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Investors Protest in Cities Around China Over Shadow Banking Concerns

Posted: 08/15/2014 1:19 pm

icbc shadow lending bank protest investorsThe risks associated with shadow banking are becoming more prominent in public as protests by angry investors took place this week throughout China.

This past Tuesday, a group of investors in Chengdu, Sichuan demonstrated in front of local government buildings when one of the biggest credit-guarantee companies in the province failed to cover loans to small firms it had insured, reports the Wall Street Journal.

And then on Monday, several dozen investors protested outside Industrial and Commercial Bank of China locations in Guangzhou and Shanghai. The protesters were upset with word they will need to wait 15 months before receiving earnings from a trust-company product sold by the bank.

Guangzhou protesters carried a sign that said, “ICBC are a bunch of swindlers; give us back the money we have made with our sweat and blood!” Zhang Liang, one of the Guangzhou protesters, said:

“ICBC managers told us the product was safe and both the principal and interests are guaranteed… If it wasn’t sold by ICBC, we would not have bought the product since we never heard of this trust firm before.”

A report by Haitong International Securities showed that 68 trust firms investigated only have net assets of RMB 275 billion, reports Bloomberg.

The second quarter of this year has seen the slowest growth in China’s trust sector in over two years as trusts have become more cautious with lending money during a weak economy, reports the Financial Times. The trust sector is the largest component to China’s shadow-banking system that has been expanding astronomically since 2010.

Shadow banking is a huge industry in China, valued at $71.2 trillion; it has tripled in size from a decade ago. This unregulated industry that largely prospered after the 2008 financial crisis has drawn concern for its rapid expansion and clandestine operations.

A report by JP Morgan last year said shadow banking in China had nearly doubled between 2010 and 2012 to nearly $6 trillion, or about 70% of the nation’s GDP.

Photos: WSJ


Coke Now Paying Expat Staff Extra To Deal With China’s Air Pollution

Posted: 07/13/2014 8:00 am

coca cola factory workerWhile the suggestion that expats are leaving China is still up for debate, the fact remains that China is an increasingly a difficult place to work because of air pollution. But if you need a reason to sacrifice your health and stay and work in China, Coca-Cola has one for you: a 15% bonus on top of your salary as a “hazard pay”, according to a report by the Australia Financial Review.

Labelled the “environmental hardship allowance”, the extra salary is reportedly an incentive to help convince company employees to relocate to China. The bonus is only offered to foreign expat employees; any Chinese nationals are exempt.

Panasonic was the first multi-national company to offer hazard pay to its expat employees working in China back in April of this year.

Photo: China Daily


[Photos] Tencent’s New Guangzhou Offices Are 100% Awesome

Posted: 06/25/2014 1:29 pm

tencent guangzhou officeCheck out the new Guangzhou offices of internet behemoth Tencent, borne from six buildings that were once part of an old textile factory.

The new offices of the Shenzhen-based maker of the popular WeChat app are shown in a pictorial published in Business Insider. Eight-hundred Tencent employees will be enjoying things like a two-story slide to pop downstairs and a wall made out of plants.

We don’t see any Segways that are ubiquitous on high-tech campuses, but we’re still very impressed with this modern design that is practical, elegant, and doesn’t look like a kitchen instrument or a pair of pants.

tencent guangzhou officetencent guangzhou officetencent guangzhou officetencent guangzhou officetencent guangzhou officetencent guangzhou office

Photos: Business Insider


Shenzhen Home to 50 of China’s Billionaires

Posted: 05/9/2014 8:00 am

Shenzhen residents: Love thy neighbor. They may be very, very rich.

Financial magazine Xincaifu has compiled a list of the richest people in China, and wouldn’t you know it—Shenzhen is home to 50 billionaires.

Well, they might not live in your neighborhood, but borrowing a little Grey Poupon is easier in Guangdong Province than anywere else in the country. Guangdong is the Chinese province with the most billionaire residents, followed by Beijing, Zhejiang, Shanghai and Jiangsu.

As if to signal the bursting of the real estate bubble, the list mentions the current ten richest people in China as having made their fortunes outside the real estate industry. The fields by which this year’s top moneymakers have rung in their gold include new energy and the internet.

We wonder what could it be that attracts them the most: the clean air, former Hong Kongers with a desire to drive on the right side of the road, uh, the local sports team?

We guess those guys that handle Shenzhen’s position as a technological and manufacturing leader have to live somewhere.

Photo: eChinacities


Northern Smog Forcing Expats South to Cleaner Guangdong

Posted: 05/7/2014 12:11 pm

The air quality in the Pearl River Delta is very good, if not excellent. Due to rain, brisk air currents and anti-pollution measures, Shenzhen enjoyed 81 days that complied with air quality standards classified as good or fairly good in the first quarter of this year.

And what isn’t perfect can be fixed: While a joint report published by mainland and Hong Kong environmental departments has noted both improvements and setbacks in air quality throughout various districts of Foshan, Zhuhai has gone ahead and adopted the measure of restricting vehicle use on heavily polluted days.

Furthermore, the Guangdong cities of Zhuhai, Shenzhen, Huizhou and Zhongshan have all been named to a list of cities with the cleanest air in China. As a PRD resident, you likely know this, but you should know that everyone knows this, knowledge that may lead towards an oncoming trend.

While pollution has no direct benefits save the allegorical efforts to turn carbon particles from Beijing smog into diamonds, it remains that southern Chinese cities may stand to benefit from an exodus of highly-qualified expat workers fleeing the bad air quality of the north.

XKB reports that an unnamed study has said that 48% of foreign companies in China are dissatisfied with the state of pollution in 2014, compared with only 19% in 2010.  They then verify this report by two members of the Dragonfly HR recruitment company.

Philippe Comolet-Tirman, head of the Dragonfly Group offices in Beijing, does not draw a strong correlation between the effects of pollution upon employment recruitment at first:

“Chinese people aren’t that concerned with this problem, although I’ve noticed in the past few months that an increasing number of Chinese are wearing masks during smoggy days. But in the field of HR recruitment, there has been no influence. Compared to urban air quality, job applicants in China are more concerned with the type of company, salary, distance from work among other things.”

However, Comolet-Tirman does point out a recent trend:

“Those people (in Beijing) that have worked there for a number of years are now moving to Shanghai, Southern China, even to Europe.”

Fellow colleague Homeric De Sarth, the operating manager of Dragonfly in Shenzhen, verifies this trend:

“Southern China has done a great job in preserving the air quality. Although it’s not perfect, it’s still much better than it is up north. We have discovered that many people working in Beijing and Shanghai have moved down south.”

An exodus of Beijing expats was first reported upon this past January, so we’ll see if the trend of foreign workers in norther cities seeking the sunny climes of southern China continue.

Photo: Business Insider


HK-Macau-PRD Free Trade Zone One Step Closer to Reality

Posted: 05/4/2014 3:15 pm

Today in “bun in the oven” news: A proposal for a free trade zone that encompasses Hong Kong, Macau and parts of Guangdong Province via the Closer Economic Partnership Arrangement (CEPA) is now under revision by some 28 ministries and commissions after being approved by the central government, reports Want China Times.

First proposed back in February of this year, the Guangdong free trade zone will unify disparate parts of the Pearl River Delta in a total area that is much larger than the free trade zone in Shanghai. Planned for economic amalgamation are the Shenzhen Qianhai Special Economic Zone, the Guangzhou Nansha Special Economic Zone, the Zhuhai Hengqin Special Economic Zone, Hong Kong and Macau.

Another defining characteristic of this proposed free trade zone are the individual characteristics of each of the markets. Under this arrangement, Guangdong Province may seek gains from the much freer markets of Hong Kong and Macau. According to the Index of Economic Freedom, Hong Kong has been rated the world’s most free market economy for 19 consecutive years, while Macau lags behind at 26th position. In comparison, the market in mainland China ranks world-wide at 136.

Guangdong Governor Zhu Xiaodan said that the new free trade zone will focus on liberalizing trade and initialize a system of cooperation in the high-end service industry.

According to Lin Jiang, dean of the public finance and taxation department of Lingnan College at Sun Yat-sen University in Guangzhou, the focus on liberalizing services through trade will set Guangdong’s free trade zone apart from the China Pilot Free Trade Zone in Shanghai.

A shift to embrace more free trade zones will be an ongoing trend if Standard Charter’s appraisal of China as the first “true mega-trader” since 1800′s Britain is apt.

However, the proposal for this free trade zone are expected to take years to formalize. Meanwhile, anyone wanting to purchase the newly unbanned Xbox One will have to go to Shanghai’s free trade zone starting this September.

Photo: Xinhua


Obscene Content May Be Banned from China’s Video Game Ads

Posted: 04/25/2014 12:16 pm

online video game girl obscene naked ban

The raid on the Shenzhen offices of Kuaibo on April 22 was regarded as an initiative by the government to get tough on copyright infringement. However, news of the police raid has sent shockwaves through the Chinese online video game industry as rumors swirl of a “obscenity ban“, iQiLu reported.

The rumored ban would prohibit video game companies from using licentious material in any of its advertising. Apparently a notice has already been sent to game companies that says video game advertisements that expose sensitive body parts through the use of short sleeves, shorts, skirts, and bathing suits are prohibited. Any physical contact between men and women characters are forbidden, though its not sure how violence is covered under these rules.

The rumors true or not, yesterday saw a downward trend in the stock market for just about every Chinese online gaming company. Shares plummeted for video game companies like OurPalm, Shunwang Technology, and Aisidi.

Besides its reputation as a notorious pirate that rebroadcast unlicensed material, Kuaidi is well-known for its racy video game advertisements.  An unnamed industry insider likens the investigation to an “attack” and gave this analysis:

What can most attract traffic on the internet is lascivious material. Reading material and news can not compare with this. Because of its individual characteristics, it was very easy for Kuaibo to attract online gaming companies to purchase advertising on its streaming products.

The fear is resonated by this representative of an unidentified Beijing-based online video game company:

The investigation of Kuaibo is a signal. During this initiative, will they continue to investigate other promotional avenues of the online gaming industry? What’s next, investigating the content of online games themselves?

For its part, Kuaidi has admitted that police visited their offices, but denies that any arrests were made. The company is adamant that is has resumed normal operations.

The government initiative to police the Chinese internet of obscene and copyright infringement began earlier this month.

Despite its effect upon the industry, Caijing reported the rumored ban as false, confirming that there is no such ban after contacting several video game companies.

Between this and the prostitution crackdown in Dongguan that continues to plague the city’s economy, we can only hope that adhering to moral principles doesn’t have a detrimental effect upon China’s economic prosperity.

Photo: 55g, kaifu


Dongguan Hotels Suffering, Occupancy Down 90% After Sex Crackdown

Posted: 04/25/2014 9:14 am

More than two months into Dongguan’s sex trade crackdown, the once bustling city is currently suffering from dwindling visitor numbers and a tepid hotel business that used to generate RMB 300 million ($48 million) in revenues annually, Time Weekly reported on April 24.

Visitors at Houjie, one of the main red light districts in Dongguan, have dropped 50 to 60 percent since the February crackdown, said one cab driver surnamed Li. Meanwhile, a downtown center in Houjie called Kangle Nan Lu has seen an 80 to 90 percent drop in visitor traffic. Li estimated that at least 80,000 people have left the town after the crackdown.

One person associated with a 5-star hotel in Houjie said, “The hotel business has entered a cold winter.” The city’s number of 5-star hotels is the third largest nationally after Beiing and Shanghai, but the crackdown has put a brake on investments towards its hotels.

Another reason Dongguan hotels are expecting more lean times is due to the government clampdown on extravagant government spending. Five-star hotels were often the venue on which government officials splurged public spending on lavish meals.

Despite government’s hardline stance on the sex trade, some brave souls have managed to keep the old business afloat. One person called Ah Jing still ferries prostitutes to different hotels. Currently managing 15 prostitutes, Ah Jing drives the xiaojie to the customer’s hotel for the special service.

It is hard to predict how long the aftermath of the crackdown is going to effect the city. However, it seems the effect is continuing to ripple wider and wider at the same time the city is also battling dwindled export figures as the country’s economy slows.

Home page photo: China News 


UK chancellor: “Stop treating China like a sweatshop on the Pearl River”

Posted: 10/15/2013 7:00 am

Britain’s chief financial minister George Osborne has said that Britain must show respect and stop treating China like a sweatshop on the Pearl River, The Daily Telegraph reports. Osborne made the remarks as Britain loosens its visa policy for Chinese tourists.

Osborne, the Conservative chancellor of the exchequer, told BBC Radio 4 during his ongoing China trip: “Of course we can bring up issues that we have concerns about. But we have to respect the fact that it is a deep and ancient civilisation that is tackling its own problems. We do need to show some respect for that.”

Throughout the 1980s and 90s, China did well to identify export markets and grew rapidly due to a vast increase in its exports of cheap manufactured goods such as clothes and textiles. At the country’s current stage of development this is not sustainable. For this reason, China has shifted its focus to exporting high-end manufactured goods and been successful in doing so. Since 2011, Chinese exports to the U.S. of high-tech electronics, auto parts and optical devices rose 24% to $129 billion, while exports of clothing rose just 5% to $47 billion, as the Wall Street Journal reported in April.

Osborne appears to want a piece of this pie as well as invite investment from China. It was reported Sunday that a deal with Chinese investors will see an Airport City at Manchester Airport creating as many as 16,000 jobs.

The paper has more:

Chinese leaders are determined to tackle corruption and organised crime and Britain must take advantage of their booming economy, Mr Osborne said, as he announced a radical relaxation of visa rules intended to boost the number of Chinese business travellers and tourists to Britain.

Under plans revealed by the Chancellor in China today, Chinese visitors will be able to apply for a British visa using the same form as that used to enter the EU’s ‘Schengen’ zone. Currently visitors have to fill in a lengthy separate application and have their fingerprints taken.

A 24-hour “super-priority” service will operate from next summer. Officials are also looking at expanding a VIP mobile visa service, currently operating in Beijing and Shanghai, to the whole country.

He also said a new wave of Chinese tourists would be “fantastic” for the British hotel industry, even though concerns have been raised around the world about the behaviour of Chinese tourists.

However, not everybody supports the move.

Home secretary Theresa May said relaxing visa arrangements for Chinese travellers would threaten national security and bring organised criminals and fraudsters to Britain. She has attempted to block the proposals but is unlikely to get her way.

This is good news for all kinds of people, from entrepreneurs trying to do business between the two countries to people trying to relocate their Chinese spouse or family to Britain.


Qianhai head says internet to be unblocked in part of Shenzhen

Posted: 10/2/2013 3:19 pm

We’ve been telling you for a while about the Qianhai Economic Zone in Shenzhen, situated just northwest of Shekou, and how it aims to be Ground Zero for financial liberalization in China.

The zone is expected to experiment with financial reforms, but has had much of its thunder stolen by the larger and more ambitious Free Trade Zone in Shanghai. Shanghai’s FTZ launched last weekend along with a few policies designed to internationalize China’s financial markets, but fell far short of expectations.

The South China Morning Post reported in an “exclusive” last week that banned websites in China would be viewable in the FTZ, but that was shot down a day later by a report in Xinhua, which assured everyone that dangerous ideas on Facebook would be kept at bay.

At least one financial expert in China has told this correspondent that Shanghai’s experiments with reform won’t amount to much, precisely because they’re happening in Shanghai. The city is far too important, and far too high profile, to begin experimenting with. If reforms are real (as they were in the early 1980s), then they’ll most likely be enacted far away from China’s capital and undisputed financial centre. They’d most likely happen here.

On that note, the head of the Qianhai zone has come out and said that the Internet will be unblocked once the project gets underway. This is from Reuters:

“In Qianhai, we will be able to see what they can see in Hong Kong,” said Wang Jinxia, director of the research and innovation centre of the Qianhai Authority, which is overseeing the proposed $45 billion financial zone in southern China.

“We will strive for an exclusive international communication channel in which information won’t be filtered,” he said, adding that Facebook and Twitter would be available.

It could be argued Qianhai is already having more success than Shanghai. The Financial Times covered the Shanghai FTZ’s launch on the weekend:

Overseas banks have given Shanghai’s much-hyped free-trade zone a chilly reception – Sunday’s launch included just two branches of non-Chinese institutions.

But the tepid reaction of foreign banks so far reflects widespread confusion about how the zone will operate, even as regulators have appealed for patience.

While here in Shenzhen

Qianhai, dubbed a “mini-Hong Kong”, has attracted about 1,700 companies – about 70 percent related to financial services – with registered capital of 200 billion yuan ($23 billion) as of mid-September.

There are 20 Fortune 500 companies registered in Qianhai, including HSBC, Hang Seng Bank and Standard Chartered.

This is not an apples-to-apples comparison, and both zones have murky policies in place at best. But it’s not a foregone conclusion that Shanghai’s FTZ will be the most important experiment driving China’s economic future.

(Photo Credit: SCMP; h/t Shanghaiist)


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