China Press Review – December 17, 2018

Press review

Selling To China: Is Your Distributor Your Friend?
First, the distributor can help you sell, but is less able to help you grow. The distributor has limited loyalty to the brand, particularly if its China sales numbers are modest or if it’s a brand that’s still relatively new to the market. Having a distributor provides a sales channel, but it does not provide a long-term strategy. Many international brands are pleased with their distributor in their home market, but that’s because they typically have far more control over the marketing activities and can communicate on local terms. They will often enjoy a stronger market position, long-term relationships with the distributor, and home market advantages of advertising and word of mouth. It is easier for the relationship to be a win-win.

A recession is looming, easy money is ending and the yuan is falling – get set for 2019, the year of living dangerously
David Brown says that with indicators turning negative and austerity the norm, investors may be well-advised to liquidate and remember that cash is king

Prospects for U.S.-China ties
So what are the prospects for U.S.-China relations in 2019? It’s probable that by March there will be an agreement on reducing the bilateral trade deficit and the import decisions that China will make to see it through. An agreement on tariff reductions by then is also possible, although its complexity may lengthen the timeline. A tariff-by-tariff approach could take a year. But if Chinese economic reformers take a more dramatic approach, by committing to zero tariffs over time and challenging the Americans to reciprocate, it could be concluded more rapidly. But this would run counter to decades of Chinese trade bureaucrats’ training to give away little, let alone be seen as giving away everything at once.

As trade war bites, China advisers recommend lowering 2019 growth target
China should lower next year’s growth target to 6.0-6.5 percent as headwinds including a trade dispute with the United States increases risks for the economy, according to government advisers’ recommendations to top leaders who will meet to map out the 2019 economic agenda.

Germany targeting China in new rules about foreign takeovers, media report says
Update of international trade regulation would allow government to review or bloc purchases of stakes as low as 10 per cent in ‘security relevant’ companies

The lives of the parties
China’s economy is more Soviet than you think The notion that China’s economy, though nominally communist, resembles that of the Soviet Union seems on its face absurd. The fall of the Iron Curtain revealed a rusted shell of a country, incapable of manufacturing goods the West might want. China is the world’s biggest exporter; its cities are jammed with gleaming skyscrapers. Soviet citizens went without consumer luxuries or bought them dearly on the black market. China’s growing middle class can choose from scores of designer brands at the local mall.

The reason why the US-China trade talks will work: it’s the personal touch
President Xi and President Trump have too much invested in the trade dispute personally to let the talks fail

As China and US talk trade, the European Union watches and wonders if peace will be bad for business
Chinese analysts and government sources understand Brussels’ position on US-China trade war is a difficult one and that both sides may play against the middle

There is a ceasefire in the US-China trade war. So who waved the white flag first?
China may scale back the rhetoric of its global ambitions, recognising that discretion may be the better part of valour in a long-term game Likewise, Trump may be less confrontational, now that the soft underbelly of the US economy has been exposed

China’s economy slows sharply, in challenge for Xi
[DONGGUAN] China’s consumers and businesses are losing confidence. Car sales have plunged. The housing market is stumbling. Some factories are letting workers off for the big Lunar New Year holiday two months early.

Who lost the US? A question for China
The deterioration in ties cannot be attributed to the Trump administration alone. China, too, has made its share of missteps.

China tightens control of local economic data ahead of expected weak growth next year
Authorities in Guangdong, nation’s manufacturing powerhouse, told all future purchasing managers’ indexes will be produced by National Bureau of Statistics Ruling comes ahead of what is likely to be tough start to 2019 for China’s economy as trade war bites

Goldman Sachs economists warn China’s yuan trading likely to get more volatile
Reducing reliance on the US dollar could avoid vulnerability Russia has faced with American sanctions on its companies Convergence between the offshore traded CNH and the onshore traded CNY argued as likely

China Confronts Its Eternal Dilemma
With pressure building for major stimulus, leaders must decide whether boosting growth or controlling debt is more important.

China economy needs new stimulus plan after November data disappoints, economists agree
Industrial production, export growth rate, foreign investment, domestic consumer spending and weak car sales hit as trade war with the United States takes effect Top officials including Xi Jinping will discuss policy for 2019 at next week’s Central Economic Work Conference in Beijing

China’s multibillion-dollar electric car companies are heading for a make-or-break moment
Two of China’s largest electric car companies make announcements on new passenger vehicles this month. The country is the largest market for such vehicles, thanks mostly to government subsidies.
It’s unclear whether the Chinese players can survive when government subsidies end, or in regions where the state has less influence.

Chinese Tesla rival NIO launches second electric SUV
Chinese electric carmaker NIO launched its second vehicle, the ES6, over the weekend. Resembling the previously launched ES8, the more affordable ES6 is now available to order for Chinese buyers. The company will begin delivering in June 2019. The vehicle will be priced from RMB 358,000 (around $52,000) to RMB 448,000 before government subsidies.

China’s online wealth management index falls for first time in five years as sector hit by tighter regulation
In the two months from June to August, 243 online lending platforms closed amid an intensified crackdown on shadow banking

Wall Street Is Battered by Worsening Economic Outlook in China
Disappointing retail sales and industrial output figures in China helped drag markets down.

Hong Kong market turnover sinks to 22-month low as investors await Xi Jinping’s speech, Fed rate move
Hong Kong stocks end flat as investors watch from the sidelines for some key events to unfold this week

The diverging figures behind Belt and Road
Data shows Beijing’s focus is more on construction than investment

China should defend the yuan at 7 to the US dollar, central bank adviser says
If currency’s value falls below this ‘crucial point’, cost of stabilising exchange rates will be much greater, Sheng Songcheng says

The world can rest easy, as there is nothing to fear from the Chinese government’s ‘Made in China 2025’ industrial plan
China will spend US$100 billion less than budgeted for R&D in the five years ending 2020, missing the government’s target

China’s Made in 2025 Plan Is a Paper Tiger
The country’s a long way from achieving its targets; staying open to foreign competition is a better way to climb the technology ladder.

China’s Next Moves Will Dictate Its Economic Future
Deng’s 1978 reforms gave China economic might. Now Xi wants more.

US to help free Canadian detainees amid Huawei extradition row, US Secretary of State Mike Pompeo says
Tensions among the three countries rise with Sabrina Meng Wanzhou’s arrest in Vancouver, at the US’ request ‘We ask all nations of the world to treat other citizens properly,’ Pompeo says after detention of Canadians Michael Kovrig and Michael Spavor

This PowerPoint presentation proves Huawei CFO Sabrina Meng Wanzhou is guilty, says US. Preposterous, says her lawyer
The presentation, given by Sabrina Meng Wanzhou to a HSBC banker in 2013, describes the links between Huawei and Skycom, a ‘partner’ doing business in Iran But the US says Skycom was actually an unofficial subsidiary, helping Huawei evade US and EU sanctions on Iran

China’s Tesla challenger Nio ‘not worried’ by tariff cuts, sees customer service as providing edge over US competitors
Nio reported sales of more than 2,059 units of its ES8 model in October, outshining Tesla whose sales on the mainland totalled 211 vehicles for the month Tesla announced on Friday that it will cut prices in China by 25 per cent, after Beijing announced it would roll back a punitive 25 per cent levy on US auto imports that took effect in October

Home price growth slows in China as sentiment turns bearish
Residential sector records 43rd straight month of expansion in contrast to other parts of the economy

China issues standards for cutting delivery waste amid e-commerce boom
The Chinese government has issued a set of standards to promote the use of sustainable packaging materials in the logistics industry, where companies including Alibaba-backed Cainiao,, and SF Express serve millions of online shoppers every day.

The International Olympic Committee on Saturday launched its first-ever online store on Tmall, China’s largest B2C marketplace operated by Alibaba Group, marking another milestone of the ongoing partnership between the IOC and the Hangzhou-based technology company.

Why China still needs Silicon Valley
China may be in the middle of a tech battle with the United States, but that hasn’t stopped some of its biggest companies from expanding their presence in Silicon Valley.

How China Is Dominating Artificial Intelligence
China’s AI dominance reaches across multiple industries compared to the majority of nations only China is widening their lead in AI globally by concentrating on a core set of best practices that energize entire industries to pilot and adopt AI for unique use cases. Thanks to its thriving start-up landscape, the United States is in second place when ranked by share of active players.
Launched in 2017, China’s New Generation Artificial Intelligence Development Plan is delivering strong results and has become a topic of national pride. BCG finds AI’s influence on key industries is moving faster than many countries’ ability to structure governance and growth frameworks around.

Chinese workers at Foxconn protest over unpaid bonuses
Hundreds of Foxconn workers joined a rally in Zhengzhou, the capital of Henan province, last week (Dec. 12-13) over alleged unpaid bonuses. Workers at the rally claimed they were promised an additional RMB 6,000 (around $870) in cash if they worked 55 days, but local employment agencies reneged on the deal. Some protesters were reportedly detained and beaten by police. Apple supplier Foxconn did not confirm the reports but has said it will look into the matter.

U.S., Canadian Executives Privately ‘Spooked’ About Traveling To China
U.S. executives have long known the risks of traveling to China with cellphones and laptops. Theft of intellectual property and cyberattacks underlie trade tensions between the two countries. But executives are more skittish than usual these days.

China African swine fever hits two more provinces
Total number of provinces affected now 22 just weeks ahead of peak demand at Lunar New Year Government says there will be plenty of pork to celebrate the arrival of the Year of the Pig

Why India’s expanding military ties with the United States and Russia could put the squeeze on China
Neighbours hold joint drills this week, but analysts suggest New Delhi’s growing alliances could impinge on Beijing’s strategic calculations

China’s art copy capital struggles to change its reputation
40 years after Deng Xiaoping’s opening up reforms Dafen has seen its fortunes rise and fall Can declining overseas orders be replaced with a demand for original art?

Laura Ashley to close 40 UK stores amid a push into China
Fashion and home furnishings retailer Laura Ashley will close about 40 stores in the UK as it plans to expand its presence in China.

The Curvy Controversy: Is China Ready for Plus-size Fashion?
Hao believes her generation is ready to embrace the body-positive culture in China, and there’s already business potential in that country for brands offering plus-size clothing. “I have women living in China asking me everyday where to buy the clothes I wear on Instagram,” Hao confides. “Their choices are limited.” Some Chinese retailers have already taken notice of this need. China Daily reported that some shop owners on Taobao, China’s largest online marketplace, make over $15 million a year selling plus-size clothing to Chinese women, and plus-size models on Taobao receive twice as much pay on average as slender models due to the increased demand for — and paucity of — them.

China’s corruption watchdog takes down self-styled Mao-tai liquor mogul who went into business for himself
Wang Xiaoguang accumulated so many bottles of the fiery spirit while on Communist Party business he opened shops and employed relatives to sell it

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