Blog about Virtual Assistant, Outsourcing, KPO, BPO and China

According to a report by the Asian Development Bank (ADB) economic growth in China is expected to dip to hit 9.9 percent this year and 9.7 percent in 2009. Concerning the East Asia in general the growth rate will moderate to 7.6 percent in 2008 and 2009 comparing with a growth rate of 9 percent in 2007. Such economic growth slowdown is attributable to the global economic slowdown, sharp rise in food and energy prices and inconstancy of the financial markets.

Rising inflation is a serious threat to the region’s sustained, strong growth as high import costs of food and fuel threaten to trigger a price and wage spiral, unleashing more inflation, the insider commented. Although the inflation rate had dropped 1.6 percent in February, the possible energy price liberation may bring the high rate back. And all signs show that a second-round price effect may be underway.

And the worsen economy situation especially the banking crisis has triggered global worry that the economic slowdown across the globe may continue. And Chinese economy is influenced by it.

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China Economy chinese economy, inflation, slowdown, US economy

Ericsson may experience the lowest profit drop in three years. It is estimated by 15 analysts that, in the second quarter the net income of the world’s largest maker of wireless networks fell 56 percent to 2.82 billion kronor ($472 million).

On July 18 Ericsson spokesman said that the company’s handset venture with Sony, Sony Ericsson Mobile Communications Ltd, almost had a zero profit, due to a waning demand on phones. Net income fell to 6 million euros from 220 million euros a year earlier and sales dropped 9.4 percent to 2.82 billion euros, the venture said.

In February Ericsson said the demand of telecom networks in Italian and other areas would be “flattish” this year. Jan Dworsky, an analyst at Handelsbanken Capital Markets in Stockholm said that “the global network market will be flat going forward, with limited growth next year, and competitive pressures will weigh on profit margins this year and next.”

It is said the company aims to cut annual costs by 300 million euros. Facing the challenging situation, last year, Carl-Henric Svanberg, CEO of the telecom giant, cut revenue forecasts twice. And it is announced to cut 1,000 staffs in Sweden and probably 3,000 more abroad.

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China Outsourcing challenge, drop profit, Ericsson, Sony Ericsson

When adopting finance and accounting business outsourcing (BPO), there are several points you should pay attention to.

At the first place, create a tough management team and sufficient funding for them. It is recommended that the team should include personals from all the related departments, e.g. legal and operational members of the finance and procurement teams. Especially the IT staffs, including the software contracts manager as well as IT ERP and security specialists, should be included in the early planning stage, as they can ensure timely access to the internal system. Many organizations failed to do the job because of a lack of the experienced staffs.

Before conducting financial BPO, ask the providers for clear guidance on their application of the latest tools for this sector, so that your IT team could evaluate the different approaches. Also it is advisable that you get the latest issues on this sector beforehand .

Another point that should rise your attention is to conduct a close relationship with your BPO provider, and collaborate with them. They will be helpful in optimizing your business outsourcing procedure.

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BPO close relationship, financial BPO, management team, tips

According to a statement from the website of National Development and Reform Commission (NDRC), property prices in China’s 70 large and medium-sized cities rose 8.2 percent year-on-year in June, compared with 9.2 percent in May. The slight drop of the growth rate indicates the property market is cooling down.

But there are some cities still “hot”, where new property price growth exceeded 13 percent year-on-year in July, including Urumqi, Haikou, Ningbo, Beijing and Hangzhou, which saw a growth rate of 20.2, 18.1, 14.7, 14.3 and 13.3 percent respectively. But all of the cities, Haikou excluded, experienced a drop of about 2 percent. There is another exception. Shenzhen is the only one in the 70 cities that has witnessed a price drop on a yearly basis, the price is 1.2 percent decreased.

Facing the falling property prices, some experts suspect that China’ banks may experience a credit crisis like US. But some other experts think that China’s banks are far from such crisis, despite the ongoing adjustment. “Some big corrections occurred only in a few cities that experienced crazy property price growth last year but don’t have enough demand to support the market,” “Besides, property demand in China is also much stronger than that in the US,” said Chris Brooke, president and CEO of CB Richard Ellis (Greater China).

The insiders believe that the current wait-and-see attitude adopted, does not mean housing demand is evaporating. And if the market does not drop as much as people expect after the Olympic Games, prices will back again and will probably even rise.

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China Consumer Market 1 percent drop, cool down, credit crisis, Olympic Games, property market, wait-and-see attitude

Today witnessed a dramatic fall of yuan in seven weeks, according to the China Foreign Exchange Trade System. It is the biggest drop since May 27. It is also the first decline in three days after a report today showed China’s economic growth cooled in the second quarter, increasing pressure on authorities to switch from fighting inflation to protect exporters. Before that the central bank had set a weaker daily reference rate, suggesting that it is seeking to boost growth and deter speculators.

Gross domestic product grew 10.1 percent in the second quarter from a year earlier, the slowest since 2005, compared with a 10.6 percent pace of growth in the first three months of the year, the statistics bureau said today in Beijing. China will likely allow the yuan to appreciate more slowly and relax controls on fuel price increases. As reported some export oriented industries has tried to persuade the government to rein in currency gains and increase export-tax rebate.

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China Finance and Banking dollar, increasing pressure, to protect export, yuan

Some Microcredit companies are going to be launched in Zhejiang province in July to cater to small and medium-sized enterprises’ demand for capital. It is said to standardized and regulate private capital, each country in the province will have one to two microcredit companies.

Microcredit has a 14 year history in China. In October 1993, the government introduced MF, modeled from the Grameen Bank, as part of the poverty alleviation initiatives. Since then three main players have immerged – CFPA, CASS (Chinese Academy of Social Sciences) and CICETE (China International Center for Economic and Technical Exchanges), along with their international backers. All of these players have focused on using Grameen styled MF as a poverty alleviation tool for rural China, to varying degrees of success.

Today there are over 300 small microfinance pilot projects, few of which are financially sustainable. CFPA is the only one which has brought all its project sites together in a branch model. Till now microcredit association has not been able to become a legal entity due to the lack of relevant registration framework, as their members are unable to become legal financial institution. Due to this lack of registration, microcredit association’s activities are limited to some training courses, and promoting NGO microfinance regulations negotiations with the relevant government bodies. China is considered one of the last frontiers for microfinance. The market is huge, the existing providers are not providing good service and most are not sustainable.

Concerning the to be built microcredit companies in Zhejiang, microcredit lenders will be chosen from quality private enterprises whose net assets should be no less than 50 million yuan, asset-liability ratio less than 70 percent and those that have been making profits for three years in a row, with revenue higher than 15 million yuan.

The project is launched at this time when small enterprises facing financing difficulties caused by factors like soaring raw material process, and tightening monetary policy. Statistics show that because of the credit crunch, most small and medium-sized enterprises have to resort to the private lending market.

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China Finance and Banking financing difficulties aid, Microcedit company, SME, Zhejiang Province

The Industrial and Commercial Bank of China (ICBC), China National Cereals, Oil & Foodstuffs Corp and Zhonghai Trust Co Ltd. Have launched China’s first wine trust project hoping to be fruitful in the tough global capital market. Different from other wealth management products, the unit of the wine trust is measured by the “barrel”, which contains 300 bottles of wine, with each investor limited to buy no more than two barrels. It is said by now the project has been more than double oversubscribed, facing only ICBC’s private banking customers and enterprise customers.

Facing the tough global capital market, banks are searching for investment alternatives. Wines are always with high investment values and could provide a more steady income it fits the quality of an investment alternative. To profit more and more banks are paying attention to the investment alternatives in the tough circumstance. China Minsheng Banking Corp, for instance, has launched a fund investing in fine arts. Industry statistics show that in the last 20 years, long-term invested well chosen wine portfolio could bring an annual return of 10 to 12 percent. And it is less volatile than stocks and shares, and not closely related with the stock market, no wonder it is more attractive to investors looking to diversify a portfolio.

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China Finance and Banking ICBC, Investment alternatives, tough capital market, wine trust

Facing the export surplus shrink, which is evident from the first-half Customs data, Chinese government may adjust the export policies to support the export business. It is believed that a proposal thrown by China National Textile & Apparel Council had been handed to the State Council, which suggested the tax rebate for textile materials will increase from 11 to 13 percent, and that of the garment sector will raise to 15 from the current 11 percent.

In June alone trade surplus shrank more than 20.6 percent, making it $5.5 billion less than the previous month. The total trade surplus in the first six months this year declined by 11.8 percent to $99 billion. Textile and garment export, the most seriously influenced sectors, declined by 4.2 percent year-on year to the slowest increase in five years. While for a long time the high trade surplus has been the top concern for economic policy. Exports contribute a large part to the overall economic growth. Influenced by the export slowdown, the total economic growth down to 10.6 percent, which is 1.3 percent below that of last year.

The tough situation draws attention from both the companies and policymakers alike. Recently Premier Wen Jiabao Vice-Premier Li Keqiang and Commerce Minister Chen Deming visited export-oriented provinces and visited enterprises, many of which were in the textile sector. These visits were seen as a sign for policy changes.

Last year, when the high trade surplus was the major concern, export tax rebate of many textile materials and garments were removed or cut down. Many favorable policies for them are also removed, because most textile manufacturing enterprises are energy consuming and may lead to environment pollution. Several months after the policy was put into effect, China’s textile companies are challenged by many other unexpected situations, including rising raw material prices, labor cost, the appreciation of the yuan and the slowdown of US economy. These make the industry association of urge for a policy change ever since April.

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China Trade Import Export export policy change, textile and garment export, trade surplus shrink, unexpected challenges

Yahoo, the second-most-popular search engine, released in a statement that it received a joint proposal from Microsoft Corp and Carl Icahn on July 13. (The later is an activist investor who controls 69 million Yahoo shares.) And it was given less than 24 hours to accept it, which is “odd and opportunistic” as Chairman Roy Bostock said. It also said Microsoft and Icahn made clear they would not like to negotiate the fundamental terms, which include the immediate replacement of Yahoo’s board and removal of top management. “It is ludicrous to think that our board could accept such a proposal. We will not be bludgeoned into a transaction that is not in the best interests of our stockholders” Chairman Roy Bostock said in the statement.

Microsoft, which on May 3 withdrew an offer to buy Yahoo, made this latest proposal a few weeks before Yahoo’s annual meeting on August 1. Microsoft said last Monday it may renew talks for a deal if Icahn succeeds in ousting Yang and his board. Microsoft has been embroiled in on-again, off-again deal talks with Yahoo for six months. And it said it no longer wants to negotiate with Yang’s team.

The financial returns of the new proposal is not given a detailed statement, saying only that it was an improvement over an offer the software maker made in June but still carries less financial value and more risk than Yahoo’s current searching advertising deal with Google. But it added that Microsoft had again rejected its repeated offer to sell Yahoo for at least $33 per share. On that day Yahoo shares, climbing 1.3 percent this year closed at US$23.57 in Nasdaq Stock Market trading. Microsoft, which fell 20 cents to US$25.25 on Friday, has slipped 29 percent this year. But Yahoo had reported eight quarters of profit declines before Microsoft’s bid.

Yahoo said it was ironic that Icahn, who had previously urged the company not to sell its search business to Microsoft, was now supporting a proposal to do exactly that. And in the Wall Street Jouranal last week Yahoo’s CEO Jerry Yang accused Microsoft of wanting to disrupt the web search company. He also said it would be “a bad choice” for Yahoo shareholders to trust Icahn.

Bostock. Concerning this proposal Bostock said Microsoft not to engage with Yahoo’s management is “completely absurd and irresponsible”, “while this type of erratic and unpredictable behavior is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders.”

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Internet and Hi-Tech Carl Icahn, Microsoft, proposal, reject, Yahoo

According to the statistics released by the Customs, the export growth in June dropped by 20.6 percent to $21.35 billion, compared with that of May which witnessed a growth of 28.1 percent. Experts attribute the slowdown to the shrinking demand caused by the global economic slowdown and the increasing pressure on Chinese manufacturers because of yuan appreciation and high raw material cost. Based on this, it is estimated the export slowdown may continue in the next half of the year, forcing the government to reconsider certain export-related policies.

Some insiders said that the declining export growth is attributable to the rising labor and raw material costs, and the government’s tightening policies implemented since last year. And the global economic slowdown is making the situation worse.

The custom figures also show that the trade between China and India is increasing the fastest among China’s major trading partners. The bilateral trade stands at $29 billion, up 69 percent. EU remains China’s largest trade partner, followed by the US. And the imports of primary goods increased fast, which many be caused by the increasing price of the commodities in the international market.

An analyst with HSBC, said that the figures should raise people’s expectations on favorable government policies for export sectors. For example, the textile industry has called for a rise in export tax rebate. And Chinese government has since last years lowered or even removed the export tax rebate of some productions to curb the trade surplus. But some sectors are struggling as a result of a global slowdown, yuan appreciation and rising operating costs, hampering exports anyway.

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China Economy decline, export growth, labor cost, rising cost, slow down, slow export growth, yuan appreciation