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Editor's Note: As the 18th National Congress of the Communist Party of China, which opened on Thursday, continues in Beijing, China Daily asked a number of top executives from international companies to give their impressions of the event and their expectations for the country. We asked five questions, and the answers we were given showed great confidence in China and its business environment under the country's new leadership, set to be elected at the congress.
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With strong confidence in the China market, Bertelsmann held its First Bertelsmann China Conference on Oct 26, 2012. More than one hundred top Bertelsmann executives were gathered to discuss the planned expansion of its business in China. Our CEO Mr. Rabe said in Beijing: "We are very pleased that Bertelsmann is highlighting the importance of the Chinese market for the company's future with the Group's first ever conference of this kind".
- The fundamental driving forces will continue to support domestic consumption and investment to a much-needed level; - The Central Government still holds the key; - Additional policy options exist, including additional pro-consumption policies, investments in infrastructure and service sectors, and structural tax cut, etc. The China media industry at an annual growth rate of 15%, and Bertelsmann has been benefiting from China's emerging urban middle class, with its high purchasing power and affinity for all things digital. As of today, over 500 million internet users, 1,000 million mobile users, and an annual retail sales of 200 billion USD via e-commerce, enriches Bertelsmann's investment opportunities in the Internet, mobile services, e-commerce, online advertising and gaming sectors in China. This is especially true in the sectors of digital media and education, where we plan to invest more in future – worldwide, and also in China.
Bertelsmann already has strong market positions, most of our businesses with number 1 or 2 in their markets. We have enormous reach to hundreds of millions of people every day. 20 years ago we were one of the first Western media companies to begin operating in China. Active in this market for 20 years, we have established long-term relationships and a number of successful businesses. In the Chinese market we have three dimensions of growth, including expanding our existing businesses, expansion via growth platforms with global opportunities and increase both medium and long-term direct investments. Bertelsmann established its first subsidiaries in China in 1992. Today all four of the Group's divisions have operations in China. For instance, Fremantle Media (RTL Group) has brought internationally successful TV shows such as "Got Talent," "X-Factor", "Hole in the Wall" or "Take me out" to China. Random House sells internationally successful titles in China - in print and e-book versions - and sells the translation rights to its English-, German- and Spanish-language books to Chinese publishers. Gruner + Jahr and its partner Boda jointly publish leading parenting, women's, men's and lifestyle magazines. Arvato, Bertelsmann's largest division in China, has a nationwide logistics network in partnership with international and Chinese corporations, and recently shipped its 100 millionth mobile phone in China. Since 2008, our Bertelsmann Asia Investments (BAI) has acquired 20 stakes in promising new businesses with predominantly digital business models. BAI currently invests in performance marketing services, digital publishing, social media platforms and e-commerce solutions/CRM and online education. Three investments are already listed on the stock exchange.
We want to make Bertelsmann a place where ideas and plans become reality and modern forms of partnership can be put into action. We want to be the top destination for creative minds as well as entrepreneurs looking for a partner with whom they can turn their ideas into reality.
---- Annabelle Yu Long Chief Executive, Bertelsmann China Corporate Centre Managing Director, Bertelsmann Asia Investments |
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The fact of increasing cost and slowing growth does not delay our investment plan in China, as comparing to the rest of the world, China still enjoys a strong position. However the strategic direction and consideration of how to invest in China will change according to the macro-environment change. Shorter term of planning and more flexible options are preferred for such a challenge. While acquisition remains a strategic option of fast growing in China as well.
----- Steven Chang CEO of ZenithOptimedia Greater China |
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In the same period, EMC China outperformed other Asia Pacific countries thanks to the rapid adoption of cloud computing solutions by our Chinese customers. China will remain one of the most important markets for EMC. In a recent survey among AmCham's China members, 78 percent of respondents selected China as one of their top three priorities for short-term investment and 20 percent of them consider the Chinese market their top priority. Compared to other parts of the world, China still offers more opportunities even with the country's economy growing at its slowest pace in the past three years. EMC has strong confidence in China, evidenced by our continued investment in the market. The most recent example is we announced a partnership with Lenovo, representing a powerful opportunity for EMC to significantly expand our presence in China, a vibrant and very important market. Information technology is undergoing a fundamental transformation that will reshape the industry landscape. China's dynamic cloud opportunities are some of the world's most exciting and customers are often unencumbered by complex legacy systems, making them more agile and willing to take the leap into the cloud. We believe China will finally step out from the shadow of the United States and lead the world at the cutting edge of cloud computing deployments. Innovation and technological capacity are fundamental to diversifying and upgrading product lines, and are crucial for the country's global competitiveness, but these capacities are still under-developed in China.
Asia is no longer merely a source of comparative advantage based on low-cost labor, it is quickly becoming a source of competitive advantage based on management innovation. The Chinese government has proven its adeptness at driving economic growth, it would be encouraging to see more measures from the top that will allow innovation to develop and flourish.
----- Denis Yip Senior Vice President, EMC Corporation President, EMC Greater China |
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Since 2007 Home Credit has already shifted its focus to Asia with China's market being its core footprint in the continent. our core competence, consumer finance to low and middle income citizens, complements very well all policies and measures taken by China's leadership to get domestic consumption boosted through citizens' propensity to spend.
This approach also includes additional investments into technological-driven back offices, customer service centers and world-class automated credit scoring and risk management technologies based in China. Completing the pilot phase of consumer finance licensed company in Tianjin, Home Credit is ready for national roll-out across provinces to prove that durable goods financing on credit may make the difference for both citizens' living standers and economy stimulation. The Home Credit's shareholders have committed to invest additional $500 million into China's operations provided the national roll-out comes true.
Home Credit will continue to double the size of its business on an annual basis. Under the preconditions of extending geographical coverage within mainland China, enhancing product portfolio (which depends on the Regulator's decision) and supposed the easier access to local currency funding base happens, the growth of Home Credit lending can be significantly accelerated. We believe that there should be decision about further rollout made within next year. Actually we are fully prepared for the continuous growth.
----- Michal Skockl CEO, Home Credit China |
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The government has attached more importance on the quality of the growth and the policy has been working out. Meanwhile, the priority will continue to be given to the consumption-led growth, though China'sGDPgrowth now still heavily rely on investment and export. China is well positioned to withstand the global economic recession, and that's also true for Nielsen. China is one of the fastest growing markets for Nielsen's global business.
Instead, we will hire more people, probably increase our headcount by 10 percent next year. Right now, we have around 200 job vacancies available. And we expect to see a double-digit growth in both revenue and profit this year.
And as an English saying goes: a rising tide would lifts all boats. China's fast growing economy provides huge growth room for the entire industry we are in, but we should also not underestimate the challenges.
Meanwhile, we are looking forward to talents that are not only academically excellent but also innovative and market-ready.
----- Yan Xuan Nielsen Greater China President |
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Some examples of our commitments: The China Logistics Center in Taicang, Jiangsu province was built in 2011. The Center is Nike's largest distribution center in Asia. We also opened the largest Asia-based Nike Brand Experience Store in Shanghai at this end of September. In the beginning of this year, we announced plans for the development of a new centralized campus for Nike's employees in Shanghai China. This new centralized campus will support our long-term business growth strategy in China. The nearly 600,000 square foot headquarters will allow Nike to elevate and expand on its facilities and capabilities, while bringing all of its Shanghai-based employees together from its portfolio of NIKE, Inc. Brands into one central campus. We also signed Memorandum of Understanding (MOU) with Minister of Education in May, a three-year project that aims to change youths' perception of sports, allowing them to utilize its power of positive change in all areas of their lives. To do this, Nike will use its resources to help Chinese youth unlock their potential and ignite their love of sport.
Theretaillandscape is changing, and we're helping lead that. We're entering a new phase of distribution in China, with an emphasis focus on improving productivity in the Nike mono-brand stores, which is the dominant format in China. We have a head start here by applying the lessons we've learned in our own DTC business. This move is helping elevate how our brands and products are presented, and helping our retail partners improve their logistics and operations. For consumers, we are delivering stronger assortments, better merchandising and seasonal story-telling that will have a strong category focus. We'll also leverage our Amplify Sport strategy that has been so effective in other markets around the world. These are the keys to expanding capacity and improving productivity for our retail partners, in our own stores and online.
----- Craig Cheek vice president and general manager of NIKE Greater China |
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----- Erik Nelander SKF China president |