The Rise of Homegrown Brands

Securities Market Weekly Issue No.41， 2016

Finally， years after Geely acquired Volvo， the company is able to reap the rewards， manifested in surging sales of its various products and soaring share prices， which have remained stable for the past six years.

Zhejiang Geely Holding Group Co.， Ltd. saw its automobile sector increase in sales and net profits， both surpassing market expectations for the first half of 2016. The company immediately responded by raising its annual vehicle sales target by 10 percent， from 600，000 to 660，000 units which， compared to the previous year， was an increase of 29 percent.

Geely is one of many homegrown Chinese auto makers that have gained a firm foothold in the domestic market for SUVs and MPVs. Those companies market share in domestic passenger vehicle manufacturing has also substantially risen.

Chinese auto brands have not only closed the gap between them and joint ventures， in terms of design， quality and configurations， but have also sought to raise quality standards by developing high-end products and attracting global talent. Foton Motor， for example， invested in the defunct German car manufacturer Borgward， allowing them to launch a comeback （their first new model in over 40 years） to compete with other big names like Mercedes-Benz and BMW. Great Wall Motors recently launched new brand Wey， a high-end SUV， and appointed Jens Steingraeber as CEO， the man behind the development of the Audi Q3.

Involving a wide extent of industrial chain， the auto industry has a far-reaching impact on both upmarket and downmarket industries. Developed countries have a significant advantage when it comes to automobile manufacturing， so it will take some time for China to catch up with the advanced levels of technology seen in other parts of the world.

Domestic brands need to develop high-end products to compete with joint venture brands， but the biggest obstacle is inferior technology and lack of brand development. Domestic automobile manufacturers have managed to snare a growing portion of the market and have gained an increasingly solid reputation as they steadily improve their technologies.

To tap into the medium to high-end market， homegrown brands must develop core competitiveness backed by technology. They can make themselves into trustworthy brands only by accumulating years of development experience and achieving significant technological breakthroughs. They also need to make every part of their models homegrown， from the engine and gearbox， right down to the chassis.

War Breaks Out in Cloud Services

Caijing Magazine Issue No. 32， 2016

A decade ago all companies had identical set-ups for their IT frameworks – supported by servers and an IT system – no matter what their location was. Then， this pattern was completely turned on its head by Amazon.

At the end of 2006， after Amazon solved the problem of managing its giant data center and complicated software system， it started to consider commercializing its experience – and that was how Amazon Web Services （AWS） was born. AWS quickly identified the enormous potential of the global cloud services market. Gartner estimated that the value of the worldwide public cloud services market would hit a colossal US $204 billion in 2016， with an annual growth rate of nearly 20 percent.

Chinas Alibaba Group soon established Aliyun in 2009. It copied the business model that AWS had established over the past five years and secured a 31 percent share in Chinas public cloud service market. In 2015， Aliyun achieved explosive growth and it planned to go into direct competition with AWS in 2016.

The market has also attracted the attention of other companies working in IT， Internet services and telecommunications and all hoping to emerge as leaders in the field. Cloud services will become a huge market in the next few years.

Investment-hungry Insurers

China Economic Weekly Issue No. 46， 2016

Insurance companies in China were previously known for sticking to the investment principles of long-term investment and stable returns， so market participants and supervision institutions believed that insurance funds played an important role in stabilizing the stock market in China. However， since 2015， Chinese insurers have swarmed to A-share markets， investing in listed companies and in the secondary market.

The third quarter report of 2016 for companies listed on the Shanghai and Shenzhen Stock Exchanges showed that insurers played an active role in both stock markets. As sales of universal insurance soared and insurers faced a shortage of high-yielding assets， they expected to increase their rate of return by expanding their equity portfolio.

Industrial insiders in the stock market believe that under the background of “asset famine” the inflow of insurance funds into the A-Share Market is conducive to stabilizing and balancing the capital market. However， some insurance funds pursue short-term profits and large， sudden influxes of capital with short-term investment horizons will have a negative impact on the stability of the A-share market. Is it possible to prevent insurers making quick profits？ It is a question worth thinking about.

Discover Yourself in Poetry

South Reviews Issue No. 25， 2016

In 2016， Bob Dylan won the Nobel Prize for Literature， which signified just how closely poetry or literature is related to ordinary people. A huge change in peoples perception of literature often results in an artistic revolution.

For example， in 1916， Hu Shi， a dedicated advocator of literary modernization， wrote Butterflies – the first Chinese poem written in the vernacular instead of classical Chinese. When people first heard it， they laughed as they thought his language was simple and childish. They had no idea that the poem heralded the coming of a Chinese literary revolution， later dubbed the New Culture Movement.

Bob Dylans award should remind people that poetry was originally a channel for ordinary people to express their feelings and praise the beauty of the landscape and love. It is not limited to artists or poets with special training.

Poetry now has even more ways to connect with people following the emergence of social media. The distance between poetry and people has been shortened.

What does poetry mean to us？ Poetry can help us to discover our true self and explore our inner lives. Poetry can guide us towards the meaning of life.

Non-performing Assets： Investment Opportunities？

Caixin Weekly

Issue No.47， 2016

On November 22， Agricultural Bank of China （ABC） announced that it plans to establish a wholly-owned subsidiary in Beijing for its asset management. ABC is the first commercial bank to set up such an asset management company. Other major state-owned banks， including Industrial and Commercial Bank of China， Bank of China， China Construction Bank， and Bank of Communications， all have plans to set up subsidiaries dealing with debt-for-equity swaps， a move aimed at limiting companiesfinancial leverage.

The four major asset management companies （AMCs） – China Huarong Asset Management Corp.， China Great Wall Asset Management Corp.， China Orient Asset Management Corp.， and China Cinda Asset Management Corp.， were created to deal with bad assets. However， today they are more focused on dealing with non-performing loans from non-financial businesses. Then private capital saw the potential and entered the market. Over the past two years， banks have sold less than RMB one trillion in non-performing loans.

This emerging opportunity has also attracted some foreign institutions back to the market， but they no longer enjoy particular advantages.