• Asia Thrives On China’s Rising Affluence – Boomtown In Tough Times

• India’s Luxury Car Market Strong Despite Slower Global Auto Sales
• Using Feng Shui To Predict The Winner of 2008 Election

Beijing is planning tax cuts and a public-works spending spree

China’s leaders are planning tax cuts and a public-works spending spree to make sure their economy’s growth isn’t doused along with the Olympic flame.

Ten of 11 summer Olympics host nations analysed by Morgan Stanley economist Stephen Jen saw growth and investment slump in the year following the Games; the only exception in his study, which stretches back to 1956, was the US in 1996.

Government officials in China, whose expansion was already slowing before the Beijing Games ended last month, are determined to avoid what Mr Jen calls the ‘Olympic Curse’. That would provide a welcome boost for some of China’s neighbours, including South Korea and Taiwan, as well as for commodity producers from Australia to Brazil whose economies are threatened by faltering demand from the US, Japan and Europe.

‘The Chinese authorities will do whatever they can to avoid a sharp slowdown,’ said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about US$108 billion. ‘China’s economy will be a key pillar of strength for Asia.’

China has already eased lending restrictions and halted an appreciation of the yuan that was starting to pinch exports. Now, after four straight quarters of decelerating gross domestic product growth, the
government is considering a fiscal stimulus of as much as 400 billion yuan (S$83.4 billion), according to economists and reports in domestic news media.

A plan awaiting approval from the State Council and the National People’s Congress includes 220 billion yuan of spending and 150 billion yuan of tax cuts, the Beijing-based Economic Observer newspaper reported last week.

China has tripled railway spending this year to 300 billion yuan. The current five-year plan, which runs through 2010, calls for investing almost 4.8 trillion yuan on power stations, waterways, roads and other infrastructure projects – more than the combined output of Taiwan, Thailand and Vietnam. Reconstruction after May’s Sichuan earthquake could cost another one trillion yuan, the government says.

‘As the Chinese economy moderates, official priorities are tilting towards maintaining growth and employment,’ said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co in Hong Kong. ‘China’s infrastructure spending could even accelerate after the Games.’

China might go beyond fiscal stimulus. The People’s Bank of China said on Aug 15 that it would ‘fine-tune’ monetary policy to cushion the economy as overseas demand weakens.

Frank Gong, head of China research at JPMorgan, expects the central bank to reduce the portion of deposits banks are required to hold as reserves by 2.5 percentage points, to 15 per cent, by next year.

China’s inflation rate ‘is coming down, so they have got potential to take their foot off the brake and ease up on monetary policy’, AMP’s Mr Oliver said. The rate peaked at 8.7 per cent in February and was 6.3 per cent in July.

China’s growth slowed to a 10.1 per cent annual rate in the second quarter after a recent high of 12.6 per cent in the second quarter of 2007.

Some economists say that China’s expansion – still the fastest among the world’s 20 biggest economies – remains strong enough to maintain its momentum without new spending or monetary easing. ‘But it’s an uncertain world situation, so a month or two from now, those plans may
look very smart,’ said David Dollar, the World Bank’s director for China.

About 20,000 Hong Kong-owned businesses will close or relocate from China’s nearby Guangdong province by the end of this year, in part because of slowing export demand, according to the Hong Kong Small and Medium Enterprises Association.

In a country where the number of new job-seekers each year exceeds the number of jobs created by 20 million, a decline in economic growth to even 8 per cent would be tantamount to a recession, said Tao Dong, chief Asia economist with Credit Suisse AG in Hong Kong. Anything ‘below 9 per cent would make the authorities quite nervous’, he said.

That figure is significant for China’s neighbours as well. For every one percentage point that China increases its growth rate, the rest of Asia will be boosted by half that, said Huang Yiping, chief Asia
economist at Citigroup Inc in Hong Kong.

Among countries with the most at stake are Taiwan, which shipped almost 36 per cent of its total exports to China last year; South Korea, which sent 25 per cent; and Japan, which shipped 19 per cent, according to UBS AG.

Japan, whose economy shrank at an annual rate of 2.4 per cent last quarter, would be even worse off without strong demand from China, which replaced the US as Japan’s biggest customer in July.

China has ample funds to pay for pro-growth policies, with outstanding debt of only 15.7 per cent of GDP, compared with 75 per cent in India, a budget surplus and the world’s largest currency reserves, at US$1.8 trillion. — Bloomberg

We have moved to our new home at TrendSniff.com –

New blog entries:-

“New Media Reaps Benefits From Buildup To Olympics“

“China eCommerce – Hidden Dragon Set For Takeoff“

“Guide To Researching New Markets In Asia Pacific“

“World Population Day – People Power In Asia“

“Good Vibes in China’s Online Video Industry” ……

Ozone Media, an internet advertising network based in Bangalore, has landed an undisclosed sum of first round funding (media reports suggest $4 million) from IDG Ventures India, which is a $150 million early-stage technology venture capital fund.

Riding on current business trends in Asia, IDG Ventures now has 8 India companies in its portfolio and plans to invest in 2 more this year, possibly companies in the mobile payments arena.

According to a recent Lintas media report, internet advertising in India grew 43% over the past year and is expected to grow 10-fold to Rs 2500 crore by 2011. Earlier in June, Bangalore-based online video advertising startup Jivox had raised $10.7 million funding from early-stage US venture firm Optus Capital and India-based Helion Venture partners.

Jivox, headquartered in California and commenced Indian operations in March this year, provides SMBs with an affordable, self-service video advertising platform that offers development, hosting and placement services.

Ozone offers customised service for advertisers across verticals such as news, financial services and entertainment. The latter has partnered with an IDG portfolio firm in South-East Asia to source advertising leads there looking to target Indians.

IDG Ventures India had previously partnered with Softbank China to provide financing of “less than $10 million” for Mumbai-based online gaming startup Kreeda Games India. Bodhi Investments (managed by Softbank China and India Holdings) is a venture capital vehicle that has investing interests in telecommunications, media and technology companies in China, India and the ASEAN countries.

India’s mobile content market is also set to explode but lacks an advertising network to act as a catalyst for monetization. Mobile advertising, which is hot in India simply because for every internet user, there are 5 cellphone users, is also projected to grow from Rs 40 crore currently to Rs 500 crore by 2011.

The past week had several Asian countries reporting record June inflation figures largely fuelled by soaring food costs, energy prices and removal of oil subsidies by some governments in the region.

India – 11.63 percent (late June), 13-year high

Indonesia – 11.03 percent, 21-month high

Philippines – 11.4 percent, 14-year high

South Korea – 5.5 percent, 10-year high

Taiwan – 4.97 percent (updated)

Thailand – 8.9 percent, 10-year high

Vietnam – 26.8%

China – 7.7 percent, May (will update as above for June when available)

Hong Kong – 5.7 percent (May)

Malaysia – 3.8 percent (May), 22-month high

Singapore – 7.5 percent (May), 26-year high

Taiwan – 3.71 percent (May)

]]> http://trendsniff.wordpress.com/2008/07/04/june-inflation-soars-in-asian-markets/feed/ 0 karmic latte http://trendsniff.wordpress.com/2008/07/02/youku-stays-on-course/ http://trendsniff.wordpress.com/2008/07/02/youku-stays-on-course/#comments Wed, 02 Jul 2008 23:47:54 +0000 karmiclatte http://trendsniff.wordpress.com/?p=81 ]]>

Despite being conspicuously missing from a list of 247 approved online video services providers recently licensed by China regulators, Youku or the Chinese YouTube equivalent, has confirmed an additional US$30 million raised in private equity funding and secured a US$10 million equipment loan provided by Western Technology Investment. Maverick Capital led the round and was joined by existing investors Brookside Capital, Sutter Hill Ventures, Farallon Capital and Chengwei Ventures.

Youku also announced it has entered into content cooperation partnerships with over a hundred traditional media groups including Shanghai TV, Beijing TV, Jiangsu TV, China Film Group, Universal Music, EMI Music, Huayi Music and a large number of top film, TV and music performers in China.

Launched in December 2006, Youku had completed three rounds of venture financing worth US$40 million by November last year. According to Nielsen/NetRatings, Youku had registered more than 12 million unique visitors and more than 100 million video views a day in December last year.

In a press interview on Sina tech news earlier last month, Youku claimed that it had surpassed close rival Tudou, which counts US company IDG among its backers, as China’s number one video sharing website. Tudou.com, which received a warning from Chinese authorities and briefly suspended operations in March, had raised US$57 million from venture funds in April (to read more on Tudou’s co-founder Marc Van Der Chijs’ views on gaming portal success in China, click here).

During the Olympic Games in August, internet users will be able to enjoy free wireless access as the “Wireless Beijing” project has begun its trial phase. CECT-Chinacomm Communications, the project’s service provider, said the program adopted the WIMAX+MESHWIFI technology and speed will be no less than 512kbps.

The trial network covers 100 square kilometers comprising 5 of the city’s urban areas, including the CBD area, Financial Street, Zhongguancun, the Wangjing zone and Yizhuang region.

By 2009, 90% of Beijing should be equipped with free wireless as the sole provider, CECT-Chinacomm Communications, is building up to 9,000 access points in public areas and 150 WiMAX stations. The citywide wireless network is scheduled to be completed in 2010.

The network, which will be free of charge during the Olympics, will cost users 0.12 yuan per minute after the Games. People can also choose another three prepayment methods, 20 yuan for one day, 60 yuan for five days and 80 yuan for one month.There is no limit on traffic.

In Nanjing, which is located near Shanghai, the price is much cheaper than in Beijing, at 0.05 yuan per minute during the promotion period.

The wireless network currently provided by China Mobile offers three payment methods – 30 yuan for 15 hours, 50 yuan for 40 hours, 100 yuan for 200 hours, and 0.05 yuan for each extra minute. These prepaid service hours are effective in all cities in China and must be used within one month.

After the conclusion of the UEFA Euro 2008, next up is countdown to the Olympics.. 40 days to go!

China is experiencing an explosion in credit card ownership, with the number almost doubling in first quarter 2008 from a year ago. According to the People’s Bank of China, the number of credit cards in circulation surged 92.9% over last year to 104.73 million as of end-March. There were 1.58 billion bank cards, including debit and credit cards, which is an increase of 29.1% over 2007, the central bank said.

Online shopping in the Asia Pacific is growing annually at 23.3% to reach US$168.76 billion by 2011, led by the new markets of China and India, based on a MasterCard study. By 2010, China’s online population is projected to hit 480 million and comprising almost 58% of the region’s internet shoppers from the current 49.9%.

Their survey of 4000 respondents in the Asia Pacific found that Singapore and South Korea are the top online spenders in the region, spending US$770.70 and $707.50 respectively over a 3-month period. 76% of total respondents intend to make a purchase in the next 6 months. Secure payment facilities, price and convenient payment methods were cited as the most important factors in making an online purchase.

I personally find Baidu.com or Yisou (yahoo china) better than Google in producing more pertinent search results in Chinese. Anyway, no surprises here.. Facebook has launched a Chinese version of its website.

Popular Social Networks in Asia Pacific, April 08 (Source: Venturebeat)

Quick Facts on Internet in China:

• Number of .cn domains: 11.8 million registrations – overtook .net as 2nd most popular domain, 1st qtr 08

• Broadband subscribers: 71.6 million (28% growth over 1st quarter 07 and 20% household penetration rate) - surpassed the US as largest fixed broadband market, March 08

• Total internet users: 221 million – overtaking the US as the largest internet market, April 08

• Network video user population: 160 million at end 07 (China Internet Network Information Centre)

• There were 55 million domestic online shoppers in 2007 who spent a total of 59.4 billion yuan (8.6 billion US dollars). U.S. online retail sales last year totalled more than 136 billion US dollars.

Taobao.com, the leading ecommerce site in China, expects 2008 transaction volume to increase 130% from the previous year and exceed 100 billion yuan (14.4 billion USD). Transaction volume was 18.8 billion yuan for first quarter 2008, up 170% from the corresponding period in 2007. Taoboa, often touted as China’s eBay, was started up in 2003.

• Total online shopping expenditure (Jan-May 2008): 16.2 billion yuan = 2.35 billion US dollars

Top 5 China Internet Retailers -

1. Taobao.com (subsidiary of Alibaba.com)
2. Danddang.com
3. Joyo.com (China subsidiary of Amazon)
4. Eachnet.com
5. Paipai.com