China Direct

CPP Group extends its China partnership with major Bank deal

CBI member, CPP Group, has announced that it has extended its agreement with Bank of Communications Pacific Credit Card Centre in Shanghai to help customers whose payment cards go missing.

This announcement builds on a relationship started in 2018, and follows a competitive tender process.

Bank of Communications (Bocomm) is currently ranked at 150 on the Fortune Global 500 list of most valuable companies and has issued more than 150 million debit cards and 70 million credit cards in China.

CPP is providing customers of Bocomm with theft and loss protection to help guard themselves from financial losses.

Wilson Chan, chief executive of CPP Group China, said: “We are delighted to have earned the endorsement of one of the biggest banks in China […] Bocomm rightly expects very high levels of customer service and to win a three-year partnership says a lot about the success of our relationship up to now.”

Jason Walsh, CPP Group chief executive, said: “Our China operation has built an excellent portfolio of partners and it is terrific to see new relationships like this one with Bocomm become firmly established […] We’re protecting 300,000 Bocomm customers after less than 18 months working together so we hope to increase that base significantly over the next three years.”

Spencer Yang, from Bocomm’s Pacific Credit Card Centre, said: “Helping our customers at important moments such as losing a payment card is a vital connection point to our bank so this service must be delivered seamlessly.

“CPP Group China has lived up to that standard and we’re looking forward to building an even stronger partnership following this contract extension.”

PWC update on China’s Lianghui or Two Sessions meeting

 

 

CBI member, Price Waterhouse Coopers has released an insight report documenting the events at last week’s LiangHui or ‘Two Sessions’ meeting, which took place in Beijing from March 3^rd – 15^th.

Titled, ‘What are the Business Implications from China’s Two Sessions?’ PWC’s report sets out the following as key takeaways:

• China will speed up the all-round opening-up of the economy by improving the business environment, particular in terms of rule of law and opening up more areas to foreign investment.
• China will continue to fight three major battles against significant risks, poverty and pollution.
• Supply-side structural reform still plays a vital role in economic development.
• Manufacturing and consumption will benefit from tax cuts for the manufacturing sector and individual tax deductions. Other takeaways include, the fact that the Chinese government has set the major economic targets for 2019 including: GDP growth of 6% to 6.5%, creating 11 million new urban jobs, and maintaining the surveyed employment rate at around 5.5%. PWC’s ‘standout sector’ are the financial services institutions active in the China market, who have made significant progress covering, securities, insurance and providing credit ratings. PWC accounts that foreign investment in China’s bond market has increased by nearly 600 million Renminbi in 2018, and the total amount has now reached about 1.8 billion Yuan.  
• Please follow the link to find the complete report.

McKinsey's China Chemicals Industry Study now available

 

CBI member, McKinsey & Company has published an updated study on the development of China’s chemicals industry.

The report hooks onto the fact that despite China’s chemicals industry having been the world’s largest by measure of revenue since 2011, its colossal size is not indicative of stability and new market dynamics are beginning to emerge.

The report highlights how China’s chemical market has contributed half of the growth of the world chemical market over the past two decades, but faces new pressures related to China’s economic slowdown and US-China trade tensions.

The report continues to outline the reasons why investors and companies should remain optimistic however, highlighting the fact that even if China’s growth rate was to slow to 5% per year, China would still be adding the equivalent of the annual sales of Brazil’s or Spain’s chemicals industries.

Broadening the scope to assess what is driving China’s massive growth within the chemicals industry, McKinsey’s report isolates a transition within China towards companies seeking to meet consumer demand rather than follow industrial policy.

According to McKinsey, within China’s domestic chemicals market, the area of the market with the most potential for growth is higher-end personal-care products, such as fragrances. Another area within China’s chemicals market that McKinsey has identified with potential for substantial growth is supplying chemicals for the manufacture of finished goods prioritised by the Made in China: 2025 programme.

Examples of this include, coatings and new materials for high-speed trains and advanced composites for use by China’s expanding aerospace industry.

Finally, the report identifies opportunities for foreign investors in China’s chemicals market and provides an overview of the types of financing foreign entrants can expect to be able to access when looking to enter the market.

Please follow the link to find the full report here.

Marsh launches BRI China desk in Dubai

 

CBI member, Marsh has launched a China desk in Dubai to benefit from the commercial links developing between the two countries as a result of the Belt & Road Initiative.

One of the world’s largest insurance brokers and risk advisers, Marsh aims to use its new Dubai-based China desk to act as a conduit for regional business emerging from China’s BRI. According to Christos Adamantiadis, Middle East and Africa chief executive, “Marsh has already picked up deals related to infrastructure projects [in Dubai], there is exponential growth, but it’s starting from a low base. […] Our main focus is China and Chinese contractors and principles.”

Africa and the Middle East are an important part of Chinese President Xi Jinping’s Belt & Road Initiative, which turned five in 2018 but whilst received heavy criticism. China hopes that the $126 billion initiative will bring about a network of infrastructure projects connecting China by land and sea to Southeast Asia, Central Asia, the Middle East, Europe and Africa.

However, at fifth-anniversary celebrations and a high-level diplomatic gathering of African leaders in Beijing in 2018, the project came under fire from both Chinese citizens and those living along the BRI alike.

Foreign companies in China are now increasingly reporting that they are finding opportunities in supporting Chinese state-owned enterprises along the BRI. These opportunities predominantly concern providing consultancy services on establishing best practise guidelines, and facilitating international cooperation in market.

HSBC, Standard Chartered and Citigroup all already have China desks in the emirate as a result.

A key factor in Marsh choosing to join these companies in Dubai, rather than establish itself in one of the other emirates, is the fact that Dubai has attracted significantly more attention than any of the other emirates within the UAE. The number of Chinese visitors to Dubai last year was up by almost 10%, and the emirate received Xi Jinping for a state visit in August.

China's revolutionary government overhaul - the new era

Xi Jinping emerged from the 19th Party Congress with a mandate to push China into a ‘new era’. To support this agenda, the Party has proposed a scheme to retool the machinery of government.

Passed at the NPC 17 March, it is the most ambitious restructuring in decades, creating seven new ministries and adjusting the structure of nearly every national agency.

It will change how government works with the Party, the market and the outside world. It could deliver streamlined governance, but risks enormous growing pains as the system copes with a disruptive change. This report explains each of the 26 changes to state structure included in the reform document: what’s changing, why and what to expect.

Liu He 刘鹤 Politburo member describes the plan as a ‘revolutionary’ reform that will touch every part of the state. It attempts to overcome endemic problems of policy implementation by creating cradle-to-grave accountability for policy goals, entrusting new, specialised ministries with singular missions.

Leaders have warned for years that ‘vested interests’ and inefficiency pose an existential threat to the Party-state. The roots of these problems were planted in the Mao era: ministries were created to meet production targets in ‘sectors’ 行业 of a planned economy.

But the biggest worry is no longer production, and those sectors are a bad fit for contemporary policy.

Former finance minister Lou Jiwei 楼继伟 joked ‘frogs in the river are governed by the Ministry of Agriculture (MoA); frogs on the shore are governed by the State Forestry Administration’.

As it attempts to pivot toward meeting what Xi calls the ‘ever-growing needs of the Chinese people’, the Party needs a government fit to regulate a demand-driven economy. The new integrated system addresses the question of oversight and accountability and designs new, purpose-built agencies.

China Direct would like to thank China Policy for sharing this wide-ranging Report with our readers.

For more information please contact: Ekaterina Kuroedova: ekaterina.kuroedova@policycn.com

Download China Policy-A revolutionary overhaul

China National People's Congress 2018 - A Summary

 

Dear CBI members and partners,

Please find attached a useful summary of China's National People's Congress which concluded earlier this week.

Download CPW No. 173

Our grateful thanks to China Politics Weekly for sharing this issue.

(CNPC image above courtesy of www.scmp.com)

 

AmCham Shanghai - 2017 Business Confidence Survey Summary

Dear CBI Members & Partners,

Please find details of AMCHAM Shanghai's recent 2017 Business Confidence Survey. Executive Summary and Headlines follow with a hot link to the Report further down. Many thanks.

Executive Summary

• Halfway through 2017, American companies are reporting an improved market environment for their goods and services, but a difficult policy environment that poses long-term challenges to the success of U.S. companies.
• Policy Environment: Significant concerns about market access, industrial policies and basic fairness persist. Most survey takers (56%) believe Chinese government policy still favors local companies over foreign companies. By industry, healthcare and hospital services (88%) felt this most acutely. By sector, retail was most impacted (73%).
• Most respondents believe Chinese government policies toward foreign companies have remained the same (40%) or worsened (33%). Only 28% see improvement.
• Five-year optimism levels were flat at 80%, or 10% below levels seen several years ago. This reflects continuing concern about China’s unclear regulatory policy, the lack of meaningful economic reform, growing domestic competition and slower growth.
• Investment: The number of companies reporting China as their number one global investment priority dropped 5.4% to 23.6%. One in five companies is redirecting investment to other locations, with Southeast Asia the top destination.
• 55% of companies increased their investment in 2016, lower than the levels observed two to three years ago of about 64-65%, and 74% in the 2013 survey.
• Business performance: Performance metrics for most companies improved in 2016, reflecting the government’s mid-year stimulus, which helped recharge the economy in late 2016.
• 73.5% of companies reported revenue growth in 2016, recovering from the 61% recorded in 2015. Retail and services performed better than manufacturing.
• More companies were profitable (77% vs 71% in 2015), led by the non-consumer electronics and pharmaceutical/medical devices/life sciences industries.
• Challenges: 60% reported that China’s regulatory environment lacks transparency. Lack of IPR protection and enforcement (64%), obtaining required licenses (63%), and data security and protection of commercial secrets (58%), were top regulatory hindrances to business success.
• The top three operational challenges was a familiar list: rising costs (93%), domestic competition (82%), and lack of talent and capabilities (78%). Seventy-nine percent of respondents reported increased competition from private Chinese companies.
• Policy response: 40% believed the U.S. government should use investment reciprocity as a tool to gain greater market access in China for U.S. companies.
• Our members ranked the pursuit of multilateral free trade agreements (32%) and stronger advocacy for a level playing field (27%) as the top trade priorities for the U.S. administration. Sixty-five percent said the Trump administration has had no impact on China investment plans.
• The improved results for U.S. companies reflected in this survey will not last unless China adopts significant reforms to eliminate market barriers, level the playing field, and provide a transparent and stable regulatory framework.

https://www.amcham-shanghai.org/sites/default/files/2017-07/2017%20China%20Business%20Report.pdf

 

EUCCC launches 2017 China Business Confidence Survey

 

The European Chamber of Commerce in China launched its annual business confidence survey on 31st May in Beijing and Shanghai.

Headlines included:

• Half report feeling less welcome compared to when they first entered the market.
• Over the last four years, more than half have consistently reported that foreign-invested enterprises (FIEs) are treated unfairly compared to domestic Chinese companies.
• 61% believe that environmental regulations are strongly enforced against foreign companies, while only 14% and 17% report that they are strongly enforced against Chinese privately-owned enterprises (POEs) and Chinese state-owned enterprises (SOEs) respectively.

For a full press report and to download the Report please follow the links below.

http://www.europeanchamber.com.cn/en/press-releases/2554

http://www.europeanchamber.com.cn/en/publications-business-confidence-survey

BP agrees sale of interest in SECCO to Sinopec

 

CBI member BP today announced that it has agreed to sell its 50% stake in the Shanghai SECCO Petrochemical Company Limited (SECCO) to Gaoqiao Petrochemical Co Ltd, a 100% subsidiary of China Petroleum & Chemical Corporation (Sinopec), BP’s joint venture partner, for a total consideration of $1.68 billion.

“This decision aligns our petrochemicals business in China with our global focus on areas where BP has leading proprietary technologies and competitive advantage. China is a key region for our chemicals business and BP will continue to look for opportunities to build on our position in the country,” said Rita Griffin, chief operating officer, BP Global Petrochemicals.

SECCO is currently owned by BP (50%), Sinopec (30%) and Sinopec Shanghai Petrochemical Company Limited (20%), in which Sinopec holds a majority interest. Based in Shanghai, SECCO is a major producer of olefins - ethylene and propylene - together with polymers and other derivatives including polyethylene, polypropylene, acrylonitrile styrene, polystyrene, butadiene and other products.

Please read more here.

Rolls-Royce completes China Nuclear Reactor modernisation

 

 

 

CBI member Rolls-Royce has completed the modernisation of Neutron Instrumentation Systems at two units of Ling Ao nuclear power plant in Shenzen, China, replacing an existing analog system, originally supplied by Rolls-Royce in the early 2000s, with a new digital system using Spinline® technology.

The new digital neutron instrumentation systems have been installed and commissioned on units 1 and 2 of Lingao nuclear power plant, with the most recent commissioning of the systems completed in November 2016. Rolls-Royce has designed and manufactured the systems, and provided on-site installation support to plant operator DNMC.

Please read more here.