Another point to add wrt Chinese workers working longer hours is that the workers directly benefit from the longer hours as does China as a whole by extension compared to the US, where the corporate setup primarily maximizes corporate profits at the expense of any worker gains/benefits.
Chinese Economics Thread
- Thread starter Norfolk
- Start date
SHANGHAI: As Beijing and Washington veer towards a full-blown trade war, American brands in China face what may be an even bigger threat: local rivals armed with innovative products and the Chinese government's blessing.
American household names like Apple, Starbucks and Procter & Gamble's Pampers are seeing their dominance challenged, a potential threat to the hundreds of billions of dollars United State firms make in China.
According to an analysis of data from Bain and Kantar, local brands snatched almost three-quarters of China's 639 billion yuan (US$97 billion) market for fast-moving consumer goods - a category that includes items like soft drinks and shampoo - last year, up from two-thirds in 2013.
The data, shared with Reuters, shows that US products like Pampers, Colgate toothpaste and Mead Johnson infant formula saw their market share drop around 10 percentage points in the past five years. The data was based on a survey of 40,000 urban households.
At the same time, savvy Chinese brands like SeeYoung, offering a popular silicon-free shampoo, and Pechoin, a maker of skincare products that plays up local ingredients, gained rapidly.
"Local competition is now extremely high on the agenda of foreign firms in China," said Bruno Lannes, Shanghai-based partner with Bain & Co, the consultancy that co-authored the report.
"In order to win in China now they need to beat not just traditional competitors," he said. "But they need to win against local companies that are faster and more innovative than they had realised."
American brands have long enjoyed a vaunted status in China. US fast food, beverages and coffee chains are ubiquitous in China's cities, while consumers lap up US-branded infant formula, designer jeans, cars and smartphones.
That dominance, however, is threatened by China's push to bolster domestic brands by creating champions in certain categories and weeding out weaker players to improve quality.
Brewing trade tensions could exacerbate this slippage, threatening more than US$180 billion in sales by US firms in China last year, according to an analysis of 121 US-listed American firms that broke out data for China sales in the most recent fiscal year.
The total is likely far higher as many US firms with a major China presence - including Starbucks, McDonald's and Walmart - don't break out China sales.
Apple made US$44.8 billion in China in the last fiscal year, P&G around US$5.2 billion and the sports apparel maker Nike US$4.2 billion.
A trade war now looks more likely after talks in Beijing and Washington failed to defuse grating issues between the two countries over a trade imbalance, technology transfers and barriers that firms face doing business in China.
GROWTH TO ZERO
But the bigger threat might be the advances made by Chinese rivals.
Apple's iconic iPhone has seen its share of the country's smartphone market stall at around 10 per cent since 2012, according to data from the analytics firm Canalys, and has been overtaken by upstart domestic phone makers like Oppo, Vivo and the more established Huawei.
Starbucks, which boomed in China on the back of a budding coffee culture, said its same store sales growth in the country slowed to zero in the second quarter of 2018. The firm cited delivery issues, but it has also been facing a rising tide of small, fast-growing domestic rivals in China's big cities.
It's not only US brands that are feeling the squeeze. A European trade body recently cited "stiffer competition" from Chinese rivals as one of the main anxieties felt by European brands.
And some firms have bucked the trend. The biscuit brand Oreo remains strong in the market, while Coca-Cola and Pepsi recovered last year after losing ground between 2012 and 2016 to juice and water drinks seen as more healthy.
Overall, local brands gained market share over international rivals last year in 21 product consumer product categories like skin care, shampoo and infant formula, according to the Bain report. Local brands grew 7.7 per cent last year versus tepid 0.4 per cent growth for overseas rivals.
"That's definitely a trend," said a senior executive at a major US consumer goods firm, adding that the biggest challenge his firm faced in China was strong domestic rivals.
GOING LOCAL
Chinese brands are getting increasingly confident about taking on overseas brands, including in high-tech sectors.
In China's auto market, the world's largest, domestic car brands - helped by supportive policies - have sneaked up on foreign brands over the past five years, challenging Ford Motor Co, General Motors Co, and the electric carmaker Tesla Inc.
The government's promotion of electric vehicles as a key industry has lured dozens of new Chinese competitors to enter the market.
Ian Zhu, a partner at NIO Capital, the investment affiliate of NIO, a Chinese electric vehicle start-up, said a shift to smart, electric and autonomous cars would bolster local brands as the vehicles increasingly become entertainment and work spaces rather than just a means of transport.
"You have to know local tastes and the local environment really well," he said. "Foreign companies will have tremendous challenges in that."
China's "Made in China 2025" push, which includes strategic areas including new energy and smart vehicles, is also helping local brands.
In other high-tech areas like medical devices, semiconductors and pharmaceuticals, China is pushing its own domestic champions to trim reliance on overseas markets.
Many firms have responded by shifting production to China, which can give a brand quasi-local status.
"Most of what we sell is domestically produced," Ze Dias, China managing director for Kraft Heinz, told Reuters at the recent Shanghai launch of the firm's Jif Jaf biscuit, a China-only Oreo look-a-like with flavors including chocolate cheese and spicy chili.
Dias said the firm was exposed to some fluctuations in the commodities market related to trade tensions. Longer-term, however, he hoped the United States and China would resolve their issues.
"There are short-term bumps in the road," he said, but the United States and China "will cooperate more than compete".
Jura The idiot
General
I think it's a strange article for example
- "Zhang believes the American obsession with politics sucks up energy and time that Americans could spend working on new technologies or developing new businesses."
but maybe one hour ago I read - or praising very long working hours by individuals (might be detrimental to their health, in case you didn't know)
Hendrik_2000
Lieutenant General
Contrary to the western press the 2nd Child policy is a success. It is so successful that the maternity leave insurance fund will run out of money. so all the talk that China will be old before it get rich is a myth.
But the system need improvement just like other social benefit
China's push for more babies is proving costly
Bloomberg
Published 4:58 am, Sunday, July 1, 2018
A child holds a Chinese flag while tourists and pedestrians walk past a portrait of former Chinese leader Mao Zedong at Tiananmen Square in Beijing on Oct. 16, 2017.
Chinese President Xi Jinping wants women to have more babies. That's proving to be a costly goal.
After government-run insurance funds paying for maternity leave suffered revenue shortfalls for the first time, Xi's government has begun taking steps to shore up the benefits system.
The cash crunch is the result of a baby drive by Chinese officials worried that a rapidly aging population poses a threat to economic growth. China eliminated the one-child policy in 2016 after almost four decades and since then almost every province has extended terms of maternity leave to encourage women to have more children.
Paid leave for mothers of newborns -- which the government in 2012 mandated at 98 days -- averaged between 138 and 158 days last year depending on the location, according to the China Daily. Insurance plans run by provincial or city governments pay the costs of maternity leave, with the money coming from mandatory contributions by employers.
The system doesn't always cover all of the costs of maternity leave. As regional governments offer more benefits, some employers are likely to discriminate against women because of concerns they will become pregnant, said Lyu Xiaoquan, a lawyer from Beijing Qianqian Law Firm who represents women in cases related to maternity-leave policies.
"The ultimate solution would be for the government and company to co-bear the costs," Lyu said.
As regional governments have offered more generous leave policies, payments have increased. In 2016, the most recent year for which statistics were available, Chinese maternity insurance funds had 53.1 billion yuan ($8.2 billion) in expenses, exceeding by 900 million yuan the amount companies paid into insurance funds, according to the National Bureau of Statistics of China.
That was the first time an annual deficit was posted since the office started reporting the data on a yearly basis in 2000. Payments exceeded premiums in 12 provinces or cities.
There's no immediate crisis, owing to surpluses accumulated before the one-child limit was lifted. While China hasn't yet published statistics about maternity-fund inflows and outflows for 2017, there were 17.2 million births last year, down 3.5 percent from 2016. That drop should ease pressure on the insurance system.
Still, even in 2015 there were three provinces or cities, including Beijing, in which maternity payments exceeded revenues. As they look at the long-term implications of promoting bigger families and longer maternity leaves, officials are acknowledging the stress the current employer-funded system faces.
The Ministry of Human Resources and Social Security in March issued a notice requiring provinces to pay maternity-related expenses in full and on time. The notice mandated that governments establish risk-alert mechanisms for maternity insurance funds and required them to keep enough in accumulated balances to cover six to nine months of payments.
That followed an August directive detailing steps governments should take when there are deficits in funds paying for maternity benefits as well as pensions, unemployment benefits, worker compensation and medical insurance.
The central government opened a new administration in May overseeing maternity and health insurance to lower costs while improving coverage, according to the Xinhua News Agency. The administration reports directly to the State Council, the highest level in the government hierarchy.
"This is good news for female employees," said Pan Jintang, a professor at the School of Labor and Human Resources of Renmin University in Beijing. "Combining the capital pool of different insurance funds can guarantee that female employees can get reimbursement for maternity insurance."
The move follows a pilot program in a dozen cities last year to expand access to maternity insurance by incorporating that system into basic medical insurance plans, potentially reducing costs.
Finding a solution is crucial if China is to avoid the demographic problems facing Japan and other Asian and European countries with low birth rates. By 2030, about a quarter of China's population will be 60 or older, the State Council said last year, up from 13 percent in 2010.
China's government is planning to scrap all limits on family size as soon as this year, a move that could further strain the system of employer-funded maternity leave.
Maternity-benefits expenses are small compared with other mandatory contributions of employers. Yet the system already puts pressure on some employers by not fully compensating them for the salaries of women on leave, said K. Lesli Ligorner, a Shanghai-based partner with Morgan, Lewis & Bockius who specializes in employment law.
"Insurance doesn't cover all of it and the employer is responsible for paying anything above that," she said.
Experts say discrimination against pregnant women in the workplace persists. Some companies require women to sign contracts stipulating that they won't get pregnant, according to Geoffrey Crothall, communications director for China Labour Bulletin, a Hong Kong-based group that promotes workers' rights. Others try to impose onerous conditions on pregnant employees in the hope that they'll quit before maternity leave starts, he said.
"A lot of employers simply will not hire women because they are worried they will have to pay for maternity insurance and that's not something they want to bother with," Crothall said.
Chinese law protects women from being fired because of pregnancy or maternity leave and courts are showing more willingness to consider complaints from plaintiffs alleging wrongful termination, according to attorney Jonathan Isaacs, head of the China employment practice at Baker McKenzie in Hong Kong.
However, because Chinese courts don't consider punitive damages for most employment cases, he said, the amounts awarded to successful plaintiffs are still small. "They're nothing near the level to make companies really pay attention," he said.
Changes to the maternity benefits system are part of a broader effort to improve China's social safety net, with the State Council on July 1 scheduled to introduce a program to help local governments make pension payments.
Such reforms show "the central government's determination to improve people's livelihoods at a time when China's population is rapidly aging," Xinhua has reported.
But the system need improvement just like other social benefit
China's push for more babies is proving costly
Bloomberg
Published 4:58 am, Sunday, July 1, 2018
A child holds a Chinese flag while tourists and pedestrians walk past a portrait of former Chinese leader Mao Zedong at Tiananmen Square in Beijing on Oct. 16, 2017.
Chinese President Xi Jinping wants women to have more babies. That's proving to be a costly goal.
After government-run insurance funds paying for maternity leave suffered revenue shortfalls for the first time, Xi's government has begun taking steps to shore up the benefits system.
The cash crunch is the result of a baby drive by Chinese officials worried that a rapidly aging population poses a threat to economic growth. China eliminated the one-child policy in 2016 after almost four decades and since then almost every province has extended terms of maternity leave to encourage women to have more children.
Paid leave for mothers of newborns -- which the government in 2012 mandated at 98 days -- averaged between 138 and 158 days last year depending on the location, according to the China Daily. Insurance plans run by provincial or city governments pay the costs of maternity leave, with the money coming from mandatory contributions by employers.
The system doesn't always cover all of the costs of maternity leave. As regional governments offer more benefits, some employers are likely to discriminate against women because of concerns they will become pregnant, said Lyu Xiaoquan, a lawyer from Beijing Qianqian Law Firm who represents women in cases related to maternity-leave policies.
"The ultimate solution would be for the government and company to co-bear the costs," Lyu said.
As regional governments have offered more generous leave policies, payments have increased. In 2016, the most recent year for which statistics were available, Chinese maternity insurance funds had 53.1 billion yuan ($8.2 billion) in expenses, exceeding by 900 million yuan the amount companies paid into insurance funds, according to the National Bureau of Statistics of China.
That was the first time an annual deficit was posted since the office started reporting the data on a yearly basis in 2000. Payments exceeded premiums in 12 provinces or cities.
There's no immediate crisis, owing to surpluses accumulated before the one-child limit was lifted. While China hasn't yet published statistics about maternity-fund inflows and outflows for 2017, there were 17.2 million births last year, down 3.5 percent from 2016. That drop should ease pressure on the insurance system.
Still, even in 2015 there were three provinces or cities, including Beijing, in which maternity payments exceeded revenues. As they look at the long-term implications of promoting bigger families and longer maternity leaves, officials are acknowledging the stress the current employer-funded system faces.
The Ministry of Human Resources and Social Security in March issued a notice requiring provinces to pay maternity-related expenses in full and on time. The notice mandated that governments establish risk-alert mechanisms for maternity insurance funds and required them to keep enough in accumulated balances to cover six to nine months of payments.
That followed an August directive detailing steps governments should take when there are deficits in funds paying for maternity benefits as well as pensions, unemployment benefits, worker compensation and medical insurance.
The central government opened a new administration in May overseeing maternity and health insurance to lower costs while improving coverage, according to the Xinhua News Agency. The administration reports directly to the State Council, the highest level in the government hierarchy.
"This is good news for female employees," said Pan Jintang, a professor at the School of Labor and Human Resources of Renmin University in Beijing. "Combining the capital pool of different insurance funds can guarantee that female employees can get reimbursement for maternity insurance."
The move follows a pilot program in a dozen cities last year to expand access to maternity insurance by incorporating that system into basic medical insurance plans, potentially reducing costs.
Finding a solution is crucial if China is to avoid the demographic problems facing Japan and other Asian and European countries with low birth rates. By 2030, about a quarter of China's population will be 60 or older, the State Council said last year, up from 13 percent in 2010.
China's government is planning to scrap all limits on family size as soon as this year, a move that could further strain the system of employer-funded maternity leave.
Maternity-benefits expenses are small compared with other mandatory contributions of employers. Yet the system already puts pressure on some employers by not fully compensating them for the salaries of women on leave, said K. Lesli Ligorner, a Shanghai-based partner with Morgan, Lewis & Bockius who specializes in employment law.
"Insurance doesn't cover all of it and the employer is responsible for paying anything above that," she said.
Experts say discrimination against pregnant women in the workplace persists. Some companies require women to sign contracts stipulating that they won't get pregnant, according to Geoffrey Crothall, communications director for China Labour Bulletin, a Hong Kong-based group that promotes workers' rights. Others try to impose onerous conditions on pregnant employees in the hope that they'll quit before maternity leave starts, he said.
"A lot of employers simply will not hire women because they are worried they will have to pay for maternity insurance and that's not something they want to bother with," Crothall said.
Chinese law protects women from being fired because of pregnancy or maternity leave and courts are showing more willingness to consider complaints from plaintiffs alleging wrongful termination, according to attorney Jonathan Isaacs, head of the China employment practice at Baker McKenzie in Hong Kong.
However, because Chinese courts don't consider punitive damages for most employment cases, he said, the amounts awarded to successful plaintiffs are still small. "They're nothing near the level to make companies really pay attention," he said.
Changes to the maternity benefits system are part of a broader effort to improve China's social safety net, with the State Council on July 1 scheduled to introduce a program to help local governments make pension payments.
Such reforms show "the central government's determination to improve people's livelihoods at a time when China's population is rapidly aging," Xinhua has reported.
Nothing surprising here. Most American Brand standing listed on this article has been on a decline for a long time in Asia if not everywhere, Better quality and value products from Japan, Korea and now China has and will continue to erode American Brand loyalty unless they can reverse course and provide better value.
These same trend can be found in Japan and Korea.
Jura The idiot
General
For one thing, I would be ashamed of buying an iPhone when ZTE was killed and Huawei phone is banned in the US. It is like handing over my money to somebody who just beaten my brother.
The current "trade war" is really not limited to trade, but has the deep impact to people's minds and feelings for generations, that is bigger beyond trade.