Foreign manufacturers begin expanding into Chinese market to seize opportunities

Toyota Motor Corp and Panasonic Corp announced a battery business partnership agreement on Wednesday, with those batteries expected to be used in EVs produced by Toyota's JVs in China. Experts say it is unlikely to pose too much pressure on domestic independent automotive lithium-ion battery makers such as BYD and CATL. However, thanks to the rapid development of the new energy battery sector, it is becoming a growing trend for more and more leading global battery manufacturers to begin expanding into the Chinese market. Meanwhile, experts also say foreign companies are still facing heavy pressure to cut costs in order to compete with local producers. Amid fierce competition among automotive battery manufacturers to win larger market shares, Toyota Motor Corp announced a partnership agreement with Panasonic Corp on Wednesday to begin studying the feasibility of a joint automotive prismatic battery business. The move is considered Toyota's great ambition in the Chinese market, as it is very likely that the batteries will be used in new-energy vehicles (NEVs) produced by Toyota's joint ventures (JVs) in China. Toyota recently announced that it will make more than 10 electric vehicle (EV) models globally in the early 2020s, with sales starting in China, Reuters reported on Monday. What influence will this move pose to domestic battery manufacturers? Leading domestic battery manufacturers BYD Auto Co and Contemporary Amperex Technology Ltd (CATL) declined to comment when reached by the Global Times on Thursday. But industry expert Zheng Jiatu, deputy managing director of the China Electric Vehicle Charging Technology and Industry Alliance, said that the deal is unlikely to pose too much influence on domestic battery brands. With China's NEV market looking good to Toyota, the Japanese manufacturer hopes to enter into the sector. "As far as I know, the batteries are very likely to be used in NEVs produced by Toyota's JVs like Tianjin FAW Toyota Motor Co and GAC Toyota Motor Co rather than be directly sold in the Chinese market," Zheng told the Global Times on Sunday. On December 11, Japanese financial newspaper Nikkei Asian Review reported that Panasonic will start to mass produce batteries for electric motorcycles and low-speed EVs at its lithium-ion battery plant in Wuxi, East China's Jiangsu Province, and may even supply them to Chinese companies due to the rising demand of batteries in the country. Liu Yong, secretary-general of the Energy Storage Applications Branch of the China Industrial Association of Power Sources, said that it is still difficult to measure to what extent the expansion of global leading brands will influence domestic makers as their competitiveness is strong after years of development. But the presence of foreign-backed battery makers could boost technological upgrading of lithium-ion batteries in China, Liu said. Currently, leading Japanese and South Korean battery manufacturers produce nickel manganese cobalt (NMC) batteries, while their Chinese counterparts mainly focus on lithium-iron phosphate (LFP) batteries. The latter has lower capacity density and shorter driving mileage, but is safer. Growing competition Panasonic is currently the world's biggest supplier of batteries for plug-in hybrid vehicles and EVs. In the first half of this year, Panasonic took up a 29 percent market share, followed by South Korean battery maker LG Chem Ltd with a 13 percent share, and Chinese brands BYD and CATL with shares of 10 percent and 9 percent, respectively, data from the Nomura Research Institute showed. Panasonic considers the battery business central to its goal of doubling its automotive business revenue to 2.5 trillion Japanese yen ($22.05 billion) by March 2022, Fortune reported on Thursday. To realize that goal, it has been expanding its battery production capacity across the world. Domestic battery maker BYD, based in Shenzhen, South China's Guangdong Province, has been investing in research and development as well as the manufacturing of NMC batteries to complement its LFP batteries. The company said in a statement sent to the Global Times on Thursday that it invested in an NMC battery production base of 10 gigawatt hours in Northwest China's Qinghai Province to realize production capacity. BYD has since built facilities in the US, Brazil, Japan and Hungary. Meanwhile, CATL, a latecomer based in Ningde, East China's Fujian Province, has developed fast this year. On December 4, the catalog for the 11th batch of NEVs, published by the Ministry of Industry and Information Technology, added 165 new vehicle types that qualify for promotion. CATL supplies batteries for 40 of these types of vehicles. Vehicles included in the catalog can get subsidies, a favorable policy to help promote the development of the domestic new energy industry. In terms of the overall performance index, the gap between domestic independently-made lithium-ion batteries and their foreign counterparts is not obvious, but what is certain is that battery cell performance is not as desirable, according to Zheng. For example, Tesla's chief battery scientist Kurt Kelty announced in May that his team made a great breakthrough, with the Tesla battery life now decreasing by 5 percent or less after the vehicle has run 480,000 kilometers. Tapping the Chinese market The sales of NEVs maintained high-speed growth this year, with the figure climbing to 609,000 units between January and November alone, the latest data from the China Association of Automobile Manufacturers (CAAM) showed. According to CAAM, the sales growth rate of NEVs is expected to stay between 40 and 50 percent in 2018. With the rapid growth of the market and the phase-out of subsidies to domestic new energy automobile brands, Japanese and South Korean battery makers in the Chinese market will grab new opportunities, experts noted. The Chinese central government will cut subsidies to NEVs by 10 percent this year from the 2016 level and plans to phase out the subsidies entirely by 2020. "With smart machinery and excellent processing techniques, foreign battery brands are indeed superior to their domestic counterparts. Demand for them may increase when the high-end market booms, but they also face heavy pressure to cut costs, and improve efficiency and safety in the Chinese market," Liu said. Only when costs are effectively lowered, driving mileages enlarged and ancillary facilities established will the demand for NEVs be truly realized, he said. Zheng said that chargeable batteries may be a good choice to popularize NEVs among customers. "Just like petroleum stations, battery stations may also emerge in the future, supplying fully-charged batteries for NEVs," he said.

China takes lead in electric vehicle market

China is taking the lead in the electric vehicle market as there is a real government push to clear the air, Bill Ford, executive chairman at Ford Motor Company. At the 2017 Fortune Global Forum held in the southern Chinese city of Guangzhou, Ford said he is bullish on China's new energy vehicle (NEV) market, saying strong government resolve to encourage their use can be successful. Optimistic on the outlook, the U.S. car maker earlier announced a joint venture with China's Anhui Zotye Automobile to produce and sell electric cars in China, with plans to launch 15 electric car models in the country by 2025. While the infrastructure for electrification has improved and the cost is coming down, there is still a question mark as to whether retail customers can accept NEVs in big numbers, according to Ford. He said the joint venture will bring in impressive technology and competitive costs so that retail customers don't get choked out of the market. Hoping the spread of NEVs can help ease pressure on the environment, the Chinese government has introduced a slew of measures, including offering tax exemptions and subsidies for car purchases, and ordering government organizations to buy more new energy cars. In the latest move, Chinese banking authorities announced new loan policies to allow buyers of new-energy vehicles to borrow a larger portion of the purchase price. Starting in 2018, NEV buyers can borrow up to 85 percent of the cost from banks, up from the previous 80 percent.

China to maintain stable economic growth in 2018

China’s economy has sustained the momentum of steady progress and will maintain sound growth in 2018, an official from the National Bureau of Statistics of China (NBSC) said on Dec.14. “China’s economic growth remains positive in 2017, with stable employment and commodities prices, as well as optimized economic structure and improved quality and efficiency,” NBSC spokesperson Mao Shengyong told chinanews.com, adding that the economy will continue to grow steadily in 2018. According to statistics released by NBSC, China’s total value of imports and exports reached 2.6 trillion RMB in November, a year-on-year increase of 12.6 percent. Specifically, the total value of exports was 1.4 trillion RMB, up by 10.3 percent, and that of imports was 1.1 trillion RMB, up by 15.6 percent, leaving a trade surplus of 263.6 billion RMB. “Generally speaking, the national economy in November maintained the momentum of stable and sound development and showed strong stability and resilience. However, we should be aware that there are still many risks and uncertainties abroad, and great challenges exist for high-quality development,” added Mao. The Ministry of Commerce also expressed confidence for China’s economy in 2018, noting that despite U.S. tax reform, China will remain in its position as a hotspot for foreign investment. “China has a relatively comprehensive industrial chain and educated workers. The domestic market has great potential, while the government has been trying to improve the investment environment,” said Ministry of Commerce spokesperson Gao Feng. “China will deepen its economic reform and keep opening up,” he added. “We have faith that our country will remain attractive to foreign investors.”

China can play key role in mapping out 5G standards

China is now at the forefront of research and development when it comes to 5G technology. Industry leaders underlined the country's role in helping to lay the foundations of a unified global standard for the next generation of mobile technology. Telecom carriers have invested heavily in 5G, carrying out tests in several major cities, Bi Qi, chief technical officer at the China Telecom Research Institute, told a forum at the 4th World Internet Conference on Monday. "The government should formulate corresponding policies to encourage them," he said. "Meanwhile, other players involved in the telecom sector should also participate." Wang Jianya, president of Nokia Shanghai Bell, is confident that China will pioneer 5G research and development before it is rolled out in the next few years. This in turn will help develop a standard blueprint across the sector. "The key issue for 5G is producing a unified global standard," Wang said. A joint venture of Nokia Corp and State-owned investment firm China Huaxin, Nokia Shanghai Bell has been promoting the commercialization of 5G with domestic telecom carriers. China Mobile Communications Corp, the world's largest telecom carrier by subscribers, has stepped up efforts to develop 5G technology. It plans to launch a pre-commercial service in 2019 before launching a fully commercialized 5G network in 2020. "With the rapid development of 5G, internet of things (IoT) and big data, we are entering the digital era," said Sha Yuejia, vice-president of China Mobile. "As intelligent manufacturing, smart transportation and healthcare become more popular, this will promote the economic momentum to achieve a new leap forward in our society," Sha said. So far, the company has established more than 2.23 million base stations with more than 900 million mobile users and 200 million IoT connections. It has also worked on intelligent solutions covering mobile authentication, home security, smart cities and logistics. High-tech companies, such as Huawei Technologies Co Ltd and ZTE Corp, are also keen to help formulate 5G global standards and promote its commercial use. China is expected to become the world's largest 5G market before 2025, according to a report released by GSMA Intelligence, a global mobile think tank, and the China Information and Communications Technology Academy. The report also forecasts that 5G connections here will reach 428 million by 2025. John Hoffman, CEO and director of GSMA, estimated that global telecom carriers will invest 3.3 trillion yuan ($499 billion) in mobile infrastructure by 2020. Up to 500 billion yuan will come from China.

Tanikawa will expand financing channels for enterprises

Recently, Tanikawa signed a strategic partnership with Shenzhen Qianhai Power Asset Management Co., Ltd. and Xing Fu Investment Management Co., Ltd.. This marks the Tanikawa will extend the service chain to the financial services, Tanikawa will cooperate with the Fund companies to expand financing channels. So far, Tanikawa has served more than 100,000 companies, many of which have financing needs. In order to effectively solve business problems and provide higher quality services, Tanikawa will provide a financial platform so that can connect fund managers and enterprises, and provide strong support for the development of both parties. For enterprises in different stages of growth, Tanikawa will help them to develop rapidly. At the same time, Tanikawa will help the Fund Party to obtain and screen the projects, it will reduce the time cost of finding good projects on the large extent. Through the two-way financial service from Tanikawa, the investment agencies and target companies will be in-depth cooperation, so that can realize a win-win situation between capital and industry.

China’s digital economy second largest in world

China’s digital economy reached 22.58 trillion yuan in 2016, ranking second globally and accounting for 30.3 percent of the national GDP, according to latest reports. The China Internet Development Report 2017 and World Internet Development Report 2017 were released during a press conference at the 4th World Internet Conference (WIC) on Dec 4. The reports were compiled by Chinese ministries, government departments, academic institutions, and research institutes. The two reports are meant to complement each other and cover a wide range of fields, including domestic and global information infrastructure, information technology, cybersecurity, digital economy, e-government, online media, and global cyberspace governance. As of June 2017, the number of Internet users around the world hit 3.89 billion, of which 751 million were in China—the most of any country worldwide. The development of the digital economy has become a common way for major countries and regions to reshape global competitiveness. At present, 22 percent of global GDP is closely related to the digital economy and China’s digital economy accounts for 30% of its GDP. In addition, the China Internet Development Report 2017 analyzes and evaluates the effectiveness of Internet development in all Chinese provinces, autonomous regions, and municipalities in terms of infrastructure construction, innovation capacity, digital economy development, Internet application, network security, and network management. Among them, the top 10 are Guangdong, Beijing, Zhejiang, Jiangsu, Shanghai, Fujian, Sichuan, Shandong, Tianjin, and Hubei.