yicaiglobal-blog

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Beijing Cracks Down on Rumormongering Among Real Estate Agencies

(YicaiGlobal) Dec. 5 — Beijing has also started to crack down on rumormongering and other illegal activities among real estate agencies following Shanghai and Shenzhen.

Beijing Municipal Commission of Development and Reform and Beijing Municipal Commission of Housing and Urban-Rural Development recently launched special ‘double random’ inspections targeting real estate agencies. Investigations were made of 30 realtors randomly selected from over 2,000, with a focus on price transparency and the authenticity of property listings.

Raids will be made in the next 20 days, and all offenses found will be punished in accordance with the laws and regulations, with zero tolerance. Beijing has been conducting special inspections at the municipal and district levels since October.

The municipal enforcement team has carried out inspections at least once a week. They have been focused on market disruptions caused by rumormongering, illegal financial businesses and non-transparent pricing practices.

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China to Revitalize Real Economy in 2017, Introduce New Mechanisms for Real Estate Market

(YicaiGlobal) Dec. 12 – A recent meeting of the Politburo of the CPC Central Committee on economic operations in 2017 called for more active efforts to revitalize the real economy and foster new economic growth drivers. For many experts, the decision of the meeting sends out a strong signal for robust efforts to boost industrial development.

In China, the last meeting of the Politburo each year focuses on economic operations for the following year and is of particular importance in that it sets the tone for the upcoming central economic working conference, which is considered to be the main indicator for the upcoming economic trends in the new year. The central financial working conference is held every five years, and the next one may take place later this year or early 2017, according to an informed source.

Real economy revitalization

“Manufacturing is the main battlefield for revitalizing the real economy. The existing manufacturing businesses are a critical factor, and innovation is the central task,” said Li Beiguang, deputy director of the planning department of the ministry of industry and information technology (MIIT), during an interview with the state-run Xinhua News Agency. Efforts will be made to promote emerging industries and, more importantly, to boost the progression of traditional industries through innovation.

China already takes on some of the challenges. According to the Intelligent Manufacturing Development Plan (2016-2020) issued by MIIT on Dec. 7, production will be digitalized in key traditional manufacturing industries by 2020, and the transition toward intelligent manufacturing will be completed in most key industries by 2025.

Upgrading the Chinese manufacturing sector is an issue closely linked with state-owned enterprises – the largest manufacturers in China. The central government has started mergers and business reorganizations of major SOEs this year in a bid to improve their competitiveness. Furthermore, the State-Owned Assets Supervision and Administration Commission (SASAC) of the State Council is actively deliberating and developing implementation plans for SOE reforms in 2017, said SASAC vice chairman, Zhang Xiwu.

Keeping assets bubble in check

Although only less than 600 Chinese characters were used in declaring the outcome of Politburo discussions about economic operations in 2017, they convey a significant amount of information and messages, Xinhua reported. It made a special reference to the preservation of stability, saying that making progress while ensuring stability is an important principle for state affairs management in China, and is particularly relevant to economic operations next year. We should strive for breakthroughs in key areas, while maintaining social stability.

“Making progress while ensuring stability will remain the main theme. Fiscal and monetary policies will continue to focus on economic growth stabilization, which is described as the top priority for 2017,” Xu Hongcai, deputy chief economist at China Center for International Economic Exchanges, told Yicai Global.

Ensuring stability involves “keeping assets bubbles in check,” and guarding against financial risks. The term was first proposed during the Politburo meeting in July 2016; and the requirement was reiterated at the level of monetary policymaking during the October meeting. It stressed, “While ensuring reasonably accommodative liquidity, attention should be paid to curbing assets bubbles and preventing economic and financial risks.”The central government clearly intends to tighten its grip over financial risks.

Since the launch of the crackdown on financial risks in internet finance businesses last April, the overall level of risks associated with the internet finance has been curbed, and the upsurge in the frequency of risk incidents has been contained, said a PBOC official on Dec. 9. Currently, the focus of the crackdown is to clean up high-risk businesses and rectify issues discovered.

The real estate sector is considered to be the main battlefield for the fight against assets bubbles. Many local governments have introduced new regulations in property markets. As an indication of the future trends for the real estate industry, the politburo meeting asked efforts should be made to speed up the introduction of a long-term mechanism to ensure steady and healthy development of the real estate sector in line with the actual situation in China and the relevant laws of the market economy.

Conditions for stabilization of the Chinese economy have gradually improved, but particular attention needs to be paid to risks in the real estate and financial sectors to prevent them from building up or spreading further; and the risks should be gradually reduced through deepening structural reforms, said Wang Yiming, deputy director of the Development Research Center of the State Council.

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Zhuhai Tightens Its Property Market, Suspends Housing Provident Fund Loans for Multiple House Owners

(YicaiGlobal) Dec. 13 – China’s Zhuhai city in China’s southeastern province of Guangdong has adopted a number of new rules and regulations for its property market. It is the latest example in a series of similar steps taken by various provinces across China, indicating Chinese authorities have stepped up their efforts to eliminate loopholes in the financial system.

Zhuhai city has unveiled its new property market regulation and control policy and tightened rules for housing provident fund loans. The new regulations stipulate that the minimum down payment ratio of a housing provident fund loan for a first-time buyer family buying a home for the first time should not be less than 30 percent.

The minimum down payment ratio of an individual housing provident fund loan for a family that has already bought one house and has settled its housing provident fund loans, but still has outstanding purchase loans should not be less than 40 percent. Zhuhai has suspended individual housing provident fund loans for families of workers with two or more houses.

The minimum down payment ratio of housing provident fund loans for families buying an ordinary house for the first time used to be no less than 20 percent; and the minimum down payment ratio of provident fund loans for families that own one occupied house was at least 30 percent.

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Future Real Estate Policies Should Stabilize Increasing Property Prices, Experts Predict

(YicaiGlobal) Dec. 19 — Houses should be homes, not investments, the Chinese government said this weekend at the Central Economic Work Conference in Beijing. It plans to protect the real estate market from significant inflation.

The conference is an annual event held in December, which sets the country’s annual economic and financial agenda and defines policy trends for the year to come.

Measures the government plans to take include restricting loans to house buyers who see their purchase as only a financial tool; releasing more land holdings to the market in cities with rapidly increasing prices; accelerating the development of small and middle-sized cities and enhancing supervision of the housing market by regulating developers, salespeople and intermediaries, according to the conference report released by state-run news agency Xinhua.

Several real estate sales records were broken during the first 11 months of this year, according to the National Bureau of Statistics. The total floor space sold rose 24.3 percent from last year to almost 1.36 billion square meters, beating the 1.3 billion record set in 2013. Total sales revenue grew 37.5 percent to pass the CNY10 trillion (USD1.44 trillion) mark for the first time, reaching CNY10.25 trillion. Some Chinese cities saw rapid growth in house prices, with an increase of over 50 percent compared with the same time last year.

Sharply rising prices have attracted a lot of investors, who often use loans to fund speculative investments in the property market. To reduce financial risk and restrain asset bubbles, many local governments have released strict purchasing policies that restrict a household to owning no more than two properties. This legislation has led to families divorcing in order to purchase additional properties.

The authorities previously used short-term policies to regulate the market, resulting in fluctuations that matched economic trends. Future policies will be tailored to the city in which they take effect, Zhang Dawei, chief analyst from Centraline Property Agency, told Yicai Global.

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Real Estate in Major Cities Cools, Stable Home Prices Trend in November’s Second Half, Data Shows

(YicaiGlobal) Dec. 19 — Latest data from China’s National Bureau of Statistics (NBS) shows that the real estate markets of 15 first- and second-tier cities rapidly chilled in the second half of November, to show a stabilizing tendency in housing prices.

The NBS released information today on changes in the residential property sales prices of 70 large and medium cities in November, and of the first-tier cities and hot second-tier cities in the second half of the month. Compared with November’s first half, nine first-tier cities and hot second-tier cities saw a monthly decline in new commercial housing prices in the second half, with a drop of between 0.1 to 0.9 percentage points. Two cities flatlined, with the remaining four logging a growth rate of new commercial housing prices that fell to less than one percent per month.

The number of cities with a monthly increase in new commercial housing prices and second-hand housing prices fell in November in 70 big and mid-sized cities. Among these, the number with a monthly increase in new commercial housing prices decreased by seven, while those with a per-month increase in second-hand housing prices dropped by eight. More cities experienced a monthly decline. Contrasting with the previous month, the number of cities with a monthly decline in new commodity housing prices and second-hand housing prices was up by four and seven percentage points, respectively.

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Tencent Cloud to Cut Storage for Ordinary Users to 10GB

(YicaiGlobal) Dec. 16 — Tencent Cloud, a leading public cloud computing service owned by internet giant Tencent Holdings Ltd., will substantially cut the storage for ordinary users to 10 gigabytes, citing sustainable growth of the platform.

Tencent Cloud offered one terabyte of free cloud storage to ordinary users in August 2013. Since then, there has been a rapid increase in the number of individual users and a number of service providers have stopped providing cloud storage services to ordinary consumers.

Ordinary users with an existing storage of over 10 gigabytes will still be able to download and view their files but the uploading of new data will be restricted, the company said last night.

In an industry-wide trend, Tencent Cloud follows Vdisk, Kuaipan.cn, Dbank.com, Sina Vdisk and Yunpan.360.cn, who have suspended storage services for ordinary users since April of this year.

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China Mobile to Commercialize 5G Nationwide by 2020, CEO Says

(YicaiGlobal) Dec. 21 — China Mobile Ltd. [HKG:0941], the world’s biggest mobile phone carrier, plans to launch pre-commercial 5G services in 2018 and commercialize the fifth-generation wireless broadband technology across the nation by 2020, said CEO Li Yue.

5G is a completely new technology because it is developed for the Internet of Things, which connects people with other people, people with goods, and goods with other goods, Li said yesterday during a speech at China Mobile Global Partners Conference 2016.

China Mobile’s 4G users totaled 510 million, or 69 percent of the country’s 4G market, as of the end of November, Chairman Shang Bing said at the conference.

Shang said the ratio of mobile digital service revenue to traditional business revenue at China Mobile has grown from 1:1 last year to 1.5:1. Wireless data business makes up a larger part of the company’s total revenue than traditional SMS (Short Message Service) and MMS (Multimedia Messaging Service) businesses, and has become the most important source of income.

China Mobile Vice President Sha Yuejia also said China Mobile has almost 400 million 2G and 3G users who will upgrade to 4G or 5G. About half of its 4G users will also trade up to a new phone, so it expects China’s mobile phone market volume to hit 540 million next year.

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Chinese Professor Trains AI Programs to Spot Beauties and Criminals

(YicaiGlobal) Dec. 21 — After training a program to distinguish between criminals and non-criminals with a success rate of 86 percent, Prof. Wu Xiaolin of Shanghai Jiaotong University has launched a service using artificial intelligence to identify good-looking women, according to tabloid news site Dzh.mop.com.

Wu said the current facial recognition system can identify people’s biological characteristics and the next task is extremely attractive and challenging — whether AI can speculate on the social characteristics of human beings based on facial recognition.

Once the program managed to differentiate between shots of criminals and ordinary people, Wu turned his research to women. He is trying to get AI to judge whether they look attractive and compare the results with the opinions of male students. His program’s aesthetic standards are highly consistent with those of male students.

His research team used 3,954 photos of Chinese women, including 2,000 ‘commended’ photos and 1,954 ‘derided’ photos grouped by Wu’s male graduate students. After initial trials, the programs can now identify the photos that got the thumbs up from those that got the thumbs down with an accuracy rate of 80 percent.

Compared with identifying criminals, spotting beauties is tougher for AI programs because the appreciation of beauty is a complex personal judgment integrating the individualities and social values of both the observer and the observed.

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China Launches First Carbon-Tracking Satellite

(YicaiGlobal) Dec. 22 – China has successfully launched its first carbon-tracking scientific experimental satellite today.

China Central Television (CCTV) reported that the satellite is in normal operation and will provide China with basic capabilities to monitor global carbon dioxide concentration in the atmosphere as well as useful data for studies on global climate change.

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Best Selling Tech Products In the United States vs. China

(YicaiGlobal) Dec.29 — Using the data analysis of the best-selling tech products from the world’s largest online shopping festivals, we compare the most popular products purchased by consumers in the United States and China.

Total online sales on Black Friday this year hit a record high of US$3.34 billion, with total online sales of Cyber Monday slightly beating Black Friday’s record at US$3.39 billion.

Based on the best selling tech product lists of Black Friday, Cyber Monday and Singles’ Day, consumers in the United States tend to purchase more entertainment products such as game consoles and high-resolution televisions, whereas consumers in China bought more practical products such as exercise counters, power banks, and smart projectors. But overall, consumers in both countries favor Apple iPads, Amazon products, and “Air”-thin notebooks.

Best-selling tech products on Black Friday and Cyber Monday in the United States:

Sony PlayStation 4

The best-selling game console comes with either 500G or 1TB storage space. It also has HDR visuals with an updated DUALSHOCK 4 wireless controller.

Microsoft Xbox One

Another best-selling game console from Microsoft, Xbox One boasts popular games such as Halo 5:Guardians, Rise of the Tomb Raider, and Forza Motorsport 6.

Samsung 4K televisions

The ‘4K’ in 4K televisions refer to 4K resolution, and is sometimes known as “Ultra High Definition” for its extremely high resolution. According to Tech Rader, the Samsung KS9500 television range has “class-leading HDR pictures” and “unexpectedly good sound”.

Apple iPads

It is no surprise that Apple iPads continue to dominate sales in the tablet sector. Lightweight, stylish, with an easy user interface – consumers are enthralled with its user-friendly functions and sleek design.

Amazon Fire tablets

Amazon Fire tablet boasts to be two times more durable than the latest iPad mini at a lower price.

LG televisions

Tech Radar reviews the LG OLEDE6 series, and points out its HDR-friendly and ultra-thin design as its plus points.

Apple MacBook Air

This lightweight and high performance laptop was another huge hit with consumers.

Alibaba, China’s tech giant, announced a sales record of RMB 120.7 billion (USD $17.8 billion) after its one-day online shopping extravaganza Singles’ Day. According to Alibaba’s e-commerce arm Tmall Electronic (refer to infographic below), many electronic products sold on Singles’ Day are from foreign brands, along with other local Chinese products that some foreign consumers may not have even heard of.

Best-selling tech products on Singles’ Day in China:

Mi Notebook Air

The minimalist design of Mi Notebook Air looks like an Apple Macbook Air, but it costs much cheaper than its American counterpart. Launched by Xiaomi in August, Mi Notebook Air is available in two specs: 12.5 inch and 13.3 inch. Its 13.3 inch version is their best seller.

iPad Air 2

The iPad Air 2 is thinner and a lot more powerful than before. According to Apple, its iPad Air 2 is just as powerful as several personal computers, and a 10-hour battery life that makes it power efficient too.

Kindle Paperwhite

The Kindle Paperwhite has the highest resolution e-reader display for “crisp, laser-quality text”, and reads like paper as compared to reflective tablet and smartphone screens. Readers can store thousands of book into a single device, making it a huge draw for consumers to purchase this product. Check the Amazon Kindle link to find a Kindle that best suits your needs.

JMGO smart projector

Priced at about US$ 417, JMGO smart projector creates a 4K screen as large as 300 inch as well as stereophony. The projector has a remote controller to pair with it.

Pisen power bank 20,000mAh

The white power bank, priced at US$ 20, can charge an iPhone 6 Plus up to five times, or an iPad Air 2 twice. Users can carry the power bank onto a plane, which is under the cap required by airlines.

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Convictions are Rare in P2P Lender Swoop

(YicaiGlobal) Feb. 17 — Cases have been opened against less than 5 percent of the thousands of platforms in China’s emerging peer-to-peer lending industry that were deemed problematic in the past three years, according to an industry report.

As of the end of January, 1,811 problematic P2P lending platforms have been identified since 2014, according to a report from Wdzj.com. Only 22 were ultimately convicted in cases with a combined value of over CNY1 billion (USD146 million).

Heads of the 22 convicted lenders were accused of charges including contract fraud, embezzlement, illegal absorption of deposits from the general public and illegal fundraising, investigations show. Compared to the possible loss of investors, penalties and sentences imposed on such leaders are not harsh.

Since problematic sites involve many investors scattered across the country and it is difficult to obtain evidence, it usually takes a long time to process such cases, the report indicated.

The main reason few cases have been opened against online lenders and court decisions are rare is that gathering evidence is time consuming, said Zhang Yexia, senior researcher at Shanghai Yingcan Business Consulting Co. Many victims choose not to file a case against small problematic platforms, as the amount of money involved is minimal.

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China’s First Mutual Insurance Society Opens, Targeting Credit Insurance for Micro Businesses

(YicaiGlobal) Feb. 17 — Zhonghui Property Mutual Insurance Society has received a business license, becoming the first mutual insurance society in China. China’s insurance regulator approved and issued a business licence to the society in only 240 days, said the company’s chairman.

Zhonghui, which will operate as a mutual insurance society, a form of insurance organization with hundreds of years of history in other countries, is expected to use today’s technology to explore a Chinese-style development mode.

It took China Insurance Regulatory Commission (CIRC) only 240 days from the day of first application for establishment to issue a business license, said the society’s founder and chairman Li Jing in an interview with Yicai Global and other media representatives.

“Only by pairing with internet and fintech can mutual insurance organizations achieve success,” said Li. In addition to the application of new technologies, mutual insurance organizations also need to find the most suitable industrial scenarios. Zhonghui hopes to explore a new path for serving small and micro businesses, Li added.

“Zhonghui will focus on credit insurance,” Li noted. “The essence of credit and guarantee insurance is credit collection. We will employ big data to improve our risk management competency through data accumulation, data analysis and risk pricing to provide services for small and micro businesses.”

As for target customer base, Li revealed that Zhonghui will focus its efforts on logistics, fast moving consumer goods and other specific industries and that it will promote business development in a prudent manner.

A mutual insurance company is owned entirely by its policyholders. Mutual insurance refers to a behavior of reciprocal insurance. Members pay premiums to establish a fund pool against risks on an equal and voluntary basis. When disasters or losses occur, the capital is used to make up for losses.

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Chinese Government Cuts Unemployment Insurance in Bid to Reduce Employment Costs

(YicaiGlobal) Feb. 17 — The Chinese government issued a document to lower the unemployment insurance rate from 1.5 percent to 1 percent, as part of efforts to lighten the burden on companies and promote employment.

As of Jan. 1, provinces (autonomous regions and municipalities directly under the central government) where the unemployment insurance rate is set at 1.5 percent can temporarily drop the rate to 1 percent until April 30, 2018, the Chinese Ministry of Human Resources and Social Security (MHRSS) said in a document today. All local governments are required to decrease the rate to 1 percent at some point this year.

China enacted the Unemployment Insurance Regulations in 1999. The regulations are enforced as part of social security legislation and aim to ensure that centrally funded financial assistance and reemployment services are provided to workers whose employment is involuntarily terminated resulting in a loss of earnings.

As of November, approximately 180 million Chinese were covered by unemployment insurance, according to government data. The unemployment insurance fund’s total income was CNY104.9 billion (USD15.3 billion), and its total expenditures were CNY80.5 billion.

Chinese corporate profits declined amid the economic downturn in recent years. To take weight off companies, the MHRSS and the Ministry of Finance lowered the unemployment insurance rate from 3 percent to 2 percent in 2015. It was reduced further to a range (from 1 to 1.5 percent) in May 2016. Local governments were allowed to decide the exact rate within the range. Sichuan and other provinces chose the minimum of 1 percent.

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CSRC Amends Rules to Curb Refinancing, Steer Funds Towards Real Economy

(YicaiGlobal) Feb. 20 — China’s securities regulator has amended rules to curb excessive financing by listed companies and divert funds from financial investments toward real economy sectors.

The new rules aim to divert investors’ attention away from short-term profits and toward value investments, experts said. The rules enable healthy investment by requiring proceeds from equity financing to be effectively used, they said.

Refinancing among listed companies has increased at an alarming rate. In some cases, excessive financing was pumped into fake projects or for speculative investment. Proceeds raised by some listed companies were left idle, or covertly put into financial investments or quasi-financial businesses, such as wealth management products. Last year, refinancing on the Shanghai and Shenzhen stock exchanges totaled CNY1.79 trillion (USD261 billion), almost 13 times the total value of IPOs during the same period.

The China Securities Regulatory Commission amended the rules three days ago, with changes including:

– Capping the number of shares issued in a private placement to 20 percent of the total share volume before the deal.

– Requiring listed companies to wait 18 months between financing rounds, including initial public offerings, additional share issuances, share allotments and private placements.

– Limiting trades to market price, which will be determined on the first day stocks are issued.

Convertible bond offerings or preferred stock, and fast financing of a relatively small value on the Growth Enterprise Market are exempt from restrictions.

The regulator announced two days ago that the new rules also apply to private placements conducted by listed companies for asset purchases through share financing, and the volume of these private placements will also be restricted to 20 percent of the total capital stock.

“Through refinancing, listed companies could previously issue securities as quasi-financial institutions, but the new rules restrict this power,” a representative at a major Shanghai brokerage told Yicai Global. The new policy will come as a serious blow to shell stocks, he added.

Almost 40 percent of additional share issues carried out by listed companies between 2010 and 2016 exceeded 20 percent of their capital stock before shares were issued, according to data from Huatai Securities Co. [SHA:601688]. The new cap will significantly reduce refinancing this year, a senior investment bank manager said.

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China Amends Corporate Income Tax Law for First Time in 10 Years

(YicaiGlobal) Feb. 20 — China’s national legislature, the National People’s Congress (NPC), will hold a meeting this week to deliberate on a draft amendment to the corporate income tax law proposed by the State Council. A tax expert suggested that the NPC may consider lowering the corporate income tax rate to around 22 percent from 25 percent.

An executive meeting of the NPC will first discuss the draft amendment on Feb. 22.

It will be the first amendment to the law since its promulgation 10 years ago. Corporate tax cuts were eagerly anticipated, but the government has so far not confirmed that the corporate income tax would be lowered, experts told Yicai Global.

Given the corporate tax reduction and decentralization principles laid down for the supply-side structural reforms and that a new wave of tax cuts worldwide triggered by tax-cut plans of the Trump Administration, the corporate income tax rate may be lowered through the amendment and relevant tax incentives could be strengthened, said Professor Liu Jianwen at Peking University Law School.

Lowering the corporate income tax rate will soften the impact of tax cuts proposed by US President Donald Trump, he said.

There could also be new changes in anti-tax evasion regulations, Liu suggested, saying China signed tax treaties with some countries in recent years, and there had been changes in international anti-tax avoidance policies, and these may be reflected in the amended corporate income tax law.

The corporate income tax law was approved by the NPC in March 2007, and went into effect on Jan. 1, 2008. The tax has been levied at 25 percent on enterprises that generate revenue in China, with lower rates offered for microbusinesses and high-tech companies.

The corporate income tax is the second largest tax in China after value-added tax (VAT). Corporate income taxes collected in 2016 totaled almost CNY2,9 billion (USD420 million), data from China’s ministry of finance shows.

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LeEco Free Phone Campaign Blunder May Cost USD138,000 in Class Action Suit

(YicaiGlobal) Feb. 27 — Beijing-based Leshi Holding Co. was named in a class action filed by 80 people due to an advert which offered LeTV smartphone to all eligible users before being changed to be available only to a limited number of users on a first-come, first-served basis.

Four defendants have been named, Leshi, LeTV Information Technology Beijing Co., [SHE:300104], Leshi Zhixin Electronic Technology Tianjin Co. and Leshi Haiyun Culture Media Beijing Ltd., China Youth Daily reported today. All companies fall under the LeEco brand.

The campaign, launched by LeEco’s official community LeMe, recorded 1.6 million page views and 376,000 responses during China’s Lunar New Year. Most users who signed in for 16 days in a row, as outlined by the campaign, found they were unable to obtain the LeTV phones as promised. Some 80 people have filed a consumer fraud lawsuit against the company, for total compensation of CNY950,000 (USD138,000).

“The flaw in this campaign was a result of copywriter negligence,” LeEco’s litigation agent said.

On Feb. 4, LeMe launched a campaign saying all LeEco users who signed in for 16 consecutive days, from Feb. 7 to Feb. 22, could get a LeTV phone at its online store at 12.00 on Feb. 25. Users later found they couldn’t, and saw the event announcement had been changed to remove the word “all” and add in that the number of phones would be limited and on a first-come, first-served basis.

LeEco’s litigation agent explained that the alteration was made due to the copywriter’s negligence. A representative had previously said “It was an editing mistake, which was not discovered until the server crashed on Feb. 25 when the exchange began.”

LeMe’s acting attorneys Zuo Shenggao and Xu Hao, from Jingsh Law Firm, said “the 80 complainants asked the defendant to fulfill its obligation to ‘exchange a CNY3,999 (USD582) LeTV phone to each plaintiff,’ and believed that the defendant’s actions constituted consumer fraud, so it should compensate each person three times the cost of the phone, CNY11,997.”

Zuo believes the LeEco users mentioned in the campaign refer to a special group of consumers who had previously bought LeEco’s products or services and signed in for 16 days in a row over the holidays to get ‘money’ in exchange for a LeTV phone. LeEco’s inconsistency in the campaign rules is actually the consumer fraud referred to in the Law of the People’s Republic of China on the Protection of the Rights and Interests of Consumers, he added.

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Faulty Brakes Injure Woman in China’s First Bike-Sharing Claim; More Set to Come as Sector Explodes

(YicaiGlobal) Feb. 27 — The first compensation claim for an accident resulting from use of a bike-sharing service recently arose in Xiamen in South China’s Fujian province over the use of a bike rented from bike-sharing platform Ofo. Bike-sharing has lately gained great popularity in major Chinese cities amid growing safety concerns.

A woman surnamed Ye suffered nasal bone fractures and contusions to her right eye after the brakes on her rented bicycle failed when she was riding downhill, local media reported, causing her to need more than ten stitches. Ye tried to call Ofo Bicycle after the accident, but got only a busy signal. The platform finally responded after media intervened.

Ofo’s staff acknowledged flaws in their service, and promised to compensate Ms. Ye for all her medical expenses. The exact amount of this settlement was not disclosed, however.

Payment is made for an Ofo bike via the WeChat messaging app of Tencent Holdings Ltd. [HKG:0700]. Users scan a QR code with their smartphones to unlock bikes. The explosive rise of cheap rent-a-bike schemes in China has led to issues such as staffing shortages and faulty bike maintenance among operators. Ofo said it has 80,000 bicycles in service in Xiamen but only 150 inspectors, whose job is to identify defects in bikes at key locations. Each inspector must check an average of 533 bikes per day.

Aside from broken bikes, bike-sharing firms also confront other issues such as customer traffic violations, bike theft and damage. Primary school students weaving uncontrollably while riding rented bikes are also a common sight. Shanghai is introducing measures to restrict minors’ access to ride-sharing bicycles. Furthermore, as more people use bike-sharing services, more velos now park in no-parking spots.

These problems have not deterred Didi Chuxing, the Chinese version of Uber, from investing millions of dollars in Ofo, which started two years ago at Beijing’s Peking University as a student project, and is now China’s biggest bike-sharing platform. The company now runs nearly 70,000 canary-yellow bikes and claims 500,000 rides each day in 20 cities, as Bloomberg News reported Sept. 26.

Intensifying smartphone use has enabled the way for bike-sharing startups such as Ofo and its competitor Mobike Technology Co.

Mobike recently received strategic investment from Singapore’s Temasek and Hillhouse Capital, bringing total investment in the Chinese smart bike-sharing startup to USD300 million thus far this year. Kicked off in Shanghai last April, Mobike has expanded to 21 cities across the country, including Beijing, Guangzhou and Shenzhen. “In just 10 months, Mobike has grown to serving more than 10 million users across 21 cities — and in that time, people across China have taken more than 200 million Mobike rides,” said Davis Wang, co-founder and chief executive, a former Uber China executive. “This equates to a reduction in carbon emissions of hundreds of thousands of tons,” Yicai Global reported Feb. 20. Although bike-sharing schemes have a definite downside, their benefits appear to outweigh their disadvantages and, however much they may arouse regulators’ ire, it also seems they are here to stay.

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