China is leading the 'automobility' revolution

China's unique urban transportation challenges, high rate of adoption of mobile internet services, and rapid and aggressive introduction of alternative mobility solutions have combined to make the country a fertile ground for mobility innovation.The automotive industry's business model is experiencing disruption. Mobility needs, previously satisfied through product "ownership", are increasingly being served through mobility services "usership" with profound implications not only for traditional businesses within the value chain, but also for new entrants - as they compete to deliver services.Connected mobility, which we define as "technology-enabled on-demand mobility services for moving people and goods from point A to B", has become a disruptive, paradigm-changing development in the automotive industry. It requires a complete rethinking of the way to deliver value to the market. Traditional automakers must widen their focus from the product (the automobile) to the utility derived from the product ("automobility"), and create a business model and digital ecosystem optimized to provide digitally enabled solutions for both car owners and mobility services users.China has far greater potential to lead the "automobility" revolution compared with other markets for several reasons. First, China's rapid urbanization has led to significant mobility challenges, as the increasingly urbanized population creates an explosive demand for personal mobility. Second, China has the world's largest internet population and most Chinese netizens use smartphones to access internet services. Third, the Chinese government plays a key role in encouraging innovation in the internet economy with a focus on digital transformation, new energy vehicles and smart cities.As a result, we are witnessing the onset of what we believe to be a three-phased "automobility revolution" in China, which will rapidly transform the competitive landscape. This landscape can be divided into four quadrants along two axes - "ownership versus usership" along the horizontal axis and "technology" along the vertical axis. The domain of the traditional automotive industry powered by the internal combustion engine includes traditional competitors such as First Automobile Works, Shanghai Automotive Industry Corporation and Beijing Automotive Industry Holding Co. In the second quadrant, on-demand mobility players, including Didi Chuxing and Yidao Yongche, are providing mobility services on a pay-per-use basis. The third and fourth quadrants are where electric and/or autonomous vehicle technologies are incorporated for both individual car owners and autonomous mobility on-demand users.In China, the "automobility 1.0 phase" (from 2012 to 2016) connected traditional cars (driven by humans and powered by an internal combustion engine) to riders using mobile technology. Pay-per-use ride hailing services, including Didi Dache, Kuaidi Dache, Yidao Yongche, Shenzhou Zhuanche and Uber were formed and grew rapidly. Stronger players such as Didi Chuxing (a merger between Didi Dache and Kuaidi Dache), backed by technology companies such as Alibaba and Tencent, have become dominant. Other forms of connected mobility services, including bike sharing (Mobike, Ofo and many others) have also emerged and grown rapidly.China recently entered the "automobility 2.0 phase", when we will see cars built specifically for connected mobility services. The defining characteristics of cars used in this manner include high utilization rates and rider-centric features that enable connectivity. We expect such cars to be powered by electricity due to their lower operating cost (especially fuel and maintenance) and include features tailored for riders (more screens, connectivity and content services).In addition, new business models and upgraded/differentiated on-demand mobility services will emerge to address mobility pain points observed in the "automobility 1.0 phase", including increased congestion, surging prices, service inconsistency, safety and security concerns, the lack of personalization and charging infrastructure, and inconvenient parking lots.After 2020, we will enter the "automobility 3.0 phase", when autonomous driving technologies are expected to become commercially viable. An accelerated pull from China's "Internet+Auto" and Smart City investments will result in the initial deployment of professionally managed autonomous mobility service fleets. The future "automobility" business model can be described by a combination of the terms - "personalized, electric, shared and autonomous mobility on-demand". Mass deployment of autonomous mobility on-demand will occur beyond 2025. And "automobility 3.0" will likely be a far more efficient system where instead of owning an under-utilized depreciating asset, people would pay for the utility that is derived from the asset.Transportation innovation has throughout history helped improve human experiences, and China's "automobility" revolution is a disruptive force that will transform the mobility experience not only within China but also in the rest of the world.Bill Russo is the managing director and Chee-Kiang Lim the principal of Gao Feng Advisory Company.

China Focus: China leads new energy vehicle development

China now leads the world in new energy vehicle (NEV) development, according to a survey ranking China top in its global electric vehicle development index for the first time in the second quarter of 2017.Results of the survey, the E-Mobility Index (2Q/2017), were jointly released by German consultancy Roland Berger and automobile study institute Forschungsgesellschaft Kraftfahrwesen Aachen on Tuesday.Starting in 2009, China's new energy auto industry experienced a robust expansion and it has become the world's largest market since 2015, according to a statement from the Ministry of Industry and Information Technology (MIIT).The German consultancy's report said that China will play a leading role in the future development of the global NEV industry thanks to its strong market growth.Sales of electric cars in China grew rapidly, from less than 5,000 in 2011 to around 510,000 in 2016.Production and sales were particularly robust in June of this year, with 59,000 units sold and 65,000 produced, up 33 percent and 43.4 percent respectively from a year earlier.The China Association of Automobile Manufacturers estimated that domestic NEV sales could hit 800,000 units at the end of this year.Industry insiders attributed the impressive progress of the Chinese market to government support and simpler licensing procedures."The output, sales and ownership of NEVs in China all accounted for more than half of global levels last year," said Chinese Vice Premier Ma Kai at a meeting in early July, adding more research should be carried out in batteries, charging technology and the construction of charging facilities.In April, the Guideline on China's Medium and Long-term Car Industry Development was jointly published by the MIIT, the National Development and Reform Commission and the Ministry of Science and Technology.The document said that new energy cars were expected to be a key area in building China from a "big" auto power to a "strong" one.Besides the government support, market demand and efforts by auto makers also prompted the domestic industry's trend, according to the survey.Beijing Automotive Industry Corp. (BAIC), a leading domestic auto manufacturer, recorded year-on-year sales growth of NEVs as high as 159 percent in 2016 and 99 percent in the first half of 2017.Chinese auto companies including BYD, BAIC and Geely ranked among the top brands worldwide in terms of electric car sales last year, according to the China Passenger Car Association.International cooperation on NEV production is also gearing up.In June, German car giant Daimler signed a framework agreement in Berlin with China's BAIC to produce Mercedes-Benz-branded electric cars via their joint venture, Beijing Benz Automotive.In accordance with the agreement, both enterprises are preparing to produce electric vehicles in China by 2020 and to provide the necessary infrastructure for battery localization using Chinese cells, as well as to expand research and development capacity.Volkswagen plans to offer Chinese consumers about 400,000 NEVs by 2020 and over 1.5 million by 2025, which has been an important part of the company's ambition in the Chinese market, according to Jochem Heizmann, CEO of Volkswagen Group China.As downward economic pressure becomes more intensive and the domestic market continues to expand, the deep-rooted challenges facing the industry need to be addressed."The cost of batteries is the issue of most concern for current development," said Ouyang Minggao from China EV100, a domestic industry group."The industrial foundation is not solid and we have not achieved breakthroughs in core technology of NEV batteries, so the competitiveness of the industry should be further sharpened," said Qu Guochun, deputy director-general of the machinery industry department at the MIIT.To further promote the healthy and sustainable development of the industry, more efforts should be made in improving the innovation system, advancing industrial transformation and upgrading, and strengthening the application of NEVs, Qu said.

Risks in China's banking sector controllable

Manufacturing sector topped Myanmar's foreign direct investment (FDI) with over 637 million U.S. dollars in the first three months of the present fiscal year 2017-2018, which began in April, official media reported Wednesday.During the first quarter period as of June 30 of the fiscal year, it saw a total of over 1.9 billion U.S. dollars' foreign investment, followed by real estate sector with 569 million U.S. dollars and others.According to the figures of the Directorate of Investment and Company Administration (DICA), total FDI in the country hit over 72 billion U.S. dollars since late 1988, with oil and gas sector standing atop with 22.4 billion U.S. dollars, followed by Energy with 20.5 billion U.S. dollars, manufacturing with 8.3 billion U.S. dollars, transport and communication with 8.2 billion U.S. dollars and real estate with 4.3 billion U.S. dollars.A total of 8 billion U.S. dollars FDI flew into other sectors - mining, hotel and tourism, livestock and fisheries, agriculture, industrial estate, construction and other services.In last FY 2016-2017, total annual FDI in the country amounted over 6.8 billion U.S. dollars.

China's auto sales back to growth in June

China's auto sales grew again in June after two months of decline, data from the China Association of Automobile Manufacturers (CAAM) showed.Some 2.2 million vehicles were sold last month, up 4.5 percent year on year, compared with a 0.1 percent decline in May and a 2.2 percent drop in April.Meanwhile, 2.2 million vehicles were produced in June, up 5.4 percent from the same period last year, according to the CAAM.Sales of passenger cars climbed 2.3 percent to 1.8 million vehicles last month, 2.2 percentage points slower than the overall growth.But both production and sales in new energy vehicles (NEVs) were particularly robust, with 59,000 NEVs sold in June, up 33 percent year on year, while 65,000 NEVs were produced, up 43.4 percent.In the first six months, total auto output and sales increased by 4.6percent and 3.8 percent year on year to 13.5 million and 13.4 million vehicles, respectively, a slowdown from the the growth in the same period last year.Some 195,000 NEVs were sold during the six-month period, up 14.4 percent from the first half of 2016, while 212,000 NEVs were produced, up 19.7 percent.The tepid auto market was partly a result of a higher sales tax, which was raised to 7.5 percent this year.In October 2015, China slashed the sales tax on cars with engines of 1.6 liters or below from 10 percent to 5 percent, helping increase total auto sales to a record high of 28.03 million last year.The tax rate will return to 10 percent again in 2018, according to the government.China has had the world's largest car market for eight consecutive years.

Anhui’s Huaibei to Create New Industry Highland

Huaibei, a coal city in northern Anhui province, will create a highland of industry innovation so as to promote its opening-up and industrial transformation, according to Agreement on Building a Highland of Industry Innovation at the border of Jiangsu, Shandong, Henan and Anhui signed by Anhui Entry-Exit Inspection & Quarantine Bureau and Huaibei Municipal Government.Huaibei has recently adhered to strategy of industrial transformation. Coal chemistry, electronic information, clothing and other industries have been developed rapidly. In 2016, Nearly 3,038 batches of goods were quarantined, an increase of 17.1% year-on-year. The total value of goods amounted to RMB 106 million, up 6.9% year-on-year.In accordance with Agreement, Huaibei will boost the construction of demonstration areas and enterprises related to food safety and automobile security. A new batch of export industrial bases will be build. It will also support the construction of “dry port” at Qinglongshan Railway, so that provide a rapid commodity transport passage. Furthermore, Huaibei will implement supply-side reform.

China’s May exports up 15.5%, imports up 22.1%

BEIJING — Both China’s exports and imports surged in May, beating expectations, customs data showed on June 8.Exports in yuan-denominated terms hit 1.32 trillion yuan (about $194 billion) last month, up 15.5 percent year on year, higher than market expectations and the 14.3 percent growth in April, according to the General Administration of Customs (GAC).Imports grew 22.1 percent in May, much faster than market forecasts and the 18.6 percent growth in April.This led to a monthly trade surplus of 281.6 billion yuan, in contrast with a 262.3 billion yuan surplus in April. However, the May surplus declined 3.4 percent year on year.Total foreign trade volume reached 2.35 trillion yuan last month, up 18.3 percent year on year.May’s data continued the growth in China’s foreign trade since the beginning of the year.In the first five months combined, exports increased 14.8 percent from a year ago to 5.88 trillion yuan, and imports jumped 26.5 percent to 4.88 trillion yuan, resulting in a 21.1 percent decline in the trade surplus.During the first five months, trade with the EU jumped 16.1 percent from the same period last year to hit 1.6 trillion yuan. The EU is China’s biggest trade partner, accounting for 14.8 percent of the country’s foreign trade.Meanwhile, trade with the United States, ASEAN and Japan went up by 21.1 percent, 23.2 percent and 17.5 percent, respectively.Machinery, electronics and clothing exports rose in the first five months, while labor-intensive products such as fertilizer, steel and automobiles saw shrinking orders.A leading indicator for China’s exports increased from 40.7 to 41.1 month on month in May, signaling positive export potential.