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China's Economic News

Discussion in 'China & Asia Pacific' started by Martian, Aug 6, 2010.

  1. RMFAN

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    These posts are NOT about knocking China. We all know the growth that China has shown in uplifting its poor is unparalleled. This is about the future of where China COULD be headed. These articles DON'T mean that this is the only alternative to China's future. This is just one scenario.
    --
    http://carnegieendowment.org/chinafinancialmarkets/72997
    s China’s Economy Growing as Fast as China’s GDP?
    If local governments and state-owned enterprises in China systematically invest in projects that are not economically justified, to the extent that these projects are not correctly marked to market, China’s reported GDP will be overstated by that amount, as will its total wealth.
    One of the most frustrating aspects of any discussion about China’s economic prospects is in the confused way with which economists and analysts, who often seem to suffer from what Giuseppe Gabusi calls “GDPism,” employ the concept of GDP. We all think we know what the term is supposed to mean. It is generally assumed that GDP is the total value of all goods and services produced by an economy, so we think of it as a measure of wealth, or as a measure of debt-servicing capacity, and we assume that it is a measure that can be compared across countries.

    But it isn’t a measure of wealth or of debt-servicing capacity, and GDP comparisons across countries are often meaningless. GDP measures certain types of economic activity that we agree to define as GDP, but these measures are conditioned by the institutions that mediate economic transactions. Among those institutions, for example, are the accounting conventions used to recognize the value of inventory, or to write down investment, in such a way that reported GDP is artificially changed by these conventions.

    GDP Requires a Mark-to-Market Mechanism
    To explain why we need to tease out the full consequences of this insight to understand the Chinese economy, I will go through a simple exercise to arrive at conclusions which are, or should be, obvious but which are nonetheless ignored in many discussions about the Chinese economy.

    Point 1: GDP does not directly distinguish between activity that increases a country’s wealth and activity that doesn’t.

    Consider the case of a country in which there is a corporate entity, which we will call China Corp., that decides to invest $100 in each of two separate projects. One project, Value Bridge, is economically justified—it could be, for example, a bridge that relieves traffic congestion significantly and so sharply lowers manufacturing costs for a neighboring industrial park. The other project, Nowhere Bridge, turns out to have no economic value—a bridge to nowhere, for example, that receives no traffic.

    In either case, China Corp. ends up with two $100 investments on the asset side of its balance sheet. The counterbalancing credit shows up either as a $200 reduction in cash or a $200 increase in debt (in this case, let us assume the latter). Net assets are unchanged, and there is no impact on the company’s income statement, although in the future there will be, as interest is paid on the debt and the bridges begin to generate revenues. If the revenues are greater than the debt-servicing costs, these remaining revenues will continue to be added to GDP in the future.

    In the current period, Value Bridge and Nowhere Bridge contribute to an increase in economic activity in exactly the same way. They both cause GDP to rise by some amount equal to the $100 value of the investment times some multiplier, which, to make our lives easier, we will assume is one. The amount by which the productive investment boosts the GDP calculation, in other words, is exactly the same as the amount by which the nonproductive investment boosts the GDP calculation.

    The point is that when the investment is made, the GDP calculation has no way to distinguish between the productive investment project and the nonproductive investment project, even though the former makes the economy richer by contributing to its productive capacity while the latter does not. Both productive and nonproductive investments boost reported GDP in the same way.

    Point 2: The mechanism by which GDP is forced to record real changes in productive capacity is some form of marking-to-market mechanism.

    Let us now assume that China Corp. recognizes that Nowhere Bridge is a bridge to nowhere and creates no economic value at all, so it must take a full write-down on the asset. The Nowhere Bridge investment project, which appears on its balance sheet as an asset, is then written down to zero in the form of a $100 credit to the balance sheet. The counterbalancing debit is made in the form of an expense that reduces the net profits of China Corp. by $100.

    When we use the income approach to calculating GDP, the writing down of the asset associated with Nowhere Bridge causes a $100 loss to China Corp., and so reduces its retained earnings by $100. This reduces GDP by lowering the value-added component by that amount.

    This is how the GDP calculations adjust in a market economy to recognize bad investment decisions. They are written down and the loss is recognized in the income statement. This is the mechanism by which the GDP calculation is forced to reconcile the accounting records with real value creation in the economy.

    Notice how this happens: at the time the investment is made, GDP is boosted by the $100 investment in Value Bridge and is also boosted by the same amount by the $100 investment in Nowhere Bridge. When the investment in Nowhere Bridge is recognized to have created no value, the Nowhere Bridge asset is written down on the balance sheet by $100, the amount of the investment, and there is a counterbalancing $100 debit to the income statement that causes a reduction in the net profits of the business sector.

    This reduction in business profits reduces the value-added component of the GDP calculation, and the economy’s reported GDP conforms to the underlying economic reality. In a market economy, the value of the investment in Value Bridge increases GDP whereas the value of the investment in Nowhere Bridge does not.

    Point 3: In an economy in which there is no mark-to-market mechanism, reported GDP will be higher by the amount of wasted investment.

    Let us now assume there are two countries, China A and China B. The two resemble each other in every respect except that in China B, there is no formal mark-to-market mechanism because all loans are guaranteed by the government sector. In each country, there is a company, China Corp., that makes the two investments described above.

    In both countries, in other words, there is a $100 investment in Value Bridge and a $100 investment in Nowhere Bridge, and in both cases GDP is increased by the investment amount. The difference is in the accounting treatment of the write-down. In China A, as described above, the investment in Nowhere Bridge is written down to zero, and the accompanying loss reduces China Corp.’s retained earnings, which removes the impact of the investment on China A’s GDP. In China B, however, the write-down does not occur, so the investment in Nowhere Bridge remains on the books at $100, and there is no $100 loss on the income statement that reduces retained earnings by $100.

    Remember that in terms of underlying economic reality, including the value of all goods and services produced by the economy, China A and China B are identical, but when it comes to reporting economic activity, there is a difference between the two. China A’s GDP will be lower than China B’s GDP by the amount of the write-down. What’s more, China Corp. in China B will have $100 more in assets than its counterpart in China A, and this will be matched on the other side of the balance sheet by $100 more in retained earnings.

    Although the two economies are identical, in other words, China B will have a higher GDP than China A. More generally, in economies that do not recognize investment misallocation, and that do not write down overvalued assets, reported GDP will be higher than it otherwise would be, as will the reported value of total assets.

    Point 4: Even if wasted investment is not formally recognized and written down, it will not create a permanent increase in GDP.

    This difference, however, is not permanent. Over time, the difference in the recorded value of the two countries’ assets will be amortized to zero, typically because China B will record a higher depreciation expense than China A, so in the future China A’s businesses will record higher net earnings than China B’s, and its assets will depreciate more slowly, until eventually the financial statements of both entities will once again be identical and their GDP levels will be the same. I should quickly note that to make it easier to understand, I am assuming away the impact of financial distress and other balance sheet effects, but in fact these effects will reduce China B’s real and reported earnings even further.

    The net result is that during the period in which China A and China B are investing nonproductively on a sufficiently large scale, China B will always show a higher level of GDP than China A, and total assets held by China B’s residents will always have a higher reported value than total assets held by the residents of China A. At some point in the future, however, their relative positions will be reversed, and China A will begin to report higher GDP growth than China B, until eventually the two countries have identical balance sheets and income statements.

    How to Read China’s GDP Data
    But remember that the two countries are identical. They produce identical amounts of wealth and value. It is only the failure to write down assets that causes an economy to record higher GDP than otherwise. This means that if one believes that China has misallocated investment and has failed to write much of it down, then one has no choice but also to believe that:

    1. Chinese GDP is overstated every year by the net amount of wasted investment made during the year that has not been correctly written down. If, for example, a government entity borrows $100 to invest in a project that over the rest of its life causes only $60 worth of additional goods and services to be produced, China’s reported GDP will be overstated by $40.
    2. At some point in the future, when China begins explicitly or implicitly to recognize and write down bad debt, this overstatement will be reversed and the country’s reported GDP will be understated by the amount of implicit amortization.
    3. Chinese wealth is also overstated by the amount of wasted investment made during the year that has not been correctly written down. In the example above, not only is China’s reported GDP overstated by $40, but Chinese entities collectively claim to have $40 more wealth than they actually do.
    4. When China begins explicitly or implicitly to recognize and write down bad debt, this is simply the obverse of assigning the losses to one economic sector or another, and it will happen one way or another. Put differently, as the bad debt is eventually written down, households, businesses, and/or government entities will discover that they are poorer than they thought by $40. This is why, as I have written many times, the process of deleveraging, which includes writing down bad debt, consists of nothing more than assigning debt-servicing costs to one economic sector or another.
    5. Notice the impact on savings. GDP is equal to consumption plus savings, and if reported GDP overstates the value of economic activity, the reported savings rate also overstates the value of savings by the amount of wasted investment in each period. This also means that the value of the stock of Chinese savings is overstated by the amount of investment and bad debt that must be written down.
    Perhaps Growth Has Already “Collapsed”
    Think about the following three countries. All of them have had a decade of 10 percent annual GDP growth driven by high investment growth rates and boosted by highly inverted balance sheets, with debt growing from nearly zero to 60 percent of GDP. But now, in all three countries, we have reached the point at which the return on additional investment is negligible. Here is what follows in each country:

    1. In Country A, investment growth drops to zero, driving annual GDP growth down to 2 percent, where it remains for the next five years. Debt also grows by 2 percent to remain steady at 60 percent of GDP.
    2. In Country B, the authorities have a growth target of 6 percent and encourage government entities to keep investment levels high enough to reach the target, even if this means an explosion of debt. For the next five years, GDP grows by 6 percent, while debt soars from 60 percent of GDP to 260 percent of GDP.
    3. Finally, in Country C, the authorities have implemented significant institutional reforms aimed at making the economy more market-driven and these reforms have caused a massive redistribution of wealth in such a way that consumption growth surges. The growth in consumption encourages additional growth in investment so that GDP growth drops to 6 percent and remains there for the next five years, with debt growing at the same pace to remain steady at 60 percent of GDP.
    Clearly, China most closely resembles Country B, but which of the other two countries more closely resembles Country B? Many economists are so impressed by GDP figures as the most fundamental description of the underlying economy that they don’t really distinguish between Country B and Country C, and because Country C enjoys healthy growth, they assume that Country B does too. One of the more consistently confused figures has been Stephen Grenville, a former Australian central banker, who recently said:

    The China bears have been around for years, continuously predicting the end of China’s stellar growth story . . . So far, so good. China’s unsustainable double-digit growth came to an end in 2008, coinciding with the global financial crisis. Growth was artificially stimulated for a couple of years but only by huge fiscal and financial stimulus. Since then growth has settled to a still-outstanding 6.5%.

    If you assume, as Grenville clearly seems to believe, that there is no relationship between the growth in economic activity and the growth in GDP, then he is right to describe China’s current GDP growth as “still-outstanding.” But that seems a pretty astonishing assumption. If GDP growth had not been artificially boosted by credit expansion, then it is hard to understand why Beijing has been trying urgently to get credit growth under control for over five years but has not even been able to prevent it from accelerating.

    In fact, I would argue that “the end of China’s stellar growth story” has already occurred, and occurred quite a long time ago. Growth in the Chinese economy has collapsed, but growth in economic activity has not collapsed (let us assume, with Grenville, that somehow the reduction in GDP growth from over 10 percent to 6.5 percent does not represent a slowdown in economic activity). The growth in economic activity has instead been propped up by the acceleration in credit growth and by the failure to write down investments that have created economic activity without having created economic value. In that case, high GDP growth levels simply disguise the seeming collapse of underlying economic growth in a way that has happened many times before—always in the late stages of similar apparent investment-driven growth miracles.

    But there is no way to get around the logic of debt: either the debt proceeds went to fund a productive investment, in which case debt-servicing costs are fully covered by the additional productivity generated by that investment, or they were not. If they were not, the debt was created either to fund an expense or to fund an unproductive investment, and in either case the associated debt-servicing cost must be assigned to some other economic entity.

    Most of the remaining so-called bull scenarios for China implicitly assume that existing losses on investments that have not been correctly written down will never be recognized. At first, these bull scenarios had the virtue of consistency—the bulls believed that there was no need to recognize the existence of unrecorded losses because these losses in fact did not exist.

    Later on, as it became obvious to everyone that there certainly were unreported losses on Chinese balance sheets that emerged from the failure to write down unproductive investment, and that these losses were significant, the bull scenarios began to incorporate implicit assumptions—implicit but never acknowledged by the bulls—that some mechanism or the other would permit the economy never to have to recognize these losses. The most popular form of these mechanisms typically involved some kind of debt monetization or a return to financial repression, but as I have shown many times before, all these do is pass on the losses in hidden ways to the household sector. In that case, the losses are eventually recognized, and in fact recognized in the most damaging way possible to the economy in the long run.

    A Digression Into Accounting
    I don’t pretend to have any great knowledge of GDP accounting—what I describe above is really quite basic stuff—but for those who are interested, what is seen as the correct way to record a debt transaction in which the proceeds are used to fund an unproductive investment is to record the expenditure as an expense. In that case, net earnings are reduced by the amount of the wasted spending, and net assets are reduced by the amount of the debt. Typically, this is done in two stages:

    1. The economic entity borrows some amount, say $100, and uses the proceeds to make an investment. This will have no impact on its income statement, but both its assets (in the form of investment) and its liabilities will rise by $100, with no impact on its net wealth.
    2. When the $100 investment is recognized to have no value, the economic entity will write down the value of the asset by $100, with no change in debt, of course, and its expenses will rise by $100. In that case, both net earnings and net assets are reduced by $100.
    The two steps together are the equivalent of recording an unproductive investment as an expense. But, as I show above, if the economic entity fails to write the unproductive investment down to its true economic value, the second stage is avoided. This changes the way the unproductive investment was recorded without changing in any way the underlying economic entity.

    China’s GDP: Different Than Assumed
    The reason I have initiated this discussion of GDP is to explain why we systematically misinterpret the information provided by Beijing’s regular GDP data releases. On July 17, 2017, China’s National Bureau of Statistics reported that, at 38.1 trillion renminbi (or $5.7 trillion), China’s GDP for the first half of 2017 at comparable prices was 6.9 percent higher than it had been in the first half of 2016. This came in slightly above consensus expectations of 6.8 percent.

    Analysts and investors treated the news of higher-than-expected GDP growth in much the same way they would if it had been about Brazil, a European country, India, Japan, or the United States. The Shanghai-Shenzhen CSI Index, for example, reacted positively, rising 2.3 percent over the next three days. Several economists also saw July’s data release as good news.

    But I have long argued that when reported growth comes in above consensus expectations, the implications for China’s economic prospects are not the same as they would be for most other large economies. In the latter cases, higher-than-expected growth might suggest that we should revise upward our longer-term growth expectations because the underlying economy is performing better than expected. In China, however, when reported growth comes in above consensus expectations, it does not imply a stronger economy. The higher demand that drove growth is unlikely to have been a consequence of underlying health—rather, it is far more likely to have been created by a temporary increase in economic activity in response to government decisions to maintain high levels of GDP growth.

    This means debt will have grown faster than it otherwise would have. Higher-than-expected GDP growth should therefore suggest that we revise downward our longer-term growth expectations. It simply means that a higher level of unrecorded losses must be written down in the future and, because it implies more debt than otherwise, financial distress costs in the future will also be higher.

    We typically use GDP as if it were an expression of the total value of goods and services produced by the economy, but it clearly is no such thing. For those who are interested, Diane Coyle has written a gem of a book about the development of GDP (GDP: A Brief But Affectionate History), which goes a long way toward explaining how GDP can be useful as a measure for the size of an economy and when it isn’t useful.

    GDP can be a fairly good proxy for the total value of goods and services produced by the economy, one that allows us to compare two economic entities or to calculate the growth rate of an economic entity. But this is only true under fairly easily defined conditions. One of the key conditions is that the entities being compared must have consistent mark-to-market mechanisms. The reported GDP of the two economic entities cannot be meaningfully compared if in at least one of them there is a significant amount of misallocated investment that does not generate enough productive capacity to justify the cost of the investment. I discussed this further in a May 2014 essay explaining why the PPP adjustment for China—which begins with an assumption that China’s GDP is calculated in a way that is consistent with the U.S. calculation of GDP—is a thoroughly meaningless exercise.
     
  5. RMFAN

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    China’s digital economy: A leading global force

    By Jonathan Woetzel, Jeongmin Seong, Kevin Wei Wang, James Manyika, Michael Chui, and Wendy Wong
    http://www.mckinsey.com/global-theme...g-global-force

    China has one of the most active digital-investment and start-up ecosystems in the world, according to a new discussion paper from the McKinsey Global Institute (MGI), China’s digital economy: A leading global force. China is in the top three in the world for venture-capital investment in key types of digital technology, including virtual reality, autonomous vehicles, 3-D printing, robotics, drones, and artificial intelligence (AI). China is the world’s largest e-commerce market, accounting for more than 40 percent of the value of worldwide e-commerce transactions, up from less than 1 percent about a decade ago. China has also become a major global force in mobile payments with 11 times the transaction value of the United States. One in three of the world’s 262 unicorns (start-ups valued at over $1 billion) is Chinese, commanding 43 percent of the global value of these companies
    Exhibit 1
    [​IMG]
    McKinsey Global Institute?Visit our Technology & Innovation page

    Three—often unappreciated—factors are propelling the expansion of digital China and suggest that there is far larger upside potential for digital in China than many observers appreciate:

    1. The bigger, younger China market is enabling rapid commercialization of digital business models on a large scale. The sheer scale of China’s Internet user-base encourages continuous experimentation and enables digital players to achieve economies of scale quickly. In 2016, China had 731 million Internet users, more than the European Union and the United States combined. Beyond scale, it is the enthusiasm for digital tools among China’s consumers that will support growth, facilitate rapid adoption of innovation, and make Chinese digital players and their business models competitive. Nearly one in five Internet users in China relies on mobile only, compared with just 5 percent in the United States. The share of Internet users in China making mobile digital payments is around 68 percent, compared with only around 15 percent in the United States.
    2. China’s three Internet giants are building a rich digital ecosystem that is now spreading beyond them. Baidu, Alibaba, and Tencent, collectively known as BAT, have been building dominant positions in the digital world by taking out inefficient, fragmented, and low-quality offline markets while driving technical performance such as computing efficiency to set new world-class standards. The BAT companies have been developing a multifaceted and multi-industry digital ecosystem that touches almost every aspect of consumers’ lives. The functionality offered by their “super apps” has increased about seven times since 2011. In 2016, BAT provided 42 percent of all venture-capital investment in China, a far more prominent role than Amazon, Facebook, Google, and Netflix that together contributed only 5 percent of US venture-capital investment in that year. Beyond China’s big three, other digital innovators such as Xiaomi and NetEase and traditional players such as Ping An are building their own ecosystems. China’s digital players enjoy the notable advantage of close links to hardware manufacturers. The Pearl River Delta industrial hub is likely to continue to be a major producer of connected devices because of its strength in manufacturing hardware.
    3. The government gave digital players space to experiment before enacting official regulation and is now becoming an active supporter. The Chinese government moved to regulate the digital sector only after a delay, which gave innovators plenty of space to experiment. As the market has matured, both the government and the private sector have gradually become more proactive about shaping healthier digital development through regulation and enforcement. Today, the government is playing an active role in building world-class infrastructure to support digitization as an investor, developer, and consumer.
     
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  6. RMFAN

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    Fortune Global 500 list of year 2017[edit]
    The following is the list of top 10 companies.[5][6]
    https://en.wikipedia.org/wiki/Fortune_Global_500


    Rank Company Country Industry Revenue in USD
    1 Walmart [​IMG] United States Retail $486 billion
    2 State Grid [​IMG] China Power $315 billion
    3 Sinopec Group [​IMG] China Petroleum $268 billion
    4 China National Petroleum [​IMG] China Petroleum $263 billion
    5 Toyota Motor [​IMG] Japan Automobiles $255 billion
    6 Volkswagen [​IMG] Germany Automobiles $240 billion
    7 Royal Dutch Shell [​IMG] Netherlands (United Kingdom) † Petroleum $240 billion
    8 Berkshire Hathaway [​IMG] United States Insurance $224 billion
    9 Apple [​IMG] United States Technology $216 billion
    10 Exxon Mobil [​IMG] United States Petroleum $205 billion
    Fortune had previously listed Shell as a British/Dutch company, but as of the 2016 listing, it is listed as Dutch.

    Breakdown by country[edit]
    As of July 2017, this is the list of the top 10 countries with the most Global 500 companies.[7]


    Rank Country Companies
    1 [​IMG] USA 132
    2 [​IMG] China 109
    3 [​IMG] Japan 51
    4 [​IMG] France 29
    4 [​IMG] Germany 29
    6 [​IMG] United Kingdom † 23
    7 [​IMG] South Korea 15
    8 [​IMG] Switzerland 14
    8 [​IMG] Netherlands † 14
    10 [​IMG] Canada 11
     
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    China's innovation tops 'many advanced economies'
    http://www.ecns.cn/business/2017/09-28/275436.shtml

    Out of 137 economies surveyed worldwide, the Chinese mainland ranks 27th in terms of overall competitiveness while in innovation, it is "on par or even better than many advanced economies," the Geneva-based World Economic Forum said on Wednesday.

    The Chinese mainland placed between South Korea and Iceland in the annual ranking based on factors contributing to productivity and prosperity, according to a report released by the forum.

     
  8. RMFAN

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    Luxury car sales in China 2016

    http://auto.gasgoo.com/News/2017/01/1606380538570005067C102.shtml

    [​IMG]

    No.1 Audi
    2016 sales: 591,554

    No.2 BMW
    2016 sales: 516,355

    No.3 Mercedes Benz
    2016 sales: 472,844

    No.4 Jaguar/ Land Rover
    2016 sales: 119,048

    No.5 Cadillac
    2016 sales: 116,406

    No.6 Lexus
    2016 sales: 109,150

    No.7 Volvo
    2016 sales: 90,930

    No.8 Porsche
    2016 sales: 65,246

    No. 9 Infiniti
    2016 sales: 41,590

    No.10 Lincoln
    2016 sales: 32,558

    No.11 Acura
    2016 sales: 8,143

    ========

    Total : 2,163,824


    China 2016 car sales surge at fastest rate in three years

    http://www.scmp.com/business/china-...2016-car-sales-surge-fastest-rate-three-years

    Carmakers sold 28.03 million cars in 2016, an increase of 13.7 per cent on the previous year, the government-backed agency China Association of Automobile Manufacturers (CAAM) said on Thursday. Yet the agency forecast the growth to slow to 5 per cent this year as the tax incentive has been reduced.
     
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    When It Comes to Luxury, China Still Leads

    https://www.nytimes.com/2016/04/05/fashion/china-luxury-goods-retail.html
    By CHRISTOPHER HORTONAPRIL 5, 2016


    • Estimates of the size of China’s luxury market vary depending on which items analysts consider to be luxury goods. Data from Fortune Character Institute has China’s luxury spending in 2015 at $16.8 billion, up 9 percent, year on year.

      Bain & Company’s 2015 China Luxury Market Study put the value of the Chinese luxury market last year at $17.3 billion, which it calculated to be a drop of 2 percent.

      Regardless of how luxury is defined, there are some visible trends that are shaping the direction of luxury consumption in China. A shift away from visibly branded goods to a focus on quality has hurt sales of many brands with strong name recognition, while strengthening other players.

      “Our research found that 39 percent of wealthy Chinese think the logo is no longer the priority,” Dr. Zhou said. “Niche high-end brands as well as bespoke products, as a result, are becoming new drivers of luxury consumption.”

      And this focal shift to younger shoppers who have absorbed luxury marketing since childhood — and are seeking something different from the LV-emblazoned bags and Burberry plaids of their parents’ generation — has profound implications, at least in the short term, for established brands.

      “The Chinese customer is becoming a lot more global,” said Andrew Keith, president of Lane Crawford, the high-end fashion retailer headquartered in Hong Kong. “There’s a real thirst for newness.”

      Photo
      [​IMG]
      The Lane Crawford store in Shanghai. CreditTim Franco for The New York Times
      Mr. Keith described today’s typical Lane Crawford customer as female, between the ages of 25 and 35 and interested in ready-to-wear. Women’s wear is the fastest-growing portion of the company’s mainland China business, accounting for 50 percent of sales, he said.

      “Today our customers are more confident, and they have much more of an understanding of lifestyle,” Mr. Keith said. “It’s not just about purchasing, it’s about the experience.”

      A big part of the experience is shopping while traveling. Not long ago, Hong Kong was a preferred destination for luxury shopping, he said, but today Tokyo and Europe are more important. Currency exchange rates play into this, as does the trend toward foreign travel.

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      A look from across the New York Times at the forces that shape the dress codes we share, with Vanessa Friedman as your personal shopper.




      Although its bricks-and-mortar presence is limited to Beijing, Chengdu, Hong Kong and Shanghai, Lane Crawford has a broader reach among the new Chinese luxury shoppers with an omnichannel approach that integrates store and online experiences. Customers who shop both in stores and online tend to spend five times as much and shop five times as often as other Lane Crawford customers, he said.

      “We have always approached online as part of the store experience — the sweet spot for us is how we use our omnichannel experience to increase loyalty,” Mr. Keith said. “We can penetrate the market fairly effectively in second- and third-tier cities where we don’t have a physical presence.”

      The rise of new global Chinese shoppers also has been a boon for Lane Crawford’s online business, he said, with Chinese customers accounting for 40 percent to 50 percent of transactions outside of Greater China, which includes the mainland, Hong Kong and Macau.

      But not all Chinese luxury purchases abroad involve travel. The fact that a luxury item in China can cost as much as 80 percent more than the identical item in Europe — the result of exchange rates, taxes and duties — has continued to help the daigou, or proxy purchase, services. These traders traditionally have taken orders — and continue to do so now from online sites — for purchases in Europe and then ship the goods to China, saving the end customer a significant amount, compared with prices in Chinese stores.

      In an industry report released last June, researchers at the Geneva-based Exane BNP Paribas said that prices in China and Europe would have to converge as the Chinese luxury market matured. “Chinese luxury demand seems to have been dramatically impacted by foreign exchange rates and the widening price differences between China and the rest of the world,” said Luca Solca, managing director and sector head, global luxury goods at Exane BNP Paribas. “A larger portion of Chinese consumers spend their luxury dollars abroad — either directly as tourists or indirectly through daigou websites.”

      More recently, the Chinese government has tried to recapture part of this business, Mr. Solca said, in an effort to increase tax revenues and stem capital outflows.

      “Stricter border controls have been introduced to curb daigou activities and renewed pressure has piled up on European luxury players to reduce the price gap against the Chinese,” he said. “More than ever, we expect prices to continue to converge in fiscal year 2016.”

      Describing the daigou effect as “rather disruptive,” Mr. Keith said that the price gap is a liability for brands. “Ultimately, it undermines the trust of the customer in your product.”

      The digital space is likely to continue to disrupt the Chinese market. Fan Chen, the Beijing-based managing director at the marketing consultancy Simon-Kucher & Partners, said she expected more brands to engage Chinese consumers directly online, noting that Burberry opened a store in late 2014 on tmall.com, the business-to-consumer site operated by the Chinese online giant Alibaba.

      Cartier introduced its online shopping site in October, and other brands have made similar moves.

      “The rapid development of China’s mobile e-commerce can certainly, to some extent, promote sales of luxury goods, but more from a marketing perspective,” Ms. Chen said. Looking forward, the clout of Chinese brands is likely to grow, she said.

      “The current market share of local luxury brands is still relatively small, but it is developing,” she said, noting the foundation laid by Chinese brands including Shanghai Tang and Chow Tai Fook, two large Hong Kong-based labels in fashion and jewelry, respectively. “There is still much room for growth for Chinese brands.”

      Lane Crawford also sees potential in Chinese brands. Its “Created in China” program has served as an incubator and showcase for emerging Chinese fashion brands. The program now features the work of 20 Chinese designers.

      “Our Chinese customers are inspired by the new generation of Chinese talent,” Mr. Keith said, naming the labels Ms. Min and Comme Moi as top performers. “China for us is really a long-term play.”
     
  10. RMFAN

    RMFAN Lieutenant FULL MEMBER

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    RMFAN Lieutenant FULL MEMBER

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    Global display panel industry development overview in 2017

    http://www.chyxx.com/industry/201705/525672.html

    TV LCD panel shipments share (by region)

    First color in the Bar: Japanese manufacturers
    Second color in the Bar: Taiwanese manufacturers
    Third color in the Bar: South Korean manufacturers

    Fourth color in the Bar: Chinese manufacturers

    From 2008 to 2016, Chinese manufacturers market share jumped from 0% to 31.3% in the world.

    [​IMG]


    Tablet PC LCD panel shipments share (by region)

    First color in the Bar: Japanese manufacturers
    Second color in the Bar: Taiwanese manufacturers
    Third color in the Bar: South Korean manufacturers
    Fourth color in the Bar: Chinese manufacturers

    From 2010 to 2016,Chinese manufacturers market share jumped from 0% to 25.3% in the world.

    [​IMG]

     
  12. RMFAN

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    My trip to China shattered my biases about developing nations

    https://qz.com/1036479/visiting-china-upended-my-misconceptions-about-developing-countries/

    WRITTEN BY
    Akshat Rathi
    OBSESSION
    China's Transition
    November 11, 2017 Quartz India


    When I went to China for two weeks on a recent reporting trip, I had certain expectations. Officially, China is still a developing country. I thought I had a pretty clear picture of life in developing and developed nations, having grown up in India and spent most of my adult life in the United Kingdom.

    Going by the data, I was expecting China to be a lot more like India than the UK. After adjusting for purchasing power parity, China’s GDP per capita was $15,535 in 2016—closer to India’s ($6,572) than the UK’s ($42,609). I expected trains and subways in China to be more modern than India’s, but equally chaotic. I thought customer service would be more polite, but equally harried. In other words, in any number of large and small ways, I thought China’s status as a developing country would show.

    I was wrong. My experience of two weeks in China left me thinking that I was visiting a country as rich as any I had visited before. The trip showed me how important it is for Westerners to change our perception of China so we can make more informed decisions—particularly when it comes to recognizing our own place in the world relative to others.

    I had vastly underestimated the impact of China’s economic growth.Subways were modern, spacious, and fitted with air-conditioning. Mobile 4G internet worked on underground metro, on high-speed trains, and even on the short, very fast magnetically levitated train in Shanghai. Taxis were easy to find and cheap, though most smelled of cigarettes. Convenience stores were everywhere. Google Maps wouldn’t work without VPN, but Apple Maps did a decent enough job. When I did get lost, it was not because the signs were missing, as in India, only that they lacked a translation.

    The staff in restaurants, malls, and train stations sometimes seemed overworked, but they were unfailingly polite and efficient. Prices in stores were clearly marked, and there was no need to haggle. I never met a seller who irritated me, or a stranger on the neighboring table who annoyed me.

    My own ignorance may be partly to blame for my misconceptions of China, but Jonathan Woetzel, a director in McKinsey’s Shanghai office, makes the case that the rest of the blame likely lies with the biased views of academics and think tanks that help create the misconceptions. “My experience working and living in China for the past three decades suggests that this one-dimensional view is far from reality,” he writes.

    Admittedly, my experience was limited to what I saw in three of China’s biggest cities—Shanghai, Guangzhou, and Beijing. And I was a tourist among urban-dwellers with relatively decent incomes (albeit a brown face at a time when India’s army was in a standoff with China’s at the Bhutan border). Still, each of those cities had better infrastructure than any world-class city I’ve visited.

    My time in China reminded me of what a smart, worldly Indian friend had said when I asked why he’d decided to move to the UK. “Everything here works as it should,” he said.

    He didn’t need to say much more. As a fellow Indian who has lived in the UK for nearly 10 years, I understood him fully. He and I had spent better part of our lives in a country full of color and vigor, but also full of broken infrastructure and poorly run institutions.

    In the UK, buses and metros run on time, drivers follow the rules of the road, and the police don’t ask for a bribe before registering a citizen’s complaint. It may have bad weather and worse food choices, but daily life is much less of a struggle in the UK than it is in India. To me, life in China’s metropolises seemed quite similar to those experienced in the UK. If anything, China’s infrastructure was better.

    The surprisingly good quality of life in Chinese cities made me wonder why the country is referred to as “developing.” Economists classify China as a developing country in part as a way to signal that it’s still in the process of liberalizing its economy. In practical terms, the classification gives China some leeway on, say, respecting intellectual property rights or on freeing up trade in all sectors. But even experts admit that they struggle to define China.

    “It’s a developed country in its shiny cities on the eastern coast, it’s a developing country in its poor regions in the west,” says Björn Conrad, vice president of the Mercator Institute for China Studies, a think tank based in Germany. “It’s a developed country if you look at number of Starbucks or literacy rate; it’s a developing country if you look at the numbers of doctors per capita or percentage of the workforce in agriculture.”

    There’s no denying China’s problems. Its cities may offer world-class comforts, but China’s human rights record is dismal. Pollution in cities, especially in Beijing, can get very bad. And as a socialist state run by a single political party, the government has the ability to place strict control on speech. But, as Siyi Chen notes in a recent article for Quartz, Western narratives about China tend to be overwhelmingly negative. They paint a limited picture of China, which may cause many people to come away with misguided ideas about what daily life there is like.

    Recalling her first visit to the US five years ago, Chen writes, “I was shocked by how often I get questions that revealed misunderstandings about my home country: ‘You’ve never gotten on Facebook, right?’ ‘Have you ever heard of the Tiananmen Square incident?’ ‘Have you ever used an iPad in China?'”

    Though I didn’t suffer any of the abuses that journalists reporting on controversial topics have in the past, I experienced China’s attempt at censorship first-hand. At the end of my trip, my translator used the popular app WeChat to send me a link to a New Yorker obituary of the Chinese dissident, Liu Xiaobo. The link never arrived. Through my two weeks, Liu’s health had been getting worse until he died on July 13. While the world was horrified and widely covered the developments, within China there was a tight control over what, if anything, could be said about him.

    That said, it wasn’t difficult for two strangers in a bar to talk politics, as I had thought it might have been. Many of the strangers I encountered were quite willing to openly criticize the government. “You don’t get government contracts without knowing somebody on the inside,” said one private contractor who does coastal reclamation.

    To my mind, these paradoxes only strengthen the case for Westerners to visit China. These days, a lot of people are putting fresh emphasis on getting outside our information bubbles and recognizing the strengths and limitations of the cultures we inhabit. A good first step is to book a flight east.



     

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