Posts tagged ‘Peoples Bank of China’

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

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15/02/2016

Home on the Range, Chinese Style – China Real Time Report – WSJ

It’s a small step in the right direction, driven more by necessity than enlightened policy.

That’s the view from economists on China’s move this year to put forward a range for its economic growth target rather than a single number. The head of the National Development and Reform Commission, China’s top economic planning agency, said early this month that the 2016 target is likely to be “6.5% to 7%,” the first time in recent memory that China has used such a band. The target is set to be officially released early next month when China’s parliament convenes.

For decades, Beijing beat its annual growth targets without breaking a sweat. More recently, as growth decelerated faster than expected, it has faced growing difficulty hitting its number, so a range provides more wiggle room.

This follows Beijing’s decision to add an “about” to both its 7.5% target in 2014 and its 7% target last year. The adjective proved handy when the actual growth figures wound up falling short both times.

The risk this year, economists say, is that even a 6.5% to 7% target may be too high, heaping pressure on local officials to artificially stimulate growth in ways that increase debt and blunt reform initiatives.

This is also the year that China sets a growth target for the coming five years that’s expected to be 6.5%, in line with a Communist Party goal of doubling per capita income by 2020 over 2010 levels. This benchmark also may be high, analysts said, given China’s many structural problems and so-far limited appetite for reform.

“If they really stick to the 6.5% target by adopting unsustainable policies, throwing up more credit, they face a bigger problem with debt down the road,” said Fitch Ratings Inc. analyst Andrew Colquhoun. “Many emerging market problems in the past have happened when countries veer off and start to believe their own hype on what growth is possible.”

Source: Home on the Range, Chinese Style – China Real Time Report – WSJ

27/08/2015

Why India Stands to Benefit From China Slowdown and Global Reaction – India Real Time – WSJ

India’s economy has been insulated from the turmoil in emerging markets by a long-standing handicap: It isn’t an export powerhouse. For years, growth in India has been fueled more by domestic demand—not, as in China, by manufacturing goods for sale abroad. Now India’s resilient consumer spending is an advantage as demand decelerates almost everywhere else. It is luring companies to produce in India and, the government hopes, can help spark a belated industrial revolution in the country of 1.2 billion.

Jayant Sinha, India’s minister of state for finance, said this week the Chinese slowdown and its world-wide fallout could provide a chance for India to “take the baton of global growth.” Mumbai’s benchmark stock index ended Wednesday down 1.2%, having slid 8.5% in total since the People’s Bank of China moved to devalue the yuan on Aug. 11. The rupee has lost 3.4% since then. India hasn’t been rattled as badly as Brazil, Russia or South Africa. Its international reserves are ample, and it isn’t highly dependent on foreign capital to fund imports.

Source: Why India Stands to Benefit From China Slowdown and Global Reaction – India Real Time – WSJ

11/08/2015

China Shakes Markets with Yuan Move – China Real Time Report – WSJ

China devalued the yuan by nearly 2% on Tuesday in a surprise move that shook markets around the world and appeared to be a response to sharply weaker exports and plummeting factory prices in a softening economy. The central bank described its action as a new way of setting the daily parity or reference rate – a rate it sets for the currency against the dollar –  to better reflect market rates.  (The markets get a chance to trade the currency around that rate, but not by much. The yuan can go up or down only 2% from that crucial central rate.)

So far this year, the parity rate has hardly budged against the dollar even though the latter has been rising steadily against other currencies. That has made China’s exports more expensive in many markets just as the world’s second largest economy is slowing.  The People’s Bank of China says it will now pay more attention to the market levels when it sets its parity rate. It also called the move a “one-time fix.”

Economists are hotly debating the significance of the move, in part because it seems to be speaking to many different audiences. It will help the struggling export sector, which has stalled amid weak global demand. Exports in July, for example, sank more than 8% and they were down nearly 1% for the first seven months of the year.

At the same time, it was essential for the People’s Bank of China not to alarm domestic and foreign investors to avoid triggering a wave of capital outflows. Investors tend to dump a weakening currency and move their assets into other currencies. Thus, the PBOC said the move was a one-time reform effort to bring the yuan more in line with the markets.

Finally, the central bank may also have had the International Monetary Fund in its sights. The yuan is up for possible inclusion in international agency’s Special Drawing Rights, a basket of currencies that serves as a global reserve. Too big a move might have damaged Beijing’s case that the yuan is a suitable candidate for addition to that basket of currencies, analysts said.

via Economists React: China Shakes Markets with Yuan Move – China Real Time Report – WSJ.

27/07/2015

China Stocks Make Sharpest Daily Fall Since 2007 – China Real Time Report – WSJ

China stocks made their sharpest daily percentage decline since 2007, as worries mount that authorities are pulling back on its measures to prop up the market. As WSJ’s Chao Deng reports:

The Shanghai Composite Index ended down 8.5% at 3725.56, its second-straight day of losses and worst daily percentage fall since February 27, 2007. China’s main index is up 6% from its recent low on July 8, but still off 28% from its high in June.

The smaller Shenzhen Composite fell 7% to 2160.09 and the small-cap ChiNext Closed 7.4% Lower at 2683.45

Analysts say the selling came as investors fear the government is curbing its buying of blue-chip stocks—and could even be testing whether the market can support itself.

“The previous support from the government funds is apparently unsustainable,” said Jacky Zhang, an analyst at BOC International. “They may withdraw support today to test whether the market has recovered its resilience. The government wants to use state funds to stabilize the market, not to prop it back to 5,000 point overnight.”

via China Stocks Make Sharpest Daily Fall Since 2007 – China Real Time Report – WSJ.

21/03/2015

ChemChina close to Pirelli deal that would trigger buyout offer | Reuters

China National Chemical Corp (ChemChina) is close to becoming the biggest single shareholder in Pirelli (PECI.MI) in a deal that would trigger a 7 billion euro ($7.5 billion) buyout of the Italian tire company.

The Pirelli logo is pictured at their headquarters in Milan March 18, 2014. REUTERS/Alessandro Garofalo

Three sources familiar with the deal, which would be the latest in a string of Chinese investments in large Italian companies, said ChemChina was discussing a deal with Pirelli’s top shareholders to buy a holding company called Camfin, which owns 26 percent of Pirelli and is 50 percent owned by Russia’s Rosneft (ROSN.MM).

Without identifying the possible buyer, Camfin said it was in talks with an international industrial group to sell its Pirelli stake at 15 euros per share, valuing the tire group at 7.1 billion euros.

It said the stake would be transferred to a vehicle controlled by the new partner, after which a takeover offer for the rest the world’s fifth-largest tire maker would ensue.

If the offer succeeds, Pirelli will be delisted. The deal comes as Pirelli’s rivals Michelin (MICP.PA) and Continental (CONG.DE) look around for growth opportunities in Asia.

State-controlled ChemChina and Rosneft declined to comment.

Previous Chinese investments in Italy include State Grid Corp of China [STGRD.UL] buying into electricity grid company Terna (TRN.MI) and gas network operator Snam (SRG.MI).

Besides Rosneft, Camfin’s owners are a holding company comprising Pirelli chief Marco Tronchetti Provera as well as Italian banks Intesa Sanpaolo (ISP.MI) and UniCredit (CRDI.MI).

via ChemChina close to Pirelli deal that would trigger buyout offer | Reuters.

05/03/2015

China 2015 defense budget to grow 10.1 pct, lowest in 5 years – Xinhua | English.news.cn

China on Thursday announced a 10.1-percent rise in its national defense budget in 2015, the lowest growth in five years as the country confronts mounting pressure in the face of an economic slowdown.

According to a budget report released shortly before the country’s top legislature starts its annual session, the government plans to raise defense budget to 886.9 billion yuan (about 144.2 billion U.S. dollars).

That would make China the second largest military spender in the world following the U.S., whose defense budget amounted to 600.4 billion U.S. dollars in 2013.

Nonetheless, the 10.1-percent rise represented the lowest expansion in China since 2010, when the defense budget was set to grow by 7.5 percent.

The figure has thereon been riding on a multi-year run of double-digit increases, expanding 12.2 percent last year.

Thursday’s budget report did not explain the rationale behind this year’s abated growth, but a government work report to be presented by Chinese Premier Li Keqiang may offer some clues.

According to the report, national defense development would be coordinated with the country’s economic growth.

The Chinese economy grew 7.4 percent in 2014, registering the weakest annual expansion in more than two decades. The government set this year’s growth target to approximately 7 percent, brewing new concerns that the world’s economic powerhouse is losing steam.

But the report played down such concerns, stressing that China is now in a “new normal” state, where a balance ought to be stricken between growth and structural optimization.

via China 2015 defense budget to grow 10.1 pct, lowest in 5 years – Xinhua | English.news.cn.

03/02/2015

BBC News – The palace of shame that makes China angry

There is a deep, unhealed historical wound in the UK’s relations with China – a wound that most British people know nothing about, but which causes China great pain. It stems from the destruction in 1860 of the country’s most beautiful palace.

Tourists at the Old Summer Palace

It’s been described as China’s ground zero – a place that tells a story of cultural destruction that everyone in China knows about, but hardly anyone outside.

The palace’s fate is bitterly resented in Chinese minds and constantly resurfaces in Chinese popular films, angry social media debates, and furious rows about international art sales.

And it has left a controversial legacy in British art collections – royal, military, private – full of looted objects.

By coincidence, one of the story’s central characters is Lord Elgin – son of the man who removed the so-called “Elgin marbles” from Greece.

But there’s a twist – a hidden side to this story – which I’ve been exploring as it involved my ancestor, Thomas Bowlby, one of the first British foreign correspondents.

His torture and death at Chinese hands – and the revenge taken by Britain, destroying the old Summer Palace in Beijing in 1860 – was a moment, says one scholar, that “changed world history”.

These days the site is just ruins – piles of scorched masonry, lakes with overgrown plants, lawns with a few stones scattered where many buildings once stood. The site swarms with Chinese visitors, taken there as part of a government-sponsored “patriotic education” programme.

As everyone in China is taught, it was once the most beautiful collection of architecture and art in the country. Its Chinese name was Yuanmingyuan – Garden of Perfect Brightness – where Chinese emperors had built a huge complex of palaces and other fine buildings, and filled them with cultural treasures.

A new digital reconstruction by a team at Tsinghua University gives a vivid idea of what this extraordinary place looked like when, 155 years ago, a joint British-French army approached Beijing.

via BBC News – The palace of shame that makes China angry.

04/12/2014

China bolsters support for farm sector with tax breaks | Reuters

China is increasing its support for agriculture by renewing select tax breaks that have expired, the government said on Wednesday, in another move to support the real economy.

A farmer plants paddy on a terrace field in Suichuan county, Jiangxi province May 20, 2014. REUTERS-Stringer

China’s stumbling economy this year has pared banks’ tolerance for risk when they lend, further reducing the supply of loans to small-time borrowers who are usually ignored by banks because they are deemed to be high-risk borrowers.

Financial companies do not have to pay a business tax on the interest earned on agricultural loans worth no more than 100,000 yuan ($16,260), the Chinese cabinet said after a weekly meeting.

Their corporate income tax would also be discounted by 10 percent to “muster the enthusiasm of financial institutions when it comes to lending to farmers”, the cabinet, or State Council, said in an online statement.

The tax breaks, previously in place but had expired, would be reinstated and are effective until the end of 2016.

Insurers that sell insurance to crop and livestock farmers would also get a 10 percent discount on their corporate income tax, the government said.

A tax break that cuts the business tax to three percent for financial firms working within counties would also be extended until the end of 2016, the cabinet said.

Buffeted by a slowing housing market and slowing domestic demand and investment, China’s economy is forecast by some analysts to be sliding towards its worst downturn in nearly a quarter of a century this year.

Annual growth in the world’s second-largest economy could fall to 7.4 percent, a Reuters poll showed in October.

To rejuvenate the real economy, China announced a cut in interest rates of 40 basis points on Nov. 21 in a move that the central bank said was aimed at lowering borrowing cost.

via China bolsters support for farm sector with tax breaks | Reuters.

30/03/2014

Germany, China say renminbi hub in Frankfurt will boost trade | Reuters

A decision by Germany and China to make Frankfurt a European hub for financial transactions in the Chinese currency will give new momentum to trade between the two economic powers, Chinese President Xi Jinping and a German minister said on Saturday.

China's President Xi Jinping waves to media following a joint news conference with German Chancellor Angela Merkel after an agreement signing, at the Chancellery in Berlin March 28, 2014. REUTERS/Fabrizio Bensch

In a speech to politicians and business leaders in the city of Duesseldorf, Xi said setting up the hub for the renminbi in Germany “represents an important step on the road of the internationalisation of our currency,” according to a translation.

The Bundesbank and the People’s Bank of China signed an agreement on Friday to facilitate transactions in the Chinese currency in Frankfurt and to cooperate more closely in clearing and settlement arrangements of renminbi payments.

Up to now, transactions in China’s currency, the renminbi or yuan, have been impractical for all but very large European companies that are able to involve China’s central bank in a deal, because the renminbi is not freely convertible.

via Germany, China say renminbi hub in Frankfurt will boost trade | Reuters.

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