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international newsletter number 1 July 2013
HINA FINANCE
China FinanCe a tool to enaBle investment China Finance is a business newsletter focused in creating proximity relations between investors, institutions and business people that operate in a global market, where China has gained a prominent role. nowadays the role of China goes far beyond its internal production capacity as the economic ability of Chinese companies is allowing investors to expand into other countries and new business areas.
China and BraZil siGn aGreement China and Brazil have agreed to trade the equivalent of up to $30 billion per year in their own currencies. the agreement will take almost half of their trade exchanges out of the us dollar zone. the agreement is due to last three years and is called a bilateral currency swap accord. China is the largest economy within the emerging powers group, which also includes russia, india and south africa.
Bearing this movement in mind this publication is aimed at the african and latin american countries that present an enormous economic growth potential. the purpose is to provide useful background information to investors, in order to promote collaboration at all levels.
the deal was signed by Chinese Finance minister lou Jiwei, and the brazilian economy minister Guido mantega described the deal as «a sort of umbrella agreement», and «Brazil hopes to promote such arrangements with other countries». the leaders underlined the importance that bilateral investment flows contribute to the aggregation of value in the production chains of the recipient country.
with four editions per year China Finance newsletter will approach, in a credible and succinct manner, a variety of issues that will provide useful facts and information to investors allowing them to evaluate the business potential.
they reiterated their promise to resolve trade questions through consultation and friendly dialogue through established institutional channels and condemned any recourse to trade protectionist measures. Brazilian officials have said they hope to have the trade and currency deal operating in the second half of 2013.
the main objective is to bring forth some highlights about the economic context, background information, facts and numbers and all kind of business related information. through the provided data businessmen will more easily get acquainted with a diversity of potential markets and investment opportunities.
trade between China and Brazil totaled around $75 billion (58.3 billion €uros) in 2012. of Brazil’s $41.2 billion exports to China, iron are accounted for 34%, while soy and soy products made up 29%, and crude oil 12%. electronics, machinery and manufactured goods figured heavily in Brazil’s $34.2 billion of imports from China.
aimed at a specific cluster – the african and latin american economies – China Finance plays an important role, as a tool to enable corporate communication and promote the interaction, in a globalized world, where it is harder to find and choose specific and relevant information. pursuing this aim the recent agreement celebrated between China and Brazil will deserve special attention, with a special issue dedicated to analyze by this two rising giants of the global economy. read China Finance for the accomplishment of good business. China Finance
Brazil has taken several measures to curb cheap imports, particularly by taxing overseas goods, such as cars and motorbikes, more heavily than domestically produced items. Brazil’s vast mineral resources and agricultural products have helped fuel China’s industrial growth and feed its people while the returns have helped bring a new era of prosperity to the latin american giant.
Chinese consumers and investors value European wine
The Chinese wine market has been significantly growing since the 1980’s, in part due to the introduction of the European wines by distributors and specialist. Today China is amongst the most popular markets for wine in the world with 1.2 billion bottles of wine are open each year. Statistics predict that this number will steadily grow by 20% annually, until 2015, this means that it is expected that wine consumption reaches a medium consumption of two liters per person. About half of the Chinese wine market is held by French wines, with special relevance to Bordeaux, a variety which sales reach 33.5 million bottles, what can be translated into 302 million euros. Italian and Spanish wines are also on the rise in this promising market. Between 2010 and 2011 Italian exports to China have grown about 80%, and Spanish grew about 56% in 2011 alone. Although these are the main European wine producers other countries, such as Greece, Hungary and Portugal have also started to conquer the Chinese taste. Consumers preference is strongly connected to where they are from in China. In the south sweet wine is more appreciate, in the northern regions full bodied wine gains preference and east favors white wine. The profile of wine appreciators shows that most of the consumers are middle aged and young professionals, the majority of them occupying positions in the business, service and manufacturing. Even though 66% of wine consumers are men, women are starting to replace beer by wine, and red wine gets the lead because it is associated with status and elegance. Has the taste for wine increases knowledge is also growing and the Chinese are becoming more and more interested in purchasing European quality wine, where the origin is clearly stated. Imported wine is not an everyday product, it is still perceived as a luxury good, associated with status although in cities like Shangai or Beijing drinking wine over a meal it’s becoming a more common habit. This sets a great number of possibilities for European wine producers that assist to a growing number of oenophiles and wine collectors. This interest is opening a wide range of new consumers that are interested in learning about new varieties, new wineproducing regions and different methods of production. This sets the perfect scenario to small European wine producers that can find in the Chinese market the perfect match for their exclusive and high quality products.
improvinG FinanCial serviCe For small and miCro-siZed enterprises
rmB internationaliZation rmB internationalization has attracted widespread attention. in the past few years, China has made considerable progress in the internationalization of rmB by advancing cross-border rmB trade settlement, launching pilot rmB cross-border investment and financing program and signing currency swap deals with many countries. this special topic focuses on how to steadily further the internationalization of the currency and risk control.
China’s small companies have always been at a disadvantage in raising funds. in recent years, CBrC has implemented a series of measures to guide banks to lend more to small and micro-sized enterprises. most banks have lowered loan thresholds and adjusted their lending policy for small companies. in this special topic, we invite regulators from CBrC, banking presidents and experts to talk about the experience and problems of banking services provided to small and micro-sized companies. since its establishment, CBrC has devoted itself to further improving banking services to small companies. its effective policy guidance has guaranteed the sustainability and efficiency of banking credits to support the real economy. under the guidance, large banks such as CCB started specialised operation of small enterprise business. nowadays CCB’s small enterprise loan business has maintained a rapid growth momentum and its growth rate has been significantly higher than the bank’s average loan growth rate. Joint-stock banks and city banks, such as CmB, CmsB and Beijing bank have also made full use of their advantages to create specific financial instruments to help ease the capital crunch for small firms. loans made to small and micro-sized companies totaled 14.77 trillion yuan, accounting for 21.95 percent of all loans by the end of 2012.
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several opinions deserve attention. First, China should grasp the pricing power of rmB exchange rate in offshore markets. rmB currency futures on the mainland need to be introduced as soon as possible. second, China should enhance the function of rmB as invoicing currency. the acceptance of the currency in commodity pricing will be the key to sustainable internationalization. third, China should consider opening capital account to the local currency and nonreserve currencies. Furthermore, during the process China should watch out for speculative capital and prevent the possible negative impacts by maintaining steady policies and improving its macroeconomic management capacity.
Innovation of Payment and Clearing Industry With the rapid development of information technology and E-commerce, payment business is becoming more efficient and safe in recent years. It has changed our consumption habits, life style and even economic development pattern. How to accelerate innovation of payment business and realize the sound development of payment and settlement service market have become important issues. In this special topic, we invite regulators from PBC and MIIT, president of ICBC and vice president of payment and clearing association to discuss the future of the payment and clearing industry. PBC has advanced the innovation of payment system and improved payment infrastructure construction with great efforts. Under its guidance, commercial banks, telecom carriers, third-party payment institutions actively participate in payment service market and promote rapid growth of the business. Several articles in this topic introduce the new trends of payment market, such as mobile payment, cell-phone number payment and other retail payment innovation. Besides, some articles referred to strengthen supervision and risk control in the payment market.
Financial Talent Development Strategy Talents are the core competitiveness of enterprises. The financial industry in China is expanding fast and facing the shortage of talent. Most financial institutions have make efforts to train employees and formed training systems with their-own characteristics. Articles in this special topic
are focus on how to cultivate financial professionals and introduce training programs and methods.
PBC has advanced the innovation of payment system and improved payment infrastructure construction with great efforts. Under its guidance, commercial banks, telecom carriers, thirdparty payment institutions actively participate in payment service market and promote rapid growth of the business.
According to the articles, the financial industry is in urgent need of five types of talents, such as professionals in law and finance, financial regulation, financial innovation, risk investment and financial operation of Strategic resources. Therefore, financial institutions should increase training investment and Encourage financial research and innovation. In this special topic, a regulator from PBC introduces the training method of international talents in the central bank. Some executives of financial institutions also introduce their training systems. For example, Bank of China has formed systematic and sound training mechanism, making full use of internal and external resources. Bank of Communications has implemented strategy adjustment of talent structure and improved the management system to support sustainable development of talents.
China Finance Newsletter Supervisor The People’s Bank of China Publisher China Financial Publishing House Editor China Finance Editorial Board No. ISSN 0578-1485 CN 11-1267/F ADVERTISING PARTNER Dragon Publishing House Ltd Fairfax House 15 Fulwood Place London WC1V 6AY United Kingdom Phone +44 20 7969 5572 | Fax +44 20 7396 4233 | email china.media.finance@dragonpublishinghouse.com France Representative +33 4 68 66 94 75 | China Representative +86 138 1783 7747 REPRESENTATIVE OFFICE Portugal and Brazil - Primeira Imagem - Public Relations, Reports and Editorial staff Largo do Poço,2 - 1600-579 Lisbon, Portugal Phone + 351 217 561 208 | email primeiraimagem@gmail.com Business Development Manager Carina Alves Phone +351 968 681 784 | email carina.alves@dragonpublishinghouse.com