China’s plastics industry has experienced a bout of slower growth, with investment into plastics machinery dropping by six percent last year, the biggest fall since the global economic recession. Despite this, the plastics industry remains a key driving force of the global industry, and by other methods of measurement, the industry is still growing. 2015 saw a 10 percent rise in demand for plastics, a figure that is 1.5 times more than GDP growth. This demand largely originates from the manufacture of cars, mobile telephones and food packaging, industries that have been requiring increasingly more plastic. China exports three times more plastics than it imports, and exports continues to grow, driven by low production costs. Commodities such as daily use products, plastic sheeting, construction materials and packaging comprises the major categories of those exports.
A recent survey conducted by Ant Financial Services, an affiliate of the Alibaba Group, has challenged the stereotype that women spend more money on themselves when shopping online. It revealed that men are more likely to treat themselves than their female counterparts in China. The study was based on data collected by Alipay, China’s biggest third party online payment operator which has over 450 million users. Though the total spending volume of women was higher than men, it shows that women tend to buy more daily necessities such as household use items, whereas men were spending more on personal care and leisure products, 26 percent more than women. It also shows that men were spending 36 percent more on education, cultural products and healthcare services online. China’s overall internet retail was valued at RMB 3.88 trillion in 2015, up 33.3 percent on the previous year.
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A report published by iReseach has predicted that the Chinese drone industry will generate over RMB 70 billion by 2025. This figure is categorized into aerial photography drones and civilian drones (for use in agriculture, forestry, security and power inspection), with the former comprising RMB 30 billion and the latter RMB 40 billion of the revenue, respectively. The report does not forecast figures generated from sales of military drones. Other firms, such as PricewaterhouseCoopers and Grand View Research, have predicted similar forecasts for the industry, which is expected to revolutionize many aspects of industrial operations, such as transport and farming.
China’s leading administrative authority has said that China’s cement industry, the largest in the world, will need to make significant efforts to cut overcapacity. It will need to rapidly dismantle large numbers of factories to cut 500 million tons of cement making capacity within the next three years. According to the National Bureau of Statistics and the China Cement Association, production fell by 5.7 percent in the last quarter of 2015, but capacity actually rose due to the construction of 31 new cement plants. The cement industry is the third major industry to experience drastic cutbacks in China after coal and steel, threatening to displace millions of workers. China’s cement industry has 3.2 billion tons of capacity, but has only a 67 percent usage rate, leaving 850 million tons of cement left over. A cut of 500 million tons is an astounding amount when compared to the total production of other countries; for instance, Canada’s cement output weighed in at 13 million tons in 2012.
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Establishing & Operating a Business in China 2016
Establishing & Operating a Business in China 2016, produced in collaboration with the experts at Dezan Shira & Associates, explores the establishment procedures and related considerations of the Representative Office (RO), and two types of Limited Liability Companies: the Wholly Foreign-owned Enterprise (WFOE) and the Sino-foreign Joint Venture (JV). The guide also includes issues specific to Hong Kong and Singapore holding companies, and details how foreign investors can close a foreign-invested enterprise smoothly in China.
Selling, Sourcing and E-Commerce in China 2016 (First Edition)
This guide, produced in collaboration with the experts at Dezan Shira & Associates, provides a comprehensive analysis of all these aspects of commerce in China. It discusses how foreign companies can best go about sourcing products from China; how foreign retailers can set up operations on the ground to sell directly to the country’s massive consumer class; and finally details how foreign enterprises can access China’s lucrative yet ostensibly complex e-commerce market.
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In this edition of China Briefing magazine, we present a roadmap for investing in China’s e-commerce industry. We provide a consumer analysis of the Chinese market, take a look at the main industry players, and examine the various investment models that are available to foreign companies. Finally, we discuss one of the most crucial due diligence issues that underpins e-commerce in China: ensuring brand protection.
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