By Alexander Chipman Koty
Recent reforms to China’s foreign investment regime have lifted ownership restrictions and offered new preferential policies in a number of industries.
The updated Catalogue of Industries for Guiding Foreign Investment (Catalogue) and Free Trade Zone (FTZ) Negative List, both released in June 2017, remove a variety of restrictions on foreign investment, offering new opportunities for businesses previously handcuffed from doing business in China.
New opportunities arise in different contexts. Domestic demands, such as environmental and energy needs, have led the government to remove restrictions on certain industries, while policies to encourage the development of strategic sectors have driven other reforms.
This article outlines some of the intriguing new industry opportunities emerging because of the latest regulatory changes.
By Stephen O’Regan
Senior Associate, International Business Advisory
Dezan Shira & Associates, Guangzhou
The Chinese government has launched a three-month campaign to crack down on pyramid schemes. The campaign follows a series of frauds that recently led to four deaths, and associated protests that erupted in downtown Beijing this summer.
The campaign, which will last until November 15, 2017, aims to eliminate gangs and scammers that lure and mislead job seekers into participating in pyramid schemes. The government’s announcement of the crackdown sent stocks of Multi-Level Marketing (MLM) companies – such as Herbalife and Nu Skin – tumbling, due to fears that the campaign could disrupt their operations.
By Maurizio Mazzoni
China is embracing green bonds as part of its efforts to combat the country’s notorious pollution problems.
China Securities Regulatory Commission (CSRC), the main regulator of the securities industry in China, released a new set of guidelines to support the issuance of green bonds on March 2, 2017.
Promoting green bonds could be considered the latest in the government’s efforts aimed at promoting environmental protection and to reduce the effects of pollution as a result of its rapid industrial growth over the past decades.
China has the world’s largest green bond market, with more than RMB 200 billion (US$ 30.3 billion) worth of green bonds issued in 2016 alone – almost 40 percent of green bonds issued globally that year.
By Jake Liddle
China is fast embracing the sharing economy, having come up with its own innovative resource sharing platforms to rival foreign counterparts such as Uber and Airbnb.
According to a report published by China’s State Information Center, the sharing economy is expected to maintain a 40 percent annual growth rate over the next few years, and is officially forecast to account for over 10 percent of the country’s GDP by the year 2020, and 20 percent by 2025. The sharing economy in China is expected to generate revenues of up to RMB 5.7 trillion (around US$915 billion) in 2017.
Many people see the sharing economy as a logical and positive development because it turns excess supply into revenue, and fits into the state’s larger initiatives to transform the country from an economy driven by manufacturing to one driven by services, by means of nurturing innovation.
By Moliang Jiang
Chinese e-commerce giant Alibaba opened its first cashier-free retail store, Tao Café, in Hangzhou this July. Customers can enter the store after obtaining a machine-readable QR code entry ticket through their Taobao account, and going through the facial recognition system at the store.
Customers can not only dine in the café, but also purchase various products both physically in the store and online by using interactive screens at each table. Customers pay automatically as they exit through the checkout sensor door. There are no queues at the cashier and no need for cash or even mobile payment.
Numerous other unmanned convenience stores have emerged and expanded rapidly in recent months. The French retail group Auchan has opened dozens of BingoBox stores in Beijing and Shanghai, while F5 Future Store has opened robot-operated shops in Guangzhou.
Are we witnessing the second retail revolution after e-commerce?
By Gidon Gautel
This is Part 2 of a two-part article on Artificial Intelligence (AI) in China. In Part 1, we discuss foreign investment opportunities within the industry.
Many business leaders across the world, including China, do not yet see AI as a priority; at least 40 percent of enterprises within traditional industries in China do not see AI as strategically important. Similarly, in the West, one study suggests only 43 percent of business leaders are likely to implement any type of artificial intelligence in the next three to five years.
A survey by Forrester has found that, of those businesses within the study who choose not to implement AI, 43 percent said there was no defined business case, 39 percent said they were unsure what AI could be used for, and 33 percent did not have the required skills for implementation.
By Gidon Gautel
This is Part 1 of a two-part article on Artificial Intelligence (AI) in China. In Part 2, we discuss how AI can optimize your China based operations.
On July 20, 2017, China’s State Council released a development plan for the country’s artificial intelligence (AI) industry. The plan aims for the total market size of AI related industries in China to exceed RMB 1 trillion (around US$150 billion) by 2020. By 2030, the plan aspires to reach 10 times this figure.
Claims that China has the rest of the world beat in AI are hyperbolic. Although the country ranks first globally for widely cited AI related papers, 70 percent of these are self-citations, and China is still behind the US and UK in terms of publication influence. In 2017, the number of promising AI startups in China, according to McKinsey, was three. The US saw 39 that year.
By Gidon Gautel
China’s data center market is poised to see increasing activity following the implementation of new regulations. To comply with China’s controversial new Cybersecurity Law, US tech giant Apple recently announced plans to build a data center in Guizhou designed to store cloud data for Chinese users as part of a US$1 billion regional investment. Apple made the move due to data localization requirements in the law requiring critical information infrastructure (CII) providers to store personal information within mainland China.
Many more firms without China-based data facilities will likely follow Apple’s lead in order to comply with the Cybersecurity Law, which stipulates that even businesses not providing CII services are encouraged to host servers in China. Others, however, are relocating for practical business reasons. Hosting servers within China can help avoid network bottlenecks and provide better and more reliable service within the country, regardless of the industry.