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Click on the link to get the full story. These are published by Danwei which reports on general everyday life in China.

The table below shows mainland China’s most important websites, newspapers, and broadcast news organizations, together with numbers for website traffic, circulation and audience.

The numbers are guesstimates based on media reports, listed companies’ public filings, media advertising rate cards, Alexa.com and Danwei interviews with media insiders. Like all numbers in China, they should be taken with a pinch of salt, for reference only. This list is updated every three months.

The major changes since the last version of this report (published in November 2013) are continued growth of Internet users, and the rise of the mobile device as the most common means of accessing the Internet:

“The number of Internet users in China had hit 604 million as of the end of September [2013], with mobile phones becoming the favored means of accessing the web, the State Internet Information Office announced”according to the China Daily.

2013 also witnessed a significant downturn of activity on Sina Weibo (often glossed as “China’s Twitter”). According to recent reports released by China Internet Network Information Center, 22.8% netizens reduced their usage of Weibo, including visits from mobile devices. In December 2013, there were 196 million mobile phone Weibo users, which is 5.96 million fewer than at the end of 2012. The decline is widely blamed on several factors, including the rise of Tencent’s WeChat messaging and mobile app service; government censorship, especially the”Big V Crackdown”; too much advertising and commercial “noise” on users’ Weibo feeds; and a lack of innovation from Sina (see this article for more on the factors behind the decline).

 

Internet

Sina Weibo Microblog Over 500 million registered users/25 million active users daily
Sina.com.cn News portal website 40 million IP visitors daily
Tencent Weibo Microblog about 540 million registered users/220 million active users monthly
Tencent Qzone Nickname SNS, blogs, home pages 620 million active users monthly
Tencent WeChat Mobile text & voice messaging, friend networks 272 million active users monthly
QQ.com News portal website 51 million IP visitor daily
Baidu Post Bar Forum and Q&A over 10 million registered users and over 200 million monthly active users
Baidu Search Engine Search engine over 80 million IP visitors daily
Taobao?and?T Mall Online mall and C2C ecommerce over 67 million IP visitors daily (combined); over 1 trillion RMB sales in 2012
Youku?&?Tudou Companies have merged; video sharing and viewing, including TV shows youku: over 10 million IP visitors daily tudou:over 1.26 million IP visitors daily
Douban Interest based, nickname SNS 79 million registered users and over 200 million active users monthly
Renren Real name SNS 184? million active users
Sohu News portal website 25 million IP visitor daily
Netease News portal website 16 million IP visitor daily23 million unique visitors daily
iFeng News portal website 11 million IP visitor daily
Caixin Financial business & politics news one of the leading websites in finance, 153 thousand IP visitor daily
Yicai Financial & economic news one of the leading websites in finance, 54 thousand IP visitor daily

Print Newspapers

Reference News
????
Newspaper 3.4 million copies
People’s Daily
????
Newspaper 2.8 million copies
Global Times
????
Newspaper 2 million copies
Southern Weekly
????
Newspaper 1.7 million copies
New Weekly??? Magazine focusing on current events and lifestyle 310,000 copies
Southern People Weekly
??????
Magazine focusing on interviews 200,000 copies

Radio and TV

China National Radio
????????
Radio Over 700 million listeners
CCTV
???????
State television broadcaster in mainland China with mutiple channels 200 million to around a billion viewers
HunanTV
????
Top provincial satellite TV station focused on entertainment programs 65 to 800 million viewers

Further reading on China’s Internet and media

Danwei Model Workers
Our list of the best English-language specialist websites about China

Wired
The Great Firewall of China (1997)
by Geremie R. Barm? and Sang Ye

The China Story Yearbook series
Behind the Great Firewall (2012); China?s Internet: A Civilising Process (2013)
by Jeremy Goldkorn
Discontent in Digital China (2012)
by Gloria Davies

The Economist
A Giant Cage – A survey of China’s Internet
by Gady Epstein

The Atlantic
?The Connection Has Been Reset?
by James Fallows


A Brief Guide to China?s Media Landscape ? February 2014

Fans of mobile phone brand Meizu were recently allowed a rare glimpse of J. Wong, the reclusive founder of the brand of sleek Android-powered smartphones based in Zhuhai, Guangdong province. In a two-hour speech posted online, Wong announced that he was going to resume his daily work routine at his company office, which he had stopped visiting following his semi-retirement in 2011.

Wong also talked about an incentive program, which aims to transform employees into shareholders as well as bring external strategic shareholders to raise one billion yuan in capital. Gree, China?s leading home appliance brand, was mentioned as one potentially interested investor. Wong also commented positively on Lenovo?s recent deal to buy Motorola, which he believes will help the company gain headway in overseas markets.

Meizu, a pioneer in the Mainland Chinese smartphone market, has been surpassed in terms of sales by its competitors in recent years. Xiaomi, for example, outsold Meizu by a factor of three in 2013. While some industry commentators believe that Wong?s return is an effort to save the company from crisis, others suggest that the prospective cooperation between Gree and Meizu, if it occurs, will help Gree, a traditional industry manufacturer, to establish its Internet pedigree and tap into the smart appliances market.

Companies and brands affected
Gree Electric Appliances Inc. of Zhuhai (SHE:000651)


Gree interested in investing in Meizu?

On December 5, the People’s Daily published a report about a police investigation into companies that offer services to delete news items and social media postings from the Internet.

The article does not, of course, mention that the biggest deleter of information from the Internet is the government itself and that because of censorship and self-censorship, deleting news articles and social media posts is entirely natural behavior for editors and other staff of Chinese Internet companies.

Nonetheless, it’s worth a read to get a sense of how filthy the Internet PR business is in China. And to permit ourselves some self-promotion, paid deletion and spam are key reasons that why Danwei’s social media tracking and media monitoring services do not rely only on automated, technical solutions and always have experienced human editors checking all of our findings.

The original Chinese report is here, below is a translation.

China’s biggest case of illegal operations by Internet PR company cracked

Charging fees from clients and bribing website administrators: Recently, Bejing police discovered a website that provides illegal services with unlawful revenues exceeding 10 million yuan, making it the largest Internet PR company on record that has engaged in illegal activities since the Supreme Court released the latest interpretation regarding Internet crimes.

Recently, in the nationwide campaign against organized online rumor mongering and other Internet crimes, Beijing police discovered that six PR companies including Beijing Koubei Interactive Marketing (??????????????) have engaged in paid information deletion and other illegal activities. Under the unified directions of the Ministry of Public Security, police authorities of more than ten provinces made scores of arrests, with 10 million yuan of illegal revenues seized.

The cost of deleting a post ranges from a few hundreds to more than twenty thousand yuan. Big corporate clients usually pay annual fees for such services.

Koubei, founded in 2007, was relatively well known in the Internet PR world. Its revenue mainly come from media monitoring, brand image maintenance and Internet marketing. The company has almost 50 clients, which are mostly well-known large companies and listed companies with annual revenues exceeding 70 million yuan.

According to Li Dong, deputy chief of Beijing police, Koubei uses Internet image marketing as a disguise, bribing related parties to provide paid information deletion service.

According to the police, Koubei has a PR department, social media department, media-monitoring department and a customer relations department. The PR and social media departments are directly involved in deleting negative information from news portals and Internet forums. If they found negative information concerning their clients, they would send an alert to the client and let them decide whether to pay to remove the information.

The company priced its services according to the amount of effort required to remove the articles with prices ranging from a few hundred yuan to just under three thousand yuan. A Mr Yang, the PR manager said: ?In addition, some big companies usually pay a monthly and annual fee to monitor, release information and delete negative information.?

According to Mr. Li [a different person from Li Dong], a Koubei employee, the company set up a QQ account for every employee, and gave them contact info for many employees of news websites. When a project commences, the responsible person would contact the editors of the websites. ?Once the removal of a post is confirmed, the company will send money to the person [at the website] who did it.? Li then said: ?Sometimes when the contact can?t be reached, we would post a message on the QQ group, then some third party agent would take care of it.?

Deleting Internet posts, making pocket money, website editors become a key link in the interest chain

According to Li Dong, ?this year after the Supreme People?s Court issued an interpretation on Internet crimes, Koubei held special meetings to discuss countermeasures. Some contracts were revised, with the clause about ?deleting negative information for customers? being rewritten to hide the the nature of the service. Yet the illegal activity did not stop.

Meanwhile, in order to reduce risks, Koubei specified that all deletion should be done by third party agencies. According to the police investigation, during the period between January and September this year, Koubei paid 470,000 yuan to such agencies.

Among them, Mi Le (pseudonym) is one of the contacts that Koubei made regular contacts. ?If there were no PR companies like Koubei, or corrupt website editors, we agents would never be able to make money.? Mi Le said that he had been commissioned by Koubei scores of times. Each time, he was paid 200 to 1000 yuan.

According to the police, one of Mi Le?s contacts is a Mr Zhao, who is an Internet engineer at Eastday.com. ?Deleting posts is part of my day job. Aside from deletion required by the company, I also takes requests from friends like Mi Le and I make some pocket money.? Said Zhao.

?We don?t delete popular posts, or those that have received large amount of clicks, or those that appeared on prominent locations as those are too risky.? Armed with this form of self-protection, Zhao and Mi Le worked together for two years. ?Each piece of information cost 200 yuan and sometimes I would earn more than my salary if I deleted enough posts.?

According to the police investigation, Koubei and other companies rely on website administrators that have the power to delete posts to conduct their illegal activities. So far scores of websites have been found to have engaged in such activities. Some of them are influential mainstream websites. Some employees of the such websites have become a key link in the criminal interest chain.

Justified deletions have legal channels: companies need to strengthen management to resist temptations

The reporter learned from Beijing police that at the moment, some involved in the crime have already been put under detention for the crime of illegal business operations, bribing non-government employees, and the crime of acceptance of bribes of non-governmental employees. 19 suspects have been arrested.

?Never count on your luck. No matter how many companies are involved, how much business you have, breaking the law will have great impact on the company,? said Mr. Yang, president of Koubei, ?All companies should have a clear idea of what they should do and what they shouldn?t. They also have to renew their knowledge about new laws and regulations.?

As the one who is directly responsible for the company?s paid deletion line of business, PR director Mr. Yang said ?I hope I will never do this again. It does no good to anyone and nobody should do anything illegal.?

?Everyday, many people came to us asking if we can help delete some posts. The offers were so tempting that we gave up our principles,? Confessed Mr. Zhao. He also said that there were legal means to delete posts, and that all websites have specialized people to deal with legitimate complaints. If a post infringes on someone?s legal interests, the infringed party can contact the website?s customer service and provide evidence (to support the request to delete it).

As regards PR companies, agencies and website employees conspiring in crimes, the police suggest that on one hand, websites should have smooth channels of communication with clients; on the other hand, websites should strengthen the self-discipline of editors.


Police bust PR companies for illegal deletion of news and social media postings

In a confident move, BYD is offering 1,000 yuan to any driver that can beat the company?s pre-release Model Qin in 400-meter drag races. The Qin, a hybrid sedan, is being marketed mainly for two new features: a 0 to 100 km/h acceleration time of 5.9 seconds, and better fuel economy than most petrol models and hybrid predecessors.

Many video clips of races involving the Qin in various cities have been posted online (see for example here and here), and these show the Qin going head-to-head with the Audi TT, the Porsche 911 and various other models. Based on the great numbers of comments generated by these videos, BYD?s promotion campaign appears to have been quite successful in garnering some buzz.

GW.com.cn, a business website, ran a story on November 26 quoting an unnamed BYD marketing manager as saying that the company had already received over 2,000 pre-orders and its factory in Xi?an was gearing up production to ensure supply after the Qin?s official launch date, scheduled for December. The source also said that the government?s release of a list of new environmental protection model cities has sped up the Qin?s launch.

Companies and brands affected
BYD Company Limited (HKG:1211)

Image source: Autoblog Green


Hybrid cars: BYD?s new Qin

While much of the world looks forward to official holidays that can be predicted years in advance, China’s annual muddle over the coming year’s holiday schedule has long been a reliable source of confusion. But yesterday the Holiday Office published three potential replacement schedules for public input “to make the official holiday schedule planning of our country more scientific and rational.” Sina has put up a poll about it.

Perhaps unique to mainland China is the practice of stealing a day off from a neighboring weekend if necessary to ensure a full three-day vacation. Among the three new options, however, the most popular so far retains the weekend-swapping ways of the current setup, perhaps because it is also the only proposal to grant seven full days off to both the Spring Festival and National Day holidays.

Those dismayed by the current results can take heart in the fact that the only option that would end almost all weekend swaps is currently in second place, only 4,000 or so votes behind. Below is a translation Sina’s poll number of votes for each as of yesterday evening.

How would you change the official holiday schedule?
In accordance with The National Method for Scheduling Days Off for New Years and Memorial Holidays, to make the official holiday schedule planning of our country more scientific and rational, with opinions raised from every aspect of society having been collected in a previous questionnaire survey, three adjusted holiday schedule proposals have been put forward for publication to solicit opinions. Participation is welcome.

1. Which of the following holiday schedule proposals would you choose?

Proposal A: Spring Festival holiday of 3 days, borrowing a day off from the neighboring Saturday, with Sunday becoming a seventh day of the long holiday. National Day holiday of 3 days, with no changes to other days off, and the vacation period being set as Oct 1 to 3, to be shifted to later date if it falls on a weekend. New Year’s Day, Tomb Sweeping Day, International Labor Day (May Day), Dragon Boat Festival and Mid-Autumn Festival all get one day off, with no changes to other days off–only those days will be off, with the following Monday off should they fall on a weekend. (11,144 votes)

Proposal B: Spring Festival holiday of 3 days, borrowing a day off from the neighboring Saturday, with Sunday becoming a seventh day off. National Day holiday of 3 days, borrowing a day off from the neighboring Saturday, with Sunday becoming the fifth day of the long holiday, and the vacation period being set as Oct 1 to 5. New Year’s Day, Tomb Sweeping Day, International Labor Day (May Day), Dragon Boat Festival and Mid-Autumn Festival all get one day off, with no adjustments to other days off if one of these holidays falls on a Wednesday–only those days will be off. If one falls on a Tuesday or Thursday, a day off will be borrowed from the neighboring Saturday [and used on Monday], with Sunday becoming the third day of the short long holiday. If one falls on a Saturday, the following Monday will be off. (5,381 votes)

Proposal C: Spring Festival holiday of 3 days, borrowing a day off from the neighboring Saturday, with Sunday becoming a seventh day off. National Day holiday of three days, borrowing a day off from the neighboring Saturday, with Sunday becoming the seventh day of the long holiday, and the vacation period being set as Oct 1-7. New Year’s Day, Tomb Sweeping Day, International Labor Day (May Day), Dragon Boat Festival and Mid-Autumn Festival all get one day off, with no changes to other days off if one of these holidays falls on a Wednesday–only those days will be off. If one falls on a Tuesday or Thursday, a day off will be borrowed from the neighboring Saturday [and used on Monday], with Sunday becoming the third day of the short long holiday. If one falls on a Saturday, the following Monday will be off. (15,162 votes)

2. How old are you?
Under 20 (754 respondents)
Between 20 and 40 (22,026 respondents)
Between 40 and 60 (8,353 respondents)
Over 60 (554 respondents)

3.Occupation
Enterprise staff (19,865 respondents)
Party or government organ civil servant (3,419 respondents)
Self-employed in industry/commerce (1,347 respondents)
Peasant (193 respondents)
Retired worker (618 respondents)
Student (2,690 respondents)
Unemployed (317 respondents)
Other (3,238 respondents)

Update: Earlier this week, Beijing Youth Daily reported on abnormalities with Sohu.com’s hosted version of the poll after 60,000 votes disappeared from its tally in the early morning on November 28.

The article raised the possibility of double voting by some netizens, and an unnamed Sohu representative was quoted as saying users couldn’t vote more than “once per 20 minutes”. In a sidebar interview, the leader of the Holiday System Reform Task Force Cai Jiming criticized the online poll for lax standards and for not taking into account the opinions of those who don’t often use the internet.

But soon thereafter, the apparent support of over half of online respondents for “option C? (7 days off for both Spring Festival and Golden Week) was seemingly corroborated by the similar results of an offline poll of 762 people across 12 provinces conducted by the People’s Daily Network, as reported by Legal Evening News. Despite a massive outpouring of votes and public interest, it is unlikely that any of this will actually have any effect on next year’s holiday schedule.

Links and sources
Original poll
Current results
Detailed description and hypothetical calendars for the three proposed schedules

This tranlsation is by Danwei contributor Hudson C. Lockett IV, a Beijing-based freelance writer and photographer. Follow him on Twitter here.

Other stories by Hudson Lockett on Danwei

Six Days in Hong Kong’s Occupy Central
Photos of Hong Kong?s anti-national education protest
Xie Yan and the fight against bad conservation laws
The uncertain return of Beijing wildlife


Internet Poll on changing China?s strange public holiday system

The table below shows mainland China’s most important websites, newspapers, and broadcast news organizations, together with numbers for website traffic, circulation and audience.

The numbers are guesstimates based on media reports, listed companies’ public filings, media advertising rate cards, Alexa.com and Danwei interviews with media insiders. Like all numbers in China, they should be taken with a pinch of salt, for reference only. This list will be updated every three months. This version was first published on November 21, 2013.

Update: “The number of Internet users in China had hit 604 million as of the end of September this year, with mobile phones becoming the favored means of accessing the web, the State Internet Information Office announced” on November 29.

 

Internet

Sina Weibo Microblog Over 500 million registered users/46.2 million active users daily
Sina.com.cn News portal website 163 million unique visitors
Tencent Weibo Microblog About 540 million registered users/100 million active users daily
Tencent Qzone Nickname SNS, blogs, home pages 626.4 million active users monthly
Tencent WeChat Mobile text & voice messaging, friend networks 235.8 million active users monthly
QQ.com News portal website 284.1 million unique visitors
Baidu Post Bar Forum and Q&A Over 200 million registered users
Baidu Search Engine Search engine Over 72.9 million visitors daily
Taobao and T Mall Online mall and C2C ecommerce 46.1 million visitors daily (combined); over 1 trillion RMB sales in 2012
Youku & Tudou Companies have merged; video sharing and viewing, including TV shows Youku: over 8.53 million visitors daily Tudou:over 2.1 million visitors daily
Douban Interest based, nickname SNS Over 100 million unique visitors monthly
Renren Real name SNS 184? million active users
Sohu News portal website 175 million?unique visitors daily
Netease News portal website 23 million unique visitors daily
iFeng News portal website 5 million visitors daily
Caixin Financial business & politics news 79,000 visitors daily
Yicai Financial & economic news 64,200 visitors daily

Print Newspapers

Reference News
????
Newspaper 3.4 million copies
People’s Daily
????
Newspaper 2.8 million copies
Global Times
????
Newspaper 2 million copies
Southern Weekly
????
Newspaper 1.7 million copies
New Weekly??? Magazine focusing on current events and lifestyle 310,000 copies
Southern People Weekly
??????
Magazine focusing on interviews 200,000 copies

Radio and TV

China National Radio
????????
Radio Over 700 million listeners
CCTV
???????
State television broadcaster in mainland China with mutiple channels 200 million to around a billion viewers
HunanTV
????
Top provincial satellite TV station focused on entertainment programs 65 to 800 million viewers

A Brief Guide to China?s Media Landscape

Hidden in a pedestrian-only lane in Beijing?s tech district of Zhongguancun, Cheku Caf? (?????) is not easy to find and appears to be an unassuming eatery like its neighbors. But if you climb up the dark staircase, you’ll blunder into what appears to be a university library: youngsters scattered around scores of desks in a large, cavernous room, gazing, typing on the glowing screens, chattering, laughing and napping.

The name Cheku, meaning garage, speaks of ambition by alluding to tech giant Apple?s rather humble origins. Some believe that China?s equivalents of the Cupertino tech giant may begin in this place: the idea of the caf? is to provide startup tech companies a communal office where rent is cheap and entrepreneurs can communicate, inspire each other and conceive ideas.

One evening last week I visited Cheku. At about six thirty, the room began to fill up. People conversed with familiarity, even though many had never previously met. For an outsider, the conversations were a little bewildering: “How many coins do you possess? How did you get them?”

Aside from its reputation as a tech hub, Cheku Caf? was chosen to host tonight?s event because of something that happened in March this year: an American student named Jake Smith asked if he could pay for his cup of coffee with Bitcoins. With hindsight, the 0.2 Bitcoins he handed over now looks a high price to pay for the beverage, though for some of the bitcoiners I met at Cheku Caf? believe the incident will go down in history.

Origins

In the second week of November, the exchange rate of Bitcoin to major currencies took a sudden jump, with its value more than doubling within a week. As of November 20, Bitcoin is trading around USD 500 per coin, triggering speculation that the Bitcoin ?bubble? is being driven by strong demand from China, an argument that is supported by strong volume increases observed on Chinese Bitcoin exchange websites such as BTC China and Huobi.com.

The first “cryptocurrency” in the world, apparently invented by a person or group known to the word as Satoshi Nakamoto, Bitcoin was born with the mission to solve the intrinsic flaws of fiat currencies and early digital currencies: inflation, double-spending, counterfeiting, cash robbery etc. The assumptions that the system is based on is that the majority of participants are honest. Every transaction need to be confirmed by all the participants. In theory, a group of cheaters could take control of the currency if they acquired more computing power than the all other users ? a condition that hasn?t even come close to materialize. Yet, the protocol is open source and it offers transparency no banking system can compete.

Many believe that the most promising application for Bitcoin is for online payment. Unlike using a credit card, payment made in Bitcoin doesn?t carry a transaction fee (though one can opt to pay a small amount for faster confirmation speed) and though every transaction is documented, it can only be traced to the virtual account that hold the Bitcoin, but not real world payers. Thanks to this anonymity, Bitcoin gained a little notoriety for being used for drug sales and money laundering. In May, when the FBI shut down Silk Road, an online narcotics marketplace that used Bitcoin as primary currency, the exchange rate tanked more than 40% in one day.

A Chinese Bitcoin multimillionaire

Li Xiaolai (pictured above), was a speaker at the event I attended at Cheku Caf?. He is perhaps the most famous figure in the Chinese Bitcoin world. Li admitted on one occasion that his Bitcoin holding is the six digits. At the current exchange rate, that is more USD 50 million, but such comparison may not do Bitcoin justice as unlike 50 million dollars, 100,000 Bitcoins is about 1/100 of all existing Bitcoins. The world?s most famous Bitcoin millionaires are Winklevoss twins who own 120,000 Bitcoins.

Li, 41, studied accounting at college. Following graduation he worked as a salesman, and later as an English teacher. Li said on one occasion?that English teaching is really just a type of sales in China: with millions of young Chinese aspiring to go abroad, English teaching is essentially selling a dream. Li also published several books such as ?Breakthrough on TOEFL essential vocabulary in 21 days?, ?How to get high scores in TOEFL essay?. But he did not make much money from these endeavors.

In the first two years after the first Bitcoins were minted in 2009, the virtual currency were used among geeks and worth no more than a few cents. Few people knew about them. Stories of a man spending 10,000 Bitcoins to buy a pizza and of a hacker attack that sent the price down by half began to interest the news media and global interest in the currency grew.

Li recounted his roller roaster trip starting from the year when his employer, the testing cramming school operator New Oriental, went public. As a new employee, Li was allowed to buy a small number of pre-IPO shares. While the company was well received at the New York Exchange, many of Li?s colleagues had fears that the company was overvalued and did not have a bright future, which Li described as ?insider?s pessimism?. Li decided he wanted to invest his money elsewhere, and this was when he found out about Bitcoin.

Li described the moment when he learned the article as a moment of shock. The idea was so elegant and Li was so mesmerized that he wasted no time to find the paper by Satoshi Nakamoto on the Internet. Although he couldn?t understand it completely, it didn?t prevent him from selling all his shares and loading up with Bitcoins. He was convinced that this thing was going to be big. In days to follow, Li said he had many insomniac nights. But as his Bitcoins grew in value, he decided to expand his profits by investing in a container worth of computers for mining.

Mining

In the paper Bitcoin: A Peer-to-peer electronic cash system, Satoshi Nakamoto explained Bitcoin mining: ?The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.? One brilliant touch is unifying the self-interest and well being of community. Newly created Bitcoins are used to compensate miners who spent computing power and electricity to process transactions, and keep the network healthy. While the miners may be perfectly self-interested in their endeavor, their selfishness is essential to the system. The speed of new coins being injected to the system is also designed to slow down as time passes and more people join the Bitcoin economy. By artificially increasing the difficulty, the miners are forced to upgrade their equipment constantly, to gain advantage in the competition for coins. When Li realized this, he divested his mining venture. Today, he focuses on Bitcoin lending ? large transactions of coins usually happen offline to avoid radical fluctuations of value. Since there is no law regarding Bitcoin trades, people like Li who have a reputation are usually invited to act as a guarantor in the deal.

Infrastructure and industry

Many compare Bitcoin with a gold rush ? not only that gold was hard to find but that those that sell shovels end up making more money than people who actually do the mining.

A Shenzhen-based company called ASICminer, founded in early 2012 by three new college graduates, has been making tens of millions by making specialized miners. Bitcoin mining computers need to have a special type of microchip that is an application-specific integrated circuit, or ASIC. In the early days, there were only three companies ? two based in China, producing the Bitcoin ASIC chips, the margins were high: One mining machine that cost 2,000 yuan to build could be sold for 40,000 yuan.

ASICminer also uses a novel way of fund raising. The company issued virtual stocks which investors buy using Bitcoins. Dividends are also paid in Bitcoins. 796.com, a virtual share and futures trading exchange, has four stocks being traded, including ASICMINER. The stock is currently trading at 0.0048 Bitcoin per share, a fraction of what it was at the beginning of the year, though many investors have earned enough in dividends to cover their losses.

Li Xiaolai is an investors in ASICminer, and remains long on the company, but he said that he would not recommend it for the faint-hearted as radical fluctuations are common in the Bitcoin world.

Regulation may be around the corner

The idea of a decentralized currency means that Bitcoin can work with or without a government, something not all governments may accept with grace. Compounding the potential annoyance to governments is that sales made in Bitcoins are often untaxable, and once people start using Bitcoin in preference to fiat money, it will necessarily result in loss of tax income.

Many predict that governments will eventually bring the unruly Bitcoin under its reins. But perhaps not: the FBI itself has acknowledged that ?Bitcoins are not illegal in and of themselves and have known legitimate uses.” In China, Bitcoin appears to still be off the government?s radar. However, that might change; the fates of Facebook and Twitter may serve as a warning.

The worst case scenario for Bitcoiners is that governments will seek to shut down the whole system. Many believe that it is impossible given its peer to peer decentralized nature. There is no central sever to take down. Unless governments begin a long and determined campaign of arresting people who own or use Bitcoin, it will be very difficult to destroy it, but a hostile stance from the authorities would undoubtedly hurt speculators? confidence. If the US or Chinese governments outlaw Bitcoin, the value may take a big dive, but in the long term, many Bitcoiners believe, it will bounce back and grow as it did before.

For a dedicated Bitcoiner like Li, the ups and down only serve to make him identify with Bitcoin more strongly. A true Bitcoiner is not an investor in the typical sense of the word, since they see owning Bitcoins as even more desirable than owning fiat money and are determined to go through the odds, with great indifference to the financial outcome. At the Cheku Caf? event, rarely did anyone ask about other types of money: they just wanted to know how many Bitcoins you possessed.

Li said that he owns no real estate and no car, his assets are almost all virtual. He also described his own situation as a dilemma ? if Bitcoin took a drop, he would lose a fortune, but only so when you think from the perspective of fiat money. From the perspective of a Bitcoiner, he would rather that Bitcoin lose value so he could do what he once was capable of doing: buy thousands of Bitcoins in one go.

Passport to the future and USA

?This is the first time in history that human beings have found a way to ensure the inviolability of personal property,? said Li in a celebratory tone, ?If you remember, two years ago, I posted on Twitter that I would do something I called a ‘virtual immigration’.?

When I asked my travel agent to obtain a visa for me, he said it couldn?t be done because I had no house. No car ? the car I drive is registered under my friend?s name, my bank account balance is a joke.

Do you know the easiest way to immigrate to the US? You get a travel visa and board an airliner, and you never come back. But if it is that easy, why most of you didn?t do it? Come on, be honest, you don?t want to live in this place, do you? The answer is that you have all your assets locked here.

Li ?finally ?got his green card. His story may be the start of a trend. The Winklevoss twins warned American regulators not to push innovation out of the U.S. and into China. While there is no sign of China beating U.S. in creating a Bitcoin economy, with Bitcoin making assets relocation so easy, one can foresee waves of Chinese?Bitcoin immigrants hitting the American shores in a future not so remote.

Finale

Many believe that the fate of Bitcoin is connected to whether it will be adopted by enough people so that one can pay bills easily with it. Li does not believe Bitcoin will replace fiat money any time soon. As long as it stays a perfect speculative vehicle, Li is happy. ?If you can?t buy a breakfast with gold, does it make your gold less valuable?? Asked Mr. Li rhetorically.

This gives rise to another question ? As Bitcoin continue to appreciate, will it send the world into a deflationary spiral because it rewards hoarding and discourages spending? This is a view held by many Bitcoin critics, including prominent economist Paul Krugman. Some think that a coin that worth hundreds of dollars is a ridiculous idea.

Bitcoin?s answer to the deflationary spiral question is infinite divisibility. Even the world had only one Bitcoin, it is more than enough for all the people, because it can be divided infinitive times. My own observations at the Cheku Caf? event seem to indicate that people will not just hoard them. The American student who spent 0.2 Bitcoins didn?t cry for being overcharged. If anything, the true believers tend to be more generous as their way of seeing money has changed.

This year, shortly after an earthquake in Meishan, Sichuan Earthquake, Li Xiaolai organized a Bitcoin donation. About 40 bitcoins were raised to help the quake victims. Like many Bitcoiners, Li seeks to create a positive image for the community as charitable and responsible, rather than shady money grabbers or drug traffickers.

The event concluded on a hopeful note when the host proposed a Bitcoin trade. Anyone can buy and sell their coins. One offered to sell ten coins at a price one hundred yuan lower than the standard exchange rate that evening. The coins were quickly snapped up by two buyers. It seems that the Bitcoiners don?t have the resistance to parting with their coins that some economists see as the cryptocurrency’s biggest problem.


Li Xiaolai, Bitcoin millionaire

Economic Information Daily (?????), a business newspaper published by Xinhua News Agency, ran a story on November 17 reporting that the National Development and Reform Commission (NDRC) may soon release a list of drugs that must be sold at low prices in China with the aim of reducing the financial burden of medical care on citizens and hospitals. The list may have a significant impact on the pharmaceutical industry: some out-of-production low-cost drugs will be protected and return to the market, while the makers of high cost drugs on the list will have their profit margins squeezed. The article also predicts that the pharmaceutical industry may soon see another round of mergers and acquisitions.

?Low-cost drugs? refers to the cheaper of the drug options used to treat a particular medical condition. The article quotes an informed source as saying that NDRC is expected to set the standard for low-cost drugs at a daily average cost of three yuan for western drugs and five yuan for processed Traditional Chinese Medicine (???, sometimes called ?Chinese patent medicine?). The criteria and the list will be reviewed and adjusted every two to four years.

Low margins have been the primary cause that discourages pharmaceutical companies from selling low-cost drugs. As a result, hospitals are sometimes unable to obtain low-cost drugs, leaving patients with no choice but to buy more expensive alternatives.

The NDRC policy is likely to be welcome to generic drug makers are concerned, but it is bound to hurt companies that focus on high-cost drugs. The Economic Information Daily reports that industry insiders believe that generic makers such as Shanxi Yabao Pharma, Beijing Tongrentang, North China Pharma, Baiyunshan Pharma , and Yunnan Baiyao will benefit while Johnson & Johnson, GlaxoSmithKline, Merck, and other producers of out-of-patent drugs will be negatively affected.

?Makers of insured drugs will hopefully see a change to their dismal state of affairs. Once companies see stable incomes, further market consolidation will follow. Some companies that are not in the industry or preparing to withdraw may merge to achieve economies of scale in production and distribution,? according to an “industry insider” quoted by the report.

The report also quotes Shi Lichen, general manager of the healthcare center of Alliance PKU Management Consultants saying that ?the cap of three yuan and five yuan per day is essentially price insurance for pharmaceutical companies. As a result, many large low-cost companies may ramp up production.? Many small companies will have a very good chance to grow, and many will see their market cap increasing. And those smaller companies, previously overlooked in M&A, who hold production permits for generic drugs may become sought-after acquisition targets.

Companies and brands affected
Shanxi Yabao Pharma (SHA:600351)
Beijing Tongrentang (SHA:600085; HKG:8138)
North China Pharma (SHA:600812) (SHA:600085; HKG:8138)
Baiyunshan Pharma (SHA:600332; HKG 00874)
Yunnan Baiyao Group (SZ:000538)
Johnson & Johnson (NYSE:JNJ)
GlaxoSmithKline plc (NYSE:GSK)
Merck & Co. (NYSE:MRK)

Links and sources
?????: ???????????1.16??????????


Low-cost drug list to transform pharmaceutical industry in China

Allied with Taobao and other online marketplaces, Chinese money market funds such as Yu?ebao are making inroads into markets traditionally dominated by banks (see previous Danwei post). Not only are these fund products more accessible for Internet users, their interest rates, usually hovering around 5%, are more than ten times the 0.35% offered to most current account holders.

Feeling the pain, banks are fighting back. The webportal China Finance Information ??????? reported on November 12 that China Minsheng Bank has been conducting tests to prepare for a December release of a new type of bank card that promises to offer interest rates on a par with most money market fund products. This move is being hailed by the banking industry as ?the first shot of a counterattack? against upstart online financing.

The CFI article quotes the Q3 results of several banks indicating a slowdown in growth rates for deposits. Among them, China Merchants Bank, CITIC, and China Minsheng Bank achieved growth rates of 0.25%, 0.71%, and 0.26%, respectively.

Companies and brands affected
China Minsheng Bank (HKG:1988; SHA:600016)
China Merchants Bank (HKG:3968; SHA:600036)
China CITIC Bank Corp. Ltd. (HKG:0998; SHA:601998)

Image: Bloomberg


China Minsheng Bank to release high-interest debit card as competition heats up

The launch ceremony of China?s first online liability insurer, Zhong An Insurance, on Wednesday was attended by three of China?s most prominent personalities, namely Jack Ma of Alibaba, Pony Ma (Ma Huateng) of Tencent, and Ma Mingzhe, president of Ping An Insurance. Although the only one of the three operative in a traditional industry, Ma Mingzhe was the one who predicted an Internet revolution at the ceremony when he expressesd his vision of the future of the banking industry:

Bank branches will grow smaller and closer to neighborhoods, and become more intelligent and diversified. In ten years, 50% to 60% of credit cards and cash will disappear. In twenty years, the counters in banks will disappear.


Refraining from explicitly suggesting who exactly will take the place of the disappearing banks, Ma and his company was noted for making strides in the online financing industry with the launch of Lufax, a modified version of a P2P lending website that links small businesses with funders and investors. Interestingly, Ping An also acquired a more traditional bank, called Ping An Bank, which gave Ping An an advantage that few in the insurance industry enjoy.

Designed to cater to the increasing needs of online businesses for protection from liabilities, Zhong An carries with it the Internet pedigree inherited from its two major shareholders, Tencent and Alibaba. Yet these companies? collaboration with Ping An may be a marriage of convenience, because a large insurer like Ping An was required to participate in order for the venture to obtain a business license. Nevertheless, for Ping An, Zhong An is perhaps the last step to complete an online financing edifice as envisioned by the company’s president.

Companies and brands affected
Tencent (HKG:00700)
Ping An Insurance (SHA:601318; HKG:2318)

Links and sources
Beijing Times:?????????????


Ping An strengthens online financing arm with launch of Zhong An Insurance

It may just confirm what we already know ? the smog is getting worse: China?s Meteorological Administration says that there were more smoggy days nationwide this year than anytime during the past 52 years. In Beijing, that includes half of the days in the month of October.

As if number alone is not alarming enough, several media articles cropped up this week that added a sense of urgency to the issue. Some such stories may seem anecdotal. On Tuesday,?China News Service?ran a headline shouting ?smog causes cancer; youngest patient is only eight years old?. The story tells a sad tale of an eight-year-old girl who was diagnosed with malignant lung tumor, a disease that is usually associated with smokers and the elderly. Though grounded on little more than speculation, the article suggests a a cause by describing that the child?s home was next to a dusty road. On Wednesday, Hong Kong’s South Morning Post published an article that the smog might have a role to play in police’s failure to prevent a terrorist attack, in which a Uighur?man smashed his vehicle against one of the bridges in front of Tian’anmen, killing everyone onboard and several passers-by on his way. Low visibility caused by smog can blind surveillance cameras, says the newspaper.

Other reports on the air more official sources. The Chinese Academy of Social Science and the China Meteorological Administration just released a ?green paper?, which is supposed to be a comprehensive review of the country?s environmental situation. The book attributes a number of increasingly common health conditions to the smog, such as impairment of the immune system and “reproductive capacity?.

However, as the chart above illustrates, for investors who have hedged against the environmental challenge by investing in the environmental protection sector, this week may not be bad at all. Among other things, a policy announced by the Ministry of Environmental Protection demanded all major cities and environmental protection model cities to implement PM2.5 monitoring systems, which have boosted some companies in the sector.

Companies and brands affected
Xianhe Environmental Protection (SHE:300137)
Air and water testing equipment manufacturer. The company has been mentioned in recent news for winning major deals from government?s projects to build nationwide air monitoring network.

SDL Tech?(SHE:002658)
Originally a dealer of imported equipment, the company has entered into manufacturing market by making air and smoke analysis equipment. In the end of October, media reported that the company won a bid from a Shandong water treatment company.

Beijing SPC Environment Protection Tech?(SHE:002573)
Desulfurisation equipment maker specialized in power plant emission reduction equipment manufacturing and solutions.

Skyray Instrument (SHE:300165)
Jiangsu-based company specialized in spectrometers, which are used in analyzing waste consistency. Trading suspended due to news of acquisition.

CPI Yuanda Environmental Protection (SHA:600292)
One of only three companies in China that are qualified to process low and medium radiation level nuclear waste. The company is also involved in air and water pollution treatment, as well as emission reduction.

Centre Testing International (SHE:300012)
Industrial testing equipment manufacturer.

Fujian Longking (SHA:600388)
China?s first listed industrial dust filtering material manufacturer.

Xiamen Savings Environmental (SHE:300056)
Leading industrial dust filtering material manufacturer.

Links and sources
Tencent Finance channel: ????????? ????????
Legal Daily: ???????????? ??????????
Economic Daily News (China News Service article): ???????? ??????????8?
South China Morning Post: Big brother blinded: Security fears in China as smog disrupts surveillance cameras

If you?d like to hire Danwei to track your company, investment or other topic of interest in China, please write to danwei@danwei.com and tell us what you want to follow.


Air pollution boosts companies in emissions analysis and filtration

Yili, a leading Chinese diary brand, posted record quarterly revenues of 12.55 billion yuan for the third quarter of 2013. To put it in perspective, the number is more than the total revenues of Guangming, one of Yili?s domestic competitors, in the first three quarters of the year. Mengniu, another competitor has not yet released its results.

One factor frequently cited by Chinese market observers is Yili?s ability to secure its supply of raw milk. The company owns more diary farms than either of its competitors. Mengniu, for example, relies more on individual farmers, which makes it more vulnerable to quality problems that have sunk domestic brands such as Sanlu.

Yili?s advantage appears particularly pronounced in a time when China is experiencing a sort of ?milk crunch?. According to a report that appeared on today?s China Business News, the number of milk cows nationwide has dropped to somewhere between eight and nine million, a low point in recent years. The article attributes the change to a variety of factors including rising beef prices, outbreak of foot-and-mouth disease and farmers? lack of confidence in the future of the dairy industry in the aftermath of several serious food safety scandals.

Despite strong growth, the company’s results still fell short of investors? expectations – Yili?s stock price dropped slightly after the release of the results.

Companies and brands affected
Yili (SHA:600887)

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Is Yili poised to gain from China?s milk shortage?

Two A-share market-listed pharma companies, Xiangxue Pharma and Kangmei Pharma, announced this week that they had obtained licenses to conduct direct sales.

Such licenses are under tight regulation for fear that they would be used to start pyramid schemes.
So far there are forty direct sales companies operating in China, most being cosmetics brands such as Avon or specialized health supplement brands such as Amway. Chinese media commentary on the two companies? direct sales licenses has speculated that the companies are eying the dietary supplement market.

Xiangxue Pharma already owns a subsidiary that produces a variety of traditional Chinese medicine- based oral supplements that claim cosmetic benefits. According to the company?s own data, such products achieved sales of 193 million yuan by mid-2012, a figure that may be impressive given
the size of the company, but meager compared to direct sales market leaders. Amway, for example, has annual sales of 27.1 billion yuan, and Perfect and Infinitus both have 12 billion each. The other company Kangmei Pharma is also reported to have launched a joint venture company last year with insurance giant PICC in the business of ?health management?.

So far, the few other pharma companies that already have direct sales licenses are not doing very well with them. Harbin Pharma, for example, discontinued its direct sales department in 2010, two years after obtaining the license, when it was accused of operating a pyramid scheme. However, the market responded positively to the news and the stocks of both Xiangxue and Kangmei were boosted by the announcements.

The rationale might be that the health supplement and ?cosmeceutical? (cosmetic-pharmaceutical) sectors are increasingly seen as an alternative source of growth, especially in the wake of recent government pressure to lower drug prices. This was corroborated by the recently released Q3 results of some companies. Yunnan Baiyao, a traditional Chinese medicine (TCM) company that originally produced anti-inflammatory drugs, was a pioneer in the cosmeceutical area. The company reported strong results in the first nine months of the year. Its net profit reached 1.9 billion yuan, 54.1% higher?year-on-year. Strong growth in the company?s general health department, responsible for several TCM- based toothpastes, was cited as a factor.

In related news:
? A news article reports that the price of Dong-E E-Jiao ? a donkey skin-based health supplement,

has grown sharply in recent years
? Jiangzhong Pharma announced a hericium erinaceus-based biscuit that claims to soothe?stomach discomfort

Companies and brands affected
Xiangxue Pharma (SHE:300147)
Kangmei Pharma (SHA:600518)
Harbin Pharma (SHA:600664
Yunnan Baiyao Group (SHE:000538)
Shan Dong Dong-E E-Jiao (SHE:000423)
Jiangzhong Pharma (SHA:600750)

If you?d like to hire Danwei to track your company, investment or other topic of interest in China, please write to danwei@danwei.com and tell us what you want to follow.


Pharma companies set to enter direct sales of nutritional supplements and beauty products?

Following Guangzhou Bayunshan Pharma’s announcement that it plans to invest five billion yuan in high-end hospitals and a strong rally in the health care sector in China’s A-share market last week, several newspaper articles have appeared beating the drum for investing in so-called “private hospital concept stocks”.

One such article appeared on China Business Times ??????, a national business newspaper. The article attributes the strong stock market performance of several A-share listed pharma companies that have holdings of hospital-related assets to the government’s favorable policies and apparent hostility to foreign pharma companies. The author quotes a source estimating that a turning point has been reached for the private hospital industry. The source also listed a number of listed companies that he believed are poised to gain from the forthcoming private hospital boom – companies that are either already active in the private hospital industry or who plan to do so.

Equally bullish,?Metropolis Express ????, a Hangzhou newspaper, quotes an industry insider who says that many big investment institutions see private hospitals as the next big thing. The article compares private sector hospitals to private sector banks, reasoning that hospitals are better investments given government incentive policies and relative lower entry barriers for newcomers.

The positive outlook is not shared by everyone. Today, another newspaper,?Private Economy News ????? took a skeptical view on the trend of pharma companies buying into the hospital industry. The article quotes Ge Jianqiu (???), former vice president of Shanghai Pharma, who says that many pharma companies only do it to burnish their annual reports and many of these investors have no experience of running hospitals. Another source, Li Su (??), president of a corporate consultancy, expresses doubt as to whether such a trend will last. Li believes that over the long term, hospitals’ margins will be squeezed as medical reform deepens.

None of the articles mention Chindex International, a Nasdaq-listed company that began selling medical equipment from the US to China in the 1980s. Chindex now operates a chain of high-end private hospitals in Beijing, Shanghai, Tianjin and Guangzhou. While the clinics initially cater to expatriates living in China, the growing number of wealthy Chinese patients promise a rosy future for the hospital chain. The image above shows a gold-plated Ferrari (from Shanghai-based writer Abe Sauer), a typical sight outside Beijing Family United clinics.

Companies and brands affected
Shanghai Forsun Pharmaceutical (HKG:02196 SH:600196)
Guangzhou Baiyunshan Pharmaceutical (HKG:00874 SH:600332)
Chindex International, Inc. (NASDAQ:CHDX)
Aier Eye Hospital Group Co Ltd. (SZ:300015)
Topchoice Medical Corporation (SH:600763)
Shanghai Fosun Pharmaceutical (Group) (SH:600196)
Gansu Duyiwei Biological Phrmctcl Co Ltd. (SZ:002219)
Xian Kaiyuan Holding Group Co., Ltd. (SZ:000516)
Zhejiang DA Diagnostics Co Ltd (SZ:300244)
Da An Gene Co., Ltd. of Sun Yat-Sen Uni. (SZ:002030)
Shanghai Kehua Bio-Engineering Co., Ltd. (SZ:002022)
Beijing Leadman Biochemistry Co Ltd. (SZ:300289)
Jiangsu Yuyue Mdcl Eqpmnt & Sply Co Ltd. (SZ:002223)
Beijing Tongrentang Co., Ltd. (SH: 601607, Hong Kong related companies not mentioned in text HKG:8138 and 1666)
Yunnan Baiyao Group Co., Ltd. (SZ:000538)
Zhangzhou Pientzehuang Pharmaceutical Co. ??? (SH: 601607)

Links and sources
Abe Sauer on Twitter; image source
Private Economy News: ?????????????? ???????????
China Business Times: ??????????????
Metropolis Express: ???????????????

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Chinese pharma companies rush to invest in hospitals

EnfoDesk, a Chinese market research company, published a report on China’s mobile phone banking sector. According to the report, bank transactions conducted via mobile phones in Q4 of 2013 reached just over 370 billion yuan, 35.90% higher than the previous quarter.

Worth noting is that the study puts China Minsheng Bank in third position in the market share ranking of mobile banking: Minsheng, with 10.68 % market share of mobile banking, is only beaten by China Construction Bank (28.19%) and ICBC (24.38%), both of which are members of China’s “Big Four” mammoth banks while Minsheng remains a much smaller upstart. The article attributes Minsheng’s fast progress in the sector to technological innovation and social media marketing.

Companies and brands affected
China Minsheng Bank (HKG:01988 SH:600016)
Links and sources
New Express: ?????2013??3?????????????? ?????????

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Mobile banking: Minsheng bank punches above its weight

According to a Southern Daily ???? report, Wang Huiying (???), vice inspector of the “Trade in Services and Commercial Services Department” of Ministry of Commerce, revealed that the Ministry is seeking to lower the business tax rate for restaurants from the current level of 5% to 3%. Speaking at a recent restaurant industry conference, Wang also said that the ministry also seeks to lower the fees that banks charge for credit card transactions.

The restaurant industry has been struggling because of rising wages and rents as well as government?s austerity policies. Worth noting is that Wang said the tax reduction will likely to only apply to low-and middle-end restaurants, so at least for the more expensive ones, now is still not the time to celebrate the end of austerity.

Links and sources
New Express: ???:???????????????

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Will a tax rebate rejuvenate China?s restaurant industry?

Beijing Times ???? yesterday published an article (based on a report in the CCTV 1 program Focus?Interview?????) analyzing the profit chain of spam texts sent by China’s three leading telecommunication operators.?According to the report, many spam texts are sent from numbers starting with 106, and such numbers can only be used by China Mobile, China Unicom and China Telecom. Such numbers were originally for internal and work units? use only, but in recent years the big three telecom operators have provided bulk spam sms services to all-comers and profiting accordingly.

According to the report, a small bulk SMS advertising company who sends out ten million texts monthly can make a profit of about 200 thousand yuan, but the big three telecom operators can make about 300 thousand yuan and provide bulk sms advertising services at cheaper rates.

Companies and brands affected
China Mobile (HKG:0941)
China Unicom (HKG:0762)
China Telecom (HKG:0728)

Links and sources
Beijing Times: ??????????????


Big three Chinese telecom operators criticized for profiting from spam

On October 8, China Business News, a publication owned by SMG, a media congomerate controlled by the Shanghai city government, published a report attacking Starbucks? high prices in China. On October 20, China Central Television (CCTV) broadcast a story targeting the high prices of Starbucks coffee and mugs. The stories have been repeated in different versions in various media outlets.

The CCTV story uses man on the street interviews in Beijing, Chicago and Mumbai to emphasize the high prices of Starbucks China compared to other countries. The CCTV report says a cup of 354 milliliters of latte coffee costs 27 yuan (USD4.4) in China as compared to only 19.98 yuan in Chicago, 14.6 yuan in Mumbai and 24.25 yuan in London. Starbucks stainless steel cups, which are made in China, are sold at about 97 yuan to 122 yuan (USD 16-20) in the US, while in China they cost between 220 to 350 yuan (USD 36?to 58). Netizens, however, are laughing at CCTV’s report for its injustice and suggested CCTV to go after the de facto monopolies, as reported by other media outlets such as Tea Leaf Nation and South China Morning Post.

Danwei contacted branches in Chaoyang District, Chaoyang Park/Sanlitun area, one of the most popular destinations for shopping and relaxation in Beijing, of the chains Starbucks, Costa Coffee, Up Bridge Coffee (????) and Pacific Coffee Company to compare coffee prices. Starbucks prices actually compare favorably with other similar chain stores.

Brand Latte Americano Cheapest
Prices in yuan.
Starbucks 27/30/33 22/25/28 17
Costa Coffee 28/31/34 22/25/28 15
Up Bridge Coffee 36 32 32
Pacific Coffee Company 27/30/33 22/25/28 22

 

  • In each cell, the listed prices are in the order from the smallest size to the largest size offered.
  • While the sizes offered in Starbucks and Pacific Coffee Company are 12oz, 16oz and 20oz, Costa Coffee offers 12oz, 14oz and 16oz; the only size offered at the Up Bridge Coffee is about 12oz.
  • The cheapest coffee at Starbucks is the weekly special filter coffee; at Costa is an espresso. At Up Bridge and Pacific Coffee, the cheapest offering is an Americano.
  • Up Bridge Coffee offers various flavored latte coffees, and the one listed above is their cheapest one.

 

Companies and brands affected
Starbucks Corporation (NASDAQ:SBUX)

Links and sources

China Business News: ???????????????????16?
CCTV: ???????????
china.org.cn: CCTV: Chinese pay higher price for Starbucks coffee
Tea Leaf Nation:?China?s Silly War on Starbucks Lattes
South China Morning Post:?CCTV’s criticism of Starbucks ‘pricey coffee’ prompts online backlash

 

 


Starbucks price comparison after the CCTV attack

Guangzhou-based New Express ran a front page story today with a massive headline reading RELEASE HIM (???). The article requests the Changsha police authorities to release Chen Yongzhou (???), a journalist working for the newspaper who was arrested on October 19 at work. Changsha police officers had crossed provincial borders from Hunan to nab Chen in Guangzhou, an alarming development for the city’s feisty journalists.

Chen’s arrest is believed to be linked to a series of articles published in New Express he wrote in which he says that Zoomlion Heavy Industry, a heavy machinery maker based in Changsha, engages in fraudulent practices including faking sales and exaggerating profits.

In July, Gao Hui (??), secretary to Chairman of the Board of Zoomlion, stated via his Sina Weibo account that the negative reports had depressed the company stock prices. He accused the writer and the newspaper of being paid off by interest groups who had benefited from the drops in the company’s stock price.

UPDATE:

The BBC reports: China reporter Chen Yongzhou ‘confesses’ on TV

An imprisoned Chinese journalist whose newspaper has made front-page appeals for his release has confessed to wrongdoing on state TV.

“I’m willing to admit my guilt and to show repentance,” said reporter Chen Yongzhou. He was arrested over claims he defamed a partly state-owned firm in articles exposing alleged corruption.

State media said he had admitted writing false stories for money.

Several high-profile suspects have made televised confessions recently.

In the footage, detained journalist Chen Yongzhou is paraded for the camera. Handcuffed and flanked by police officers he is marched along a corridor. Then he sits, a lone figure in a green police-issued top, in an interrogation room, making his purported confession. He’s clearly susceptible to pressure.

In many countries Chen Yongzhou’s detention, and the broadcast of the footage of it, would provoke a legal outcry. Corruption is known in Chinese journalism, stories planted to blacken rival firms. But the facts of this case are murky and this “confession” does little to clear them up.

All China’s major construction equipment firms have been under severe financial pressure recently as the economy, so reliant on construction, has slowed. And after Mr Chen’s newspaper printed a brave and highly-unusual front-page call for his release, the police have been under pressure too.

The release of the “confession” may be their attempt to regain the initiative. But it’s likely to fuel the row, with questions about the role of the police and of state television, and the way they have obtained and aired Mr Chen’s admission.

Xinhua News Agency is more convinced of the truth of Chen’s confession: Detained reporter apologizes for releasing untrue stories. However, judging by the chart below, the markets might take more convincing than CCTV and Xinhua News Agency that Zoomlion remains a reputable company.

Zoomlion (HKG: 1157) stock price Monday October 21 to Friday October 25, 2013

zoomlion stock

UPDATE 2:
? October 28 12pm The market appears to like CCTV confessions.

Zoomlion 2

Companies and brands affected
Zoomlion Heavy Industry (HKG: 1157, SZ:000157)

Links and sources
New Express: ???
China Media Project: Paper goes public over reporter?s detention

Updates:
China Media Project: The New Express story in today?s papers, Guilt and shame in China?s media
New York Times: Chinese Newspaper Asks Police to Free Detained Reporter

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Paper fights back against journalist arrest, Zoomlion alleged fraud back in spotlight

Upstart Chinese clothing brand Vancl, a rising Internet star that aims to be Zara and Amazon rolled into one, has been the subject of a series of negative news reports. Of late, according to New Financial Observer (?????? ), a financial newspaper published in Tianjin, not only does the company owe suppliers great amounts of money, it has been delaying paying photographers and models. Some of the company?s creditors took to Weibo to voice their discontent, including one who threatened to commit suicide at the company?s office building.

Rumors that Vancl has cash flow problems started in August this year, when founding CEO Chen Nian announced that the company would move its office location from close to Beijing?s CBD area to Yizhuang, a satellite district off the fifth ring road. The company has also cut the number of its staff from 11,000 at its peak time to the current 3,000.

Lackluster designs, high inventory levels and high advertisement costs are blamed for Vancl?s cash woes, according to online discussions. It is said that in a recent meeting, Chen Nian was criticized by Lei Jun, a successful entrepreneur who headed Xiaomi and Kingsoft and invested in Vancl, who believed that Vancl?s products lack appeal. Lei previously denied a rumor that he was going to take over Vancl, though rumors persist that Chen Nian is facing great pressure from investors to step down.

The image above is a VANCL advertisement from 2010 featuring heart throb blogger, novelist and car racer Han Han.

Companies and brands affected
Vancl (privately held)

Links and sources
Techweb.com: ????????????? ?????
iFeng.com: ???????????????PPG???????


Does Vancl face a cash crunch?

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