown of China’s economy—significant differences, for instance, in consumer confidence, do indeed persist between these clusters.

For instance, some 70 percent of consumers in the Fuzhou–Xiamen city cluster, which lies on the coast across from Taiwan, said in our latest report that they are confident their income will significantly increase over the next five years. In that same report, the Byland–Shandong city cluster, which lies on the coast between Beijing and Shanghai, was comparatively pessimistic, with only 33 percent of its consumers expressing such confidence.

Furthermore, when our latest survey compared the consumers in the Shanghai area to those around Beijing and Hangzhou, certain spending attitudes also showed marked differences. For example, brand loyalty increased much faster in Shanghai (24 percent increase in three years versus just 7 percent in Beijing and 9 percent in Hangzhou), as did the willingness to pay for better or healthier products.

Growing discretionary spending

Despite geographic differences, there are broad similarities among Chinese consumers. These mirror the general trends economists have found among consumers around the world as economies develop. The general tendency is for consumers, as they earn more, to spend a lower percentage of their income on food, a little more on healthcare, and even more on travel and transportation, as well as on recreational activities. It was no great stretch then, in our report five years ago, to predict a significant shift in consumption from necessities and seminecessities into discretionary categories.

Sure enough, our new survey shows Chinese consumers following the anticipated pattern. When we asked how they plan to increase spending as their income increases, dramatically fewer consumers said they will increase it on food (46 percent in the latest survey, compared to the 76 percent who said they would do so three years earlier).

Responses trended slightly up for healthcare products (from 16 percent to 17 percent), and increased for travel (from 14 percent to 23 percent) and leisure (from 17 percent to 25 percent).

Aspirational trading up

In our previous predictions, we also argued that as the income of Chinese consumers grew, they would aspire to improve their quality of life by not only spending more on discretionary items, but also by shifting their spending to more expensive items in the same categories.

In necessity categories such as food, for example, we predicted consumers would be willing to spend more for healthier versions of the same products—for instance, that olive oil would grow much faster than less healthy (and less expensive) oils. In semi-necessity categories like apparel, we predicted people would buy more special-occasion and premium brands. We anticipated that the strongest beneficiaries of these changes would be in the more discretionary and aspirational categories, such as skincare and automotive. So what has happened so far?

Premium categories have really accelerated. Comparing cosmetics purchases between 2011 and 2015, 44 percent of consumers have traded up their purchases, compared with 4 percent who traded down. Even for rice, 25 percent of consumers traded up versus 3 percent who traded down. Automotive was not included in our survey, but sales data from the Traffic Management Bureau of the Ministry of Public Security in China suggest significant trading up. In 2011, 51 percent of the renminbi spent on cars by Chinese consumers were for autos cheaper than 100,000 RMB. These sales accounted for only 43 percent of the market. Cars selling for 100,000 to 250,000 RMB grew twice as fast with a compound annual growth rate (CAGR) of 19 percent versus 9 percent. And cars with price tags between 250,000 and 400,000 RMB grew the fastest of all, with 23 percent CAGR.

Emerging senior market

In 2011, we observed a big generational difference between consumers in their late 50s and early 60s, who were very conservative spenders, and all of the age cohorts younger than them.

We predicted that by 2020, as the needs of consumers over the age of 55 changed along with their economic confidence, their spending habits would follow suit, making this age group worth pursuing by consumer-product companies. If anything, we underestimated the speed and force with which this trend would unfold.

By 2015, the 55–65 age group had started to shift even faster than the rest of the population. For example, 52 percent of the people in this age group showed a preference for premium products, compared to just 32 percent in 2012. They leaped from being the most conservative age group to the one most likely to trade up. Similarly, the preference for famous brand names among these older buyers jumped by more than 20 percent, fully closing the previous difference among cohorts. As Exhibit 1 shows, these older consumers don’t shy away from indulgences, and they have grown more likely to use the Internet to research their purchases, even if they still do so less often than younger consumers.

Chinese consumers in their late 50s and early 60s are shifting their buying behavior.

That said, the upper age group has remained more pragmatic and cost conscious than any other age group, as we discuss in the following section.

The still-pragmatic consumer

Back in 2011, even as we were predicting changes in the behavior and preferences of Chinese consumers, we also saw ways in which their essential pragmatism would likely stay the same. For instance, we anticipated that impulse buying would remain lower than in other countries and that value for money would continue to be an important consideration when choosing products and services. Interestingly, Chinese consumers across all age groups have, in some ways, become even more pragmatic. They’re now even more likely to compare prices across multiple stores, to be more price aware, and to stock up on promotions. That said, they’re now willing to buy more often on impulse (Exhibit 2).

The pragmatism of Chinese consumers has increased slightly across all age groups.

The individual consumer

We also predicted that as Chinese consumers aspire to a better life and trade up their purchases, they would become more discerning and gradually more individualistic. This would lead, for example, to a shift toward more healthy choices, more user-friendly products, and products and brands that better fit their personality. This could be a big opportunity for niche brands—and a threat to the mass-market brands that had won big in previous years by using scale and ubiquitous availability, supported by the trust gained by heavy advertising.

Our latest research certainly shows a decrease in consumption in categories deemed less healthy and a willingness to spend significantly more on health and more environmentally conscious categories. It also shows consumers are more likely to spend more to indulge themselves and more likely to try new technology. While their consumption choices have become more individualistic, though, it is important to note that family values continue to be at the top of their priorities (Exhibit 3).

Chinese consumers’ needs and values continue to center around family.

One area our predictions missed, however, was by anticipating that consumers, as they became more individualistic in their choices, might focus less on basic product reliability and safety. Perhaps in part because of a number of more recent food scandals, however, consumers seemed more concerned with these issues in 2015 than they were before.

The increasingly loyal consumer

When our team first started researching Chinese consumers, nearly ten years ago, many of us were surprised by their fickle attitude toward brands. Fewer than half of consumers tended to stick with their favorite brands, compared, for example, with almost three quarters of US consumers.

As we debated this tendency while making our predictions, we wondered if, in the clash between pragmatism and individualism, brand loyalty would stay low, increase, or even decline. Ultimately, we decided it would increase as the emotional benefits of brands became more important to consumers and as increased choice and availability of branded products (online and off) would allow consumers to optimize for price and convenience without changing choices too often.

Our recent research confirmed the changes we anticipated. Consumers are now significantly less likely to buy a brand that is not already among their favorites, continuing the upward trend we observed in 2011 (Exhibit 4).

Chinese consumers are increasingly brand loyal and focused on just a few brands.

The modern shopper

Our 2011 predictions were bullish on e-commerce, predicting that Chinese consumers would adapt their channel choices even faster than has occurred in developed markets.

We estimated that by 2020, online consumer-electronics purchases would jump to 40 percent, from about 10 percent. More mainstream categories would rise to 15 percent, and some categories, such as groceries (now below 1 percent), could reach about 10 percent. These changes are occurring even as the enduring pragmatism and diligence of the Chinese consumer continue to be in place. Our latest research shows that consumers of all age groups are much more likely to collect information online, even on fast-moving consumer goods, than they were just three years ago.

In 2015, online food and beverages sales (excluding fresh) reached 7.2 percent: reaching our predicted 10 percent in five years looks very likely. The online share of consumer-electronic purchases, meanwhile, has reached a whopping 39 percent in 2015, and it now looks possible that by 2020 it will be about 50 percent of overall sales.


Looking from today’s perspective at our 2011 predictions, it is impressive to see the evolution of Chinese consumers—even as their most characteristic traits endure. Certainly, we’ll check in on their progress as we get ever closer to the year 2020. Making predictions may be difficult, especially about the future—as US Baseball Hall of Famer Yogi Berra famously observed. But they can still provide valuable foresight for executives.

Source: Chinese consumers: Revisiting our predictions | McKinsey & Company

07/10/2016

Keeping pure and true | The Economist

CHINA’S cities abound with restaurants and food stalls catering to Muslims as well as to the many other Chinese who relish the distinctive cuisines for which the country’s Muslims are renowned.

So popular are kebabs cooked by Muslim Uighurs on the streets of Beijing that the city banned outdoor grills in 2014 in order to reduce smoke, which officials said was exacerbating the capital’s notorious smog (the air today is hardly less noxious).

Often such food is claimed to be qing zhen, meaning “pure and true”, or halal, prepared according to traditional Islamic regulations. But who can tell? Last year angry Muslims besieged a halal bakery in Xining, the capital of Qinghai province, after pork sausages were found in the shop’s delivery van. There have been several scandals in recent years involving rat meat or pork being sold as lamb. These have spread Muslim mistrust of domestically produced halal products.

In response, some local governments have introduced regulations requiring food purporting to be halal to be just that (though not going into detail of what halal means, such as the slaughter of animals with a knife by a Muslim). Earlier this year, however, the national legislature suspended its work on a bill that would apply such stipulations countrywide.

There is much demand for one. Local rules are often poorly enforced. Advocates of a national law say a lack of unified standards is hampering exports to Muslim countries. According to Wang Guoliang of the Islamic Association of China, the country’s halal food industry makes up a negligible 0.1% of the global market.

The government began drafting a national halal law in 2002. But Muslim communities in China have varying definitions of the term. Work on the bill was slow. Each year, during the legislature’s annual session in March, Muslim delegates called for faster progress. But there were opponents, too. Some scholars argued that the government should not regulate on matters relating to religious faith. Others said that by giving in to the Muslims’ demands, China would encourage them to press for more concessions and ultimately form their own enclaves run by sharia.

Such views may have given pause to China’s leaders. In April, at a high-level meeting on religious affairs, President Xi Jinping said religion should be prevented from interfering with the law. That month Wang Zhengwei, a Muslim official who had been pushing for halal legislation, was removed from his post as the head of the State Ethnic Affairs Commission.

Also in April, the Communist Party chief of Ningxia urged officials to “sharpen [their] vigilance” against the use of halal labels on products such as toilet paper, toothpaste and cosmetics. And the government of Qinghai province ordered the inspection of Muslim-only toilets and hospital rooms, as well as shops catering to Muslims, to make sure that halal symbols were being used only on food. Xinjiang, the far-western region that is home to the Uighurs, recently introduced an anti-terrorism law threatening punishment of those who “overextend” halal rules. Officials clearly worry that those who do so might be the same sort of people who embrace jihad.

Ismael An, a Muslim writer, says this is overreacting. “Supporters of the halal law are not the so-called extremists, because real extremists don’t make demands through legislation,” he says. On the internet, however, a small but vocal group of Islamophobes has been calling for a boycott of halal-certified products. They say the price of such goods factors in payments to Islamic groups that grant the certificates—they do not want to give the religion even indirect support. Ironically, it is the non-Muslim love of Muslim food that will ensure the campaign will not succeed.

Source: Keeping pure and true | The Economist

03/10/2016

Furniture Retailing With Chinese Characteristics – China Real Time Report – WSJ

At the opening of Zaozuo’s first furniture store this month in Beijing, a shopper snoozed on a couch while others clambered onto wall-mounted shelves to take selfies perched in chairs.

Welcome to furniture retailing with Chinese characteristics.Online furniture startup Zaozuo Zaohua Zworks Ltd. opened the outlet in an upscale mall after hitting resistance from customers wary of buying bulky items without so much as a feel of the fabric, let alone a bit of shuteye.

Liu Yusi, a 33-year old human-resource executive living in Beijing, said the showroom is a good idea given that buying large pieces of furniture without a test drive can be a leap of faith, although she was a little disappointed there weren’t any beds on display. “Maybe the store is too small,” Ms. Liu said. “But I think a mattress is something you really need to lay on before you decide to buy.”

Zaozuo has tried to distinguish itself from competitors by letting customers vote on the design and style of furniture items at the prototype stage before they’re mass produced, a strategy it says reduces inventory and cuts cost. This is a Chinese adaptation of business models used by the likes of U.S. website Threadless.com — which conducts online polls of crowd-sourced T-shirt designs before producing winning entries – and by crowd-funding sites that have investors vote on ventures they’re willing to fund.

Zaozuo’s customers vote for the designs they’d like to buy. PHOTO: ZAOZUO, DON ARBOUR/THE WALL STREET JOURNAL

The approach has its skeptics. Guangdong Weiyuhua Furniture Co. says it thinks Zaozuo’s voting is a gimmick and questions whether selling furniture online is sustainable. “It targets a few rich people in cities like Beijing or Shanghai,” said company sales manager Li Songzhi. “Traditional furniture companies like ours have real stores all over China.”

With nearly 700 million online users, Chinese consumers are driving explosive growth in the e-commerce sector, undercutting traditional retailers and leaving new online ventures fighting for an edge. Zaozuo co-founders, Stanford business school graduates Shu Wei and Guan Zishan, say China’s struggling manufacturing sector needs a wakeup call as it battles rising debt and excess capacity.“

The old system is not working very well,” said Ms. Shu. “That was the starting point of our business model.”

One potential problem with the company’s voting system is possible voter fraud, says Travis Wu, China research director with consultancy Forrester Research Inc. “In China, everything is a bit tricky, and lots of people try to game the system,” Mr. Wu said. That could see designers tilt results toward their own models, for example, or allow competitors to steer Zaozuo into producing money-losing items, he said.

Another concern: with Zaozuo opening a showroom, it risks driving up costs and undercutting its advantage over traditional furniture makers. Mr. Guan says users must be registered before voting, the company watches carefully for unusual online activity and the new store is not a major investment.

Zaozuo, which attracted several thousand curious shoppers to its store launch on a recent weekend, sees itself inhabiting a competitive space between expensive designer brands and mass marketers like Sweden’s IKEA, a company that attracts its share of showroom lounge lizards. On any given weekend, entire families can be found snoozing on beds in Ikea’s massive showrooms, luxuriating in the air conditioning and enjoying the inexpensive food.

China’s fragmented furniture industry with around 5,000 large companies and combined revenue of 244.5 billion yuan [$37.3 billion] in 2015, up 16.1% increase from the previous year, is tradition-bound and due for a shakeup, say online companies. Internet furniture companies only command a tiny slice of the market but are growing rapidly. Privately held Zaozuo said sales are increasing by 40% annually although it has yet to break even. MZGF Furniture Studio Co., another online firm, said sales have been expanding by as much as 200% year on year in some months.

Zaozuo, which works with 50 Chinese factories and more than 80 European designers, has attracted $17.5 million in venture funding and hopes to eventually go public. Anna Fang, chief executive of venture capital group Zhen Fund, which has invested $1.3 million in Zaozuo, said prospects for the industry are promising but the startup may need to shorten delivery times, which range from three to 35 days. “Ikea can get furniture to you right away,” she added.At its store opening, Zaozuo said it tried to discourage shoppers from getting too comfortable on its furniture. “The customer might be comfortable, but the image is not that good for other customers who can’t feel the fabrics if someone’s sleeping on it,” said Mr. Guan. “Maybe they do it because they’re tired. Shopping can be very tiring.”

Source: Furniture Retailing With Chinese Characteristics – China Real Time Report – WSJ

29/09/2016

China punishes coal, steel companies for violating pollution, safety rules | Reuters

China’s state planner has punished hundreds of coal and steel companies by forcing them to close or cut output for violating environmental and safety regulations, the latest effort to crack down on the country’s heavily polluting industries.

The National Development and Reform Commission (NDRC) forced two steel companies to shut completely, 29 firms to halt production and another 23 to curb output, it said in a statement on Thursday. The closures and curbs followed a nationwide inspection of more than 1,000 steel makers in the world’s top producer.

Among more than 4,600 coal mines inspected, the NDRC has revoked safety certificates for 28 coal mines and forced another 286 coal mines to halt production, it added.

The planner did not identify or name the companies, or give details on how the companies broke the rules and how long the penalties will be in place.

Beyond the safety and environment rules, the NDRC also listed other infractions such as violations of energy consumption rules or quality standards.

The statement reflects the government’s continued push to force ageing mills and mines to comply with tough new pollution rules by meeting emission standards and installing appropriate monitoring equipment.

China’s unwieldy coal and steel industries are considered two of the biggest sources of pollution in the country.

The government is targeting coal output cuts of 500 million tonnes in the next three to five years.

Source: China punishes coal, steel companies for violating pollution, safety rules | Reuters

29/09/2016

Chinese Tourists Encouraged to Behave Ahead of Mass Vacation – China Real Time Report – WSJ

Urinating on the streets of Hong Kong? Hurling hot water at flight attendants? Stealing wood from Lovers’ Beach in Thailand?

These are the kind of mainland-Chinese tourist antics that the motherland is looking to stub out ahead of the week-long national holiday known as Golden Week, when throngs of citizens travel both domestically and abroad.

To help them do so, the China National Tourism Administration and one of China’s dominant online travel firms, Ctrip.com International, are teaming up to find model tourists to promote travel behavior worthy of emulation—and national recognition.

“Civility of Chinese tourists is an important indicator of a country’s soft power and one of the major ways to export a country’s influence,” the tourism administration’s Vice Chairman Wang Xiaofeng said at an event announcing the campaign.

The two organizations, along with state-run newspaper China Daily, are asking the Chinese public to provide examples of what they think is model traveler decorum. Ctrip will give gifts to exemplary participants, such as free travel products and company souvenirs, said Ctrip senior director of investment relations Zhou Shiwei.

“The campaign is about changing the perception of Chinese travelers,” he said. “We definitely want Chinese travelers to be well-received abroad.

”Examples include pictures of Chinese soccer fans who picked up trash in Seoul, even after the Chinese men’s team lost to South Korea earlier this month, or photos of Chinese tourists patiently waiting in line.Ctrip says the campaign is aiming to publish a compilation of guidelines and pictures suggested by Chinese netizens during Golden Week. Chinese tourists can upload pictures via Chinese social-media network Weibo, and to the China Daily website. It is unclear how the photos will be verified.More than 600 million Chinese are expected to travel abroad in the next five years, as China’s middle class grows and visa restrictions ease in some countries welcoming Chinese spending. Last year, about 120 million Chinese traveled overseas—10% more than in 2014, according to the national tourism administration.

Domestically, tourism generated about $620 billion last year, with more than four billion trips taken.

The campaign, entitled “Good Chinese Tourists,” is an addition to other recent efforts the government has put forth to curb travel misbehavior. Last year, it unveiled new measures that allow authorities to track the bad habits of wayward tourists for up to two years.

The tourism administration also recently published a guidebook on civilized tourism, in which it urges tourists to refrain from spitting and littering—common practices back home—and to take photographs only where permitted. “Do not chase, beat or feed animals,” it adds. “Do not be greedy with complimentary items.

”For traveling abroad, the guide includes recommendations that cutting in line is “shameful wherever you are” and suggests that tourists “not leave footprints on toilet seats.”

Source: Chinese Tourists Encouraged to Behave Ahead of Mass Vacation – China Real Time Report – WSJ

04/09/2016

China says should constructively handle disputes with India | Reuters

Chinese President Xi Jinping told Indian Prime Minister Narendra Modi on Sunday that the two countries should respect each other’s concerns and constructively handle their differences.

The two nuclear-armed neighbours have been moving to gradually ease long-existing tensions between them.

Leaders of Asia’s two giants pledged last year to cool a festering border dispute, which dates back to a brief border war in 1962, though the disagreement remains unresolved.

Meeting on the sidelines of the G20 summit in the eastern Chinese city of Hangzhou, Xi said relations had maintained a steady, healthy momentum, and should continue to increase mutual understanding and trust.

“We ought to respect and give consideration to each other’s concerns, and use constructive methods to appropriately handle questions on which there are disputes,” Xi said, in comments carried by China’s Foreign Ministry.

“China is willing to work hard with India the maintain the hard-won good position of Sino-India relations,” Xi added.

China’s Defence Ministry said last month that it hoped India could put more efforts into regional peace and stability rather than the opposite, in response to Indian plans to put advanced cruise missiles along the disputed border with China.

Indian military officials say the plan is to equip regiments deployed on the China border with the BrahMos missile, made by an Indo-Russian joint venture, as part of ongoing efforts to build up military and civilian infrastructure capabilities there.

China lays claim to more than 90,000 sq km (35,000 sq miles) ruled by New Delhi in the eastern sector of the Himalayas. India says China occupies 38,000 sq km (14,600 sq miles) of its territory on the Aksai Chin plateau in the west.

India is also suspicious of China’s support for its arch-rival, Pakistan.Modi arrived in China from Vietnam, which is involved in its own dispute with China over the South China Sea, where he offered Vietnam a credit line of half a billion dollars for defence cooperation.Modi’s government has ordered BrahMos Aerospace, which produces the BrahMos missiles, to accelerate sales to a list of five countries topped by Vietnam, according to a government note viewed by Reuters and previously unreported.

Source: China says should constructively handle disputes with India | Reuters

04/09/2016

UK’s May to review security risks of Chinese-funded nuclear deal | Reuters

Prime Minister Theresa May said on Sunday she wanted her security advisers to review a delayed nuclear power investment from China – a source of diplomatic tension – as she arrived in the country to attend a G20 summit.

May upset Chinese officials in July by delaying a $24 billion project that would see French firm EDF (EDF.PA) build Britain’s first new nuclear power plant in decades with the help of $8 billion from China.

Speaking during her first visit to China, May was asked whether she would ask the National Security Council, a team of ministers supported by intelligence officers, to look at the potential security implications of the Hinkley deal.

“I will be doing exactly as you’ve said,” May replied, saying it would be part of her decision-making process. The comment marked the first official acknowledgement that national security was a factor in her decision.

The initial delay caught investors by surprise and has cast doubt over whether May, who took office in July following Britain’s vote to leave the European Union, will continue to court China as a major source of infrastructure investment.

“This is the way I operate,” May earlier told reporters en route to the summit, which will include a one-to-one with Chinese President Xi Jinping.

“I look at the evidence, …take the advice and consider that and come to my decision.

“A final decision is expected later this month.

May, a former interior minister, is wary of the risks of allowing China to invest in nuclear projects, according to a former cabinet colleague. The EDF deal is viewed as a precursor to Chinese involvement in another two nuclear plants.

Asked whether she trusted China, May said: “Of course we have a relationship with them… What I want to do is build on that relationship.

“She also stressed a need to broaden the group of nations that Britain can trade with and tap for cash to help reinvigorate its power, transport and technology infrastructure.”This is the G20, this is about talking to a number of world leaders. I’m going to give the message that Britain is very much open for business… I want to be talking about the opportunities for free trade around the world.”

Source: UK’s May to review security risks of Chinese-funded nuclear deal | Reuters

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