Tag Archives: China
TOKYO (Reuters) – Japan’s Toshiba Corp has decided it will cancel the planned $ 18.6 billion sale of its memory chip unit if it does not get approval from China’s anti-monopoly regulator by May, the Mainichi newspaper said on Sunday.
A consortium led by U.S. private equity firm Bain Capital last year won a long and highly contentious battle for the unit, which Toshiba put up for sale after billions of dollars in cost overruns at its Westinghouse nuclear unit plunged it into crisis.
But Toshiba was unable to complete the sale by the agreed deadline of March 31 as it was still waiting for approval from China’s antitrust authorities.
Toshiba raised $ 5.4 billion from a share issue to foreign investors late last year and it had now decided it did not need to go through with the sale, the Mainichi newspaper reported. It did not cite any source.
“Toshiba has come to a decision that there is little necessity for the sale as it is no longer in insolvency,” the newspaper reported, adding that Toshiba would consider listing the unit if the sale did not go ahead.
A Toshiba spokesman said the company was still aiming to complete the sale as soon as possible.
In early April, Toshiba Chief Executive Nobuaki Kurumatani said his company would not use the option of cancelling the sale unless there was any “major material change” in circumstances.
Reporting by Makiko Yamazaki, Kiyoshi Takenaka; Editing by Robert Birsel
BEIJING/SHANGHAI (Reuters) – In China, a platform for risqué jokes is no laughing matter.
Toutiao, a hugely popular news and online content portal that is luring investors, was forced to pull its joke sharing “Neihan Duanzi” app, literally meaning “implied jokes”, after a watchdog said it included “vulgar and improper content”.
The move comes amid a broader clamp-down targeting online content from livestreams and blogs to mobile gaming, as the country’s leaders look to tighten their grip over a huge and diverse cultural scene online popular with China’s youth.
China’s State Administration of Radio and Television ordered the app to be taken down permanently in a post on Tuesday for low values that had “caused strong disgust amongst netizens”. It urged Toutiao to regulate similar content on its other sites.
Toutiao, one of the country’s fastest-growing tech start-ups which was valued at around $ 20 billion last year, has been in hot water with regulators lately. Earlier this week, its main mobile app was also removed from a number of Chinese smartphone app stores following reports of increased censorship.
In a public letter titled “Apology and Introspection”, Toutiao founder Zhang Yiming pledged to raise the number of in-house censors – referred to as content auditors – to 10,000 people from 6,000 currently to keep its content wholesome.
“This product walked the wrong path and had content in deviation of socialist core values,” he wrote in the letter posted on his official microblog account on Wednesday.
Reporting by Pei Li and Adam Jourdan; Editing by Michael Perry
BEIJING/NEW YORK (Reuters) – Walmart Inc has opened its first small high-tech supermarket in China, where smartphones can be used to pay for items that are mostly available on the U.S. retailer’s store on Chinese online marketplace JD.com, it said on Monday.
The world’s largest retailer, known for its hypermarkets, is expanding in China as shopping with mobile devices gains popularity in the country, and as retailers and technology companies such as Alibaba Group Holding Ltd and Tencent Holdings Ltd cut deals to integrate online and offline shopping.
Walmart is also targeting more online shoppers, who spend twice as much in the United States when buying on its website.
Walmart had run smaller Walmart Express stores in the United States, with 12,000 to 15,000 square feet, compared with about 105,000 square feet for its typical supermarket. But the concept did not take off and the retailer was forced to shut them down in 2016.
Walmart did not specify the size of the China store, in the southern city of Shenzhen. The company did not immediately respond to a request for comment.
The outlet will stock more than 8,000 items ranging from stir-fried clams to fresh fruit, 90 percent of which will be available online, it said in a statement. Items can be delivered within a 2 kilometer (1.2 mile) radius as quickly as 29 minutes, said Walmart, which owns a stake in JD.com.
Customers can opt to pay with their smartphone using a program on Tencent Holding Ltd’s WeChat messaging.
In March, Walmart said it would expand its grocery home deliveries in key markets to reach more than 40 percent of U.S. households, or 100 metro areas from six currently.
Reporting by Pei Li and Brenda Goh in Beijing and Nandita Bose in New York; Editing by Muralikumar Anantharaman and Richard Chang
WASHINGTON (Reuters) – The Trump administration this week will unveil the list of Chinese imports targeted for U.S. tariffs to punish Beijing over technology transfer policies, a move expected to intensify trade tensions between the world’s two largest economies.
The list of $ 50 billion to $ 60 billion worth of annual imports is expected to target “largely high-technology” products and it may be more than two months before tariffs take effect, administration officials have said.
The U.S. Trade Representative’s office needs to unveil the list of products by Friday under President Donald Trump’s China tariff proclamation signed on March 22.
The tariffs are aimed at forcing changes to Chinese government policies that USTR says results in the “uneconomic” transfer of U.S. intellectual property to Chinese companies.
The agency’s “Section 301” investigation authorizing the tariffs alleges China has systematically sought to misappropriate U.S. intellectual property through joint venture requirements, unfair technology licensing rules, purchases of U.S. technology firms with state funding and outright theft.
China has denied that its laws require technology transfers and has threatened to retaliate against any U.S. tariffs with trade sanctions of its own, with potential targets such as U.S. soybeans, aircraft or heavy equipment.
On Sunday, Beijing slapped extra tariffs of up to 25 percent on 128 U.S. products including frozen pork, as well as wine and certain fruits and nuts in response to steep U.S. tariffs on imports of aluminum and steel announced last month by the Trump administration.
Fears have arisen that the two countries will spiral into a trade war that will crush global growth.
TARGETING ‘MADE IN CHINA 2025’
U.S. technology industry officials said they expected the Trump administration’s list to target products that benefit from Beijing’s “Made in China 2025” program, which aims to upgrade the country’s domestic manufacturing base with more advanced products.
The state-led program targets 10 strategic industries for replacing imports with Chinese-made products: advanced information technology, robotics, aircraft, shipbuilding and marine engineering, advanced rail equipment, new energy vehicles, electrical generation equipment, agricultural machinery, pharmaceuticals and advanced materials.
“Foreign technology acquisition through various means remains a prime focus under Made in China 2025 because China is still catching up in many of the areas prioritized for development,” USTR said in its report justifying the tariffs.
U.S. Trade Representative Robert Lighthizer has said that preserving America’s technological edge is “the future of the U.S. economy.”
Reports that the tariff list may also include consumer goods such as clothing and footwear drew strong protests from U.S. business groups, which argued that it would raise prices for U.S. consumers.
LIMITED TIME FOR TALKS
While there have been contacts between senior members of the Trump administration and their Chinese counterparts since Trump announced his intention to impose tariffs, there has been little evidence of intensive negotiations to forestall them.
“The administration is following the Japan model from the 1980s,” said a tech industry executive. “They’ll publish a Federal Register notice of tariffs on certain products, then try to reach a negotiated settlement over the next 60 days.”During his first stint at USTR in the Reagan administration, Lighthizer employed similar tactics to win voluntary Japanese export restraints on steel and autos.
Wendy Cutler, a former deputy USTR in charge of Asia negotiations, said that addressing the sweeping intellectual property allegations identified by USTR would require major changes to China’s industrial policy. A 60-day settlement may not be realistic in that case.
“I think they’ve set up a high bar for what they need to achieve, in order not to impose these types of tariffs and investment restrictions,” Cutler said.
Reporting by David Lawder; Editing by Peter Cooney
Efforts to put cleaner cars on American roads are being threatened. In a few days, The New York Times reports, the Environmental Protection Agency will move to weaken the regulations that demand automakers producer cleaner and more efficient vehicles.
The existing standards, which Barack Obama pushed for in 2012, demand each automaker nearly double the average fuel efficiency of its cars, to deliver 36 miles per gallon. But before President Donald Trump, EPA head Scott Pruitt, or anyone else can knock that number down, they must tangle with California. The state had rules to battle govern tailpipe emissions before a 1970 amendment to the Clean Air Act gave the EPA the authority to govern vehicle efficiency. Because of its early bird status, and especially grave pollution problem at the time, Congress gave California the unusual right to keep making its own regulations, even though federal rules should supersede state ones. No other state can do this, but they may opt to follow California’s rules, which tend to be more stringent than whatever Washington drums up. Today, 13 states and Washington DC do so.
Together, those states (which, unsurprisingly, cover most of the East and West Coasts) account for a third of the American car market. So automakers have long built vehicles that meet California’s tougher rules. It may sound like a pain, but it’s cheaper than building two versions of every car—the cleanish one for most of the country, and the cleaner one for the folks who like their air salty but clean. And so lowering the national standards is only effective if you can get California to lower its too.
Pruitt, a climate change skeptic, has signaled he’s ready—and right—to wrestle the grizzly bear. “California is not the arbiter of these issues,” he told Bloomberg this month. But four decades of legal precedent don’t vanish without a fight, certainly not quickly. “We’re prepared to do everything we need to defend the process,” the state’s attorney general, Xavier Becerra, told the Times.
Okay, but say Pruitt gets his way, California loses its special status, and automakers no longer have to meet such tough efficiency and emissions standards. First off, don’t expect coal rolling poor Prius drivers to become the new national sport. “We’re not gonna go sliding back to the gas guzzling 80s,” says Rebecca Lindland, an industry analyst with Kelley Blue Book. That’s because automakers plan years ahead. They have already spent the money developing the turbochargers, lightweight materials, low resistance tires, and other tech they need to meet the current rules. They’re not going to change their carefully laid plans now.
That’ll keep the fumes away for a few more years, at least. But there’s better news for anybody worried about driving the Earth into climatic disaster: The electric cars—the ones that make the entire notion of miles per gallon outdated, the emission zero heroes—are still coming, thanks to two parties: China, and the millennials.
Let’s start with China. The country is already the world’s largest car market, buying about 23 million vehicles a year, and its appetite is growing by about five percent year over year, according to a McKinsey report. For automakers who have already flooded American streets with their wares, fresh territory is a vital resource. “The US [luxury] market in my view is going to remain relatively stagnant. It won’t decline, but it won’t grow,” Cadillac head Johan de Nysschen said this week at the New York International Auto Show. “The Chinese market, in the next 10 years, is going to triple.”
And China—where pollution is a serious problem—insists that any automaker doing business within its borders sell lots and lots of electric cars. That’s a big part of the reason why General Motors plans to roll out 20 new fully electric cars by 2023 and Ford is putting $ 11 billion into building 16 new models by 2022. Volvo is making its entire fleet “electrified” (a term that includes hybrids), and even Jaguar Land Rover, which debuted its first all-electric car just last year, says that by 2020, it will offer electric or hybrid versions of every car it makes. In an increasingly globalized industry, you can expect to see those models hit US and European shores as well—the more of each they sell, the faster automakers can amortize heavy R&D costs.
And the youths will help the process along. Right now, Lindland says, “the push to develop and deploy electric vehicles has been driven by regulations…consumers are not demanding these products.” Forcing people to change their habits—where, when, and how they fuel their vehicles—is hard. But that could change with the generation just now learning to drive. “I think people born after 2003 are those who will demand electrification,” Lindland says. “Those who haven’t bought a car yet. It’s not even a conversion.” Indeed, she says, that may help along China’s push for battery-powered cars. “They have more first time buyers at their disposal.”
Automakers play a very long game, and they know this new generation is coming. “As we see more millennials coming into the marketplace, companies are looking to strike a more efficient picture,” says Carla Bailo, CEO of the Center for Automotive Research. That means more electric cars, fewer emissions, and cleaner air.
So millennials—the kids who kill everything—along with whatever generation comes next, just might save the planet.
Chinese customs officers have arrested smugglers who attempted to drop millions of dollars worth of iPhones from drones into China.
Twenty-six suspects were arrested in China recently after they tried to use drones to fly two 660-foot cables from Hong Kong to Shenzhen, according to Reuters. Those cables were going to be used to lift iPhones worth 500 million yuan ($ 79.6 million) to the mainland, where they could be sold via the black market for a hefty profit, according to the report. A local Chinese report from the Legal Daily said it was the first time drones were employed to smuggle phones.
The operation was set to go off at night, where smugglers would pack small bags with approximately 10 iPhones and attach them to the drones. Those drones would then fly from Hong Kong to the mainland in just a matter of seconds. According to Reuters, the smugglers had the ability to transport up to 15,000 iPhones each night.
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Smuggling of high-value products—like iPhones, jewelry, and luxury products—is nothing new in China. In fact, the government has been working hard to crackdown on the practice and do a better job of breaking up what has become an increasingly powerful black market.
Smuggling gangs often steal devices or buy them at a deeply reduced rate and sell them for a higher price in China. They’re careful, however, to keep their prices below the going rate for those who purchase products legitimately. The result is a profitable business for smugglers and an opportunity for Chinese consumers to get authentic goods at a cheaper price.
Despite breaking up the drone attempt, Shenzhen officials warned that smuggling would continue. According to Reuters, the customs officers are planning to use several types of equipment to thwart other attempts by the smugglers.
BEIJING (Reuters) – Customs officers in southern China’s technology hub Shenzhen busted a group of criminals using drones to smuggle 500 million yuan ($ 79.8 million) worth of smartphones from Hong Kong to Shenzhen, the official Legal Daily reported on Friday.
Authorities arrested 26 suspects who used drones to fly two 200-meter (660-feet) cables between Hong Kong and the mainland to transport refurbished iPhones with a total value of 500 million yuan, the paper said in a report on the crackdown by Shenzhen and Hong Kong customs.
“It’s the first case found in China that drones were being used in cross-border smuggling crimes,” the Legal Daily reported, citing a news conference held by Shenzhen customs on Thursday.
The smugglers usually operated after midnight and only needed seconds to transport small bags holding more than 10 iPhones using the drones, the report quoted customs as saying. The gang could smuggle as many as 15,000 phones across the border in one night, it said.
Regulating the use of drones has become an important task for China, the world’s largest manufacturer of consumer drones.
China published strict rules last year to tackle incidents of drones straying into aircraft flight paths, including requiring owners of civilian drones to register craft up to a certain weight under their real names.
Shenzhen customs was quoted by the Legal Daily as saying it would closely monitor new types of smuggling with high-tech devices and enhance their capability with technical equipment, including drones and high-resolution monitors, to detect smuggling activity.
Reporting by Lusha Zhang and Se Young Lee; Editing by Paul Tait
SHANGHAI (Reuters) – H&M, the world’s second-biggest fashion retailer, launched its core brand on Alibaba’s giant online marketplace Tmall on Wednesday to try to keep up with competition in China.
It is the first time that H&M, which also has seven newer add-on labels, has sold its main budget apparel brand through a third party. By moving on to Tmall, it is playing catch-up with some of its major rivals.
Market leader Inditex’s main brand Zara opened an online store on Tmall in 2014, joining western brands such as Gap and ASOS , while Amazon joined in 2015, alongside its own online store in the country.
Sweden’s H&M launched its own independent online store in China in 2014, after entering the country around a decade ago, but China’s e-commerce market is dominated by virtual shopping centers such as Alibaba’s Tmall and Taobao.
Magnus Olsson, H&M’s China country manager, said in an interview in Shanghai that H&M needs to be on the platforms where most of the customers are, adding that pricing and offering on Tmall would differ little from that on hm.com in China.
The H&M group has seen sales growth stall and shares dive in recent years as it has struggled to adapt to the shift online. It sees future growth mainly in new markets such as China although the bulk of business is still in Europe.
Last year the group generated around 11 billion Swedish crowns ($ 1.3 billion) of its total 200 billion in revenues in China where it has around 500 of its 4,700 stores.
Olsson said competition was getting tougher in China amid a major shift online that was boosting rivals and increasing price transparency, and H&M was now adapting its ranges more in the country to meet regional demand.
“Something we’re really focusing on is trying to understand where consumer behavior, and especially here, the fashion sense of the consumer is heading,” he said. “We create more and more Asia specific or China specific collections.”
H&M, which had already launched its Monki brand on Tmall, plans to launch its other brands too on the platform.
Olsson expects the Tmall partnership to help pave the way for store expansion in smaller Chinese cities where brand recognition is still slim.
“There are also other advantages with the Tmall tie-up and that is that in most of the tier 3 or 4 cities where we’re not present, H&M might not be as well known, but Tmall is, so they find H&M through that platform until we come with a store,” he said.
($ 1 = 8.2115 Swedish crowns)
Reporting by Adam Jourdan, writing by Anna Ringstrom in Stockholm, editing by Keith Weir
SAN FRANCISCO/BEIJING (Reuters) – When Apple Inc begins hosting Chinese users’ iCloud accounts in a new Chinese data center at the end of this month to comply with new laws there, Chinese authorities will have far easier access to text messages, email and other data stored in the cloud.
That’s because of a change to how the company handles the cryptographic keys needed to unlock an iCloud account. Until now, such keys have always been stored in the United States, meaning that any government or law enforcement authority seeking access to a Chinese iCloud account needed to go through the U.S. legal system.
Now, according to Apple, for the first time the company will store the keys for Chinese iCloud accounts in China itself. That means Chinese authorities will no longer have to use the U.S. courts to seek information on iCloud users and can instead use their own legal system to ask Apple to hand over iCloud data for Chinese users, legal experts said.
Human rights activists say they fear the authorities could use that power to track down dissidents, citing cases from more than a decade ago in which Yahoo Inc handed over user data that led to arrests and prison sentences for two democracy advocates. Jing Zhao, a human rights activist and Apple shareholder, said he could envisage worse human rights issues arising from Apple handing over iCloud data than occurred in the Yahoo case.
In a statement, Apple said it had to comply with recently introduced Chinese laws that require cloud services offered to Chinese citizens be operated by Chinese companies and that the data be stored in China. It said that while the company’s values don’t change in different parts of the world, it is subject to each country’s laws.
“While we advocated against iCloud being subject to these laws, we were ultimately unsuccessful,” it said. Apple said it decided it was better to offer iCloud under the new system because discontinuing it would lead to a bad user experience and actually lead to less data privacy and security for its Chinese customers.
As a result, Apple has established a data center for Chinese users in a joint venture with state-owned firm Guizhou – Cloud Big Data Industry Co Ltd. The firm was set up and funded by the provincial government in the relatively poor southwestern Chinese province of Guizhou in 2014. The Guizhou company has close ties to the Chinese government and the Chinese Communist Party.
The Apple decision highlights a difficult reality for many U.S. technology companies operating in China. If they don’t accept demands to partner with Chinese companies and store data in China then they risk losing access to the lucrative Chinese market, despite fears about trade secret theft and the rights of Chinese customers.
Apple says the joint venture does not mean that China has any kind of “backdoor” into user data and that Apple alone – not its Chinese partner – will control the encryption keys. But Chinese customers will notice some differences from the start: their iCloud accounts will now be co-branded with the name of the local partner, a first for Apple.
And even though Chinese iPhones will retain the security features that can make it all but impossible for anyone, even Apple, to get access to the phone itself, that will not apply to the iCloud accounts. Any information in the iCloud account could be accessible to Chinese authorities who can present Apple with a legal order.
Apple said it will only respond to valid legal requests in China, but China’s domestic legal process is very different than that in the U.S., lacking anything quite like an American “warrant” reviewed by an independent court, Chinese legal experts said. Court approval isn’t required under Chinese law and police can issue and execute warrants.
“Even very early in a criminal investigation, police have broad powers to collect evidence,” said Jeremy Daum, an attorney and research fellow at Yale Law School’s Paul Tsai China Center in Beijing. “(They are) authorized by internal police procedures rather than independent court review, and the public has an obligation to cooperate.”
Guizhou – Cloud Big Data and China’s cyber and industry regulators did not immediately respond to requests for comment. The Guizhou provincial government said it had no specific comment.
There are few penalties for breaking what rules do exist around obtaining warrants in China. And while China does have data privacy laws, there are broad exceptions when authorities investigate criminal acts, which can include undermining communist values, “picking quarrels” online, or even using a virtual private network to browse the Internet privately.
Apple says the cryptographic keys stored in China will be specific to the data of Chinese customers, meaning Chinese authorities can’t ask Apple to use them to decrypt data in other countries like the United States.
Privacy lawyers say the changes represent a big downgrade in protections for Chinese customers.
“The U.S. standard, when it’s a warrant and when it’s properly executed, is the most privacy-protecting standard,” said Camille Fischer of the Electronic Frontier Foundation.
Apple has given its Chinese users notifications about the Feb. 28 switchover data to the Chinese data center in the form of emailed warnings and so-called push alerts, reminding users that they can chose to opt out of iCloud and store information solely on their device. The change only affects users who set China as their country on Apple devices and doesn’t affect users who select Hong Kong, Macau or Taiwan.
The default settings on the iPhone will automatically create an iCloud back-up when a phone is activated. Apple declined to comment on whether it would change its default settings to make iCloud an opt-in service, rather than opt-out, for Chinese users.
Apple said it will not switch customers’ accounts to the Chinese data center until they agree to new terms of service and that more than 99.9 percent of current users have already done so.
Until now, Apple appears to have handed over very little data about Chinese users. From mid-2013 to mid-2017, Apple said it did not give customer account content to Chinese authorities, despite having received 176 requests, according to transparency reports published by the company. By contrast, Apple has given the United States customer account content in response to 2,366 out of 8,475 government requests.
Those figures are from before the Chinese cyber security laws took effect and also don’t include special national security requests in which U.S. officials might have requested data about Chinese nationals. Apple, along with other companies, is prevented by law from disclosing the targets of those requests.
Apple said requests for data from the new Chinese datacentre will be reflected in its transparency reports and that it won’t respond to “bulk” data requests.
Human rights activists say they are also concerned about such a close relationship with a state-controlled entity like Guizhou-Cloud Big Data.
Sharon Hom, executive director of Human Rights in China, said the Chinese Communist Party could also pressure Apple through a committee of members it will have within the company. These committees have been pushing for more influence over decision making within foreign-invested companies in the past couple of years.
Reporting by Stephen NellisEditing by Jonathan Weber and Martin Howell
BEIJING/SHANGHAI (Reuters) – Apple Inc will accept Chinese mobile payment app Alipay in its local stores, boosting its ties with giant e-commerce firm Alibaba Group Holding Ltd amid a push by the iPhone maker to revive growth in the world’s No.2 economy.
The tie-up will make Alipay, run by Alibaba affiliate Ant Financial, the first third-party mobile payment system to be accepted at any physical Apple store worldwide, Ant Financial said in a statement on Wednesday. Apple’s own payment system has had a lukewarm reception in China.
The Cupertino-based firm will accept Alipay payment across its 41 brick-and-mortar retail stores in China, said Ant Financial, which was valued at $ 60 billion in 2016.
Apple, whose China website, iTunes store and App Store have been accepting Alipay for more than a year, did not immediately respond to requests for comment.
The deal comes as Apple is doubling down on the market and looking to strengthen ties with local Chinese partners and government bodies. The firm’s CEO Tim Cook has made regular recent visits to the country.
Apple is also shifting user data to China-based servers later this month to meet local rules and last year removed dozens of local and foreign VPN apps from its Chinese app store.
Alipay is China’s top mobile payment platform, but faces stiff competition from rival internet giant Tencent Holdings Ltd’s payment system that is embedded within its hugely-popular chat app WeChat.
China’s official Xinhua news agency said late on Tuesday that Apple would build its second data center in China in Inner Mongolia Autonomous Region after it set up a data center in the southern province of Guizhou last year.
Reporting by Pei Li in BEIJNG and Adam Jourdan in SHANGHAI; Editing by Himani Sarkar