Tag: China

China news: Boy grows up in ‘financial difficulty’, learns after graduation father owns ₹692-crore business

Zhang Zilong learned of his family’s vast wealth only after completing his university education. For years, he was under the impression that his family was struggling with debt due to the financial demands of running their business.

His father, Zhang Yudong established Mala Prince in the same year his son was born 24 years back. Annually, the leading Hunan spicy gluten snack brand churns out products valued at roughly 600 million yuan ( 692 crore), as per South China Morning Post (SCMP).

Despite the brand’s success, the younger Zhang grew up in modest surroundings in Pingjiang County, Hunan province in China. He would believe his family was in financial difficulty.

He even attended a prestigious secondary school in Changsha, the province’s capital, without leveraging any family connections. After graduation, Zhang Jr. harboured simple aspirations: securing a job with a salary sufficient to aid his family in overcoming their supposed debt.

The revelation of their true financial status came as a shock to him after university, when his family upgraded to a luxurious villa valued at 10 million yuan ( 11.5 crore). He entered the family business and joined the e-commerce sector. However, he received no special treatment from his colleagues.

Despite his newfound wealth, Zhang Jr. expressed a desire to steer clear of becoming a ‘fu er dai’ or a stereotypical second-generation rich individual, a term often used pejoratively in China.

His ambitions have since evolved; he aims to take the company public and expand its reach to international markets. His father has stipulated that ownership of the company would pass to him only if he proves his mettle.

Netizens react

The story has garnered reactions online on Douyin, the original version of the app that is internationally known as TikTok. The app is available only in China.

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WPP slashes outlook again as China slowdown adds to tech woes

Branding signage is seen for WPP, the world's biggest advertising and marketing company, at their offices in London

Branding signage for WPP, the largest global advertising and public relations agency at their offices in London, Britain, July 17, 2019. REUTERS/Toby Melville/File Photo Acquire Licensing Rights

  • WPP cuts full-year forecast for second quarter in a row
  • Expects growth of 0.5-1.0, down from 1.5-3.0%
  • Tech companies reluctant to spend, GroupM slows sharply
  • Shares fall as much as 5% to three-year low

LONDON, Oct 26 (Reuters) – Ad group WPP (WPP.L) cut its outlook for the second time in as many quarters on Thursday as tech clients continued to cut back on marketing, growth slowed sharply at its media buying agency GroupM and China disappointed.

The British company, whose agencies include Ogilvy, said it now expected like-for-like growth for 2023 of 0.5-1.0%, down from the 1.5-3.0% it forecast in August and the up to 5% it expected earlier in the year.

“Our top-line performance in Q3 was below our expectations and continued to be impacted by the cautious spending trends we saw in Q2, particularly across technology clients with more impact from this felt in GroupM over the summer than the first half,” CEO Mark Read said.

WPP’s like-for-like revenue less pass-through costs fell 0.6% in the quarter while the market had expected 1.0% growth.

The performance trailed rivals Interpublic, which reported a 0.4% decrease, Omnicom, which recorded 3.3% growth, and Publicis, the strongest of the big four, with 5.3% growth.

Read noted that Meta, which published results on Wednesday, had reduced marketing spend by 24%.

“Technology companies (…) are looking very carefully at their marketing expenses,” he said in an interview. “But I do think in the long run that will correct itself.”

Its shares fell as much as 5% to a three-year low.

Read said it was also a tougher quarter in China, where consumer spending had not returned

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Current and ex-employees at WPP-owned media agency detained in China – sources

Branding signage is seen for WPP, the world's biggest advertising and marketing company, at their offices in London

Branding signage for WPP, the largest global advertising and public relations agency at their offices in London, Britain, July 17, 2019. REUTERS/Toby Melville Acquire Licensing Rights

SHANGHAI, Oct 21 (Reuters) – (This Oct. 21 story has been corrected to fix the reference to ‘U.S. consultancy Mintz Group’, not ‘U.S. law firm Mintz’, in paragraph 13)

Four people linked to WPP-owned (WPP.L) media agency GroupM have been questioned by authorities in Shanghai, according to two people with knowledge of the matter.

One current employee and two former staff were detained, one of the people said. The fourth, GroupM China’s CEO and country managing director for WPP China, Patrick Xu, was questioned by police but not detained, the person said.

WPP declined to comment on news of the investigation and detentions. Calls to GroupM’s office in Shanghai to seek comment went unanswered and Xu did not immediately respond to an email requesting a response.

An employee stationed in the closest police precinct to WPP’s Shanghai office said police could not comment.

Both sources said police visited the WPP campus in Shanghai on Friday. There has been no official confirmation regarding the nature of the investigation into GroupM’s current and former employees, but one of the sources said it was related to rebate mismanagement.

Both sources declined to be named citing the sensitivity of the situation. The detentions and police visit to WPP’s offices in downtown Shanghai were first reported by the Financial Times.

The investigation is likely to reverberate around China’s foreign business community, which is already unnerved by a widespread crackdown on consulting and due diligence firms as well as a new national security law, leading some business leaders to warn that foreign firms may hesitate to invest further in the market.

GROWTH STRATEGY

China is a major growth engine for

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Western companies take slow steps towards China ‘de-risking’

Western companies are slowly insulating their China operations from the mounting tensions over trade and geopolitics between Beijing and the west, as governments call for increased “de-risking”.

The notion, which has replaced the radical “decoupling” as a diplomatic buzzword this year, is a sign that the west is seeking a less antagonistic approach to managing relations with China. But businesses have yet to formulate clear strategies to give it substance, analysts say.

While a number of companies such as US toymaker Hasbro have already been moving manufacturing out of China, the vast majority are still weighing their options, which range from partial divestments to delayed spending decisions and ways to make their China operations disruption-proof by having them serve only the Chinese market.

“Europe is still thinking about what de-risking is and how to implement it in practice,” said Agathe Demarais, senior policy fellow at the European Council on Foreign Relations. “Over the past year there’s been much more private sector talk of localisation strategies as a form of de-risking, but it takes several years for investment to come to fruition.”

Beijing’s pandemic lockdowns and Moscow’s assault on Ukraine have intensified the sense of urgency as western leaders fret about China’s dominance of key supply chains, the potential for a clash over Taiwan, and trade hostility between Washington and Beijing. On Monday, EU trade commissioner Valdis Dombrovskis is meeting Chinese officials to discuss the EU’s growing trade deficit with China and the EU anti-subsidies investigation into EV imports.

There are emerging signs of longer-term shifts in production. A report this year by the European Chamber of Commerce in China found that 11 per cent of European

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Franklin Templeton CEO says China pessimism is overhyped

2022 Milken Institute Global Conference

Jenny Johnson, President and CEO of Franklin Resources, Inc., speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, U.S., May 4, 2022. REUTERS/Mike Blake/File Photo Acquire Licensing Rights

SINGAPORE, Sept 11 (Reuters) – The idea that investment opportunities in China have met their demise is probably overhyped, said Jenny Johnson, president and chief executive officer at global investment management firm Franklin Templeton.

“There is a lot of pessimism built into the pricing,” she said at a session at the Forbes Global CEO Conference in Singapore.

“You are talking about the second-largest economy,” she said. “You are talking about an economy that generates more engineers than any other any country in the world every year, and so from innovation I think there is going to be opportunities.”

Johnson, who led Franklin Templeton’s acquisition of Legg Mason in 2020, resulting in a combined organization that now has $1.5 trillion in assets, sees desire in China to have more independence in energy and food security.

“You’re probably not going to time it exactly right, it could bump a lot of for a while, but when it gets right it is going to be a rubber band back up,” she said.

Johnson’s comments came as global investors have reduced their appetite for China, discouraged by the country’s faltering economic recovery and tensions with the West.

U.S. Commerce Secretary Gina Raimondo noted during her China visit in August that U.S. companies have complained that the country has become uninvestable, pointing to fines, raids and other actions that have made doing business in China risky.

Meanwhile, Johnson also sees opportunities in secondary private equities and private credit globally.

“I think it’s underappreciated as investment opportunity,” she said. “You have of LPs out there who are overcommitted and have capital calls and they have

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US Lawmakers Say China Using Coercive Business Practices for Economic Advantage

U.S. lawmakers Thursday charged the Chinese Communist Party is using coercive economic practices to achieve worldwide dominance over the United States.

The accusations came at a hearing of the House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party days after U.S. Treasury Secretary Janet Yellen met with Chinese officials in Beijing to discuss the nations’ economic relationship.

Yellen said that while the United States was taking targeted national security actions, “a decoupling of the world’s two largest economies would be disastrous for interests for both countries and destabilizing for the world, and it would be virtually impossible to undertake. We want a dynamic and healthy global economy that is open, free and fair.”

Diplomatic relations between the two countries have been tense since the U.S. downed a Chinese spy balloon earlier this year. Witnesses told the House panel Thursday U.S. companies are facing increasing threats operating inside China.

“There’s no such thing as a private company in China, a raft of legislation like the updated counterespionage law, the data security law, the anti-foreign sanctions law has codified what was always true. China reserves the right to swipe any data, to seize any assets and take IP that it wishes,” committee Chairman Mike Gallagher said.

According to committee members, China’s restrictive environment is resulting in a so-called “brain-drain” of its own business people, turning China into the top country in the world for the departure of wealthy individuals, fleeing what they fear is the Communist Party’s ability to arbitrarily seize assets.

Witnesses testified the environment in China is becoming increasingly restrictive for American companies and individuals.

“In the last few months, PRC authorities are now charging any domestic or foreign businessperson with espionage simply for providing any services using PRC information to grant

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China should allow cross-border data sharing, financial lobby group says

SHANGHAI/HONG KONG, June 27 (Reuters) – China should allow cross-border sharing of information by financial firms operating in the country, a leading financial lobby group said, as authorities tighten control of data generated within its borders in a national security drive.

Last July, China unveiled cross-border data review measures that require a security review for “important” offshore data transfers – a move that triggered confusion and concern among foreign financial firms operating in the country.

Foreign interest could be curbed if the country’s data regulations remain vague or stringent, even as China continues to open up its capital markets, said Alice Law, CEO of the Asia Securities Industry & Financial Markets Association (ASIFMA).

“You try to create a firewall, and then your own market becomes a data island itself,” she said, adding foreign firms could go elsewhere or diversify away from China. “Global markets should be interoperable and be able to talk to each other.”

ASIFMA, which represents global banks and asset managers, in a report on China’s capital markets on Tuesday called for clearer, tailor-made rules to enable cross-border sharing of data in the financial sector.

Some firms are scrambling to reduce risk in China following a crackdown on sharing of sensitive information, which ensnared a few foreign consultancies in recent months, with Beijing focusing on national security amid escalating Sino-U.S. rivalry.

The financial sector lobby group said cross-border transfer of data such as investment outlooks, portfolio analysis, shareholding information and anti-money laundering information should be allowed.

“It’s absolutely critical to share information with affiliates, for research purposes, for compliance regulatory purposes, and for risk management purposes,” said Lyndon Chao, managing director of ASIFMA’s equities division.

Although ASIFMA has been actively lobbying for such carve-outs as well as rule clarifications, a quick fix is unlikely as China’s financial regulators

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AstraZeneca drafts plan to spin off China business amid tensions

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AstraZeneca has drawn up plans to break out its China business and list it separately in Hong Kong as a way to shelter the company against mounting geopolitical tensions.

The Anglo-Swedish drugmaker began discussing the idea with bankers several months ago and is among a growing number of multinational companies now considering that option, according to three people familiar with the talks.

A separation might not ultimately take place, the same people cautioned. One of the people said listing the entity in Shanghai was also possible.

The discussion shows the significant restructuring multinational corporations could be forced to undertake as they adapt to growing friction between China and the US and its allies.

Earlier this month Sequoia, the Silicon Valley venture capital group, said it would spin off its China business and run it as a “completely independent” entity from its US operations. Neil Shen, the billionaire founder of Sequoia China, said there was “much less in common now” between the Sequoia entities.

Under the plans AstraZeneca, which is the UK’s biggest listed company by market value at £183bn, would carve off its operations in China into a separate legal entity but would retain control of the business.

The idea has been “on the table for a few years”, one adviser to AstraZeneca said, adding that it had been sidelined until recently amid a global downturn in biotech stocks.

“Every multinational with a strong China business” seems to have considered a similar move, one senior Asia-based banker said. “Even if it’s just the option to give you flexibility in the future, it’s worth thinking about.”

A person briefed on AstraZeneca’s plans said listing a

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US venture capital giant Sequoia to split off China business

The venture capital giant Sequoia Capital is splitting its China business into a separate entity amid rising tensions between Washington and Beijing.

The renowned Silicon Valley group, which made bets on fast-growing tech companies such as TikTok parent ByteDance and Alibaba, said on Tuesday it would run its Chinese business as a “completely independent” entity from its US operation.

The Chinese arm will give up the Sequoia name and instead be called HongShan, a romanisation of its Chinese name, which means redwood.

The VC group will also separate its Indian and south-east Asian business into a third entity, it said, adding that the changes would take place by March next year.

Roelof Botha, managing partner of Sequoia Capital, said in an interview that a decision to break up was taken in the past few months. “It really was a very complicated decision. Over the years, we have reassessed the cost-benefit trade-off of this arrangement and whether it was the right structure for the firm. We realised it was time for this.”

Neil Shen, the billionaire founder of Sequoia China, told the Financial Times: “There’s much less in common now” between the different Sequoia entities. He said conversations about splitting the businesses “have been evolving over the last two to three years”.

The split marks an end to one of the most successful US-China investing alliances. It has reaped rewards for the American mother ship and seeded generations of Chinese tech companies since Shen launched Sequoia China in 2005 as an arm of Sequoia Capital.

Shen has raised billions of dollars from US investors as recently as last year and has been confronted with the delicate task of investing in Beijing’s priority areas such as semiconductors and artificial intelligence, while staying on the right side of Washington’s push to introduce controls

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India News: India top destination being explored by MNCs as alternative to China, finds global CEO survey

India is the top destination being explored by multinational corporations as an alternative to China, according to a survey of 100 CEOs who primarily represent foreign B2B-focused firms.

The CEOs also consider Vietnam, Thailand and their own home countries as potential options.

Amid China’s increasing geopolitical assertiveness, questionable trade and business practices, and rising labour costs, 88% of the CEOs who participated in research firm IMA India’s 2023 Global Operations Benchmarking Survey opted for India as their primary alternative to China. The survey was run among companies with a presence in India.

“In the last five years foreign MNCs have increased their onground presence in India, partly as a result of diversification away from China. In particular, the IT & ITES companies are ramping up the share of their global workforce that is based in India,” said Suraj Saigal, Research Director, IMA India.

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According to a report based on the survey, nearly 70% of the firms saw substantial changes to their business strategies and onground operations in China in the past three years. The industrial sector shows a more prominent pull-back compared to the services sector. Among those implementing changes 56% have decreased their sourcing from China and 41% reduced investments.

While a minority completely exited, 6% of the surveyed companies have scaled back their market engagement.

The research also examined how businesses are perceiving and capitalising on the opportunities presented by India, taking into account the recent shifts in commercial and geopolitical strategies.

From FY18 to FY23, India’s estimated global share in workforce has increased from 22.4% to 24.9% in mean percentage terms, while revenue share has risen from 14.8% to 15.8%. These figures demonstrate incremental growth for India on the global stage during this period.

As per the study, a larger proportion of manufacturing companies, in comparison to

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