Weekly Business Roundup #4

May 13, 2024

Kweichow Moutai has nominated Zhang Deqin as the new chairman. The company also reported its Q1 2024 results on April 26, achieving a record high with revenue of 45.776 billion yuan (up 18.11% YoY) and a net profit of 24.065 billion yuan (up 15.73% YoY). Direct sales contributed 19.319 billion yuan, up 8.49% YoY, while wholesale revenue rose by 25.78% to 26.324 billion yuan. The "i-Moutai" digital platform generated 5.343 billion yuan, growing by 8.97% YoY, although this growth has slowed compared to previous years. There are now 2,097 domestic distributors, an increase of 17.
Xiaomi's CEO, Lei Jun, announced on Weibo that the 10,000th SU7 rolled off the production line just 32 days after its launch.

Shares of NIO HK (09866.HK) rose by more than 14% on Tuesday morning after it was reported that the company delivered 15,620 electric vehicles in April, representing a 134.6% increase year-over-year.

During the recent five-day Labor Day holiday, China saw a significant increase in both inbound and outbound travel. According to the National Immigration Administration, passenger throughput surged by 35% to over eight million compared to last year. Chinese mainlanders alone accounted for nearly 4.8 million of these travelers, marking a 38% rise. Additionally, domestic tourism during this period saw a 7.6% increase, with total spending reaching CNY166.9 billion (USD23.1 billion) - up 13% from the previous year.
The Shanghai headquarters of the PBOC and nine other departments convened to discuss Shanghai's financial support for large-scale equipment upgrades and consumer goods replacement. Midea $000333

Beijing and Shanghai, along with four other major regions in China, continue to enforce house purchase restrictions, contrasting with cities like Hangzhou and Xi'an that have recently lifted such measures to rejuvenate the sluggish real estate market. These cities have also eased down payment requirements and extended mortgage terms following a national call to reduce housing stockpiles. While broader policy relaxation trends are noted across the country, first-tier cities and some provinces maintain stricter buyer qualifications, although selective easing in areas like Shenzhen, Beijing, and Shanghai indicates gradual changes in policy.

Shanghai-based SMIC reported first quarter revenues of $1.75 billion, a 19.7% increase from the previous year, surpassing Taiwan-based competitors UMC and GlobalFoundries, which reported revenues of $1.71 billion and $1.549 billion, respectively. This marks the first time SMIC has outearned these firms in quarterly revenue.

Pinduoduo has obtained a license to operate courier distribution hubs through its affiliate Yucan, enhancing its control over last-mile delivery, crucial in e-commerce. Managed by co-CEO Zhao Jiazhen and located in Shanghai, Jiangsu, and Shandong, these hubs will allow Pinduoduo to better manage customer data and streamline service optimization. The company, having previously partnered with major courier services for its grocery arm Duoduo Maicai, aims to expand these hubs across more cities. Despite the competition from firms like Cainiao and JD Logistics, the market remains open for growth, particularly in China's less saturated central and western regions.
China is reportedly planning to eliminate the dividend tax for mainland investors who purchase Hong Kong stocks. This move aims to prevent double taxation and enhance liquidity in the Hong Kong market. Regulatory bodies, such as the China Securities Regulatory Commission and the State Taxation Administration, are currently evaluating a proposal from Hong Kong. This proposal suggests waiving the 20% tax on dividends from stocks acquired through the trading link connecting Hong Kong with Shanghai and Shenzhen.

Kuaishou, China's second-largest short video platform, plans to open an office in Riyadh, Saudi Arabia, as part of its expansion into the Middle East, North Africa, and Brazil. According to the South China Morning Post, Kuaishou's CFO Jin Bing sees these regions as great opportunities due to similarities in user engagement and online purchasing behaviors. The platform's international version, Kwai, currently has over 20 million monthly active users in the Middle East and North Africa. This expansion is concurrent with TikTok, also a Chinese-owned platform, fighting a US law that might force it to be sold or face a ban.
Qu Jing, Baidu's PR head, resigned after her comments minimizing her role in addressing employees' personal issues sparked backlash on Chinese social media. Her controversial statements, made in videos on Douyin, have since been deleted but continue to stir debate. This incident has escalated into a major PR crisis for Baidu, which is already struggling with a declining market share and transitioning towards an AI-focused strategy.

The Great Wall Street - Investing in China