China’s New Foreign Currency Restrictions

 

China’s foreign exchange reserve has plunged to $3.6 trillion. According to a Bloomberg Intelligence gauge, an estimated $762 billion flowed out of the country in the first 11 months of 2016.

China has stepped up its monitoring of forex transactions. From January 1st 2017, Chinese citizens are required to provide more detailed information before converting their Chinese yuan into foreign currencies, according to the website of the State Administration of Foreign Exchange (SAFE).

While Chinese citizens are still allowed to send up to $50,000 a year out of China, the latest directive did add another layer of approval processes. Getting money out of China has become more complicated due to China’s efforts to slow down a foreign currency exodus.

Key elements of the new requirements:

Customers must sign a pledge, affirming that the money won’t be used for overseas purchases of property, securities, life insurance or investment-type insurance.

Customers must give a more detailed account of the planned use of funds, such as business travel, overseas study, family visits, medical treatment, merchandise trade or purchases of non-investment insurance policies.

Violators of foreign exchange rules will be added to the currency regulator’s watch list, denied foreign exchange quota for three years and subjected to anti-money-laundering investigations.

Customers must confirm compliance with restrictions on money laundering, tax evasion and underground bank dealings.

Customers must now confirm they aren’t lending or borrowing quotas to or from other citizens.

Investors face “significant uncertainty and risks” on the returns from foreign-currency holdings, SAFE warned. Banks should make spot checks on individuals’ foreign-exchange reports, penalizing those who provide false information or illegally move money abroad, it said.

Read More:
https://www.bloomberg.com/news/articles/2017-01-03/china-drills-down-into-forex-transactions-as-money-exits-abroad

China Turns to Tourism to Boost Sagging Economy

BEIJING — China is ramping up support for tourism, creating investment funds and building tourist attractions from camp grounds to theme parks in a bid to lift spending in its softening economy.

Helped by a fast-expanding middle class, tourism has emerged as a prospective new driver in China’s economy, with the government aiming to double leisure spending to 5.5 trillion yuan ($886 billion) by 2020 from 2013.

Ten new ports for cruise ships will be constructed by 2020 and state companies will be encouraged to build vacation boats to spur growth, the State Council, China’s cabinet, said in an online statement on Tuesday.

In addition, around 1,000 camp grounds for recreational vehicles will be developed by 2020 and 57,000 toilet facilities for tourists will be built or renovated in the next three years, it said.

Wireless networks will be installed at top tourist spots to give visitors free Internet access at some 10,000 destinations.

To pay for the new construction, funds will be created and private investors will be encouraged to become partners in projects, the cabinet said, without giving further details.

More funding will be made available for the construction of roads and parking lots at holiday spots, as well as for new airports in northwest China.

Credit support for tourism firms and outdoor sports equipment makers will be increased, and more holiday destinations will offer tax breaks to lift spending.

Tourist spots will target elderly Chinese, a well-heeled group whose spending lags that of the wider population, the cabinet said.

Held down by a cooling property market, sluggish investment, faltering global demand and a stock market slide, the world’s second-largest economy is forecast to grow 7 percent this year, its worst showing in 25 years.

In another move seen by analysts as a way to shore up the economy, China devalued its currency on Tuesday by nearly 2 percent. [ID:nL3N10M1PP]

(Reporting by Beijing Newsroom and Koh Gui Qing; Editing by Alan Raybould)

When it comes to Jewellery, Chinese believe local Companies are best

2803 When it comes to Jewellery, Chinese believe local Companies are best

Posted On 2015/06/03 By In Business, Face, Fashion, Luxury, News, Shopping

Many Chinese like to chase deluxe brand name handbags or cars but when they buy jewellery, they feel “value for money” is more important and this tends to benefit Hong Kong-listed jewellery brands Chow Tai Fook, Chow Sang Sang and Luk Fook.

Brands like Nike and Adidas dominate sportswear, handbags are the domain of Chanel, LV and Prada, and luxury cars are the turf of Audi and BMW, according to a Morgan Stanley report.

But when it comes to buying gold or diamonds for a wedding or a gift to a new born baby, the mainland Chinese jewellery buyers go for local brands.

“If we use Hong Kong as a reference for a mature Chinese city, we can see that despite the high disposable income per capita, mass market jewellery brands such as Chow Tai Fook, Chow Sang Sang and Luk Fook still own the lion’s share of the jewellery market in Hong Kong,” Morgan Stanley said, adding the trio of Hong Kong jewellery retailers command a 40 per cent share of the market.

In contrast, foreign brands such as Tiffany and Cartier only has meagre two per cent market share each.

The reasons behind this was because customers believe the local jewellers are very conscious about “quality” and “value”, the Morgan Stanley survey of about 1,500 mainland and Hong Kong jewellery buyers showed.

“This supports our thesis that mass market, value for money brands like Chow Tai Fook (which ranks well on these metrics), as opposed to premium-positioned jewellery brands, could continue to be market leaders in China, and gain share in a fragmented jewellery market,” it said.

The survey showed mainland customers prefer to spend more on the materials of the jewellery, such as paying more for a bigger carat of diamond or a larger amount of gold, than paying the premium of a luxury brand.

The lender noticed that some overseas brands are on average 20 to 30 per cent more expensive than Chinese brands on a similar solitaire diamond ring.

“This may have to do with the fact that it is more difficult to show off a ‘brand’ on a ring than say a handbag or a car,” the Morgan Stanley report said.

“This is not to say that a brand does not matter in jewellery, far from it in fact. But the values sought by most Chinese consumers are different – more trustworthiness (authenticity of goods, fair and reliable prices, after-sale services), than luxury and aspiration.”

In the survey, it showed the most frequent jewellery buyer in the mainland is female between the ages of 25 to 34 years old with high income. They travel to Hong Kong and South Korea often.

Among the 21 jewellery brands in the survey, it showed Chow Tai Fook ranked top of the list with a positive long-term outlook, while Chow Sang Sang and mainland brand LaoFengXiang also ranked high. Luk Fook was generally weaker in brand awareness.

It said some of the Hong Kong jewellery retailers would suffer from the challenges of fewer mainland tourists coming to Hong Kong and Macau, but the long term outlook is positive. The report warned the local jewellery brands maybe at risk of losing share to international brands in future as these international brands have increased advertisements and expanded their distribution network.

“While headwinds continue with sales and a tourist slowdown in HK/Macau and share prices reflect this weakness, we see improving risk/reward profile for the sector, especially given its healthy fundamentals and local brands’ long-term competitiveness, as supported by our survey,” the report said.

“We believe industry consolidation and margin expansion through product mix improvement will serve as long-term earnings drivers for sector leaders such as Chow Tai Fook.”

Global Unionpay card issuance exceeds 5 billion: China Unionpay chairman

UnionPay_SS

SHANGHAI – The cumulative number of UnionPay cards issued globally has exceeded 5 billion and UnionPay has become Chinese residents’ preferred payment brand, Ge Huayong, Chairman of China UnionPay, said at the opening ceremony of 2015 Shanghai City Campaign in Milano on June 10.

Ge said secure, convenient, preferential and innovative payment services are able to make life more convenient, stimulate consumption, facilitate trade and connect to the world in building smart cities, and UnionPay is seeking opportunities for growth in this trend.

UnionPay is the official payment service provider of the China Pavilion in Milan Expo, and is also the partner of the Shanghai City Campaign in Milan.

While providing payment services to the world’s largest cardholder base, UnionPay is working closely with major cities including Shanghai to improve its services.

The payment network has built up a platform where residents are able to pay utility and credit card bills conveniently. It has also been promoting the contactless UnionPay QuickPass service for small-ticket transactions, by which payment can be completed with a simple tap-and-go.

To keep up with the trends of the payment market, UnionPay has created an online payment platform and stepped up efforts in mobile payment. Its online and mobile payment users have surpassed 200 million to date.

In overseas markets, innovative UnionPay products and services are increasingly being used, with 10 million online merchants outside the Chinese mainland currently accepting payment with UnionPay cards. As UnionPay chip cards are issued in a large scale, innovative applications including QuickPass are also being enriched.

“After years of exploration and considering the current market environment and trends, UnionPay has found a strategic positioning that suits its development. And that positioning is to be an open and comprehensive service platform with global influence,” he said.

“To realise that goal, internationalization is essential. After 13 years of fast development, UnionPay as a payment network now ranks No. 2 in terms of global transaction volume and No. 3 in terms of acceptance footprint. This has set the foundation for our global development and we will stick to the strategy of going global to build UnionPay into a global network and international brand.”

UnionPay International also announced on the same day a partnership with CartaSi, the largest acquirer in Italy, which will see 15,000 merchants under CartaSi start accepting UnionPay cards by the end of July this year.
- See more at: http://business.asiaone.com/news/global-unionpay-card-issuance-exceeds-5-billion-china-unionpay-chairman#sthash.hpqlrDV5.dpuf

Chinese Luxury Spending Soars in Europe

Chinese tourists spent record amounts on luxury items last month due to low prices in Europe caused by the weakening Euro, according to figures from VAT refund company Global Blue. Luxury spending by Chinese tourists rose 122 percent in March after increasing 52 percent in February, reports Channel News Asia. Overall, luxury spending rose 67 percent during the first quarter, a huge gain when compared to the 32 percent spending increase in the fourth quarter of 2014 and an 18 percent overall gain in 2014. “This continues to reflect the redirection of Chinese spending from Hong Kong towards Europe in particular, given the widening of the price differentials, which is a much-discussed theme during the ongoing reporting season,” commented brokerage firm Barclays. Worldwide tourism spending increased overall in March, reaching its highest point since May 2011. Watches and jewelry performed the best, as sales climbed 67 percent in March after a 32 percent gain in February. Leather goods sales rose 50 percent in March after climbing 24 percent the previous month. For Chinese consumers, the euro’s decreasing value means prices are cheaper in Europe by as much as 50 percent, or more, compared to China, which has led to an increase in parallel imports and gray market luxury goods. In fact, investment bank J.P. Morgan Cazenove estimates that between 20 and 40 percent of all luxury sales in mainland China are now parallel. To combat the price differences, luxury brands are adjusting their prices regionally. In February, Swiss watch maker Patek Philippe lowered prices in Hong Kong by up to 22 percent to combat parallel imports from Europe. Similarly, in March, Chanel cut prices by as much as 20 percent in China on many of its product lines with prices on additional goods leveling out throughout the year. Kering is expected to announce similar price cuts, specifically for its flagship Gucci brand, when it announces its first quarter figures on Tuesday.

U.S. seeks to boost international visitors to 100 million a year

ORLANDO—U.S. Commerce Secretary Penny Pritzker says the U.S. is on the path to welcome 100 million international visitors annually by 2021 because of efforts such as expanding the visa waiver program and decreasing visa wait times.

In an interview with USA TODAY at the U.S. Travel Association’s IPW travel industry conference in Orlando, Pritzker outlined the Obama administration’s plan to attract international visitors. It includes increasing the number of countries whose citizens don’t have to get visas, improving the arrival process at 17 U.S. airports, and expanding a program that allows travelers from other countries to go through customs before boarding their flights to the USA.

“We’re trying to improve our positioning because it’s a competitive landscape,” she said.

The administration launched the National Travel and Tourism Strategy in 2012. Last year, there were about 74 million international visitors to the USA, who spent an estimated $222 billion.

Pritzker, whose father co-founded Hyatt Hotels, outlined the administration’s strategy for increasing tourism from other countries. The highlights:

Expanding the visa waiver program. The number of countries whose citizens can enter the USA for business or leisure travel for up to 90 days has grown to 38. The most recent additions include Greece, Taiwan and Chile.

Pritzker says that 59% of international visitors come from those countries.

Decreasing visa waits. The amount of time that visitors from countries that do require visas has decreased, Pritzker says.

“Our wait times in some countries were several months and now, our wait times have been brought down to less than 5 days, which is considered very competitive globally,” she says.

Increasing the number of countries with preclearance. Last week, the Department of Homeland Security announced its intention to begin negotiations to expand its preclearance program to 10 airports in nine foreign countries.

Preclearance allows visitors to go through immigration and customs by U.S. Customs and Border Protection before boarding a direct flight to the USA.

The countries that could get preclearance are: Belgium, the Dominican Republic, Japan, the Netherlands, Norway, Spain, Sweden, Turkey and the United Kingdom.

Upgrading 17 airports. The administration is also working on improving the experience when travelers arrive to the USA at 17 airports that account for nearly three-quarters of arrivals in the USA.

The goal, Pritzker says, is “to simplify and streamline the entry process all while not compromising our national security.”

Through a series of public-private partnerships valued at $20 million, 340 additional automated passport control kiosks will be installed to reduce wait times by up to 30%.

Other changes include better signage and a streamlined baggage claim process.

Boosting tourism from China. The administration has focused its efforts on encouraging travel from China, the fourth largest market for inbound tourism.

Pritzker says that extending visa validity for Chinese travelers from one to 10 years has increased demand for visas by citizens of that country by 50%.

The administration is expecting the number of Chinese visitors to more than double to about 5 million a year by 2019.

“You can see there is tremendous growth potential,” she said.

Chris Thompson, president and CEO of Brand USA, says that Chinese visitors spend on average $6,000 a person on each trip to the USA, about 30% more than other international travelers.

Reauthorizing Brand USA, a marketing organization made up of public and private partnerships to promote the USA. President Obama signed a bill into law in December that included federal funding for Brand USA through fiscal 2020.

Brand USA generated more than 2 million incremental international visitors in the last two years, according to a new study by Oxford Economics, a global forecasting firm. Those visitors spent $6.5 billion.

“I think it got off to a bit of a rocky start but now I think jt’s doing a bang-up job,” Pritzker said, “and there’s so much potential when you bring the private sector and public sector together to promote the United States as a destination.”

China UnionPay Debuts Wearable Payments to Counter Service Providers

China UnionPay Debuts Wearable Payments to Counter Service Providers

MAY 27, 2015 10:28am ET

China UnionPay Co. introduced the nation’s first wearable payment product as the giant of the Chinese industry moves to defend its turf from other service providers.

The bracelet lets some Industrial Bank Co. credit-card holders make payments at more than 5.3 million point-of-sale machines or checkout terminals, according to statements released in Shanghai on Wednesday from firms involved.

UnionPay faces rising competition from third-party payment service providers including Alibaba Group Holding Ltd., while foreign firms such as Apple Inc. and Samsung Electronics Co. are also eyeing the Chinese market. The nation’s mobile payment transactions jumped 134 percent to 22.6 trillion yuan ($3.6 trillion) in 2014, according to the central bank.

The bracelet shown at a press briefing in Shanghai can be used for payments in shopping malls, supermarkets and subways. It was jointly developed with Industrial Bank and Chengdu Ledong Information Technology Co., the firm with sports app Codoon.com. The device works with terminals that use so-called near-field communcation technology.

Shanghai-based UnionPay has issued 5.4 billion credit and debit cards, on which users made transactions totaling 11.8 trillion yuan in the first quarter, President Shi Wenchao said at the briefing. That included payments and transfers.

Chinese Luxury Consumers Do Their Research

Chinese-Tourists-Shopping-in-Britain

Today, China is an undoubtedly important market for luxury brands. This is supported by the fact that there are almost 3 million luxury consumers in Mainland China. These consumers can be broken down into two distinct categories: Luxury and Super Luxury consumers. Luxury consumers are those who have spent $1 million in personal wealth, while the aptly named Super Luxury consumers have spent at least $10 million.Seeking out internationally recognised and lauded brands, the likes of Louis Vuitton, Hermes, Tiffany & Co. and Apple have profited from the expanding Chinese luxury market. China’s increasing purchasing power, a rise in disposable income, and a quickly growing middle class have largely spurred the expansion of this market. However, while Chinese consumers have been fuelling the luxury market, they often aren’t making luxury purchases in China. In fact, newspaper China Daily recently reported that 76% of China’s luxury consumption happens overseas. Due to lower prices abroad, there is a tendency among Chinese luxury consumers to make purchases while overseas, whether it is in other Asian countries like Japan and South Korea or in Western countries like the UK and USA.While luxury products sold outside of China can be as much as 40% cheaper than those sold inside China, this is not the only reason Chinese consumers purchase high-end goods outside of their home country. For Chinese consumers, buying high-end products from developed countries or their origin country displays prestige and superiority. The influence of Western lifestyles has also led to the belief that foreign brands and products made in a developed country are better quality. In fact, Global Blue, a retail-tourism company, found that purchasing luxury brands was a crucial part of travel plans for many global Chinese travellers.

Reaching Chinese Luxury Consumers in China

However, Chinese consumers aren’t buying luxury products at the spur of the moment while travelling abroad. On the contrary, most of them are doing thorough research prior to purchasing luxury products in other countries. This change in consumer behaviour represents a major challenge for Western brands. Since Chinese consumers are now making purchasing decisions before they leave China, brands need to respond by reaching customers at this crucial point.

One of the most common ways for brands to connect with consumers is through social media. However, this can prove difficult for Western brands in the Chinese market since China blocks popular Western media platforms like Facebook, Twitter, Instagram and YouTube. So what’s a brand to do?

More and more Western brands are fully embracing Chinese social media platforms, such as Weibo and WeChat, to take advantage of the lucrative Chinese market. For example, iconic British luxury brand Mulberry created a WeChat account and uses it to provide exclusive content to curious consumers. Similarly, classic American luxury brand Tiffany & Co. operates a Weibo account where they strive to associate themselves with Chinese celebrities and establish themselves as a leading jewellery brand. And with Chinese luxury consumers making purchasing decisions while still in China, look for an increasing amount of high-end brands to open up Chinese social media accounts.

The Nilson Report: UnionPay Debit Cards the Most Popular Global Payment Method in 2014

UnionPay Credit Cards overtake MasterCard Credit Cards

CARPINTERIA, Calif., Apr 06, 2015 (BUSINESS WIRE) — American Express, Diners Club/Discover, JCB, MasterCard, UnionPay, and Visa brand cards generated 195.56 billion transactions at merchants in 2014, an increase of 24.28 billion or 14.2% over 2013, according to the annual report Global Cards 2014, published in the current issue of The Nilson Report, the top trade newsletter cover the card and mobile payment industries. Purchase volume for goods and services grew by $2.832 trillion or 18.3% in 2014.

UnionPay debit cards were the most popular payment method by card type based on purchase volume, followed by Visa debit cards and Visa credit cards. UnionPay credit cards overtook MasterCard credit cards, and MasterCard debit cards overtook American Express credit cards.

Visa and MasterCard purchases accounted for $55 of every $100 in purchase volume last year, compared to $59 in 2013. Visa cards generated $37 of every $100, down from $40. UnionPay cards accounted for $38 of every $100, up from $33 in 2013.

UnionPay continued to have the highest percentage increase in purchase transactions. Last year its credit and debit purchase transactions at merchants grew by 52.3%. However, its year-over-year growth of 6.78 billion transactions compared to an increase of 10.40 billion for Visa and 6.17 billion for MasterCard. The number of purchase transactions on UnionPay debit cards exceeded the number on American Express credit cards for the first time.

Visa debit cards continued to account for the most purchase transactions with a share of 36.79%, followed by Visa credit cards with 20.95%, MasterCard credit cards with 13.76%, MasterCard debit cards with 12.58%, Union Pay credit cards with 5.45%, UnionPay debit cards with 4.65%, American Express cards with 3.40%, Diners Club/Discover cards with 1.24%, and JCB cards with 1.18%.

Most Popular Category Among China Online Shoppers

china-online-shopping-product-categories-2015

 

March 9, 2015 By Incitez China

Apparel is the most popular product category for China online shoppers according to McKinsey. And, the most frequent online purchases are packaged and fresh food.

40% of Chinese consumers buy food online, in contrast to just 10% of their US counterparts.

The total transaction value of China online apparel market exceeded RMB434.9 billion (USD70.75 billion) in 2013 with a YoY increase of 42.8%, which accounted for 23.1% of the whole China online shopping market.

It is estimated that in 2014, the total transaction value would increase to RMB615.3 billion (USD100.1 billion) with a YoY increase of 41.5%, accounting for 22.1% of the whole China online shopping market.