In a tech market that is moving as quickly as China`s, spotting the latest trends as they develop is crucial to reaching consumers and capturing sales. As of the first half of this year we have seen some interesting developments in both the sites that consumers use and how they pay for products. In China you can forget PayPal and Credit Cards its all about the likes of Alipay and Tenpay.

Only about 1 in 4 Chinese people own a credit card and they certainly don't use them to purchase goods on Tmall or Taobao, instead preferring to use one of the online payment services as below:

% transaction volumes in 2013, according to iResearch

China is certainly embracing e-commerce with enthusiasm: advertising from e-commerce companies and websites are filling every available space. Logistics companies are growing exponentially with deliverymen on bikes, trikes and vans lugging packages around every corner of the major cities. It would be interesting to survey how many office hours are lost annually to e-commerce shopping.

The rise of WeChat and the fall of Weibo.

Weibo continues to lose popularity among China’s netizens with users abandoning it in favor of WeChat. A couple of reasons for this being the tightening of registration requirements for Weibo (requiring real ID`s) along with the appeal to users who prefer a combination of Twitter-like communication with a native mobile chat app experience.

For companies the prevalence of fake Weibo accounts has taken away the allure of gaining “1 million followers’ since the current going rate is 5 RMB for 1,000 fans and combined with its limited functionality companies are now looking at other platforms to engage consumers. WeChat on the other continues to innovate and improve, now allowing you to pay for some services, call a cab or even make purchases.  WeChat has proven to be a superior marketing platform for business: merchants can advertise their products and send coupons by messaging directly to their subscribers.

Possibly the most significant development to watch will be the proliferation of more decentralized consumer finance integrated directly into smartphones. In recent months, China’s web giants, Baidu, Alibaba and Tencent have been applying for financial services licenses to be issued by the government. That will allow those companies to offer the same services that the banks do: savings portfolios, loans, insurance, and payment methods. Such new services would include savings and investment in funds like Alibaba’s Yuebao and Baidu’s Baifa, microfinance and peer-to-peer lending.

But who will process these payments: Alipay v`s Tenpay v`s Baidu.

Alibaba was the first to introduce its hugely popular Alipay system that today accounts for about 50% of all online transactions. It is currently the system used for buying products at the most popular online shopping sites and most importantly is trusted by consumers. However hot on its heals is Tenpay by Tencent which thanks to the popularity of Tencent’s WeChat platform, is projected to grow beyond that of Alipay due to its integration with the platform. Not to be left out Baidu was a late entrant to online payments with its Baidu Wallet. It focuses on mobile payments and the service will be integrated with other Baidu platforms and its 14 apps. Considering its 600 million users this should form a solid base for the system.

With the continuing expansion of China`s 4G network smartphone users are experiencing faster connections and more bandwidth meaning the ability to receive richer content, such as HD videos, as well as faster loading times for ecommerce sites and apps. This can only translate into an even wider adoption of e-commerce, which is completely mobilized. A Ministry of Industry and Information Technology forecast, which regulates China’s internet, stated that it aims to double the value of China`s e-commerce sales to RMB 18 trillion (USD 2.86 trillion) by the end of 2015 which would imply there is ample room for growth for payment provides, E-commerce sites and the logistics companies that support them.

Vast amounts of venture capital has poured into the Chinese online retail industry over the last few years and we are now seeing the effects. With a current estimated 250 million e-shoppers and an annual increase of 30 million new users, China e-commerce market is something not to be ignored.

China’s policy towards Africa over the last year has shown several new trends that illustrate Beijing’s evolving priorities and strategies in the continent that will have significant implications for African Nations.

Peace & Security in Africa.

In an unusual shift in policy, China has assertively enhanced its direct involvement in Africa’s security affairs. Two months into Xi Jing ping`s reign, Beijing unprecedentedly dispatched 170 PLA combat troops to the United Nations peacekeeping mission in Mali. This was in contrast to China`s policy of only contributing non combat troops to UN missions. It remains to be seen whether this move changes the PLA`s operating principle of “no combat troops on foreign soil”. China’s choice in dispatching combat troops for the first time in recent history does suggest rising interests, enhanced commitment and a direct role in maintaining peace and security of Africa.

In a further unprecedented and surprising move, China under Xi engaged in open intervention in the South Sudan conflict through direct mediation. In 2013, China’s envoy for African affairs, Ambassador Zhong Jianhua, paid no less than 10 visits to Africa to coordinate positions and mediate in the South Sudan issue. Again, in January 2014, in a rare display of overt political intervention, Chinese Foreign Minister Wang Yi publicly called for an immediate end of hostilities in South Sudan. At Ethiopia’s invitation, Wang Yi traveled to Addis Ababa to meet with rebel and government delegations. He openly urged “immediate cessation of hostilities and violence,” and publicly called for the international powers to back the Ethiopian-led mediation efforts. Given China’s considerable oil stake in South Sudan (China imported nearly 14 million barrels of oil from South Sudan in the initial 10 months of 2013), many believe that China is gradually abandoning its long-term “non-interference” principle to protect its overseas economic interests.

Under Xi Jinping, China has continued its naval missions in the Gulf of Aden whilst enhancing its security cooperation with Djibouti on such matters as local logistical supplies and emergency assistance. China has dispatched a total of 16 ships to the region and escorted over 5,300 ships.

China’s increasing direct involvement in the peace and security affairs of Africa is also reflected in its rising financial and military contribution to the main regional organization—the African Union (AU)—to help boost its security role in the continent. In 2013, China provided $1 million in assistance to the AU to support its mediation and coordination efforts in the Mali conflict. It has also provided military material assistance to African nations involved in the AU peacekeeping missions under the same framework.

China’s rising involvement in Africa’s security affairs is motivated by multiple considerations: primarily the instability and conflicts in Africa have increasingly become a direct challenge to China’s economic presence in Africa. China has reflected on its expensive lesson during the Libyan civil war in 2011, and is known attempting to take the initiative in preempting similar situations. Equally crucial is President Xi Jinping’s desire to build China’s leadership role and image on the international stage, peace and security issues in Africa being the perfect platform for such a goal.

New aspects of Chinese Economic Cooperation with Africa.

China has expanded its financing to Africa. In a little over a year, China has issued over $10 billion in loans to African nations, and promised a further $20 billion to be leant before 2015. The emphasis of these loans lies in China’s new priority of financing infrastructure, agricultural and manufacturing industries in Africa, a strategy that shifts away from its traditional investment in Africa’s extractive industries.

China is further strengthening its cooperation with African nations on developing their manufacturing industries. In the case of Ethiopia, the country is trying to become the center for manufacturing in Africa based on Chinese investment. This would serve to facilitate a shift in China’s own position in the world supply chain and transfer some of its manufacturing industries to Africa, which is eager for industrialization. Whilst this does not necessarily indicate an abandonment of the energy and natural resources Africa has to offer, it does suggest that China is trying to diversify its investment in Africa in pursuit of new investment models whilst defusing criticisms on China’s “exploitation” of African resources.

Diversifying the Chinese-African Political relationship.

In separate strategy to improve China’s image in Africa, Xi Jinping`s government is presently eagerly engaging the African media to propagate China’s virtues and beneficial investments in the continent. Under the “China-Africa People to People Friendship Action” plan, Chinese embassies across Africa are seeking collaborations with African NGO`s and have implemented dozens of projects. Although these projects are primarily implemented by NGO`s, they serve to diversify China’s aid model in Africa and promote exchanges and cooperation with society.

During his first year in office, Xi Jinping`s government has demonstrated a major new and diversified policy towards Africa and we wait to see the evolving relationship between the two.

With another 200 Million Chinese people expected to join the middle class by 2025, who will be making the purchasing decisions in these household and what will they be buying?

It`s the mothers. The highest percentage of a Chinese family’s disposable income is spent on their child after that it's the household. Mothers, by and large, decide how that money is spent and what brands they spend it on. This means that they control a very large portion of China consumer spending which is often much larger than their husband`s purchasing power. Any company attempting to sell consumer goods in China must understand this demographic and how they think. But what are the top priorities for mothers?

Health, Education, Household goods & Cars is what we believe mothers care about. Whilst middle class consumers have rising purchasing power and are increasingly willing to pay more for higher quality, brand names, and differentiated features, they are still price sensitive and recognizing who is doing the purchasing is essential to success in the marketplace. Brands need to connect emotionally and forge a strong brand position.

Health. The expansion of the middle class is not just stimulating investment in private hospitals but also in dental services, cosmetic specialties, rehabilitation services and elderly care. Spending that would previously have been seen as a luxury items is becoming a standard cost of living for the middle class. Patients usually want to go to clinics attached to the highest-reputation hospitals and private health insurance is now a necessity for many families to facilitate this.

Education. In a country as populated as China it`s all about differentiating yourself for the other thousands of equally qualified people and with the one child policy still in force the child is the center of the family. Academic achievement reflects successful parenting and tiger mothers often only allow their children to engage in activities that would help further their academic ambitions: Exam preparation classes, Foreign language lessons, Arts and music classes, role play centers for social education and physical exercises. No expense is too great to further the potential of the families child.

Household goods. Buying habits are changing in a subtle shift away from a focus on ‘Value for money” to quality and value added goods that have a track record for good safety. As urbanization accelerates, consumer spending is becoming more like that of the West’s middle class. Urban Chinese are shopping to meet emotional needs, driving a skyrocketing demand for middle-class goods, food, and entertainment.

Cars.  Nothing says you have made it better than a car. Demand simply keeps on rising for both domestic and foreign brands with China becoming BMW`s biggest market in 2013.  Increasingly it is women who now make the final decision about which car to purchase and forefront in their minds is Quality & Safety.

As marketers focus on China’s middle class they will also have to prepare to serve an even more affluent upper tier of that demographic which, in many cases, will be located outside of China’s first-tier cities. According to consulting firm McKinsey, China will soon undergo a shift from its current “mass middle class” to a new category of upper-middle-class Chinese consumers. Calling this cohort the “new mainstream,” the firm identifies them as consumers with household incomes between ¥106,000 and ¥229,000 ($16,000-$34,000). Perhaps even more striking, their numbers will swell from just 14 percent of urban households today to 54 percent by 2022, according to McKinsey’s estimates. It is not uncommon for women to keep the family bank accounts in their own names and give their husbands a weekly allowance hence it will be the mothers of this new mainstream that will be holding the purse strings and the demographic that must be catered to. Chinese women are emerging as one of the most confident bodies of consumers in the world. And they have the money to keep on spending.

A selection of incredible photographs from China Pre-1900 showing both the ordinary lives of Chinese people as well as the Empress Dowager Cixi and Foreign troops sent to quell the Boxer Rebellion. The imgaes are taken form the collections of: Albert Khan (1860-1940), John Thompson (1837-1921) and Jonathon Goforth (1859-1936) & China Magazine.

Located near the geographical center of China but culturally part of Western China, Xining is the Capital of Qinghai province and at the heart of the governments Go West policy. With a population of about 2.25 million inhabitants about half of whom live in the main four urban areas, it is a prefectural level, third tier city with a GDP per capita of ¥19,494 RMB (US$2,800) in 2008, placing it roughly in the middle of all Chinese cities. Its main industries are currently wool spinning and textiles, fur, high altitude animal husbandry, dairy products, salt extraction & processing, Traditional Tibetan medicines, and light processing industries.

Xining has a relatively high percentage of ethnic minorities, the majority being Hui with also a sizeable Tibetan population. It is home to significant religious sites for both Muslims and Buddhists. Xining has a cold, semi-arid climate due to its high altitude.

Major Economic Indicators (2012)

Source: Xining Economic and Social Development Report 2012

Xining has seen substantial economic growth over the past few years with 15% growth in GDP in 2012 from a year earlier. It’s GDP makes up nearly half of the total province (45.2% in 2012). In the same year, Xining’s value added industrial output rose 19.5% and foreign trade 14.5% year on year.

It is at the center of the so called Silk Road Economic Belt being a hub for both logistics and investment for increased economic ties with Central Asia. Key to this development plan is the currently ongoing Industrial Transfer process where manufacturing in the eastern costal cities are being actively encouraged to re-locate to the area, with a special focus on renewables.

One of the largest development projects in recent years was the Xining Economic and Technological Development Zone, completed in 2010. XETDZ lies in the east of Xining and is the first of its kind at the national level on the Qinghai-Tibet plateau as part of the country’s attempt to further develop the western region. XETDZ focuses on export-oriented industrial projects. It has an area of 12.8 square kilometers with a GDP over 18 billion in 2010.

Ferrosilicon, machine tools, bearings and cotton yarn are major exports of Xining. Japan, South Korea and the U.S. are the most important trading partners of the city.

The province is rich in natural resources, and current has an economy based on mineral extraction, hydropower, and Highland agro-husbandry. Oil and natural gas from the Chaidamu Basin have also been important contributors to the economy. Underdeveloped infrastructure however has thus far prohibited it from fully capitalizing on these advantages. For the future however, the focus will be very much on “Inclusive and Sustainable’ development revolving around solar, wind, and low-carbon energy projects.

Major Companies:

Qinghai Salt Lake Industry Group is a leading producer and distributor of potassium fertilizers. Headquartered in Xining, it posted RMB 5.9 billion in revenues and RMB 1.5 billion in net profits for 2010.

West Mining Co is a private company headquartered in Xining. It is engaged in the mining, smelting and trade of zinc, lead, copper and aluminum. It is China’s second-largest producer of lead concentrate. It posted RMB 18.51 billion in revenues and RMB 989.43 million in net profits for 2010. West Mining Co listed its A shares on the Shanghai Stock Exchange in 2007.

Xining Special Steel (Group) Co., Ltd. is the largest special steel enterprise in Northwest China with annual output of 400,000 tons. It produces steel bars and reinforced bars and machinery. It posted RMB 7.05 billion in revenues and RMB 233.12 million in net profits for 2010.

Qinghai Jinrui Mineral Development Co., Ltd. is principally engaged in the research, development, production, processing and sale of strontium products and castings. It was listed on the Shanghai Stock Exchange in 1996 and has total assets worth over 1.3 billion as of 2012.

Xining New Energy Development Co., Ltd. is a high-tech and joint stocking enterprises and engages in solar energy power generation. It is the largest production base of household solar energy power generation system in China.

      Golmud 200 MW PV solar plant

Qinghai Supower Titanium Co., Ltd. is the only company in Qinghai which produces and processes titanium and titanium alloy. Located in XETDZ, the company employs about 200 people with an annual output of 8,000 tons of titanium. It was founded in 2008 and has a registered fund of RMB 240 million.

Qinghai Huanghe Hydropower Development Co. Ltd. is a comprehensive energy enterprise focused on the development and construction of power stations as well as the production and sale of silicon products and solar power generating equipment. It was established in 1999 under China Power Investment Corporation and now has total assets worth over 57 billion RMB.

Resources

Xining is rich in mineral resources. Its reserves of potassium, magnesium, lithium, iodine, natural sulfur, silica and asbestos rank the first in China.

Education

As a provincial capital, Xining is the center of education of the province. As of the end of 2012, the city had 9 colleges and universities with a total of 61,858 students. The major universities include Qinghai University, Qinghai Normal University, and Qinghai University for Nationalities.

Transportation

Xining's main station is the first stop on the Qinghai-Tibet train line. This line, completed in 2006, is the world’s highest railway. As a result, Xining has considerable tourism from travelers passing through on their way to Tibet, especially as this is considered the best place to start the journey in order to acclimate to the altitude. Xining is also the connecting point for trains heading the opposite way on the Lanzhou-Qinghai Railway.

The main station has almost been completed for the high-speed rail link to Lanzhou and Urumqi, with construction due to finish in August.

Xining Airport (IATA: XNN) is located about 30km east of downtown Xining. It has 13 airlines operating out of it heading to more than 20 domestic destinations and Hong Kong.

There are long distance buses out of Xining to about ten surrounding cities ranging from 4-20 hours away. These buses run on China National Highway 214 out of Xining.

Within the city there is a low-cost bus system (flat-rate 1 RMB) that runs until about 9 p.m., sometimes ending earlier in the winter.

Tourism

Xining is a popular tourist destination in the summer, especially as it is an important religious location with the Ta’er Monastery(one of six famous monasteries in the Gelugpa Sect of Tibetan Buddhism) and the Dongguan Mosque (one of the most famous mosques in the northwest region of China).

Tourism is also an important pillar in Xining. In 2012, it hosted 11.28 million tourists, with a tourist income of RMB 7.52 billion, up 33.9% year on year.

History and Culture

There are about 37 nationalities living in Xining, though only a few groups are numerically significant. According to the 2010 Census, Han Chinese make up 74.04 percent of the total population of Xining, while Hui (16.26 percent), Tibetan (5.51 percent) and Tu (2.6 percent) are the main minority groups in the city.

Xining has a history of over 2,100 years and was part of the Northern Silk Road. It was also significant as a western stronghold against foreign attacks in the Han, Sui, Tang, and Song dynasties.

The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration. At present, China is the largest trading partner of ASEAN while ASEAN is China's third largest trading partner. From 2002 to 2012, China-ASEAN bilateral trade climbed 23.6 percent annually to its current 400 billion U.S. dollars. Mutual investment added up to over 100 billion dollars by the end 2012. Currently member countries and China are working to upgrade and deepend the China-ASEAN Free Trade Area (CAFTA) that was established in 2010.

Source: General Administration of Customs of China

Source: Ministry of Commerce of China

Beijing based Hanergy is China`s largest, privately owned, producer of renewable energy. The group operates in the hydropower, wind power and the solar power fields, whilst it`s focus has now shifted towards the latter, the company has become the largest thin film solar panel producer in the world and has a presence in Europe, North America and Asia-Pacific. The company was recently featured in the MIT Technology Review’s “50 Smartest Companies of 2014” ranking, probably due to its almost 1000 patents, mostly related to photovoltaic innovation.

Currently Hanergy’s installed capacity for hydropower exceeds 6 GW, whilst the same figure for wind power stands at 131 MW according to the company’s reports. The company also has the world’s largest, privately built, power station, Jin’anqiao. Its Wind power plants are in Jiangsu and Ningxia provinces.

However, today, the core business and focus of the company is the development and production of photovoltaic panels. Hanergy has made striking progress in becoming a global leader in the field, considering it only started the development of its photovoltaic arm 5 years ago. Local media in Guangdong, province where Hanergy launched its solar panel operations, coined new term – “Hanergy speed”. The company claims its annual capacity for producing PV panels is now over 3 GW, which would translate to 4 billions kWh of electricity annually. The group has signed construction agreements for solar power plants with a 4 GW total capacity in Inner Mongolia, Ningxia, Jiangsu, Hainan, Shandong, Hebei and other provinces, as well as in several European countries.

Hanergy focuses on thin film photovoltaic solar panels. Production line start-up costs are relatively high whilst efficiency is lower than traditional silicon panels, but the lower production costs and consistently improving transformation rate should increase thin film panels commercial attractiveness. Over supply in the solar industry forced numerous companies out of business, some of which were rescued by Hanergy Solar Group (HNS), in which Hanergy Group acquired a controlling stake in February this year.

Hanergy Group and Hanergy Solar Group have been aggressively expanding in both the domestic and international markets. It recently signed a partnership with IKEA, where it will furbish its retail stores with solar panels in the UK and China. Furthermore, by acquiring MiaSole and Global Solar Energy in the US and Solibro in Germany it has significantly strengthened its R&D capacity The latter has been working on improving conversion efficiency of Copper Indium Gallium and Selenium (CIGS) panels since the acquisition, with highest efficiency rate of patented panels being 15.5% conversion, while the latest lab tests are reaching 19.6% conversion: meaning about a fifth of sun’s radiation is being converted into electricity. Moreover, Hanergy has signed an agreement with Aston Martin Racing, and will explore possibilities of solar technology application in motorsports.

However, despite all positive news, Hanergy’s future plans seem to be both risky and reliant on Governmental patronage. The group’s investments into wind and solar farms are only 30% - 40% funded by the Hanergy itself, the rest of the capital usually coming from local governments. If Hanergy fulfills its expansion plans, it will have a solar panel production capacity of around 6.6 GW, while globally added capacity was just less than 40 GW last year, with a quarter of it coming from China. It believes that its markets success is dependent on it`s development and delivery to customers of its latest CIGS panels and considering Hanergy does not currently figure among the top sellers globally, all will indeed depend upon the volume of its CIGS panels shipped to end users.

The full paper is available here.