China Watch Blog

China Watch Blog has learnt that Baidu Inc, the most popular search engine in China, introduced a service on Wednesday that will make it easier for customers to access content they have searched for on mobile devices.

The China Daily reported that the step is intended to fend off competition from rivals such as Tencent Holdings Ltd.

The mobile “box computing” service, as Baidu calls it, takes users directly to games, e-books, music or other content they have searched for instead of showing a list of Web pages containing links to that content. With it, Baidu is trying to bring a variety of Internet services to its basic search engine.

“Giving users better searching experiences with ‘box computing’ will help us gain more market share,” said Yue Guofeng, general manager at Baidu’s mobile Internet division.

Baidu is using the service to stay ahead of competitors such as Tencent Inc and the US-listed Qihoo 360 Technology Co, analysts said.

Tencent, which owns the instant-messaging service QQ – one of the most popular applications in China – has been working with software developers to add various Internet offerings to its main product. Qihoo has adopted a similar approach.

“The three companies all have a large number of users, and by providing diversified services on their own platforms, they can monetize their large user bases,” said Fang Li, an analyst with the domestic research company Analysys International. She added that although Baidu provides search services, Tencent instant messaging, and Qihoo security, the companies compete with each other as Internet sites that offer diversified Internet services.

Baidu said earlier this month that it will invest $306 million in Qunar.com, a Chinese online travel website. Yue said the step is intended to add to the number of Internet services offered by Baidu.

Tencent has also poured billions of yuan into investments this year. The money has gone into e-commerce, online travel, movies and other products and services.

China Watch Blog has learnt that China rising prices around the country have not only been hitting consumers, but also small businesses.

Small businesses

According to a China Daily report, a decline in freight orders, which started in mid-May, has caused a number of problems for Zhang Yan, the owner of a delivery company .

Zhang owns 30 vans that mainly transport goods manufactured in Baigou town, Hebei province, a major production center for the luggage industry, 102 kilometers south of Beijing. The decline in orders convinced Zhang that a downturn in business was inevitable as bag makers were facing a contraction.

“Two of my clients shut down their businesses last month and some of the others have reduced production because of squeezed profit margins,” said Zhang.

Baigou is famous in North China for producing leather bags and suitcases. The town, with a population of about 120,000, has more than 3,000 factories and workshops that churn out 65 million bags annually.

Factory in Baigou

The rapid rise in labor costs and the soaring price of raw materials, together with the increasing cost of borrowing, has left small and medium-sized businesses (SMEs) across the country facing a dilemma.

In June, inflation in China showed no signs of abating. The consumer price index, the main gauge of inflation, rose to 5.5 percent in May, and when the figures for June are released in the middle of next month, they’re expected to confirm another increase.

Moreover, the Producer Price Index, which reflects changes in the prices of raw materials and other costs, came in at 6.8 percent in May, down from 7.3 percent in March, but still much higher than in September, when it was 4.3 percent.

Meanwhile, the authorities have cracked down on lending and the money supply to combat inflation, a move that has further increased the pressure on China’s capital-thirsty small businesses. To make ends meet, some businesses have even been forced to use underground financing sources, which charge exorbitant interest rates. Moreover, wages have been rising continually in recent years, adding to corporate costs.

Along the main street of Baigou where many small workshops are situated, a number of the factory gates have been closed for some time.

China Watch Blog has learnt that Shenzhen may restrict the use of electric bikes instead of banning them.

electric bike

According to a draft handed to lawmakers for a second reading on June 27, industries that rely heavily on electric bikes, such as the postal service, can apply to police for permits.

“Police can restrict electric bikes at designated times according to the situation,” the draft says.

According to national standards, electric bikes must weigh no more than 40 kg and the maximum speed will be restricted to 20 kilometers per hour.

“Electric bikes that fail the standards will be banned from roads,” the draft says. Riders who break the speed limit will be punished.

The draft remains tough on people using electric bikes as taxis.

The draft was revised and submitted to lawmakers for a second reading after a wide public opinion poll. Many residents opposed a ban on electric bikes because it would greatly inconvenience commuters and some businesses.

Shenzhen police had initiated a six-month rule to restrict electric bikes from entering six districts except Pingshan and Guangming new zones, and four remote sub-districts in Longgang from June 6.

China Watch Blog has learnt that China will reduce import duty on luxury goods once key ministries have reached general agreement on the issue, and it is only “a matter of time”.

Lumix Camera

The China Daily reported citing Yao Jian, China’s Commerce Ministry spokesman, as saying that the commerce and finance ministries are likely to submit a proposal on measures to promote imports to the State Council, the Cabinet, and this will include details on cutting duty on luxury items.

China has committed itself to doubling imports by 2015 to balance trade. Amid a decline in import growth over the past few months there were suggestions that the government was considering cutting duty on some luxury goods, such as cosmetics, cigarettes and alcohol.

“The relevant authorities have, in principle, reached agreement on lowering import duty on some luxury goods to help boost imports, although there are differences of opinion on the specifics,” Yao said, without elaborating.

With rising disposable income and a growing brand awareness, China is expected to surpass Japan by 2012 as the world’s largest luxury consumer market, with an estimated value of $14.6 billion, according to the World Luxury Association.

But industry figures also reveal that Chinese consumers spend four times more on luxury goods abroad than at home, thanks to high import duty and taxes.

“Cutting duty (on luxury goods) is a general trend,” Liu Huan, an adviser to the State Council and deputy director of the School of Taxation at the Central University of Finance and Economics, said.

“It should stimulate domestic consumption as consumers will spend more in the domestic market.” Reducing duty will also mean that China honors commitments to the World Trade Organization (WTO), he added.

China Watch Blog was told by a reader that no matter what we think and do in our life, there is always the “animal nature” in us towards food, that is, the desire to eat most things that we can lay our hands on.

Chili sting ray and cockleshell

Nowadays, many, after being bombarded with messages of healthy living, healthy food and healthy exercises, may not be so tempted to gorge himself or herself with his or her favourite food like in the past. Yet, there are many people who have this problem.

Singapore hawkers' centre

Yes, the strong desire to eat – tantamount to food addiction – can lead to addiction if not checked. Many blame themselves for having lack of self control.

Delicious "low mean"

But what do you do if you “love” to eat and cannot control yourself?

Mouth Watering Fried Crab

A nutrition expert says that instead of trying to fight the desire to “eat”, which is not easy, people should go with the flow and “eat”, but everytime, they do so, they should try to eat half of the food and either packed the other half for someone else in the family or at least bring it back and feed their pet, if relevant.

Just get the taste of the food, and try to stop after one or two mouthful in the long run. Yes, it is difficult, but if you keep trying and trying and trying, you can kick the habit and fight the addiction to food.

Again, remember to go with the flow, but eat sparingly and you will win the battle.

China Watch Blog has learnt that profits for China’s industrial businesses rose 27.9 percent year-on-year in the first five months of this year to hit 1.92 trillion yuan (296.80 billion U.S. dollars), the National Bureau of Statistics (NBS) announced on Monday.

The growth rate, however, was 1.8 percentage points lower than that of the first four months of this year.

The NBS figures showed that combined revenues for the country’s industrial firms rose 29.4 percent year-on-year to reach 31.10 trillion yuan in the first five months of this year.

The report was based on a survey of industrial companies with annual sales exceeding 20 million yuan each. Survey of industrial companies before 2011 used a sales threshold of 5 million yuan.

China Watch Blog has found an interesting article by Shelly Palmer, who is the host of NBC Universal‘s Live Digital, a weekly half-hour television show about living and working in a digital world, which outlines his frustrations with mobile phones’ prices and tariffs galore Europe compared with US$3 per day all in – in the USA.

His article “International Cell Service: Still A Costly Mess” reveals the reality of the world we live in. Everywhere people talk about connectivity, but Palmer says in his article headlined “International Cell Service: Still A Costly Mess”, he describes mobile phone connectivity, say, between USA and Europe a Wild Wild West Show as people have to pay through their noses if they Verizon’s International Roaming Service.

“Charges for calls and data in the UK, Germany and France, according to Verizon, was Dollars per minute for voice, and tens of dollars for data,” Palmer says.

Verizon is not a workable solution for American international travelers, if you phone works at all, you must mortgage your house to pay Verizon, he says.

With a fully functional Motorola Atrix Android 2.2 FroYo at his disposal, Palmer who thought he would get a London Zim card and his problem would be solved. However, he discovered, much to his chagrin, that his phone was locked and could not be used. However, someone told him that there was a guy at an Internet Cafe who could “hack” and unlock his phone in return for buying a “very reasonable Labara SIM card with 10 GBP of talk time”. So the tale goes.

Palmer says there was no plan that stood out as “the obvious one to purchase.” In fact, nothing about the experience was obvious at all. You could spend a lot of money or a ton of money or a small fortune or large fortune, but “spend” was the only common feature of these plans.

At 4.50 USD per MB of data, checking my email would cost me $25-$30 USD daily. Texting would jump from $10 USD/per month to $10-$15 USD per day. Sticker shock is an understatement. Just for goofs, I purchased the full package from Labara (Voice, Txt & Data) on their lowest price pay-as-you-go plan.

His conclusion is that this state of affairs will NEVER GET SORTED OUT. Why? Simply because there’s no pressure to make it any less expensive or less confusing. From the carrier’s perspective, it’s perfect the way it is. Perfect for them, that is, Palmer says.

Write to “Shelly Palmer” , if you want more details.

China Watch Blog has learnt that the official overseeing Guangdong’s small and medium-sized enterprises (SME) denied on June 23 that sweeping SME bankruptcies are taking place in the province, although the businesses are confronted by a number of problems.

“SMEs in Guangdong are facing increasing difficulties in their production and operation, with rising overall costs and a widening gap in their working capital,” Zhang Wenxian, director of the Guangdong SME bureau was quoted as saying by China Daily.

SMEs are facing new difficulties, including a shortage of capital and rising costs for fund-raising,” Zhang said.

The situation meant that some SMEs dared not accept orders and some industries are seeing a decline in profits or the suspension of business, Zhang said.

However, the general situation for SMEs in Guangdong remains stable, without significant bankruptcies.

Media reports have been painting a gloomy picture for SMEs in both Guangdong and Zhejiang provinces, claiming that the situation is even worse than in 2008 when the global economic downturn hit, and has been using the phrase “sweeping bankruptcies,” although no official statistics are available.

Difficulties have arisen from the continued appreciation of the yuan, the rising costs of labor and raw materials, a shortage of capital amid credit-tightening measures, and power shortages in some areas, according to the reports.

Earlier this month, China News Service reported that Li Jinhui, chairman of Dongguan Lianying Non-woven Technology Co in Guangdong, predicted that bankruptcies could become prevalent in the city of Dongguan in the second half of the year, with only innovative players remaining fully operational.

Zhang said the number of non-State-owned businesses in Guangdong grew by 3.5 percent in the first quarter of the year, while privately held domestic firms rose by 14.7 percent year-on-year.

SMEs in the province posted double-digit growth in industrial added-value in the first five months, which was more than 11 percentage points higher than the provincial average.

They also reported growth in imports, exports and tax contributions.

China Watch Blog has learnt that group-purchasing websites have the most potential for advertisers, who are witnessing a boom for their industry on the Internet thanks to the increasing number of netizens and the development of online companies in China, according to a new report.

During the first quarter of this year, leading Chinese group-purchasing websites Lashou.com, Nuomi.com and Gaopeng.com each invested more than 10 million yuan ($1.54 million) in television advertisements, China Daily reported, citing a report by Charm Communications Group, a domestic advertising and media service provider.

Group-purchasing websites need to advertise to establish a well-known brand before they can solicit more customers, the report said.

They regard TV as the top priority when choosing an ad platform because it gets the message across more quickly than other media platforms.

However, the report pointed out that the trend cannot be sustained because the group-purchasing industry is experiencing consolidation. After the restructuring of the sector, from thousands of players of various sizes to just a few big companies, the advertising expenditure will shrink.

The popularization of smartphones such as the iPhone enable more convenient surfing, resulting in more time spent on the Internet.

The number of netizens in China reached 457 million – more than one-third of the nation’s population – by the end of last year.

Since last year, Chinese websites have been competing to go public, with Dangdang.com and Youku.com listed in 2010 and Qihoo360, Renren.com and Jiayuan.com going to the Nasdaq this year.

A large part of these websites’ revenues came from advertisements. When they can raise money from the market, they will invest more to increase the quality of their adverts and expand market influence.

The report predicted that the Internet will continue to be the important growth engine of the advertising industry in China over the coming few years.

Currently, transportation, Internet services, real estate, IT and finance are the top five sectors for Internet advertisements.

China’s advertisers spent 148.65 billion yuan on advertising fees in the first quarter of this year as the nation’s economy grew steadily. The amount was 18.6 percent higher than the fourth quarter of last year’s 125.36 billion yuan, said the report.

China Watch Blog has learnt that the country will cut or completely eliminate tariffs on 33 commodities, ranging from fuel to textiles.

Import tariffs on gasoline and fuel oil will both be lowered to 1 percent from the previous 5 percent and 6 percent, respectively, while tariffs for diesel and aircraft fuel will be cut to zero, the ministry of Finance said in a statement on its website.

The tariff reductions, effective from July, aim to ease the country’s trade imbalance and boost imports of advanced technological equipment and raw materials, the statement said.

In an effort to restructure the country’s economy, the Chinese government has vowed to expand imports while stabilizing exports over the coming five years.

During the first five months of this year, the country’s trade surplus dropped 35.1 percent year-on-year to reach $22.97 billion.