This week saw the end of Yahoo China, the Shanghai Composite Index peaked, and Uber found an unlikely partner in the Warren Buffet-backed BYD.
‘Honey, Let’s Buy our Dream Home’
China’s property market slump is not over yet, despite predictions that a recovery is underway. Average new home prices in 70 major Chinese cities fell by 5.7% in February from a year ago, the sixth consecutive and the biggest annual decline since 2011, according to Reuters’ calculation based on official statistics.
An analysis posted by the National Bureau of Statistics on its website says that the drop is due to the Chinese New Year, a period during which home transactions are usually slow. The figures for March are likely to improve, the analysis adds.
This past weekend, Chinese Premier Li Keqiang told the press that as urbanization continues, China’s demand for housing is absolute and the government would ensure the “stable and healthy growth” of the market.
Chinese Shares Rise to Seven-Year High
In spite of the cooling economy, China’s capital market is embracing the warmth of spring. The Shanghai Composite Index has rallied seven days in a row to a new high in almost seven years.
The index closed at 3,582.27 on Thursday, a peak that has never occurred since June 2008. The A-share market has been on a bull run since July last year. The momentum accelerated sharply in November, when China cut interest rates for the first time in more than two years. Analysts had predicted a barrier of 3,400, beyond which the market could embark on a bull run that would last for years.
The market had taken a few setbacks in previous months as authorities launched probes into malpractices in margin trading, fining a dozen big brokers for violating trading rules. But for now, it’s unbridled growth for the market, some analysts say, at least until the index reaches 4,000.
Xiaomi Eyes Finance
We should have seen this one coming. China’s leading smartphone maker is asking users to deposit money into their Xiaomi account. The bait? Annualized interest rates as high as 6.4%.
Xiaomi launched the beta service on Tuesday. It is very similar to Alibaba’s Yu’e Bao, a money market fund product sold on smartphones since mid-2013. Since its debut, Yu’e Bao, whose yields are now in the 4%-to-5% range, has become one of the largest funds in the world.
However, Xiaomi President Lin Bin said that the company doesn’t plan to get into the banking business as Alibaba and Tencent did; it won’t introduce any mobile payment services anytime soon neither. Currently Xiaomi users can pay for access to videos and TV shows through their Xiaomi account, so the latest move might help drive consumption on the company’s content platform.
The Uber-BYD Tango
The world’s hottest transportation start-up has picked China’s BYD as its latest car supplier, a move that might have taken many by surprise.
According to Reuters, the two kicked off a pilot program a few weeks ago, under which 25 BYD e6 electric cars have been sold or leased to Uber drivers in Chicago. The goal is to increase that number to hundreds by the end of the year. The deal is made to happen through a dealership called Green Wheels, who specializes in new energy cars as well as building charging facilities.
Warren Buffett-backed BYD has been eyeing US consumers for years but hasn’t announced specific plans to penetrate the market; the partnership with a sexy start-up may help the carmaker, whose executives have repeatedly complained about a lack of respect and support in China, raise brand awareness in the US.
Yahoo Pulls out of China
US internet company Yahoo is finally cutting its ties with China and announced a plan to retreat on Wednesday. The firm plans to let go most of its 350-odd employees at its research center in Beijing next month, which will then be closed after five years of operation.
Yahoo sold its consumer-facing operation in China to Alibaba in 2005. Most of its services, such forums, email and news, have been shut down one by one since 2013, leading to the end of Yahoo.com.cn, once a major internet portal in China. Yahoo recently has scaled back the headcount in other Asian countries, including India, Malaysia and Singapore.
Bad news for Yahoo employees? Maybe not. It might not be too hard for Yahoo engineers to find other jobs in Beijing. “Come on board to a new home,” says a job ad targeting Yahoo alumni circulated by Yidao Yongche, a popular Uber-like technology start-up in China.