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.
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.
Over the past year, the housing price in many Chinese cities has doubled. The property industry, which contributed to the economy’s growth, is now ‘hijacking’ China’s economic growth model. Instead of investing in real businesses, individuals and companies are betting on increasing property prices. In this interview, Professor Xu Chenggang talks about the government’s role in real estate regulation, the major challenges of pushing reforms in China and how state-owned enterprises and local governments should roll out these reforms.
Digitalization has changed book reading, book production and book marketing, and it may ultimately even change the nature of books. Amazon’s Kindle e-reader sold out in 5.5 hours after it was first released in November 2007 and remained out of stock until April 2008. All over the world, a similar shift has been underway—slower in markets where bookstores and book sales are regulated, such as France and Germany; faster in more open markets, such as China, where more than 2 million digital book titles are now available and nearly half of all books sold are sold online. Yet surprisingly, most book buyers still end up with print books.
China’s home loan market reached $539 billion in the first nine months of 2016, more than double the same period in 2015. Based on figures from Ehomeday, Shanghai’s second-hand home price index rose by 27.82% year-on-year on October 2016. In Q4 2016, the skyrocketing home prices slowed across the country due to tighter government restrictions, but nevertheless, 2016 witnessed an astonishing 19% overall increase in home prices. In this edition of China Data, we bring you the latest numbers from China related to state-owned enterprises reform, China’s export slowdown, outbound tourism, Dalian Wanda’s new studio complex and more.
In China, while state-owned enterprises dominate the monopoly industries like petroleum and telecom, the country’s private economy is still the major source for growth in production, employment and exports. Private companies are very sensitive to market changes: When profit margins shrink, they will jump out quickly. Expectations are low while the Chinese economy is under the ‘New Normal’, but the government is still concerned about private investment stagnation. The top economic agency has created a work team to look into the problem and made 60 proposals to solve the slow-down issue. But will top-down methods work?
Over the past two decades, China’s urban population growth has been higher than in the rest Asia or the world as a whole. Young people are migrating to cities, leaving the elderly and children back home on the farm. So as manufacturing and urban life took off, catapulting China to world-power status, rural China and farming lagged behind. Roughly 86% of farms in China were only 1.6 acres, a tiny fraction of the size of the average 441-acre US industrialized farm and most of the work on these small farms is done by hand by an increasingly elderly population of farmers who now average over 50 years old. But that is starting to change.
In our increasingly fast-paced world, there is no room for companies to be complacent. To survive in the competitive marketplace long term, constant product innovation is a basic necessity. However, nearly three-quarters of new products either fall far short of their targets, or fail entirely. Not only that, businesses have become tolerant of this high failure rate to the point where it is treated as a given risk. But Georg Tacke, CEO of the global management and consulting firm Simon-Kucher & Partners, disagrees with this assumption and thinks the failing might be the result of a homegrown issue—from the initial design to end marketing.
Business has changed, specifically the relationship between management and employees. Once upon a time, companies offered careers—long-term, stable employment wherein the employee filled a narrowly-defined role. In past generations, it was common to spend an entire working lifetime at a single company, but now most millennials are ‘less loyal’ to employers, they go where their talents are valued. Edward E. Lawler III, Distinguished Professor of Business at the University of Southern California, expounds on the new model, which he terms “talent management”, a new paradigm focuses on the critical needs of a business, and finding the right people that can fulfill them.