Chinese companies have been on a buying spree around the globe over the past two years. 2016 witnessed a record level of Chinese outbound mergers and acquisitions (M&A) activity, with 932 deals worth over $220 billion taking place, an increase of 246% compared to 2015, according to PwC China. However, the surge in outbound investments has brought concerns from both Chinese authorities and recipient countries; the latter are becoming more cautious regarding the presence of Chinese capital in large-scale deals in key industries. Affected by such concerns and tighter government scrutiny, the number of M&A deals might not be as numerous in 2017 as in 2016, but the trend will not stop.
Traditional offices are disappearing—some are being redesigned to be beautiful spaces that employees actually want to come to work in and meanwhile, humbler versions of the Silicon Valley spaces are increasingly popular too. This year, about 1 million people will work in a co-working space. In ten years, that number will top 1 billion. The co-working idea reflects the trend that companies keep trying to move more of their balance sheet from fixed to variable costs, and the supply of office-less workers keeps rising. So which vision of the future will win out—the palace or the co-working hive?
Fulfilling his campaign promise, US President Donald Trump took the United States out of the Trans-Pacific Partnership (TPP). With that failure, the spotlight has now fallen on the Regional Comprehensive Economic Partnership (RCEP), a proposed trade deal among 16 countries in the Asia Pacific region which is widely seen as a Chinese initiative and a way of pushing back against US influence in Asia. However, compared to TCC, the RCEP has a much narrower scope and labor, environment, IP, competition policy, issues screaming for attention will not be significantly discussed. Meanwhile, TPP is not completely down without the US: Strong incentives for the TPP or a “TPP-lite” will remain.
Management was never easy—“like herding cats,” as the old joke puts it—but in the old days, the cats were at least in the same alley. Today, management may be more challenging still, as executives must lead an ever-changing stream of employees and independent contractors—who may or may not be in the same building or even in the same city—as they navigate through an ever-changing technological landscape, and deliver on objectives that may also shift. So what are the positive and negative aspects of working remotely? How is the employee mindset and the management style of employers affected?
“Innovation” is difficult, yet the word itself is so overly used that the meaning of it has become hollow. Some people consider being “innovative” as being “lucky.” Yet for Clay Christensen, a business professor at Harvard, innovation is about finding the “jobs that need to be done” in our lives. In this interview with CKGSB Knowledge, he argues that companies should not take the task as akin to gambling. Instead, companies should adopt a more focused, process-oriented approach of finding the “jobs” that customers need to do in their lives, and then create products that make those jobs easier.
Do you like to work in a café like Starbucks or do you prefer staying in your cubical at the office? Today, fewer people are working in traditional offices, as most administrative work is either being automated or outsourced to cheaper markets, reducing the need for the in-house typing pools and IT services that once took up a lot of room. Young professionals, instead of being assigned to a desk, like to choose where they sit and work. The ideal place should be comfortable, with an open, cozy coffee-shop style. A boss-less office space is becoming increasingly popular.
China’s One Belt, One Road initiative is the fusion of two development schemes—the land-based Silk Road Economic Belt, and the 21st Century Maritime Silk Road. Together they comprise infrastructure between 65 countries containing 63% of the world population, more than 35% of global merchandise trade, and 30% of global GDP. To date about $ 150 billion in investment has been committed.
China’s digital economy is booming and creating more employment opportunities, the number of jobs created from this sector is far more than jobs that will be eliminated by technology in future. Alibaba, the e-commerce giant which has expanded into cloud computing, financial technology and media and entertainment, could account for as many as 29.4% job opportunities in China’s digital economy by 2035. In this edition of China Data, we bring you data about China’s domestic debt, clean energy, debt-for-equity swaps and more.
Seven years ago, around 70% of passengers in US-China air trips were American. But today, more than 50% of travelers are Chinese. Flying used to be a luxury mode for travel in China, but now is for the masses. Data shows that by 2029 China will overtake the US as the world’s largest passenger market. The increasing passenger demand has not only brought Chinese airlines big successes in the past decade but also some real challenges like lengthy delays and poor service. In fact, Chinese airlines are struggling to keep up with growth in demand, and compared to foreign counterparts, they are not as global nor as profitable as they should be.
The Spring 2017 issue of CKGSB Knowledge is out! It has articles and interviews like: COVER STORY: Made in China, For China: The Middle Kingdom seeks to replace foreign manufactures with domestically-produced goods CHINA DATA: From stats on ring roads and the car market, to bitcoin and bailouts, the numbers you need to know SNAPSHOT: The New Silk Roads: ‘One Belt […]
Chinese industrial economy still faces severe problem of overcapacity, according to the latest CKGSB survey of over 2,000 industrial firms nationwide. The survey, led by CKGSB Professor Gan Jie, shows a significant rise in product prices in the fourth quarter of 2016, posing worrying signs of inflation. The investment confidence also remains low: only 1% of the firms considered it a “good” time to make fixed investments, a mere 2% made expansionary investments and 9% of firms made fixed investments. However, given the government’s commitment, the BSI team remains optimistic about the long-term outlook of the Chinese economy.
Just a few years ago, China was a major obstacle to a global agreement on climate change. But the attitude of the government has changed, to the delight of all. But it will take more than good will to clean up and it will be a long time before the smog lifts. In this sense, the idea that China will be a ‘Green Leader’ anytime soon says more about how far they have to go than how far they have come. Yet in recognizing the problems and directing investments towards new technologies, China has stumbled upon a realistic expectation of leadership in the energy technologies of the low-carbon future.
Thirty years ago, there was such nationalist angst in the United States over Japanese buyouts of American companies that Hollywood even made a movie about it. In Ron Howard’s 1986 comedy Gung Ho, the fictional Assan Motors Corporation swoops in to buy an idled auto plant in a desperate Pennsylvania company town. The film was a comedy and of course ended with cooperation prevailing and the plant being saved. There is an obvious parallel with the situation today with the US agonizing over Chinese investments in a remarkably similar way to how it worried about Japanese takeovers in the 1980s.
The Chinese internet industry has developed at an amazing speed with a number of tech firms becoming “unicorns” worldwide. A major force behind those fast-growing companies and young CEOs is the venture capital firms who play a crucial role in spotting and supporting innovative models. Over the past 10 years, VC has evolved from a non-mainstream form of finance to one of the hottest areas in the Middle Kingdom. Ramon Zeng, with a number of successful investments in “unicorns”, talks about his observation of the industry and what the next big trend will be.
Huawei is one of only a few Chinese companies that has become truly global, deriving more revenue abroad than at home. Long a telecom equipment provider, Huawei shifted its focus to consumer devices and took only five years to become the second most profitable Android smartphone maker and the third largest in terms of production. How did the company manage to do that, given that the smartphone industry is highly competitive? And smartphones are only the highest-profile part of the sprawling telecom giant. With over 170,000 employees across the globe, what is the company’s management system like and what could we learn from Huawei’s model?
Chinese people love to try new technologies. Over the past year, virtual reality exploded across the country, attracting attention as well as investment from people who see a potential wave of the future: Analysts predict that China’s VR market will be worth $8.5 billion by 2020. But the real-world business of VR, which surged largely on the back of heavy investment, is less solid than it could be. Some people expect the technology to bring revolutionary changes to many industries like gaming, films and shopping but currently a huge portion of the VR market is still for video games and the business model is not yet solidly defined.
On the surface, digital publishing would seem to be at an early stage in China. Observers say that traditional publishers are not pushing e-editions of their books very hard, and until recently, the government, which is still the industry’s dominant shareholder, has not put its weight behind the format. Look more closely, however, it’s clear that a new publishing ecosystem is already taking shape in China, but it’s not the Amazon co-prosperity sphere model. Instead, digital publishing platforms are becoming the dominant channel for young writers.
Debt is a ticking-time bomb for the Chinese economy. In the past three years central government stopped local governments from financing through investment vehicles and set a cap for the issuance of bonds. But new forms of debt continue to be formed. Local officials appear not to care about borrowing more, as long as the money can be used in projects that may translate to political achievements. And with those achievements, officials will be promoted to a higher level–as will the debt burden. A more worrisome thought will be: can those additional government debts and investments support China’s long-term growth?
The rise of e-books and reading on digital devices has changed every part on the publishing production chain, affecting everyone from the editors, to the designers, to the marketing and sales people. Editors are spending more time on acquiring books and less time working on manuscripts. Designers become more flexible and strategic: they need to make sure a book won’t be ignored by skimmers who only glance at thumbnails on websites, and must ensure that texts are well-laid-out for reading on many kinds of mobile devices. But they’re not who need to change most. It’s the marketing and sales people who face an ever-more-challenging job.
Optimism for Chinese firms over the next six months still holds, but the corporate financing environment is getting difficult and the corporate inventory is increasing, according to the CKGSB Business Conditions Index, which registered 61.5 in February, a slight increase on January’s mark of 59.8. For CKGSBʼs sample of successful businesses operating in China, corporate sales index fell slightly from 82.7 to 80.5, while profits rose from 67.0 to 72.2, both are well above the confidence threshold of 50. Yet the other two sub-indices—corporate financing and in inventory—are below 50.