FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

China Business Weekly20 May 2020

FCCC/EUCBA ACTIVITIESWebinar: Assessing COVID-19 Economic Impacts on China, Implications for Global Business – 27 May 2020, 9.00 am CET

The EU-China Business Association and the Flanders-China Chamber of Commerce in partnership with The ConferenceBoard are organizing a webinar on: 'Assessing COVID-19 Economic Impacts on China - Implications for GlobalBusiness'.

The business community is deeply concerned about the impact of the COVID-19 crisis on China’s economy, where itcaused immense internal shocks on both supply and demand in Q1. Every company with a supply chain in China hasbeen hit hard, some to the point of paralysis. So too for consumer companies impacted by store closures, workerquarantines, and operational bottlenecks – many of which continue to this day. The extent of China’s economic shutdown,and the breadth of the “restart” that is now taking place, are unprecedented in modern economic history. And now, theChinese economy is being hit hard again by collapsing export demand as major economies around the world reel fromCOVID crises in their countries.

Foreign companies operating in China must prepare for slow growth, protracted volatility, and a possibly ongoing virusoutbreak conditions, that might last for months and involve broad ripple effects in China and globally.

Key questions to be addressed:• What is the status of China’s economy across major sectors?

• Will consumption rebound in typical post-crisis fashion, as was the case with SARS in 2003?

• What policy measures is the Chinese government undertaking, and how much will they help?

• What operating environment changes in China should be anticipated in the wake of the crisis?

• How is the crisis impacting Sino-foreign relations, and what does the future look like for market bifurcation andsupply chain decoupling in China?

Speakers:

Mr. David HoffmanSenior Vice President Asia and Managing Director of the China Center for Economics & Business The Conference Board

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

China Business Weekly20 May 2020

FCCC/EUCBA ACTIVITIESWebinar: Assessing COVID-19 Economic Impacts on China, Implications for Global Business – 27 May 2020, 9.00 am CET

The EU-China Business Association and the Flanders-China Chamber of Commerce in partnership with The ConferenceBoard are organizing a webinar on: 'Assessing COVID-19 Economic Impacts on China - Implications for GlobalBusiness'.

The business community is deeply concerned about the impact of the COVID-19 crisis on China’s economy, where itcaused immense internal shocks on both supply and demand in Q1. Every company with a supply chain in China hasbeen hit hard, some to the point of paralysis. So too for consumer companies impacted by store closures, workerquarantines, and operational bottlenecks – many of which continue to this day. The extent of China’s economic shutdown,and the breadth of the “restart” that is now taking place, are unprecedented in modern economic history. And now, theChinese economy is being hit hard again by collapsing export demand as major economies around the world reel fromCOVID crises in their countries.

Foreign companies operating in China must prepare for slow growth, protracted volatility, and a possibly ongoing virusoutbreak conditions, that might last for months and involve broad ripple effects in China and globally.

Key questions to be addressed:• What is the status of China’s economy across major sectors?

• Will consumption rebound in typical post-crisis fashion, as was the case with SARS in 2003?

• What policy measures is the Chinese government undertaking, and how much will they help?

• What operating environment changes in China should be anticipated in the wake of the crisis?

• How is the crisis impacting Sino-foreign relations, and what does the future look like for market bifurcation andsupply chain decoupling in China?

Speakers:

Mr. David HoffmanSenior Vice President Asia and Managing Director of the China Center for Economics & Business The Conference Board

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Mr. Filip PintelonSenior Vice-PresidentGeneral Manager Healthcare Business GroupBarco

Moderated by:Ms. Gwenn SonckExecutive DirectorFlanders-China Chamber of CommerceEU-China Business Association

Practical Information:Date and time: May 27, 9.00-10.00 am CET

Location: Online

Price for members: Free

Price for non-members: €35 (Excl. VAT)

SUBSCRIBE HERE

PAST EVENTSWebinar: 10 Basic IP Tips for Doing Business in China – 20 May 2020

The Flanders-China Chamber of Commerce in partnership with the China IPR SME Helpdesk organized a webinar focused on “10 Basic IP Tips for Doing Business in China” on 20 May 2020.

Mr. Peter Sczigel (China IPR SME Helpdesk) gave an introduction to the webinar and the services of the China IPR SME Helpdesk, followed by a presentation of the Flanders-China Chamber of Commerce by Ms. Gwenn Sonck (FCCC), Executive Director.

IP Business Advisor Matias Zubimendi gave a presentation on the key factors for a successful IP strategy in the Chinese market. The webinar ended with a Q&A session where attendees raised their questions and interacted with the speakers.

COVID-19 RESOURCES GUIDE v.3.1The latest version of the Covid-19 Resources Guide v.3.1 is available here and can also be downloaded as a PDF on the website of the Flanders-China Chamber of Commerce (FCCC). The latest statistics of cases and deaths can be consulted on Johns Hopkins University’s CSSE page: https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html

Follow the Flanders-China Chamber of Commerce onLinkedIn – Click here

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Mr. Filip PintelonSenior Vice-PresidentGeneral Manager Healthcare Business GroupBarco

Moderated by:Ms. Gwenn SonckExecutive DirectorFlanders-China Chamber of CommerceEU-China Business Association

Practical Information:Date and time: May 27, 9.00-10.00 am CET

Location: Online

Price for members: Free

Price for non-members: €35 (Excl. VAT)

SUBSCRIBE HERE

PAST EVENTSWebinar: 10 Basic IP Tips for Doing Business in China – 20 May 2020

The Flanders-China Chamber of Commerce in partnership with the China IPR SME Helpdesk organized a webinar focused on “10 Basic IP Tips for Doing Business in China” on 20 May 2020.

Mr. Peter Sczigel (China IPR SME Helpdesk) gave an introduction to the webinar and the services of the China IPR SME Helpdesk, followed by a presentation of the Flanders-China Chamber of Commerce by Ms. Gwenn Sonck (FCCC), Executive Director.

IP Business Advisor Matias Zubimendi gave a presentation on the key factors for a successful IP strategy in the Chinese market. The webinar ended with a Q&A session where attendees raised their questions and interacted with the speakers.

COVID-19 RESOURCES GUIDE v.3.1The latest version of the Covid-19 Resources Guide v.3.1 is available here and can also be downloaded as a PDF on the website of the Flanders-China Chamber of Commerce (FCCC). The latest statistics of cases and deaths can be consulted on Johns Hopkins University’s CSSE page: https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html

Follow the Flanders-China Chamber of Commerce onLinkedIn – Click here

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

NEWS FROM OUR PARTNERSThe ecological environment of Weihai in 2019 is the best in Shandong

“Air Quality” and “Water Quality” Won the Championship

On May 8, 2020, the Weihai Eco-environmental Quality Bulletin 2019 was released, announcing that the "Air Quality” and“Water Quality” of Weihai both won the championship. The air quality has reached the national second-level standard forfour consecutive years, ranking first in Shandong Province. The annual average pH value of urban precipitation rangedfrom 6.08 to 6.86, and no acid rain occurred the whole year.

The water environment quality index of the city ranked first in Shandong Province. The water quality of 12 main drinkingwater sources remained in good condition and 100% met the water quality standard. The quality of seawater in the coastalareas continued to be in a good condition. All environmental functional zones in coastal areas met the required standard.The ecological environment index of Weihai was 65.79, which ranked the first in Shandong Province and meets therequirements of the national ecological civilization construction index (≥ 60).

NPC & CPPCC SESSIONSChina's parliament to start its annual session in the second half of this week

In the second half of this week, the National People'sCongress (NPC) and the Chinese People's PoliticalConsultative Conference (CPPCC) will hold their

annual sessions, which were postponed from earlyMarch. The duration of the sessions will be shortened fromabout 10 days to one week. So-called “closed loopmanagement” will be used, which means that allparticipants will have been tested for Covid-19 and will beseparated from the outside world. They will be staying atspecially reserved hotels and brought to the Great Hall ofthe People in busses. They will not be allowed to roamfreely in the city or receive visitors. Hong Kong's NPCDeputies and CPPCC Members will first go to Shenzhen inGuangdong province to undergo nucleic acid tests beforeflying to Beijing. The number of staffers accompanyingthem to Beijing, including Chinese reporters, will bereduced. Journalists can only conduct interviews by phoneor video chat, the Global Times reports. This year, noforeign journalists have been invited to cover the twosessions.

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

NEWS FROM OUR PARTNERSThe ecological environment of Weihai in 2019 is the best in Shandong

“Air Quality” and “Water Quality” Won the Championship

On May 8, 2020, the Weihai Eco-environmental Quality Bulletin 2019 was released, announcing that the "Air Quality” and“Water Quality” of Weihai both won the championship. The air quality has reached the national second-level standard forfour consecutive years, ranking first in Shandong Province. The annual average pH value of urban precipitation rangedfrom 6.08 to 6.86, and no acid rain occurred the whole year.

The water environment quality index of the city ranked first in Shandong Province. The water quality of 12 main drinkingwater sources remained in good condition and 100% met the water quality standard. The quality of seawater in the coastalareas continued to be in a good condition. All environmental functional zones in coastal areas met the required standard.The ecological environment index of Weihai was 65.79, which ranked the first in Shandong Province and meets therequirements of the national ecological civilization construction index (≥ 60).

NPC & CPPCC SESSIONSChina's parliament to start its annual session in the second half of this week

In the second half of this week, the National People'sCongress (NPC) and the Chinese People's PoliticalConsultative Conference (CPPCC) will hold their

annual sessions, which were postponed from earlyMarch. The duration of the sessions will be shortened fromabout 10 days to one week. So-called “closed loopmanagement” will be used, which means that allparticipants will have been tested for Covid-19 and will beseparated from the outside world. They will be staying atspecially reserved hotels and brought to the Great Hall ofthe People in busses. They will not be allowed to roamfreely in the city or receive visitors. Hong Kong's NPCDeputies and CPPCC Members will first go to Shenzhen inGuangdong province to undergo nucleic acid tests beforeflying to Beijing. The number of staffers accompanyingthem to Beijing, including Chinese reporters, will bereduced. Journalists can only conduct interviews by phoneor video chat, the Global Times reports. This year, noforeign journalists have been invited to cover the twosessions.

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

There are two major decisions pending, which couldresult in trillions of yuan in extra economic stimulus, to beapproved by the NPC: raising the deficit-to-GDP ratioand issuing special government bonds. Another majorissue is which GDP growth target will be set, if one is set atall. Most economists interviewed by the Global Times saidthat the target should be about 3%, which would give amuch-needed boost to business confidence and serve as aguide for economic policy. Instead of a growth target for theyear 2020, China could set one for the two years of 2020-2021 combined, which could be set at 6%. Another heatedtopic – the annual fiscal deficit rate – will be raised to 3.5%or even 4% of GDP to drive up investment andconsumption, experts said. The Ministry of Finance set thefiscal deficit target at 2.8% of GDP for 2019.

Despite deteriorating China-U.S. relations, theCustoms Tariff Commission announced that a newbatch of imported products from the U.S. will beexcluded from punitive tariffs. Products on the list – 79items including rare-earth metals, gold ore and medicaldisinfectant – will no longer be subject to additional tariffsfrom May 19, 2020 to May 18, 2021. On May 8, the Officeof the United States Trade Representative (USTR)announced several new tariff exclusions for importedproducts from China, including medical items. Bothcountries are still struggling to implement their phase onetrade agreement. Gao Lingyun, Expert at the ChineseAcademy of Social Sciences (CASS) in Beijing, told theGlobal Times that both China and U.S. may face difficultiescarrying out the trade deal because of the pandemic. Chinamay have delayed purchases of some U.S. goods in thefirst quarter, while the U.S.' ability to supply products toChina has been constrained by the pandemic.

In a video address to the 73rd World Health Assembly(WHA), Chinese President Xi Jinping said that Chinasupports the comprehensive review of the Covid-19response and inquiry into the origin of the virus, if theinvestigation is conducted in an objective andimpartial manner after the pandemic has been broughtunder control. The inquiry should be based on science andprofessionalism, led by the WHO and conducted in an

objective and impartial manner, Xi said. He added that withenormous sacrifice, China has turned the tide on the virusand protected people's lives. During this process, thecountry attached great importance to openness,transparency and responsibility. Xi also told the WHA thatChina will provide USD2 billion over two years to help withthe Covid-19 response, set up a global humanitarianresponse system with the help of the UN, and make aCovid-19 vaccine a global public good. As the majority ofcountries believe the pandemic has not reached its end,collaboration in fighting the virus remains the top prioritywhile it is still premature to launch an investigation and lookinto the source of the virus, Zhao Lijian, Spokesperson ofthe Chinese Foreign Ministry, told a press conference.

China's consumer price index (CPI) and producer priceindex (PPI) continued to decelerate in April, indicatingpossible structural deflation, but providing room forstimulus measures. Food price increases eased due tosufficient supplies of fresh vegetables and increasing hogproduction and supplies, according to Dong Lijuan, SeniorStatistician at the National Bureau of Statistics (NBS). TheCPI rose 3.3% year-on-year in April, down 1.0 percentagepoints from March. The PPI slid 3.1% year-on-year in April,compared with a 1.5% fall in March. According to the NBS,food prices rose 14.8% year-on-year in April, down 3.5percentage points from the previous month. The pork pricerose 96.9% year-on-year in the month, down 19.5percentage points from March. Non-food prices rose 0.4%year-on-year in April, down 0.3 percentage points fromMarch. In the first four months of this year, the CPI went up4.5% year-on-year.

After six new infected persons were detected in onecommunity in Wuhan, city authorities decided to conduct a10-day city-wide coronavirus testing of all its residents.Wang Zhonglin, Communist Party Secretary of Wuhan,said at a conference that learning from recent new caseswill prevent a rebound and is the best way to ensurepeople's health and safety. The city of Shulan in Jilinprovince and a district of Jilin city have been put inlockdown after 21 Covid-19 cases were detected. Travel inthe area has been restricted.

FOREIGN INVESTMENTCountries planning charter flights to take executives back to China

Companies from Germany, France and Switzerlandplan to charter planes to bring their executives back toChina amid the Covid-19 pandemic, and Chineseauthorities are likely to open express channels to facilitatetheir comeback and revitalize economic activity, sourcestold the Global Times. The German Chamber ofCommerce in China is organizing a flight with Lufthansa toassist German executives to fly back to China. The flight isplanned to leave from Frankfurt and land in Shanghai onMay 25. Other European countries such as Switzerlandand France may also charter flights to get corporateexecutives back to China, a person familiar with the matter

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

There are two major decisions pending, which couldresult in trillions of yuan in extra economic stimulus, to beapproved by the NPC: raising the deficit-to-GDP ratioand issuing special government bonds. Another majorissue is which GDP growth target will be set, if one is set atall. Most economists interviewed by the Global Times saidthat the target should be about 3%, which would give amuch-needed boost to business confidence and serve as aguide for economic policy. Instead of a growth target for theyear 2020, China could set one for the two years of 2020-2021 combined, which could be set at 6%. Another heatedtopic – the annual fiscal deficit rate – will be raised to 3.5%or even 4% of GDP to drive up investment andconsumption, experts said. The Ministry of Finance set thefiscal deficit target at 2.8% of GDP for 2019.

Despite deteriorating China-U.S. relations, theCustoms Tariff Commission announced that a newbatch of imported products from the U.S. will beexcluded from punitive tariffs. Products on the list – 79items including rare-earth metals, gold ore and medicaldisinfectant – will no longer be subject to additional tariffsfrom May 19, 2020 to May 18, 2021. On May 8, the Officeof the United States Trade Representative (USTR)announced several new tariff exclusions for importedproducts from China, including medical items. Bothcountries are still struggling to implement their phase onetrade agreement. Gao Lingyun, Expert at the ChineseAcademy of Social Sciences (CASS) in Beijing, told theGlobal Times that both China and U.S. may face difficultiescarrying out the trade deal because of the pandemic. Chinamay have delayed purchases of some U.S. goods in thefirst quarter, while the U.S.' ability to supply products toChina has been constrained by the pandemic.

In a video address to the 73rd World Health Assembly(WHA), Chinese President Xi Jinping said that Chinasupports the comprehensive review of the Covid-19response and inquiry into the origin of the virus, if theinvestigation is conducted in an objective andimpartial manner after the pandemic has been broughtunder control. The inquiry should be based on science andprofessionalism, led by the WHO and conducted in an

objective and impartial manner, Xi said. He added that withenormous sacrifice, China has turned the tide on the virusand protected people's lives. During this process, thecountry attached great importance to openness,transparency and responsibility. Xi also told the WHA thatChina will provide USD2 billion over two years to help withthe Covid-19 response, set up a global humanitarianresponse system with the help of the UN, and make aCovid-19 vaccine a global public good. As the majority ofcountries believe the pandemic has not reached its end,collaboration in fighting the virus remains the top prioritywhile it is still premature to launch an investigation and lookinto the source of the virus, Zhao Lijian, Spokesperson ofthe Chinese Foreign Ministry, told a press conference.

China's consumer price index (CPI) and producer priceindex (PPI) continued to decelerate in April, indicatingpossible structural deflation, but providing room forstimulus measures. Food price increases eased due tosufficient supplies of fresh vegetables and increasing hogproduction and supplies, according to Dong Lijuan, SeniorStatistician at the National Bureau of Statistics (NBS). TheCPI rose 3.3% year-on-year in April, down 1.0 percentagepoints from March. The PPI slid 3.1% year-on-year in April,compared with a 1.5% fall in March. According to the NBS,food prices rose 14.8% year-on-year in April, down 3.5percentage points from the previous month. The pork pricerose 96.9% year-on-year in the month, down 19.5percentage points from March. Non-food prices rose 0.4%year-on-year in April, down 0.3 percentage points fromMarch. In the first four months of this year, the CPI went up4.5% year-on-year.

After six new infected persons were detected in onecommunity in Wuhan, city authorities decided to conduct a10-day city-wide coronavirus testing of all its residents.Wang Zhonglin, Communist Party Secretary of Wuhan,said at a conference that learning from recent new caseswill prevent a rebound and is the best way to ensurepeople's health and safety. The city of Shulan in Jilinprovince and a district of Jilin city have been put inlockdown after 21 Covid-19 cases were detected. Travel inthe area has been restricted.

FOREIGN INVESTMENTCountries planning charter flights to take executives back to China

Companies from Germany, France and Switzerlandplan to charter planes to bring their executives back toChina amid the Covid-19 pandemic, and Chineseauthorities are likely to open express channels to facilitatetheir comeback and revitalize economic activity, sourcestold the Global Times. The German Chamber ofCommerce in China is organizing a flight with Lufthansa toassist German executives to fly back to China. The flight isplanned to leave from Frankfurt and land in Shanghai onMay 25. Other European countries such as Switzerlandand France may also charter flights to get corporateexecutives back to China, a person familiar with the matter

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

told the Global Times. “We are in constant contact with ourmembers as well as with the Swiss and Chineseauthorities. There is an urgent need for travel and we doour best to find solutions that take into account this needand take care of everyone's safety,” Daniela Reinau,Deputy General Manager of the Swiss-Chinese Chamberof Commerce in Beijing, told the Global Times. Thereturning executives would need special visas to enterChina. In view of the rapid spread of Covid-19 across theworld, China on March 28 temporarily suspended entry byforeign nationals, except for special and humanitarianreasons, but China is preparing “express access" for keybusiness representatives and technicians, Chinese StateCouncilor and Foreign Minister Wang Yi said.

Shanghai, which has the largest number of headquartersof foreign companies in the Chinese mainland, is strivingto revive economic activity by helping foreignmanagers return. The process won't be easy, industryinsiders said. “For instance, we must first apply to localdistrict authorities in Shanghai where the Chinese branchis located, and show that the foreign executives arecrucially needed for performing economic, trade, scientificor technological activities,” an employee of a Chinesebranch of a German company based in Shanghai told theGlobal Times. “The foreign national can get an invitationafter all the documents are processed and approved bylocal authorities, and the process may take a week. Thenhe may apply for a new visa at a Chinese embassy orconsulate,” the person said, adding that “the process forobtaining a visa will also be affected by the pandemicsituation in the foreign national's home country”.

Passengers must take Covid-19 tests and offer proof ofnegative test results, valid within 48 hours before departurefrom Germany. They will also need to go through a 48-hourquarantine after arrival in Shanghai, during whichmandatory Covid-19 and antibody tests will be performedfor each passenger, the employee said.

China requires international travelers to the country toundergo a 14-day quarantine, which was mandatory, saidYang Zhanqiu, Deputy Director of the Pathogen BiologyDepartment at Wuhan University. But since China haslargely contained the virus, it is possible that the quarantineperiod could be shortened in some circumstances, likethose of German managers returning to work in China.Edmund Yang, a Pricewaterhouse Coopers (PwC) partnerin Beijing, told the Global Times that some of the firm'sclients want to get their staff back to China as early aspossible.

As of April 28, 76.6% of foreign companies in China hadresumed more than 70% of their production capacity,according a survey of 8,200 key foreign-funded firms in theChinese market by the Ministry of Commerce (MOFCOM).The number of newly established foreign-funded firms inChina reached 9,616 in the first quarter, with foreign directinvestment up 6.5% year-on-year to CNY242.28 billion,reports the Global Times.

China's Foreign Ministry initially advised diplomats not toreturn to China before May 15, but has now extended thistime frame to June 1. “China may relax border controlsgradually in early June,” Wang Hongwei, Professor atRenmin University's School of Public Administration andPolicy in Beijing, told the Global Times.

IT & TELECOM

SMIC manufactures advanced chips for Huawei's smartphones, as TSMC refuses orders from Huawei

Chinese mainland chipmaker SemiconductorManufacturing International Corp (SMIC) hassuccessfully mass-produced a smartphone processor

for Huawei Technologies, marking a breakthrough inthe mainland’s push to boost its chipmaking industry,experts said. Huawei’s chipset, the Kirin 710A, wasproduced through an advanced, 14-nanometermanufacturing process by the Shanghai-based chipmaker,marking the first time that a Chinese mainlandsemiconductor company has used that technology tomass-produce smartphone processors. The processproduces more efficient chips. The move also confirms thatHuawei is shifting partial production of its self-designedchips to SMIC.

Meanwhile, the U.S. has further restricted the supply ofchips incorporating U.S. technology to Huawei. Undernew rules, foreign semiconductor makers must obtain aU.S. license to ship Huawei-designed semiconductors tothe Chinese company that were produced using U.S.technology. The rule went into effect on May 16, with a120-day grace period for chips already in production.

Taiwan Semiconductor Manufacturing (TSMC)announced it would no longer accept chip orders from

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

told the Global Times. “We are in constant contact with ourmembers as well as with the Swiss and Chineseauthorities. There is an urgent need for travel and we doour best to find solutions that take into account this needand take care of everyone's safety,” Daniela Reinau,Deputy General Manager of the Swiss-Chinese Chamberof Commerce in Beijing, told the Global Times. Thereturning executives would need special visas to enterChina. In view of the rapid spread of Covid-19 across theworld, China on March 28 temporarily suspended entry byforeign nationals, except for special and humanitarianreasons, but China is preparing “express access" for keybusiness representatives and technicians, Chinese StateCouncilor and Foreign Minister Wang Yi said.

Shanghai, which has the largest number of headquartersof foreign companies in the Chinese mainland, is strivingto revive economic activity by helping foreignmanagers return. The process won't be easy, industryinsiders said. “For instance, we must first apply to localdistrict authorities in Shanghai where the Chinese branchis located, and show that the foreign executives arecrucially needed for performing economic, trade, scientificor technological activities,” an employee of a Chinesebranch of a German company based in Shanghai told theGlobal Times. “The foreign national can get an invitationafter all the documents are processed and approved bylocal authorities, and the process may take a week. Thenhe may apply for a new visa at a Chinese embassy orconsulate,” the person said, adding that “the process forobtaining a visa will also be affected by the pandemicsituation in the foreign national's home country”.

Passengers must take Covid-19 tests and offer proof ofnegative test results, valid within 48 hours before departurefrom Germany. They will also need to go through a 48-hourquarantine after arrival in Shanghai, during whichmandatory Covid-19 and antibody tests will be performedfor each passenger, the employee said.

China requires international travelers to the country toundergo a 14-day quarantine, which was mandatory, saidYang Zhanqiu, Deputy Director of the Pathogen BiologyDepartment at Wuhan University. But since China haslargely contained the virus, it is possible that the quarantineperiod could be shortened in some circumstances, likethose of German managers returning to work in China.Edmund Yang, a Pricewaterhouse Coopers (PwC) partnerin Beijing, told the Global Times that some of the firm'sclients want to get their staff back to China as early aspossible.

As of April 28, 76.6% of foreign companies in China hadresumed more than 70% of their production capacity,according a survey of 8,200 key foreign-funded firms in theChinese market by the Ministry of Commerce (MOFCOM).The number of newly established foreign-funded firms inChina reached 9,616 in the first quarter, with foreign directinvestment up 6.5% year-on-year to CNY242.28 billion,reports the Global Times.

China's Foreign Ministry initially advised diplomats not toreturn to China before May 15, but has now extended thistime frame to June 1. “China may relax border controlsgradually in early June,” Wang Hongwei, Professor atRenmin University's School of Public Administration andPolicy in Beijing, told the Global Times.

IT & TELECOM

SMIC manufactures advanced chips for Huawei's smartphones, as TSMC refuses orders from Huawei

Chinese mainland chipmaker SemiconductorManufacturing International Corp (SMIC) hassuccessfully mass-produced a smartphone processor

for Huawei Technologies, marking a breakthrough inthe mainland’s push to boost its chipmaking industry,experts said. Huawei’s chipset, the Kirin 710A, wasproduced through an advanced, 14-nanometermanufacturing process by the Shanghai-based chipmaker,marking the first time that a Chinese mainlandsemiconductor company has used that technology tomass-produce smartphone processors. The processproduces more efficient chips. The move also confirms thatHuawei is shifting partial production of its self-designedchips to SMIC.

Meanwhile, the U.S. has further restricted the supply ofchips incorporating U.S. technology to Huawei. Undernew rules, foreign semiconductor makers must obtain aU.S. license to ship Huawei-designed semiconductors tothe Chinese company that were produced using U.S.technology. The rule went into effect on May 16, with a120-day grace period for chips already in production.

Taiwan Semiconductor Manufacturing (TSMC)announced it would no longer accept chip orders from

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Huawei. Guo Ping, rotating Chairman of Huawei, warnedthat the U.S. restrictions “will also affect communicationsservices for the more than three billion people who useHuawei products and services worldwide.” To cope withrestrictions, Huawei’s research and development spendinggrew 29.8% to CNY131.7 billion in 2019, while inventoriessurged 73.4% on a yearly basis, the China Daily reports.

China’s state-backed funds pumped USD2.25 billioninto SMIC to raise its registered capital from USD3.5 billionto USD6.5 billion. Meanwhile, U.S. President DonaldTrump extended with another year an order signed lastMay that prohibited U.S. companies from using telecomsequipment made by firms deemed a national securitythreat – a ban that includes Huawei and ZTE. At the sametime, a waiver allows Huawei to still sell certain equipmentto U.S. telecom carriers.

Xiang Ligang, Director General of the InformationConsumption Alliance, said that the Kirin 710A chip’sdesign, manufacturing, testing and packaging are now alldone by Chinese mainland companies, which is abreakthrough for the industry. The comments came afteremployees of SMIC Shanghai received Huaweismartphones last week with “Powered by SMIC” printed onthe back.

Huawei said earlier that it would expand its productioncapacity in 14 nm manufacturing to 15,000 wafers permonth by the end of 2020. The company said in its first-quarter financial report that its revenue in the three monthswas USD905 million, up 35% year-on-year and marking arecord high. Huawei is also beefing up its own chipresearch and development capabilities. HiSilicon, Huawei’ssemiconductor arm, became the first Chinese mainlandcompany to enter the Top 10 global chip rankings, takingthe 10th position in the first quarter of 2020, according tomarket research company IC Insights, the China Daily

reports.

As the U.S. announced it would block shipments ofsemiconductors to Huawei, China is preparingcountermeasures, including putting U.S. companies onan “unreliable entity list,” launching investigations,imposing restrictions on U.S. companies, and suspendingpurchase of American products, a source close to theChinese government told the Global Times. The U.S.companies mentioned, including Apple, Qualcomm, Ciscoand Boeing, are all highly dependent on the Chinesemarket. Boston Consulting Group (BCG) warned that ifshipments of U.S. chips and chipmaking equipment toChina were stopped, and China were to ban imports ofU.S. electronics and software, it could cost the affectedU.S. companies 37% of their annual sales. BCG found thatthe top U.S. semiconductor makers have reported amedian revenue decline of between 4% and 9% in each ofthe three quarters following the ban on Huawei buying U.S.chip technologies in May 2019.

Smartphone shipments in China rose by 17.2% in Aprilon a yearly basis, the first such expansion in the past fourmonths. Data from the China Academy of Information andCommunications Technology (CAICT) showed that 40.8million smartphones were shipped from factories toretailers in April, with 32 new models being launched.Shipments of 5G smartphones stood at 16.38 million units,a 164% growth on a monthly basis, and accounted for39.3% of total shipments, the report said. Strong consumerdemand for cutting-edge devices prompted retailers toshore up stocks. With the virus outbreak still rampant inmany overseas countries, Chinese smartphone firms likeHuawei, Xiaomi, Oppo and Vivo are now focusing more onthe domestic market, thereby intensifying competition. InApril, 22 new 5G smartphone models were launched inChina, according to CAICT.

CHINA NEWS ROUND-UPFDI on the rise again in April Growth of non-financial foreign direct investment (FDI)on the Chinese mainland surged 11.8% year-on-year inApril, compared with a decline of 14.1% in March, showingthat global companies’ confidence in China continued togrow despite the Covid-19 pandemic, according to theMinistry of Commerce (MOFCOM). The total FDI inflowinto China fell 6.1% year-on-year to CNY286.55 billion inthe first four months of this year. The decline was 4.7percentage points narrower than in the first quarter.Thanks to the government’s policies and measures tostabilize foreign investment and offer global companieseasier market access, their confidence continued toincrease in China, a MOFCOM Spokesman said, addingthat a number of key foreign investment projects were

signed and implemented in the first four months.

To maintain solid economic fundamentals, the governmentemphasized the importance of focusing on the sixpriorities of safeguarding employment, people’slivelihoods, the development of market entities, food andenergy security, the stable operation of industrial andsupply chains and the smooth functioning of society. TheSpokesman added that stabilizing foreign trade this yearremains a challenge. Investment in China by economiesrelated to the Belt and Road Initiative (BRI) rose 7.9% andthat of the Association of Southeast Asian Nations(ASEAN) increased 13% year-on-year in the first fourmonths, while investment by the European Union fell29.1% on a year-on-year basis. The global capital flow intohigh tech services industries grew by 2.7% year-on-year

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Huawei. Guo Ping, rotating Chairman of Huawei, warnedthat the U.S. restrictions “will also affect communicationsservices for the more than three billion people who useHuawei products and services worldwide.” To cope withrestrictions, Huawei’s research and development spendinggrew 29.8% to CNY131.7 billion in 2019, while inventoriessurged 73.4% on a yearly basis, the China Daily reports.

China’s state-backed funds pumped USD2.25 billioninto SMIC to raise its registered capital from USD3.5 billionto USD6.5 billion. Meanwhile, U.S. President DonaldTrump extended with another year an order signed lastMay that prohibited U.S. companies from using telecomsequipment made by firms deemed a national securitythreat – a ban that includes Huawei and ZTE. At the sametime, a waiver allows Huawei to still sell certain equipmentto U.S. telecom carriers.

Xiang Ligang, Director General of the InformationConsumption Alliance, said that the Kirin 710A chip’sdesign, manufacturing, testing and packaging are now alldone by Chinese mainland companies, which is abreakthrough for the industry. The comments came afteremployees of SMIC Shanghai received Huaweismartphones last week with “Powered by SMIC” printed onthe back.

Huawei said earlier that it would expand its productioncapacity in 14 nm manufacturing to 15,000 wafers permonth by the end of 2020. The company said in its first-quarter financial report that its revenue in the three monthswas USD905 million, up 35% year-on-year and marking arecord high. Huawei is also beefing up its own chipresearch and development capabilities. HiSilicon, Huawei’ssemiconductor arm, became the first Chinese mainlandcompany to enter the Top 10 global chip rankings, takingthe 10th position in the first quarter of 2020, according tomarket research company IC Insights, the China Daily

reports.

As the U.S. announced it would block shipments ofsemiconductors to Huawei, China is preparingcountermeasures, including putting U.S. companies onan “unreliable entity list,” launching investigations,imposing restrictions on U.S. companies, and suspendingpurchase of American products, a source close to theChinese government told the Global Times. The U.S.companies mentioned, including Apple, Qualcomm, Ciscoand Boeing, are all highly dependent on the Chinesemarket. Boston Consulting Group (BCG) warned that ifshipments of U.S. chips and chipmaking equipment toChina were stopped, and China were to ban imports ofU.S. electronics and software, it could cost the affectedU.S. companies 37% of their annual sales. BCG found thatthe top U.S. semiconductor makers have reported amedian revenue decline of between 4% and 9% in each ofthe three quarters following the ban on Huawei buying U.S.chip technologies in May 2019.

Smartphone shipments in China rose by 17.2% in Aprilon a yearly basis, the first such expansion in the past fourmonths. Data from the China Academy of Information andCommunications Technology (CAICT) showed that 40.8million smartphones were shipped from factories toretailers in April, with 32 new models being launched.Shipments of 5G smartphones stood at 16.38 million units,a 164% growth on a monthly basis, and accounted for39.3% of total shipments, the report said. Strong consumerdemand for cutting-edge devices prompted retailers toshore up stocks. With the virus outbreak still rampant inmany overseas countries, Chinese smartphone firms likeHuawei, Xiaomi, Oppo and Vivo are now focusing more onthe domestic market, thereby intensifying competition. InApril, 22 new 5G smartphone models were launched inChina, according to CAICT.

CHINA NEWS ROUND-UPFDI on the rise again in April Growth of non-financial foreign direct investment (FDI)on the Chinese mainland surged 11.8% year-on-year inApril, compared with a decline of 14.1% in March, showingthat global companies’ confidence in China continued togrow despite the Covid-19 pandemic, according to theMinistry of Commerce (MOFCOM). The total FDI inflowinto China fell 6.1% year-on-year to CNY286.55 billion inthe first four months of this year. The decline was 4.7percentage points narrower than in the first quarter.Thanks to the government’s policies and measures tostabilize foreign investment and offer global companieseasier market access, their confidence continued toincrease in China, a MOFCOM Spokesman said, addingthat a number of key foreign investment projects were

signed and implemented in the first four months.

To maintain solid economic fundamentals, the governmentemphasized the importance of focusing on the sixpriorities of safeguarding employment, people’slivelihoods, the development of market entities, food andenergy security, the stable operation of industrial andsupply chains and the smooth functioning of society. TheSpokesman added that stabilizing foreign trade this yearremains a challenge. Investment in China by economiesrelated to the Belt and Road Initiative (BRI) rose 7.9% andthat of the Association of Southeast Asian Nations(ASEAN) increased 13% year-on-year in the first fourmonths, while investment by the European Union fell29.1% on a year-on-year basis. The global capital flow intohigh tech services industries grew by 2.7% year-on-year

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

between January and April, with inflow of FDI intoinformation services rising by 46.9%, e-commerce up by73.8% and FDI in professional technological servicesectors growing 99.6% year-on-year.

Jerome Jean Haegeli, Chief Economist of Swiss Re Group,said that in comparison with many other economies, Chinafaces manageable supply chain risks as it is increasinglyless reliant on manufacturing FDI. The nation has aremarkable potential domestic market, and it has beenspeeding up investment in new infrastructure. These twoelements would facilitate its transformation into aconsumption-oriented and digital economy. He stressedthat the Chinese economy is best placed to emerge as theworld’s strongest from the crisis, and it still has competitiveadvantages based on a range of indicators, such as itslabor market and infrastructure, the China Daily reports.

China's exports in April rose 8.2% year-on-year toCNY1.41 trillion, while imports were down 10.2% toCNY1.09 trillion, according to customs data.

Beijing's two international airports to accept all cargo flights The Civil Aviation Administration of China (CAAC) willopen both airports in Beijing for all operators of cargoflights, a move to encourage rising air shipments as thecoronavirus outbreak ebbs. China will allow domestic andforeign carriers to operate cargo routes at both BeijingDaxing International Airport and Beijing CapitalInternational Airport. In 2018, all airlines except ChinaPostal Airlines were told to choose one of the two airportsto operate cargo routes. The regulator said it will furthersimplify the procedures for permits for international cargoroutes. For example, airlines only need to apply for apermit once, and they can operate all international cargoroutes in the catalog after gaining approval.

China maintains regular cargo flights to 102destinations in 49 countries and regions. In April,Chinese and foreign airlines had an average of 1,574scheduled flights per week, an increase of 133.2% from thepre-virus period. American Airlines currently operates twodaily cargo flights from the Hong Kong SpecialAdministrative Region to Los Angeles and two daily cargoflights from Shanghai to Los Angeles, carrying mainlymedical supplies and daily necessities. Starting on May 14,American Airlines will add three weekly cargo flights fromBeijing to Dallas-Fort Worth using a Boeing 787-9.Lufthansa Cargo China has resumed scheduled cargoflights between Germany and China from mid-April, and itnow has 105 cargo flights per week between Germany andChina. Before the coronavirus epidemic, Lufthansa Cargohad a market share of around 12% for cargo shippedbetween Europe and China, and 25% for that shippedbetween Germany and China.

Airbus said it is developing a modification for the A330 andA350 family aircraft that will enable airlines to install freightpallets directly onto the cabin floor seat tracks, afterremoval of the economy-class seats. This solution willalleviate the global shortage of “cargo-hold” air cargocapacity due to the widespread grounding of long-haul

aircraft amid the Covid-19 pandemic, the Global Timesreports. Domestic and foreign international cargo flights in Chinatotaled an average of 1,574 per week in April – up morethan 55% from before the coronavirus outbreak. Theweekly figure surged to 2,365 in the first two weeks of thismonth.

North Bund area to become new growth engine for ShanghaiThe North Bund area in Hongkou District will become a“new engine” for Shanghai’s future development withthe tallest building in Puxi. Wu Xinbao, Hongkou’s PartySecretary, mapped out the new blueprint for the NorthBund waterfront along the Huangpu River to journalists.The riverside region, covering about 4 square kilometers,will be on par with the Lingang Special Area and thePudong New Area in the east, and the demonstration zonefor the integrated development of the Yangtze River Deltaregion and the Hongqiao Business District in the west, Wusaid. “The North Bund will become the new landmark tolead the city’s north-south development axis as well as thenew benchmark for urban development in the new era,” hetold reporters. According to the blueprint, the North Bundwill include a core central business district, with a highdensity of office buildings and commercial facilities, andhistorical and cultural regions around the Tilanqiao andHongkougang river, where the historical ambiance will befully preserved. As part of the Huangpu River skyscraper cluster, a 480-meter new landmark structure will be built on the NorthBund to match the Lujiazui skyscrapers on the oppositeside of the river. The new building will become the talleststructure in Puxi and the third tallest in the city after the632-meter Shanghai Tower and the 492-meter ShanghaiWorld Financial Center in Pudong’s Lujiazui area. It willform a new skyline along the river with the current highestbuilding on the waterfront, the 320-meter-high tower of theSinar Mas Plaza. “About 8.4 million square meters of newbuildings have been planned for the North Bund, equal tothe total amount of buildings in Lujiazui and on both sidesof Century Avenue in Pudong,” Wu said. The North Bund ishome to over 1,500 financial companies which manageover CNY5 trillion of assets. They include a ninth ofChina’s mutual funds and over 4,700 shipping companiessuch as COSCO Shipping and Shanghai International PortGroup.

Wu said Hongkou aims to work out a general plan for theNorth Bund in three years and make the area fullyfunctional in five years. The waterfront is due forcompletion within 10 years. By then, over 200 buildings willbe home to the headquarters of about 100 multinationalcorporations, the Shanghai Daily reports.

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

between January and April, with inflow of FDI intoinformation services rising by 46.9%, e-commerce up by73.8% and FDI in professional technological servicesectors growing 99.6% year-on-year.

Jerome Jean Haegeli, Chief Economist of Swiss Re Group,said that in comparison with many other economies, Chinafaces manageable supply chain risks as it is increasinglyless reliant on manufacturing FDI. The nation has aremarkable potential domestic market, and it has beenspeeding up investment in new infrastructure. These twoelements would facilitate its transformation into aconsumption-oriented and digital economy. He stressedthat the Chinese economy is best placed to emerge as theworld’s strongest from the crisis, and it still has competitiveadvantages based on a range of indicators, such as itslabor market and infrastructure, the China Daily reports.

China's exports in April rose 8.2% year-on-year toCNY1.41 trillion, while imports were down 10.2% toCNY1.09 trillion, according to customs data.

Beijing's two international airports to accept all cargo flights The Civil Aviation Administration of China (CAAC) willopen both airports in Beijing for all operators of cargoflights, a move to encourage rising air shipments as thecoronavirus outbreak ebbs. China will allow domestic andforeign carriers to operate cargo routes at both BeijingDaxing International Airport and Beijing CapitalInternational Airport. In 2018, all airlines except ChinaPostal Airlines were told to choose one of the two airportsto operate cargo routes. The regulator said it will furthersimplify the procedures for permits for international cargoroutes. For example, airlines only need to apply for apermit once, and they can operate all international cargoroutes in the catalog after gaining approval.

China maintains regular cargo flights to 102destinations in 49 countries and regions. In April,Chinese and foreign airlines had an average of 1,574scheduled flights per week, an increase of 133.2% from thepre-virus period. American Airlines currently operates twodaily cargo flights from the Hong Kong SpecialAdministrative Region to Los Angeles and two daily cargoflights from Shanghai to Los Angeles, carrying mainlymedical supplies and daily necessities. Starting on May 14,American Airlines will add three weekly cargo flights fromBeijing to Dallas-Fort Worth using a Boeing 787-9.Lufthansa Cargo China has resumed scheduled cargoflights between Germany and China from mid-April, and itnow has 105 cargo flights per week between Germany andChina. Before the coronavirus epidemic, Lufthansa Cargohad a market share of around 12% for cargo shippedbetween Europe and China, and 25% for that shippedbetween Germany and China.

Airbus said it is developing a modification for the A330 andA350 family aircraft that will enable airlines to install freightpallets directly onto the cabin floor seat tracks, afterremoval of the economy-class seats. This solution willalleviate the global shortage of “cargo-hold” air cargocapacity due to the widespread grounding of long-haul

aircraft amid the Covid-19 pandemic, the Global Timesreports. Domestic and foreign international cargo flights in Chinatotaled an average of 1,574 per week in April – up morethan 55% from before the coronavirus outbreak. Theweekly figure surged to 2,365 in the first two weeks of thismonth.

North Bund area to become new growth engine for ShanghaiThe North Bund area in Hongkou District will become a“new engine” for Shanghai’s future development withthe tallest building in Puxi. Wu Xinbao, Hongkou’s PartySecretary, mapped out the new blueprint for the NorthBund waterfront along the Huangpu River to journalists.The riverside region, covering about 4 square kilometers,will be on par with the Lingang Special Area and thePudong New Area in the east, and the demonstration zonefor the integrated development of the Yangtze River Deltaregion and the Hongqiao Business District in the west, Wusaid. “The North Bund will become the new landmark tolead the city’s north-south development axis as well as thenew benchmark for urban development in the new era,” hetold reporters. According to the blueprint, the North Bundwill include a core central business district, with a highdensity of office buildings and commercial facilities, andhistorical and cultural regions around the Tilanqiao andHongkougang river, where the historical ambiance will befully preserved. As part of the Huangpu River skyscraper cluster, a 480-meter new landmark structure will be built on the NorthBund to match the Lujiazui skyscrapers on the oppositeside of the river. The new building will become the talleststructure in Puxi and the third tallest in the city after the632-meter Shanghai Tower and the 492-meter ShanghaiWorld Financial Center in Pudong’s Lujiazui area. It willform a new skyline along the river with the current highestbuilding on the waterfront, the 320-meter-high tower of theSinar Mas Plaza. “About 8.4 million square meters of newbuildings have been planned for the North Bund, equal tothe total amount of buildings in Lujiazui and on both sidesof Century Avenue in Pudong,” Wu said. The North Bund ishome to over 1,500 financial companies which manageover CNY5 trillion of assets. They include a ninth ofChina’s mutual funds and over 4,700 shipping companiessuch as COSCO Shipping and Shanghai International PortGroup.

Wu said Hongkou aims to work out a general plan for theNorth Bund in three years and make the area fullyfunctional in five years. The waterfront is due forcompletion within 10 years. By then, over 200 buildings willbe home to the headquarters of about 100 multinationalcorporations, the Shanghai Daily reports.

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

China suspends some beef imports fromAustralia China has suspended beef imports from four majorAustralian meat processors. Foreign MinistrySpokesman Zhao Lijian told reporters that China’s customsagency found the Australian companies violated inspectionand quarantine requirements and suspended the imports to“ensure the safety and health of Chinese consumers.”Labeling issues were also cited by Beijing when the samecompanies and two others lost their licenses to ship beef toChina in 2017 for several months. Zhao added that thesuspension was unrelated to the bilateral dispute overCovid-19, but blasted Australia’s demand for a coronavirusinquiry as “erroneous words and deeds” and warnedagainst “using the epidemic to engage in politicalmanipulation.”

Australian Trade Minister Simon Birmingham described theimport suspension as “disappointing”. “We are concernedthat the suspensions appear to be based on highlytechnical issues, which in some cases date back more thana year,” he said. “We will work with industry and authoritiesin both Australia and China to seek to find a solution thatallows these businesses to resume their normal operationsas soon as possible.” Birmingham said Kilcoy Pastoral Co,JBS’s Beef City and Dinmore plants, and the NorthernCooperative Meat Co have been banned from exportingbeef to China due to issues with labeling and healthcertificates. Australian Meat Industry Council ChiefExecutive Patrick Hutchinson said the companies madeup approximately 20% of Australian beef exports toChina. Australian meat exporters were aware of Chineselabeling requirements, Hutchinson said.

Worth more than AUD3 billion, Chinese demand forAustralian beef surged in 2019, fueled by a growing middleclass and as consumers switched to eating beef as porkavailability fell during a swine fever outbreak whichdecimated Chinese hog herds. JBS said in a statement itwas working with Australian officials “to understand thetechnical issues that China has raised” and would takecorrective action, the Shanghai Daily reports. Australian Trade Minister Simon Birmingham has warnedChina’s “unpredictable” trade interventions may forceAustralian producers to sell to other markets and Australiareserves its right to take the case before the World TradeOrganization (WTO).

International luxury brands count on China International luxury brands increasingly see China as asafe haven, with high-end consumption reviving andmany luxury companies raising prices. But experts warnthat even the most affluent consumers have psychologicallimits in the wake of the Covid-19 pandemic. In less thanthree months, French fashion house Louis Vuitton hasraised its prices twice. Prices went up about 5% on May 5,following a hike of 3% in March. The latest increasesequate to CNY1,000 to CNY3,000 on average for some ofits bags sold in the Chinese mainland. Chanel is alsoraising its prices. The price hike strategy amid the Covid-19epidemic reflected expectations of luxury makers that sales

may surge in the post-pandemic period, which could helpoffset some losses incurred during lockdown periods. Bain& Co estimated that the market for personal luxury goodsdeclined 25% in the first quarter due to the pandemic. Theslowdown could accelerate in the current quarter and leadto an estimated contraction of 20% to 35% for the full year.

LVMH, the world's largest luxury goods company that hasmore than 70 brands, including Louis Vuitton, saw sales inthe Chinese mainland rise by more than 50% in April,according to Bloomberg. SKP, Beijing's high-end shoppingdestination with luxury brands, celebrated its 14th

anniversary. Although the mall limited visitor numbers andrequired advance reservations, the Global Times foundthat there were long lines at the outlets of Louis Vuittonand Chanel.

Yang Qingshan, Expert with the Luxury Research Center ofthe University of International Business and Economics,said that luxury brands usually go against broadereconomic trends in setting prices. “Unlike other goods,luxury brands usually need high prices to maintain theirimage in the minds of customers.” The impact of thepandemic means those brands will certainly ramp up theirpromotional efforts in the Chinese market, Yang said. But ifsales in China underperform, luxury retailers are very likelyto incur losses globally this year. Also, if price hikes areseen as excessive, there might be a backlash fromconsumers, the Global Times reports.

ANNOUNCEMENTWelcome to the 127th session of Canton FairThe 127th session of the China Import and Export Fair, alsoknown as the Canton Fair, will be held online from June 15to 24.

Powered by advanced information technology, the CantonFair will provide around-the-clock online services forproduct promotion, matchmaking and businessnegotiations, enabling both Chinese and internationalbusinesses to place orders remotely.

For more information, please visit:www.cantonfair.org.cn

Buyer’s Guide for the 127th Canton Fair OnlineExhibit CategoriesThe exhibition sections of the National Pavilion andInternational Pavilion shall be arranged as in the previoussession. A Traditional Chinese Specialty section will be setup, and these products will also be included in thecorresponding section according to category. All contentsof the Fair will be released online at the same time.

There are 50 exhibition sections that cover 16 majorcategories in the National Pavilion: Electronics &Household Electrical Appliances; Lighting Equipment;Vehicles & Spare Parts; Hardware & Tools; Machinery;Building Materials; Chemical Products; Energy Resources;Consumer Goods; Gifts; Textiles & Garments; Shoes;

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

China suspends some beef imports fromAustralia China has suspended beef imports from four majorAustralian meat processors. Foreign MinistrySpokesman Zhao Lijian told reporters that China’s customsagency found the Australian companies violated inspectionand quarantine requirements and suspended the imports to“ensure the safety and health of Chinese consumers.”Labeling issues were also cited by Beijing when the samecompanies and two others lost their licenses to ship beef toChina in 2017 for several months. Zhao added that thesuspension was unrelated to the bilateral dispute overCovid-19, but blasted Australia’s demand for a coronavirusinquiry as “erroneous words and deeds” and warnedagainst “using the epidemic to engage in politicalmanipulation.”

Australian Trade Minister Simon Birmingham described theimport suspension as “disappointing”. “We are concernedthat the suspensions appear to be based on highlytechnical issues, which in some cases date back more thana year,” he said. “We will work with industry and authoritiesin both Australia and China to seek to find a solution thatallows these businesses to resume their normal operationsas soon as possible.” Birmingham said Kilcoy Pastoral Co,JBS’s Beef City and Dinmore plants, and the NorthernCooperative Meat Co have been banned from exportingbeef to China due to issues with labeling and healthcertificates. Australian Meat Industry Council ChiefExecutive Patrick Hutchinson said the companies madeup approximately 20% of Australian beef exports toChina. Australian meat exporters were aware of Chineselabeling requirements, Hutchinson said.

Worth more than AUD3 billion, Chinese demand forAustralian beef surged in 2019, fueled by a growing middleclass and as consumers switched to eating beef as porkavailability fell during a swine fever outbreak whichdecimated Chinese hog herds. JBS said in a statement itwas working with Australian officials “to understand thetechnical issues that China has raised” and would takecorrective action, the Shanghai Daily reports. Australian Trade Minister Simon Birmingham has warnedChina’s “unpredictable” trade interventions may forceAustralian producers to sell to other markets and Australiareserves its right to take the case before the World TradeOrganization (WTO).

International luxury brands count on China International luxury brands increasingly see China as asafe haven, with high-end consumption reviving andmany luxury companies raising prices. But experts warnthat even the most affluent consumers have psychologicallimits in the wake of the Covid-19 pandemic. In less thanthree months, French fashion house Louis Vuitton hasraised its prices twice. Prices went up about 5% on May 5,following a hike of 3% in March. The latest increasesequate to CNY1,000 to CNY3,000 on average for some ofits bags sold in the Chinese mainland. Chanel is alsoraising its prices. The price hike strategy amid the Covid-19epidemic reflected expectations of luxury makers that sales

may surge in the post-pandemic period, which could helpoffset some losses incurred during lockdown periods. Bain& Co estimated that the market for personal luxury goodsdeclined 25% in the first quarter due to the pandemic. Theslowdown could accelerate in the current quarter and leadto an estimated contraction of 20% to 35% for the full year.

LVMH, the world's largest luxury goods company that hasmore than 70 brands, including Louis Vuitton, saw sales inthe Chinese mainland rise by more than 50% in April,according to Bloomberg. SKP, Beijing's high-end shoppingdestination with luxury brands, celebrated its 14th

anniversary. Although the mall limited visitor numbers andrequired advance reservations, the Global Times foundthat there were long lines at the outlets of Louis Vuittonand Chanel.

Yang Qingshan, Expert with the Luxury Research Center ofthe University of International Business and Economics,said that luxury brands usually go against broadereconomic trends in setting prices. “Unlike other goods,luxury brands usually need high prices to maintain theirimage in the minds of customers.” The impact of thepandemic means those brands will certainly ramp up theirpromotional efforts in the Chinese market, Yang said. But ifsales in China underperform, luxury retailers are very likelyto incur losses globally this year. Also, if price hikes areseen as excessive, there might be a backlash fromconsumers, the Global Times reports.

ANNOUNCEMENTWelcome to the 127th session of Canton FairThe 127th session of the China Import and Export Fair, alsoknown as the Canton Fair, will be held online from June 15to 24.

Powered by advanced information technology, the CantonFair will provide around-the-clock online services forproduct promotion, matchmaking and businessnegotiations, enabling both Chinese and internationalbusinesses to place orders remotely.

For more information, please visit:www.cantonfair.org.cn

Buyer’s Guide for the 127th Canton Fair OnlineExhibit CategoriesThe exhibition sections of the National Pavilion andInternational Pavilion shall be arranged as in the previoussession. A Traditional Chinese Specialty section will be setup, and these products will also be included in thecorresponding section according to category. All contentsof the Fair will be released online at the same time.

There are 50 exhibition sections that cover 16 majorcategories in the National Pavilion: Electronics &Household Electrical Appliances; Lighting Equipment;Vehicles & Spare Parts; Hardware & Tools; Machinery;Building Materials; Chemical Products; Energy Resources;Consumer Goods; Gifts; Textiles & Garments; Shoes;

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Home Decorations; Office Supplies, Cases & Bags, andRecreation Products; Food; Medicines, Medical Devicesand Health Products.

The International Pavilion displays 6 major categories:Electronics & Household Electrical Appliances; BuildingMaterials & Hardware; Machinery Equipments; Food &Drink; Household Items; Fabrics and Home Textiles.

Online ServicesPowered by advanced information technology, we willestablish an online exhibition platform on the official

website. About 25,000 exhibitors who have their boothsconfirmed in this session will display online according totheir exhibition sections. We will provide around-the-clockonline services for product promotion, matchmaking andbusiness negotiations, including online exhibition, livestreaming services, matchmaking and activities on thirdparty platforms.

How to Log in Domestic and overseas buyers can register or log in on theofficial website of the Canton Fair to join various activitiesonline.

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Home Decorations; Office Supplies, Cases & Bags, andRecreation Products; Food; Medicines, Medical Devicesand Health Products.

The International Pavilion displays 6 major categories:Electronics & Household Electrical Appliances; BuildingMaterials & Hardware; Machinery Equipments; Food &Drink; Household Items; Fabrics and Home Textiles.

Online ServicesPowered by advanced information technology, we willestablish an online exhibition platform on the official

website. About 25,000 exhibitors who have their boothsconfirmed in this session will display online according totheir exhibition sections. We will provide around-the-clockonline services for product promotion, matchmaking andbusiness negotiations, including online exhibition, livestreaming services, matchmaking and activities on thirdparty platforms.

How to Log in Domestic and overseas buyers can register or log in on theofficial website of the Canton Fair to join various activitiesonline.

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Your banner at the FCCC website or newsletterCompanies interested in posting a banner/anadvertisement on the FCCC website or FCCC weeklynewsletter are kindly invited to contact the FCCC at:info@flanders-china.be

Organisation and founding members of theFlanders- China Chamber of CommerceChairmanMr. Stefaan Vanhooren, President Agfa Graphics,Member of the Executive Committee of the Agfa GevaertGroup, NV THE AGFA-GEVAERT GROUP SA

Vice-ChairmenMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Secretary and TreasurerWim Eraly, Senior General Manager, NV KBC Bank SA

Executive DirectorMs. Gwenn Sonck

Members of the Board of Directors and FoundingMembers:Mr. Stefaan Vanhooren, President Agfa Graphics, Memberof the Executive Committee of the Agfa Gevaert Group, NVTHE AGFA-GEVAERT GROUP SAMr. Carl Peeters, Chief Financial Officer, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, General Counsel, Senior Vice

President Legal IP GRC, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Head of Corporate and Transaction Banking, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales &Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Membership rates for 2019 (excl. VAT)● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

ContactFlanders-China Chamber of CommerceOffice: Ajuinlei 1, B-9000 Gent, BelgiumNew telephone and fax numbers:T ++32/9/269.52.46F ++32/9/269.52.99E info@flanders-china.beW www.flanders-china.be

Share your storyTo send your input for publication in a future newslettermail to: info@flanders-china.be The FCCC Newsletters are edited by Michel Lens,who is based in Beijing and can be contacted by e-mailmichel.jc.lens@gmail.com

Disclaimer: the views expressed in this newsletter are notnecessarily those of the FCCC or its Board of Directors.

FCCC-VCKK – CHINA BUSINESS WEEKLY 20 MAY 2020

Your banner at the FCCC website or newsletterCompanies interested in posting a banner/anadvertisement on the FCCC website or FCCC weeklynewsletter are kindly invited to contact the FCCC at:info@flanders-china.be

Organisation and founding members of theFlanders- China Chamber of CommerceChairmanMr. Stefaan Vanhooren, President Agfa Graphics,Member of the Executive Committee of the Agfa GevaertGroup, NV THE AGFA-GEVAERT GROUP SA

Vice-ChairmenMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Secretary and TreasurerWim Eraly, Senior General Manager, NV KBC Bank SA

Executive DirectorMs. Gwenn Sonck

Members of the Board of Directors and FoundingMembers:Mr. Stefaan Vanhooren, President Agfa Graphics, Memberof the Executive Committee of the Agfa Gevaert Group, NVTHE AGFA-GEVAERT GROUP SAMr. Carl Peeters, Chief Financial Officer, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, General Counsel, Senior Vice

President Legal IP GRC, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Head of Corporate and Transaction Banking, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales &Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government AffairsAsia, NV UMICORE SA

Membership rates for 2019 (excl. VAT)● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

ContactFlanders-China Chamber of CommerceOffice: Ajuinlei 1, B-9000 Gent, BelgiumNew telephone and fax numbers:T ++32/9/269.52.46F ++32/9/269.52.99E info@flanders-china.beW www.flanders-china.be

Share your storyTo send your input for publication in a future newslettermail to: info@flanders-china.be The FCCC Newsletters are edited by Michel Lens,who is based in Beijing and can be contacted by e-mailmichel.jc.lens@gmail.com

Disclaimer: the views expressed in this newsletter are notnecessarily those of the FCCC or its Board of Directors.