1 Talking Point 6 Week in 60 Seconds 7 Telecoms Week in 8 Banking and Finance 9 Economy 11 China and the World 13 Shipping 14 Society and Culture 27 November 2015 19 And Finally Issue 305 20 The Back Page www.weekinchina.com

Clash of the internet kingdoms m o c . n i e t s p e a t i n e b . w w w

In a flurry of recent dealmaking ’s Robin Li looks to make up

ground on bigger rivals Brought to you by Week in China Talking Point 27 November 2015

Searching for answers A new era as Baidu enters banking with Citic and insurance with Allianz?

In the spotlight: Baidu’s founder Robin Li is looking to catch up with rivals Alibaba and

hen Forbes ranked China’s The rivalry between the BAT trio – acquisitions and dealmaking. But Wrichest tycoons a year ago, which are seeking to dominate after its unexpected coup last the top three slots were taken by China’s internet – is frequently com - week – in linking itself to a major the founders of Baidu, Alibaba and pared to a period in the third cen - state-run bank – might Baidu re - Tencent – the internet giants tury when the states of Wei, Shu and gain the upper hand in its battles known locally by the acronym BAT. Wu battled for supremacy. The era, with Alibaba and Tencent? At that time Baidu’s chief executive known as the Three Kingdoms, was Robin Li was the second richest a particularly bloody chapter in his - A more eventful year for Baidu? man, just behind Jack Ma of Alibaba tory, characterised by battles for ter - Baidu started 2015 with a bang, in - but ahead of Tencent’s Pony Ma. ritory, deadly military innovations vesting $600 million for a stake in However, when Forbes recalculated and alliances of convenience as the Uber. The partnership allowed the its rankings last month, Li had weak combined to repel the strong. American car-hailing firm to tap fallen to sixth position, with his net Back in the present day Baidu has into Baidu Map, a service with 240 worth shrinking almost a third to tended to look the weakest of the million active users a month. Li also $10.4 billion (the Ma duo retained BAT kingdoms, with its core search hoped the deal would give Baidu a their top-three status). The fall in engine business seemingly out - competitive edge in one of the Li’s fortune came despite Baidu’s ag - flanked by Alibaba’s dominance in fastest-growing segments of the gressive push for new revenues in e-commerce and Tencent’s strangle - O2O industry. P h o t o the online-to-offline (O2O) sector. hold of social media with WeChat. What followed set the tone for a

S o u r c But will it begin to tick up again Possessing cash-rich and fast- year in which Li’s kingdom suffered e :

I m

a thanks to a new growth engine: the growing businesses, each of the a series of strategic setbacks at the g i n e

C announcement last week of a joint Ma monarchs has been looking to hands of his rivals. Kuadi and Didi, h i n a venture with Citic Bank? expand their territories through the leading local taxi-hailing apps – 1

Week in China Talking Point 27 November 2015

and each separately backed by Al - ibaba and Tencent – shocked Li and many others in China’s internet world when they announced a sur - prise merger in February. Baidu’s two bigger rivals forged another unlikely O2O alliance last month with the $15 billion merger of group buying and food delivery websites Meituan – partly owned by Alibaba – and Dianping, backed by Tencent. The merged entity has an 82% market share, easily outflanking Nuomi, which Baidu bought last year. As with car-hailing, once again Alibaba and Tencent were threaten - Its name is based on a poem from the Song Dynasty ing to crowd out a market that Baidu had newly entered. (That ators – a key source of Baidu’s earn - firms. But the trend is evident that said, Alibaba is now reportedly in ings – and its -listed unit Baidu is dropping off from the big talks to reduce its stake in Meituan- Ali Health declared this week that it league,” suggests iHeima.com, a Dianping and grow a wholly-owned will expand its internet-based med - website focusing on investments in equivalent of its own.) ical services network, without speci - China’s tech space. “Maybe Baidu Following Baidu’s announcement fying the amount of money it is should instead be more worried of disappointing first quarter results, going to invest. about JD.com [an e-commerce plat - investors were rattled further in form which has market cap of about April by a high-profile clash between The weakest link among BAT? $40 billion].” the firm and one of its major adver - Despite the popular acronym, BAT Although it is trailing in value tisers. The Putian Health Industry has never been much of an equilat - creation, Baidu claims to be the Chamber of Commerce, which rep - eral triangle. A fairly miserable 2015 most tech-savvy of the three tech resents about 8,600 private sector has also seen Baidu’s share price suf - firms. The company has been pay - hospitals, threatened to boycott fer. As of this week its market capi - ing a lot of attention to projects Baidu’s search engine for overcharg - talisation stands at roughly $70 bil - such as visual internet search, self- ing it for online advertising (these - lion, considerably less than half of driving cars, Baidu Eye (China’s an - fees contribute about 10% of Baidu’s Tencent’s $189 billion, and some way swer to Google Glass) and Baidu annual revenue, see WiC276). further back on Alibaba, which is Brain (again inspired by Google, it “The fact Putian felt bold enough valued by investors at about $200 seems). to boycott Baidu earlier this year billion. Emulation may well be the sin - shows the company is no longer the Over the past 12 months Baidu’s cerest form of flattery, but perhaps monolith it once was,” believes tech stock has dropped more than 15%. Baidu has been trying too hard to analyst and blogger Doug Young, Tencent’s shares, which trade in make itself look like Google. And it adding that Baidu is struggling to Hong Kong, have climbed more is also tackling the same problem maintain its dominance in the than 30%. Alibaba’s comparables are that its American equivalent faced search engine business. “Baidu’s for - less useful in this respect because it five years ago: how to migrate its mer control of 70% of the market only went public in New York in Oc - dominance of desktop PC searches had been reduced to about 55% by tober 2014. However, it is now about and mapping services onto smart - the end of last year while Haosou 18% above its IPO price. (And unlike phones. While Google dealt with the [run by Qihoo 360] and ’s Baidu and Tencent, some of the issue by acquiring and then devel - Sogou controlled 30% and 13%, re - most promising assets in the Al - oping Android, an operating system P h o t

o spectively,” Young claims. ibaba empire, such as Alipay, remain for mobile phones, Baidu hasn’t

S o u r Adding to Baidu’s discomfort, Al - privately-held and unlisted.) made the same transition, lagging c e :

R e ibaba has stepped up its efforts to “The BAT used to represent behind Alibaba and Tencent when it u t e r s

court private-sector healthcare oper - China’s most influential internet comes to capturing offline business 3 Week in China Talking Point 27 November 2015

opportunities in the era of the mo - bile internet. Planet China Of course, WiC has reported on Strange but true stories from the new China many of the dogfights between Al - ibaba and Tencent in O2O and mo - MCMANSION MOMENT. bile (also see our focus issue The Ronald McDonald is not normally associated with Battle for China’s Internet ). But cross-Strait politics, but McDonald’s has stirred controversy with its latest Baidu seems to have spent too outlet in Hangzhou. Last week the fast food chain opened a 100-seat much time on the sidelines. McCafe in the lower storey of a villa that Chiang Kai-shek’s son Chiang “Baidu’s mobile internet strategy Ching-kuo once stayed in. Conservationists claim the villa – by the famed is streets behind Alibaba and Ten - West Lake – is a cultural heritage site and should be converted into a cent. When the latter two were tak - museum. Demos Chiang, grandson of the Generalissimo (who fled to ing on each other in bloody O2O in 1949 having lost the civil war to Mao’s Communists), wrote on battles over car hailing services [see weibo: “I don’t understand, opening a McDonald’s in the villa. How exactly WiC226] and wealth management does that adhere to regulations on the use of cultural heritage sites?” University academic Zhou Fuduo agreed, telling the BBC that the products [see WiC225], Baidu was villa was a symbol of China and Taiwan’s shared history. But a spokesman simply an onlooker,” iHeima.com for the local government countered that Chiang only lived there for a month points out. in 1948. Besides, the authorities needed money to recoup the cost of maintaining the building throughout the years. The official added: “The How is Baidu playing catching up? interiors look nothing like they used to when the Chiang family was here – According to a report in Caijing there is not much point turning it into a museum.” magazine, Li told 150 tech bosses and investors attending a confer - A similar approach in M&A has Rmb40.5 billion in the previous ence in San Francisco in July that he helped Baidu grab an advantage in quarter. regretted not being more aggressive China’s fast-growing online travel in buying into the mobile internet. market too. In a convoluted deal Next up O2O financial services? Baidu also estimates the O2O inked last month, it traded away its Financial services has been regarded market to have grown to at least controlling stake in Qunar to Ctrip, as another strategic weak-spot for RMB10 trillion ($1.56 trillion), with a China’s biggest travel site. In return Baidu. Alibaba and Tencent have ad - current online penetration rate Baidu is getting 25% of the merged vanced in this area via third-party that’s still less than 5%. The market entity – which controls an esti - payments, crowdfunding and is set to double in four to five years, mated 61% of the market for flight wealth management products. Both the company has suggested. bookings online, and 41% for hotel have also been leading the charge As a result Baidu is doing more to rooms (see WiC302). into private sector banking. expand beyond its core search busi - Baidu now aspires to do much Regulators have granted bank li - ness and in June it said it would in - more than match information with cences (in Alibaba’s case through vest Rmb20 billion ($3.2 billion) over search requests, setting out to Ant Financial, a sister firm) to chal - the next three years on O2O serv - match “people and services” as well, lenge the monopoly grip of the ices. The bulk of this investment will Caijing reports. The plan is to tap state-owned banks. Earlier this year be pumped into Nuomi, which into its 643 million mobile search Tencent launched an online-only Baidu still hopes to transform into a users and map users to offer lo - bank called WeBank (named after its platform where mobile internet calised services and then charge for popular messaging app WeChat) users can buy just about any service. them with its online wallet payment and Ant Financial followed with its In a telling indication of Baidu’s app. Mybank. move to a more offensive footing, it “We are in a new development Baidu’s year-end push into bank - has also planted flags areas un - phase and we call it ‘indexing the ing is clearly designed to close some colonised by its rivals. In August it real world’,” Baidu’s head of commu - of the gap. Teaming up with Citic invested $100 million in mobile- nications told the magazine. Bank, the banking unit of financial based, on-demand laundry firm The company said last month conglomerate Citic Group, the pair Edaixi. The deal represented a rare that revenues from its O2O plat - have announced an initial invest - victory over Tencent and Alibaba, forms such as Nuomi and Qunar ment of Rmb2 billion in their new Caijing reports, as both had also have risen to Rmb60 billion in the venture, Baixin Bank. gone after Edaixi. third quarter, as compared with Baixin is an attempt by Baidu to 4 Week in China Talking Point 27 November 2015

help Citic offer more efficient inter - acronym was still relevant. “There have turned relatively low key,” a net banking services. The first ever will no longer be BAT. The future is tech columnist wrote recently in tie-up between a Chinese internet about the competition of AT,” one the Global Times. The columnist firm and a state-run lender, it also columnist wrote on NetEase. also expects Baidu to garner more differs from rival banking ventures Others gave it a different spin, attention next year if it launches its by combining Baidu’s ‘big data’ ca - predicting that there were now ‘four speech recognition and voice-based pabilities with Citic Bank’s physical kingdoms’ and the acronym should search services (for mobile) success - retail presence. be extended to BATX – with the “X” fully. Adding to its drive into banking, standing for Xiaomi. Nor should we overlook the dif - Baidu wants to make a splash in the The five year-old start-up – fering DNAs that spawned the three insurance industry too. The search founded by Lei Jun – completed a firms. Alibaba and Tencent have cer - engine group said this week that it fundraising a year ago which valued tainly shown more urgency in con - would be launching a joint venture it at $46 billion. The addition of Xi - verting their digital leadership into with German financial behemoth aomi to the mix would underline a nakedly commercial masterplan Allianz and local investment group expectations that (like Apple) it will and monetise as many services on - Hillhouse Capital to set up an online leverage its smartphone hardware, line as possible. insurer. The trio intends to offer a a point of difference from the BAT, Perhaps there is something a lit - range of products including travel, which have grown without selling tle more idealistic about Li, evident health and internet finance insur - devices. in the name he chose for his com - ance, the Financial Times reports. Other dark horses may emerge to pany. ‘Baidu’ derives from a Song Of course, Alibaba and Tencent rival Alibaba and Tencent and re - Dynasty poem about the persistent teamed up with Ping An Insurance place Baidu. search for an ideal, represented by a in 2012 to launch their own O2O in - “BAT is likely to become ATX in the beautiful woman (the relevant surance venture. “So is Baidu throw - future,” Sina Technology predicts, verse: “hundreds and thousands of ing down the gauntlet in front of adding that companies like Xiaomi, times, for her I searched in chaos, the three Ma’s [Jack Ma, Pony Ma LeTV and JD.com are all threatening suddenly I turned by chance, to and another Ma – Ping An’s boss to contribute the “X factor” that where the lights were waning, and Peter Ma]?” an internet user queried Baidu is lacking. there she stood…”). on this week. Not everyone is writing Baidu off. The poet in Li looks now to be “First came the investment in Ctrip swapping his calligraphy brush for Should we add an X to BAT? and now we have the Baixin Bank. a sword. Only time will tell if he can Earlier in the year pundits were voic - You can see Baidu is taking on more brandish it quite as powerfully as ing their views on whether the groundbreaking deals, while AT his larger foes... n

Apple Pay to launch in China by February?

More ‘phoney’ money could be set to place their phones near readers in come to China, courtesy of Apple, stores and then uses their fingerprints reports the Wall Street Journal. It to validate purchases. In the US reckons the tech giant has signed a Apple typically takes 0.15% of all deal with the nation’s four biggest credit transactions and 0.5 cents per banks to launch Apple Pay, and hopes debit transaction, the Wall Street to start the service before February 8, Journal suggests. the start of the Chinese New Year. If so In June Apple registered an entity I l l u s that would be quite a coup, marking a in Shanghai’s free trade zone to t r a t i o

n foreign firm’s entry into China’s vast operate the service in China. Should it : w w

w and erstwhile protected payments system (UnionPay launch on the reported timetable, Apple Pay’s . b e n processes virtually every one of China’s credit card emergence would also provide a boost for the profile of i t a e p s swipes). The Apple product works on its latest the Shanghai zone, whose impact has been t e i n . c smartphones the iPhone 6 and 6s, and allows users to questioned by local and foreign media alike. o m

5 Week in China The Week in 60 Seconds 27 November 2015

Nuclear deals signed in KL The major news items from China this week were...

Three representatives of China Railway Construction 1Corp were among the fatalities of the Mali hostage crisis last week. The representatives were there to dis - cuss a potential construction project. President Xi as - serted China will “resolutely fight violent terrorist activities that hurt innocent lives, to maintain world peace and tranquillity.”

Alibaba is reportedly seeking to sell its $1 billion stake 2in the Meituan-Dianping merger formed last month, which accounts for 7% of the new company’s shares. Sources suggest Alibaba is removing itself from Meituan-Dianping to focus on its own, similar O2O plat - form, Koubei. Machine age: the World Robot Conference in Beijing China General Nuclear Power (CGN) sealed a deal to 3purchase the power assets of Malaysian state-owned A robotics conference was held in Beijing this week, 1MHB, in the form of Edra Global Energy and its sub - 5with both President Xi and Premier Li writing to ex - sidiaries. The $2.3 billion exchange is expected to be press support of the industry. Vice-president Li Yuan - completed in February next year. This news emerged chao encouraged foreign companies to share technology whilst Premier Li Keqiang was in Malaysia, offering a with Chinese firms, suggesting it would help them tap string of economic perks to strengthen ties. into the growing market. The industry is expected to cre - ate $15.7 billion in turnover by 2020. The People’s Liberation Army (PLA) announced 4plans for a major restructure, consolidating its cur - The CEO of Guotai Junan Securities’ Hong Kong sub - rent seven military command centres into four: Beijing, 6sidiary has been missing since November 18 it was , Chengdu and Guangzhou. The consolidation is revealed this week, with speculation that he has been designed to slim-down the PLA, making it “a real mod - taken for questioning amid ongoing investigations into ern army of international standard”. the summer stock market crisis.

Sixteen European countries attended the economic 7summit for cooperation between China and Central and Eastern European Countries this week in Suzhou. Premier Li, heading the summit, said “China respects the standards of the European Union and wants to find more avenues and agile methods to give financing sup - port to big projects”. To this end, China signed deals with Hungary and Serbia to develop a railway line between Budapest and Belgrade, which will support trains trav - P h o t

o elling up to 200km per hour. The line is due for com -

S o u r pletion in 2017 and will “help create a fast lane for c e :

R e import and export of products between China and Eu - u t e r s Li Keqiang shows Serbia’s PM the Chinese bullet train rope,” Xinhua reports. n 6 Week in China Telecoms 27 November 2015

Vertu reality Hampshire phone firm gets new Chinese owner

n a recent book review in the are marketed as objects of beauty as IBritish magazine The Spectator, much as communication devices. Stephen Bayley observed that “the Prices range from an entry level BMW-sponsored London Olympics $10,000 to a more plutocratic were held on a site devastated by $200,000 and come with scratch- Luftwaffe planes powered by BMW’s proof sapphire glass, titanium cases engines”. and exotic leathers (ostrich in the If that seems ironic, others might case of the Aster model). For the also consider it an irony that a com - pricier handsets gold and diamonds pany from Communist China has feature, while the ringtones are pro - just taken control of Vertu, a smart - duced exclusively by the London A maker of $200,000 smartphones phone firm that very explicitly caters Symphony Orchestra. to the needs of the world’s top 0.01% An additional benefit: the phones domestically-engineered GOS plat - (as opposed to the proletariat). come with an in-built app that of - form uses advanced encryption Of course, readers of WiC with a fers concierge services promising and can wipe data if a phone is re - greater familiarity with modern access to the most exclusive restau - ported lost or stolen. It looks likely China won’t find it particularly sur - rants and tickets for sellout theatre that this software will supplant the prising at all, but they still might be performances, such as Benedict Android-based OS that Vertu puzzled as to why a little-known Cumberbatch’s Hamlet . phones have run on for the past Chinese entity is interested in this But as one former Vertu cus - two years. niche phonemaker, formerly owned tomer told WiC, the main draw is Godin is obviously betting that a by Nokia. less the concierge service and more Made in England phone with a hy - According to Nanfang Daily, an what ownership of the phone im - per-secure Made in China operating investment agency named Godin plies (elite status). No doubt this is system might persuade more of Holding has purchased Vertu for an the kind of message that Vertu’s new China’s super-wealthy to join the undisclosed sum. Vertu had previ - owner from China would like to am - Vertu club. ously been acquired by the Swedish plify. According to Communication And in other smartphone news private equity group EQT for €200 Information News, Vertu already Xiaomi released a new model, the million ($212 million) in 2012. has 60 ‘boutiques’ in China, con - Redmi Note 3, this week. At $140 the Godin Holdings was incorporated centrated mainly in first-tier cities. model clearly isn’t going to compete in Hong Kong in July and seems to But it has struggled to deliver local with Vertu but it will lock horns be a shell company for Beijing-based language services, which has re - with homegrown brands like the Godin Cyberspace Security Technol - stricted its word-of-mouth reach Huawei P8 (which – thanks to its ogy (tech news provider Engadget among Chinese high-end users. dual SIM card and innovative fea - found the connection in the Hong The new owner will need to cor - tures – got a rave review from Kong Companies Registry). rect this if it is to succeed with Jonathan Margolis in the Financial So what exactly is Godin buying? Vertu’s new strategy to expand its Times). Data from Canalys sug - Unusually among tech companies, retail network into more second and gested that Huawei had overtaken Vertu is based in the Hampshire idyll third-tier cities, Communication In - Xiaomi to lead the local smartphone P h o t o of Church Crookham in the UK, and formation News suggests. market in the third quarter (see

S o u r c employs 450 people there (as well as Forbes magazine says that an - WiC304), with Huawei’s unit sales e :

I m

a about the same number elsewhere other of Godin’s priorities may be growing 80% year-on-year. Vertu’s g i n e

C in the world). The phones are hand - to promote a new ‘secure’ operating new owner will be hoping for a sim - h i n a made by individual craftsmen and system that it released in June. The ilar percentage increase… n 7 Week in China Banking and Finance 27 November 2015

Taking stock Birthday of Stock Connect passes with a whimper

“ hat we lack is relatively long- agers would buffer the A-share army, Wterm, rational investment but that hasn’t happened as antici - from institutions,” complained Qi pated,” reported National Business Bin, head of the international de - Daily, with some understatement. partment at the China Securities Daiwa’s strategist Kevin Lai went Regulatory Commission (CSRC). He further, telling the Wall Street Jour - was commenting shortly after the nal that the scheme has “failed mis - launch of the Shanghai-Hong Kong erably”. Figures show that north - durable consumer goods. Mainland Stock Connect scheme in November bound investors (from Hong Kong investors, on the other hand, have last year. Sadly, 2015 won’t be re - to Shanghai) used up only 40.3% of preferred small cap stocks in membered as one in which institu - their annual Rmb300 billion ($46.95 pharma, construction and property. tional investors finally introduced billion) quota. Southbound in - This may bode well for smaller firms more sophisticated valuation tech - vestors used up less: 36.72% of their listed in Hong Kong if the Shenzhen- niques to China’s A-share market, as Rmb250 billion allowance. Hong Kong Stock Connect also gets the founders of Stock Connect Of course, Stock Connect was off the ground, as it will embrace hoped. launched only shortly before the Hong Kong’s Small Cap Index. Charles Li, head of Hong Kong Ex - height of China’s stock market frenzy When might that be? The People’s changes and Clearing (HKEx) and this spring, when Shanghai and Bank of China tripped up a few Gui Minjie, President of the Shang - Shenzhen were trading up to $380 weeks ago when it republished old hai Stock Exchange, had plotted this billion a day, compared to about $9 comments mentioning that the goal when they first discussed a mu - billion in London and $248 billion Shenzhen link could start before the tual access scheme at a small tea - across the US. Foreign investors then end of 2015 (sparking a short-lived house in Shenzhen in 2012. had to deal with the disorderly con - rally). But analysts believe that any They hoped that a link between sequences of the subsequent melt - expansion in Stock Connect is more their respective exchanges would down, with many of them running likely in spring next year, so that help tilt the Chinese stock market rapidly for the exits. China stands a better chance of get - away from momentum-driven re - HKEx’s Li argues that the mar - ting its A-shares included in the tail investors towards the kind of ket needs to take a longer-term per - MSCI’s Emerging Market Index. funds that dominate Hong Kong spective. “The focus shouldn’t be CSRC officials have also hinted trading, where roughly 60% of busi - on aggregate quota usage or trad - that Stock Connect’s quotas and list ness is driven by institutions (and ing turnover,” he told Xinhua. of investable stocks will be ex - 80% of that by foreign funds). “Stock Connect is much bigger than panded, allowing investors to trade Instead, 2015 will be remembered that. It’s a catalyst and a model for across the wider market. Further as the year when foreign investors the future.” down the road, bourses in London, weren’t able to provide a sobering But wider analysis of the scheme Taipei and New York’s Nasdaq are influence as millions of retail in - shows that foreign and domestic re - hoping to set up similar two-way vestors got drunk on spiralling tail investors have displayed very schemes too. share prices and margin financing. different criteria in utilising the This might help to stem the flow As a result, many of the press arti - cross-border link. Foreign money of Chinese firms delisting from the cles marking Stock Connect’s one- has favoured (available) large cap US, including property portal Sou - P h o t

o year anniversary on November 17 stocks in China with valuations be - Fun, which is about to become the

S o u r have been downbeat. low 30 times earnings and a track first NYSE-listed Chinese company c e :

R e “The Chinese government hoped record of paying dividends. Their to hive off assets and refloat them in u t e r s Hong Kong’s professional fund man - top holdings are in banks and China via a backdoor listing. n 8 Week in China Economy 27 November 2015

Production overhaul Domestic factors conspire to dampen traditional manufacturing

ongguan’s mayor Yuan DBaocheng was putting a brave face on his city’s challenges last month. “This year, we learned that about 500 foreign and domestic businesses have closed,” he said. “[Under] reasonable market com - petition, it’s normal to see some businesses close and others open.” City officials have claimed that economic output increased in the first three quarters of the year and that Dongguan will benefit from Xi Jinping’s "One Belt, One Road" eco - nomic strategy. But as we have written previously (see WiC173), others wonder whether Is her job being outsourced to Vietnam and Cambodia? the city’s troubles could be a little more terminal. last year. Economic growth and an jing and Dongguan – which is esti - According to Lin Jiang, professor aging population have both played mated to have cost at least 9,000 at Guangdong’s Sun Yat-Sen Univer - roles in higher labour costs, China jobs. The closures are part of Mi - sity and a specialist on the city, Labour Bulletin also notes. “Fewer crosoft’s broader plans to relocate Dongguan enjoyed its “Golden Age” young people are entering the work - Nokia production to Vietnam. between the Asian financial crisis of force and those that do have higher Recognising the rise in labour 1997 and the global financial crisis expectations. Workers have become costs, policymakers in Guangdong of 2008. Dongguan’s success was better organised and employers in (Dongguan’s provincial home) have built on an export-oriented model, many sectors have been forced to announced plans to promote in - China Business agrees. A slump in pay higher wages in order to recruit vestment of $152 billion in industrial global demand since 2008 brought and retain staff,” says the Hong robots over the next three years. But the “first wave” of factory closures Kong-based organisation. some are sceptical of the pro - to the city. But now it is domestic Although an increase in wages gramme’s benefits, saying that au - factors that are contributing to what will be welcomed by the migrant tomation isn’t a viable option for the magazine describes as a “new workers that still form much of the many of the region’s businesses. wave” of shutdowns. manufacturing labour force, there For instance, Yeh Cheun-rong, In particular higher l abour costs are obvious consequences on com - the former director of Dongguan’s are creating difficulties for the small pany profitability. The hike in pay Taiwan Business Association, says to medium-sized enterprises (SMEs) has pushed costs at some of the that local businesses would already that dominate Dongguan’s com - city’s factories above those in have introduced more automation mercial landscape. A survey con - Bangladesh, Vietnam and Cambo - if they thought it could keep them ducted by the China Centre for Pro - dia, where businesses are now relo - competitive. P h o t

o motion of SME Development found cating their operations. “Entrepreneurs definitely think

S o u r that roughly 79% of businesses con - This “new wave” of closures in - ahead of the government. If their c e :

R e sidered rising labour expenses as a cludes Microsoft’s shuttering of its manufacturing process could be au - u t e r s top concern – an increase of 10% on Nokia production factories in Bei - tomated they would have adopted 9 Week in China Economy 27 November 2015

automation long ago. But lots of pro - duction cannot be done by machines or robots,” he said. Dongguan’s challenges aren’t un - usual, an advisor at the same Tai - wanese Business Association has also claimed. “It isn’t only Dong - guan. The whole country’s situation is more or less the same. , Changzhou, , Kunshan, Suzhou: the factories in these areas that make products for export have all seen their growth rates fall by 40% or more.” Last month the closure of Farun, capacity of 400,000 tonnes, trans - “Made in China 2025” policy, which a major sheet-glass maker head - lating to additional costs per an - aims to promote IT, robotics, aero - quartered in Suzhou in , num above the $30 million pre - space, railways, electric vehicles and pointed to another new challenge dicted by Citic. other advanced industries in a bid to for factory bosses: increased pres - The increases in operating ex - move the economy away from the sure to comply with environmen - pense are putting pressure on a sec - low-value model that fuelled growth tal protection rules. tor struggling with oversupply. in the past. According to the Australian Fi - As a staff member with China This month the Financial Times nancial Review, Farun had been Southern Glass Holding reports: explored a similar theme after news named and shamed as one of the 17 “The glass industry – especially flat of falling orders at the Canton Fair. worst polluters in China, with only glass – has always existed alongside Headlined “Adapt or die” the article one of its 18 production lines fitted a supply glut. Most notably in 2010 looked at the troubles facing com - with the required pollution filters. the majority of firms were expand - panies in cities like Dongguan. But it But the newspaper claimed that ing at unreasonable rates, creating also offered a welcome example of a Farun’s founder had simply paid the fierce competition. Since last year, company that has revived its fines for breaching the environ - the price of glass has been in con - prospects. mental standards, because the stant decline.” Megmeet was a maker of basic penalties were more than out - The slide in glass prices also re - components for heaters and power weighed by the financial benefits of flects the slowdown in a separate in - supplies. But its new subsidiary skirting the rules. dustry: property. According to CBN, Ikahe now makes its own-brand of Now the context has changed and real estate development accounts ‘smart toilets’ (think of the fancy research from Citic Securities has for 75% of demand for flat glass in Japanese ones), which sell for up to estimated it would cost $80 million China – for Farun it accounted for $2,000 each. to bring Farun into compliance with even more of its production – but As an Ikahe executive told the the newly toughened regulations, growth rates in the property sector FT, the firm’s move into the world plus an extra $30 million a year in have been slowing since 2014. of higher-value consumer prod - operating costs. In looking for a silver lining Bei - ucts has been a well-time one and An analyst in the glass industry jing News has been drawing on Dick - the company has high hopes of es - told National Business Daily: “Start - ens for inspiration, describing the tablishing a new niche market: ing from the beginning of this year, situation as “the best of times and “Every Chinese person has an environmental pressure placed the worst of times” for manufactur - iPhone now, even cooks and clean - upon the glass industry, especially ing firms. ers, so if rich people want to show in the East China region, has become The “best of times” is dawning for their status the best way is with an increasingly severe. This can be seen entrepreneurship and innovation, expensive toilet.” across the industry where, at a basic the newspaper argues, but the That sounds a little optimistic, al - P h o t

o level, the cost of production has in - “worst of times” has already arrived though Dongguan’s local govern -

S o u r creased by Rmb60 ($9.38) per for some of the most traditional, ment bosses will be hoping for sim - c e :

R e tonne.” lower-end factories. ilarly positive energy as they try to u t e r s Farun had an annual production In May, Beijing announced its reinvent the city’s economy. n 10 Week in China China and the World 27 November 2015

Darwinian instinct Australia sends out mixed signals on investment review process

hree major Chinese invest - Tments in Australia – or at - tempts thereof – have come under intense scrutiny in the past week. The first is a bid by a private Chi - nese firm to buy a cattle farm; the second is the reported refusal to allow the State Grid Corporation of China to join a deal to privatise the New South Wales electricity grid; and the third is an agreement by the state government to grant the Chinese company Landbridge a 99-year lease of the Port of Darwin in the Northern Territory. “Malcolm, we’ve got to talk”: Obama is said to be unhappy about port deal In each case local opposition has been voiced on national security had a committee that looked into it tered that the security concerns grounds, providing a useful lens earlier this year and it reported in about the Darwin deal are over - on how Australia views China and April and recommended that the... stated, including Trade Minister An - its rise. Northern Territory Government drew Robb. “The fact of the matter is It also casts fresh light on that consult... with FIRB [Foreign Invest - Defence has step-in rights, so if evergreen conundrum for Aus - ment Review Board] and with the something happens for whatever tralian policymakers: how best to Australian Defence Department.” reason and they want to take control manage their country’s relation - Peter Jennings, the executive di - of the port, they can,” he insisted. ships with the world’s two largest rector of the Canberra-based Aus - Professor Hugh White of the Aus - powers, the US and China. tralian Strategic Policy Institute, tralian National University says the Concerns over the port in Darwin told WiC via email that the Darwin debate over Darwin also highlights stem from the background of the dispute is symptomatic of a deeper Canberra’s diplomatic challenges in Chinese firm that has leased it. Op - problem in how the country’s FIRB managing its two most important ponents of the deal have focused on assesses Chinese bids for Aus - relationships. the apparent connection between tralian assets. This week he told WiC: “Clearly Landbridge and the Chinese mili - “I think the aggregate volume of the closer we become to China eco - tary, including a page on the com - potential Chinese FDI is stressing nomically, the more we will face pany’s website that proudly refers an already broken FIRB system,” he choices between the US and China. to its in-house armed militia. warned. “It’s also the case that Chi - Washington is deeply displeased by Prime Minister Malcolm Turnbull nese business is qualitatively dif - what has happened, as we must ex - went on the defensive over the lease ferent because of the nature of the pect. Canberra has been in denial after speaking to President Obama at Party system and a lack of trans - about this, assuring us the ‘we don’t the APEC meeting in Manila this parency in how businesses are have to choose’, but in fact we face month. Reportedly, Washington is managed. It is idle to pretend that such choices all the time, as the Dar - P h o t

o annoyed, not least because it was not this is just ‘business as usual’ where win case shows.”

S o u r informed in advance. But Turnbull Australian critical infrastructure is Previously the Chinese have ex - c e :

R e explained: “The Northern Territory concerned.” pressed their own concerns about u t e r s parliament conducted an inquiry. I Other political leaders have coun - the American presence in Darwin, 11 Week in China China and the World 27 November 2015

after it was announced that a con - country. But Chinese investors don’t and an official was quoted as call - tingent of US marines would be seem to have been much deterred. ing it “serious discrimination based there. Acording to KMPG Australia, the against China”. More recently Beijing protested Chinese have invested A$70 billion But Australian unease at allega - at the (as it turned out, erroneous) ($49 billion) in Australia in the past tions of Chinese espionage aren’t news that B-1 bombers would be sta - seven years, becoming the single fully unfounded, says Peter Jen - tioned there (Washington later clar - largest foreign investor last year. nings from the Strategic Policy In - ified that Assistant Secretary of China is already Australia’s stitute. State David Shear “misspoke” when largest two-way trade partner too. “Beijing is an aggressive intelli - he told a Congressional hearing the The annual survey on Australian gence gatherer against Australia in aircraft would fly from Darwin). attitudes to the wider world from terms of government and private The case of the Kidman Ranch – the Lowy Institute paints a more sector interests. I believe there are the largest cattle station in the mixed picture, however. A ‘solid ma - justifiable concerns about the po - country – is different. This time the jority’ (77%) see China as ‘more of tential for China to seek to gather government blocked the sale to all an economic partner to Australia’ information of value to it under foreign buyers (including the Chi - than a ‘military threat’, while only the guise of business engagement,” nese) because the cattle station bor - 15% see China as ‘more of a military he warns. ders on the Woomera Protected threat’. Attitudes seem to be soften - Jennings has also been outspoken Area, a testing site for munitions ing too, with a 9-point drop in the on State Grid’s bid (made jointly used by the defence ministry. percentage of people (39%) thinking with Australian financial group Liberal Senator Richard Leyon - it ‘likely’ that ‘China will become a Macquarie) for Transgrid, the New hjelm, who has an agribusiness military threat to Australia in the South Wales transmission business, background, criticised the decision. next 20 years’. arguing that it should be treated in “We were promised a rejection of de - Australians also view China as the the same way as the 2012 decision to fensive policy – but there is noth - most important country to them block Huawei from a role in con - ing more defensive than a policy economically, ahead of the US. structing Australia’s national broad - driven by fear of the ‘Yellow Peril’. But 70% of respondents to the band network. The cattle industry would not exist Lowy poll also said that their gov - A report in the Australian Fi - but for foreign investment,” he ernment is allowing too much in - nancial Review last weekend sug - wrote in Farm Weekly. vestment from China. gested that defence and intelli - Nick Xenophon, an independent “Our historical polling suggests gence officials have recommended member of the Senate, welcomed that Australians may have a partic - the government reject the State the refusal, but called for more clar - ular aversion to Chinese investment Grid bid too. ity about the investment review cri - in residential real estate compared And on Wednesday the Senate teria after "the gobsmacking deci - with other forms of Chinese invest - stepped in and ordered a wider re - sion" on Darwin’s port. ment in Australia,” the survey’s au - view that will encompass Transgrid, “What doesn't make sense here is thors suggested. Darwin port and the blocked sale of that an iconic cattle property is to be The same sense of hesitation the Kidman Ranch. It will report kept in Australian hands on national seems to apply to purchases of ru - back on February 4. interest grounds. But a key strate - ral land, following a deal between Hugh White at the Australian Na - gic asset like the Port of Darwin is the ruling Coalition (made up of tional University says the confusion subject to a foreign takeover with the Liberal Party and the rural- highlights the need for a fresh per - barely a whimper from the Foreign based Nationals) and the Greens to spective on how to handle Chinese Investment Review Board,” he said. reduce the approval threshold for investment in Australia (see WiC173 When criticisms of Chinese in - foreign investment in farmland for a review of White’s book The vestment are raised, accusations of from projects worth A$252 million China Choice ). “The fears about Chi - racism are rarely far behind. For in - to A$15 million. nese investment do clearly reflect a stance, former leader Tony Abbott Buyers from China, and Ko - growing sense that China is, or warned against such sentiment in rea will all be scrutinised by the might become, a strategic threat to countering Labor’s concerns that FIRB, despite signing free trade Australia,” he suggests. “But they sections of the China-Australia Free agreements with Australia in the also show that Australia has not yet Trade Agreement (ChAFTA) might past 12 months. China’s Ministry of thought through the wider implica - allow more Chinese workers into the Commerce sees the move as hostile, tions of China’s rise.” n 12 Week in China Shipping 27 November 2015

The urge to merge Yet another giant SOE consolidation – this time in shipping and logistics

reform-minded minister in - lion): far larger than the proposed Atent on creating a world-beat - Rmb500 billion asset base of a com - ing Chinese company that attracts bined Cosco/CSG. international investment and draws A similar deal almost happened a on Western technology but which decade ago, if rumours are to be be - stays under government control. lieved. Indeed it has been suggested It might sound like someone on that Sinotrans’ current chairman a high-profile mission for current Zhao Huxiang left CMG in 2005 for Chinese president, Xi Jinping. But the logistics group in order to facil - in fact it describes Li Hongzhang, a itate a merger. Instead, he found leading government minister in himself overseeing a consolidation the later years of the Qing Dynasty. with Wuhan-based Changjiang Na - The business that he created – tional Shipping Company, which China Merchants Steam Naviga - She may soon have a new boss was completed in 2008 – although it tion – was China’s first joint stock took a further six years before the company. The Western competi - shift its headquarters to Hong Kong two companies had fully integrated tors he had in his sights were Hong in the 1980s. their operations. Kong-based merchants Jardine 21CN Business Herald says the In a press conference last week Matheson and Butterfield and idea came from CMG and has been Zhao argued that a tie-up between Swire. Li’s efforts formed part of a approved in principle by Sasac, CMES and Sinotrans & CSC would broader ‘self-strengthening’ move - which will remain the ultimate be more straightforward as the op - ment that was popular at the time shareholder of the merged entity. erations of the listed entities will (although he was less successful in The newspaper also claims the not change significantly and the propping up the ailing Qing Dy - merger will take a different form groups have complementary rather nasty). After its establishment in from the enforced merger between than overlapping businesses. 1873, China Merchants did break train rolling stock manufacturers Sector experts agreed, noting too the duopoly of the British hongs in CNR Corp and CSR Corp, or the po - that – unlike Cosco and CSG, which Yangtze River shipping. tential joining of container shipping are expected to confirm their Almost 150 years later, the com - giants China Cosco and China Ship - merger early next year – none of the pany the Qing bureaucrat created is ping Group (CSG). companies concerned have sus - spearheading another round of re - There will be no asset swaps be - pended trading in their stocks pend - form of state-owned enterprises tween CMG’s maritime arm China ing further details of a deal. (SOEs). Last week, the listed entities Merchants Energy Shipping Both CMES and Sinotrans & CSC of shipping firm Sinotrans & CSC (CMES ) and the Sinotrans & CSC have energy transportation busi - Holdings announced that they had listed entities. Instead, the merger nesses which can expect to be a fo - received notice from their parent will take place at group level and cus of the new arrangements, says about a strategic restructuring that CMG will use its financial firepower 21CN. Likewise, the partners both could see their businesses run by a (it is better known for its banking have shipping businesses, with new controlling shareholder. operations) to structure the deal as CMES focusing on regional markets P h o t o According to the Chinese press an acquisition, with Sinotrans & and Sinotrans & CSC on more do -

S o u r c that new shareholder will be China CSC becoming a subsidiary. mestic business. Linking them e :

I m

a Merchants Group (CMG), the latest A merger would create a super - would create a shipping services g i n e

C incarnation of China Merchants tanker of an SOE with total assets of chain underpinned by the logistics h i n a Steam Navigation, which went on to around Rmb700 billion ($110 bil - capabilities of Sinotrans. n 13 Week in China Society and Culture 27 November 2015

Coming of age Why a popular genre of Chinese movie usually features an abortion

ollywood is the spiritual home Hof the blockbuster action flick; of more arty, melancholy movies; and Britain of the period drama (think Anthony Hopkins and Emma Thompson wandering around imposing stately homes). How about Taiwan? Well, its film - makers seem to have found the se - cret sauce for producing teenage ro - mances. The rough story arc: boy meets girl at high school, time flies, they grow up and drift apart, before meeting once again. Such elementary ingredients saw You Are the Apple of My Eye take in more than NT$410 million ($12.6 million) in 2011, registering as the island’s third biggest box office hit ever. When released in mainland China in 2012, You Are the Apple of My Eye broke the record for a Tai - wanese movie, earning Rmb76 mil - lion ($12 million). But that perform - ance is going to be surpassed by Our Times , another adolescent love story. The plot begins in present-day Taipei where lead actress Joe is Joe Chen: Taiwanese star is popular with teens across the strait in her thirties and stuck in a dead- end job. One night she recalls her more than NT$530 million) didn’t film moguls aren’t likely to pass on puppy love of the 1990s (the excite mainland audiences, with attempting to make a domestic ver - younger Chen is played by Vivian one critic blaming the movie’s “im - sion too. Sometimes, though, they Sung, a clumsy girl who spends her plicit Japanophilia” – a result, he add a twist of their own. Take So days fawning over the most popular said, of Taiwan’s colonial past under Young , where a Chinese woman re - boy). Straightforward stuff, it seems, Japanese rule. connects with her college sweet - but Our Times has already grossed Our Times opts for the safer heart. It was a commercial success, more than Rmb100 million in China themes of first love and coming of as were My Old Classmate and Back since its debut last week. age, experiences that can be shared in Time .

P Teen romances from Taiwan by those on both sides of the Tai - But unlike their Taiwanese h o t o

S aren’t guaranteed to be hits. Cape wan Strait. brethren, all three featured a gritty o u r c e No.7 , the highest grossing Chinese- Of course, if a genre is seen to be subplot: abortion. :

C F P language movie in Taiwan (it made working with audiences, China’s “So Young , My Old Classmate and 14 Week in China Society and Culture 27 November 2015

Back in Time have been considered China Daily reports, the number of ure in quick succession to hit the the trilogy of our youth romance under 16s undergoing abortions is back of the net against a minnow of genre. Three movies, three abor - growing 30% a year, triggering con - world football – has almost certainly tions. A 100% abortion rate,” Sina cerns about the effectiveness of sex prevented China from qualifying for Entertainment notes. education among young people. the World Cup Finals. “Wait a minute, why do they al - Traditionally discussion about “The Chinese Football Associa - ways jump to abortion after hav - the birds and the bees has been tion (CFA) has apologised for the na - ing the first kiss? What has hap - something of a taboo subject for tional team’s poor performance in pened to our teen films?” a netizen Chinese parents. According to the qualifying matches for the 2018 commented in a post on the same same report in The Economist, a 24 World Cup in Russia,” wrote the article. year-old forestry student from Bei - China Daily. “The association said it Pregnancy terminations now jing informed the magazine that his took full responsibility for the seem so associated with some of parents had told him he had team’s lacklustre displays and apol - China’s ‘teen films’, that when you “emerged from a rock” when he en - ogised for letting supporters down.” type that term into the search en - quired about his origins. When the The admission came after angry gine Baidu, “abortion” pops up as a same man started having sex with fans took to the web to lambast yet complementary keyword. his university girlfriend he had little another chapter in the team’s his - “Watching Taiwanese teen films idea about contraception. tory of underperformance. is like taking a warm bath or cycling In the absence of better sex edu - Aside from the result in Hong along sea breezes. Very relaxing and cation in schools and at home, per - Kong itself, hordes of fans were up - very comfortable,” a critic writes on haps mainland film producers are set by the CFA’s reaction to it: silence China.com. “But the same genre of taking on more of the responsiblity and denial. movie in the mainland tackles a themselves. Their dramas may not Titan Sports pointed out that the much more brutal reality. That is have the same lyricism as their Tai - association’s own webpage “proves the biggest difference.” wanese progenitors but at least they the ugliness of the CFA”. Why so? The ThePaper.cn reckons that Tai - make plain the consequences of weekly newspaper noted that two wanese directors handle the genre careless coupling for teens. days after the depressing result, the more skilfully, blending the right CFA’s homepage featured just three mix of sentimentality and comedy. headlines: one about a victory for Across the Strait there are much the under-16 women’s national harsher realities to contend with. “In team, another about a game with mainland productions the boys and Getting shirty Bhutan and a third relating to the girls all have to undergo vigorous Victorious Evergrande FC’s Chinese Olympic football team. labour pains to grow up. Their com - sponsor is mightily upset But as Titan pointed out, there ing of age typically involves sacri - was no mention whatsoever of the ficing an unborn baby. If that’s not or Chinese football it was a week match everyone was talking about: cruel enough, some scriptwriters Fof apology, glory and recrimina - the goalless draw with Hong Kong. resort to car crashes so that the tion. In an action-packed seven days Titan’s conclusion: “It [the CFA] youthfulness of the lead characters the country’s top team even faced a feels ashamed and tries to save face.” is crushed to pieces,” ThePaper.cn potential lawsuit – from its own The sports news outlet added dis - suggests. sponsor – while one of its owners – missively: “Without the courage to But is Chinese cinema just mir - Alibaba’s Jack Ma – was compared to face failure and even the spirit of roring reality? About 13 million Mao Zedong for the frenzied adula - seeking truth from facts, how can abortions are carried out annually, tion accompanying his appearance the CFA talk about ‘reform and de - according to the technology re - at Saturday night’s big game in velopment’?” search centre under the National Guangzhou. The CFA’s boss also came in for a Health and Family Planning Com - But let’s start with the apology. bashing from leading football com - mission, the China Daily reported On Monday the China Daily re - mentator Dong Lu. In a scathing as - in January. The Economist, citing an ported that the nation’s football sessment of Cai Zhenhua, Dong estimate by the health agency Marie governing body had finally spoken noted that he was also caught by Stopes, says that the annual figure up about last week’s goalless draw TV cameras looking at his phone may be closer to 40 million. with Hong Kong. That somewhat when the winning goal was scored At a public hospital in Tianjin, the embarrassing result – its second fail - at Saturday’s AFC Champions 15 Week in China Society and Culture 27 November 2015

dia glory for long. No sooner had it raised the trophy aloft than busi - ness-focused magazines like Caijing and Caixin Weekly were chastising the club for “defaulting” on contrac - tual obligations to its sponsor Dongfeng Nissan. That’s because on the night of the final the team replaced the logo on its shirt promoting the Venucia car to one publicising its co-owner’s move into a new business line. The shirts read ‘Evergrande Life’, following Evergrande’s purchase of 50% of Great Eastern Life Assurance- China for Rmb3.94 billion this month (the company was swiftly re - named Evergrande Life). However, Caixin said this “fla - grantly breached its contract” with the Sino-Japanese sponsor and il - lustrated that the club “obviously does not know how to safeguard the rights of its core sponsor that con - tributes a quarter of the team’s total revenues”. According to state media Dongfeng Nissan has responded that its deal with the club – worth Rmb110 million annually – states that it has the sole right to adver - tise on the team’s shirts and that Pity for Dongfeng Nissan the name on the winning shirt wasn’t its own “changes should be made under mutual consent”. League final. Dong asked of Cai, a Evergrande’s success retriggered Dongfeng says it rejected a re - former table tennis player, “Does the debate about how the football quest to switch logos for the final, he really love football? Does he re - world reflected the difference be - but the club went ahead with it any - ally understand the laws of foot - tween the efficiency of the private how. State media adds that the car - ball? Does he have enough courage sector and the lumbering nature of maker says it has started legal ac - and determination to change the the state system (as embodied by tion against the club, while status quo of Chinese football? I the CFA). Another sports commen - Evergrande claims to be “open for think these may become huge tator Jianxiang made the negotiations and wishes Dongfeng question marks after tonight.” point explicitly: “Evergrande’s abil - Nissan to continue its sponsorship”. Indeed, many of the recrimina - ity to succeed confirms that if the This wasn’t the only non-football tions about the CFA – and its un - government gets out of Chinese soc - related matter of the evening. The precedented apology – came after cer and gives it over to the market other talking point centred on the the success of Guangzhou Ever - and society, there will be quick re - manner in which Chinese fans at the grande Taobao in the aforemen - sults. Evergrande don’t only rely on the stadium responded to the club’s P h o t o tioned game at the weekend. money, but also the most profes - co-owner Jack Ma. The Alibaba bil -

S o u r c In this instance, the Chinese team sional skill levels and methods to lionaire isn’t regarded as a football e :

I m

a was the victor, winning its second improve their game.” expert. But whenever Ma responded g i n e

C Asian championship in three years In spite of its success on Satur - to play or made hand gestures he h i n a by defeating Dubai’s Al Ahli one-nil. day, Evergrande didn’t bask in me - was greeted with whoops of adula - 16 Week in China Society and Culture 27 November 2015

tion by the crowd, clearly in thrall to his fame and fortune. Online this led some to draw comparisons between the attention Ma was receiving at the match and the kind of worship once bestowed on Mao at the height of the Cultural Revolution. “Ma is the reincarnation of Mao,” wrote one blogger. “Many people lis - ten to Ma’s words like disciples. Or, as they say, when the drums beat the followers flock forward to the battlefield like tigers down the mountain.” Hungry for success: actors Hemsworth, Lawrence and Hutcherson Another worshipper wrote: “Ma is the contemporary version of Mao. ate the citizens of Panem that has carrying Jennifer Lawrence’s Although some netizens criticise made her such an icon. Fans view Valentino purse as the cast took to him, he doesn’t have to care about the actress “as if she was a member the Great Wall. Hemsworth later told that, because this is how great peo - of their family,” the Global Times American TV host Jimmy Kimmel ple are.” says. that he thought the Great Wall was Of course, while Ma was inspir - At the box office, The Hunger spectacular: “A lot of hard work was ing the fans from the stands, and Games: Mockingjay — Part 2 racked put into that wall. I respect it.” despondent Dongfeng Nissan exec - up $16 million in its opening week - Hemsworth’s praise for China’s utives were wondering what had end in China. Lionsgate – the studio air quality was more measured, happened to their shirt sponsor - producing it – linked up with China however, telling Kimmel: “We ship, we shouldn’t forget that the Film Group to hold its first ever pre - couldn’t see very far because of the real star of the evening wasn’t Chi - miere in China, which was attended smog, you could have been on any nese at all. by Lawrence, co-stars Josh Hutcher - small, brick-like bridge”. Yes, the scorer of the winning son and Liam Hemsworth, and di - Mockingjay – Part 2 was Lions - goal was the Brazilian striker Elke - rector Francis Lawrence. Adoring gate’s biggest effort yet in China, de - son, who broke the deadlock in the tributes ensued. “It seems that buting on several thousand screens, 54th minute. everywhere this young actress goes, And the movie’s success in China laughter follows. Her current trip to comes despite its seemingly con - China is no different,” said the tentious political message – after Global Times, which focused on all, this is a film about rebels over - Lawrence’s love for laughter, at one throwing an authoritarian regime. Red arrows point describing her giggling so The film’s director said the author Latest Hunger Games movie much she could barely stand up. of the series, Suzanne Collins, had set proves big hit in Beijing “Lawrence certainly has a repu - out to write about the consequences tation for being a fun extroverted of war and violence, but that “one of true measure of success for in - person. She humorously dealt with the odd things that’s started to hap - Aternational celebrities in China her falls on her way to the stage pen now is that some of the ideas is when they are bestowed with an when receiving her Oscar in 2013 that are in our movies are getting re - affectionate nickname. Jennifer and also during the red carpet for flected back into real life”. Lawrence, beloved for her portrayal the Oscars the following year, which The franchise hasn’t always had of freedom fighter Katniss Everdeen made fans just love her even more,” an easy time of it in China, although in the Hunger Games series, is pop - the newspaper gushed. apparently (and surprisingly) not ularly known as Da Biaojie , or ‘older There were more jolly japes in because of its political content. cousin’. In fact China is consumed photos from the cast’s publicity Mockingjay – Part 1 opened in the by Lawrence-love right now, and tour. One showed Hemsworth, who US in November 2014, but didn’t likewise with the tale of the “girl on plays the brooding hero Gale reach China until February this year, fire” who leaves District 13 to liber - Hawthorn, wearing a panda hat and after authorities pushed back the 17 Week in China Society and Culture 27 November 2015

opening date to balance the commer - screens. These included survival rules restricting overseas movies to cial box office hauls for domestic and epic Everest , sci-fi flick Maze Runner: 34 releases per year. foreign movies in the calendar year The Scorch Trials , Snoopy’s first 3D This week also sees the launch of 2014. outing The Peanuts Movie , and of The Martian , with Matt Damon. No - A similar commercial jig oc - course James Bond in Spectre . vember has been so busy that the curred this year, with July’s black - Mockingjay - Part 2 was released quota for the year is nearly used up, out of foreign films giving priority on the same day as the Sino-French meaning that The SpongeBob Movie: to domestic titles. But that’s meant thriller The Transporter Refuelled , Sponge Out of Water , which opens this November has seen a bonanza which is said to be a co-production on December 1, could be the last in - of foreign movies hit Chinese and so does not come under the ternational offering of the year. n

Ask Mei: A country of contrasts

But what was more surprising was what I saw moments later from my hotel window. Gazing at the surrounding area from an elevated level, I could see two newly finished high rise apartment blocks close-by. But less expected, I also saw an area resembling a shanty town. There were dozens of dilapidated houses crammed together, most of their roofs covered with dirty plastic sheets. The contrast of the old and new, the luxurious and shabby was so great that I couldn’t quite adjust my eyes. And all of this within a single block! Later I asked a local friend: “How can such shabby houses stay next to some of the most expensive developments in the city centre?” He shrugged: “It’s because we Chinese finally learned about respecting property rights and stopped bulldozing these rickety buildings down to make way for During a recent trip to Chengdu, which is one of my new development. I bet the owners of these houses are favourite cities in China, I stayed at a brand new five- too smart and greedy to accept the price currently being star hotel that combines the best of traditional Chinese offered by the developer. That’s why they are still there.” architecture with the most sophisticated modern Upon hearing this, I made a mental adjustment. Over comfort. One early morning, I walked around the hotel’s the years I have regretted and sometimes even neighbourhood and explored a new Xintiandi-type of resented the disappearance of old Chinese architecture, commercial area next door. I first saw a Tesla showroom and the relentless rise of modern skyscrapers. next to the popular Taiwanese restaurant Ding Tai Fung. But in this situation, I felt the opposite. I have to Turning the corner, I ran into glitzy luxury stores for the confess that I’d rather see the shanty town replaced. likes of Gucci, Cartier and Hermès. Not all things old are worth keeping. And not all new A few more yards down the street, I came across a property development is bland, boring or out-of-place. beautifully restored temple. Daci Temple (or Big Benevolence Temple) was first built in the 3rd and 4th centuries. Xuanzang, the famous Tang Dynasty monk A native Chinese who grew up in northeastern China, who made a historic journey to India, took his vows in Mei attended an elite university in Beijing in the late this temple in 622. The building is grand and elegant, 1980s and graduate school in the US in the early 1990s. with beautiful calligraphies, statues, traditional Over two decades she has worked in the US, Hong courtyards and gardens. However, stepping outside the Kong and mainland China, where she has honed her temple, I time-travelled straight back to the 21st century, bicultural perspective. If you’d like to ask her a question, seeing a Starbucks and a statue of Kungfu Panda. send her an email at [email protected]

18 Week in China And Finally 27 November 2015

Growing quickly ‘Golden Spear’ wants to supplant Viagra

igh speed railways, low-cost Brother’ in Chinese. Hhandsets – and now drugs for Jin’ge was the first chemically erectile dysfunction. similar version of Viagra to be re - The list of cheaper technologies leased in the domestic market but that China wants to supply to the there are other companies offering rest of the world took an intimate erectile dysfunction drugs with the turn last week when the makers of same sildenafil ingredient. Jin’ge is taking on Viagra Jin’ge – a Viagra equivalent – an - In fact Pfizer had to fight hard nounced plans to start selling over - to keep the company’s patent for an aging population, means that de - seas. the full fourteen years. In 2004 it mand is growing. Jin’ge – literally ‘Golden Spear’ – lost patent protection after a chal - Last year a survey of the nation’s appeared in shops last October, lenge from a group of local drug sex life got straight to the point by shortly after Pfizer’s fourteen-year makers. Two years later a court in asking men if they were “hard like patent had expired in the Chinese Beijing reinstated it. Viagra also cucumber” or “soft like tofu”. A little market. serves as a cautionary tale for West - over half (55%) reported the former. Last week Guangzhou-based ern companies seeking to trade - The domestic media returned to Baiyunshan Pharmaceutical Hold - mark their product names in China. the same theme last week, estimat - ings announced that sales had By the time Pfizer got round to reg - ing that 127 million men over the reached Rmb700 million ($109.56 istering Wei Ge as the brand’s Chi - age of 40 suffer from erectile dys - million) – more than half way to its nese language name, local compa - function, but that many younger target of Rmb1 billion a year by 2017. nies had already claimed it. men suffer from it too, with work Success at home is encouraging Officially Viagra is now known as and economic pressures cited as two the pharma firm to go international. Wanaike, which translates loosely as contributing factors. “We have started applying for sales ‘make love 10,000 times’. Traditionally, Chinese men want - of the medicine in several countries In spite of its local difficulties, Vi - ing a little more oomph have opted and regions, as global demand is agra still has the largest market for herbal remedies made from huge,” deputy general manager share, even with rapid rise of Jin’ge. crushed tiger bones. And for those Wang Wenchu told local press. Studies have suggested the Chi - that still prefer a natural boost be - Golden Spear is about half the nese market is large enough to in - fore bedtime, Baiyunshan has its price of Viagra, which is known col - corporate several players. A high in - own herbal remedy called Tie Ma loquially as Wei Ge or ‘Mighty cidence of cigarette smoking, plus or ‘Iron Horse’. n

Not a winter of discontent

“Beijing just embraced the first snow of the year, which indicates the advent of winter, but I believe that P h for Lenovo we are ushering in a more brilliant season and the hardest time has become history” o t o

S o u r c e

: Lenovo boss Yang Yuanqing tells CBN that the worst is over for the PC and smartphone maker after

* I m a g a $714 million loss (its first quarterly loss in six years). Yang said the company will grow smartphone i n e

C sales in emerging markets, sell more servers to Chinese corporates and cut 5% of staff. Yang: looking ahead h i n a

19 Week in China The Back Page 27 November 2015

Photo of the Week In Numbers 55% Fall in reported profits in the first six months for Hong Kong-listed cosmetics retailer Sa Sa International. Its boss Simon Kwok said “Overall, Hong Kong’s tourism has been losing its competitiveness gradually”.

30% P h The percentage of global luxury spending o t o

S in 2014 that was made by the Chinese, up o u r c e ten-fold from 2004, according to the :

I m a Financial Times. But consultancy Bain & Co g i n e

expects a 2% contraction this year in C h i n a domestic luxury sales.

Winter is coming: heavy snowfall blanketed the Great Wall of China and 50 million the nearby capital city Beijing over the weekend The number of citizens China intends to ‘pull out’ of poverty by 2020, according to a statement from the Chinese Communist Party on Monday. At the meeting it was Where is it? declared that 700 million rural citizens Some of the places referred to in this issue have risen from poverty since Deng Xiaoping’s ‘Reform and Opening Up’ programme began in 1978. In 2014, Beijing China’s rural poverty line was drawn at those making less than $438 a year. China Nanjing 12% Shanghai The percentage of Peking University Hangzhou Chengdu graduates who joined start-ups in 2015, up from 5% in 2004, according to McKinsey.

Guangzhou Dongguan 6% Hong Kong The percentage of Chinese holding a passport, according to the Financial Times.

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