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Ringing in good numbers

It is common nowadays to see people using ZTE-produced mobile phones in Indonesia, in sharp contrast to 10 years ago, said Fan Xiaoyong, managing director of PT ZTE Indonesia.



Telecom equipment maker on steady road to global success

BEIJING – It is common nowadays to see people using ZTE-produced mobile phones in Indonesia, in sharp contrast to 10 years ago, said Fan Xiaoyong, managing director of PT ZTE Indonesia.
Even though companies such as ZTE Corp – China’s second-largest telecom equipment maker – began trying to enter the Indonesian market starting in 1999, they encountered many obstacles.With more Indonesians buying mobile phones, companies such as ZTE Corporation are designing and installing mobile applications that signal the times for daily Islamic prayers in the country, home to the most Muslims in the world.

The situation has changed greatly in the past decade. ZTE’s business in Indonesia has been gaining momentum since 2006, when it achieved annual sales of $200 million. Its revenue has since doubled.

“ZTE continues to grow fast here. Our telecom equipment business is robust. What’s more, we have enjoyed an unexpected, high growth rate in mobile device” sales, including mobile phones and data cards, Fan said.

The breakthrough in Indonesia came largely after China’s entry into the World Trade Organization (WTO), said Tina Tian, a telecom analyst with Gartner Inc.

Tian added that ZTE benefited from China’s entry because, afterward, there were fewer barriers to competition in a much freer and fairer overseas environment.

“If China was not a WTO member and was still afraid of opening its own market, how could Chinese telecom gear makers have the chance to sell their products in overseas markets?” Tian asked.

According to Tian, the decade after the WTO entry was a “golden era of overseas expansion” for Chinese telecom equipment producers.

Huawei Technologies Co Ltd, the larger Chinese telecom equipment giant and rival to ZTE, seemed to gain even greater popularity worldwide during the period.

“Both Huawei and ZTE were founded in the late 1980s, but they remained tiny through the late 1990s. In the interim, foreign vendors were the incumbents,” said C.W. Cheung, Asia-Pacific consulting director of technology at the research firm Ovum PLC.

Cheung said that during the past 10 years, Chinese vendors became dominant in many sectors domestically, and, for Huawei, ZTE and others, increasingly internationally as well.

Established in China’s southern coastal city of Shenzhen in 1987, Huawei has become the world’s second-largest telecom-hardware maker, competing with the likes of Sweden’s Telefon AB LM Ericsson and Paris-based Alcatel-Lucent.

Huawei realized annual sales of 185.2 billion yuan ($28.35 billion) in 2010, not far behind the leader, Ericsson, which had $30 billion in sales. The Chinese company is expected to overtake its Swedish competitor this year.

Overseas markets, including Europe and the United States, have generated more revenue than the domestic Chinese market for Huawei since 2005.

Huawei’s revenue from overseas markets reached 120.4 billion yuan in 2010, up 33.8 percent year-on-year. Overseas sales in 2000 only reached $100 million.

“Branding is not as important for telecom equipment makers as for consumer goods makers. Advanced technology and quality products are what really matter,” said Xiang Ligang, a Beijing-based telecom expert who also runs a Chinese telecom industry Internet portal.

China’s entry into the WTO accelerated Huawei’s and ZTE’s global expansion, as both companies learned to play within international rules and make use of favorable policies, Xiang added.

Cheung noted that Huawei and ZTE had achieved their current positions through hard work, creativity and government support.

“Persistent global financial instability and difficulties in the past three years also helped differentiate the low-price, high-performance-value propositions of the Chinese vendors,” he said.

However, Chinese telecom gear producers had some problems during their aggressive expansions.

Huawei encountered hurdles in India and in the North American market because of political concerns, as local governments contended that the company founder, Ren Zhengfei, “had a Chinese military background”.

Ericsson filed lawsuits against ZTE in three European countries in April, charging that the Chinese company had breached its patents related to the second- and third-generation wireless technologies known as GSM and WCDMA.

“Recent setbacks for Chinese telecom vendors taught them a lesson: Business is not all about offering better services or products, and selling at a lower price. Business is sophisticated.

“Therefore, they should adopt appropriate strategies for some mature markets,” said Ji Chengdong, an analyst with the research firm Frost & Sullivan.

Huawei is trying various tactics to become fully involved in the global market. The company has been appointing more foreigners in recent years.

The company’s latest such hire was John Suffolk, a former British government information official, to the position of global cyber-security officer.

Huawei and ZTE have made good progress in selling mobile devices to US carriers, a sign that they are finding other ways to break into the US market.

“If they are able to break into the US market, they are even more likely to break into the top tier of mobile device vendors, which has so far been dominated by companies from the US, Europe and South Korea,” said Jan Dawson, chief telecom analyst with Ovum.

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Ringing in good numbers

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China Scraps Health Declaration Requirement for All Travelers from November 1



China has lifted all COVID-19 travel requirements, including the need to fill out a health declaration form. Travelers should still report symptoms voluntarily, however.

Travelers leaving and entering China are no longer required to fill in the China health declaration form, meaning that China has now lifted all travel requirements related to COVID-19. Travelers should still voluntarily report themselves to Customs staff if they have symptoms or have been diagnosed with an infectious disease. 

China’s General Administration of Customs (“Customs”) has announced that, as of Wednesday, November 1, 2023, it will no longer require people leaving and entering China to fill in the Entry/Exit Health Declaration Card (“Health Declaration Card”). This card was implemented during the COVID-19 pandemic to screen travelers for symptoms of COVID-19 by asking them to fill out a survey on their current health conditions and symptoms. The system then generated a QR code that travelers had to show to Customs staff when leaving or entering the country.

The removal of the Health Declaration Card requirement means that China has now lifted all COVID-era restrictions and requirements for travelers leaving and entering the country. This move could help to encourage more international travel to and from China, and will further improve the travel experience for passengers.

Existing regulations on declaring possible symptoms of infectious disease when traveling will still be in place, as we discuss below.

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China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at

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Chinese commercial banks fear stimulus measures will do littl…



China’s commercial banks are raising questions about whether the central bank’s recent cut to outstanding mortgage rates will be sufficient to hold back a flood of mortgage prepayments and help protect bank margins.

The People’s Bank of China (PBOC) unveiled new guidance last month requiring commercial banks to lower interest rates on outstanding mortgages for first-home loans. The new rates, which will be effective starting on September 25, aimed at stimulating consumption while also reducing the incentive for households to pay down their mortgages early, which had led to a decline in bank profits.

“Lowering outstanding mortgage rates will help alleviate the interest burden on households,” a spokesperson for the PBOC told local media on Wednesday, adding that the new rules have already led to a decline in prepayments, and will help improve household balance sheets and consumer confidence.

The measure has led at least some homebuyers to reconsider their mortgage prepayments.

Officers stand guard in front of the headquarters of the People’s Bank of China, the central bank, in Beijing on September 30, 2022. Photo: Reuters

Kang Chao, an insurance company employee in Changsha, in southeast China’s Hunan province, told the Post that a new mortgage rate of 4.2 per cent could help his family free up about 1,700 yuan (US$234) each month to cover living expenses.

“[My wife] and I both took out mortgage loans in 2018 and 2019, when the interest rates were as high as 5.15 per cent,” he said. “Each month, we need to pay about 9,800 yuan, and this leaves us no more than 3,000 yuan to spend on everything else.

“So we were under a lot of pressure to pay off our debt quickly, especially after we had a child. At one point, we were even considering selling one of our houses. Now that the new policy is out, we feel somewhat relieved.”

An estimated US$700 billion in mortgages, representing around 12 per cent of the country’s total mortgage balance, has been prepaid since 2022, according to analysts.

China property support spurs buying but sceptics warn of weak demand

Chinese commercial banks could see an earnings decline of up to 5 per cent this year if the prepayment wave persists, according to analysts’ estimates. However, if banks refinance home loans at lower rates, their net profits could also drop by 1 to 5 per cent, a report by Fitch Ratings said.

Early repayment is a behaviour driven by interest rates, and as the gap between new and outstanding mortgage rates narrows, the incentive to pay down mortgages early will start to decrease, said Gary Ng, senior economist for Asia-Pacific thematic research at Natixis.

“However, it does not mean [lowering outstanding mortgage rates] is a panacea for boosting China’s household confidence in properties,” he said. “The confidence issue is complex, and it will take more than rate cuts to repair. Although early repayment will ease, mortgage growth is not likely to see a significant jump.”

A banking analyst at the Beijing branch of a commercial bank echoed this…

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China trade: exports tumble for fourth consecutive month in A…



China’s exports tumbled for the fourth consecutive month in August amid weak external demand and ongoing global supply chain upheaval, posing more challenges to the world’s second-largest economy as it struggles to carve out a path to a post-pandemic rebound.

Exports fell by 8.8 per cent compared to a year earlier to US$284.9 billion last month, according to customs data released on Thursday.

The decline, however, narrowed from a fall of 14.5 per cent in July, and was above the forecast by Chinese financial data provider Wind for a 9.5 per cent decline.

Imports, meanwhile, fell by 7.3 per cent last month to US$216.5 billion, narrowing from a 12.4 per cent decline in July, and exceeding the expectations from Wind for a drop of 8.2 per cent.

China’s total trade surplus in August stood at US$68.4 billion, down from US$80.6 billion in July.

“The typhoon in mid-July likely disrupted port operations in July and the normalisation of that could add to trade growth in August,” said economists from Goldman Sachs.

Improved year-over-year growth of oil prices would have also helped import growth last month, they added.

Heron Lim, assistant director and economist at Moody’s Analytics, said exports are expected to continue their retreat as weakness across the broader global economy keeps new export orders soft.

Will belt and road, Asean trade be China’s silver lining amid US de-risking?

“But as trade performance was already weakening from the second half of 2022, it will be slower,” he said.

The data showed that China’s exports to most of its major trading partners continued to shrink, although the declines narrowed from July.

Shipments to the Association of Southeast Asian Nations – China’s largest trade partner – fell by 13.25 per cent compared to a year earlier, marking the fourth consecutive monthly decline.

Exports to the European Union, meanwhile, declined by 19.58 per cent, year on year, while shipments to the United States dropped for the 13th consecutive month after falling by 9.53 per cent.

The figures still suggest the headwinds remain despite some marginal improvement

Zhou Hao

Zhou Hao, chief economist at Guotai Junan International, said while the August trade figures came in slightly better than expected, the overall momentum remains lukewarm.

“In general, the figures still suggest the headwinds remain despite some marginal improvement,” Zhou said.

“Looking ahead, whether China’s trade growth has already hit the bottom will hinge on several factors. The most important one is obviously the domestic demand where the recent property easing might provide some support in the short term.

“In the meantime, the rising oil prices suggest that the import growth in value terms might pick up somewhat in the foreseeable future.”

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