China Watch: Top Business News From the World's Second Largest Economy
More China smartphone sales numbers have come out, this time from Strategy Analytics. The Korea Herald
cites a report from the research firm that found that Samsung
(OTCMKTS:SSNLF) was the best-selling smartphone maker in the mainland in the first quarter, shifting 12.5 million units (an 18.5% share). China has also become the world’s largest smartphone market.
Second and third were Huawei and Lenovo
(OTCMKTS:LNVGY) with 8.1 million and 7.9 million units respectively, while Coolpad (7 million) and ZTE (6.4 million) followed behind.
As for Apple
(NASDAQ:AAPL), the iPhone maker finished outside of the top five, placing sixth with 6.1 million units sold. However, an earlier Canalys report put Apple in the fifth spot, with an 8% share of the market.
While Apple’s exact placement in the China market is still uncertain, what’s for sure is that with sales slowing, the company needs a deal with China Mobile
(NYSE:CHL) more so than ever. The latter continues to grow strongly; it added 730 million subscribers in April. With a stronger bargaining position, China Mobile will probably be able to extract a better carriage deal from Apple compared with Apple’s arrangements with Verizon
(NYSE:VZ) or Vodafone
Chinese Firm to Buy Smithfield Foods for $4.7 Billion
This week, China’s Shuanghui International
(SHE:000895) announced that it had reached an agreement to acquire Smithfield Foods
(NYSE:SFD), the US company famous for its pork products. With a $4.7 billion bid, the deal would be the biggest Chinese takeover of a US company ever.
Immediately, the announcement raised food safety worries, with many assuming that Shuanghui would begin selling Chinese pork in the US.
"The Smithfield-Shuanghui deal ... highlights the need for country of origin labeling," Grassley said in a recent statement
. "Like so many Americans, I would rather eat pork, beef, and poultry raised in the United States. The deal only makes it more logical to ensure that American consumers know exactly what they are paying for and eating."
However, both companies have said that the deal would be beneficial to US farmers, who would in fact be exporting pork to China, whose population has a ravenous appetite for the protein.
“People have this belief … that everything in America is made in China,” said Smithfield President and CEO Larry Pope, according to Businessweek
. “I like to tell people, ‘Open your refrigerator door, look inside.’ Nothing in there is made in China, because American agriculture is the most competitive and efficient in the world. This is the one place America can absolutely compete. This is exporting America to the world.”
The deal is still subject to approval by the US Committee on Foreign Investment. And given the recent spate of food safety scares in the mainland, the committee will likely take some time to review the case before it reaches a decision.
Toyota to Make More Batteries in China
(NYSE:TM) is in discussions with a Chinese firm to launch a joint venture producing batteries for China’s small but growing hybrid car market.
The move comes as China looks likely to start providing generous purchase subsidies for hybrid cars this year. Previously, the mainland only afforded subsidies to those who purchased all-electric green cars.
According to Reuters
, Toyota aims to introduce two new lower-priced hybrid models in China in 2015, one through its joint vnture with state-owned Guangzhou Automobile Group
(HKG:2238) and another with FAW Group
(SHE:000800), also a state-owned enterprise.
Toyota faces stiff competition in the green auto market from local firms like SAIC Motor
(SHE:600104) and the Warren Buffett-backed BYD
(HKG:1211) who are also investing in greener auto technology in order to cut down China’s reliance on fossil fuels.
IMF Forecasts Slower Growth for China
The International Monetary Fund cut its growth forecast for China this week to 7.75% from its previous projection of 8%, citing a global economic slowdown that would hurt Chinese exports.
Nonetheless, the new projection remains higher than the Chinese government’s official 7.5% GDP growth target.
The IMF said that China’s recent credit expansion would boost its growth rate in the latter half of 2013, but also warned that the credit growth “raises concerns about the quality of investment and its impact on repayment capacity, especially since a fast-growing share of credit is flowing through less-well supervised parts of the financial system.”
Growth, said the agency, was “too dependent on the continued expansion of investment, much of it by the property sector and local governments whose financial position is being affected as a result.”
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