Mark Schlarbaum Irvine California

China now has a $300 billion company

China’s Tencent has joined the exclusive $300 billion club.

Tencent shares closed at a record high of 248.40 Hong Kong dollars (just under $32) on Tuesday, valuing the company at more than $302 billion. (Hong Kong markets are closed Wednesday for a holiday.)

Tencent (TCEHY) joins Apple (AAPL, Tech30) and Google-parent Alphabet (GOOGL, Tech30) in the ranks of the world’s biggest firms by market capitalization.

It’s the only firm outside the U.S. among the world’s top 10 most valuable companies, and is now nipping at the heels of JPMorgan (JPM), which is currently worth $309 billion.

Tencent isn’t the first Chinese company to achieve the eye-popping number. Alibaba’s (BABA, Tech30) value briefly went above $300 billion in November 2014, soon after its New York IPO, according to Chinese financial news publication Caixin. Alibaba is currently worth about $295 billion.

Led by its media shy CEO, “Pony” Ma Huateng, Tencent is huge in China, where its messaging platform WeChat is used for everything from texting to booking karaoke sessions.

But the company remains relatively unknown in the U.S. For now.

encent announced Tuesday that it is setting up an artificial intelligence research lab in Seattle, on Amazon (AMZN, Tech30) and Microsoft’s (MSFT, Tech30) home turf. It will be headed by former Microsoft scientist Yu Dong.

In March, the tech company ponied up $1.8 billion for a 5% stake in Tesla (TSLA).

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Mark Schlarbaum China Meitu App Goes Public

Why China is beating the U.S. at innovation

For decades, America lost factories and jobs to China but retained a coveted title: the world’s leader in inventing and commercializing new products.

Now, even that status has been eroded, and it’s hurting the economy.

While the United States is still at the top in total investment in research and development — spending $500 billion in 2015 — a new Boston Consulting Group (BCG) study released Monday has made a startling finding: A couple of years ago, China quietly surpassed the U.S. in spending on the later stage of R&D that turns discoveries into commercial products. And at its current rate of spending, China will invest up to twice as much as the U.S., or $658 billion, by 2018 on this critical late-stage research.

In other words, the U.S. Is doing the hard work of inventing new technologies, and China, among other countries, is reaping the benefits by taking those ideas and turning them into commercial products,the report says.

“Other countries are free-riding on the U.S. investment,” says Justin Rose, who co-authored the BCG study.

The slippage is a significant blow for the U.S. economy, costing the country tens of billions of dollars a year in manufacturing output and hundreds of thousands of factory jobs over the past decade or so, BCG says. Companies that lead in commercializing ideas also typically build factories near their research centers so scientists can test products before making them.

The burgeoning commercial drone market is a prime example of the shift. The U.S. military developed drone technology throughout the 20th Century for reconnaissance and other purposes, adding microchips for better wireless control and longer-lasting batteries. But China’s Da-Jiang Innovations has refined the unmanned vehicles to better avoid obstacles and has become the world’s largest builder of commercial drones. It sells them to U.S. real estate and construction firms for applications such as aerial photography and mapping. DJI has three factories in Shenzhen.

The U.S. has also given birth to a Smithsonian-worthy collection of breakthrough technologies — including flat-panel displays, digital mobile handsets, notebook computers and solar panels — only to fumble away their development to other countries, particularly China and Japan.

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Mark Schlarbaum China Yum

China Yum Brands beat Street estimates

Yum China reports earnings beat, shares soar on improved KFC, Pizza Hut sales

Investors ate up shares of Yum China.

Share prices spiked 9.16 percent higher on Thursday, a day after the Chinese spinoff from U.S.-based Yum Brands reported quarterly earnings that beat Street estimates.

Yum China said it had first-quarter adjusted earnings of 44 cents per share, topping a Thomson Reuters consensus estimate of 38 cents.

The operator of fried chicken outlet KFC, Pizza Hut and Taco Bell in China saw same-store sales — a metric closely watched by Wall Street for restaurant stocks — rise 1 percent in the first quarter, compared with flat same-store sales the period one year ago. This number was boosted by growth of 1 percent at KFC-branded stores, and by 2 percent growth at Pizza Hut locations, the company said.

“We are especially gratified with the progress made on two key drivers of growth – Digital and Delivery,” Chief Executive Micky Pant said in a statement. “We believe we have unprecedented insights into consumer behavior and have been engaging with them across the digital eco-system: from pre-order to payment.”

The Chinese restaurant chain, which has more than 7,600 properties in the country, said it remains on track to open 550 to 600 restaurants in 2017.

Yum China said its total revenue for the quarter fell 1.5 percent to $1.28 billion, but this beat the average analyst estimate of $1.27 billion, according to Reuters.

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Mark Schlarbaum, Irvine, California

China Steel

Here’s how much more steel China will need for its new megacity

China’s new project to build a megacity on the outskirts of Beijing will drive steel demand, with the country likely gobbling up an extra 12 to 14 million metric tons of the commodity a year if plans are implemented in 10 years, Citi Research analysts said in a note released on Tuesday.

While the amount will just be a minuscule proportion of the nearly 1.63 billion tons in global crude steel production last year according to the World Steel Association, it will nonetheless provide “greater certainty on continuation of Chinese steel demand at high levels,” wrote Citi analysts.

The global steel industry has been under duress in recent years, with largest producer and consumer China under scrutiny for alleged dumping of the commodity on international markets due to domestic over-capacity.

The newest special economic zone of Xiongan in Hebei was announced on Saturday in a bid to boost domestic growth in a province that has been hit by massive job layoffs from heavy industries as China moves to maneuver economic growth away from manufacturing toward services.

Xiongan, south of Beijing, will initially cover 100 sq km (38.6 sq miles) and will be expanded in the long run to 2,000 sq km.

“Assuming the authorities wish to replicate Shenzhen in 10 years (double the speed at which Shenzhen was built) at least in terms of physical infrastructure, that would provide 12-14 million tons of extra steel demand per year on a current domestic demand rate of about 700 million tons, i.e. about a 2 percent uplift,” wrote the analysts.

According to Citi’s calculations, around 120 to 140 million tons of steel are required to replicate Shenzhen.

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Mark Schlarbaum, Irvine, California

More than 100 Chinese cities now above 1 million people

More than 100 Chinese cities now above 1 million people

Government policy and a shift westward have fed the staggering scale of China’s urban ambitions – 119 cities as big as Liverpool, and likely double that by 2025

China now has more than 100 cities of over 1 million residents, a number that is likely to double in the next decade.

According to the Demographia research group, the world’s most populous country boasts 102 cities bigger than 1 million people, many of which are little known outside the country – or even within its borders.

Quanzhou, for example, on the south-east coast of China, was one of the most cosmopolitan cities in the world a millennium ago, when it served as a hub for traders from across Asia and the Middle East. It is now home to more than 7 million people, nearly 800,000 more than Madrid.

But while Madrid is a cultural powerhouse and the centre of Spanish politics, Quanzhou, with its 1,000-year-old mosque and charming cafes, is rarely discussed even within Chinese media, whereas Beijing, Shanghai and Hong Kong continue to get most of the headlines.

Outside China, meanwhile, few will even have heard of Kaifeng, a former imperial capital that was once a terminus on the Silk Road, or Weihai, both cities bigger than Liverpool (estimated population of urban area 880,000).

The scale of China’s urban ambitions is staggering: it now has 119 cities bigger than Liverpool. By 2025, according to a report by the McKinsey Global Institute, that number is predicted to have more than doubled.

One reason is that the government is actively encouraging rural residents to urbanise. China aims to have 60% of its people living in cities by 2020, up from 56.1% currently, and the World Bank estimates a billion people – or 70% of the country’s population – will be living in cities by 2030.

Thousands of government officials have campaigned across the country to convince farmers to move to newly built urban districts, turning centuries-old villages into ghost towns.

Another factor? China’s centre is moving west. Guiyang, for example, topped a few lists of the best-performing Chinese city last year, as the once-sleepy capital of the country’s poorest province saw a boom in cloud computer servers and telecommunications, with e-commerce giant Alibaba a major investor.

Factories are moving inland from the coastal regions in droves. Xiangyang and Hengyang, both now home to more than 1 million people, are swelling as low-end manufacturing moves to cities with cheaper labour.

The local government in Zhengzhou, for its part, transformed a dusty patch of land in central China into an industrial park overnight; Foxconn, the world’s largest contract electronic manufacturer, now makes about half of all iPhones there and has also built a plant in Hengyang.

Meanwhile, as factories flee the expensive coasts, others have been forced to the traditional manufacturing hub of Guangdong province, especially in industries such as textiles and low-end electronics.

This shift to cities is unprecedented in modern Chinese history. For decades, the ruling party wanted to keep rural residents out of cities. They used a household registry system – known as a hukou – that meant people could only receive healthcare, education and other social services in the location where they were registered. Now, however, officials eager to entice farmers into cities are offering them an urban registration with the promise of better benefits.

The result is that urban centres of all sizes are forecast to grow, and by 2025 China will have 221 cities with a population of at least 1 million, according to the consultancy firm McKinsey. That will mean an explosion in construction of buildings, roads and transport systems.

Many people worry that many of these newly minted metropolises will lose their character – the Chinese government has set a target for 30% of buildings to be prefabricated in the next 10 years.

Newly built apartment blocks already have a cookie-cutter feeling, with identical 30-storey buildings visible from the window of nearly every high-speed train ride. The uniform construction can create an eerie scene, one city indistinguishable from the next.

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China Beer Brands - Mark Schlarbaum

China’s Biggest Beer Brands

For beer companies, craft beer is where the profit is. All those imperial stouts, pale ales and spring saisons are “premium” beers that command premium prices. Craft sales have been steadily growing, too, even as overall beer consumption declines in many markets. These factors help explain why AB InBev (bud, +1.51%), the gigantic beer conglomerate that makes Budweiser, Corona and Stella Artois, is flexing its marketing muscles in China today in an effort to dominate that country’s growing beer scene, as Fortune depicts in a new feature magazine this week.

But no matter how much the beer snobs may dislike them, the vast majority of the beer sold and consumed worldwide has more in common with Budweiser than Blind Pig IPA: Most of it is affordable, mass-produced, and supermarket-friendly. That’s just as true in China, where most of the best-selling brands wouldn’t feel out of place in a 24-ounce cup at a baseball game. Here’s Fortune’s somewhat opinionated guide to China’s biggest beer players.

Snow
The world’s best selling beer is a forgettable pale lager that doesn’t taste like much. But in China it’s cheap and ubiquitous, and it’s tough to beat that name. China Resources, the company that brews Snow, commands almost 25% of the country’s beer market.

Tsingtao
Pronounced Ching-dow, it is the only Chinese beer to make waves with drinkers overseas. The brewery was founded by Germans in the early 1900s; the Chinese government now owns it.

Budweiser
Bud is a blue-collar staple in the states, but it’s sold at premium prices in posh packaging in China, where it’s a luxury. Its Chinese name, bai wei, translates roughly as “hundreds of power.”

Related: China’s New Craft-Beer Bully

Yanjing
In Beijing, the local brewer’s 600ml (20.2 ounce) green bottles often litter restaurant tables and sidewalks. The pale lager has been losing market share over the last five years, but remains the country’s fourth most popular beer.

Carlsberg
This Danish lager is a Chinese favorite. The brewer entered the country as soon as the Communists opened it to the world in the late 1970s. The brand is particularly popular in China’s poorer western regions, where market share tops 60%.

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Mark Schlarbaum, Irvine, California

Meitu of China Built on the Selfie Could Be Worth $5.23 Billion

Chinese property market will remain ‘favorable’

Chinese property market will remain ‘favorable’ despite cooling measures: Leju CEO

The Chinese government’s efforts to arrest fears of a property market bubble by introducing a series of cooling measures could still keep long-term demand-supply dynamics favorable for businesses, the chief executive of a U.S.-listed Chinese online-to-offline real estate services company told CNBC.

Last year, several Chinese cities tightened rules for home purchases, including Beijing, which increased the down payment required on real estate buying. First-time buyers are now required to put a down payment equivalent to 35 percent of the property’s purchase price, up from 30 percent. For people buying their second property, they will have to put down at least half of the selling price.

Yinyu He, CEO at Leju, told CNBC’s “Squawk Box” on Tuesday, “We understand that the policies aim to cool down the overheated market … however, the local governments imposed very strict limitations on the marketing activities of developers, which imposed a negative impact to our business.”

Leju reported earnings on Monday, where fourth-quarter revenue fell 39 percent to $104.9 million on-year and quarterly net loss was $26.4 million compared with a net income of $12.8 million a year earlier.

In a separate earnings statement, He said the cooling measures, which took effect in the fourth quarter of fiscal 2016, led to reduced transaction volume and demand for marketing activities from developers across all major cities in China.

Data from the National Bureau of Statistics suggests the cooling measures are occurring as the staggering pace at which house prices were rising appears to have slowed.

Reuters reported that, in January, China’s home price growth slowed for the fourth straight month. Average new home prices in 70 major cities rose 0.2 percent on-month, slowing from December’s print of 0.3 percent on-month rise. But annually, home prices still rose.

Official data on Tuesday showed that, despite official measures to curb a housing market bubble, property sales by area in January and February surged 25.1 percent annually, according to Reuters.

He said the demand for new homes in tier 1 and tier 2 cities is still strong while lower tier cities were facing a case of excess supply.

“The new policies I think will, for the short term, adjust the market growth to a reasonable level, but in the long term, I think the supply and the demand dynamic is still very favorable,” the executive said.

To tap into the existing demand for property among Chinese consumers — real estate is a key sector for China’s broader economy — Leju is partnering up with China’s biggest internet players such as Sina, Tencent, Alibaba and Baidu among others.

“(The) low frequency in the online real estate market needs high-frequency internet platforms so that we can get potential buyers from them and provide our services,” said He.

Apart from forging key partnerships, He said Leju is also innovating to improve their product offerings to make it more efficient for potential home buyers and home furnishing customers.

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MARK SCHLARBAUM - Experienced in China - US business partnerships. Never giving up for those that never stop fighting! Help me join the fight against blood cancer and reach my fundraising goal! Visit My Fund Raising Page

Mark Schlarbaum, Irvine, California

China Banana Investment - Mark Schlarbaum

Banana bonanza sparks debate on shift to China

Philippine banana bonanza sparks debate on shift to China

Exports have soared but is Duterte getting enough in return for his strategic pivot?

The Philippines has boasted of an early win in its pivot from the US to China: a surge in sales of tropical fruits for which President Rodrigo Duterte’s home island is renowned.

Exports of Philippine bananas have soared since the outspoken leader’s landmark October trip to Beijing led China to lift import curbs imposed in the wake of maritime territory dispute.

Manila’s banana diplomacy underlines the fruit’s role as a bellwether of the country’s domestic politics and Asia’s security dynamics. It has also raised questions about whether Mr Duterte is getting enough in return for a strategic shift in which he has embraced China and poured scorn on the US, a longtime ally, since taking office last June.

“There is something symbolic in those banana exports,” said Professor Herman Kraft, a political scientist at the University of the Philippines. “They symbolised the break in bilateral relations between the Philippines and China. Now they seem to be the harbinger of the normalisation of relations.”

Mr Duterte gave thanks to China last week for having “lightened up the economic life of our country”, including by buying more fruit and vegetables. He gave a speech praising President Xi Jinping and the Chinese people “for loving us and giving us enough leeway to survive the rigours of economic life”, according to local media reports.

Manila has also touted a looming deal for China to buy a further $1bn of agricultural produce, ranging from delicate mangosteens to pungent durians. Many of these delights come from the fertile southern island of Mindanao, where Mr Duterte’s more than two decades as mayor of Davao City opened his path to the presidency.

Boo Chanco, a columnist at the Philippine Star newspaper, said the China import boom showed his country was “pretty much a ‘banana’ republic”. He noted that the fruit was a subject “close to the gut” for politicians, particularly because plantations were such an important part of the rural economy in “Duterte’s backyard” of Mindanao.

“President Duterte knows his priorities, it seems,” Mr Chanco said.

Philippine banana exports to China plunged more than two-thirds in volume between 2014 to 2016, as Manila pressed ahead with a case at an international tribunal that ended with a stinging ruling last July against Beijing’s claims in the South China Sea. China had months before destroyed allegedly pesticide-contaminated Philippine bananas and then suspended imports from some companies.

But banana sales rose again sharply beginning around the time Mr Duterte announced more than $13bn of trade and investment deals with China — as well as Manila’s “separation” from Washington. Sales to China in the last quarter of 2016 were more than double those a year earlier, according to official export data. By December China accounted for almost a quarter of Philippine banana exports.

Yet the figures also suggest the story is not quite the straightforward success Mr Duterte and his ministers have promoted. Total Philippine banana exports surged at an even faster rate towards the end of last year.

China also appears to have paid about $322 a tonne in December, with the rest of the world averaging about $382. Banana exports to China then fell more than 20 per cent in January compared with a year earlier, according to preliminary data.

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MARK SCHLARBAUM - Experienced in China - US business partnerships. Never giving up for those that never stop fighting! Help me join the fight against blood cancer and reach my fundraising goal! Visit My Fund Raising Page

Mark Schlarbaum, Irvine, California

Mark Schlarbaum Bike Sharing

China bicycle-sharing start-up gets funding

China bicycle-sharing start-up Mobike gets funding from Temasek, others

BEIJING: Chinese bicycle-sharing start-up Mobike on Monday (Feb 20) said it has raised funding in a new round led by Singapore state investor Temasek Holdings and hedge fund Hillhouse Capital, bringing its total new funding in 2017 to more than US$300 million.

The Shanghai-founded start-up said last month it raised US$215 million from a range of investors including Tencent Holdings, Warburg Pincus LLC and Chinese travel firm Ctrip.com International.

Mobike also announced an undisclosed investment from Foxconn last month, in a bid to double the number of bikes it produced last year to 10 million in 2017.

A spokesman for the start-up declined to confirm the amount of the most recent investment. Mobike has not shared its valuation.

Mobike allows users to find, ride and pay for company bicycles scattered throughout 21 Chinese cities using an app and QR codes.

The firm is one of two Chinese bike-sharing start-ups that have raised hundreds of millions in funding since the beginning of 2016.

Earlier this month, Mobike confirmed it has already opened an office in Singapore and is currently considering other markets outside China.

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Mark Schlarbaum

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MARK SCHLARBAUM - Experienced in China - US business partnerships. Never giving up for those that never stop fighting! Help me join the fight against blood cancer and reach my fundraising goal! Visit My Fund Raising Page

Mark Schlarbaum, Irvine, California

Boeing China Mark Schlarbaum

Boeing Moves Jobs To China

Summary

Stealing technology from Boeing 737 is nearly impossible.

Chinese delivery center makes ordering Boeing aircraft more attractive for Chinese airlines.

Move to China frees up space and time that can be used to increase Boeing 737 production rates.

In late 2016, Boeing (NYSE:BA) and future competitor COMAC signed an agreement to open a Boeing 737 completion center in Zhoushan. The center will focus on installing cabins and painting the aircraft. While this does not seem to fit Boeing’s long term view of keeping jobs in the US, it probably was something that was to be expected. In this article, I will have a look at why the net effect will be positive to Boeing and why concerns over theft of technology are overdone.

Technology

One thing I often hear is that opening a completion center or assembly line in China will easily allow the Chinese to take advantage and inspect the aircraft with the ultimate goal to copy the Boeing 737 technology. In my opinion that concern is overdone; the aircraft will be built in the US, after which the final touches such as painting the aircraft and installing the cabin will be done in China.

These activities are no more complicated – I think it is safe to say that they are even less complicated – than maintenance activities carried out by airlines all over the world. There is no way that Chinese could steal technology from completing the aircraft or that they could disassemble an aircraft in order to obtain knowledge about aircraft design. Additionally, one has to take into account that the Boeing 737 is quite an old concept. Even if there is the slightest chance of being able to learn from the Boeing 737, it can only be done on the wing design.

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MARK SCHLARBAUM - Experienced in China - US business partnerships. Never giving up for those that never stop fighting! Help me join the fight against blood cancer and reach my fundraising goal! Visit My Fund Raising Page

Mark Schlarbaum, Irvine, California