Gree energy: Gree Electric boss Dong Mingzhu is finding
time amid the bidding war for her company’s shares held by the city government
to chair another joint-venture, this one involved in new-energy industries.
Read more on Yicai Global.
Keep calm and Carrie on: Hong Kong CE Carrie Lam welcomed
more than 5,000 delegates to the city’s Belt and Road Initiative Forum today,
saying the “Hong Kong spirit” will overcome the current turmoil. This followed
an evening of protesters singing their own anthem in shopping malls and soccer
fans booing the national anthem. Read the SCMP’s wrap.
No more panic: China must stay alert to the possibility of a
severe market disruption in case the trade war deteriorates further, as a
repeat of the 2015 sell-off will shatter the confidence of international
investors, Jessie Pak, managing director for Asia at FTSE Russell, tells the SCMP.
Caixin has a gripping story about the bidding process for the Zhuhai government’s stake in Gree Electric, the city’s biggest and most famous privately owned company. From a starting field of around 25 bidders, only two remain, as the air conditioner giant inches closer to a deal that has captured the market’s attention for months.
Gree Electric Appliances, the air conditioner giant chaired by one of China’s best-known female business leaders, has been approved to go completely private. The company said in an announcement this week that the State-owned Assets Supervision and Administration Commission has agreed in principle for the city government to transfer most of its stake in the company through a public tender.
The prestigious Fortune China 500 list has been released for 2019, with GBA companies standing out in measures of both revenues and profits. Shenzhen-based Ping An, which began as an insurer but is now more of a fintech firm, is the GBA’s leading light, ranking No. 4 in revenues and No. 6 in profits nationwide.
A total of 86 from the GBA made the top 500. Moreover, 12 of the top 40 most profitable were from the GBA.
Gree Electric boss Dong Mingzhu has clearly never seen a challenge she didn’t relish. Despite doubts about her plans to self-develop microchips for the Zhuhai-based home-appliance giant, she is pushing ahead with a RMB50 billion (US$7.3 billion) investment project over the next three years.
The company told Caixin Global it has already started using self-developed chips in some of its air conditioners, and it plans to have them installed in all of them by the end of the year. This is less of a gamble and more of a prudent diversification strategy than it might at first appear. Gree is currently spending RMB4 billion a year on microchip purchases. Developing its own chips is clearly a response to the U.S. attack on ZTE and Huawei.
Investors in the Shenzhen-listed company (SHE: 000651) appear to be of two minds about Gree’s plan, bouncing the stock up and down over the past month. However, since the start of the year, it has made a robust 57% return. Read more.
Guangdong’s listed A-share companies raised their investment in R&D by nearly 20% last year, to more than RMB144.3 billion. In so doing, they increased their share of R&D spending by all listed A-share companies by four percentage points to 19.82%.
Telecom equipment maker ZTE, which was nearly bankrupted a year ago by US sanctions, ranks top among the province’s listed companies and 7th among all A-share companies, investing RMB10.9 billion in R&D last year. (Huawei Technologies is not publicly listed.) Others that invested more than RMB5 billion in R&D include Foshan’s Media Group, Shenzhen’s BYD, Zhuhai’s Gree Electric, and Huizhou’s TCL Corp. As a percentage of income, IT companies invest the most, at an average of 11.3%.
Guangdong has 615 listed companies with a total market cap of RMB10.62 trillion, accounting for 18.22% of all A-share companies. They generated income of RMB1.61 trillion in Q1, up 12.41% from the previous quarter, with profits up 25.28% to RMB161.73 billion.
Zhuhai-based Gree Electric Appliances, the world’s biggest maker of home air conditioners, plans to plough into research and development the RMB5.3 billion (US$790 million) it got to keep last year thanks to China’s tax cuts, reports Caixin Global.
The money saved will be spent on core technologies, according to Dong Mingzhu, chairwoman of the company.
China started replacing business tax with VAT in 2016. Last May, it cut the 17 percent and 11 percent VAT rates to 16 percent and 10 percent, respectively, and dropped them further for many sectors, including manufacturing, from 16 percent to 13 percent this April.
The government’s tax policy includes the deduction of R&D expenses and tax incentives for high-tech enterprises to help support innovation. In the past three years that saved Gree CNY5.8 billion, Dong said.