1.From January to September, profits of industrial companies above 20mn revenue fell by 9.0%

During the first 3 quarters, large-scale industrial companies (above CNY 20mn revenue) achieved business revenue of CNY 96.35 trillion (approximately $13.17 trillion), same as last year. Operating costs reached CNY 81.96 trillion (approximately $11.2 trillion), up 0.3%.

During the first 3 quarters, profits of industrial companies above a designated size across China fell by 9.0%, although the decline continued to narrow. These companies achieved total profits of CNY 54.12 trillion (approximately $7.4 trillion), 2.7 percentage points less than the decline from January to August.

Revenue (Yellow line) and profits (Blue line) y-o-y change in %

During this period, state-owned industrial enterprises saw a total profit of CNY 18.48 trillion, down 11.5% y-o-y. Joint-stock companies registered a total profit of CNY 39.62 trillion, down 8.7%. Foreign, Hong Kong, Macao, and Taiwan investment enterprises recorded CNY 12.88 trillion in profits, a decrease of 10.5%. Private companies achieved a total profit of CNY 14.39 trillion, a decrease of 3.2%

1st half 2023 revenue (Yellow bar) and profits (Blue line) change in % by enterprise type

2. Nike to implement the four-day work week, which includes the option to work from home on Fridays

On October 23rd, “Nike Greater China announced its intention to implement a four-day work week” which caused a hot search, the new hybrid work model entails working in the office from Monday to Thursday, and having the option of working from home on Fridays.

Many global corporations already incorporate a “four days on, three days off” schedule, and in 2019, Microsoft Japan experimented with a four-day workweek for all staff. Findings from a study released by Microsoft Japan indicated that working only four days a week and taking three days off can improve work efficiency by up to 40%, with employee satisfaction levels amounting to 92%.

For instance, Nike’s new “four-day work system” for their Greater China home office has left many netizens disillusioned. Some have complained that eliminating the commute means being on call all day while at home, leading to increased efficiency but also much more fatigue than working in the office.

Working from home can lead to a more exhausting experience for those with challenging family situations, inadequate professional equipment, or young children to care for. As a result, some netizens reflect that “working from home is more tiring”, which is somewhat justified. Working remotely from home presents various significant management challenges for companies. It becomes challenging to manage, track and monitor the progress, quality and execution of work by employees. Furthermore, communication and collaboration barriers may arise, which can cause additional difficulties. At the same time as the boundaries between work and life becomes blurry, how to make sure the working hours are respected is another challenge.

While “four days on, three days off” or “Working from home” is already pretty normal in some western countries, its effectiveness and acceptance still needs to be tested in China as the corporate culture is completely different.

3.Zhong Shanshan has reclaimed his spot as China’s wealthiest person for the third time

On 24th October, the “2023 Hurun 100 Rich List” was published, with Nongfu Spring’s Zhong Shanshan, Tencent’s Ma Huateng, and Pinduoduo’s Huang Zheng claiming the top three spots, respectively. The Hundred Rich List reveals that this year’s Hurun Hundred Rich List includes 1,241 business owners with a personal net worth exceeding 5 billion yuan, a reduction of 5% (equivalent to 64 individuals) compared to last year’s list. The overall wealth of the entrepreneurs on the list decreased by 4 % (1 trillion yuan) from last year to 23.5 trillion yuan.

Nongfu Spring’s 69-year-old Zhong Shanshan retains his status as China’s richest man for the third consecutive year with a net worth of 450 billion yuan, which remained stable from the previous year. The second and third spots on the list have changed this year. Ma Huateng, 52-year-old CEO of Tencent, has regained the second position from last year, with his wealth increasing by 30 % year-on-year to 280 billion yuan, mainly due to the growth of its gaming business and Tencent’s stake in Meituan. Huang Zheng, aged 43, of Pinduoduo, has entered the top three with a wealth of 270 billion yuan, representing a YoY increase of RMB 100bn (59%). As a result, he is the entrepreneur with the highest wealth growth on this year’s list and has moved up seven places from his position in last year’s ranking. This growth can be mainly attributed to Pinduoduo’s improved performance and expansion overseas.

Many may wonder how Zhong Shanshan, a water vendor, managed to surpass a group of internet and emerging industry entrepreneurs to become the wealthiest man in China.

In fact, Zhong Shanshan holds two sources of wealth. The initial one is packaged drinking water, from his publicly traded company Nongfu Spring. The second item pertains to vaccines sourced mainly from the controlled listed firm Wantai Biologicals.

Packaged drinking water and vaccines, although unrelated, form a part of the health-related production industry. Health has always been the direction of Zhong Shanshan’s entrepreneurship. His earliest company, Yangshengtang, established in 1993, was involved in the healthcare business. Presently, he has over 100 companies operating under his umbrella, offering a range of products spanning from food and beverages, biological vaccines, healthcare products, cosmetics, and others.

4.Mitsubishi Motors will discontinue the localised production in China

On 24th October, Mitsubishi Motors Corporation revealed that it will undertake structural reforms of GAC Mitsubishi Motors’ China operations. Production of Mitsubishi brand vehicles in China will terminate locally.

Official announcement by GAC

GAC Group stated on the same day its intentions to carry out the restructuring of GAC Mitsubishi, including the equity adjustment of GAC Mitsubishi Automobile Sales Company, and other restructuring matters. After the completion of restructuring, GAC Mitsubishi will become a fully owned subsidiary of GAC Group. The production capacity of GAC Mitsubishi will be absorbed by GAC AION.

As one of the pioneering Japanese brands to enter the Chinese market, Mitsubishi Motors has been operating in China for fifty years. Way back in 1973, Mitsubishi put up for sale medium-sized lorries in China and subsequently established joint ventures in the Chinese market.

Like other joint venture brands that have withdrawn from China, GAC Mitsubishi also experienced a “peak period”. Figures reveal that between 2017 and 2019, GAC Mitsubishi recorded yearly sales of 117,300, 144,000, and 133,000 respectively. It is noteworthy that in 2018 the Outlander, a single model in the sales portfolio, virtually singlehandedly supported GAC Mitsubishi’s annual sales, with 105,621 units sold. This indicates a significant dependency on a solitary model.

Since 2020, GAC Mitsubishi’s sales have significantly declined. According to official data, in the years 2020 to 2022, GAC Mitsubishi sold 75,000, 66,000, and 33,600 vehicles respectively. This represents a year-on-year decrease of 43.62%, 11.99%, and 49.13%.

Into 2023, China’s automotive industry is experiencing heightened “involution” and a strong push towards EVs, leaving GAC Mitsubishi in a challenging position. According to recent data, GAC Mitsubishi only sold 326 units in June of this year hence the move was not really a surprise.

5.Flights between the United States and China can be elevated to 35 round trips per week, starting from as soon as the 9th of November

On 27th October local time, the US Department of Transport released a fresh directive, the sixth amendment since June 2020, permitting Chinese airlines to conduct a maximum of 35 direct flights per week connecting China and the US, starting from 9th November.

In its most recent guidance, the Department for Transport of the United States of America stated that its primary goal is to improve the environment in which airlines on both sides can fully exercise their bilateral rights, and to maintain competitive balance, fairness, and equal opportunity between U.S. and Chinese airlines. The statement expresses its desire to maintain a constructive discussion with the Civil Aviation Administration of China (CAAC) to gradually enable the reinstatement of the wider air transport market between the United States and China.

As of 27th October, incomplete statistics show that the number of weekly return passenger flights between China and the United States, operated by local airlines, has increased from the previous 18 pairs to 24 pairs, of which 8 pairs are operated by Air China, 7 pairs by China Eastern Airlines, 6 pairs by China Southern Airlines and 3 pairs by Xiamen Airlines.

It is noteworthy to mention that the precise allocation of the 11 new pairs of round-trip flights between China and the United States is yet to be determined. Prior to the outbreak of the pandemic, the count of direct flights between China and the United States exceeded 300 per week. Moreover, apart from Air China, China Eastern Airlines, China Southern Airlines, and Xiamen Airlines, domestic airlines such as Capital Airlines, Hainan Airlines, and Sichuan Airlines also flew China-US routes.

At a CAAC briefing on 27th October, Liang Nan, Director of CAAC Transportation, stated that international air travel has shown a steady recovery this year, and has stabilised at over 50% of pre-epidemic levels since late August. The number of international flights scheduled for the upcoming winter and spring seasons is approximately 70.7% of those in 2019.

With the increase in flight availability, airfares for direct flights between China and the United States have decreased throughout the year. On the Qunar platform, the price of direct flight tickets from Shanghai to Los Angeles has gone down from 15,000 to 10,000 yuan during the summer, then down to approximately 8,000 yuan in September. As of November, the current price has further dropped to 7,000 yuan.