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Monday July 31, 2017

CHINA will resolutely curb the rise in hidden local government debt via “disguised channels,” although risks posed by the overall government debt load are generally under control, fi nance ministry offi cials said Friday.

In recent years, the govern-ment has tightened controls on new local government debt to help ward off risks following a borrowing binge since the global fi nancial crisis.

Local governments will be prevented from obtaining “disguised fi nancing” via local

government fi nancing vehicles (LGFVs), Wang Kebing, deputy director general of the ministry’s budget department, told a news conference.

Authorities will also prevent local governments from using the public-private partnership (PPP), government investment funds and government procurement services as “disguised channels” for raising debt, Wang said.

Local governments can only issue bonds within the annual quota set by the parliament, although their “reasonable”

fi nancing demand will be met, Wang added.

LGFVs will be transformed into State-owned companies responsible for their own profi ts and losses, Wang said, reaffi rm-ing a ban on local governments providing guarantees for debt issued by such vehicles.

Authorities must strictly regulate local government debt-raising activities and halt illegal debt guarantees, the State Coun-cil, China’s Cabinet, said after a regular meeting.

Resolving local debt risks was

important to ensure China’s economic and fi scal sustain-ability and fi nancial safety, the Cabinet said.

Chinese Vice Finance Minister Liu Wei told the same news con-ference that risks posed by local and central government debt combined were generally under control. Overall government debt was equivalent to 36.7 percent of gross domestic product in 2016, which was lower than that of major economies and most emerging market economies, he said. (SD-Agencies)

China to contain local govt. debt risk

STARBUCKS is to take full own-ership of all its China outlets, after agreeing to buying out its joint venture partner for US$1.3 billion.

The deal will see it acquire the 50 percent stake it does not already hold in 1,300 stores in Shanghai and the provinces of Jiangsu and Zhejiang.

Starbucks already fully owns the other 1,500 outlets in China — its fastest-growing market out-side of the United States.

The coffee giant said the buyout was its biggest-ever acquisition.

The announcement came as Seattle-based Starbucks announced net income fell 8.3 percent to US$691.6 million for the three months to July — only just matching market expecta-tions.

The company also announced plans to close all 379 of its Teavana stores by the middle of next year because they had been “persistently underperforming.”

Starbucks bought the tea brand for US$620 milion in 2012, and plans to continue carrying the products in its main Starbucks stores.

Starbucks shares fell 5.5 per-cent to US$56.24 in after-hours trading.

The latest results are the fi rst under new chief executive Kevin Johnson, who took over from co-founder Howard Schulz in December.

Johnson described the China buyout as part of the fi rm’s “long game” to deal with cooling growth in the United States.

The world’s largest coffee chain is being affected by a reduced footfall in America’s malls and high streets, as more consum-ers turn to shopping online or buying from meal kit sellers and convenience stores.

Same-store sales in the United States rose by 5 percent last quar-ter. In China, there was 7 percent growth.

Starbucks already has a pres-ence in 130 Chinese cities and hopes to expand its 2,800 stores to more than 5,000 outlets by 2021. There are nearly 600 stores in Shanghai alone, the largest number of any city globally.

(SD-Agencies)

Starbucks to own 100% of its China stores

HUAWEI Technologies Co. is aiming to grow mobile shipments by only a modest amount in 2017, as it gears up to go head-to-head with the hotly anticipated 10th-anniversary edition of Apple Inc.’s iPhone.

The world’s No. 3 smartphone maker, which in 2016 declared it will someday surpass both Apple and Samsung Electronics Co. in market share, is shooting for shipments of 140 million to 150 million units in 2017 — up mar-ginally from 139 million in 2016. But it’s also putting the fi nishing touches on its most powerful device yet, the Mate 10.

Huawei is the largest of a coterie of Chinese smartphone makers that have grabbed global market share via affordable phones with premium specifi -cations. The Mate 10 will debut right around the time Apple is expected to take the lid off its own fl agship device, but will trump the iPhone in many aspects, said Richard Yu, chief of Huawei’s consumer division.

“We will have an even more powerful product,” Yu said in an interview. “The Mate 10, which has much longer battery life with a full-screen display, quicker charging speed, better photographing capabilities and many other features that will help us compete with Apple.”

Yu issued his challenge after Huawei reported a sharp fall in

revenue growth in the fi rst half, as smartphone sales tapered off from the dizzying pace of 2016. It posted a 15 percent rise in rev-enue to 283.1 billion yuan ($42 billion) in the fi rst six months of 2017 — half the pace at which sales grew last year.

Its breakneck expansion in 2016 came at a cost: Huawei’s earnings grew at their slowest pace in fi ve years in 2016, as it sank money into 5G research and a marketing blitz to gain ground in smartphones. The company didn’t release fi rst-half income numbers Thursday.

Eric Xu, one of Huawei’s several rotating chief executives, warned in December that mount-ing expenses could damage prof-itability. He pledged in a memo to staff to overhaul its culture, weed out unnecessary expenses and rethink the way it conducts business, expecting global uncer-tainty to mount in 2017. Its main business of telecommunications equipment is slowing as phone carriers rein in network rollouts to prepare for the advent of faster 5G standards.

Huawei’s consumer division, comprising mainly smart-phones, reported a 36 percent rise in revenue to 105.4 billion yuan during the fi rst six months. The unit is targeting 25 percent growth in consumer revenue to US$33 billion in 2017, down from about 42 percent in 2016.

It also sells smartwatches, tablets and accessories from earbuds to cameras.

Huawei controlled a 9.8 per-cent share of the global smart-phone market in the fi rst quarter, according to research fi rm IDC. In China, it overtook Oppo in the fi rst quarter by shipping 20.8 million smartphones, one- fi fth of the country’s overall sales, IDC said. The company, founded by former army engineer Ren Zhengfei three decades ago, has managed to make inroads into segments once dominated by Apple and Samsung.

It enlisted prestigious camera brand Leica to improve photo quality as a dual-camera became standard-issue for fl agship hand-sets. Its latest, the 5.5-inch P10 Plus, goes for as much as 5,588 yuan. The company also intro-duced its fi rst laptop — the Mate-Book X — in May to compete with HP Inc. and Lenovo Group Ltd. in personal computers.

“We are giving up the very low-end devices because the margin in this is extremely low, and it’s not making enough profi t for us,” Yu said. Huawei also intends to sustain the pace of an overseas expansion that’s already taken it into Europe and other more developed markets. “The prior-ity is Europe, China and Japan, where the economy is healthy and people are able to consume them.” (SD-Agencies)

Huawei readying an answer to upcoming iPhone

Zhang Yangnicolezyyy@163.com

FOUR entrepreneurs were invited as guest speakers to share their insights regarding the development of intelligent hardware during a forum held by Newtop 100 — a digital media outlet — in Nanshan District on July 27.

One of the guest speakers was Hu Zhenyu, founder of JmGO, a company specializ-ing in the production of intel-ligent projectors. According to Hu, one of the key things that hardware startups should do is to defi ne their products accurately based on users’ demands and make sure that their products are suitable for mass production.

He said the design of a prod-uct should not go beyond the startup’s quality-control and production capacity, because quality and inventory prob-lems are the two things that could easily destroy a fl edging hardware startup.

Additionally, he said start-ups should avoid targeting a minority of customers because the cost of running a hardware startup is too high, and it would be too risky for them to choose a small, niche market. “Your company will fail if the size of your business wasn’t pro-portional to the size of your targeted market,” he said.

Another guest speaker You Yanjun is the CEO of LUMI, a company specializing in the development of smart home devices. When talking about the confl ict between standard-ized and customized products, You said many products are standardized before being sold to customers, but intel-ligent products are those that can be customized after being purchased by customers.

“We can standardize the manufacturing process of a product, but we should also enable the customers to per-sonalize the product by using it. This is the core concept of smart home,” he said.

Wang Guobin, founder and CEO of tubatu.com, a home furnishing service website, said the smart home market is huge in China. According to him, many of his customers are willing to spend more money on such products.

According to Gao Zheng, a general manager at JD Finance — a crowdfunding website operated by JD.com, custom-ers in the future will pursue individualized products more than ever. “Rising standards among consumers means that producers will need to provide a variety of products so that customers can fi nd those suit-able to their personal tastes,” he said.

Experts give advice on intelligent hardware

Visitors are seen at Huawei stand during the 2017 Mobile World Congress in Shanghai, China on Friday. SD-Agencies