Although official data for first-quarter GDP and industrial growth exceeded expectations, the industrial economy has not yet bottomed out, according to the latest CKGSB survey. The survey, led by CKGSB Professor Gan Jie, shows that overcapacity remains at a historical high, both in terms of its prevalence and severity in Q1 2017. As in 2016 Q4, rising costs have been the driving force behind rising prices. Among firms with product costs inflation above 5%, cost rises were the most prominent. Meanwhile, the advantage of state-owned firms over private firms has increased in recent quarters.
HNA Group is the most acquisitive Chinese conglomerate in China. Through acquisitions, the group quadrupled its size and made its debut on the Fortune 500 list as the world’s 464th biggest firm in terms of revenue. And it aims higher: becoming one of the top 10 by 2025 with holdings of $5–6 trillion in assets—more than double the assets held today by JPMorgan, the biggest bank in the United States. What is its business model like? How did the Group, which started as a small regional airline company in China’s southernmost island, with only two jets, make it? What are the risks behind the buying spree?
Some introverts dread small talk and trying to get to know strangers. But like it or not, networking is necessary. Research has found that regions with higher numbers of contacts per capita were more resilient to economic shocks during the Great Recession. Today, as we embrace all the advances in communication–with more online discussion and less face time–questions over the efficiency of online networking are being raised. Yet the trend is irreversible, and what we need to do is find out a useful role for this new way of networking .
As people imagine the future of transportation, the first thing they think of is driverless cars. There are still many questions to consider, however, and not just at the level of personal safety. How will transportation networks adapt? What about laws and regulations? What will be the impact on logistics and employment? Many technology firms and automakers have had their prototypes, but none which could be commercialized for public use. Wu Gansha, a veteran engineer and former director of Intel Labs China, suggests a rapid way to commercialize driverless cars. He claims that the car produced by his startup will commercialize in two years.
Despite the periodic ferocity of China bears in recent years, Matthews Asia Investment Strategist Andy Rothman–who has been investing in consumer-facing companies in China for over 20 years–often refers to China as having the greatest consumer story. According to Rothman, this is not only because the real income (adjusted for inflation) in urban China has gone up by 120%, but also because Chinese people themselves are pretty optimistic about their futures. However, he also notes that one needs to be realistic: over the next ten years, real income growth is not going to be 130% and retail sales growth will continue to decelerate.
Some people think Chinese people and enterprises have not formed the habit of giving. Is it true? Although it is the world’s second largest economy and has the second largest number of billionaires, China ranks 144th out of 145 countries on the 2015 CAF World Giving Index, which measures engagement in charity and willingness to help strangers. It is also reported that China’s top 100 philanthropists gave $3.2 billion—which is less than the amount given by just the top three givers in America. But despite the disappointing numbers, there are reasons to believe philanthropy is on the rise, with an awakening of social awareness and increasingly new ways to give.
While e-commerce giants like Amazon and Alibaba continue to rise, many physical-store retailers are dying off. MINISO is a rare exception, however. Founded in 2013 by Chinese entrepreneur Ye Guofu and Japanese designer Miyake Junya, MINISO has exploded into an emerging business empire with 1,800 stores in 40 countries, delivering an eclectic collection of affordable, curated goods, challenging the physical retail naysayers. What is the key to MINISO’s success? Through careful consideration of the customer and a unique aesthetic, it manages to do what online stores cannot: Deliver an experience.
Predicting China’s future is hard given its size, history and complexity of population, but it’s easy to share an opinion about the country—anybody can come in and say something about China, whether it’s news media or self-styled pundits. The cost of entry for having a view on China is so low that basically anybody can have one. The ongoing topic is the Chinese economy: bulls and bears have been arguing non-stop about the state of the economy. Damien Ma, Fellow of the Think Tank at the Chicago-based Paulson Institute, talks about how find the true signal in the noise, and discusses the less relevant factors one should dismiss.
After Chinese President Xi Jinping took a strong stand in support of globalization, a clear line was drawn between him and US President Donald Trump. But China and the US are not swapping roles, said Martin Wolf, the chief economics commentator at the Financial Times and a long-time observer of the Chinese economy. Wolf suggested that China, despite its rapid growth and maturing economy, remains a developing country and will not take on the mantle that the US has in the post-war era. “People don’t know what the true nature of the so-called ‘Trumponomics’ is,” said Wolf in his interview with us.
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?