🍟 McDonald’s Adds 150k Jobs in China, CNY overtakes USD, & Audi - Shanghai Auto EV Deal 💲

2024-05-26 | subscribe | homepage | read online

Welcome back to China Insights Weekly for our latest edition. We've sifted through hundreds of sources to bring you the latest business and tech insights on China in under 5 minutes.

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 🚀 Headlines

McDonald's increasing China expansion, eyes 150,000 new China staff in 2024 (link)

McDonald's plans to hire 150,000 new employees this year, roughly the same as last year, as the American fast-food giant remains on track to reach 10,000 outlets in China by 2028. McDonald's, which has a strong footprint with nearly 500 locations in Shanghai, plans to create over 10,000 new positions in the city this year. Vocational training programs with over 550 domestic colleges and universities are expected to cover 4,000 students this year. McDonald's completed the acquisition of an additional 28 percent of its China operations at the end of January, taking its total ownership to 48 percent.

EV maker Tesla breaks ground on Megapack energy storage battery factory in Shanghai (link)

Electric vehicle maker Tesla has begun construction of a factory in Shanghai to make its Megapack energy storage batteries. The USD 200 million plant in Shanghai’s Lingang pilot free trade zone will be the first Tesla battery plant outside the United States. It said the factory was slated to start mass production in early 2025, with an initial capacity of 10,000 Megapack units a year. China is by far the world leader in installing wind and solar capacity, making it a major market for energy storage.

SAIC, and Audi formally sign tie-up deal, 1st jointly developed EV due to hit the market in 2025 (link)

Chinese carmaker SAIC Motor Corp and Audi, the premium car brand of Germany's Volkswagen, have officially signed a cooperation agreement, following a strategic memorandum of understanding signed last July. The companies will jointly develop several high-end smart electric vehicles (EVs) for their joint venture SAIC Audi, as well as jointly develop the Advanced Digitized Platform. The two companies are combining resources to jointly develop a range of EV models, with the first product expected to go on sale in 2025.

China’s Pony.ai Gets China’s First Permits to Test Inter-City Robotrucks (link)

The latest approval allows Pony.ai to conduct truck fleet unmanned driving tests along the Beijing-Tianjin-Tanggu expressway and other road sections which will be a big step in supporting large cargo transport services powered by autonomous driving. Pony.ai's test fleets use a '1+N’ format, with one lead unmanned truck followed by other trucks with Level-4 autonomous driving capabilities. This helps to significantly lower operating costs while enhancing transport efficiency. Regulations allow fleets with one lead vehicle followed by up to five vehicles. Last month, Pony.ai, Sinotrans, and Sinotrans Logistics Development teamed up to launch commercial freight transport services using L4 autonomous driving trucks on round trips between Beijing and Tianjin. The first batch of goods transported was fast-moving consumer goods.

German DHL Opens First EV Excellence Center in China to Help Sector’s Businesses Grow (link)

Courier giant Deutsche Post DHL Group has set up a new Electric Vehicle Center of Excellence in Shanghai to help EV makers and related sectors expand locally and globally. The new center is DHL's first of its kind in China after previously opening such facilities in key regions, including Indonesia, Mexico, the United Arab Emirates, and the United Kingdom. "The Shanghai EV Center of Excellence is supported by DHL Global Forwarding's extensive network of 35 branches strategically positioned to optimize major gateways across China," the firm noted. The company has a network of over 50 warehouses and cross-dock facilities with a strong presence in major commercial cities.

China is a ‘critical’ global supplier, full decoupling may be impossible, Allianz survey shows (link)

Despite talk of decoupling and derisking from China, European companies remain bullish about prospects in the country — with nearly 40% of companies in Germany and Spain and more than 30% of firms in France expecting their supply chain footprint in the country to increase. Only 27% of companies surveyed in the U.S. were planning to expand in China. “European companies are clearly less worried than U.S. firms,” the report, led by Allianz Trade’s Head of Economic Research, Ana Boata said. The Allianz Trade survey polled more than 3,000 companies in China, France, Germany, Italy, Poland, Spain, the UK, and the U.S. were surveyed about their outlook for global trade in 2024. More than one-third of respondents plan to increase their China footprint, while only 11% said they would decrease it. Companies in China are growing more optimistic about exporting to other countries. Over one in ten exporters in China projected a greater than 10% increase in exports.

China is gradually moving away from the US dollar, RMB accounts for 52.9% of China's trade, in 2010 the figure was less than 1% (link)

Since 2010, the majority of China’s cross-border payments, like those of many countries, have been settled in U.S. dollars (USD). In the first few months of 2010, settlements in local currency accounted for less than 1% of China’s cross-border payments, compared to approximately 83.0% in USD. China has since closed that gap. In March 2023, the share of the RMB in China’s settlements surpassed the USD for the first time. As of March 2024, over half (52.9%) of Chinese payments were settled in RMB while 42.8% were settled in USD. This is double the share from five years previous. According to Goldman Sachs, foreigners’ increased willingness to trade assets denominated in RMB significantly contributed to de-dollarization in favor of China’s currency. Also, early last year, Brazil and Argentina announced that they would begin allowing trade settlements in RMB.

Blacklisted China chipmaker SMIC becomes the world's second-largest pure-play foundry by revenue — outsells American GlobalFoundries and others (link)

Semiconductor Manufacturing International Corp. (SMIC), China's largest contract chipmaker based in Shanghai, this week announced its financial results for the first quarter of 2023. Despite crushing US sanctions, SMIC is now the world's second-largest pure-play foundry after TSMC. The company managed to outsell American GlobalFoundries and Taiwan’s UMC, two of the other pure-play foundries, which it used to trail for years. However, it still lags behind IDMs like Intel and Samsung. With USD 1.75 billion revenue for the first quarter, SMIC is ahead of the two other leading pure-play foundries, UMC (which earned USD 1.71 billion, up 0.8% YoY) and GlobalFoundries (which earned USD 1.549 billion, down 16% YoY). As a result, SMIC is the No. 2 pure-play foundry in the world for now.

🎁 Bonus Stories

Alibaba injects another USD 230 million into Lazada to keep pace with Shopee (link)

Southeast Asian e-commerce platform Lazada has received USD 230 million in capital from its parent company Alibaba. This marks Alibaba’s first capital injection into Lazada this year, having invested over USD 1.8 billion in the subsidiary last year. Alibaba has invested approximately USD 7.7 billion in Lazada since 2016, when it acquired a controlling stake in the company.

Scratch card sales in China doubled in a year, young people find solace in the instant lottery as cards sell out (link)

Since last year, scratch cards have been going from strength to strength. You scratch the card at the shop and can cash your reward on the spot if you win. It has become a social activity or hobby for many. Coffee shops in China have been incorporating scratch cards by acquiring relevant licenses since last year. The annual sales of instant lottery nearly doubled in 2022 and 2023 from the former 60 billion RMB (8.31 billion USD) to almost 120 billion RMB (16.61 billion USD). In the first 3 months of 2024, sales had already reached 38.9 billion RMB (5.38 billion USD), up from 17.4 billion (2.41 billion USD) in Q1 2023, more than double the year before. However, in China, the supply of scratch cards is strictly regulated and monitored from budgeting to printing. Only 3 factories in Beijing and Shijiazhuang, Hebei are authorized to print the scratch cards. Furthermore, the budget for scratch cards has been growing around 20% annually despite sales almost doubling in recent years. With a long turnaround time and a low target, it is clear the supply cannot keep up with the high demand.

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