Standard & Poor’s affirmed its sovereign ratings on China this week, saying that the country will “maintain strong growth” even though economic expansion in the mainland this year is set to slow to its lowest rate in 13 years.
The ratings agency maintained its AA- rating and A-1+ ratings on China’s long-term and short-term credit respectively. The credit affirmation reflect China’s “strong economic growth potential, robust external position, and the government's relatively healthy fiscal position," said S&P in a statement.
“We expect no major change in policy directions in China in the wake of the recent top leadership changes," said S&P analyst Kim Eng Tan. "Efforts toward deepening structural and fiscal reforms are likely to continue.”
"We expect the Chinese economy to continue its strong growth while the country maintains its large external creditor position in the next three to five years," Tan continued.
Here is the week’s business news:
(NASDAQ:AAPL): The iPhone 5 will make its China debut on Dec.14, after Apple received its final regulatory approval needed for the sale of its bestselling phone.
According to Apple Insider, China's Telecommunication Equipment Certification Center has given the green light to the WCDMA and CDMA-2000 models, which are compatible with China Unicom and China Telecom respectively.
The models approved by Chinese regulators are WCDMA and CDMA-2000, compatible with China Unicom
(NYSE:CHU), the nation's second-largest carrier, and China Telecom
(NYSE:CHA), its third-largest. China Mobile
(NYSE:CHL) uses the TD-SCDMA 3G network standard.
In the fiscal quarter through September, Apple racked up $5.7 billion in sales in the mainland, which was about 16% of the company’s global total. In the period, Apple sold 2.1 million iPhones in China.
Apple will also debut Wi-Fi versions of its fourth-generation iPad and iPad Mini in China on Dec. 7, with the release dates of the 4G LTE models of the iPads still an unknown.
(NASDAQ:SBUX): The coffee giant this opened its 100th store in Beijing. Starbucks now has more than 700 stores in mainland China. The company is expanding at a rapid rate in China and by 2014, the mainland will become Starbucks’ second-largest market behind the US. By 2015, the company plans to more than double its China store count to 1,500, which will be spread across more than 70 cities.
How fast has its growth been? Consider this: Starbucks only had 278 outlets in China in October 2011, and as recently as the end of September 2012, a mere 408.
The Starbucks outlets in China are markedly different than those here in the US, however. As the Wall Street Journal
points out, the ‘grab and go’ culture popular here does not prevail in China, with customers preferring to hang around in comfortable couches. The company also customizes its products to suit local tastes: An example is the red bean frappucino, a local favorite.
As the same time, however, brand consultants warn that Starbucks cannot steer too far away from its core Western image. “It's extremely critical to keep authenticity and consistency," Vincent Lui, a partner of Boston Consulting Group, told the Journal
(NASDAQ:BIDU): Baidu issued $1.5 billion worth of bonds last week in an effort to boost its war chest, the first time it has ever raised debt in dollars. The company said that the money would be used for debt repayment and other corporate purposes. There is also speculation that Baidu would be looking into acquisitions to help in its search battle against upstart Qihoo 360
(NYSE:C) analysts caution, however, that Baidu should not acquire any more mobile-related companies until it can implement a successful strategy to monetize mobile traffic, according to the Wall Street Journal
But as Citi notes, citing a survey it conducted, paid search is the least popular ad format for mobiles, explaining why advertisers are still unwilling to buy mobile search ads. Despite a 60% jump in advertising revenue in the third-quarter, the Baidu raised its mobile business as a challenge going forward. Mr. Li said it could take a few years “before the mobile monetization gap will close.” Baidu released its own mobile browser
and announced plans for a new cloud computing center in September to strengthen its hold on the mobile market.
General Motors (NYSE:GM): GM is the leading auto maker by volume in China, and the company intends to keep things that way. Together with its Chinese joint-venture partners, the auto maker announced that it will spend 6.6 billion yuan ($1 billion) to build a third vehicle plant in southwest China to meet growing demand.
Construction on the Chongqing plant will commence next year, with the first phase of the factory set to open in 2015, said the SAIC-GM-Wuling, a joint venture between GM China, Shanghai-based SAIC MotorCorp (SHA:600104) and Liuzhou-based Wuling Motors (HKG:0305).
Once completed, the factory will be able to produce 400,000 vehicles and engines each year, helping the joint venture meet its target of turning out 2 million vehicles annually in China by 2015, though GM has yet to specify which models this plant will make.
In China, SAIC-GM-Wuling has become known for its minivans, which sell well in rural China. GM also has two other joint ventures in the mainland, as foreign automakers have to partner with local companies to sell cars. GM brands sold in China include Buick, Cadillac, Chevrolet and Opel, and Jiefang and Wuling.
No positions in stocks mentioned.
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