App Makers Struggle in China

AP Photo

Mobile-application developer 9thQ, like tens of thousands of small- to medium-sized developers in China, is faced with a dilemma: While it is more adapted to the Chinese market, the company has to release its products on overseas platforms like Apple’s App Store or Google’s Android Market.

Though China is full of developers, distribution of applications like those found in the App Store or on social-networking sites is fragmented. Chinese consumers often use smaller, independent stores or electronics retailers to obtain mobile apps, and the prevalence of piracy in the country also limits sales, driving developers to look abroad for profits.

Meanwhile, platforms in China offer lower revenue share than platforms overseas — about 50% to 60% or even less, compared to 70% — and lack of marketing from third-party platforms makes the market less profitable as well. And app stores run by telecom operators generally have qualification and technology requirements, which put up barriers for smaller developers.

Baidu’s new platform, unveiled last week, appears to be an attempt to solve that problem. The Chinese search engine says it will charge only 30% commission on paid apps.

But while the platform promises access to Baidu’s massive user base, and some 400 apps and games are on it, some Chinese developers like 9thQ are taking a wait-and-see approach.

“We haven’t yet considered releasing our products on the Baidu platform,” said Shi Weixing, founder and CEO of 9thQ, in Beijing. While several other Internet companies have also launched so-called open platforms, he added, the terms aren’t always fair.

“I haven’t paid much attention to the news of Baidu’s platform, but we won’t consider launching products on Baidu at this moment,” said Wu Kezheng, founder of Beijing-based developer Zhang Shang Ji Hao Information Technology Co., which distributes apps through China Mobile, as well as Tencent’s platform, even though it pays a whopping 70% commission fee.

Despite Tencent’s 70% commission, he said, “we make the most from Tencent. The high user stickiness on the site help keep the customers.”

China Mobile’s Mobile Market is currently the most successful one within China, but still, many developers complain that they don’t actually make many releases on that platform.

As for the smaller independent app stores, Baidu’s new platform may cannibalize traffic to other distributors. “For those websites/developers that are able to pass the acceptance check of Baidu, the risk is that their users might stop on Baidu’s search page given that they can access the game/software directly from there,” said analyst Li Zhi, analyst of Beijing-based market research firm Analysys International. “For those who failed to pass the approval, they’ll find it even harder to generate network traffic because potential users are attracted away by those showed high up in Baidu’s search-and-use platform.”

http://blogs.wsj.com/chinarealtime/2010/09/06/app-makers-struggle-in-china/

China, Here Comes Fight Club

UFC’s Frank Edgar, right, punches BJ Penn. Getty Image

The country that brought the world martial arts is about to get a taste of American-style extreme fighting, with the introduction of the Ultimate Fighting Championship organization in Asia.

The fight organizer and promoter for the form of sports-combat called mixed martial arts announced that it would be setting up a foothold in Asia. The company didn’t specify where it would set up shop, but its new chief in Asia is Mark Fischer, a former exec with the National Basketball Association Inc., who lives in Beijing.

As part of its sop to Chinese audiences, the UFC is also touting the addition of an Inner Mongolian lightweight bruiser named Zhang Tiequan to a televised bout through its sister organization, World Extreme Cagefighting. The group said it will also leverage its existing ties with the China National Wushu Federation to drum up support and talent.

Mixed martial artists may combine elements from many styles of hand-to-hand combat or wrestling in their repertoire, or fights can pit combatants who specialize in one type of combat against someone who trained in a different fighting form.

To manage UFC’s Asian business, the fight group owned by Las Vegas-based Zuffa LLC is turning to Fischer with the hope that some of his magic touch in marketing the NBA can rub off on their fledgling Asian franchise.

Basketball has been one of the few American sports imports to become a winner in China.

Under Fischer’s direction from 2003 to 2008, the NBA managed to ink more than 20 marketing partnerships with leading brands in the country. Tsingtao, for instance, is now the official beer of the NBA in China. The NBA has actually set up a separate corporate entity for its China operations, which was valued at $2.3 billion when it was set up in 2008.

http://blogs.wsj.com/chinarealtime/2010/08/31/china-here-comes-fight-club/

Shining Light On China’s ‘Gray Income’

If Chinese people don’t trust the figures generated by their National Bureau of Statistics, they may have only themselves to blame.

It’s become increasingly widely accepted among researchers that better-off Chinese people not only hide their money from the taxman, they also don’t honestly answer the survey questions that government agencies use to figure out household incomes. The clear implication is that official income figures are too low.

“Due to people’s increasing sense of privacy, there is some omission and understatement in the current income survey, and relatively few members of high-income groups are in the survey sample,” writes one researcher.

This statement comes not from a bomb-throwing critic, but an official within the statistics bureau: Wang Youjuan, who this week published a lengthy essay (in Chinese) on the bureau’s website. The essay carries a disclaimer that it represents only the opinions of its author, and not the National Bureau of Statistics.

Wang’s essay was a response to a recent, widely circulated paper by an outside scholar, Wang Xiaolu of the National Economic Research Institute in Beijing, entitled “Gray Income and the Household Income Gap” (in Chinese).

The NERI paper presents the results of an unusual survey that tries to overcome the biases in the official income figures produced by the NBS. “We contend that the present statistics on residential incomes have major distortions, especially in the part concerning the disposable income of high-income residents in urban areas,” the paper says.

http://blogs.wsj.com/chinarealtime/2010/08/27/shining-light-on-chinas-gray-income/

Buffet’s leson in charity for China – Can Buffet and Gates persuade China’s rich to give back?

By Huang Daohen

While China’s billionaires are busy investing their money to pave the way for their companies to become multinationals, American billionaires Warren Buffett and Bill Gates have announced that they will come to China next month to ask the country’s rich to donate at least half of their wealth, according to AFP.

Without a backdrop of philanthropist heritage in China, many doubt that Buffett and Gates’ trip for a more charitable China will have a positive effect.

Warren Buffet (left) and Bill Gates are due in China to press the wealthy to donate more. Daniel Glushoter/CFP Photo

The move comes after the release of a list of 40 rich donors who pledged to give more than half of their fortune to charity. In June, Buffett and Gates launched a project called “The Giving Pledge,” calling the wealthiest individuals and families in the US to give away the majority of their wealth.

Wealthy individuals – including CNN founder Ted Turner and New York City mayor Michael Bloomberg – have signed the pledge, AFP said.
In a press briefing earlier this month, Buffett said he will meet with a large group of wealthy Chinese people. “That’s just to explain it to people in those countries and maybe give a little bit of our experience. And if they wish to take what we think is a good idea and run with it, we’ll be cheering,” AFP quoted Buffet as saying.

According to Forbes magazine, China has the second highest number of billionaires in the world, after the US. This year’s list included 117 Chinese, with 64 from mainland, 25 from Hong Kong and 18 from Taiwan.

However, due to cultural differences between China and the US, many doubt the two Americans will persuade anyone.

China Reconsiders Death Penalty for Animal Smuggling, Tax Fraud

China took a small step away from capital punishment Monday when it said it would consider abolishing executions for 13 nonviolent crimes and people over 75 years old. Currently, 68 crimes carry the death penalty.

The 13 crimes under consideration include economic crimes such as tax-rebate fraud, counterfeiting bonds and forging letters of credit.

The amendment would also eliminate capital punishment for those caught smuggling endangered species, stealing objects from ancient tombs or illegally excavating human and animal fossils.

This would be the first time China has reduced the number of capital crimes since it enacted the criminal law in 1979. The move may be more symbolic than substantive, however: China Daily quoted a Beijing lawyer who said executions are rarely used for these crimes anyway.

China doesn’t make its execution numbers public. But Amnesty International says the number for 2009 was probably in the thousands, more than the rest of the world combined, and ahead of runners up Iran (more than 388), Iraq (more than 120), Saudi Arabia (more than 69) and the U.S. (52).

Symbolic or not, China has recently made an effort to tighten up on executions.

The Supreme People’s Court said that in 2007, the first year in which it took back review of death penalties from lower-level courts, the number of death sentences was down 30% from the year before.

The court also announced in 2008 that it would replace shooting with lethal injections, considered more humane, in more cases.

At the same time, China has come under fire for executing a British man last December convicted of drug smuggling, the first time it has executed a foreign national in more than 50 years.

– Emma Ashburn

(http://blogs.wsj.com/chinarealtime/2010/08/25/china-reconsiders-death-penalty-for-animal-smuggling-tax-fraud/)

Chinese Traffic Jam Stretches 60 Miles, Ten Days

Traffic jams are common in China, but one that began earlier this month has been going on for nine days .

Did you have a bad commute today? How long did you sit in traffic — an hour, maybe two? Thousands of motorists in China have been stuck for ten days in a jam that goes on for more than 60 miles.

Road construction started the jam August 14 in China’s Heibei Province on a major highway headed toward Beijing. The snarl got worse as some vehicles collided and others broke down. Officials say the backup could continue for a month because the road project is expected to last about that long.

The stretch of highway, which is a vital route for produce, coal and other supplies shipped to Beijing. It has become increasingly prone to big jams as the capital (home to more than 20 million people) consumes more and more goods. Growing numbers of heavy trucks hauling the freight cause damage to the roads which in turn need more traffic-slowing maintenance.

China has pushed hard in recent years to expand its road network. In many cases, though, traffic has grown a lot faster that the roads’ ability to carry it. Heavy traffic is common around many Chinese cities but the ten-day jam is outside the norm. The extreme congestion reportedly has developed its own economy as merchants sell food, water and other essentials to stranded drivers at inflated prices.

http://blogs.wsj.com/drivers-seat/2010/08/24/chinese-traffic-jam-stretches-60-miles-ten-days/

A tale of two economic giants – What does it mean now that China has overtaken Japan?

AChina rises, Japan stalls. The biggest news in global media this week was China officially overtaking Japan as the world’s second largest economy. A New York Times writer gushed, “The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real.”

But what’s the real story behind those numbers?

A Chinese worker works on a Lenovo LED production in Beijing. CFP Photo

Bloomberg reported Tuesday that China’s second quarter gross domestic product (GDP) surpassed Japan’s. The report cited Japanese cabinet officials saying that Japan’s nominal GDP for the second quarter totaled $1.288 trillion, less than China’s $1.337 trillion.

Japan’s annual GDP is $5.1 trillion, while China’s is just under $5 trillion.

Bloomberg said comparing the two countries is tricky. While China’s output was larger in the fourth quarter of 2009, Japan’s GDP rebounded to exceed China’s in the first quarter of this year, according to Bloomberg data.

Different calculations paint different pictures of the situation. Using purchasing power parity calculations to adjust for exchange rate differences, China overtook Japan in 2001, according to the IMF.

China overtook the US last year as the biggest automobile market and Germany as the largest exporter. The nation is the world’s No. 1 buyer of iron ore and copper and the second biggest importer of crude oil.

Car Ownership or Ease of Driving: Which is the Real Challenge?

Car ownership is on the rise in China, where events like the Beijing Auto Show entice consumers to purchase personal vehicles. Photo by erinohara73.

The rapid motorization of countries like China and India is a scary prospect. China and India alone acheiving the same levels of vehicle miles traveled (VMT) per capita as the United States would probably push us past irrevocable climactic tipping points.  Transportation planners in these countries, meanwhile, already have a nightmare of a task trying to unclog streets, even though driving trips represent a considerably smaller fraction of travel than in the U.S.

Unfortunately, in India at least, politicians overwhelmingly aspire for their country to become a nation of car owners.  The promotion of a domestic auto industry, an interest in mega-construction projects, and a belief that private auto ownership will best provide mobility for its citizenry are all reasons that the government, at all levels, has developed a keen industry in motorization.  Perhaps more importantly, the public – to a large degree – also aspires to own cars.  Trying to argue that Indians should not buy cars is simply not a tenable position right now.

Given this political and social climate, it is encouraging to note that in many cities in the world, relatively high rates of auto ownership do not necessarily mean the demise of public transit.  The plot below, constructed from the Millennium Cities Database, shows public transit mode share vs. private car ownership for 100 prominent cities around the world.  Notably, there are a number of cities that have relatively high rates of car ownership (greater than 200 passenger cars per 1,000 citizens) but where public transit mode shares remain substantial. (Click image below to enlarge.)

This is precisely the sort of evidence that planners and engineers in China and India need to see.  It is possible for public transportation to thrive, even as there are more autos on the road.  The crucial distinctions to be made lie with the cost and ease of car ownership and the quality and availability of substitute options.  In Europe and parts of Asia, even though auto ownership may be widespread, operating costs (notably fuel prices, parking, and in some cities congestion pricing) are higher, parking availability is not as guaranteed, and driving alternatives are more prevalent and competitive with driving.  Households that own cars do not perceive it as the only way of getting around but rather as one option in a menu of choices from which the most appropriate mode for a given trip may be chosen.

This is hopeful for planners and engineers tasked with solving congestion problems (and for citizens of the world concerned with the climate.)  While local planners may find it impossible to stop the rush to motorization, they do have a considerable measure of control over the ease with which cars may be used.  Allocation of road and parking space and provision of alternatives that can compete with or beat private driving in travel time (think: bus rapid transit) are levers that engineers can pull that greatly change the relative ease of driving.

Of course, the struggle does somewhat lie with car ownership itself.  Even if households do not use their car much, they must still park it somewhere.  Furthermore, car owners may not properly assess the personal costs incurred if they have already bought the car (the investment is sunk.)  Nevertheless, there is great cause for hope.  Engineers in China and India and elsewhere have significant power to promote sustainable transportation, even in the face of seemingly inevitable motorization.

http://thecityfix.com/

Pentagon warning over China military build-up

A soldier passes a Chinese-made Hongqi-2 missile at a museum in Beijing.

(AFP) – China is extending its military advantage over Taiwan and increasingly looking beyond, building up a force with the power to strike in Asia as far afield as the US territory of Guam, the Pentagon said.

In an annual report to Congress, the US Defense Department said that China was ramping up investment in an array of areas including nuclear weapons, long-range missiles, submarines, aircraft carriers and cyber warfare.

“The balance of cross-Strait military forces continues to shift in the mainland’s favor,” the report said.

The Pentagon said China’s military build-up on the Taiwan Strait has “continued unabated” despite improving political and commercial relations since the island elected Beijing-friendly President Ma Ying-jeou in 2008.

The report — which US officials delayed for five months amid strains with China — covered 2009, before the United States approved a 6.4 billion-dollar arms package for the island in January.

Taiwan has said it is “closely monitoring” China’s mounting defences following news of the US report.

Read more

Factory ‘Closure’ Order Less Than It Might Seem

Reuters Image

China’s order this past weekend to shutter inefficient and polluting industrial capacity was clearly intended as yet another sign of the government’s resolve to tackle pollution and improve energy efficiency. But observers would do well to keep their excitement in check over how big a difference it will make.

The Ministry of Industry and Information Technology on Sunday published an order for 2,087 companies to shutter “backward production capacity”—that portion of their factories that has been deemed inefficient. The MIIT released a list of the affected factories in 18 different categories, half of them involving metals production: iron (175), steel (28), coke (192), iron alloys (143), calcium carbide (39), aluminum (17), copper smelting (6), lead smelting (17), zinc smelting (53), cement (762), glass (19), paper (279), alcohol (38), monosodium glutamate (7), citric acid (2), leather (84), printing and dyeing (201), synthetic fiber (25).

Contrary to some reports, the government didn’t order 2,087 entire factories to close. In fact, the MIIT’s list (Word document, in Chinese) is generally quite specific about which equipment in which factory should be eliminated: two blast furnaces at Haicheng City Xiyang Steel Co. in Liaoning province, one cement mill at the Hongdong County Huoyue Construction Materials Co. in Shanxi, 91 rotary drums at the Shijiazhuang City Tongtai Leather Industry Co. in Hebei etc. Only about a dozen factories are listed for full closure, including a pair of paper plants in Hebei, five printing-and-dyeing operations in Guangdong, and a trio of liquor factories in Sichuan.

http://blogs.wsj.com/chinarealtime/2010/08/10/factory-closure-order-less-than-it-might-seem/