The best China News from the web in one place.

Collating the best China News from the web in one place and bringing you some of our own. China Brain is a community site for China Business Professionals, Academics, Entrepreneurs and Watchers.

Editorials

A direct policy response to Sino-African relations or a genuine new chapter in the U.S-Africa relations?

A direct policy response to Sino-African relations or a genuine new chapter in the U.S-Africa relations?

It is fair to assert that it has taken America decades to realise the true potentials of an emerging Africa, and that she is only doing so on the heels of growing Chinese influence on the continent. This assertion has led many experts to believe that the well-publicised upcoming US-Africa summit in August is another opportunity for the US to re-strategize and come up with policies that will counter and contain the growing Chinese presence and influence on the continent. Truth be told; there’s growing concern within the corridors of power in most western nations notably; France and the United States that, giving the speed at which China is penetrating Africa, China could soon start enjoying the level of political influence in Africa that was historically held by France and the United States. With this in mind, both countries have had to go back to the drawing board and drastically redesign their African policies, with each one of them emerging with different strategies and policy options to contain the Chinese expansion and grip on the continent. The forthcoming US-Africa summit could be seen as yet another opportunity to re-engage with Africa. However, for this to yield any fruits, many looming questions must be sincerely scrutinised and answered.

 

 

Is America stepping in late? Can the Americans match the Chinese success in curbing and nurturing Africa at the same time? Can they move in with full packages like the Chinese do? Have they got the extra money to spend like China? Can the Americans establish relationships based on friendship and mutual understanding rather than the tutor-student relationship that is being perceived by many Africans? Can the Americans compromise on their values for democracy and human rights in favour of a “cordial and friendly relationship”? What of the non-interference policy being advocated and practised by China? A well-known and highly adorable sweetener in the Sino-African relations has no match, especially with proponents and advocates of democracy and the respect of Human rights. With a capitalist system in place, how will America create and bank role state owned corporations to take on big and visible projects in Africa in return for natural resources?

 

To be able to answer the above questions, one will need a full understanding of the foundations on which these relationships with Africa are established and how they have evolved over time.

 

It is evident that China’s huge and expanding presence and success in Africa is not by chance or luck. It has been a well thought and worked out strategy in the making for many years. A Chinese foreign minister Li Zhaoxing once stated that “today’s Sino-Africa relationship is viewed by both sides as deep-rooted and forged in years of mutual support “. Well, that is the Chinese narrative, and what they do not also tell the world is that it is an unbalanced relationship in which one out-powers the other in everything, leaving the weaker with little or no bargaining power or a better alternative.

 

Early foreign policy reforms embarked on in the early 90s by the Chinese government regarding Africa can be credited for the country’s success on the continent. As early on as 1995, the commerce ministry, on orders from the Chinese state council was instructed to reform its Africa policies, prioritising any link between aid and trade.  Creating the Forum on China–Africa Cooperation (FOCAC) in 2000 was a clear indication that there was a true commitment within the highest level of Chinese government to foster bilateral trade and relations with Africa. The cornerstone of this commitment was the Chinese believe in the continent and willingness to take risk while the rest of the world’s investment community watched from a safety distance. Note, FOCAC was launched in October 2000; five months after the US congress had approved the African Growth and Opportunity Act (AGOA).

 

Via partnership programs with host countries, the Chinese government has help fund multimillion dollar projects across the continent, most in infrastructure ranging from road construction, power plants to rail ways. To many Africans, this is the kind of investment and development aid the continent has been yearning for and not development aid in the form of wheat and flour or digging wells. Even if the oil and other natural resources are being siphoned to China, they are at least leaving behind visible investments. 

 

 

So far Africa seems quite comfortable with that relationship with China, but not to the satisfaction of the US, who sees China’s presence in Africa as being exploitative and on many occasions has had to voice these concerns openly. In 2012, Hillary Clinton, the then US secretary of state while on an African tour warned Africans against unnamed “outsiders” coming to “extract the wealth of Africa for themselves, leaving nothing or very little behind.” It was obvious who the unnamed outsider was. China feeling guilty, quickly responded by accusing the United States of seeking to sow discord between China and Africa while keen to reap benefits for itself from the booming continent. It is indeed a battle between two elephants.

 

America and other proponents of democracy believe China has no plans to halt its expansion on the continent even when democracy and humans rights are at risk. But fairly speaking, if one was to do a survey in many African countries on what they will choose between visible development and democracy, we all can guess the outcome. Very few will want to compromise any development initiative or project (even with known long term exploitative objectives) for democracy. That is not to say democracy does not have its place.  Both should go hand in hand. America seems trapped in a dilemma, given that on one hand they do over emphasised democracy; while on the hand continue to support some autocratic and in some cases military regimes on the continent. These mixed messages have not been doing America any good.

 

The African Growth and Opportunity Act (AGOA) approved by the US congress and passed into law in 2000 was a golden opportunity for the United States to re-engage Africa and take over the front seat in piloting the continent’s growth. However, the lack of commitment and the limitations with AGOA explains why 14 years down the line; the US is still trying to catch up. First and foremost AGOA which granted preferential duty-free and largely quota-free access to the U.S. market for some 1,800 products from 41 sub-Saharan African countries was a bold and a major step taken by the US to engage with Africa on the trade front, however the details of the program lacked the ingredients required to enhance and kick start growth on the continent.  Secondly AGOA highly publicised as a program aimed at encouraging exports from Africa, failed woefully in encouraging new product lines being exploited and exported to America. There was hardly any investment in infrastructures to boost new productivity, whether be it in the garment industry or basket weaving.

 

The program ended up only facilitating exports in products that would have been exported with or without AGOA. For example, 2008 figures show that African countries exported over $66 billion worth of products to the United States, an increase of almost 30% from 2007. But more than $62 billion, or 94%, came from oil and gas and minerals, products that would have been exported with or without trade preferences. Similar in 2013, oil and petroleum products accounted for over 80% of the exports to the United States from African countries. Hopefully, the shortcomings of the AGOA program that is expected to come to an end in 2015 will be used as a yard stick and learning curve for future engagements with Africa.  America had the opportunity in Africa, but lost it to China.

 

Another bone of contention between the US-Africa relationship is the perception held by many Africans with regards to the Washington consensus. For close to three decades today, the market fundamentalism or neoliberalism (Washington consensus) being implemented by the World Bank, and her sister institution the International Monetary Fund has had very little noticeable impact in developing the African continent and alleviating poverty via economic growth. It is again fair to assert that both institutions failed to jump start the continent’s economy. Many [1]studies have concluded that the strings and conditions attached to most development aid under the Washington Consensus were dampening rather than encouraging economic growth on the African continent. Even still in cases where lesser strings and conditions were attached, the implementation mechanism of policies designed in Washington had very little impact, since they often failed to directly address the problems and challenges facing the struggling masses.

 

The Washington consensus on a grand scale agreed and encouraged developing countries to export more of their natural resources including cash crops to international markets, so as to raise funds for servicing debts. Countries implementing the Washington Consensus (structural adjustment and stabilisation programs) were often forced to cut spending on vital sectors such as health, education and development so as to meet up with debt repayment plans.

 

This left many impoverished African countries with no glimpse of hope to ever industrialise and diversify their economies.

 

Many impoverished countries were often encouraged to concentrate on the production of cash crops similar to other developing countries, which obviously resulted to a surplus in the market and hence leading to a drastic fall in prices on those products and commodities, this to the benefit of the richer and developed nations. Fairly speaking, the Washington Consensus, from its inception was never designed to enhance development, economic growth and fully alleviate poverty in the developing countries. In a real world, it was/is a well-crafted debt creation and collection tool. The only thing the Washington Consensus succeeded in doing was widening the gap between the rich and poor, and creating new oligarchs in countries that were implementing privatisation programs.

 

Twisting the arms of developing countries to carry out recommended structural reforms at the expense of key functions of the state was never going to be growth enhancing. This may be explains why for over a quarter of a century, the World Bank and the IMF despite spending a chunk of cash, have failed to deliver tangible results in Africa.

 

Contrary to these conditional and strings development aid, the Chinese aid comes with no strings or conditions attached to it. However encoded within the aid packages are pseudo long term exploitative objectives whose adverse impacts are often too blur to see. The perception being portrait by China is that, they have agreed to deal with African countries as partners in development rather than the master-servant relationship practiced by the western nations in Africa. As per the Chinese narrative, it is a give and take kind of relationship.

 

The coming of the Chinese with their new model, aka the Chinese full package (Money, Technical expertise and protection from international sanctions) changed the balance. The complete package, from the sound of it is always too good to not tempt many African leaders, especially those with murky human right records.  But the big question is, to what extend can these countries rely on China for protection in the event of a unilateral action, say from one of the super powers? For now, and lessons from recent events have shown that the probability of China stepping in and preventing a military action with the use of  counter force is close to, if not zero per cent. In that full package, their guaranteed protection ends at blocking UN Security Council resolutions against countries in which their interest is at stake. But as soon as the Security Council is by passed, China has proven not to have the guts to stand in the way. Sadly in some instances, they have quickly switched sides to get closer to the winning group so as to secure their interest when the new group takes over.

 

 

Possible policy options if the US-Africa summit fails to achieve its goals

 

If the summit fails to achieve its defined goals, the US will be left with no option but to concentrate on hotspots where there are conflicts, since it is evident that China often shies away from mingling in internal conflicts. With its military strength, which is also its biggest asset and export, the US will stand to benefit by increasing the exportation of this asset to countries rich in natural resources.

 

One way to achieve this will be to promote and expand the war on terrorism, so as to militarily engage those countries.

 

To a lesser extent, encourage espionage to foment new conflicts on the continent, so to have a reason for intervention in favour of a regime that will be pro-American.

 

Form new alliances and strengthen existing ones with other disgruntled stakeholders such as France who are losing grounds on the continent, for a joint resistance against the Chinese expansion on the continent.

 

What America should do

 

It is not yet too late. There is still a void in the industrialisation sector across Africa and the US has another chance to fill that gap. If the Americans will want to remain relevant in Africa for a foreseeable future, then they will have to deviate or shift their strategy from the heavy military oriented interest to a rather economic interest.

 

Cut down its military assistance to the continent and redirect the resources to visible growth enhancing infrastructure projects.  It is pointless to carry on providing military assistance and training regimes that in most cases are the very ones creating the greatest problems. Not cutting down on this will imply that, the US will carry on expanding its military presence on the continent via the Africa Command Centre (AFRICOM), while China on the other hand will carry on expanding its economic presence. It is obvious which one will pay off in the long term.

 

Rather than embarked on exaggerating the security risk of the continent and scaring off potential American investors, the US should promote and encourage investors to move into the continent and invest in the continents’ infrastructure, so as to turn Africa into the new factory of the World. There is enough cheap and available labour to run that new factory. Infrastructure should be built to take on the production that is currently being outsourced to Asia, in particular China. It will be beneficial for America to have an alternative, and hence reduce the heavy reliance on China who is at the same time a real rival.

 

With over 200 million people aged between 15 and 24 (the youth bracket), Africa has the youngest population in the world, an asset which the US can exploit for its consumer based economy.   With that youth population size, it is evident that cheap and sustainable labour can be sourced from the continent.

 

 

After this summit, Obama should multiply the number of trade visits to Africa during his remaining years in the Whitehouse, taking along with him large delegations of potential investors. The era of the “BIG America” perception is fading out, so it will be a miscalculation to seat back and send low level government officials on behalf of the president and expect much in return from the African head of states. Taking the lead and championing such trips will delineate a new level of commitment and readiness to do business. A Long term commitment to invest in key sectors of the economies will be key to the success of this summit.

 

The US must stop leaning on the risk factor in Africa, because others are taking the risk and succeeding. One of the reasons why security is an issue is because of the huge youth unemployment. Dangerous sects and extremist are exploiting this high rate of unemployment to their benefit.  A case in hand is the dangerous extremist sect Boko Haram originating from North Nigeria. The shrinking of the major garment in industry in that part of the country left many youth unemployed and hence vulnerable to Boko Haram recruiters. Therefore seating back and relying on a military response is not an option.

 

From a Pan Africanist perspective

 

Africa has a lot to offer and has complete packages as well, which are; expanding markets, cheap labour, and natural resources. They deserve the full attention and respect from their counterparts.It is obvious today that the opportunities in Africa and its potentials far outweigh any challenges the continent might be facing. Now the fastest growing continent in the world with growth estimated at 7 to 10 per cent and home to 7 of the 10 fastest growing economies in the world; Africa really has a lot to offer. The continent must stop portraying itself as a victim and the weakest link during negotiations. To carry on wearing the victims’ hat at the negotiation table is self-defeating.

 

The continent has what it takes to be in control now and to define the rules of the game on the continent. External actors should not be the ones setting the rules of the game being played on the continent.  Despite all the odds and criticism, the coming of the Chinese gave the continent an alternative and a backup to cut loose of the conditionality regime that had governed the continent for many years. It has repositioned Africa and given the continent some leverage over its bargaining power. However, China should not be blindly embraced. Africa must plan now for the long term and its leaders must be conscious of the fact that whatever arrangements they make today, their impacts will determine the future of the continent. Externalising our economic growth and surrendering it to external actors to design and control the pace of that growth is not healthy for the continent and that format is not sustainable.

 

Africa has one more chance in its history to correct the errors of the past by clinging on these new opportunities, exploiting them to its benefit and get the continent ready for the next wave. Though there is so much interest on the continent and somewhat inflated speculations about its growth potentials, the continent is at a cross road and any policy blunder now will be very costly for its’ future.  The purported adoration for the continent will not carry on forever so it must act wisely.  If it squanders these opportunities then it will have but itself to blame.

 

Addressing the high rate of youth unemployment on the continent should be given a priority. Reducing youth unemployment will tackle a majority of the security problems while at the same time creating a consumer base, which will in turn guarantee a sustainable economic growth.

 

And finally the need to boost intra-regional trade within Africa and speed up the process towards a single trading union is more important now than ever before.

 

This article was originally published in the African Policy Forum and is reproduced here with the permission of the author. Eric Acha is a policy analyst and the Executive Director of the Africa Policy Forum.

 

Of course China Innovates, just look at the Smartphone sector.

Of course China Innovates, just look at the Smartphone sector.

China being the worlds largest Smartphone market has invigorated entrepreneurialism and brought to the fore some of the world's most innovative new companies - particularly in field of mobile technology. Relatively new companies such as One plus One, Smartisan, MeiZu and of course XiaoMi are increasing research and development spending by up to 20% a year and bringing to market some incredible new devices set to change the established order. Not only competing on price but also on specifications and design, these companies are set to become global names as they begin an aggressive global expansion policy, particularly in the emerging markets of Latin America, India, Africa and Asia.

 

China produced some 870 million mobile phones in 2013, with some 70% of these being manufactured by domestic companies catering to the vast lower end of the market, typically less than 2,000 rmb (330 usd).  However with the domestic market predicted to slow in 2014 the emphasis will be on delivering higher specification handsets to both telecoms operators and non contract purchasers as well as tapping into foreign markets, in particular those in Asia.



Not to ignore established companies such as Huawei, Coolpad, K-Touch and Lenovo we instead focus on those companies we believe bring Apple-esq build quality and design to their products but at half the price of their foreign competitors.

 

 

MEIZU

 

 

Jack Wong, Founder, Chairman and Chief Architect: Founded Zhuhai based MEIZU in 2003 as an MP3 player company and began smartphone production in 2006. Committed to developing high-end smartphones since then, they have focused on developing innovative and user-friendly smartphones for consumers. With more than 1,000 employees and 600 retail stores as well as 100 patents in China, the company has built a global presence in Hong Kong, Israel, Russia, Saudi Arabia and Ukraine.

 

 

One Plus One

 

 

OnePlus is a technology startup committed to bringing the best possible technology to users around the world. Created around the mantra ‘Never Settle’, OnePlus creates beautifully designed devices with premium build quality. OnePlus currently sells directly to global buyers via its website in 15 countries - Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Italy, the Netherlands, Portugal, Spain, Sweden, Taiwan, United Kingdom, and the United States. However the purchase process seems to be a little trickier than expected.

 

 

XiaoMi

 

 

Xiaomi (little rice) is a Beijing based mobile internet company dedicated to creating an all aspect user experience. Founded in 2010 by Lei Jun, the company has fast become one of the leading tech firms in China. The company is currently valuated at over 10 billion USD and has over 3000 employees. With its new international headquarters in Singapore the company has already landed in Malaysia, Philippines and India, and also has plans to enter Indonesia, Thailand, Russia, Turkey, Brazil and Mexico. During Q2 of 2014, they overtook the top spot from Samsung in terms of shipments in China. Competing primarily on price and design: the newly released Xiao Mi 4 has the same specifications as a Samsung Galaxy S5 at less than half the price

 

 

Xiaomi's main portfolio of products includes:

  1. - Xiaomi Phones: high quality and performance Android devices
  2. - MIUI ROM: highly customizable ROM that can be flashed across multiple Android devices
  3. - MiTalk: a preeminent messaging application
  4. - MiBox: A smart set-top box the enriches your TV experience

 

 

Smartisan

 

 

Founded in early 2012 the Beijing start-up, Smartisan, is both a manufacturer and OS/Android UI design company. It`s name is derived from ‘smart’ and ‘artisan’ combined into a word, meaning "intelligent mobile phone era". Headed by entrepreneur Luo Yonghao, the company is all about the details less than affordability, in both it`s OS and phone design. It`s flagship T1 is a sleek, predominantly glass exterior, higher-end handset using the Android-based Smartisan OS.

 

 

Chinese manufacturing plants have been producing foreign brand phones for most of the last decade, so the technical know-how is well established. Combined with the massive pool of design and development talent, domestic brands are now coming to the fore both on the international and domestic stage. They are no longer willing to compete simply on price but taking on the established OEM`s in terms of design and innovation.

 

With the shift in demand for smart connected devices moving from developed markets to emerging markets (its is estimated one billion devices will be delivered to emerging markets in 2014), Chinese OEM`s seem ideally placed to meet this demand. Although the double-digit growth of smartphones and tablets in emerging countries is a driving force for market entry, the low selling price and margins mean OEM`s will struggle to meet the demands of profitably.

 

Electric Vehicles, a strategic emerging industry.

Electric Vehicles, a strategic emerging industry.

China is already the world's largest manufacturer of electric bicycles and electric tricycles but only 6,900 domestic-brand electric cars (EV`s) were sold in China in 2013, according to a new report on China’s EV production and sales. That’s in contrast to China’s total car sales for 2013 of 22 million, surpassing 15.6 million in the US. Little demand for EVs means the nation is far off it`s target, set in 2012, to sell 500,000 electric cars in 2015 and five million in 2020. The one caveat being in the booming demand for electric busses. Not to be perturbed the Government has released new incentives to promote what it sees as a strategic emerging industry.

 

Subsidies will continue for at least the next 6 years and from September the 10% purchase tax will be waived on all new EV`s. Whilst the main factor for the slow take up on EV`s is their price, lack of charging facilities and private investment have also been identified as crucial factors. With new partnerships, Tesla is set to build 40 new Supercharger stations across China.

 

Aside from the pricey Tesla, no foreign car company is selling an EV in China at the moment. Nissan plans to sell a Chinese version of its all-electric Leaf, which will be called the Donfeng-Nissan Venucia e30, in September. The top selling passenger EV in China last year was the BAIC E150 (pictured below), according to the Paglee report. The Ford Fiesta-sized car starts at a pricey RMB 195,000 (US$31,700) for the electric model, as opposed to just RMB 58,000 (US$9,430) for the identically-bodied petrol model with a 1.3-liter engine.

 

 

The Warren Buffet-backed BYD is struggling to generate interest in its growing range of EV`s. The auto-maker, known for its battery technology, aims to triple sales of EVs to 8,000 units this year, including 2,000 buses. But most of its electric cars will be sold to taxi fleets.

 

   

 

2014’s EV sales in China could get a much-needed boost from cash incentives put in place in last year and the new announcements. China’s Ministry of Industry and Information Technology (MIIT) introduced hefty government subsidies to buyers of all-electric or plug-in hybrid cars. The largest subsidy option, of RMB 60,000 (US$9,450), is available to buyers of all-electric cars with a range of over 250 kilometers; the smallest is RMB 35,000 (US$5,690) for plug-in hybrid vehicles that go for over 50 kilometers. These are available only to buyers of domestic-brand cars. Many cities around China have also implemented local incentives in addition to the national subsidies to promote electric vehicles in their cities:

 

  • Beijing: Same as national subsidy + free license plate
  • Shanghai: CN¥40,000 ($6,504) + free license plate (a CN¥70,000 [$11,382] value)
  • Guangzhou: CN¥10,000 ($1,626) + free license plate
  • Shenzhen: Same as national subsidy
  • Hangzhou: Same as national subsidy
  • Hefei: CN¥20,000 ($3,252)
  • Changchun: CN¥35,000 ($5,691) to CN¥45,000 ($7,317)

 

But fundamental problems remain. One is that China’s urban middle class prefer foreign brands. The top-selling three models in China last year were the locally-manufactured versions of the Ford Focus, VW Lavida, and Buick Excelle. Another is that most urban residents in China live in gated apartment communities, meaning people have no personal garage in which to charge an EV. Homeowners in Shanghai can apply for installation of private charging facilities, but they must actually own a parking space inside their compound – which not all property owners do.

 

The Shanghai Daily reported earlier this year that Shanghai Power Company has received 140 applications for home-based charging ports, but has so far given the go-ahead for just 30 of them. These charging stations can cost as much as RMB 50,000 (US$8,000), which eradicates much of the savings people make from the EV subsidy. A further barrier is that not all real estate companies are open to such modifications being made to parking spots.

 

Beijing municipal authorities have published a ‘2014 to 2017 action plan’ for electric vehicles, according to Tencent Tech. The initiative centers around building 10,000 charging facilities across the capital by 2017. The first batch of 1,000 will be positioned within a five-kilometer radius of the city center, focused on major transport hubs. But what of the nation’s other cities? Only once a city has a charging infrastructure that’s even larger than its network of petrol stations might EV`s stand a chance of being seen as a viable alternative to petrol driven cars.

E-commerce & online payment trends for 2014.

E-commerce & online payment trends for 2014.

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:

 

Payment Method Market Share
Alipay 48.7%
Tenpay 19.4%
Union Pay 11.2%
99Bill 6.7%
China PnR 5.8%
YeePay 3.4%
Huanxun IPS 2.9%
Others 1.9%

% 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.

 

A diversified policy towards Africa.

A diversified policy towards Africa.

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.

 

Thought Leadership more...

Report on the Diversification of China’s Education Industry 2014.

Report on the Diversification of China’s Education Industry 2014.

Date: 2014-06-16

Since the beginning of 2014, two hot issues have emerged in China’s private education sector. First, in March this year, Premier Li Keqiang pointed out that “vocational education reforms should keep current with social progress”, emphasizing that “efforts should be made to develop vocational education and professionals that are suited to market needs, to create a merit-based but not diploma-oriented social atmosphere.” This statement opens up a new pathway for vocational education, serving as a beacon for the development of private and vocational schools in China. Second, an investment spree in the on-line education sector beginning the second half of 2013, has continued to make headlines in mainstream media. Internet behemoths are making inroads into this new business area, leading to turbocharged growth of the online education market. But a look at the private education market clearly shows that online education represents only a small proportion. In fact, the market is now growing at a slower pace, in its transition from “enclosure movement” to “intensive cultivation”. In this stage, How China’s private education groups diversify becomes especially vital.

 

 

Caged Tiger: The Transformation of the Asian Financial System.

Caged Tiger: The Transformation of the Asian Financial System.

Date: 2014-05-27

There will be no Asian Century without an Asian financial transformation.

The ‘Asian Century’ is upon us. Asia’s economy already accounts for a quarter of global economic output, up from 17% two decades ago. ANZ expects Asia’s share to rise to 35% in 2030 and to be over half the world economy by 2050. The United States (US) and Europe, which currently account for around half the world’s economic output, could see their share fall to less than a quarter by mid-century. This is a tectonic shift in the global economic landscape.

 

Yet with the exception of Japan and the newly industrialised economies, Asia’s rapid industrialisation of the past two decades has not been matched by an extensive development of its financial system. Many Asian countries have relatively closed and highly regulated financial systems, with a dominant bank sector and heavily managed exchange rates.

 

Litigating effectively: When in China, do as the Chinese do?

Litigating effectively: When in China, do as the Chinese do?

Date: 2014-04-02

Whenever a Western company loses a business dispute, it usually accepts the ruling of the court and pays up (assuming appeal is no longer possible). Chinese businessmen tend to hold a different view: it ain’t over until it’s over.

                 

When entering into a transaction with a Chinese counterpart, enforcement of the agreement should already be taken into account during negotiations. A (foreign) bank guarantee or escrow is of course a good solution, but this is often a non-starter for the Chinese side.

The Evolution of the 2nd & 3rd Tier Cities in China.

The Evolution of the 2nd & 3rd Tier Cities in China.

Date: 2014-01-06

There are 35 regional cities in China which account for approximately 16 percent of China’s population and 36 percent of China’s Gross Domestic Product (GDP). The majority of regional cities are located on the east coast, particularly in the economically advanced regions of the Bohai Rim, the Yangtze River Delta and the Pearl River Delta, and a number of inter-connected ‘city clusters’. The remaining cities are more widely distributed through the country. Each one of these 35 featured cities offers foreign companies particular opportunities, as well as challenges, in a wide range of sectors. These regional cities are considered as the 2nd and 3rd tier cities of China. In general they have a population of more than 5 million people, have a provincial GDP of at least RMB 250 million and the key characteristics are rapid economic growth, lower input costs, large and developing consumer and industrial markets, strong local government support and policy momentum for regional economic development.

Finding faster growth. I eat therefore I am.

Finding faster growth. I eat therefore I am.

Date: 2013-12-16

As millions of Chinese emerge from poverty they use newly disposable incomes to define themselves through food. If they are to take advantage, brands must first understand why.

 

23 million members of the Chinese population will have money to spend on indulging themselves for the first time this year. By 2020, it’s likely that over 160 million more will be able to do the same.
 
 
New research from TNS proves that the vast majority of these newly disposable incomes will be spent on eating and drinking, enjoying new types and new quantities of food and beverages. For brands and manufacturers in these categories, no greater opportunity exists on earth

 

Repatriation Strategies – How can a SME get their profits out of China?

Repatriation Strategies – How can a SME get their profits out of China?

Date: 2013-12-09

In today’s environment, with China as an increasing consumer market, many companies have a respectable part of the total value chain in China. Quite often this results in having money “trapped’ in China. Through the appropriate business model, foreign investors can create solutions and structures to remit cash back to the shareholder or any other related company.

 

Profit repatriation is a delicate subject under China’s foreign direct investment regime. Various regulatory, formality and tax factors surrounding the issue make it worthwhile for investors to define carefully their repatriation strategies, so as to entail tax and profit outcome that they should be legally entitled to. These strategies may not necessarily be complex or costly, while their effects could be substantial.

Value-Added Tax (VAT) Reform in China

Value-Added Tax (VAT) Reform in China

Date: 2013-11-20

For many years, China has operated a dual system of indirect taxes, with VAT applicable to the domestic purchase and sale of goods as well as the importation of goods, typically at a rate of 17%. By contrast, most services have been subject to Business Tax (BT) at rates of either 3% or 5%. These reforms are taking place because BT is an inefficient turnover tax. It effectively taxes each stage of a supply chain, irrespective of the profit or “value-added” by each business in that supply chain. By contrast, VAT is a tax collected by businesses, but effectively borne by the end consumer.

 

Taxpayers should actively communicate with customers and suppliers and re-evaluate their business models, including but not limited to pricing, invoice issuance, previous arrangements for the purpose of avoiding repeated BT tax levy etc., to effectively reduce their VAT liabilities and optimize the cost savings benefits. Most importantly companies should meet with their direct tax officers to discuss the tax liabilities imposed upon them for various “services” in order to have a full understanding of the new VAT principles.

 

Intellectual Property Rights (IPR) - Best Practices in China.

Intellectual Property Rights (IPR) - Best Practices in China.

Date: 2013-09-03

"If you can make it, they can fake it!” – A common phrase used in China. Intellectual property (IP) protection is one of the major concerns that western companies have while deciding whether to collaborate with Chinese companies or even enter the China market. The IP protection history in China is very short. For centuries, the Chinese people had not had any sense of protecting their own inventions or respecting the inventions of others. Not until 1984, when the Chinese government established its first patent law. The Chinese government has realized that creating a positive IP protection environment is not only important to protect the rights of foreign companies collaborating with their Chinese partners, but also critical to foster a creative environment for technology advancement of Chinese companies.

 

There are numerous internal and business policies that companies can undertake to reduce the exposure of IP misuse in the first place, including internal IP control; non-disclosure of trade secrets and know-how; careful selection and monitoring of business partners in China, including distributors and licensees; or avoidance of business partners. Although this may make market penetration more difficult, it will protect a company’s vital assets from being exploited. It is advisable for companies to seek advice on IP issues before entering the market.

 

Analysis of the competition strategy for MVNOs

Analysis of the competition strategy for MVNOs

Date: 2013-08-23

In May 2013, the Ministry of Industry and Information Technology issued the Notice for the Launch of the MVNO (Mobile Virtual Network Operator) Pilot Program in China, allowing private enterprises to enter into the MVNO business. In a short period of time, we will start seeing MVNOs operating in China's telecom market.  Which types of enterprises have advantages in the MVNO area? When different types of enterprises enter the MNVO market, should they adopt different strategies? What are the potential opportunities and threats in the MVNO market?

LTL

Resources

Trademark Law of the PRC.

Trademark Law of the PRC.

China's new Trademark Law has been issued and becomes effective May 1st, 2014. Important changes in the areas of anti-piracy, prosecution, enforcement, well-known mark determination and usage, opposition, and cancellation have been made. Foreign companies and their counsel should be aware of these changes so that rights and interests are not prejudiced and opportunities are not missed.

 



The significant changes include:

 

  • Strengthened protection against piracy.
  • Shortened trademark prosecution times.
  • Sound marks and multiple class trademark applications made available.
  • Strengthened well-known mark protection.
  • Narrowed legal standing for oppositions and invalidation.
  • A mark proceeding to registration if the opposition fails at the first level of adjudication at the Trademark Office.
  • Increased fines, compensation, and statutory damage against infringement.

 

For the full updated atricles of the new law please click here for the PDF.

Is China’s Economy Crashing? The Imminent Middle Income Trap.

Is China’s Economy Crashing? The Imminent Middle Income Trap.

China’s economy might indeed crash. Then again, it might not. Bearishness on China has gone viral. Two years ago, talk was of China’s economy saving the world. Today observers have swung to the opposite extreme, one expressed elegantly by Paul Krugman as “the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.”

 

 

The following essay was written for the Boao Review by Professor Danny Quah of the LSE where he carefully dissects current predictions that the Chinese economy will either dramatically crash or else become ensnared in the ‘middle income trap’, please click here to open the full PDF.

 

Xining

Xining

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)

 

 

Land Area (km2)

    7,665

   Population(million)

    2.25

   GDP (RMB billion)

    85.11

   

GDP Composition

 

          Primary Industry (Agriculture)

    3.66%

          Secondary Industry (Industry & Construction)

    51.64%

          Tertiary Industry (Service)

    44.7%

    GDP Per Capita (RMB)

    38,034

    Unemployment Rate

    3.47%

    Fixed Asset Investment (RMB billion)

    70.05

    Total Import & Export (USD million)

    934.17

          Export (USD million)

    662.14

          Import (USD million)

    272.03

    Sales of Social Consumer Goods (RMB billion)

    31.75

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.

 

Key Indicators on ASEAN-China Trade & Investment 2013

Key Indicators on ASEAN-China Trade & Investment 2013

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.

 

 

Key Indicators on ASEAN-China Relations (2013): Trade

 

Category

Contents

Ranking

Remarks

ASEAN-China Trade

443.6 billion USD

(ASEAN Importing 244.1 billion USD /Exporting 199.5 billion USD)

China is ASEAN's largest trade partner, and ASEAN is China's 3rd largest trade partner.

Increased by 10.9% from 2012

 China's Trade with Malaysia

 106.07 billion USD

(Malaysia Importing 45.93 billion USD /Exporting 60.14 billion USD)

 1st among ASEAN Member States

Increased by 11.9% from 2012
 China's Trade with Singapore

75.91 billion USD

(Singapore Importing 45.86 billion USD /Exporting 30.05 billion USD) 

2nd

 Increased by 9.6% from 2012
China's Trade with Thailand

71.26 billion USD

 (Thailand Importing 32.74 billion USD /Exporting 38.52 billion USD)

3rd

Increased by 2.2% from 2012

 China's Trade with Indonesia

 68.35 billion USD

(Indonesia Importing 36.93 billion USD /Exporting 31.42 billion USD)

 4th

Increased by 3.2% from 2012 
 China's Trade with Vietnam

 65.48 billion USD

(Vietnam Importing 48.59 billion USD /Exporting 16.89 billion USD)

 5th

Increased by 29.8% from 2012
China's Trade with the Philippines

38.07 billion USD

(the Philippines Importing 19.84 billion USD /Exporting 18.23 billion USD)

6th

Increased by 4.6% from 2012

Source: General Administration of Customs of China

 

Key Indicators on ASEAN-China Relations (2013): Investment

 

 ASEAN-China Investment Total: 14.09 billion USD

 

 ASEAN's Investment to China Total: 8.35 billion USD China's Investment to ASEAN Total: 5.74 billion USD 
Rank   Country  Investment    Rank  Country Investment
 1st among ASEAN Member States  Singapore  7.327 billion USD  1st among ASEAN Member States Singapore 2.4 billion USD
 2nd Thailand  480 million USD 2nd  Laos 800 million USD
 3rd  Malaysia  280 million USD  3rd  Indonesia  760 million USD

Source: Ministry of Commerce of China

 

Hanergy Solar Group

Hanergy Solar Group

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.

 

China News more...

Research & Commentary more...

Iris Worldwide

Past Polls more...

Do you believe China housing prices may be set for a long period of stagnation?

Respondents:51

Yes:14%No:51%Only in Tier 1 Cities:35%

Are you willing to change your lifestyle to reduce your environmental footprint?

Respondents:120

Yes:57%No:8%Yes, but to the extent that comfort & convenience of my life is not sacrificed:36%

Do you believe Beijing would benefit from having the Central Government moved away to a purpose built centre outside the city limits?

Respondents:54

Yes:63%No:20%Interesting Idea!:17%

Which city in China will enjoy the highest GDP growth in 2013?

Respondents:129

Chengdu:38%Chongqing:23%Tianjing:14%Shenzhen:11%Hangzhou:14%

If China were to reach the levels of Individual consumption of the West, do you believe the World could support that?

Respondents:86

No:71%Yes:29%

Which of the following Chinese Auto brands would you consider purchasing?

Respondents:68

Geely:12%BYD:21%Great Wall:32%Cherry:1%None of these:34%

What do you see as being the most pressing Social issue China faces over the next decade?

Respondents:61

Education:23%Healthcare:30%Housing:7%Retirement:41%

Is China currently an investment opportunity or heading for crisis?

Respondents:107

Opportunity:88%Crash:12%

How many gold medals will China win in the Olympics?

Respondents:25

45+:16%40-45:24%35-40:48%-35 :12%

Where will the Shanghai Composite be at the end of 2012?

Respondents:14

more than 2,200:50%more than 2,500:21%more than 2,700:29%

How many Chinese companies will be in the Fortune 500 by 2015?

Respondents:14

more than 50:57%more than 100:21%more than 150:21%

What do you think China's GDP growth will be in 2012?

Respondents:5

less than 5%:20%less than 10%:60%more than 10%:20%

Please login here

Create new account / Forgot password?

Create new account

And a little about you

Forgot your password?

Enter the e-mail address you used to create your account and we will send you instructions for resetting your password.

* Please check your email to get the temporary password we've just assigned you

Edit Password

To continue reading this article please register below as a site user. Thank you

Create new account

And a little about you

If you are already a member, please login here