“It is estimated that nearly 60 million children are left behind in rural hometowns while one or both parents work in manufacturing or city jobs. “

~ from Chapter 6 of China’s Economic Supertrends by Jason Inch

]]> http://www.chinasupertrends.com/photo-of-the-day-chinas-floating-population/feed/ 0 http://www.chinasupertrends.com/todays-links-chinas-stimulus-plan-surge-in-luxury-brand-sales-bright-acquires-weetabix/?utm_source=rss&utm_medium=rss&utm_campaign=todays-links-chinas-stimulus-plan-surge-in-luxury-brand-sales-bright-acquires-weetabix http://www.chinasupertrends.com/todays-links-chinas-stimulus-plan-surge-in-luxury-brand-sales-bright-acquires-weetabix/#comments Mon, 14 May 2012 01:46:12 +0000 news http://www.chinasupertrends.com/?p=594 Despite the fact that many luxury and electronic brands such as Apple are experiencing growth in sales, “consumption in China is actually severely depressed…To reduce taxes and stimulate consumption, China will likely increase the minimum deductible salary, increase wages and give more subsidies  or tax cuts to small and medium enterprises.”
(Chapter 1 of China’s Economic Supertrends).

Today’s China links:

• Chinese Food Company takes a big bite out of Weetabix
• US Treasury Secretary urges China to focus on domestic consumption to sustain China’s economic growth
• Shanghai Disneyland spurs increase in foreign direct investment into the city
• Temasek to sell $2.4bn in shares in its Chinese banks as profits at banks slow
• Luxury brands in China experience surge in sales
• Canadian farmers looking to milk China’s high demand for grains and oilseeds
• China kickstarts stimulus plan in response to signs of weakening economy
• In the meantime, the Wall Street Journal are skeptical of the stimulus plan’s effectiveness

Photo credit: Han Yi

Copyright: All photographs are released by ChinaSupertrends.com under the Creative Commons – Attribution – Non-Commercial – No Derivatives license. This means you are free to use and reproduce the photographs for non-commercial purposes as long as you attribute them to “ChinaSupertrends.com” as an active hyperlink (if on a webpage) or “Photo courtesy of ChinaSupertrends.com” (for all other media) directly below or within the same viewing area as the picture is reproduced. For information about this license, please see this Creative Commons link.

“Monthly auctions during the last two years saw high demand and high prices for plates.  In fact, the price of a plate can be as much as eight to 16 months’ salary for a typical office worker… Sixes and eights are important in Chinese numerology, so plates with auspicious numbers such as 888 are even more expensive and can go for astronomical amounts.”

~ from Chapter 6 of China’s Economic Supertrends by Jason Inch

Photographer: Han Yi

China’s Great Firewall will continue to face challenges in the future.  In the meantime, Mongolia may be putting up its own walls to stem the flow of Chinese foreign investment.

Today’s China News Links:

• US and Chinese film industries join forces to build Chinawood, a $1.27 bn movie making complex in Tianjin.
• China’s PMI rises indicating re-energizing of manufacturing output.
• Resource rich Mongolia  suspends exploration and mining activities at flagship mine in a possible  move to wean itself off from Chinese foreign investment.
• GE shifts attention from China to Australia.
• Netizens at the great firewall. Deadline for real-name registration on microblogging sites passes without a hitch…for now.
• The incredible shrinking trade surplus.

Art Scene in China

Today’s Links:

• China to become the next art superpower?
• The auto industry ramps up production of luxury cars in China. On a related note, GM will also open an additional 600 dealerships as well.
• Huawei’s net profit falls by 53 %
• Chinese manufacturers begin to experience a rebound
• Hollywood’s move to the East to hit a possible roadblock with bribe investigations
• LVMH launches new site to reach Chinese consumers
• The Lancet’s China themed issue takes a look at the healthcare system

Photo credit: nuomi

"China is simply crazy for cars. With just over 100 private motor vehicles per 1,000 people (versus 750 cars per 1,000 in the United States and 120 per 1,000 globally) China's personal car ownership market is expected to grow quickly." - Jason Inch (Chapter 5 - The New Manufacturing Supertrend, pg 181)

Photo credit: China Supertrends Photography Project

Here are today’s China’s news links:

• The property bubble deflates as home prices continue to fall
• Scrimp or splurge syndrome: the real spending habits of China’s middle class
• China’s TCL partners with IKEA to make the UPPLEVA
• Those in rural dwellers will suffer the most from the upcoming demographic crisis
• China to offer a crude-oil futures contract
• A growing number of U.S. film studios are teaming up with Chinese studios but what kind of issues lie ahead?
• Goldman Sachs to sell $2.3 billion stake in ICBC
• The Economist talks about the issue of water shortage in China
• Mini electric cars are a hot sell amongst lower-income buyers in China while Ford drives expansion in China with new plants. As indicated by the demand for license plates and as mentioned in the New Manufacturing Supertrends chapter, the demand for cars in China continues to grow.

• Forbes says that China’s monopoly of rare earth metals won’t bottleneck production of electronics
• Disney and China partner up to make Iron Man 3
• How Chinese manufacturers are benefiting from Japan`s technological brain drain
• Small plane manufacturers jet to China to take advantage of growing market opportunities
• IMAX in China faces its newest local competitor called…DMAX
• Debate brews over increasing Chinese investments in the Caribbean.  This idea of reverse globalization is also highlighted by Jason  in the Affluence Supertrends chapter where he talks about the directions that China`s overseas investments are taking. As indicated in the graph below (pg 61 in China`s Economic Supertrends), China`s overseas direct investments have practically skyrocketed and continue to increase.  Meanwhile, foreign direct investment (FDI) going into the country is down 6 %.

China`s Overseas Direct Investments from 1990-2010

``According to China`s own leaders, China is still a developing economy, so it may come as a surprise that it has the same (or even greater) financial strength as the largest developed economies.`` - Jason Inch, from China`s Economic Supertrends (quote and chart from Chapter 8 - Affluence Supertrend - China's Foreign Direct Investment)

China Flag / Caribbean View Photo credit: mdany

One article which is an especially good overview of the book is by the Global Times reporter Shen Shushu. An online edition of the article can be found at this link. However, a PDF which includes some of the photos from the China Supertrends Photography Project, is also available here:

Global Times – Show me the money – China’s Economic Supertrends – April 16 2012

If you are thinking about reading China’s Economic Supertrends, check out Shen Shushu’s article today.

Here are today’s China links:

• China’s domestic consumption to rise 15 % and drive growth in 2012
• China Construction Bank’s growth expected to slow down despite rise in profits
• Chinese airlines begin to target international markets with expansion abroad
• Meanwhile, China Eastern and Qantas join forces to set up a budget airline
• Apple’s Tim Cook visits China
• Huawei to ask Australia to reconsider them for a broadband project after being banned

Owning a car in China is becoming more expensive as the price for a car license plate in Shanghai reaches a record high. At the most recent auction for license plates, the price for a plate hit 58,625 RMB. Despite the high prices for plates, demand continues to rise. In February 23,391 bidders competed for plates. In March, the number of bidders increased to 24,897.

The chart above compares the price of a license plate in Shanghai to the number of plates.

For more details visit this link (Mandarin).

The new book China’s Economic Supertrends, coming out on April 18th, also covers the Shanghai license plates auctions and Beijing license plate lottery. To read more about this phenomenon, here is a short excerpt from the new book below:

The World’s Most Profitable DMV

Since 1994, in a bid to keep Shanghai’s high-spending consumers from flooding the roads with cars, Shanghai has had a cap on the number of new license plates. At present, it releases about 5,000–10,000 new plates per month, which it sells at a monthly auction.

In many years, the amounts raised from this activity are significant, as much as half a billion dollars or more for the city to use on subsidizing public transport. More importantly, the system acts as a disincentive on the purchase of new cars, reducing road congestion and pollution. It is not without controversy, being opposed by car buyers, while most transit users support it. The controversy mostly arises from a lack of transparency as to how the funds are being used.

In 2007, the once-a-month license plate auctions generated about $500 million in annual revenue, while the 2010 auctions raised a total of $659 million for the city, probably making it the most financially lucrative Department of Motor Vehicles in the world. Most of this money was used to improve local public transportation facilities and subsidize public transportation costs. The amount left over each year is published, but detailed spending figures are not yet available.

With the car craze unabated, monthly auctions during the last two years saw high demand and high prices for plates. In fact, the price of a plate can be as much as eight to 16 months’ salary for a typical office worker, yet consumers seem willing and able to continue to pay the high tax. Sixes and eights are important in Chinese numerology, so plates with auspicious numbers such as 888 are even more expensive and can go for astronomical amounts.

Prices rose to a record average price of 58,625 yuan ($9,305) per plate in March 2012. This price level can actually eclipse the price of an economy car, such a Chinese-made Chery QQ, which goes for about 51,000 yuan ($8,095). With the plate nearly doubling the cost of a small car, many people try to register their cars in nearby provinces where the plate costs are lower. But, in recent years, this circumventing of the rules has become more complex and expensive. In fact, the high plate prices in Shanghai could actually be having a negative impact on the environment: many consumers use the high plate price as a justification to get a more expensive car, which will likely have a higher displacement engine and emissions, increasing China’s carbon footprint and local pollution. It is a good example of the sometimes unintended consequences of an economic policy. On the one hand, fewer cars are on the road. On the other hand, the cars that are on the road are bigger and less fuel-efficient.

Nevertheless, using this plate system, Shanghai has been able to limit itself to 80,000 to 110,000 new cars on the road each year, and make a lot of money in the process. That one of China’s largest cities is able to do this is probably a good thing, considering the Chinese nationwide are purchasing more than 10 million vehicles a year now, and China is the world’s largest market for automobiles. In 2012, Shanghai had about 1.3 million public vehicles and 1.2 million private cars on its roads. Without the controls on new plates for cars purchased by Shanghai’s 22 million residents, Shanghai would likely find itself overwhelmed with cars, much the same way Beijing already is.

Want to read more? Pre-order China’s Economic Supertrends on Amazon.com today.

Photo: Robert Scoble

Here are today’s China news links:

• Manufacturing in China continues  to slow.
  
• In the meantime, clothing factories shift production away from China and  go West
• China likely to give go ahead on Google-Motorola
• Law drafted in China to encourage good Samaritans who lend a helping hand
• Outlook for China’s banking sector takes a downturn

China links of the day:

• China’s property prices continue to fall
• Steel industry in China negatively impacted by the slowdown of high speed rail development and construction projects
• Schools in East Asia, including some Chinese universities, are inching their way up school rankings.
• IMF’s Legarde suggests that China must wean itself off from exports and investment
• The Economist on Bo Xilai’s downfall