Posts tagged ‘Business and Economy’


All you need to know about business in China | McKinsey & Company

A lot of people view China business as mysterious. Relax. Consumers behave pretty much the same everywhere. Competition is pretty much the same everywhere. You just need to ignore the hype and focus on the basic fact that in China today, there are six big trends (exhibit). That’s it. Six trends shape most of the country’s industries and drive much of China’s impact on the Western world. They are like tectonic plates moving underneath the surface. If you can understand them, the chaotic flurry of activity on the surface becomes a lot more understandable—and even predictable.

Coauthors Jeffrey Towson and Jonathan Woetzel discuss China’s six megatrends with Nick Leung, the managing partner of McKinsey’s Greater China office.

These trends move businesses on a daily basis. They’re revenue or cost drivers that show up in income statements. Deals, newspaper headlines, political statements, and the rising and falling wealth of companies are mostly manifestations of these six trends, which aren’t typically studied by economists and political analysts. In fact, we happen to think that Chinese politics or political economics are wildly overemphasized by some Westerners in China. So let’s tell a story about each of these megatrends, with some important caveats. They’re not necessarily good things. They’re not necessarily sustainable. For every one of them, we can argue a bull and a bear case. Most lead to profits or at least revenue. Some may be stable. Some lead to bubbles that may or may not collapse. We are only arguing that they are big, they are driving economic activity on a very large scale, and understanding them is critical to understanding China and where it’s headed.

via All you need to know about business in China | McKinsey & Company.

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* Even China’s Economists Are Singing the Blues – China Real Time Report – WSJ

It’s all relative.  To any developed nation, a GDP growth of just over 7% would look absolutely marvellous!

“China’s state media have long accused foreign analysts of being too bearish on the Chinese economy. Those analysts looking in from the outside are often said to be too eager to be “chanting decline”—chang shuai—when it comes to the economy’s prospects.

This time around, China’s own economists seem to be chanting a pessimistic tune about growth prospects. Perhaps they are not quite as negative as those pesky foreign counterparts—who according to at least one report China’s state media are being told to avoid—but they are increasingly outspoken about slowing growth and rising financial risk.

“We are now in a painful stage,” economist Wang Luolin told a seminar this week.  “Let’s not try to dress things up,” said the consultant to the Chinese Academy of Social Sciences, a government think tank.

Yu Bin, a senior researcher at the influential Development Research Center under the State Council, took a similarly pessimistic view.

“The fact is, China’s economic growth is facing substantial downward pressure,” he said. “I don’t think we should get our hopes up for this year’s growth.”

China’s growth has been slowing amid a recovering global economy coupled with weak domestic demand. The days of double-digit expansion are long gone. Economic growth slipped to 7.7% in the fourth quarter of last year from 7.8% in the third – and many economists see a further slackening ahead.

“We expect the economic growth rate to be just above 7% this year, and that’s about it,” Mr. Yu said. That would be well below the 7.7% expansion in all of 2013.

Mr. Yu added that all three big drivers of China’s growth — investment, consumption and exports— are looking weak.”

via Even China’s Economists Are Singing the Blues – China Real Time Report – WSJ.

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IT push aims to boost domestic demand |Sci-Tech |

Work on 4G licenses and broadband

Internet access to be speeded up

China is to promote consumption of IT-related products and services as it seeks to spur domestic demand and push economic upgrading.

It will speed up work to issue licenses for the fourth generation (4G) mobile network this year and accelerate development of broadband Internet access, according to a statement released after an executive meeting of the State Council presided over by Premier Li Keqiang.

The nation is aiming for annual average growth of 20 percent in the information consumption industry from 2013 to 2015, the statement said.

The meeting demanded implementation of the “Broadband China” strategy, stepped-up efforts to construct and upgrade network infrastructure, pushing forward the FTTH (Fiber To the Home) project and improving Internet speed.

China, which has the largest number of mobile phones in the world at 1.2 billion, is already building 4G trial networks in major cities.

China Mobile, its largest telecom carrier, is promoting the homegrown Time-Division Long-Term Evolution (TD-LTE) 4G standard and hopes to start commercial 4G rollout as soon as possible.

via IT push aims to boost domestic demand |Sci-Tech |


China unveils fresh measures to boost growth

BBC: “China has unveiled a series of moves aimed at boosting growth, indicating that policymakers are concerned about the slowdown in its economy.Worker climbs out of an underground construction site in Hefei, China

The steps include tax breaks for small businesses, reduced fees for exporters and opening up of railway construction.

China’s economic growth rate has slowed for two quarters in a row and there are concerns that it may slow further.

But the cabinet said the economy was in a reasonable shape and it was pushing for reforms to stabilise growth.

“The economy is still running in a reasonable range,” the cabinet said.

“We must look at now and beyond to let restructuring and reform play an active role in stabilising growth.””

via BBC News – China unveils fresh measures to boost growth.

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Papua New Guinea reconsiders China as a partner

So not everyone who is wooed by China responds without reservations!

China Daily Mail

China Papua New GuineaPapua New Guinea’s Prime Minister Peter O’Neill has written to Public Enterprises Minister Ben Micah asking him to review a $300 million deal with China’s ZTE Corporation and China Great Wall Industry Corp for a communications satellite.

This is the latest of a series of complications in the relationship between PNG and China, which was for many years warm but remained chiefly diplomatic.

More recently, however, soft loans through the Export-Import Bank of China and other Chinese channels have facilitated much closer engagement, with Chinese companies taking a prominent role in development projects around the country – resulting in some tough lessons starting to be learned on both sides.

First, state-owned giant Metallurgical Group Corporation built the $1.4 billion Ramu nickel mine, which recently began operating after a two-year hiatus while environmental issues were fought through the courts.

Then a year ago China provided a $3bn soft loan to rebuild…

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* Companies turn to India to boost their business

FT: “Oil company Shell’s technology centre in the Indian high-tech hub of Bangalore is actually a facility in two halves, with a couple of campuses in different locations around the city.

Originally unable to find one suitable site for its growing efforts, the Anglo-Dutch company decided to split the difference, setting up dual facilities, working on everything from next-generation chemicals to underwater modelling.

But now the company plans to bring everything back together, having announced plans late last year to build a giant new research and development campus on a patch of land close to Bangalore’s airport, with room for 1,500 staff, and even plans for a cricket pitch on the grounds.

Shell’s move is part of a pattern in which many of world’s largest companies are turning to India in their search for new ideas that will boost its business, and follows similar moves to open up innovation facilities around Bangalore by the likes of GE, Cisco and Siemens.”

via Companies turn to India to boost their business –


* Central authority fails to face up to surge in emigration

Given that China has 1.3 billion people and there are over 1 million millionaires – according to Huran survey, does it matter that some successful people are emigrating? All it will do is open the way for the ‘next level’ to step up and be successful too.

See –

China Daily Mail

China EmigrationThe surge of emigration was not something that was talked about in China until yesterday. The news broke when CCTV made special footage on emigration, which indicates the seriousness of the issue.

Another graver piece of news is that even CCTV dared not persuade rich people not to emigrate, but only reminded them that they should not emigrate through an illegal immigration agency. From that we can see how justified it is to emigrate.

People are only given the advice not to emigrate through an illegal agency

In CCTV’s news program last week, it played a special footage, more than 10 minutes long, that gave an example of an investment immigrant to the US who found that he had been deceived when he arrived in the United States.

To be frank, even if one has obtained a conditional green card, one is still not sure whether one can obtain…

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* A Silicon Valley Campus with Chinese Characteristics

Reuters: “Like most of China’s high-tech manufacturers, Semiconductor Manufacturing International Corp. is located in an outsized and relatively isolated technology park.

But unlike the bulk of China’s electronics manufacturers, which set up cramped dormitories and massive dining facilities to manage legions of workers who come to do basic assembly, SMIC’s campus is actually pleasant.

Located within walking distance of its production facilities, apartment buildings in SMIC’s residential zone are brightly painted and framed by well-manicured trees. A short stroll across a canal leads to an area populated by villas that seem more suited to an American Sun Belt suburb than a technology park in Shanghai’s Pudong district.”

via A Silicon Valley Campus with Chinese Characteristics – China Real Time Report – WSJ.


* Mahindra Sees IT Revival

WSJ: “It is good to do the first interview in Davos with someone who can feel the pulse of the global economy, and Anand Mahindra, chairman and managing director Mahindra & Mahindra Ltd. 500520.BY -0.19%, can to an extent do that.

Sure, the giant Mahindra federation of companies—don’t call it a conglomerate, please—has many large businesses focused on its home market of India. But its information technology business relies on the investment decisions taken in the boardrooms of New York, London and Frankfurt—and the feeling of Mr. Mahindra is positive.

“The IT companies are going to see a revival,” says the Harvard-educated Mr. Mahindra. “I have been surprised at how strong the recovery has been.”

“What we are seeing is that customers in the west, by which I mean U.S., U.K. and Western Europe, these companies have not shied away in the last year from making the necessary investments in IT that they need to improve their businesses.”

That would be good news for the broader IT sector in India, which started the year with upbeat corporate results from some of the big players, but then some of the shine diminished when No. 3 player Wipro Ltd. 507685.BY +0.75% said it didn’t see any significant increase in demand.

It would also be good news for the broader global economy. Mr. Mahindra says, “I don’t think anyone in the world uses Indian IT companies as a barometer, but I think it’s a very interesting one.”

Mahindra & Mahindra has an incredibly diverse range of businesses, from tractors to parts for jet fighters to rural lending.

Mahindra Group has two software services companies—Tech Mahindra Ltd. and Satyam Computer Services Ltd. 500376.BY -0.30% The two companies have already announced a merger, which will create the fifth biggest Indian software services company by sales.

For the domestic business environment, he says he is more optimistic now than he has been for a couple of years.”

via Mahindra Sees IT Revival – India Real Time – WSJ.


* China Pushes Industry Consolidation

WSJ: “China’s industry ministry on Tuesday set an aggressive goal of forging global giants in the electronics sector within the next two years through mergers and alliances, and reiterated a longstanding push for Chinese companies to explore overseas acquisitions.

The target for the electronics sector is part of a wider plan to consolidate China’s fragmented major industries, including steel, shipping, automotives, cement and aluminum. Overcapacity in heavy industries has been blamed for amplifying a sharp slowdown in growth in the last two years.”

via China Pushes Industry Consolidation –

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