05 | 2015 | Business and Finance

In this issue of the German Chamber Ticker, we will take a closer look at these and other topics related to the Chinese financial industry. Experts will share their insights on China’s approach to its “new normal,” the future of the yuan, disruptive innovation in China’s banking industry and emerging opportunities for cross-border mergers & acquisitions. We hope that you enjoy reading!


Alexandra Voss - GCC | North China Executive Director

 

GCT-05-2015

Cover Story 1 - The RMB: Just One Lever in a Complex Machine

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Future Challenges of the Chinese Yuan

by DR. SIMON BAPTIST

 

China is undergoing an economic transition on an incredible scale: a continent-sized economy is moving rapidly to higher income status, from investment to consumption, and coming down from 10% levels of growth, while simultaneously opening its financial markets. It's a tough balancing act, and it won't all be smooth sailing. The Chinese currency, the renminbi (RMB), is just one lever in a very complex machine: one of critical importance, but not the only item to balance. In order to understand where the RMB will go, it is critical to understand Chinese policymakers’ broader reform goals.


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Cover Story 2 - Duplication to Disruption

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How Alibaba, Baidu and Tencent are About to Change the Way a Billion People Bank

by ZENNON KAPRON

One of the advantages of living in China is that you have ringside seats to one of the most dramatic economic transformations of our generation. China’s economy over the past three decades has outperformed nearly every other global economy and it is now the second largest in the world. China has the world’s largest rail network with 112,000km of track as of 2014, enough to wrap around the globe nearly three times. China has brought more people out of poverty than any other country in modern history. There are countless unique ways that China has shattered everyone’s expectations besides its own.

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Cover Story 3 - Like an Athlete on Dope

Like an Athlete on Dope

by PROF. DORIS FISCHER

In 2013, during a discussion about the upcoming economic policies of the new Chinese leadership under Xi Jinping, a Chinese friend and economist close to the government stressed that the state should better fulfill the tasks it is obligated to fulfill, and refrain from meddling in matters which should be left to markets and private initiatives. American economist Joseph E. Stiglitz has also reiterated this idea in publications. What does this statement imply?


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Cover Story 4 - Changing Appetites

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A Snapshot and Outlook to Cross-Border Mergers & Acquisitions into and out of China

by PROF. CHRISTOPHER KUMMER

The Chinese market for Mergers & Acquisitions (M&A) is already the second largest market for companies after the United States. This year, more than 3,500 transactions valued at over USD 400bn have been announced since January. The majority of deals took place between Chinese companies, making more than 85% of all transactions national ones. Due to the overall increase in local Chinese M&A, the share of crossborder transactions has declined. However, the interest for international deals by Chinese companies has been increasing significantly in the last couple of years, as well as foreign companies continuing to make acquisitions.


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Cover Story 5 - Leverage is a Double- Edged Sword

Professor Yan Hong of the Shanghai Advanced Institute of Finance on China's Financial System

by DR. ANNIKA BEIFUSS

What caused the turbulence in the stock market? Are shadow banks a problem in China? What is the reason for China’s growing income gap? These and many other questions arose during the preparation of this special issue on business and finance. Who else could we ask these questions to than a professor of finance? Professor Yan of the Shanghai Advanced Institute of Finance at Shanghai Jiaotong University patiently answered questions from the German Chamber Ticker team.


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In the Spotlight: Asia is Our Lynchpin for Success

Interview with Thomas Berg, Managing Director of BREMA Marketing GmbH & Co. KG

by OLIVER REGNER and FABIENNE PRIVAT

Since its inception north German import company BREMA has been providing customers with tools, garden furniture, and household items. With two subsidiaries in China, BREMA’s CEO kindly took the time to talk to the German Chamber Ticker about BREMA’S activities and the import business in China.

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Feature 1 - FTZ Update

New Regulations for International Shipping Business in China FTZs

by DR. ULRIKE GLUECK and CYNDI CAO

Foreign investors engaged in the international shipping business in China are regulated by the PRC Regulations on International Maritime Transportation (“Maritime Regulations”) issued by the Ministry of Transport (“MOT”) as well as its implementation rules (“Implementation Rules”). These regulations subject foreign investment in the area of international shipping business to many restrictions.


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Feature 2 - Economic Update

Understanding the Chinese Stock Market

by MAX J. ZENGLEIN

The first half of the year saw China’s economy off to a weak start. The economic slowdown accelerated in the first quarter, with most key macroeconomic indicators dipping to lower levels of growth. Data for the second quarter, however, provided hope that the slowdown had bottomed out: industrial production and retail both picked up growth in May and June, while fixed asset investments stabilized after having fallen to lower growth levels in the previous months.


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Feature 3 - How to Make a Successful Exit

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Chinese Liquidation Processes and Tax Consequences

by KRISTINA KOEHLER-COLUCCIA

China's economy grew 7% year-on-year in the first quarter of 2015 - its worst performance in six years. According to the European Union Chamber of Commerce in China’s latest survey of 541 European companies, China reached an economic slowdown. Nearly one-fifth of the companies surveyed said they are considering shifting some of their China investments to other markets. One of the reasons for this development is the difficulties set by the Chinese government towards foreign companies.


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Feature 4 - The Rise of Social Media in China

Understanding How it Differs from the Rest of the World

by AHMET TOMBUL

Every day, millions of people in China are communicating and sharing information in virtual communities, better known as social networks. These communities are built around family members, friends, colleagues, partners or other people belonging to a group of interest. People are posting and sharing everything relevant to them or their communities.

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Feature 5 - Creations of the Mind

Interview with Reinout van Malenstein, Intellectual Property Expert on the Status of Chinese IP Law

by OLIVIA HELVADJIAN

One of the key reasons for German companies not to engage in R&D in China, according to the latest Business Confidence Survey by the German Chamber of Commerce China, is that they are concerned about insufficient protection of intellectual property. The same survey lists IPR infringement among the top 10 business challenges for German companies operating in China.

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More than Business 1 - From CSR 1.0 to 3.0

Corporate Social Responsibility is Becoming Established in China

by PROF. JUELIN YIN and PROF. FLORIAN KOHLBACHER

Corporate Social Responsibility (CSR) is arguably one of the hottest business topics in recent years. While it seemed to have been most relevant to corporations in the western world, the concept and its implications are now becoming increasingly visible in emerging markets as well.

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