State Council to Deploy Policies to Improve Import and Export of Consumer Goods

On April 28 Chinese Premier Li Keqiang chaired an executive meeting of the State Council, main content of the meeting includes, the deployment and improvement of policies on the import and export of consumer goods, abundance of domestic consumer shopping choices; acceleration of oil products quality upgrading to promote air pollution control and technological upgrading of enterprises; implement of the rare earth tungsten and molybdenum resource tax reform to rationalize the relationship between resources and tax.

The meeting held that the expansion of domestic consumer demand could promote economy growth and structural adjustment. In order to meet the consumption upgrading requirements, the government will improve the tax adjustment policies to create a fair competitive environment for import and export, to increase the imported consumer goods which masses have strong willingness to buy, the government will also promote exports of goods with international competitiveness, thus expanding domestic demand and employment, promoting the domestic industry towards high-end level. 

The meeting confirmed that the relevant departments should come up with concrete programs based on scientific assessment, first, regarding some foreign consumer goods for which the consumers have a large demand, the government will carry out pilots, reduce tariffs, and expand the scope of the tax reduction goods before the end of June this year. Second, the government will improve the consumption tax policy of the clothing, cosmetics and other consumer goods, coordinate and adjust the tax base, tax rate and links. Third, the duty-free stores will be increased, the duty-free varieties will be expanded, the amount of the tax-free shopping will be increased, thus it would be more convenient for Chinese consumers to buy foreign products in China. Fourth, the government will further promote the establishment of passenger shopping clearance and tax facilitation, formulate inspection and quarantine policies to promote the development of the cross-border e-commerce and clean up unreasonable charges during importing. Five is to accelerate the Chinese brand promotion projects, support the development of the offline store and achieve online and offline interaction.  (www.chinainout.com)

Economic Recession Good for Health

While an economic crisis results in untold misery for countries and their people, a new study of health in Cuba has suggested there could be a silver lining during lean times.

Researchers appear to have implied that people can lose weight during a recession due to a reduction in eating and increasing physical activity.

Their dramatic findings, published online in the British Medical Journal, were based on a study in Cuba, wher the population suffered food and fuel shortages following the economic crisis of the early 1990s triggered by the collapse of the Soviet unio.

This resulted in an average of 4 to 5kg (8 to 11 lbs) being shed by the people and subsequent rapid declines in deaths from diabetes and coronary heart disease.

The scientists from the University of Alcalá, in Madrid, also discovered that when Cubans put the weight back on, cases of diabetes surged again.

The researchers concluded that the Cuban crisis could have lessons Britain.

They suggested that an average weight loss of just eleven pounds across the UK could cut deaths from heart disease by a third while the mortality rate of type 2 diabetes, the form of the condition related to obesity, could also be halved.

Whole population trends in food consumption and transport policies linked to physical activity could reduce the burden of two major illnesses, said the researchers.

"During the deepest period of the economic crisis in Cuba, from 1991 to 1995, food was scarce and access to gas was greatly reduced, virtually eliminating motorised transport and causing the industrial and agricultural sectors to shift to manual intensive labour,” said Prof Manuel Franco, who led the international team of researchers from Spain, Cuba and the United States.

"We found a population-wide loss of 4-5 kg in weight in a relatively healthy population was accompanied by diabetes mortality falling by half and mortality from coronary heart disease falling by a third.

"So far, no country or regional population has successfully reduced the distribution of body mass index or reduced the prevalence of obesity through public health campaigns or targeted treatment programmes." (www.chinainout.com)

In First Quarter of 2015 Car Imports and Exports both Fall

The general administration of customs recently released data, in the first quarter of 2015, imported motor vehicles (including chassis, the same below) reached 260,000, down by 16.3% year on year, the amount of the imported motor vehicles $10.647 billion, down by 21.7%; the imported auto parts reached $6.509, down by 10.0%. The exported car reached 190,000, down by 5.7%, the amount of the exported car $2.735 billion, an increase of 2.4%; the auto parts exports amounted to $10.906 billion, an increase of 0.1%.

There are sharp distinctions between automobile import and export. The decreasing amplitude of the imported vehicle number is more than the decreasing amplitude of the exported vehicle number, but the imported vehicle is 70,000 more than the exported vehicle; the declining amplitude of imports is more than 20%, the exports slightly increase, the deficit amounts to $7.914 billion. However, the auto parts export situation is much better than imports, the amount of surplus reaches $4.397 billion.

For automobile imports, in January and March, 100,000 were imported, in February 60,000 imported. Due to the Spring Festival, it is a normal condition. For automobile exports, in January 72,000 were exported, in February 60,000 exported, exports in March was slightly lower than exports in February.

China's auto exports have greater progress, ranging from exclusively exporting the commercial vehicle to exporting the passenger car, which accounts for 60 percent of total auto exports, exporting to more countries, ranging from exporting CBU to exporting the CKD parts. However, according to the first quarter’s automobile imports and exports, there’s still a gap between China’s auto and the auto of other countries like EU, US, Japan and South Korea, the international competitiveness of China’s auto is behind other countries, from the first quarter’s vehicle trading volume and value, we can know, one exported auto price is only $14,400 on average, while the average price of imported auto reaches $41,000.

In the first quarter, the imported car market was in downturn. According to the imported car market information joint committee feedback, the imported car registration number was much lower than imports, the current inventory was close to 4.8 months, hitting a record, the average sales price declines by 67,000 yuan, a decrease of 10.5%.

As part of the import car market, parallel imported cars lead to “the castle in the air”. Because multinational companies’ profit is falling, parallel imported cars share the market of authorized imported auto, the growth of parallel imported cars is impacted, for example, the BMW X5 and X63.0T has been authorized channels to sell in China, and their displacement is 2.979L, while the displacement of the parallel imported cars reaches 3.001L, vehicle excise duty and VAT of parallel imported cars will increase; the manufacturer of Mercedes-Benz and Land Rover prohibits sales across the region in order to suppress the parallel import business; Toyota desires to take domestic strategy to reduce vehicle prices to significantly narrow the spreads; vendors set up barriers of cash payment for parallel import car buyers, and so on.
www.chinainout.com

Surging Dollar Impacts US Corporate Profits

A surging dollar is expected to hit some of the largest US multinationals this week, as more than a fifth of S&P 500 companies report results for a quarter marked by a 9 per cent jump in their domestic currency.

Blue-chip behemoths such as IBM, General Motors, United Technologies, Coca-Cola and McDonald’s are among those set to release earnings by Friday.

With the S&P up only 1.1 per cent this year, investors are concerned that several companies could emulate General Electric and Philip Morris, which each said last week that the dollar reduced their revenues by nearly $1bn in the first quarter. GE said currency swings hit profits by $120m, and Philip Morris reported a $585m hit to “operating companies income”.

Fears of a new Greek crisis are resurfacing and US economic data has disappointed of late, but corporate earnings are likely to be a key driving force for US equities this year, said Russ Koesterich, global chief investment strategist at Blackrock.

“For 2015, it will come down to earnings and whether companies can overcome a higher dollar,” he said.

Earnings reports so far have validated recent concerns over falling energy prices and a rising dollar that have led to the largest downgrade of earnings estimates since the financial crisis.

FactSet expects first-quarter earnings for the S&P 500 to decline 4 per cent and revenues to dro 3 per cent. But it expects both earnings and revenues to be down 10 per cent for companies that generate less than half their sales in the US.

Between the end of October and mid-March, the dollar index – which measures the greenback against a basket of its peers – climbed 15 per cent .

The euro suffered its biggest quarterly decline against the dollar since it was created in 1999, and many strategists hastily brought forward their target date for the dollar reaching parity with its transatlantic partner, although that expectation has been tempered by poor US economic data. (www.chinainout.com)

WGWG Cooperates with Henan Radio, Nation’s Largest O2O Offline Experience Center Launches

The Provincial Press Publication and Radio Administration has been in the cooperation with WGWG. They take full advantage of Tower Fu and build the nation’s largest cross-border e-commerce bonded exhibition center, with the areas of over 20,000 m². The products come from the United States, Britain, Germany and other core trading countries and cover a wide range of categories.

Through the connection with customs and CIQ’s IT systems, cross-border e-commerce platform will achieve the effective integration of information flow, capital flow and logistics, thus consumers will enter an age of the intelligence global shopping. Then the intelligent terminal will be able to extract consumer orders, payment, logistics and other information, submit to the Customs and then make clearance, finally the product will be delivered to the consumer's hands.

The director of Henan Press Publication and Radio Administration, Zhu Xiayan said that intelligent global shopping is the future trend of development of the e-commerce, as a leading cross-border retail e-commerce platform, WGWG has the efficient management and advanced technology, which is the key to cooperation. At the same time, the WGWG CEO Kate Guo said, "Relying on the favorable policies, coupled with the successful collaboration, Henan cross-border e-commerce companies will have a leading position in the nation’s cross-border e-commerce circle and win the initiative." 

Back in 2013, the strategy "one belt one road" made it clear that Zhengzhou would be built into an inland open economy Heights, the cooperation with coastal ports and border ports would be strengthened, and that cross-border e-commerce pilots would be launched. Last May, when the party and state leaders inspected in Zhengzhou, they also made important instructions on the "buy from global, sell to global". This time, WGWG chose to cooperate with Henan Radio, turned down the model of the country's largest O2O offline experience and exhibition hall, and would create a offline flagship brand of the cross-border e-commerce based on central China.

Up to now, WGWG’s exhibition hall has attracted many e-commerce merchants and many famous international brands like Aptamil, Garbo, Asco, Coach, Ecco settled.
www.chinainout.com
www.wgwg.com

China to Boost Economic Growth Again

China has acted to stimulate its slowing economy, cutting sharply the level of cash commercial banks must park with the central bank in a strong signal of intent to boost flagging growth.

The People’s Bank of China moved to free up cash to lend to business by cutting its so-called the reserve requirement ratio by 1 percentage point just days after data revealed the country’s economy expanded its slowest pace for six years in the first quarter.

The PBoC has only once before reduced the reserve requirement ratio by as much and that was during the depths of the financial crisis in November 2008.

“This clearly signals that China has entered into an aggressive monetary easing cycle, to counter the economic slowdown and the rising deflation risk,” said economists at bank ANZ. “This surprising move suggests the authorities are frustrated by the stubbornly high real interest rates facing the Chinese enterprises.”

The required reserve ratio, known as the RRR, specifies the portion of a commercial bank’s deposits that must be held on reserve at China’s central bank, wher it is unavailable for loans and other investments.

China has already cut benchmark interest rates twice and lowered the RRR once since November. The size of the latest reduction to 18.5 per cent exceeds analyst expectations for a 50 basis point cut sometime this month, after first-quarter growth slipped to 7 per cent, held back by a slowdown in construction and manufacturing.

That was the weakest quarterly expansion since early 2009. The Chinese government had previously announced a growth target of “around 7 per cent” for 2015.

China’s booming growth in recent years forced the PBOC to keep bank reserves high to help manage capital inflows. But now, slower growth has reduced the amount of foreign money flowing in while Chinese banks’ net foreign exchange purchases recorded their largest-ever decline in December and January.

“With the fall-off in capital inflows the central bank needs to cut reserve requirements fairly substantially just to keep monetary policy neutral,” said Andrew Batson of Gavekal Dragonomics, which forecasts that China will cut RRR by 200 basis points or more this year.

The move to lower the RRR on Sunday came a day after official data showed average new home prices fell year on year for a seventh consecutive month in March.

However, the dro narrowed from February after a number of cities introduced measures to encourage purchases. In Shanghai, home prices were flat, while prices in Beijing and Shenzhen rose.

The slower pace of decline in property prices suggests loosening measures adopted over the past year are starting to feed through.

New home prices fell in 49 of the 70 cities tracked by the statistics bureau, compared with 66 cities last month. Average prices fell by 6.1 per cent in March compared with a year ago, according to an FT analysis of official figures, but only by 0.2 per cent compared with a month earlier. In February, prices dropped 0.4 per cent from the month before.

Real estate supports about 40 industries, from cement and construction to furniture and other consumer goods. It accounts for about 15 per cent of Chinese economic activity.

A normal uptick in home buying during the spring played a role, but property agents also reported they were busier than usual.

“The rate of sales has been higher in the past month than it has for the past two or three years. Some apartments that have been on the market for over a year have suddenly sold,” said Wan Jie, a real estate agent in Beijing.

Late last month, authorities reduced minimum down payments for buyers of second homes and also cut to two years the length of time a seller had to have owned the home in order to avoid paying a business tax. The moves come as Chinese authorities become increasingly concerned at the rate at which the country’s broader economic growth is slowing.

The relaxing of restrictions winds back constraints put in place by former premier Wen Jiabao, whose curbs on bank lending and property purchases were designed to stop a politically unpopular rise in high-end housing prices.

Those policies helped feed the growth of China’s shadow banking sector, as desperate property developers turned to unregulated high-interest loans, and marked the incursion of state-owned developers into a sector that had previously been dominated by private entrepreneurs. (www.chinainout.com)

2014 Milk Powder Sales Increases by 4.2%, Price War More Ferocious

With the impact of the purchasing agents and the overseas shopping, the infant formula industry is stuck in the intense competition, and as companies continue to try e-commerce, the milk industry price war is intensified, these factors have eroded profits in the milk business. In 2014, Beingmate annual profit fell by 88.88%; Ashley Holdings net profit fell by 43.1%.

Data shows that in 2014 milk powder sales reached 7,000,000 tons, turnover increased by 4.2%, compared with 10-20% turnover in previous years, the growth rate was a bit small. "

　　

Data shows that if we make calculation on ex-factory price, sales of in 2014 baby formula sales was 70 billion yuan, in which 10 billion yuan was through the overseas purchasing agents, sales of the top 20 companies was 50 billion yuan, and the remaining enterprises occupied 100 billion.

Over the past year, the market share of foreign milk powder brands declined for the first time, data released by AC Nielsen shows that, among the top ten brands of sales, the number of domestic brands of milk powder is almost as same as the number of foreign brands.

Nevertheless, China's huge market potential still attracts foreign milk powder brands, in recent years, the milk powder brands in Europe continuously enter into the Chinese market, including some high-end brands, while the milk powder price is constantly refreshed, baby formula at the highest price on the market is Hyproca infant formula, the retail price of each tank reach 458 yuan / 900 grams. To obtain a more long-term development in the Chinese market, foreign milk powder brands take different measures to expand the Chinese market. Wyeth Nutritionals will organize more than 500 activities about "a tribute to breast milk" in more than 20 cities this year, while Hyproca1897 recently announced the launch of a two-year research projects under the cooperation with Peking University.

Another trend change in the baby formula is sino-foreign joint venture driven by policy. Abbott and Fonterra signed an agreement, planning to build a dairy cow breeding base in China through joint venture. Royal Dutch Friesland Ltd., one of the world's top five dairy giants, announced to establish a joint venture with China Huishan Dairy Holdings Limited, and the New Zealand Synlait chose to cooperate with the New Hope Dairy.

"Infant formula price into downlink channel"

Since 2013 the National Development and Reform Commission has launched antitrust investigation on milk powder brands, Wyeth and Beingmate US has announced price cuts, which also opened the prelude to the milk industry price cuts, in 2014 the milk industry price war was intensified, with low-cost Junlebao and e-commerce channels, the baby formula price fell.

"The infant formula price has been into downtlink channel, in 2015 the price war will be more ferocious." Song Liang pointed out that the infant formula price has been into downtlink channel, due to overcapacity and e-commerce channels ( the compression of the circulation), moreover, the Chinese market is in line with international standards, and impacted by overseas shopping and purchasing agents.(www.chinainout.com)

Way to Warren Buffett's Success: "Always Try to Be a Good Person"

When Warren Buffett was 25 years old, he had accumulated about $2 million in today's dollars.

He had achieved his childhood goal of assured financial independence.

Everything after that, he explained in a talk at Ivey Business School in late February, "has been surplus."

Today at age 84, he is the world's third wealthiest person, with an estimated net worth of over $70 billion, and has cemented his reputation as one of the greatest investors in history.

In the Ivey talk, Buffett was asked about his personal definition of success. He explained that he's been motivated by an inner drive to feel proud of his work and to continue improving his business, which has been the Berkshire Hathaway conglomerate since 1970.

"The saying goes that success is about getting what you want, while happiness is about wanting what you get," he said. "For myself, happiness is more important."

Buffett advised not to judge yourself and your performance by what other people think.

"As you move along in your career, you always want to consider your inner scorecard — how you feel about your own performance and success," he said. "You should worry more about how well you perform rather than how well the rest of the world perceives your performance."

Buffett has always prioritized the success of his company over his own personal success in terms of financial returns, he said, which may be why he tells his management team that their top priority is to "zealously guard Berkshire's reputation."

According to Buffett, true success comes from working for a purpose greater than your own well-being.

"The most important takeaway is that you should always try to be a good person," he said. (www.chinainout.com)