Posts tagged ‘Business’

« Older Entries  |   Newer Entries »
01/06/2013

Yuan may continue to appreciate

China Daily: “The yuan may be trading at below 6.1 against the US dollar as the Chinese currency continues to rise in the next few months, said a currency analyst at DBS Bank.

Yuan may continue to appreciate

A trader with an Asian bank in Shanghai said that the yuan’s valuation has peaked for a few days, while sales of dollars are easing.

An employee from the Industrial and Commercial Bank of China is counting the renminbi and Japanese yen in Huaibei, Anhui province, on May 17. The yuan has gained some 20 percent against the yen since the beginning of the year. Woo He / For China Daily

“Most of my peers working in Shanghai share the opinion that in the short term the renminbi may further appreciate against the US dollar,” the trader said.

China’s central bank, the People’s Bank of China, set the yuan’s midpoint at a record-high level of 6.1796 against the US dollar, while the spot yuan closed at 6.1345 per dollar on Friday.

It has been 12 months since Japan’s yen and China’s yuan became directly convertible, and the yuan has gained some 20 percent against the yen since the beginning of the year.

The appreciation of the yuan and the depreciation of the yen may cast risks to China’s currency as it’s the only currency which lacks the elasticity of East Asian economies, wrote Liu Yuhui, a financial researcher at the Chinese Academy of Social Sciences in an article published on Tuesday.

“It has been very difficult for us to guarantee orders from Japan these days because our price advantage disappeared,” said Yuan Hongtao, owner of a Hangzhou-based plastic production company, which exports some 40 percent of its products to Japan.

Analysts said that policymakers now have to figure out ways to help companies grow, as the renminbi is increasingly going global.

“While the benefits of direct convertibility between the renminbi and other currencies are obvious, including cutting the costs of exchange and reducing the risks brought by the fluctuation of the US dollar, it can also bring some risks to companies and regions in China whose growth is driven by foreign trade,” said Liu Yang, a foreign exchange analyst with Shanghai Gaofu Consultancy.

Currently, the yuan is directly convertible to the yen and the Australian dollar. New Zealand and China are in an early stage of negotiations for direct convertibility of each other’s currencies, according to a Reuters report on May 26.

“One important step to make the renmibi more internationalized is to use more yuan in direct investment overseas”, said Nathan Chow, vice-president and economist of group research with DBS Bank (Hong Kong) Ltd.

Chow said that only about 6 percent of China’s outbound direct investment uses renminbi, while 36 percent of foreign direct investment in China uses renminbi.

If regulations on ODI using renminbi are eased, a large amount of yuan will be released to overseas markets and help divert risks of the fluctuation of the US dollar, which is being used for foreign exchange reserves, said Chow.

He added that more big corporations may want to issue dim sum bonds — yuan-denominated bonds issued in Hong Kong — as the renminbi bond market grew significantly this year, driven by lower funding costs, improved macroeconomic conditions and the heightened expectations for yuan appreciation.

“Despite all these factors, market facilities for renminbi bonds still have a lot of catching up to do. Decision makers and financial institutions need to work closer with corporations, while continuing to improve the fundraising infrastructure in offshore renminbi centers such as Hong Kong and Singapore,” he said.

The yuan had appreciated 1.72 percent against the dollar since the beginning of the year, following a moderate gain of 1.03 percent throughout 2012.”

via Yuan may continue to appreciate |Economy |chinadaily.com.cn.

See also:

Related articles

Posted in China alert, Economics, GeoPolitics, Politics, Reserve currency, Trade | Leave a Comment »

Tags: , , , , , , , ,
01/06/2013

Sun Pharma Keeps Expanding Overseas

WSJ: “A bid by India’s Sun Pharmaceutical Industries Ltd.  to acquire Swedish drug maker Meda AB  for as much as $5 billion, could be a big plus for Sun, say stock analysts in India.

Mumbai-based Sun Pharma, which makes generic versions of patented drugs including those used for cancer treatment, has been the best performer on India’s benchmark Sensex’s 30-share index this year.

The stock has gained 42% this year to close at 1045.50 rupees ($18.45) a share on Friday. In comparison, Sensex is up only around 3% since the beginning of the year.

Analysts say a big acquisition that expands Sun Pharma’s product offerings would help it grow further. Already, Sun Pharma generates more than 70% of its total revenue from overseas units.”

via Sun Pharma Keeps Expanding Overseas – India Real Time – WSJ.

Posted in Economics, Foreign acquisition, India alert | Leave a Comment »

Tags: , , , , , , , , , ,
01/06/2013

India’s economic growth at slowest rate in a decade

BBC: “India‘s economy grew at its slowest pace in a decade during the 2012-13 financial year, figures show.

An factory worker welds at an air conditioner manufacturing facility near Ahmedabad

The economy grew by 5% over the year, after having grown at an annual pace of 4.8% in the January-to-March quarter.

India was recording annual growth of 9% until two years ago, but in recent months it has seen a sharp decline blamed on a slowdown in its manufacturing and services sectors.

Foreign investors have also kept away due to delays in key reforms.

One factor is India’s weakening job market.

“Companies now want a perfect candidate. Because of the global recession they are cutting down the job opportunities.”

Falling orders and fewer jobs

According to the latest figures released by the ministry of statistics, India’s manufacturing sector grew at an annual pace of 2.6% during the latest quarter while farm output rose by just 1.4%.

The figures are in line with official estimates. In February, India lowered its growth forecast to 5% for the year, underlining the challenges it faced in reviving the sluggish economy.

Last month, Prime Minister Manmohan Singh said the current downturn was “temporary” and he was confident the country’s economy would bounce back to an “8% growth rate”.

However, the mood has remained pessimistic in the business community with industry leaders worried over high rates of inflation.

The slowing economy has also meant that Indian companies are putting less profit back into their businesses.

Annual capital investment growth slowed to 3.5% in the first three months of 2013, down from 4.5% year-on-year in the previous quarter.

Meanwhile, complex business regulations are often blamed for driving foreign companies away.

Foreign direct investment into India has fallen, while the amount of corporate money leaving the country is on the rise.

“The government needs to go all-out to turn around investment sentiment,” said Yes Bank chief economist Shubhada Rao.

via BBC News – India’s economic growth at slowest rate in a decade.

Posted in Economics, India alert | Leave a Comment »

Tags: , , , , , , , , ,
30/05/2013

China designates service industry new growth engine

Xinhua: “China will step up efforts to build up its service industry to make it a new engine to power sustainable growth, Premier Li Keqiang said on Wednesday.

CHINA-BEIJING-LI KEQIANG-GLOBAL SERVICES FORUM (CN)

Speaking at a summit during the second Beijing International Fair for Trade in Services, Li stressed the important role of the service industry in job creation and economic upgrading.

“Increasing service supplies and improving service qualities will help unleash huge potential in domestic demand, and thus offer firm support for stable economic growth and structural optimization,” he said.

The latest emphasis on service trade is part of China’s efforts to drive growth in the sector to build an upgraded version of the economy.

In 2012, the service industry accounted for 44.6 percent of gross domestic product (GDP), up 2.7 percentage points from a year earlier but still significantly below the share of 60 percent or more seen in many developed countries.

Li noted the key to spur growth in the area lies in reform and opening-up to remove institutional barriers.

“China will further open up the service industry, and pilot free trade experimental zones to tap development,” he said, adding that the government will seek balanced trade and encourage cross-border investments in the sector.

The premier stressed countries should abide by the win-win principles of rising against protectionism, removing trade barriers, and coordinating efforts to facilitate personnel flows, recognition of qualifications and a setting of standards.

Developed countries should lead the effort to open up their markets, while developing economies should be actively engaged in building the global trade mechanism and standards in the service industry, according to Li.

Under China’s 12th Five-Year Plan (2011-2015), the country aims to bring the sector’s proportion of GDP to 47 percent by 2015 and to make it a strategic focus for the country’s industrial restructuring and upgrading to ease reliance on traditional manufacturing.”

via China designates service industry new growth engine – Xinhua | English.news.cn.

See also: https://chindia-alert.org/2013/04/19/chinas-growth-the-making-of-an-economic-superpower-dr-linda-yueh/

Related articles

Posted in China alert, Economics, Services | Leave a Comment »

Tags: , , , , , , ,
30/05/2013

In China, Big Data Is Becoming Big Business

Business Week: “With 1.3 billion people, a quickly expanding urban economy, and rising rates of Internet and smartphone penetration, China generates an immense amount of data annually. If streams of that data can be appropriately sifted, analyzed, and stored, companies seeking to understand China’s often-fickle consumers could have access to valuable real-time insights—and perhaps early warning to the next big consumer trends.

Shopping drives Beijing's Sanlitun area

At a presentation last week at Peking University’s Guanghua School of Management, China’s premier business school, associate professor of marketing Meng Su predicted: “China will soon become world’s most important data market.” He advised job seekers in China and elsewhere to consider training for a new career path as “data scientists,” which he described as “one of the most valuable jobs in the next 10 years.” Interpreting big data seems poised to become big business.

China’s government has signaled its intention to help domestic enterprises develop the infrastructure necessary to store and analyze “big data”—that is, data sets too large to be handled by traditional database-management tools and software. The current Five Year Plan, which aims to stimulate “higher-quality growth,” names seven strategic “emerging industries,” including next-generation information technology.

Meanwhile, leading Chinese firms, especially Internet companies, have already begun to incorporate big data into their strategies. Jack Ma, founder and then-chief executive officer of China’s e-tail giant Alibaba, declared last fall that the company should focus on three pillars of future business: e-commerce, finance (providing loans to small and medium enterprises in China), and data mining. In January, Alibaba underwent a restructuring that, among other changes, created a data-platform division with about 800 employees, as reported in the Chinese financial magazine, Caixin. The Alibaba Group has just begun to scratch the surface of analyzing the reams of user data generated through its business-to-business e-commerce site and its massive consumer-to-consumer platform, Taobao.com.

Professor Su warned, however, that the hype around big data in China may be a case of too much, too soon: “If everyone is talking about something, there is probably already a bubble,” at least of expectations, he said. “Most Chinese companies don’t own enough data, let alone know how to utilize, analyze, or monetize their data.” In other words, a select number of companies in China that do own large quantities of user-generated data—such as Alibaba and Baidu (BIDU)—hold the cards and may profitably sell that valuable information to other vendors.”

via In China, Big Data Is Becoming Big Business – Businessweek.

Posted in China alert, Consumer, Economics, Technology | Leave a Comment »

Tags: , , , , , , , , , ,
30/05/2013

Smithfield Foods to be bought by Chinese firm Shuanghui International

Washington Post: “Smithfield Foods, whose signature hams helped make it the world’s largest pork producer, is being bought by a Chinese firm in a deal that marks China’s largest takeover of an American consumer brand.

The $4.7 billion purchase by Shuanghui International touches several sensitive fronts at once — the quick rise of Chinese investment in the United States, China’s troubled record on the environment and the acquisition of Smithfield’s animal gene technology by a country considered to be America’s chief global competitor.

Consumer spending was stronger than first thought, but businesses restocked more slowly and state and local government spending cuts were deeper.

What’s more, the deal puts a major company from a Chinese industry with a history of food-safety problems in charge of a U.S. firm with past environmental problems of its own.

Separately, U.S. government and business officials often complain that China uses strict control of its market of 1.6 billion people to force American companies that want to do business there to surrender intellectual property.

The deal may become a test of U.S. attitudes toward China as it moves through likely reviews by the Justice Department and the Committee on Foreign Investment in the United States.

With no obvious national security concerns stemming from the production of ham, bacon and sausage, Smithfield chief executive C. Larry Pope said he expects approval. He emphasized that the deal wasn’t about bringing Chinese pork products or management standards to the United States but about sending U.S. products and expertise the other way. The deal will leave intact Smithfield’s management, workforce and 70-year presence in Virginia, he said.”

via Smithfield Foods to be bought by Chinese firm Shuanghui International – The Washington Post.

See also:

Posted in China alert, Economics, food safety, food security, Foreign acquisition | Leave a Comment »

Tags: , , , , , , ,
30/05/2013

Royal Albert Dock set to become London’s third business district under £1bn deal

London 24: “London Mayor Boris Johnson has unveiled details of a £1bn deal to transform London’s historic docklands into the capital’s next business district forging links with China.

View of Royal Albert Docks

The state-of-the-art business district at Royal Albert Dock will act as a platform for financial, high-tech and knowledge driven industries, and will be largest development of its kind in the UK.

It is set to become the third financial district in the capital after the City and Canary Wharf, creating tens of thousands of jobs.

Owned by the Greater London Authority the 35-acre site will be transformed by commercial developer ABP Chinese (Holding) into a gateway for Asian and Chinese business seeking to establish headquarters in Europe, along with other businesses wanting to set up in the capital.

The deal is believed to be worth £6bn to the UK economy, generating £23m in business rates annually and acting as a catalyst for further development in the area.

Mr Johnson said: “For centuries the waterways of east London were the throbbing arteries of UK trade and commerce. This deal symbolises the revival of that great era, continuing the re-invention of this once maligned part of the capital into a 21st century centre of trade and investment.”

The deal is expected to deliver around 20,000 full-time jobs and boost local employment in Newham by 30 per cent.

Mayor of Newham, Sir Robin Wales, said: “The Royal Docks Enterprise Zone offers an unrivalled investment opportunity and this deal further strengthens Newham’s growing reputation as an ideal destination for international business.”

The deal represents one of the first direct investment by a Chinese developer in London’s property market.

Chairman of ABP, Mr Xu, said: “My vision is to develop a world class international business district which will initially target Asian businesses to help them secure a destination in London, which in China is seen as the gateway to both the United Kingdom and the wider European economy. Our plans aim to strengthen trade between east and west, provide new local jobs and deliver benefits for the wider London and UK economy.”

The area will become home to over 3.2 million square feet of high quality work, retail and leisure space, including 2.5 million square feet of prime office space along London’s waterways.”

via Royal Albert Dock set to become London’s third business district under £1bn deal – Politics – London24.

See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/

Posted in China alert, Economics, Foreign acquisition | 1 Comment »

Tags: , , , , , ,
29/05/2013

Amway India snared by law against pyramid schemes

FT: “William Pinckney, chief executive of Amway India, the country’s biggest direct selling consumer goods business by sales, was released on bail on Tuesday evening after his arrest along with two fellow directors. Business leaders have been dismayed by the episode, saying it will damage investment and confidence.

It’s an odd tale that says much about the unpredictability of India’s police forces. What lies beneath is even more perplexing: the way a business regarded as entirely legitimate in the west may be viewed as an illegal pyramid scheme under Indian law.

Amway India, a wholly owned subsidiary of Amway Corporation of the US, has 1.5m agents across the country who distribute products on commission by selling door to door and who help recruit more agents like themselves. The company had revenues of Rs21.3bn ($380m) in 2011.

Amway is far from the only player. India’s direct selling industry employs some 6m people, 70 per cent of whom are women, according to the Federation of Indian Chambers of Commerce and Industry.

This week’s arrests were triggered by complaints from agents in the southern state of Kerala. They were angry after making losses on products they bought from Amway before securing customers. But Sudeep Sengupta, an Amway spokesperson, said the police were making this a case of “money circulation”, as defined under the Prize Chits & Money Circulation Scheme (Banning) Act of 1978.

The law is designed to deal with what in the west are known as pyramid schemes – fraudulent investment vehicles in which returns are paid to initial investors from the funds generated by later ones. In India, these can take the form of “chit funds” – popular and often legitimate schemes in which groups of people club together to buy products collectively, for instance, or to save money on a regular basis. But chit funds can go wrong, as demonstrated by a scandal that erupted this month in West Bengal after agents of several funds who lost money committed suicide.

Direct selling companies can fall foul of the law if their sales agents are paid for recruiting new agents (as well as earning commission for making sales). This, the thinking goes, brings them into the scope of the law because no real wealth is created in the recruiting process and the system must implode as the pool of new recruits dries up.

However, Amway and others insist that they pay their agents only when they make sales, not for getting new sales agents on board.

“We enroll distributors who are all meant to retail products. The growth of the network is not compensated for,” Sengupta told beyondbrics. “The growth of the network is only meant to expand the depth of the market and never meant as a model for compensation.”

One problem facing Amway and others is that there is no legislation that recognises direct selling as a specific type of commerce in India. The Indian Direct Selling Association, the industry’s self-regulatory body, is asking the government to change that.”

via Amway India snared by law against pyramid schemes | beyondbrics.

Posted in Economics, India alert | Leave a Comment »

Tags: , , , , , , ,
16/05/2013

* China in innovation challenge to Europe

FT: “Europe’s business leaders fear its industry will fall behind China in technological innovation within a decade as the economic crisis undermines one of the continent’s competitive advantages.

More than two-thirds of business leaders surveyed by Accenture, the consultancy, on behalf of BusinessEurope, the business lobby group, said China would reach or pull ahead of Europe in innovation by 2023.

Weak demand caused by Europe’s economic crisis has sent industrial production into decline, while corporate reluctance to delve into cash reserves is holding back new investment, training and R&D.

Rising unemployment threatens labour flexibility and Europe’s ability to maintain a highly skilled workforce. Fewer than half of those surveyed said Europe’s workforce remained a competitive advantage for industry.

European policy makers are determined to reverse industry’s decline. The European Commission last year proposed by 2020 to raise industry’s share of EU gross domestic product from 15.6 per cent to 20 per cent.

“We cannot continue to let our industry relocate outside Europe,” said Antonio Tajani, vice-president of the European Commission.

European companies remain leaders in sectors ranging from automotive to aerospace, engineering to pharmaceuticals, and two-thirds of surveyed business leaders said European industry was still competitive internationally.

But some Chinese companies such as Huawei, the telecoms equipment maker, are drawing level in innovation capability and gaining share in Europe. Some 61 per cent of those surveyed said they feared Europe would struggle to recover from its economic crisis for at least three years.

Some 90 per cent of German business leaders said Europe’s industry was competitive compared with only half of business leaders in Spain.

The Accenture study identified two areas to support growth: rebuilding Europe’s skills base and reinvigorating industry’s access to finance, including better access to capital markets and venture capital funding for start-ups.

Although Europe is mired in recession, there remain opportunities in areas ranging from low-carbon technology and smart grid networks to biotechnology and advanced manufacturing.

“The China machine is definitely going to invest a lot of money in technology innovation over the next 10 years . . . [But] there’s a sense that if we get our act together Europe can remain successful in manufacturing,” said Mark Spelman, strategy chief at Accenture.

“Just because there is zero growth across Europe doesn’t mean there are not segments of good growth within that . . . So it’s about how you place bets in an intelligent way.

To address the innovation deficit, business leaders want to see more public funding for R&D, reduced tax for R&D and capital investment and improved financing conditions.

European executives raised a variety of other worries ranging from the cost of energy to labour costs.

A majority of respondents were pessimistic that European industry would be cost-competitive in energy compared with markets such as the US, Russia and China in three years’ time.

US industry is enjoying cheap energy courtesy of discoveries of shale gas that permit new investment in gas-intensive industry, such as petrochemicals.

In contrast, Europe remains dependent on more expensive Russian gas, and costly regulation and investments in renewable energy are adding to the burden.”

via China in innovation challenge to Europe – FT.com.

See also: https://chindia-alert.org/prognosis/how-well-will-china-and-india-innovate/

Posted in China alert, Economics, innovation, patents | Leave a Comment »

Tags: , , , , ,
14/05/2013

* India and China; making up, but what about trade?

FT: “Salman Khurshid, India’s foreign minister, is back from a trip to China last week, happy to see the end of a tense stand-off over a long-running border dispute. Settling that issue will re-open the way for a planned visit by Chinese Premier Li Keqiang to India and allow the two countries to concentrate on the big topic on Khurshid’s agenda: trade.

But here, too, relations between the region’s big powers are not entirely friendly.

Back in November 2011, India and China set a target for bilateral trade of $100bn for 2015. That’s quite a leap from $2.3bn a decade ago and marks a concrete step in bringing the two nations closer together.

But the balance of trade is strongly in China’s favour. Now Kurshid has put the November 2011 agreement “on pause” until the imbalance is resolved.

According to India’s department of commerce, India’s exports to China in April to December 2012 were worth $9.7bn. In the same period, China’s exports to India were worth $41.2bn – a bilateral trade deficit for India of $31.5bn, nearly a quarter of India’s entire trade deficit in the period.

Khurshid claimed not to have minced his words:

We said that let the trade imbalance be addressed upfront as an urgent priority, and then of course we can move to the next stage which is the regional trading arrangement.

What does the minister want from China? One target is better market access, especially for India’s IT and pharmaceuticals companies. Indian business leaders complain that exports to China would be much greater if China’s big state owned enterprises could be persuaded to source from foreign suppliers.

But others say a lack of competitiveness among Indian manufacturers contributes to the problem.

“China has a very competitive manufacturing sector that is able to produce at a large scale pretty efficiently and for reasonable prices,” says Louis Kuijs, chief China economist at RBS.

“Sometimes we would be inclined to think there is a lot of [Chinese] government policy behind this. People point to the subsidies that China’s government has given to industries in the past and companies having preferential access to loans. But in the bigger scheme of things, those subsidies aren’t the driving force. China is a bit ahead in industrialisation and has becomes very competitive globally.”

Kuijs doesn’t think this is about to change. Chinese manufacturers do good business in India in both consumer goods and capital goods. And he takes the view that, despite the current cyclical slowdown, both consumption and infrastructure investment will remain robust in India, so demand for Chinese products will continue to grow.

A little tinkering on a calculator provides a bit of good news for Indian trade, however. According to data from the World Trade Organization, India’s global merchandise exports grew faster than China’s between 2005 and 2012. Over the seven-year period, India’s exports grew at an average 18.3 per cent a year, against a figure of 16.3 per cent for China and 9.4 per cent for the world as a whole.

So, Indian exports are growing relatively quickly. But China’s lower growth comes from a far higher base. In 2012, China exported goods worth more than $2tn while India’s exports were worth $293bn. Even with their faster rate of growth, it will take a long time for India’s exporters to catch up on China’s lead.”

via India and China; making up, but what about trade? | beyondbrics.

Posted in China alert, Chindia Alert, Defence, Diplomacy, Economics, Foreign invasion, GeoPolitics, History, India alert, Military, Neighbour conflict, Politics, Trade | Leave a Comment »

Tags: , , , , , , , ,
« Older Entries  |   Newer Entries »
CCChang

Law of Unintended Consequences

continuously updated blog about China & India

ChiaHou's Book Reviews

continuously updated blog about China & India

What's wrong with the world; and its economy

continuously updated blog about China & India