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Features - 10 September 2014

China's e-Commerce Market Booming

As Chinese e-commerce company Alibaba prepares for its IPO through the New York Stock Exchange, the Dalian Wanda group in China announced on Friday that it would be entering into an e-commerce joint venture with Baidu and Tencent Holdings to be registered in Hong Kong. Wanda will own 70 percent of the new venture with Baidu and Tencent each holding 15 percent. The aim is to tap into China's e-commerce market, which is reportedly the largest in the world and currently dominated by Alibaba. The collaboration between the three companies will create the world's biggest online-to-offline (O2O) e-commerce platform, where people use their mobile devises to locate and buy goods and services, often while they are in or nearby the physical store.

The joint venture, currently referred to as Wanda e-commerce, is reportedly structured over three years with the initial investment being 1 billion yuan. Located in Beijing, Dalian Wanda Group Corporation Limited is a conglomerate with interest in tourism, hotels, real estate and entertainment. With headquarters in Nanshan District, Shenzhen, Tencent Holdings Limited has interests in mass media, internet and mobile phone value-added services, internet and online advertising, while Baidu is an internet service provider located in the Haidian District of Beijing.

As China's largest e-commerce company, Alibaba generates sales exceeding those of Amazon and eBay combined. Categorized as a 'special-purpose entity' or 'variable-interest entity' Alibaba operates through an agency in the Cayman Islands to sidestep Chinese law prohibiting foreigners from direct investment in Chinese companies. But this also means that investors have no say in the corporate decision making process, as founder of Alibaba, Jack Ma, and selected partners appointment more than half of the company's supervisory board members. Nevertheless, with China's e-commerce market valued at around $300 billion a year and growing, it is anticipated that Alibaba's IPO through the NYSE will attract significant investor attention.


Upgrade of ASEAN-China FTA to be Negotiated - 27 August 2014

At the 13th AEM-MOFCOM conference held earlier this week in Naypyidaw, Myanmar, it was agreed to upgrade the ASEAN-China Free Trade Area (ACTFA) in order to ensure that it remains relevant in today's economic climate. The AEM-MOFCOM (ASEAN Economic Ministers-Ministry of Commerce People's Republic of China) meetings formed part of the broader 46th ASEAN Economic Minister Meeting. The topic of Custom Procedures and Trade Facilitation (CPTF) negotiations was also raised, as well as the need to review the Sensitive Track and Rules of Origin, with a progress report to be made at the next AEM-MOFCOM consultation.


Foreign Automakers Gain Market Share in China - 13 August 2014

A recent report revealed that domestic automakers in China are losing market share to foreign automakers at a steady rate that appears set to continue as multinational corporations set up manufacturing plants in China. With an increasing number of China's citizens gaining wealth, new car sales are soaring, and more affluent consumers are choosing global brands which are seen as being safer, more reliable and more luxurious than locally produced vehicles. Moreover, restrictions on the number of license plates issued each year in Shanghai, Beijing and Guangzhou has made choosing a car an important decision, and buyers appear to be prepared to spend more on a car when they receive their much sought-after, and often long-awaited, license plates.