💰 MasterCard's Clearing Milestone, EU Firms Navigate China's Opening & Surge in Tech Imports 🚀

2024-05-12 | Subscribe | Homepage | Read Online

🌟 Welcome to this week’s edition of China Insights Weekly! 🌟

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Now, let's delve right into the top stories of this week!

An increasing number of European companies report China market opening while 42% are losing market share and 21% will onshore their supply chains (link)

The European Union Chamber of Commerce in China, in partnership with Roland Berger, released its European Business in China Business Confidence Survey 2024 (BCS). A positive finding in the survey is the notable increase in the proportion of respondents reporting market opening in their industry at 45%, an increase of 9% from last year. 42% of companies report losing market share to domestic competitors. Despite the increased competition from local players, 42% of companies are considering to expand further in China. 21% will onshore more of their supply chains, while 13% have already shifted, or taken the decision to shift, existing investments out of China. 52% of respondents plan to cut costs, with 26% of them doing so by reducing headcount.

China’s imports jumped 8.4% in April, exceeding expectations as purchases from the US and of AI equipment grow (link)

China’s exports rose by 1.5% year-on-year in April in U.S. dollar terms, while imports climbed by 8.4%, beating expectations of a 4.8% increase from a year ago. China’s imports from the US climbed by 9%, while exports dropped by nearly 3%. The US remains China’s largest trading partner on a single-country basis, while the Association of Southeast Asian Nations (ASEAN) is China’s largest trading partner on a regional basis. China’s exports to ASEAN rose by 8% in April, while imports rose by 5%. China’s exports to the EU fell by about 3.5%, imports rose by 2.5%. The value of China’s imports of automatic data processing equipment, including computers and equipment for developing AI, surged 50% year on year in the first 4 months so 2024. Imports of computer chips and other high-tech products recorded double-digit gains. In another positive news, China’s consumer prices rose for a third straight month in April, while producer prices extended declines, signaling an improvement in domestic demand.

MasterCard's China JV starts bank card clearing services (link)

The Chinese joint venture of New York-based MasterCard and NetsUnion Clearing Corporation, a clearinghouse platform backed by China's central bank, has begun processing payments made on the Chinese mainland. More than 10 Chinese banks launched over 30 MasterCard bank card products on the day MasterCard NetsUnion started operations. The cards will be accepted for domestic and international purchases. On Nov. 17, the People's Bank of China issued a bank card clearing business license to MasterCard NetsUnion, making MasterCard the second overseas bank card clearing institution to enter the Chinese market after American Express in 2020. The JV is the third such institution established on the Chinese mainland.

After the departure of Uber Eats China’s Meituan rose to the top of the Hong Kong food delivery market in just a year since its entry (link)

Hong Kong’s food delivery market was a three-way battle between Germany’s Foodpanda, the USA’s UberEats, and the UK’s Deliveroo from 2018 to 2021. After Uber Eats exited, in 2023, Meituan’s KeeTa entered the scene, once again making it a triopoly battlefield. From 1Q23 – 1Q24, the market experienced impressive growth in order volume, up by over 40% from last year, and the gross merchandise value (GMV) has witnessed an increase of approximately 22% year on year. KeeTa’s market share in the food delivery-only segment — excluding grocery and pickup services — reached 32% by GMV and an impressive 43% by order volume. Over 60% of the orders in Hong Kong came with promotions. However, amongst the current three players in all service areas (food, grocery, delivery, pickup), Foodpanda remains No.1 by both order volume and GMV.

‘City of Superchargers’: Shenzhen’s charging network surpasses gas stations (link)

Shenzhen, China’s third largest city by urban population after Shanghai and Beijing, has 362 supercharging stations for new energy vehicles (NEVs), surpassing the number of gas stations. Shenzhen saw a surge in NEV charging, reaching 670 million kilowatt-hours, a 10.9% year-over-year rise. The expanding fleet of NEVs in the hometown of BYD surpassed 970,000 units in December 2023, constituting approximately 60% of the local car market. One of the largest charging stations in Shenzhen is located at the Shenzhen Airport Terminal. It features 258 fast charging points. A joint venture between multinational oil giant Shell and BYD operates it.

China emerges as global tech hub with 369 unicorns, AI and semiconductor sectors dominate (link)

The report on China’s unicorn enterprise development was jointly released by five prominent institutions, including KPMG. China now has 369 unicorns, which are privately held startups valued at over $1 billion. Over 25% of these unicorns are involved in China’s artificial intelligence (AI) and semiconductor sectors. Beijing leads the pack with 114 unicorns, followed by 63 in Shanghai and 32 in Shenzhen, a prominent technology hub in southern Guangdong province. Notably, the AI and semiconductor sectors collectively represent over a quarter of China’s 369 unicorns. According to Global Unicorn Index 2024 by the Hurun Research Institute, last year there were over 700 unicorns in the US compared to 340 in China.

China’s ‘silver economy’ fuels a new gold rush (link)

Retail sales among domestic large-scale jewelry enterprises reached 331 billion RMB (USD 45.7 billion) in 2023, a 13.3% year-on-year increase. This was the second-highest growth rate among all consumer goods categories, trailing only the food and beverage segment. China currently is home to more than 7.83 million jewelry-related companies, more than 2.6 million of which were registered between January and October 2023, an increase of 89.9% year on year. The consistent interest of China’s middle-aged and elderly populations in traditional gold and pearl jewelry designs plays a significant role in sustaining the market’s growth.

China was the both largest producer and buyer of gold in 2023 (link)

Over 3,000 tons of gold were produced globally in 2023. China was the top producer in 2023, responsible for over 12% of total global production, or 370 tons, followed by Australia and Russia. Gold mines in China are primarily concentrated in eastern provinces such as Shandong, Henan, Fujian, and Liaoning. In addition to being the top producer, China emerged as the largest buyer of the yellow metal for the year as well. The country’s central bank alone bought 225 tons of gold in 2023. 46% of the gold produced in 2023 was used in jewelry, 23% by central banks and institutions, 16% for physical gold bars, and 9% for official coins, medals, and imitation coins.

🎁 Bonus Stories

Chinese firms are investing abroad at fastest pace in eight years (link)

Chinese companies made 243 billion yuan ($33.5 billion) in foreign direct investments from January to March, data released last week showed. That was the highest first-quarter figure since 2016 — before a crackdown on capital outflows -– and up almost 13% from a year earlier. A separate report released this week showed a surge in Chinese manufacturing investment in the ASEAN block of southeast Asian countries, which almost quadrupled last year. At $26 billion, it was nearly twice the combined total for US, South Korean, and Japanese firms.

South Koreans' direct purchases from China hit record high in Q1 2024 (link)

Direct purchases from China by South Korean customers surged more than 50 percent in the first quarter of 2024 to account for the largest share ever. The total value of online direct buying from overseas increased 9.4 percent on-year to 1.65 trillion won (US$1.19 billion) in the January-March period. It marked the largest figure for any first-quarter tally. Of the total, direct buying from China accounted for 57% of the total direct purchases by South Korean consumers in the first quarter, which was the largest proportion ever. The U.S. took up 22.8% and the EU had 8.6%, the data showed.

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