Can Facebook overtake WeChat? - Matthew Brennan

Tencent's WeChat has been a winner in China in terms of users but might even beat its Western competitors in terms of functionality, writes WeChat analyst Matthew Brennan at the China Channel. The bigger question is will the tech giants outside China ever be able to catch up?

Matthew Brennan:

Chinese users spend approximately one-third of all their time on mobile in WeChat. That presented a huge opportunity to build extra features and functionality on top of the basic messaging experience. And it was many of these features that hit the China market at exactly the right time, met the needs of local users perfectly, and helped propel WeChat to becoming the juggernaut that it is today. 

Classic examples include Shake-shake, Friends Nearby, Walkie-Talkie, QR Codes, Official Accounts, Mini-Programs, and of course WeChat Pay. 

It’s no coincidence that Tencent was the company to grasp this best, given their previous experience with flagship desktop messaging product QQ. Tencent CXO David Wallerstein had this to say: “When it came time to building value-added services around WeChat, it just came to us very naturally because we had just learned so much over a decade, probably like 12 years of learning by the time we got to WeChat… we also started thinking more about the economy, more about financial services, more about e-commerce, about how do you really transform a business or a hospital or a government using WeChat and I think we had so much experience with platform services and tying services together in a seamless way that when it came time to WeChat, it was like okay, good fresh platform, let’s get everything right this time.” 

The growth rate of new active WeChat users has been steadily declining for many quarters and many — myself included — believe it has pretty much reached a ceiling. The future and focus of WeChat will not be about gaining more new users, it will be about embracing it’s stated vision to “Connect people to people, people to services, people to businesses, and people to objects.” 

The digitalization of daily life continues at rapid pace in China through trends such as mobile payments, online-to-offline services, the sharing economy, smart retail and digital ID cards. WeChat acting as China’s great universal connector is at the very center of all of this and showing little sign of relinquishing its place at the forefront of Chinese innovation. The bigger question is will the tech giants outside China ever be able to catch up?

More at the China Channel.

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China dominates the woman self-made billionaires - Rupert Hoogewerf

Rupert Hoogewerf

Chinese women dominate the Hurun global self-made woman rich list, says Hurun founder Rupert Hoogewerf. The list is released on today's Women's Day, and has Zhou Qunfei of the Lens Technology firm as the topper, says the BBC.

The BBC:

China has once again dominated a list of global self-made woman billionaires. 

The top four women in the report by publisher Hurun - and five of the top 10 - come from the Asian superpower. 

Zhou Qunfei, who founded a firm that makes glass used to cover laptops and smartphones, was the world's richest self-made woman, with $9.8bn (£7.1bn). 

Her company Lens Technology has contracts with some of the biggest technology firms, and counts Apple and Samsung as its main customers... 

In total, 28 of the top 50 on the Hurun self-made list are from China. 

Ms Zhou took the top spot from Beijing-based real estate developer Chen Lihua ($8.1bn). 

Ms Chen, who runs Fu Wah International, slipped to third after her wealth barely changed since 2017. 

Another property developer, Wu Yajun from the western city of Chongqing, moved into second place. She is worth $9.3bn after a staggering 83% leap in her fortune in just 12 months. 

The richest self-made woman from outside China is American Diane Hendricks, the co-founder of Wisconsin-based ABC Supply, one of the US's largest distributors of roofing and windows.

More at the BBC.

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A booming "she economy" - Ben Cavender

Ben Cavender

Milleniums, especially women, are key for consumer spendings, says retail analyst Ben Cavender at Reuters on Women's Day. Companies went all out to attract the female buyers, he says.

Reuters:

The women-targeted market, or the so-called “she economy”, a term coined by China’s education ministry in 2007, is expected to account for $700 billion by 2019, according to the Chinese securities firm Guotai Junan. 

“If you look at how companies are thinking about their ad spending, how they think about product selection, probably they are thinking, 70 to 75 percent of our spending really needs to be targeted directly at women,” said Ben Cavender, Shanghai-based principal at China Market Research Group. 

Women spent 64 percent more in 2017 than in 2015, with a majority of purchases made in major cities such as Beijing, Shanghai and Guangzhou, according to a report by Alibaba, which controls the largest share of retail e-commerce sales in China.

Purchases were more than cosmetics and shoes. 

The number of women who bought running outfits rose over 13 times in the last 12 months, while spending on boxing gloves by women soared 75 percent, according to a separate Alibaba report.

More at Reuters.

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WeChat goes for more services, as growth stalls - Matthew Brennan

Matthew Brennan

Tencent's WeChat announced a record number of monthly users over Springfestival passing one million. But WeChat expert Matthew Brennan expects that growth in numbers reached its top, and WeChat will be adding more functionality to expand its business, he tells CNNMoney.

CNNMoney:

WeChat’s number of monthly active users popped above the milestone during the Lunar New Year holiday in February, its parent company, Tencent, said this week. It’s an impressive number, but it’s still well short of Facebook’s 2.1 billion monthly users or WhatsApp, which has more than 1.5 billion. Catching up with those totals will be tough. WeChat is the dominant messaging platform in China but has struggled to win over large numbers of users outside its home market. 

“The growth on WeChat has been slowing down consistently for the last two years,” said Matthew Brennan, founder of ChinaChannel, a WeChat-focused research firm. 

“It’s really topped out, I feel,” he said. “It’s not going to go much further.”... 

But user growth hasn’t been a priority for WeChat for some time, according to Brennan. Instead, Tencent is focused on pushing users to turn to the app for more and more activities, such as gaming, entertainment and payments. 

By getting people to spend more time and money on those services, WeChat has a lot of “untapped potential” for bringing in greater revenue, according to Brennan. “It’s not about new users anymore,” he said.

More in CNNMoney.

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Getting a launching platform for your startup - William Bao Bean

William Bao Bean

Most internet startups are at the mercy of Facebook, Google, and in China Tencent or Alibaba to get a launching platform. William Bao Bean, managing director of Shanghai-based SOsV, co-founded the Mobile Only Accelerator MOX, an independent platform offering not only capital but also an audience to launch, he explains in the News Lens.

The News Lens:

MOX member companies can tap support that includes financing from SOSV, the US$300 million VC fund that oversees MOX, and access to audience that sidesteps the life-sapping expenses involved in acquiring users through Facebook and Google. Founding teams can also tap the advice and knowhow of 270 global mentors. 

MOX founder William Bao Bean summed it up: “It doesn’t matter how good your app is – no one will ever see your app or platform unless you pay Google, Facebook or a bunch of Chinese guys [Alibaba, Tencent, etc.]. They charge 20 to 30 cents per app launch, and it’s impossible to make that back in emerging markets.” 

SOSV is regularly ranked among the most active seed investors in the world by Crunchbase, the data-driven company analytics service, and 60 percent of the companies in MOX’s previous three batches have either raised money or broken even (or both), with 30 percent closing or about to close US$1-3 million in the last year, according to Bao Bean. 

In return for offering up a share of their revenue and equity, MOX companies are provided with up to 150,000 users to help localization and optimization as they enter each of the markets in MOX’s coverage, which spans Southeast Asia, India, Eastern Europe and South America.

More in the News Lens. William Bao Bean is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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US does not want more market, but contain China - Arthur Kroeber

Arthur Kroeber

The disruption caused by trade tensions is not going to give the US more market share for American companies, says leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to Bloomberg. And that is not what the US wants: "The USTR is not trying to bargain with Beijing: it is trying to force a deep change in behavior."

Bloomberg:

The U.S. Trade Representative’s office, along with national security officials labeling China a "strategic competitor" ultimately aren’t interested in things such as greater market access for American companies, says Arthur Kroeber, head of research at economic consultancy Gavekal Dragonomics in Beijing. Instead, these Trump administration elements are engaging in an effort to contain the growing sway of a state-driven Chinese economic model on the global stage, he argues. 

"The USTR is not trying to bargain with Beijing: it is trying to force a deep change in behavior," Kroeber wrote in a March 2 note. The policy "is to either get China to dismantle its industrial-policy edifice and conduct its economy more along Western lines, or failing that, ensure the U.S. defeats China in the race for technological supremacy." 

Kroeber added that "the odds are that the trade and security hawks will have the better of the battle in 2018" in the administration, unless supporters of globalization such as White House economic adviser Gary Cohn can organize greater support from U.S. companies with major China operations that could be under threat.

More in Bloomberg.

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What is behind the Xi Jinping policies - Victor Shih

Victor Shih

As China prepares for the second term of president Xi Jinping, the world wonders what is behind his acts. Political analyst Victor Shih, author Factions and Finance in China: Elite Conflict and Inflation takes at the Guardian a helicopter view on Xi's anti-corruption drive, his global aspirations and plans for the future.

The Guardian:

Soon after coming to power in 2012, Xi began a sweeping anti-graft campaign that has seen about 1.3 million officials punished in some form. But Xi’s work to weaken rival factions at the pinnacle of Chinese politics has left him the last man standing. Zhou Yongkang, the former security czar, became the highest ranking official since the founding of the People’s Republic to be jailed on corruption charges. 

“Xi has a very particular vision of where China is going: for China to enter the centre stage of world affairs and reshape the global order,” said Victor Shih, a politics professor at the University of California, San Diego. “He feels he needs control every little detail to achieve those goals, and will silence officials he thinks stand in his way.” 

Xi has also targeted high-ranking military officials, with some committing suicide rather than suffer the consequences of a public shaming, and is pushing to establish an anti-corruption watchdog with more extensive powers, ensuring the purges will continue... 

Now he is poised to have his name inscribed in the country’s constitution as well. But ordinary Chinese people are already accustomed to seeing Xi’s name everywhere. While China’s state-controlled media has always focused heavily on the achievements of national leaders, Xi was second only to Mao in frequency and intensity of state media coverage, according to a 2014 study. 

“The airwaves are saturated with his thoughts, his image and his work, they go out of their way to cover him,” said Shih. “It shows he’s firmly in control, but also that he is personally responsible for China’s direction, instead of the state or the party.”... 

Xi has centralised power in his own hands to a greater extent than even Deng Xiaoping, and for junior officials to critique Xi’s policies would amount to career suicide. 

“If he makes a policy mistake, no one is going to be there to correct him,” said Shih. “What used to be healthy policy debates will turn into sycophancy.” 

Shih pointed to the creation of a new city called Xiong’an, meant to be a satellite capital to Beijing where non-essential departments are based, as a “massive waste” helmed by Xi. In theory absolute power comes with absolute responsibility, but so far Xi has been able to deflect the blame for crises, like a stock market meltdown in 2015.

More at the Guardian.

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Why China can afford to stay cool under Trump's trade war threats - Arthur Kroeber

Arthur Kroeber

China has reacted pretty cool on the increased signals US president Donal Trump is heading for a trade war, says leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to the Washington Post. While the traditional conflict-solving procedures at the WTO might not fit the tit-for-tat approach of a trade war, China can afford to keep its composure.

The Washington Post:

Many will now wonder whether the United States is not a greater threat to the world trading system, said Arthur Kroeber, managing director of the Beijing-based research firm Gavekal Dragonomics. 

“China can afford to play it pretty cool and measured, as they have been doing ever since Trump took office,” Kroeber said. “They take a small, really negligible, hit to their steel and aluminum exports, but strategically they come out way ahead by just letting Trump be Trump.”

More at the Washington Post.

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IT-giants replace real estate tycoons in policy building - Shaun Rein

Shaun Rein

A strong shift from real estate tycoons to IT-giants marks a shift at China's economy in the ongoing political meetings in Beijing, says author Shaun Rein of The War for China's Wallet: Profiting from the New World Order to the South China Morning Post. "China is picking five to 10 private technology companies to make them national champions."

The South China Morning Post:

Technology is already a major contributor to China’s economy, underscored by the dominance of internet-based businesses and online advertising. China accounts for US$1 out of every US$4 dollar generated globally across application stores, according to analytics company AppAnnie, with Chinese app users spending more than 200 billion hours in apps in the fourth quarter of 2017, more than 4.5 times more than the next largest market India, and way ahead of the US in third place. 

“China is picking five to 10 private technology companies to make them national champions, while also giving them the roles that were formerly assigned to state companies, including the collection of information, big data sharing, and censorship,” said Shaun Rein, the managing director of Shanghai-based market intelligence company China Market Research and author of The War for China’s Wallet: Profiting from the New World Order. 

More than 20 property tycoons have dropped out as delegates to China’s legislative and consultative conference this year. 

Among them are Hu Baosen, chairman of construction firm Jianye Group, Longfor Properties’ chairman Wu Yajun, Yuexiu Group’s chairman Zhang Zhaoxing, New World Development’s chairman Henry Cheng Kar-shun, Shui On Group’s chairman Henry Lo Hong-sui, and Fosun Group’s chairman Guo Guangchang, whose conglomerate includes a property business.

More at the South China Morning 

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Xi Jinping still has to deliver on reforms - Victor Shih

Victor Shih

Much of the first five years of president Xi Jinping's rule saw many promises on financial and economic reforms. But he fell short on delivering on those promises, says financial and political analyst Victor Shih to Quartz.

Quartz:

[W]hile Xi has paid market reforms plenty of lip service, he has yet to deliver on them, as noted by Victor Shih, a professor of political economy at the University of California-San Diego. “From everything we’ve seen, despite his rhetoric about reform and opening, Xi Jinping heavily favors a strong state sector,” says Shih. That raises another possibility: Perhaps China’s chief economic woes stem from Xi’s having too much power, rather than too little. 

“Whatever biases he has will continue to be reflected in the Chinese government’s policies for the duration of his tenure, which now will likely stretch well into the next decade,” says Shih. 

Xi has some good biases—for instance, his seeming commitment to cleaning up air pollution in northern China. But he also has a bias toward heavy state intervention into the economy, as is evident in his efforts to fix problems like dangerous debt levels and deflationary overcapacity—the latter via much-touted “supply-side reform.” During Xi’s tenure, the government took action to control the stock market, bond market, and foreign exchange markets, as well as the supply of coal, steel, and cement, Shih points out.

More in Quartz.

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Fewer rich show up at China's legislature - Rupert Hoogewerf

Rupert Hoogewerf

Coming weeks China's lawmakers will flood Beijing for the country's annual two legislative conferences. Favorite past time or media: counting the rich. Although China gets weekly four new billionaires, both conference will see fewer rich, although their average wealth went up, says Rupert Hoogewerf or Hurun who just released the 2018 Global Rich list, to AP.

AP:

Xi [Jinping] is set to begin a second-five year term as president at the parliament's meeting starting March 5. NPC delegates are expected to approve the Communist Party's plan to remove presidential term limits, giving Xi, who has taken control of an unusually wide range of political and economic tasks, even more power. 

Hoogewerf said while the ranks of superrich lawmakers have thinned out, he hasn't seen anything to indicate Chinese entrepreneurs are "losing confidence in the business environment." 

Delegates are chosen every five years, most recently this year. High turnover between last year's group and the new NPC attendees is one big reason for the ranking's changes, said Hoogewerf. He added that delegates don't have nearly the same power that members of Congress or senators have in other legislatures. 

Heading the list is Pony Ma Huateng, CEO of internet giant Tencent Holdings, operator of China's ubiquitous WeChat/Weixin chat app, with a net worth of $47 billion.

More at AP.

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What is the purpose of US' trade actions? - Arthur Kroeber

Arthur Kroeber

Most observers of the recent trade actions by the US have been left behind flabbergasted, says leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to CNN. While the rhetoric is firmly anti-Chinese, most damage is done to other countries than China. Although that could change, he adds.

CNN:

The bigger concern for China is whether Trump will soon come out with other measures that target it more heavily and directly. That could result from an investigation into Chinese efforts to get hold of U.S. intellectual property that was launched last year by Trump's trade czar, Robert Lighthizer. 

"Behind the scenes, the U.S. administration appears to be preparing a more focused campaign directed against China," said Arthur Kroeber, a founding partner at economic research firm Gavekal. 

If Trump comes down harder on Beijing by slapping tariffs on a broad range of China's exports and clamping down aggressively on Chinese investment in the U.S., President Xi Jinping will fire back, experts say... 

Trump's argument that the steel and aluminum tariffs are justified on grounds of national security may have given Chinese leaders another avenue of attack. 

"By using a national security justification for protection that obviously serves no real national security purpose, Trump opens the door for other countries -- notably China -- to use the same justification to protect their own industries," Kroeber wrote in a note to clients. 

Trump's latest move also helps China deflect widespread criticism of its own trade practices, which include subsidizing key industries, dumping excess production of a product such as steel on global markets and shutting out foreign companies and investors from huge swathes of its economy. 

"Although Trump and his trade advisers consistently claim that China is the main villain in international trade, these tariffs make it far harder to organize resistance to Chinese bad behavior," Kroeber said. 

The metal tariffs could end up doing the most harm to U.S. allies like South Korea, Japan, Germany, Taiwan and Brazil. 

Most of those governments "would have been quite happy to join in U.S.-led efforts to restrain Chinese mercantilism and fight for greater market access in that highly protected economy," Kroeber wrote. "Now they will be inclined to wonder whether it is really China or the U.S. that poses the greater threat to the world trading system."

More at CNN.

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The Shanghai rules for self-driving cars - Mark Schaub

Mark Schaub

After Beijing Shanghai has become the second city in the race to regulate self-driving cars. Shanghai-based lawyer Mark Schaub compared both regulations and draws from the differences some conclusions for Shanghai, he writes on the China Law Insight.

Mark Schaub:

Hot on the heels of Beijing, Shanghai has become the second city in China to issue road testing regulations for self-driving cars. This is another important momentum for the development of autonomous cars in China following Beijing’s road testing regulations (“Beijing Regulations”) issued late last year. The Shanghai Regulations use the term “intelligent and connected vehicle” (ICV) for self-driving cars. The self-driving cars governed by the Shanghai Regulations cover L3, L4 and L5 vehicles. 

Although the Shanghai Regulations are largely similar to the Beijing Regulations there are some notable differences... 

The release of the Shanghai Regulations is another concrete step in China’s regulating of road testing for self-driving cars. Their release also shows local authorities are seeking to provide sound policy environment to allow for self-driving cars to develop in China. National rules for self-driving car road testing are expected to be released in the near future. 

Unlike the Beijing Regulations, the Shanghai Regulations are valid for 22 months i.e. until 31 December 2019. From this time frame it appears the Shanghai government intends to regulate the self-driving car road testing in a dynamic fashion. 

The Auto industry is a key pillar of Shanghai’s economy. In 2017, the gross industrial output of Shanghai auto industry was RMB 677.4 billion with a year-on-year growth rate of 19.1%. If local governments will support the development of self-driving cars then it can be expected that Shanghai will lead the way. 

On 1 March 2018, SAIC Motor and Nio were the first two carmakers to obtain temporary car plates for test vehicles under the Shanghai Regulations. We expect more carmakers and technology companies will join them on Shanghai’s roads.

More details in the China Law Insight.

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The political dimensions of foreign investments – Harry Broadman

Harry Broadman

Chinese investments into the US have increasingly gotten into the crosshairs of the CFIUS, the organization checking foreign investments into the US for security risks. Private equity investor and former CFIUS employee Harry Broadman tried to shed some light on this often murky process, and its political dimensions for Forbes.

Harry Broadman:

Notwithstanding my own experience, it should be abundantly clear from CFIUS’ public track record over all these years, that like other countries’ inbound investment decision-making calculus, the organization hardly operates in a domestic political vacuum. It may—though not always—be subject to various pressures both within the Executive Branch as well as from Capitol Hill. 

While one might wish that not to be the case, that is the universal reality. This make all the more surprising the sometimes-sheer naiveté of potential foreign investors pursuing deals in the U.S.—not to mention that of the advisors inside the U.S. from which they seek counsel—about how to structure a strategy to deal with the CFIUS process. 

The truth is that every economy in the world has a policy regime specifying in varying degrees the regulation of inflows of FDI. In statutory terms, the restrictiveness of U.S. regulation of FDI is about average for the 62 countries routinely assessed by the Organization of Economic Cooperation and Development (OECD)—the group of the world’s wealthiest countries. (The OECD’s assessment includes all of its 35-member countries, all the G20 countries, and a number of other countries that are less wealthy.) Moreover, as a matter of practice, there are exemptions granted by the U.S. from these formal regulations, particularly at the state level. 

That CFIUS decisions blocking or demanding the restructuring of inbound transactions—which are actually few in number—may be subject to political pressures, sometimes based on quite spurious reasons, as politicians the world over are wont to do, overall, U.S. regulatory constraints on inbound FDI are effectively benign. 

The most compelling proof of this are official data that the U.S. is the world’s largest recipient of FDI flows in absolute terms, and it has been so ever since 2006 (except for the brief 2010-2014 period, when comparable inflows to China were slightly larger). Some professional services firms like to cite their surveys of foreign business executives’ perceptions of the U.S. investment climate and aspirations for prospective transactions here—for which the U.S. is often ranked highest in the world—as evidence of the country’s hospitable environment. While such findings may be heart-warming, these measures are not data-driven. Their economic meaningfulness is not robust nor can they be used to make systematic cross-country comparisons. Perception indices are ‘old-school’. In a nutshell, they do not reflect investment decisions actually undertaken, which really is the only meaningful basis on which a country’s policy stance can be assessed and on which policy reforms should be formulated. 

Some readers will be surprised to learn that today U.S. inflows of FDI are the highest in the world, believing that China surely would have been a larger recipient. In 2016, China’s inflows of FDI were US$171 billion, while those of the U.S. were US$468 billion, about 2¾ times greater. It is true that China does take in a huge amount of foreign direct investment; it’s of course the largest nation in the world. Taking into account the relative sizes of countries would thus make sense in making such judgments. On this basis, FDI inflows in 2016 for China were US$97 per capita; for the U.S. they were US$1193 per capita. It is also the case that annual flows of FDI for any country can fluctuate greatly, especially for a year when one-time, large foreign acquisitions of domestic firms take place. For these reasons, cross-country comparisons are best made on the basis of cumulative inflows—or the ‘stock’—of FDI. In this context, as of year-end 2016, the stock of FDI per capita in the U.S. was US$19,491; in China it was $980.

The full story in Forbes, here republished with the kind permission of the author.

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How Alibaba and Tencent retail strategies differ - Matthew Brennan

Matthew Brennan

China is leading the way in digitalizing the consumer experience in retail, but both major competitors - Alibaba and Tencent - have different retail strategies, says WeChat expert Matthew Brennan to the News Lens. Alibaba focuses on the offline experience, Tencent's WeChat will stay online. In 2018 the battle will be on mobile payment, he adds.

The News Lens:

Matthew Brennan, founder of China Channel, a consultancy on China's digital market, said that the trend is apparent across all consumer-facing industries. "China is leading the rest of the world in terms of digitalizing the customer experience and blending this experience seamlessly between offline and online elements," Brennan said. According to Brennan, retailers are moving back to offline as online growth matures – being a purely online play will no longer sustain the rapid growth that Alibaba and Tencent are used to. 

Tencent’s payment service, WeChat Pay, already has about 800 million users in China, and together with Alibaba's Alipay, the pair dominate China’s massive mobile payment space. The majority of retailers here, from supermarkets to street vendors, now accept either or both forms of payment. As such, the latest official data showed mobile payments reached 81 trillion yuan in the first 10 months of last year, up 40 percent on the whole of 2016. While Tencent has its fingers in many pies, it is not a direct retailer, and instead relies on a partnership with e-commerce major JD.com in place since 2014 to drive sales through WeChat Pay. 

The two companies announced in October that they would expand the cooperation via the launch of the JD-Tencent Retail Marketing Solution, which according to a press release promises to “integrate insights on consumer behavior from Tencent’s social platforms with online and offline shopping data from JD and its brand partners.” Pushing into unmanned stores is thus a natural next step for Tencent as it attempts to remain relevant in "new retail" while building on its existing strength in the mobile payments market. 

"WeChat does not have ambitions to open its own stores across China, Tencent's strategy is to partner with existing retail players and help digitalize the retail experience," Brennan explained. "Both [Alibaba] and Tencent are now moving into a wide variety of vertical industries for a variety of reasons, retail though is the most important battleground for 2018. “In the short term, new retail is in large part about mobile payments. Tencent and Alibaba are blocking each other's moves to protect their market share in payments."

More in the News Lens.

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China's billionaires: moving up in the 2018 Global Rich List - Rupert Hoogewerf

Rupert Hoogewerf

Americans still dominate the 2018 Global Rich List, but with four new billionaires a week, China is moving up very fast, says Hurun Rich List chief researcher Rupert Hoogewerf at the release of the annual overview. Tencent's CEO Pony Ma is now the highest listed Chinese billionaire at no.15, beating Xu Jiayin of Evergrande and Jack Ma of Alibaba this year.

The Hurun Rich List:

The Hurun Global Rich List 2018 ranked 2,694 billionaires from 68 countries and from 2,157 companies in another record-breaking year for the world’s billionaires. 

Total wealth increased by a staggering 31% to US$10.5 trillion, equivalent to 13.2% of global GDP, and almost double the 7% of global GDP six years ago. Rupert Hoogewerf said, “Never has so much wealth been concentrated in the hands of so few.” 

It has been an outstanding year for billionaires: 1508 saw their wealth increase and there were 567 new faces. 

Chinese billionaires are pulling away from the USA for the third year running, 819 compared with 571.  Just two years ago, they were neck and neck at 534 and 535. Hoogewerf said, “China is going through an amazing period of entrepreneurship, adding 210 billionaires in the past year.” 

It has been a good year for India, claiming back its third place after adding 31 billionaires, on the back of a record performance of the Indian stock markets. 

The average lister is aged 63, one year younger than last year. 

Rupert Hoogewerf says, “The world today has the best part of 6,000 dollar billionaires, assuming that for every one we found, we have probably at least one if not more, particularly from the Gulf states.” 

Hoogewerf continues, “A boom in China, a weak dollar and a 26% hike in Nasdaq have led to a surge in dollar billionaires across the world. The US dollar depreciated 16% against the Euro, 12% against the British Pound, 10% against the Chinese Yuan and 6% against the Indian Rupee. Global economic growth was at 3% last year, the fastest rate since 2011 and a significant acceleration compared with 2.4% the previous year.”

More at official the Hurun Rich List.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Xi Jinping: looking for stability - Zhang Lijia

Zhang Lijia

The proposal by President Xi Jinping to scrap the two-term limitation for his position as president has generated little opposition, not domestically or internationally. A logical step in moving to more stability, comments author Zhang Lijia "Socialism Is Great!": A Worker's Memoir of the New China at the Wikitribune. And nobody wants to tock the China boat.

The Wikitribune:

There’s little the West can do to stop China from instituting autocratic measures within the country, according to Lijia Zhang, a Beijing-based social commentator and author of “Socialism is Great!” A Worker’s Memoir of the New China. “I am not sure what other governments can do,” she told WikiTribune via email. 

“China is playing an increasingly important role in the world. People wouldn’t want to upset the regime, or deal with a huge chaotic country with 1.3 billion population.”... 

The proposal comes at a point when the Chinese president “has amassed [a] huge amount of power since taking his position and become the most powerful leader after Chairman Mao,” says Zhang. “He feels that he needs to be in total charge in order to realize his vision: to fight corruption, reduce poverty, upgrading its economy, see through his ‘one belt, one road’ initiative and restore China’s former glory.”

More at the Wikitribune.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Why do Chinese companies love Brazil? - Shaun Rein

Shaun Rein

Chinese insurance and investment conglomerate Fosun International snapped up Brazilian asset manager Guide Investimentos for US$52 million on Tuesday, reversing a trend of disinvestment after the central government came after conglomerates with excessive outbound investments. Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order, explains in the South China Morning Post why Brazil is such a popular destination.

The South China Morning Post:

“Fosun is regaining pace – it seems like a signal that political pressure is easing for the company,” said Shaun Rein, the managing director of Shanghai-based market intelligence company China Market Research and author of The War for China’s Wallet: Profiting from the New World Order. 

“Brazil is attractive given its market size and population. The asset prices are also attractive there, compared with those in Southeast Asia, which gained a lot of investment from China last year,” he said. 

Tuesday’s deal is the second acquisition of a Brazilian financial institution by Fosun. In July 2016, the group bought Brazilian fund manager Rio Bravo Investimentos, its first acquisition in Latin America.

More at the South China Morning Post.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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HK audit regulations go downhill to attract US business - Paul Gillis

Paul Gillis

Many Chinese companies took a listing at US exchanges because audits in Hong Kong and on mainland exchanges were stricter. The HK stock market now is watering down regulations for audits, notes Beida accounting professor Paul Gillis on his website to his shock, to pull back those Chinese companies from the US.

Paul Gillis:

The Hong Kong Stock Exchange (HKSE) has issued its latest proposal to weaken corporate governance standards in order to attract Chinese listings that have gone to the US. The US has won most of the listings of China's privately held companies, including bellwethers Alibaba, Baidu and Sina. There are several reasons for that, including the fact that the US permits weaker governance than Hong Kong or China, and that fees for investment bankers are considerably higher with US listings. The weaker governance rules led to the NYSE winning the Alibaba listing over the HKSE. Hong Kong faced the possibility it would not win another major IPO from China because most Chinese founders want a controlling vote, even when they no longer hold a majority of the shares. 

Much to the consternation of corporate governance advocates, Hong Kong proposes allowing control structures (called weighted voting rights - WVR).   Shareholder advocates in the US have opposed the proliferation of these structures in technology companies. Hong Kong is also proposing to relax other listing standards related to profitability. 

The proposed rules essentially allow unicorns to list in Hong Kong with control structures. More flexible rules are proposed for biotech issuers. 

In addition, the path is being cleared to allow overseas listed companies to seek secondary or main listings in Hong Kong after two years of compliance on a foreign exchange. 

Restrictions apply to prevent regulatory arbitrage, where a company lists overseas first in an attempt to circumvent tougher Hong Kong listing standards.

More at the Chinacountingblog.

Paul Gillis is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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