Shanghai real estate market scales new peak

Shanghai real estate market scales new peak

Indications of this were visible recently when foreign buyers started scouting for property in Greentown Shanghai Rose Garden and purchased four villas for 180 million yuan.
Zhao Qiang, an analyst from Everbright Securities, said prices of apartments in Shanghai would continue to rise at least for the next three to six months.
“The depreciation of the US dollar may see more foreign funds flowing into the Chinese real estate market,” Zhao said.
Figures from E-House show that from Nov 2 to Nov 8, a total of 503,600 sq m of residential housing were sold, an increase of 8 percent over the previous week.
“Judging from the high transaction volume over the past three weeks, you can find that it is quite close to the figure recorded in June, when the real estate market in Shanghai hit its peak,” said Xue.
“I think it is time for the government to take effective measures to stabilize the Shanghai market, taking into consideration the recent real estate transactions,” he said.

Used-car market shifts into top gear

Used-car market shifts into top gear

The company plans to have StarElite pre-owned vehicle showrooms at all its dealerships.[China Daily] 
Luxury carmaker Mercedes-Benz yesterday entered the premium used-car market with its StarElite Pre-Owned Program, in a bid to garner more market share and support its businesses in the country.
“We have come out with StarElite, a sub-brand under the Mercedes-Benz umbrella, as part of our overall market strategy for the country. It would also be our debut in the pre-owned vehicle market,” said Bjoern Hauber, general manager of sales and marketing, Mercedes-Benz (China) Ltd.
According to Hauber, StarElite offers multi-brand trade-in, certified pre-owned vehicles and premium after-sales service, in a transparent, reassuring, and convenient one-stop shopping experience.
“With multi-brand trade-in, a customer can bring any vehicle brand to the dealership and get the same appraised by a StarElite professional. After an objective and transparent inspection of the vehicle, the appraiser would calculate the value of the old vehicle and also offer customers the option of trading in the same for a new Mercedes-Benz or a StarElite pre-owned Mercedes-Benz vehicle after reducing the exchange value,” said Hauber.
The StarElite facility would be available in 11 cities and 15 showrooms.
“We intend to add another 10 to 15 StarElite dealerships next year,” said Hauber.
Going forward, Mercedes-Benz plans to have StarElite pre-owned vehicle showrooms at all its dealerships, he said.
The used-car market is still in its infancy in China and has been growing at a slow pace. The first instance of a second-hand car purchase took place in 1988 when a Beijing resident bought a Fiat 126P.
However, with China’s automobile industry maturing and vehicle sales surging, the used-car segment has also started to gather steam in recent times.
According to figures from China Automobile Dealers Association (CADA), used-car sales have risen from 252,000 units in 2000 to 2.74 million units last year. During the first eight months of this year, trade-in vehicle sales touched 2.06 million units, up 25.29 percent over the same period last year.
“We expect used-car sales to cross 3 million units this year and grow further in the next few years,” said Hauber.
In the Western markets, used-car sales normally account for 1.5 to 3 times new automobile sales. However, last year, second-hand sales accounted for just 30 percent of the new vehicles sales in China.
“We see huge potential and a promising future for the used-car market in China,” said Hauber.

The government is likely to launch a slew of policies over the next few months to regulate and encourage the second-hand vehicle sales in China. The era of second-hand vehicles is certainly coming, said Shen Rong, deputy secretary-general of CADA.
Shen said the Ministry of Commerce has worked out a policy jointly with the Ministry of Finance to establish standard second-hand vehicle trading markets in 10 cities and provinces from this month onwards.
“It is the first step the government would implement this year. The national standard for second-hand vehicle enterprises and second-hand vehicle appraisal are under discussion and would be released soon,” said Shen.
Mercedes-Benz is not the first automobile brand to launch a specific used-car service in China. Its German rivals Audi and BMW are already present in the used-car market.
“What makes Mercedes-Benz different from others is in its use of an independent third-party audit for the transaction. Dekra, an independent automotive inspection agency, will guarantee the transparency of the trade-in evaluation and certification,” said Hauber.

Taxi fares to rise as fuel costs surge in Beijing

Taxi fares to rise as fuel costs surge in Beijing

Taxi passengers will have an extra 1 yuan added to their fares within days after the city’s fuel price hit its highest level in years.

A worker at a foreign-funded gas station on the East Fourth Ring Road sets up a sales promotion board yesterday. [Yuan Zhou]
Under a new municipal government policy, passengers will pay an extra 1 yuan for each trip they make as a fuel surcharge.
Passengers with a 10 yuan fare – the smallest journey possible – will not have to pay the surcharge.
It follows a price increase for gasoline. The city’s 66,000 cab drivers currently pay 6.66 yuan for each liter of fuel.
The policy stipulates that the price of taxi fares could rise further if gasoline prices rise above 7.1 yuan.
The last change in taxi fares was in 2006, when it was increased to 2.4 yuan per km.
The government refused to reveal when the new pricing system would take effect, but FM103.9 Beijing Communications Radio quoted anonymous sources as saying the policy would come into force “in the next few days”.
Locals told METRO they are not concerned about the 1 yuan surcharge, but they worry that taxi fares will continue to soar in the coming months.
“The 1 yuan surcharge per trip seems okay,” said Fofo Hu, an employee of a Korean firm who often takes taxi to her office near Zhongguancun.
“But if the fares per km rise, I will go crazy,” she said.
Experts, who helped set the current taxi pricing system in 2006, said the increase is necessary.
“Exorbitant fuel prices and a bad economic environment have made it necessary for everybody to share the cabbies’ burden,” said Hu Anchao, a Beijing-based lawyer who helped decide the taxi fares at the last public hearing in 2006.
Zheng Xiang, an associate professor on transportation policy with Beijing Jiaotong University, said: “We agreed on a mechanism in the last public hearing to leave room for more increase.”
“But the increase should come after fuel prices rise too high and taxi operation companies prove the economic pressure is holding them up.”
China’s retail gasoline and diesel prices have increased by 6 percent since Tuesday, bringing the price for 93-ron gasoline, used by most Beijing taxis to 6.66 yuan per liter. The 0# diesel also increased by 6.6 yuan per liter and jet fuel prices also rose by around 300 yuan per ton.
Shenzhen and Shenyang recently tabled similar proposals to increase stipends for taxi drivers. Currently, Beijing municipal government and taxi companies offer each taxi driver a stipend package of 1,305 yuan per month to help pay for their fuel costs.
“This is the best news for me so far this year,” Fu Chengzhi, a 44-year-old taxi driver, told METRO. “The stipend is much more than I expected.”
The taxi driver, who drives between 20 and 30 trips per day, said the stipends will give him an extra income of up to 1,000 yuan, adding an extra 25 percent to his monthly income.

Domestic airlines face fuel tax again

Domestic airlines face fuel tax again

The National Development and Reform Commission (NDRC) will re-impose a fuel tax on domestic airlines after a ten-month cancellation due to oil prices rising to 480 yuan ($70) per ton Tuesday, the Guangzhou Daily reported Wednesday.
Each passenger will be charged a fuel tax of 20 or 40 yuan ($3 or $6). Flights 800 km or less will be charged 20yuan and anything above that level will cost 40 yuan.
Airline companies will reportedly lower tickets price to sustain customers.
Recharging the fuel tax will mainly affect economy class passengers, as first class and business class passengers may not think it¡¯s a big deal, according to one airline insider.
Efforts to contact the Civil Aviation Administration of China for more information failed.

A/H1N1 spread triggers rush for health insurance

A/H1N1 spread triggers rush for health insurance

The growing number of A/H1N1 flu cases in the mainland has triggered a rush for insurance products as more and more people are trying to mitigate exposure and health risks.
The demand for A/H1N1 insurance products started to grow since last month after reports that the number of people affected by the disease has started to soar globally.
Sales of A/H1N1 insurance products by the Sichuan branch of Ping An Insurance Co of China rose 30 times in October compared with the average sales volume from June to September.
“I have been able to sell at least three to five A/H1N1 insurance contracts every day since last month. Most of my clients are people who are planning overseas trips,” said a Ping An Insurance saleswoman surnamed Sun in Jinan, the capital city of Shandong province.
In Shenzhen, an increasing number of people have been flocking to insurers for A/H1N1 insurance consultancy.
“With the weather becoming colder, the number of people coming for consultancy has also doubled. It has also resulted in better sales volume,” said a salesman surnamed Li from Ping An Insurance’s Shenzhen branch.
Ping An Insurance started to sell such products in May. Sun said she could hardly sell one contract in the first couple of months.
“At that time, most of the A/H1N1 cases were from overseas. People were still lacking in risk awareness,” said Sun.
According to Sun, the A/H1N1 insurance contracts, designed by Ping An, could be divided into three types. One can pay 50 yuan ($7.32) for 20,000 yuan worth of coverage, or 100 yuan for 30,000 yuan worth of coverage, or 200 yuan for 80,000 yuan worth of coverage.
Another insurance company, Tai Ping Life Insurance, sells a similar product in four classifications. The coverage could be as high as 150,000 yuan in this case.
To better serve clients, many insurance companies, like CITIC Prudential Life Insurance, Generali China Life Insurance and AIA Life Insurance, have opened “green channels” to speed up compensation claims of customers.
Since the outbreak of the flu, many insurance companies have said that the standard medical care insurance and life insurance contracts would also cover A/H1N1 cases. People who bought such products can get compensation when they are admitted to hospitals for A/H1N1.
The companies, however, clarified that the standard contracts do not cover A/H1N1 casualties.

The cost of auto boom

The cost of auto boom

This will be a year of milestones for many carmarkers in China with both production and sales of new vehicles having exceeded 10 million units in the first 10 months for the first time.
However, while enjoying these robust figures, domestic automakers should not lose sight of the rising cost of driving in this country. If they do not do their best to bring down the environmental and economic cost of their cars as soon as possible, expectations of a sustained expansion of the auto market can prove all too premature.
On Monday, the China Association of Automobile Manufacturers announced that vehicle sales reached 10.9 million units between January and October, up 37.8 percent over the same period last year.
This news is no surprise to the carmakers. Unexpectedly strong domestic sales since the beginning of the year have already made them the envy of their foreign counterparts who have been hit hard by the sluggish performance of other major auto markets around the world.
The muscular growth of the domestic auto market so far this year is generally attributed to the government’s massive stimulus package, including tax cuts and vehicle upgrade subsidies for rural residents.
Yet, as carmakers prepare to expand production for next year, they should not only worry if the government will keep the tax incentives in place. The steady rise of fuel prices will only become a bigger concern for potential car-buyers.
The government raised the prices of gasoline and diesel both by 480 yuan ($70.28) per ton from yesterday – the fifth rise this year. As a result, the retail price of gasoline climbed 0.36 yuan per liter and diesel rose by 0.41 yuan per liter.
With prices at the pump reaching record levels, carmakers should no longer take this year’s pent-up demand for granted.
Under the current pricing mechanism, the government frequently revises retail fuel prices to reflect changes in international crude prices, and consumers will think twice before buying a new car as international crude oil price seems set to rise further. On the one hand, worldwide energy demand will continue to grow amid the global economic recovery. On the other, the surge in the number of new cars sold in China itself can considerably inflate domestic demand for gasoline, thereby pushing up fuel prices.
The rapid increase in auto production and sales has brought about not only tremendous benefits to carmakers and car-buyers, but also huge challenges to traffic control and environmental protection. The present boom has come as a pleasant surprise to carmakers who were worrying about survival amid the worst global financial and economic crisis in many decades. But it can also end sooner than expected if domestic carmakers do not pay close enough attention to the underlying environmental and economic cost.
Given the size of the Chinese market, only more energy-efficient cars can help sustain the auto boom.

Chinas new loans sharply down in Oct

China’s new loans sharply down in Oct

China’s new Yuan-denominated loans in October were down 51 percent from September, the People’s Bank of China, the central bank, announced Wednesday.
Growth of the new yuan loans slowed to 253 billion yuan ($37.06 billion) from September’s 516.7 billion yuan ($75.68 billion), according to the central bank.
Yuan loans outstanding at the end of October were 34.19 percent higher than a year earlier, almost the same as September’s reading of 34.2 percent.
The broad M2 measure of money supply, which covers cash in circulation and all deposits, was up 29.42 percent in October from a year earlier to 58.62 trillion yuan, the central bank said.
Annual growth of the narrow M1 measure of money supply, which covers cash in circulation plus current corporate deposits, accelerated to 32.03 percent from 29.3 percent in September.
Yuan lending in the first 10 months totaled 8.92 trillion yuan, far exceeding the government’s target of 5 trillion yuan for this entire year.

Chinas retail sales up 16.2% in Oct

China’s retail sales up 16.2% in Oct

China’s retail sales in October rose 16.2 percent year-on-year to 1.17 trillion yuan ($171 billion), the National Bureau of Statistics (NBS) announced Wednesday.
The rise was 5.8 percentage points lower than that a year earlier, but 0.7 percentage points higher than that in September, NBS spokesman Sheng Laiyun said at a press conference.
The first 10 months saw a 15.3 percent growth of retail sales to 10.14 trillion yuan year-on-year. The rate was 6.7 percentage points down from the same period last year, and 0.2 percentage points up from the first nine months this year, Sheng said.

China auto sales top 10 million

China auto sales top 10 million

GM sold 1.459 million vehicles in China in the first 10 months.  [Hao Ran]
 China’s vehicle sales have breached the 10-million barrier for the first time ever, with 10.9 million automobiles sold in the first 10 months of this year, up 37.8 percent over the same period last year, the China Association of Automobile Manufacturers said yesterday in an emailed statement.
This has consolidated its top position in the global automobile market, indicating that the nation has been the first to walk out of the global industry downturn, analysts said.
The robust average growth rate of over 20 percent seen so far this year, up from the 6.7 percent average seen in 2008, has been attributed to the government’s successful stimulus package, including tax cuts and vehicle upgrade subsidies for rural residents. It is a development that provides confidence and hope to global automakers to offset their losses in Western markets, analysts said.
General Motors Co, which stepped out of bankruptcy protection in July, announced yesterday that the automaker and its joint ventures in China would surpass 1.5 million in vehicle sales for the year. With a strong October, the GM China family continued its string of record monthly sales that began at the start of the year, it said.
GM China expects to be the first automaker to cross 1.5 million in annual sales in China, after being the first in 2007 to sell 1 million vehicles in a year.
“This has been a year of records for GM in China,” said Kevin Wale, president and managing director of the GM China Group. “With our new engine and transmission technologies, we are able to present winning products that offer good fuel efficiency to satisfy local market needs.”

For the first 10 months of 2009, GM’s sales in China totaled 1,459,460 units. This was a rise of 59.8 percent from the first 10 months of 2008 and a new record for the period.
Despite the National Day holiday at the beginning of the month, the automaker and its joint ventures ended October with 166,911 vehicles sold. This was more than double the number sold in October 2008.
Its passenger car joint venture Shanghai GM sold 68,505 vehicles domestically in October, which represented an increase of 109.7 percent from the same month last year, finishing the month number one in sales among domestic passenger car manufacturers.
China’s battery and carmaker BYD Co also announced yesterday that the Warren Buffet-backed company sold 30,008 units of its F3 car, making the model one of the best selling vehicles in the domestic market and the first car to sell more than 30,000 units in a single month in China.
The homegrown model, which hit the market four years ago, has topped China’s monthly best selling model for six months since October 2008.
The company, ranked the seventh among Chinese car manufacturers last month, sold 46,600 cars in October.

Chinese-character domain names to expand

Chinese-character domain names to expand

The use of non-Latin characters from start to finish for Internet domain names could see a massive expansion of Internet use and commerce in China, experts predict.
The board of the Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit body that oversees Internet addresses, has allowed the use of non-Latin characters in more than 20 languages, including Chinese.
The China Internet Network Information Center (CNNIC), which will oversee Chinese-character domain names, will sumbit requests for top-level names with the suffix “.Zhongguo” (China) in all Chinese characters as soon as the ICANN allows non-Latin-character applications from November 16.
Any organizations or individuals in China could apply for a domain names in Chinese characters to 43 domestic website companies authorized by the CNNIC.
Foreign organizations or individuals who want to apply for Chinese-character domain names could apply to the CNNIC’s two overseas agents in Singapore and Malaysia.
The annual fee for a domain name in Chinese characters from start to finish would be 280 yuan ($41).
“This represents one small step for ICANN, but one big step for half of mankind who use non-Latin scripts,” said Rod Beckstrom, CEO of the ICANN.
Chinese experts said the move would provide more convenient access to the Internet for many elderly Chinese who are unfamiliar with Latin characters, and greatly improve the efficiency of on-line business for Chinese companies and for foreign firms wanting to do business with Chinese customers.

Qian Hualin, chief scientist with the CNNIC, said it would take some time for Chinese companies and organizations to finally acquire addresses entirely in Chinese characters, but companies selling Chinese domain names would have huge market potential.
Domain names in Latin characters, such as for e-mail addresses, were confusing for many Chinese users, said Qian, a key advocator of the Internet domain names in Chinese and a board member of the ICANN.
Many Chinese had particular difficulty distinguishing between the pronunciations of the letters “i” and “r” in English, which often led to mistakes in their daily communication, Qian said.
If they could use domain names in Chinese, there would be no confusion or ambiguity.
Chinese addresses would also prevent addresses designed to mislead Chinese Internet users with Latin characters very similar to frequently visited sites, he said.