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China Times: Primary iPhone Manufacturer Foxconn Setting Up Operations in Vietnam

Major Taiwanese newspaper China Times recently reported that, based on Vietnamese media reports, the primary Apple iPhone manufacturer Foxconn started a cooperative process with the City of Hanoi to establish its manufacturing operations in Vietnam. The move is reportedly in response to the on-going China-U.S. trade war. In fact, in October, the company’s subsidiary Foxconn Interconnect Technology had already completed a US$130 million acquisition of the Vietnamese company named New Wing Interconnect Technology, which is located in Bac Giang Province. Another possible reason for the Foxconn move could be the weakness of the new Apple iPhone sales trend, which has caused concern about reduced supply chain profits. Foxconn refused to validate this Vietnam move, citing its company policy of not commenting on matters directly related to its clients.

Source: China Times, December 4, 2018
https://www.chinatimes.com/cn/newspapers/20181204000393-260204

Millions of “Untrustworthy” Chinese Restricted from Air and High-speed Rail Travel

In 2018, China has continued to enhance its social credit score system. The authorities have released 32 Memorandums of Cooperation (MoCs) on disciplinary actions in fields that include social security, intellectual property, research, medical care, and marriage registrations.

Restrictions on plane and train travel appear in almost every MoC. For example, the Memorandum of Cooperation on Joint Disciplinary Actions against Seriously Untrustworthy Enterprises and Personnel in Social Security, jointly issued by 28 authorities, lists 32 types of penalties for nine cases of violations, including refusal to pay social security fees, failure to report social security income truthfully, and social security fraud. Among the disciplinary actions are restrictions on air travel, sleeping carriages with cushioned berths on trains, on second-class on ships, on all seats on the G-series multiple unit (MU) trains (high-speed rail), and on first-class seats on other MU’s.

Beginning in June 2018, on the first working day of each month, the “Credit China” website (http://www.creditchina.gov.cn/) will announce a list of people who are restricted from trains and planes. As more MoC’s have been issued, the number of people restricted from travel by air or by train has been increasing every month. As of September 2018, the cumulative occurrence of restrictions on air ticket purchases has been 14.78 million; on high-speed rail tickets it has been 5.24 million.

Another punishment for being “untrustworthy” is the denial of the qualification for working as a civil servant. In some recently issued joint MoC’s, some new disciplinary measures have begun to appear, such as not being able to buy a house and a restriction on tourist travels. People who owe taxes of more than 100,000 yuan (US$ 14,500) are also blacklisted and subject to restrictions such as no bring allowed to leave the country.

Source: China News Service, December 8, 2018
http://www.chinanews.com/cj/2018/12-08/8695727.shtml

Xinhua: China’s New Energy Vehicle Market Faces Risk of Excess Capacity and Lack of Core Technology

Xinhua published an article on the new energy vehicle industry in China. It reported that, in recent years, the industry has experienced rapid growth. However, the industry is facing some challenges that are also emerging. These include dependence on subsidies, overcapacity, and a lack of ownership of core technologies. According to the article, over the last five years, China has had an annual compound growth rate for new energy vehicle sales of 130 percent, mostly due to financial assistance from the government, which has provided rebates to consumers and subsidies to the manufacturers. Meanwhile, an increased number of public charging stations in residential complexes, work units, and along the highways has boosted the support for electric vehicles. In 2017, the investment in the new energy vehicles industry exceeded 700 billion yuan (US$100 billion), accounting for more than 50 percent of the total investment in the entire automotive industry. However, the new energy vehicle industry also faces challenges. First, the industry is flooded with companies that want to take advantage of the government subsidy program, especially engine battery manufacturers, which has resulted in excess capacity. Also, over a dozen companies have been charged with filing false claims to cheat the subsidy system. Second, the companies lack the drive to develop new technology and to market the vehicles as many of them tend simply to rely on the government subsidies just to break even. According to the 2018 Global Electric Vehicle Development Index, China ranks first overall, but this is mainly reflected in the market scale. On the technical level, China’s vehicle manufacturing is still positioned in the low-tech field. It still relies on imports of basic components such as electric drive high-speed bearings and control chips. Third there is an increased risk in environmental hazard control. The potential environmental waste from used batteries could be a big risk. It is estimated that by 2020, China will have 120,000 to 170,000 tons of electric batteries to be scrapped. Lastly, domestic manufacturers are facing competition as foreign auto manufacturers such as Volkswagen, Honda, Tesla, BMW, Audi, and Jaguar have increased their investment and presence in the new energy vehicle market in China.

Source: Xinhua, November 29, 2018
http://www.xinhuanet.com/energy/2018-11/29/c_1123782958.htm

Chinese IT Company to Launch 272 Satellites and Offer Free Internet Worldwide

On November 27, LinkSure Network, a Shanghai-based mobile Internet service provider, announced in Beijing that it launched the satellite Internet access plan, “LinkSure Swarm Constellation System.” The system, which LinkSure will develop independently, consists of 272 hybrid orbit satellites and will provide satellite communication services and solutions. The first satellite is expected to be launched into space in 2019. The goal will be to provide free satellite Internet service worldwide by 2026. The total investment in the system is estimated at 3 billion yuan (US$ .43 billion).

LinkSure’s satellite team was formally established in 2016. The company currently operates more than 50 satellites in orbit. According to the plan, the first satellite will be assembled and tested in Changzhou, Jiangsu in 2018 and launched by the Long March series of rockets at the Jiuquan Satellite Launch Base Center in 2019. The first batch is expected to include 10 satellites. After the launch of the first satellite, the remaining nine will be launched according to the Long March series rocket launch arrangements. In 2020, the first 10 satellite launches of the constellation system will be completed.

China’s commercial satellite launch service market has been growing at an accelerated pace. In 2014, the State Council announced Document No. 60 to encourage private capital to enter the national civil space infrastructure. Goldman Sachs also expects that, over the next 20 years, the space commercial market will usher in a long-term and high-profit opportunity and its industry scale will grow to trillions of dollars.

Source: The Paper, November 27, 2018
https://www.thepaper.cn/newsDetail_forward_2676730

Beijing News: Chinese Government Is Now the Biggest Owner of Apple iCloud in China

Beijing News recently reported that the Chinese cloud technology company Guizhou Cloud has completed a series of mergers and become Guizhou Cloud Big Data. In February, Apple officially handed its iCloud services to Guizhou Cloud and Guizhou Cloud is now fully serving all Chinese region Apple iCloud customers. This arrangement was to comply with Chinese data location laws and allowed Guizhou Cloud to have the master encryption key to decrypt all Chinese region traffic and data. The recent ownership changes made China’s Guizhou Province government the biggest stockholder (around 38.24 percent) of the newly formed company Guizhou Cloud Big Data. This is a “strategic move” of the Guizhou government’s big data industrial development plan. The Guizhou Communist Party appointed Kang Keyan as the Party Secretory of the Guizhou Cloud Big Data Group and, at the same time, nominated him as the chairman of the board of the Group. Kang is the former Deputy Director of the Guizhou Big Data Development Authority.

Source: Beijing News, November 16, 2018
http://www.bjnews.com.cn/finance/2018/11/16/522023.html

The U.S. Launches Encirclement Campaign against Huawei

Well-known Chinese news site Sohu recently reported that the U.S government is undertaking an unusual “encirclement campaign” to work with its allied countries to cut off Huawei’s breathing room internationally. These governments include Germany, Italy, and Japan. The U.S. excuse for the campaign is national security and these countries all have U.S. military bases. The U.S. argued that the military operations have partial but significant communications dependency on the local communications infrastructure, and Huawei’s equipment introduces uncertainty and security concerns into that infrastructure. However, Huawei is now the world’s largest communications equipment provider (around 22 percent of the global market) and has a competitive pricing advantage. Realizing Huawei’s pricing power, the U.S. government has been offering subsidies to the allies who obtain communications equipment from any non-Huawei suppliers. For years, the U.S. government has also been mounting pressure on domestic Huawei buyers such as Best Buy. The Chinese Ministry of Foreign Affairs said it had no detailed knowledge and was unclear about the situation, but that China always asks its companies to obey domestic laws in foreign countries.

Source: Sohu, November 24, 2018
http://www.sohu.com/a/277504780_610300