Chinese Economics Thread
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- Start date
broadsword
Brigadier
It will to help reduce Thailand's buffer of rice built up as a result of the PM's policy of subsidizing rice farmers by buying at a high price.
Hendrik_2000
Lieutenant General
For all the talk of capital investment gone berserk in China, China railway length is less than US railway length circa 1840. I though this is an interesting article to bring some reality to the debate. In short China still has long way in capital investment before it reach the proverbial "Bridge to nowhere" . It will support the economy for decades to come. Of course this is Bloomberg article, It just can't help itself bringing the subject of Ordos and Ghost city
China Railways Trailing 1880 U.S. Show Spending Scope: Economy
By Bloomberg News - Oct 16, 2013 10:56 PM CT
After $5 trillion in spending on infrastructure over the past five years, China still needs more.
The nation struggles to provide drinkable tap water, millions of people live in shantytowns and the length of the rail network is yet to match that of the U.S. in 1880.
Enlarge image Beijing Subway System
Commuters disembark from a train while others wait to board at a subway station in Beijing, China. Photographer: Tomohiro Ohsumi/Bloomberg
Beijing Subway System Shows Need for Expansion
0:53
Oct. 17 (Bloomberg) -- Bloomberg's Christine Hah reports on the crowded Beijing subway system, the oldest metro in mainland China, which transports over 10 million passengers each day. After about $5 trillion in spending on infrastructure over the past five years, China still needs more. The nation struggles to provide drinkable tap water, millions of people live in shantytowns and the length of the rail network is yet to match that of the U.S. in 1880. (Source: Bloomberg)
While investors focus on ghost cities and unneeded factories as evidence of overinvestment, gaps in infrastructure will allow the spigot of state spending to be open for years to come, according to HSBC Holdings Plc. That may serve as a safety net, limiting the scale of any slowdown during the economic restructuring that Communist Party leaders are set to map out at a meeting in Beijing next month.
“China still has plenty of room to keep building useful bridges before building bridges to nowhere,” said Qu Hongbin, Hong Kong-based chief China economist at HSBC. “Even after five or six years of massive infrastructure development, China’s infrastructure is only at a level similar to that of Japan in the 1960s or 1970s.”
Installed in March, President Xi Jinping and Premier Li Keqiang have already used infrastructure spending to support growth in what Bank of America Corp. described as a “mini fiscal stimulus” this year. After expansion cooled during the first and second quarters, the State Council rolled out measures targeting city infrastructure such as drainage systems, waste-water treatment, subways and light rail, roads and bridges, power grids, railway construction and shantytown redevelopment.
Growth Report
The effects may be visible in tomorrow’s report on third-quarter expansion from the National Bureau of Statistics, which will say that the economy grew 7.8 percent from a year earlier, based on the median estimate of 46 analysts surveyed by Bloomberg News.
Any reading below the government’s 7.5 percent annual target would stoke anticipation of fresh stimulus measures. Li said last week that growth exceeded 7.5 percent in the first nine months of the year, following a report of 7.6 percent expansion in the first half.
Data tomorrow will also show that authorities maintained the pace of fixed-asset investment excluding rural areas at 20.3 percent for the first nine months of the year, equal to the January-August pace, according to the median economist estimate. The statistics bureau also reports September figures for industrial production and retail sales.
Investment in national railways and joint-venture railways rose 12.2 percent to 327 billion yuan in the first nine months of 2013 from a year earlier, according to a report in today’s Economic Information Daily, a newspaper of the official Xinhua News Agency.
FDI Report
Separately, China’s inbound, non-financial foreign direct investment rose 4.9 percent in September from a year earlier, following a 0.6 percent gain in August, Commerce Ministry data showed today. In Singapore, non-oil exports in September fell 1.2 percent from a year earlier as manufacturers shipped fewer electronics and pharmaceuticals, a report showed.
Elsewhere in the world, retail-sales figures are due in the U.K., Sweden and the Netherlands report on September unemployment and the U.S. will see weekly reports on jobless claims and the Bloomberg Consumer Comfort Index.
China’s fixed-asset investment in infrastructure totaled 33.1 trillion yuan in the five years through August, based on data compiled by Bank of America. The figures include spending on transportation, such as roads and railways, as well as utilities and water facilities.
Subway Absence
The gaps in infrastructure range from the absence of a subway system in Lanzhou, a city of about 3.6 million and the capital of northwestern Gansu province, to passengers crushed together during peak hours on Beijing underground lines.
The average Internet speed of 1.7 megabits per second ranked 98th worldwide and compared with 14.2 megabits in No. 1-rated South Korea in the first quarter of this year, according to Akamai Technologies Inc. (AKAM), which provides services to speed delivery of Web content.
“I hate the traffic jams,” Li Xuejun, a taxi driver, said last month in Jinan, the capital of Shandong province, as cars, buses, trucks and motor-tricycles jostled for space. Li said he was looking forward to the completion of the West Second Ring highway bridge, an 8-kilometer (5-mile) highway completed this month with a price tag of 2 billion yuan.
China is putting about 5,500 kilometers of railway lines into operation this year, bringing the total length to 100,000 kilometers, Xinhua reported in August. The government said in July that it plans to grant ownership and operating rights on some city and regional railways to local government and private investors.
Sun’s Goal
In the early 20th century, Sun Yat-sen, Republican China’s first president after the fall of the Qing Dynasty, set a goal of 160,000 kilometers. In the U.S., the rail network reached about 148,000 kilometers by 1880 and peaked at 409,000 in 1916, shrinking to 224,000 kilometers in 2011, according to the Association of American Railroads.
In Beijing, a city known for architectural signature pieces such as the Bird’s Nest stadium built for the 2008 Olympics, people died in flooding last year because the city’s drainage system was inadequate to handle the biggest rainstorm in six decades. The downpour killed 77 and submerged vehicles and flooded homes, resulting in about 11.6 billion yuan in losses, according to Xinhua.
Drinking Water
China has pledged to ensure the supply of safe drinking water by 2015 to more than 100 million people in rural areas who don’t have access to it now, Xinhua reported in August.
At Credit Suisse Group AG, economist Dong Tao says that the new Communist Party leadership regards infrastructure spending as a “stabilizer” rather than the “accelerator” used in the global financial crisis, when a 4 trillion yuan stimulus package helped reverse the nation’s slump.
Over coming quarters, officials will jab the pedal as needed to keep growth around the 7.5 percent to 8 percent level, according to Tao, chief regional economist for Asia excluding Japan.
Potential obstacles to infrastructure spending include government debt that analysts at banks including JPMorgan Chase & Co. say is approaching levels that helped trigger turmoil in other economies.
The National Audit Office is working on the broadest review of government borrowing in two years, with former Finance Minister Xiang Huaicheng saying in April that local-government finance vehicles may hold more than 20 trillion yuan of debt, almost double the official tally from 2010.
Bridge Collapse
Some of the nation’s design and construction failures have been deadly. In August 2012, a new $300 million, eight-lane suspension bridge collapsed in the northeastern city of Harbin, sending four trucks tumbling and leaving three dead. The high-speed rail system suffered a blow from a collision in July 2011 that killed 40 people. Former Railway Minister Liu Zhijun was given a suspended death sentence this year for abuse of power and taking bribes.
China also has overinvestment in some areas. The government on Oct. 15 posted a plan by the State Council to cut excess capacity in steel, cement and aluminum.
Some municipalities have turned into ghost cities after local governments failed to attract residents to fill new towers. A prime example is Ordos, Inner Mongolia, where cranes stood silently above half-finished developments in July after a building spree that included an expanded airport, a sports stadium and high-rise apartments surrounding an artificial lake.
Japanese Debt
China Railways Trailing 1880 U.S. Show Spending Scope: Economy
By Bloomberg News - Oct 16, 2013 10:56 PM CT
After $5 trillion in spending on infrastructure over the past five years, China still needs more.
The nation struggles to provide drinkable tap water, millions of people live in shantytowns and the length of the rail network is yet to match that of the U.S. in 1880.
Enlarge image Beijing Subway System
Commuters disembark from a train while others wait to board at a subway station in Beijing, China. Photographer: Tomohiro Ohsumi/Bloomberg
Beijing Subway System Shows Need for Expansion
0:53
Oct. 17 (Bloomberg) -- Bloomberg's Christine Hah reports on the crowded Beijing subway system, the oldest metro in mainland China, which transports over 10 million passengers each day. After about $5 trillion in spending on infrastructure over the past five years, China still needs more. The nation struggles to provide drinkable tap water, millions of people live in shantytowns and the length of the rail network is yet to match that of the U.S. in 1880. (Source: Bloomberg)
While investors focus on ghost cities and unneeded factories as evidence of overinvestment, gaps in infrastructure will allow the spigot of state spending to be open for years to come, according to HSBC Holdings Plc. That may serve as a safety net, limiting the scale of any slowdown during the economic restructuring that Communist Party leaders are set to map out at a meeting in Beijing next month.
“China still has plenty of room to keep building useful bridges before building bridges to nowhere,” said Qu Hongbin, Hong Kong-based chief China economist at HSBC. “Even after five or six years of massive infrastructure development, China’s infrastructure is only at a level similar to that of Japan in the 1960s or 1970s.”
Installed in March, President Xi Jinping and Premier Li Keqiang have already used infrastructure spending to support growth in what Bank of America Corp. described as a “mini fiscal stimulus” this year. After expansion cooled during the first and second quarters, the State Council rolled out measures targeting city infrastructure such as drainage systems, waste-water treatment, subways and light rail, roads and bridges, power grids, railway construction and shantytown redevelopment.
Growth Report
The effects may be visible in tomorrow’s report on third-quarter expansion from the National Bureau of Statistics, which will say that the economy grew 7.8 percent from a year earlier, based on the median estimate of 46 analysts surveyed by Bloomberg News.
Any reading below the government’s 7.5 percent annual target would stoke anticipation of fresh stimulus measures. Li said last week that growth exceeded 7.5 percent in the first nine months of the year, following a report of 7.6 percent expansion in the first half.
Data tomorrow will also show that authorities maintained the pace of fixed-asset investment excluding rural areas at 20.3 percent for the first nine months of the year, equal to the January-August pace, according to the median economist estimate. The statistics bureau also reports September figures for industrial production and retail sales.
Investment in national railways and joint-venture railways rose 12.2 percent to 327 billion yuan in the first nine months of 2013 from a year earlier, according to a report in today’s Economic Information Daily, a newspaper of the official Xinhua News Agency.
FDI Report
Separately, China’s inbound, non-financial foreign direct investment rose 4.9 percent in September from a year earlier, following a 0.6 percent gain in August, Commerce Ministry data showed today. In Singapore, non-oil exports in September fell 1.2 percent from a year earlier as manufacturers shipped fewer electronics and pharmaceuticals, a report showed.
Elsewhere in the world, retail-sales figures are due in the U.K., Sweden and the Netherlands report on September unemployment and the U.S. will see weekly reports on jobless claims and the Bloomberg Consumer Comfort Index.
China’s fixed-asset investment in infrastructure totaled 33.1 trillion yuan in the five years through August, based on data compiled by Bank of America. The figures include spending on transportation, such as roads and railways, as well as utilities and water facilities.
Subway Absence
The gaps in infrastructure range from the absence of a subway system in Lanzhou, a city of about 3.6 million and the capital of northwestern Gansu province, to passengers crushed together during peak hours on Beijing underground lines.
The average Internet speed of 1.7 megabits per second ranked 98th worldwide and compared with 14.2 megabits in No. 1-rated South Korea in the first quarter of this year, according to Akamai Technologies Inc. (AKAM), which provides services to speed delivery of Web content.
“I hate the traffic jams,” Li Xuejun, a taxi driver, said last month in Jinan, the capital of Shandong province, as cars, buses, trucks and motor-tricycles jostled for space. Li said he was looking forward to the completion of the West Second Ring highway bridge, an 8-kilometer (5-mile) highway completed this month with a price tag of 2 billion yuan.
China is putting about 5,500 kilometers of railway lines into operation this year, bringing the total length to 100,000 kilometers, Xinhua reported in August. The government said in July that it plans to grant ownership and operating rights on some city and regional railways to local government and private investors.
Sun’s Goal
In the early 20th century, Sun Yat-sen, Republican China’s first president after the fall of the Qing Dynasty, set a goal of 160,000 kilometers. In the U.S., the rail network reached about 148,000 kilometers by 1880 and peaked at 409,000 in 1916, shrinking to 224,000 kilometers in 2011, according to the Association of American Railroads.
In Beijing, a city known for architectural signature pieces such as the Bird’s Nest stadium built for the 2008 Olympics, people died in flooding last year because the city’s drainage system was inadequate to handle the biggest rainstorm in six decades. The downpour killed 77 and submerged vehicles and flooded homes, resulting in about 11.6 billion yuan in losses, according to Xinhua.
Drinking Water
China has pledged to ensure the supply of safe drinking water by 2015 to more than 100 million people in rural areas who don’t have access to it now, Xinhua reported in August.
At Credit Suisse Group AG, economist Dong Tao says that the new Communist Party leadership regards infrastructure spending as a “stabilizer” rather than the “accelerator” used in the global financial crisis, when a 4 trillion yuan stimulus package helped reverse the nation’s slump.
Over coming quarters, officials will jab the pedal as needed to keep growth around the 7.5 percent to 8 percent level, according to Tao, chief regional economist for Asia excluding Japan.
Potential obstacles to infrastructure spending include government debt that analysts at banks including JPMorgan Chase & Co. say is approaching levels that helped trigger turmoil in other economies.
The National Audit Office is working on the broadest review of government borrowing in two years, with former Finance Minister Xiang Huaicheng saying in April that local-government finance vehicles may hold more than 20 trillion yuan of debt, almost double the official tally from 2010.
Bridge Collapse
Some of the nation’s design and construction failures have been deadly. In August 2012, a new $300 million, eight-lane suspension bridge collapsed in the northeastern city of Harbin, sending four trucks tumbling and leaving three dead. The high-speed rail system suffered a blow from a collision in July 2011 that killed 40 people. Former Railway Minister Liu Zhijun was given a suspended death sentence this year for abuse of power and taking bribes.
China also has overinvestment in some areas. The government on Oct. 15 posted a plan by the State Council to cut excess capacity in steel, cement and aluminum.
Some municipalities have turned into ghost cities after local governments failed to attract residents to fill new towers. A prime example is Ordos, Inner Mongolia, where cranes stood silently above half-finished developments in July after a building spree that included an expanded airport, a sports stadium and high-rise apartments surrounding an artificial lake.
Japanese Debt
TerraN_EmpirE
Tyrant King
The Bull....
The Bear.
The news re Investment into the UK Nuclear (and presumably other energy sector) Industry is very interesting.
The question that interests me most is "what exact form will this investment take"?
By this I mean what currency will China be spending to make these investments?
It is tempting to suppose that the currency will be RMB and that this is no small part the reason that the recent multi billion currency swaps have taken place. I actually doubt this though as the point of currency swaps is to enable direct purchase trade and settlement to happen in native currency, without the need for an intermediary. Investment is a different creature and the size of the investments would rapidly exhaust the sums of the currency swaps.
In short Investment is Capital, while trade is cashflow and the swaps are facilitate the ease of cashflow.
In that light, my best guess is that the Investments will be made in US$ and that the earnings will be taken in Stirling and Euro's.
I can see that this would be of considerable interest to China as it will enable them to spend their increasingly risky looking dollar reserves and diversify both into overseas assets, but also realise the gains in non dollars.
Its actually a true win win. Hinkley C (Hinkley is just about twenty miles down the road from where I live) has been held up by a disagreement between the head contractor (EDF) and the British Government over the "Strike Price" - the pre-agreed price at which they will buy the electricity, once it is in operation.
With the Chinese deal however, the Chinese SOE company will "borrow" the money from the Forex reserves, which will be made available at a much cheaper price than any Western Firm could borrow at. This means that the cost of debt to be taken into account in the Strike Price will be massively reduced and which makes a lower strike price economically viable for all parties.
The question that interests me most is "what exact form will this investment take"?
By this I mean what currency will China be spending to make these investments?
It is tempting to suppose that the currency will be RMB and that this is no small part the reason that the recent multi billion currency swaps have taken place. I actually doubt this though as the point of currency swaps is to enable direct purchase trade and settlement to happen in native currency, without the need for an intermediary. Investment is a different creature and the size of the investments would rapidly exhaust the sums of the currency swaps.
In short Investment is Capital, while trade is cashflow and the swaps are facilitate the ease of cashflow.
In that light, my best guess is that the Investments will be made in US$ and that the earnings will be taken in Stirling and Euro's.
I can see that this would be of considerable interest to China as it will enable them to spend their increasingly risky looking dollar reserves and diversify both into overseas assets, but also realise the gains in non dollars.
Its actually a true win win. Hinkley C (Hinkley is just about twenty miles down the road from where I live) has been held up by a disagreement between the head contractor (EDF) and the British Government over the "Strike Price" - the pre-agreed price at which they will buy the electricity, once it is in operation.
With the Chinese deal however, the Chinese SOE company will "borrow" the money from the Forex reserves, which will be made available at a much cheaper price than any Western Firm could borrow at. This means that the cost of debt to be taken into account in the Strike Price will be massively reduced and which makes a lower strike price economically viable for all parties.
Hendrik_2000
Lieutenant General
Well they say China is only good at copying but no original design. One company beat that stereotype and the name is Xiaomi. This quarter Xioamin out produce Apple 4.4 million handset vs Apple 4.3 million
Why This Chinese Company Could Replace Apple's iPhone
By Adrian Campos | More Articles
October 21, 2013 | Comments (4)
Despite being three years old and having only 3,000 employees, private company Xiaomi could become a disruptive force in the smartphone market, currently dominated by two of the biggest companies in the world: Apple (NASDAQ: AAPL ) and Samsung (NASDAQOTH: SSNLF )
Despite its small scale of operations, Xiaomi is already selling more smartphones in China than Apple. This is very surprising because there's a common belief that a company needs to be big in order to succeed as a smartphone manufacturer. Apple and Samsung dominate the market, while small companies, like BlackBerry (NASDAQ: BBRY ) , are struggling to survive. However, Xiaomi has enough competitive advantages to avoid becoming the next BlackBerry. How does this Chinese start-up plan to conquer the fierce smartphone world?
Xiaomi's explosive growth plans
Xiaomi seems to have studied BlackBerry very well, as it is avoiding some of the biggest mistakes made by the Canadian manufacturer. Like BlackBerry, Google, and Apple, the company knows that creating a mobile operating system is the best way to promote its own payment ecosystem. However, in a world where Google's Android and Apple's iOS combine for more than 91% of total market share, Xiaomi realized it had to create not only a friendly operating system, but also something compatible with Android or iOS.
This is why, unlike BlackBerry, the company based its MIUI operating system on Android, which has an active open-source community. Therefore, any Android device can run Xiaomi's operating system. So far, more than 20 million users, including many Android users, have downloaded it.
But, Xiaomi's operating system isn't just another Android variation. From a lock screen flashlight to a one-click cache clean up option, the company has added more than 200 new features. It has also given more personalization power to the user.
So, why is Xiaomi promoting its own operating system? The company is selling its devices very cheap, practically at cost price. Therefore, it plans to get profits through its software.
During the development phase, the company tried to remove and replace Google services with its own cloud services, games, paid themes, and apps store. This shows Xiaomi is well aware of the importance that Google Play and iTunes have in Google and Apple's cash flows.
Of course, Xiaomi's apps store is not as rich as iTunes or Google Play, but unlike BlackBerry OS, the company can easily rely on Google Play to offer localized applications and content if it ships overseas.
Notice, however, that despite its size limitations, Xiaomi's app store is performing better than expected. It reached one billion downloads in only 391 days.
In terms of hardware, Xiaomi's flagship product, the Mi3 TD, has nothing to envy in the world. Compared with Apple's iPhone 5s, the Mi3 TD has bigger resolution, a more powerful camera, and larger display. More importantly, the Mi3 TD is equipped with some of the most powerful mobile processors the world has ever seen. Xiaomi's customers can choose between Nvidia's Tegra 4 quad-core -- the world's first 1.8Ghz quad-core processor -- and Qualcomm's Snapdragon 800.
Xiaomi's smartphone is so good that even Samsung's latest device, the Galaxy Note 3, may have trouble competing in China, despite having a similar processor. This is because Xiaomi offers top technology for a bargain price.
In terms of sales, Xiaomi's Mi 2S device is the most popular phone in China, according to Chinese benchmarking company Antutu. Technically, the Mi 2S performed better than HTC's flagship device, but was slower than Samsung's Octa S4. However, that was no problem for Xiaomi because its phone sold for less than half the price of Samsung's S4.
But, Xiaomi's aggressive pricing is allowing the company to capture more than just market share from Samsung. Xiaomi has already beat Apple in China. According to Quartz, the company shipped 3.3 million phones in the last quarter, versus Apple's 4.3 million.
Final foolish thoughts
Xiaomi's aggressive pricing, outperforming hardware, and user-friendly Android-based operating system have contributed to the company's amazing early success in China. The company can easily replicate this growth story in other emerging economies, where the increasing smartphone penetration ratio is still low, and customers are highly price-sensitive. It won't be hard to replace Apple in South America, East Asia, and Africa.
After it develops a strong community of users, strengthens its brand, and increases the number of applications in its store, Xiaomi can move to mature markets, where Apple and Samsung remain securely positioned.
Profit from Apple's destruction
Xiaomi has been a tremendous success story, but can they really hurt Apple's growth prospects in China? Also, Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, “Apple Will Destroy Its Greatest Product.” Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.
Xiaomi muscles past Apple to take sixth place in China’s smartphone market as Samsung stays on top
By Kaylene Hong, Tuesday, 6 Aug '13, 11:22am
Chinese smartphone manufacturer Xiaomi has been on a roll despite launching its first device only as recently as 2011 — it has officially overtaken Apple in the Chinese market.
The latest figures were conveyed to TNW by Canalys, an independent analyst firm, which noted that Xiaomi shipped a total of 4.4 million smartphones in China during the second quarter of 2013, inching above Apple which shipped 4.3 million units and knocking it to the seventh position. Last quarter, Apple managed to occupy the fifth spot in China’s smartphone market.
Samsung still took the lead in China in Q2 2013 with 15.5 million smartphones shipped to make up for a market share of 17.6 percent.
Despite only selling its phones in mainland China, Hong Kong and Taiwan, Xiaomi has been garnering success by inspiring the loyalty of many consumers. Its competitively priced phones are sold in batches that, when released in phases, regularly sell out fast, often within half an hour.
The latest figures come as Xiaomi recently unveiled its $130 Hongmi phone, the lowest-priced in its range, which has received an overwhelming response so far. According to a Donews report, pre-orders for the phone on social networking site Qzone exceeded a jaw-dropping 5 million units within three days. The phone will go on sale from August 12 onward.
The up-and-coming company has been compared to Apple on a regular basis, with some even criticizing it for being an Apple clone. However, it seems that consumers are happy to flock to the lower-priced Xiaomi smartphones instead of high-end iPhones, proven by its success so far. This could make it even harder for Apple to recapture some of its lost market share in China — despite rumors of a lower-priced iPhone, it could be too little, too late.
Why This Chinese Company Could Replace Apple's iPhone
By Adrian Campos | More Articles
October 21, 2013 | Comments (4)
Despite being three years old and having only 3,000 employees, private company Xiaomi could become a disruptive force in the smartphone market, currently dominated by two of the biggest companies in the world: Apple (NASDAQ: AAPL ) and Samsung (NASDAQOTH: SSNLF )
Despite its small scale of operations, Xiaomi is already selling more smartphones in China than Apple. This is very surprising because there's a common belief that a company needs to be big in order to succeed as a smartphone manufacturer. Apple and Samsung dominate the market, while small companies, like BlackBerry (NASDAQ: BBRY ) , are struggling to survive. However, Xiaomi has enough competitive advantages to avoid becoming the next BlackBerry. How does this Chinese start-up plan to conquer the fierce smartphone world?
Xiaomi's explosive growth plans
Xiaomi seems to have studied BlackBerry very well, as it is avoiding some of the biggest mistakes made by the Canadian manufacturer. Like BlackBerry, Google, and Apple, the company knows that creating a mobile operating system is the best way to promote its own payment ecosystem. However, in a world where Google's Android and Apple's iOS combine for more than 91% of total market share, Xiaomi realized it had to create not only a friendly operating system, but also something compatible with Android or iOS.
This is why, unlike BlackBerry, the company based its MIUI operating system on Android, which has an active open-source community. Therefore, any Android device can run Xiaomi's operating system. So far, more than 20 million users, including many Android users, have downloaded it.
But, Xiaomi's operating system isn't just another Android variation. From a lock screen flashlight to a one-click cache clean up option, the company has added more than 200 new features. It has also given more personalization power to the user.
So, why is Xiaomi promoting its own operating system? The company is selling its devices very cheap, practically at cost price. Therefore, it plans to get profits through its software.
During the development phase, the company tried to remove and replace Google services with its own cloud services, games, paid themes, and apps store. This shows Xiaomi is well aware of the importance that Google Play and iTunes have in Google and Apple's cash flows.
Of course, Xiaomi's apps store is not as rich as iTunes or Google Play, but unlike BlackBerry OS, the company can easily rely on Google Play to offer localized applications and content if it ships overseas.
Notice, however, that despite its size limitations, Xiaomi's app store is performing better than expected. It reached one billion downloads in only 391 days.
In terms of hardware, Xiaomi's flagship product, the Mi3 TD, has nothing to envy in the world. Compared with Apple's iPhone 5s, the Mi3 TD has bigger resolution, a more powerful camera, and larger display. More importantly, the Mi3 TD is equipped with some of the most powerful mobile processors the world has ever seen. Xiaomi's customers can choose between Nvidia's Tegra 4 quad-core -- the world's first 1.8Ghz quad-core processor -- and Qualcomm's Snapdragon 800.
Xiaomi's smartphone is so good that even Samsung's latest device, the Galaxy Note 3, may have trouble competing in China, despite having a similar processor. This is because Xiaomi offers top technology for a bargain price.
In terms of sales, Xiaomi's Mi 2S device is the most popular phone in China, according to Chinese benchmarking company Antutu. Technically, the Mi 2S performed better than HTC's flagship device, but was slower than Samsung's Octa S4. However, that was no problem for Xiaomi because its phone sold for less than half the price of Samsung's S4.
But, Xiaomi's aggressive pricing is allowing the company to capture more than just market share from Samsung. Xiaomi has already beat Apple in China. According to Quartz, the company shipped 3.3 million phones in the last quarter, versus Apple's 4.3 million.
Final foolish thoughts
Xiaomi's aggressive pricing, outperforming hardware, and user-friendly Android-based operating system have contributed to the company's amazing early success in China. The company can easily replicate this growth story in other emerging economies, where the increasing smartphone penetration ratio is still low, and customers are highly price-sensitive. It won't be hard to replace Apple in South America, East Asia, and Africa.
After it develops a strong community of users, strengthens its brand, and increases the number of applications in its store, Xiaomi can move to mature markets, where Apple and Samsung remain securely positioned.
Profit from Apple's destruction
Xiaomi has been a tremendous success story, but can they really hurt Apple's growth prospects in China? Also, Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, “Apple Will Destroy Its Greatest Product.” Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.
Xiaomi muscles past Apple to take sixth place in China’s smartphone market as Samsung stays on top
By Kaylene Hong, Tuesday, 6 Aug '13, 11:22am
Chinese smartphone manufacturer Xiaomi has been on a roll despite launching its first device only as recently as 2011 — it has officially overtaken Apple in the Chinese market.
The latest figures were conveyed to TNW by Canalys, an independent analyst firm, which noted that Xiaomi shipped a total of 4.4 million smartphones in China during the second quarter of 2013, inching above Apple which shipped 4.3 million units and knocking it to the seventh position. Last quarter, Apple managed to occupy the fifth spot in China’s smartphone market.
Samsung still took the lead in China in Q2 2013 with 15.5 million smartphones shipped to make up for a market share of 17.6 percent.
Despite only selling its phones in mainland China, Hong Kong and Taiwan, Xiaomi has been garnering success by inspiring the loyalty of many consumers. Its competitively priced phones are sold in batches that, when released in phases, regularly sell out fast, often within half an hour.
The latest figures come as Xiaomi recently unveiled its $130 Hongmi phone, the lowest-priced in its range, which has received an overwhelming response so far. According to a Donews report, pre-orders for the phone on social networking site Qzone exceeded a jaw-dropping 5 million units within three days. The phone will go on sale from August 12 onward.
The up-and-coming company has been compared to Apple on a regular basis, with some even criticizing it for being an Apple clone. However, it seems that consumers are happy to flock to the lower-priced Xiaomi smartphones instead of high-end iPhones, proven by its success so far. This could make it even harder for Apple to recapture some of its lost market share in China — despite rumors of a lower-priced iPhone, it could be too little, too late.
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broadsword
Brigadier
Actually, among the four BRICs, only China deserves distinction.
Express rail service to boost China-Europe trade
Xinhua | 2013-10-24 21:37:57
A regular express train from Poland to Southwest China's Sichuan Province is expected to be inaugurated by the end of this month, authorities with Sichuan's Chengdu City said on Thursday.
The first one-way express rail service in the opposite direction -- from Chengdu to Lodz in central Poland, crossing Kazakhstan, Russia and Belarus -- began running on April 24.
The rail transport is organized by China's Chengdu Hatrans YHF Intermodal Logistics, and Lodz-based logistics firm Hatrans is the train operator in Poland.
"Twenty-three trains have so far traveled from China to Poland, transporting 1,886 TEUs," said Chen Zhongwei, director of the General Office of Chengdu Municipal Leading Group for Modern Logistics Development.
The one-way service, traveling 9,826 km in 12 days, is eight to 10 days faster than ordinary trains, but thus far has traveled back empty to China during the initial trial operation period.
The operation of the railway from Poland back to China is expected to help boost Sino-European trade, transporting products including European cars to China next month.