The Nanfang / Blog

Mainland Tourists, Avoiding Hong Kong, Head to Macau Instead

Posted: 10/7/2014 9:16 am

Tourists walk past a luxury store in Hong Kong

The number of mainland tourists to Macau swelled to 1.2 million in the first four days of the week-long national holiday, surpassing the figures recorded last year as people stay away from Hong Kong as streets remain blocked with protesters.

On October 3, more than 300,000 visitors entered Macau, more than double last year’s 115,800 tourists on the second day of the week-long holiday, according to figures released by Zhuhai Exit and Entry Frontier Inspection Station and Macau Government Tourism Bureau.

Meanwhile there were 157,212 Mainlanders heading to Hong Kong on October 1, a 2 percent decline compared with a year ago, Wall Street Journal reported. China has temporarily suspended visas for tour groups heading to the city because of the unrest.

Anti-occupy protesters beat a protester in Mongkok.

According to figures released by the Hong Kong Immigration Department, 165,685 visitors from mainland China arrived in the city on the second day of the national holiday, a 70 percent decline from last year. It’s a “very low percentage during the Golden Week,” wrote Shenzhen Evening News on October 4.

Pro-Beijing Chinese newspaper Ta Kung Pao said the protests have brought instability and financial losses to the city. ANT bank estimated the protests cost the city HK$2.2 billion of losses in retail, the newspaper reported.

Photos: Alex Ogle/AFP/Getty ImagesTyrone Siu/Reuters



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


Soaring Wedding Costs in China Lead to Daddy Competitions

Posted: 06/23/2014 11:02 am

The cost of holding a wedding has increased globally, but nowhere more so than here in China. Chinese youth are now spending over RMB 200,000 (US$32,000) to get married, according to 2010 statistics, a massive increase over what was spent just a few years ago.

In China, the groom is the one who traditionally pays for weddings. In fact, he’s also responsible for buying a home, car, and giving a substantial sum to the bride’s family that can range anywhere from RMB 10,000 to RMB 1 million or higher. Because few men have this kind of cash on hand, people are joking we’re in an age of “daddy competitions” because the groom’s family is increasingly likely to foot the bill.

The cost of getting married has increased dramatically over the past 40 years in China. In the 60s, couples needed only a bottle of good Chinese white wine, two sets of Maoism books and their family, closest friends and co-workers. Guests would have tea and candies and the cost wouldn’t exceed one person’s monthly salary, around RMB 20 to RMB 30.

In the 70s, the cost of getting married increased to almost RMB 1,000, with most of it spent on making furniture (RMB 400) and a wedding lunch at a factory canteen with co-workers, friends and family.  An average factory worker needed to work for about two years to pay for the wedding.

The big leap came after Deng Xiaoping launched the opening up policy. The cost of getting married in the early 80s was around RMB 3,000 to RMB 5,000, with a big chunk of it spent on a color TV (RMB 1,800) and a big wedding celebration with food and drinks in a local restaurant (10 tables for around RMB 600). In the late 80s and early 90s, a honeymoon somewhere in China became popular for newlyweds who had the financial wherewithal. That cost another RMB 1,000. The cost of getting married was about three to four years’ worth of the groom’s salary, which was still considered reasonable.

In the late 90s, as Chinese became more exposed to the outside world, a celebration at a local restaurant was no longer good enough; it had to be in a luxury hotel, preferably a foreign hotel. A soft bed and western style beddings were a must to make the bride and her parents happy. Gold accessories became a must-have in the 90s; the groom’s family had to bring gold necklaces, a gold ring and a pair of gold earrings to the bride when they came to ask for permission from the bride’s parents.  The cost of the “old three gold sets” cost the groom RMB 3,000.  With RMB 5,000 for the celebration in luxury hotel, gold sets and a western style bed and beddings, the cost easily passed the RMB 10,000 level.

There were other requirements, too. A western style wedding photo set was considered upscale and luxurious.  Moreover, a team of luxury cars to pick up the bride on the morning of the wedding was also a way to show family status and wealth.  The cost of getting married in the 90s was about four or five years’ worth of the groom’s salary.

Things however really got crazy in the new millennium. Chinese people have officially entered the age of comparing their dads’ net worth. Now brides’ families say: Want to marry my daughter? You have to have an apartment in the city, you have to have a proper city hukou (identity card)….  Okay, you’ve met all of the requirements?  Good! Now bring RMB 10,001 (no more no less), this is according to Feng Shui!

A wedding celebration now costs about RMB 8,000 at the lower end. If you want a fleet of cars, a ceremony and a host with a meal for family and friends, the cost will be around RMB 30,000 to RMB 40,000. Then there’s the honeymoon, wedding dress and other treats that push the cost even higher.

The cost of a wedding varies nowadays in China, and is largely dependent on the net worth of the groom’s father. For an ordinary person in major cities, the cost now easily exceeds RMB 200,000 ($32,900). That means the groom – and his father – need to work harder and put aside even more money to get the bride’s consent.

Sina compiled the data based on a survey. You can read the report in Chinese here.

Home page photo credit: JingDaily


Foshan Grooms Second Generation Rich As Next Captains of Industry

Posted: 05/29/2014 8:56 am

The cost of helping this year’s estimated 8 million Chinese university graduates find a job is very high, and it seems Foshan has decided it’s more economical to focus on a select minority—namely, the fuerdai (富二代), otherwise known as the second generation of China’s rich, in order to get them ready to take over their rich fathers’ legacy and start contributing to Foshan’s economy.

A seminar with the trainees. Photo credit: Nandu

And who better to make this decision than Foshan’s own Organisation Department, the same body in charge of personnel arrangements within the Party, government and SOEs.

The city’s private sector contributes RMB 400 billion to the city and accounts for more than 60% of its GDP. However, the heirs of these companies are reluctant to inherit their fathers’ businesses, reported the Beijing Morning Post.

What compounds the situation is that according to the department’s survey of 812 fuerdai personnel, 21.6% of them are overseas passport holders and 77.4% of them are non-Party members. Nationwide, only about 40% of the rich successors are willing to take over their fathers’ mantle, while Shunde’s successful succession rate was slightly higher at 60%, but those who did are mainly forced by their ageing fathers, the report said.

These rich kids aren’t interested in being given a job that pays well, and in which you get to own a company to boot. Rather, the root of the succession problem has been described as their lack of faith in the Party and not having the sense of duty to contribute for the better of the society as their fathers did—you know, by serving as a CEO of a corporation. “If we fail to strengthen their education, all the capitals and human resources will flow to the foreign countries,” an unnamed official told the newspaper.

Therefore, the department organised a six month on-the-job training program for 48 fuerdai born between the 70s and 90s at state companies. The training started in November last year and ended in May.

And the training isn’t necessarily difficult. Feng Zhijun, a 34-year-old fuerdai and one of the trainees, finally learned that the trick to succeeding in business in China after 10 years abroad is warm greetings to the head boss. “When I first returned to China, I found it hard to adjust. I wouldn’t say hello or greet my superiors when I saw them.” Feng was reprimanded by his chairman father who said: “You’re acting like you will never survive here”.  Now, Feng is the general manager of an alsphalt company in Foshan. I guess he did learn it after all.

Jiangsu Province in coastal China ran a similar program several years ago with some 1,000 fuerdai, but the results were “not ideal”, the newspaper said. Liu Yuanxin, the official at the organisation department, said the program in Foshan is only a pilot scheme and could be abandoned if it suffers the same fate as Jiangsu.

But so far, he said more than 100 fuerdai have signed up for the second training program. Hopefully, they too will learn the trick to business is a warm hello.

Home page: Sohu 


Intel Announces New Shenzhen Tech Center with $100M Fund

Posted: 04/4/2014 1:20 pm

Intel has further deepened its 29 year relationship with China by announcing the establishment of a Shenzhen-based development center for smart devices along with a $100 million fund to promote and support development of Intel-based technology in China, the Register reported.

The proposed Intel Smart Device Innovation Center will provide local original equipment manufacturers, original design manufacturers and software developers with access to Intel technology platforms and help support local tech firms in bringing products from conception to commercial actualization.

The announcement was symbolically made on April 3 at the Intel Developer Forum being held in Shenzhen.

CEO Brian Krzanich looking to increase tablet chip shipments from 10 million to 40 million a year. Krzanich said, ”We have missed the tablet, but we will grab future trends, including wearable devices and the Internet of Things.”

In addition to this announcement, Intel has further deepened its interests in China by courting relationship with successful “white box” vendors like Onda, Emdoor and Vido, reports PC World.

Stephanie Hallford, a director for Intel’s mobile business in China, stated that Intel has developed partnerships with about 13 Shenzhen-based original design manufacturers who use Intel chips to make products of 30 separate models. Hallford further elaborated that by the year’s end, Intel hopes to have partnerships with over 20 manufacturers that will produce a total of over 80 models.

Photo: Artdaily


China expert John Dorris predicts China to lead developing world, but questions innovation

Posted: 04/1/2014 11:29 am

American John Dorris, a founder of consulting firm Sino-Associates, raised concerns over China’s innovative spirit as the economy continues to grow in a speech at the Shenzhen IdeaXchange  on March 30. The expert on Chinese affairs said while the nation poised to be the biggest economy by 2030, local innovators may not be able to directly compete with those in the West any time soon. But there is much certainty that they will be leading the developing world in South America and Africa.

He went on to discuss how challenges lie in store for the new generation. “In the past, globalization was left to outliers, adventurers and explorers. Today, we are all involved in globalization,” he said. “We are the first truly global generation at work.”

Dorris, a frequent guest speaker at Hong Kong University, described himself as an “interculturalist,” and went over a host of issues for the audience. From the history of globalization going all the way back to China’s role in the ancient Silk Road to modern trading from 1950 and on, he detailed the rapid changes within China. For example, in 1984 Sun Guiying was famously the first Chinese citizen to privately own a car – a Toyota Publica – yet by 1986 China was the second largest market for Toyota. With his expertise on multicultural environments, it was a fascinating discussion at the latest Shenzhen IdeaXchange  speaking event.

With over 250 people in attendance at the Nanshan library, the free event has been taken to a whole new level compared to last month’s humble venue in OCT’s Farsome space. Other engaging speakers included economist Edgar Ollervides on fiat currency; Hanan Yariv continuing to deconstruct economies by going over cryptocurrencies such as Bitcoin; local comedian Jay Jay keeping it light with an education on comedy structure; and lastly more multicultural issues with Anthony Paglino on his experiences in Chinese villages and how it relates to his views on cultures coming together.

The Shenzhen IdeaXchange  will continue to hold monthly events. Watch The Nanfang for announcements on the April lineup of speakers, sure to be among the most interesting activities in the PRD.


Forbes says Guangzhou number one place in China for business

Posted: 12/3/2013 7:00 am

Cantonese are known, fairly or otherwise, for being very good at business. Facts tend to back it up: Hong Kong is Asia’s premier financial centre and Guangdong is the richest province in China. Now the industriousness of the Cantonese is being recognized by Forbes magazine.

The Chinese version of Forbes has put Guangzhou as the top city in China in which to do business:

Guangzhou, which moved up from No. 4 a year ago, topped the new list in part on the strength of the city’s infrastructure for both cargo and passenger traffic.  The southern business hub is home to 13.6 million people, notably including billionaire Zhang Li of Guangzhou R&F Properties, one of China’s richest people.


Even better for Guangdong, neighbouring Shenzhen finished second on the list, with Shanghai falling to third place. Foshan, also in Guangdong, placed 10th.
Despite concerns about the long-term competitiveness of the region, the Pearl River Delta continues to thrive.

Guangzhou’s hotel industry is sailing along, but there may be rough seas ahead

Posted: 10/18/2012 11:01 pm

Beijing and Shanghai look with envy at Guangzhou’s luxury hotel market. While China’s top two cities have sluggish occupancy and erratic room rates, the Flower City has been blossoming.

Across the province, manufacturing is an important growth maker meaning when times are good the benefits are felt including in the services sector, like hospitality, and likewise in harder times the trading environment is challenging.

Concerns of slowdown paint a gloomier picture, based on some data, leaving Guangzhou treading carefully.

As the Canton Fair gets ready for business, China’s flagship trade fair – central to Guangzhou’s economic story – is hoping for brisk business despite the outlook. The city’s hotel industry thrives on it, benefiting from the extra hotel occupancy and room rates swelling. By the time the trade fair wraps up, some 200,000 people will have been and gone.

From a Hilton and Ritz-Carlton to a Westin and Shangri-la, big names vie for corporate accounts and business bookings. The good news for them is the premium-room market is on the cusp of its next big upgrade. But throw in a Four Seasons, Mandarin Oriental, Jumeirah and another Marriott hotel into the mix – all of which just opened or will open soon – and only the fittest will survive, according to one hotel boss.

According to the latest data seen by The Nanfang, Guangzhou’s optimistic picture is in stark contrast to hoteliers in rival cities fighting for more room nights and customers in a market that’s oversaturated. Despite the slowdown, tens of thousands of more rooms are being added every year across the country.

Past, present and future
By the end of 2012, Guangzhou will add another 3,627 high end rooms taking supply near the 20,000 mark. However, Shanghai will be flooded by another 5,500 rooms bringing 50,000 room choices to customers. In Beijing only 2,500 rooms will come online taking the total to 34,000 rooms, according to hospitality consultancy firm Jones Lang LaSalle Hotels.

The 2010 Asian Games is a good example of how a big event can boost hotel statistics. It helped operators in Guangzhou recover as the 2009 financial crisis struck. Occupancy rates jumped 10 per cent over the Games year.

While Guangzhou is holding strong, it was a late bloomer in attracting 5-star hotels, with an influx of operators arriving in 2007. Guangzhou is not the “country’s financial centre that Shanghai is or the capital like Beijing,” explains Darlena Zhai from Horwath Asia Pacific.

Horwath Asia Pacific also says over the next five years the “top-tier” market nationwide will add another 30 per cent more rooms. Even so, year-on-year demand for luxury hotels is outpacing supply, growing 7.9 per cent compared to the supply side’s 7.5 per cent growth. The strong numbers have reached near all-time occupancy rates as Guangzhou nears the 70 per cent level.

But hoteliers across the nation have reservations about growth and are becoming increasingly concerned about the market a few years out.

General managers The Nanfang spoke with have a hard time predicting what the future may hold. “I don’t have a crystal ball,” says John Burger, formerly the general manger of the Hilton Guangzhou Tianhe.

Economic snapshot
The economic outlook in China and around the world has plenty to keep general managers both excited and awake at night.

Internationally, the global recession continues to linger following the international financial crisis of 2008, and a series of new flash-points  such as territorial disputes with Japan, are impacting places like Guangzhou. Horwath notes that Japan, Korea and Southeast Asia “are the main drivers of international corporate demand.”

Peter Esho, chief market analyst at City Index Asia Pacific, reckons a major turnaround can’t take place without significant interventions.

“[We need] confidence back in Europe, the Chinese policy response…which parts of the economy will be targeted, monetary easing by the People’s Bank of China, more reserve requirement ratio cuts and possibly [base] rate cuts and among the state owned and controlled banks. We need to see the lending flood gates resume once again.”

The Westin Guangzhou’s Carolyn Smith is confident and assured that her hotel is in good shape, which is why she is bullish about her hotel’s prospects. For her, the economic signs are pointing in the right direction. As general manager she is presiding over 72 per cent capacity; higher, she says, than the city and national average.

“The market is growing, China is growing, the business world in China is growing, the middle class is growing,” she says. “China has more than 170 cities with more than one million people. China has tremendous capacity and I think it will be a long time before there is oversupply.” As for Guangzhou, “it can continue to take new hotels and new hotel openings, [but] not all at the same time.”

One risk is Guangdong’s largely manufacturing-heavy economy could take a negative turn as China slows. For now, it is an important driver for the province and the manufacturing index in September showed a contraction.

“In terms of the manufacturing index, it is holding up well. It is a very good example of how the slowdown doesn’t necessarily affect all areas at the same time,” Carolyn adds. “Market forces might dictate but they might not dictate at the right times.”

But Horwath Asia Pacific’s Darlena Zhai warns, “since a lot of corporate demand is from the manufacturing industry and auto industry, it would be strongly affected by economic changes in China.”

John Burger’s is bullish but he pulls no punches. He thinks there is saturation in the market, and the casualty will be those smaller, local hotels that have not spent money on their infrastructure.

While the Hilton Guangzhou Tianhe started from “a zero base,” Burger isn’t too concerned. “A new hotel has got a growing phase like a child. You have got to mumble and talk before you can shout; before you run you have to walk.”

But he concedes as an indicator of performance “when you look at the occupancy rates, some places are doing better than others” although he is not “unhappy” with how his establishment is doing. He is projecting growth this year and next year.

The Hilton’s high-end global reputation strikes the right note with the cash-rich Chinese traveller – which makes up 70 per cent of business at the Hilton Tianhe. “The Chinese consumer is more brand aware than they were in the past. As long as the Chinese traveller is fueling the international brands then that’s ok.”

“You name it, we have it in Guangzhou,” says Arics Lam, general manager of the China Hotel, a Marriott Hotel, but cautions “none of us can see what is going to happen to us in a few years time.”

Nevertheless, the China Hotel, A Marriott Hotel is outperforming its peers by operating at 72 per cent occupancy. However, Arics says the city needs more tourists. That is more of a concern rather than the macro-economic picture.

For the time being, Arics is one of many general managers in discussions with the Guangzhou Tourism Bureau on how hotels can work together to help promote the city. “We’re suggesting repositioning Guangzhou. Going into the international market is important. How we can propose to government bodies how we can form something to promote the city.”

With warning signs down the road, at least in Guangzhou, hoteliers hope to work more closely with the tourism bureau to drum up business. Bosses are also hoping for more trade fairs and exhibitions to soak up supply. Horwath Asia Pacific notes the bi-annual Canton Fair can result in 40 per cent of total annual revenue for major brands.

The future
Local statistics favour Guangzhou but national statistics do not look good.

With money pouring into public transport infrastructure, Horwath Asia Pacific warns of an increase in day-tripping from more popular cities like Hong Kong.  ”Transport infrastructure in Guangzhou and its improved accessibility from other surrounding cities is likely to increase the city’s appeal.”

At least in the key areas where Guangzhou is successful – manufacturing, trade and hosting exhibitions – business is ticking over for the time being.


Nanfang News: Updated figures on the state of the PRD economy

Posted: 07/29/2011 10:17 am

Death penalty for Dongguan money counterfeiter
This one comes from Xinhua:

A man was sentenced to death Tuesday in south China’s Guangdong Province for forging counterfeit yuan notes with a par value of 170 million yuan with 15 other gang members. Xiao Guihong, the ring leader, was given the death penalty in the first-instance trial, according to a verdict released by the Dongguan City Intermediate People’s Court.

More on the story here.

Dongguan women’s clinic found preying on patients

Dongguan clinic deep throat

A woman in Dongguan has blown the whistle on her former employer, a scam neighborhood women’s clinic which lured people in with the promise of a free first visit. In a confession letter she sent to the city’s health authorities, the woman claimed that doctors at the clinic would use the free initial examination to deliberately give women internal injuries, then used as justification to call for repeat visits at exorbitant charges. The woman said that the clinic brought in more than RMB 6 mln in revenue last year.

Guangdong Party Committee to PRD business community: Everything is OK.
Elsewhere in Dongguan, at the 11th high-level roundtable meeting of Guangdong-Hong Kong-Macao key chambers of commerce held in the city yesterday, member of the Standing Committee of the CPC Guangdong Provincial Committee and director general of the Department of the United Front Work of the CPC Guangdong Provincial Committee, Zhou Zhenhong, quoted a few numbers to argue that small and medium enterprises in the province are not being forced to shut down due to shrinking exports and rising costs. According to Zhou, 2010 saw nearly 1.01 mln privately-run enterprises in operation in Guangdong, up from last year’s figure of 950,000. Ten years ago, Zhou said, a Guangdong-based private enterprise had an average of 1.12 mln in registered capital; as of June this year, that figure now stands at RMB 2.29 mln. Finally, Zhou said that of this year’s newly formed private enterprises, only 0.4% are involved in agriculture, followed by 7.4% in manufacturing, and 92.2% in the service industry.

Subway No. 9
Construction has begun on line 9 of the Guangzhou Metro, which will run straight across Huadu. No word yet on when it will be completed, but in the meantime check out line 9′s own Wikipedia entry here.

Thinking economic globalization, enacting PRD localization
In a meeting yesterday with EU Ambassador to China, Markus Ederer, Guangdong Party Secretary Wang Yang said the usual about China’s ongoing enhanced economic cooperation with the European Union, but he also compared plans in China’s 12th Five-Year Plan (2011-2015) to integrate the PRD with the Europe 2020 strategy aimed at reviving the continent’s economy. More on what Wang’s been up to recently on the political front here.

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