China Watch: Top Business News From the World's Second Largest Economy
It was not a good 2012 for US companies in China, thanks to an economic slowdown and increased government regulations.
The American Chamber of Commerce in Shanghai conducted a survey of US companies and found that the number of firms that said they were profitable fell to 73% in 2012 from 78% a year ago.
"The 'new normal' for US companies in China will be characterized by a maturing economy that is likely to generate weaker growth returns and rising business challenges," said the chamber, according to AP
In 2012, the Chinese economy grew by 7.8%, a rate that far exceeded those of the US, Europe, and Japan, but that was still China’s slowest annual rate of growth since the 1990s.
American firms also said that they found China’s regulatory environment “increasingly challenging.”
"Reports from American managers competing in China indicate that some domestic firms take advantage of unclear rules, laws and regulations to give them a competitive leg up," the chamber said in its report.
Here is this week’s business news:
(NYSE:IBM): IBM presented its 2015 growth roadmap to investors at a conference this week. For 2015, the tech giant sees strong growth coming from China, South America, and Africa, as well its big data business. It also projects earnings of $20 a share or higher.
Here’s how IBM projects how its business in China will be like in 2015:
(Source: ZD Net
(NASDAQ:BIDU): Developers who are not fluent in Chinese rejoiced this week as Baidu, known as China’s Google
(NASDAQ:GOOG), launched an English-language website
for developers, allowing them to have a chance to enter the lucrative and ever-growing Chinese market.
For now though, the English-language site “is limited to introductory materials about Baidu’s developer services” though it “will eventually make it possible for developers who do not read Chinese to build apps for the Chinese market, tapping into Baidu’s strengths in search, LBS [location-based services] and maps, cloud storage, and numerous self-developed technologies,” said Baidu spokesperson Moca Huangfu in a statement. According to Kaiser Kuo, Baidu’s head of international communications, his company will also assist non-Chinese developers by making their apps searchable on Baidu’s Mobile App Center. “As for monetization, no models are off the table,” Kuo told TechCrunch
. “Subscriptions, freemium, in-app ads and just about any other revenue model is up for discussion, and depends on what works best for the type of app in question.”
Baidu is China’s leading search engine, with a 72.1% market share in January. Finishing a distant second was Qihoo 360
(NASDAQ:QIHU), with a 10.5% share.
(NYSE:CHL): Does Apple
(NASDAQ:AAPL) need China Mobile more or is it the other way around? The two companies have been negotiating for years for China Mobile to become the final of China’s Big 4 wireless carriers to support the iPhone, and it seems like China Mobile has seen its market share affected in recent months.
According to data from January, China Mobile’s market share, while still dominant at 63.8%, is being eroded at a rate of around 0.2% a month, reports Seeking Alpha
. Apple sold 2 million iPhone 5s in China in December 2012, presumably with none of those sales going to China Mobile, which has got to hurt.
But it’s likely that China Mobile will carry the iPhone 6 when it’s released. The world’s largest mobile phone operator by subscribers announced this week that it will debut its iPhone-compatible 4G LTE network to 100 Chinese cities by the end of this year. Four major handset makers, LG
(SHE:002502), and ZTE
(SHE:000063), have already confirmed that they will release LTE-compatible equipment, with Samsung
(PINK:SSNLF) and Apple likely to come on board as well.
(NASDAQ:YHOO) co-founder Jerry Yang has joined the board of directors of the world’s second-largest PC maker as an observer, as Lenovo attempts to grab a bigger share of the growing mobile-devices market.
According to a statement from the company, the 44-year-old Yang will sit in board meetings to share his "experience and perspective as an Internet and technology pioneer," though he will not have the rights of a director.
"Jerry's perspective, experience, and proven entrepreneurial spirit will help us continue to drive growth and expand our business," Lenovo CEO Yang Yuanqing said in the e-mailed statement.
For his contributions, Yang will be paid a annual salary of $61,875 and will be offered rights to Lenovo equity with a value of $135,000.
No positions in stocks mentioned.
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