China Aims to Accelerate New Development Model Construction of Real Estate
The Chinese government has proposed to accelerate the establishment of a housing system that combines renting and purchasing, and to speed up the construction of a new model for real estate development. This initiative aims to address the growing demand for housing among the wage-earning group and support the diverse needs for improved housing among urban and rural residents
In a statement, Pu Zhan, Deputy Director of the Policy Research Center of the Ministry of Housing and Urban-Rural Development, emphasized that building a new model for real estate development is a fundamental solution to the problems in the sector. The new affordable housing and social security housing will help meet the targeted buyers’ demand. Meanwhile, the tax policy will also be optimized to relieve the financial burden of people and real estate developers. Increasing the construction and supply of affordable housing is crucial to promote stable and healthy economic growth.
The decision also grants full autonomy to city governments in regulating the real estate market, allowing them to implement policies according to their specific city conditions. This includes the flexibility to cancel or reduce housing purchase restrictions and eliminate standards for local and non-local residences (based on Hukou), providing a more tailored approach to housing policy.
Furthermore, multiple departments have launched a package of policies involving finance, land, and the digestion of inventory commercial housing. Localities have optimized and adjusted real estate policies in a timely manner according to local realities, with policy effects gradually being released and market activity increasing. Positive changes are emerging in the real estate market, with the decision’s release further releasing the demand for home ownership, reducing the housing consumption burden on residents, and accelerating the pace at which the real estate market regains confidence and exits the adjustment period.
However, there’s a risk that the housing price may decrease sharply. It’s unclear whether this policy will optimize the housing market or harm the price system. We will follow up on the effect of this newly implemented policy.
Swiss Watch Sales Decline in China
Swiss luxury goods conglomerate Richemont released its financial results for the first quarter of fiscal year 2025 (starting from April 2024), revealing a challenging period for its watch division. According to the report, Richemont’s watch sales declined by 13% to EUR 911 million, accounting for less than 20% of the group’s total results. The primary factor contributing to this decline was the notable decline in the markets of mainland China, Hong Kong, and Macau
The Swiss Watch Industry Federation reported a 7.2% decline in total exports in June compared to the same period in 2023, largely attributed to the downturn in the Asian market. For the six-month period ending in June, the watch industry as a whole has exported a total of EUR 13.33 billion overseas, representing a 3.3% decrease from the first half of the previous year. In examining the results for June, it is evident that the Hong Kong and Mainland China markets continue to underperform, with significant declines of 23.1% and 36.5%, respectively.
Richemont is not alone in facing challenges in the watch industry. Swatch Group also experienced a decline in revenue during the first half of this year, recording net sales of EUR 3.57 billion, representing a 14.3% year-on-year decline at current exchange rates.
Xiaomi Founder Lei Jun Announced the New Product Launch During Annual Speech
On July 19th, Xiaomi founder Lei Jun delivered his annual speech at the Shougang Ice Arena in Shijingshan, Beijing. The theme of the speech was “courage,” and it focused on Xiaomi’s journey into the automotive industry over the past three years
Lei Jun’s involvement in the automotive industry marks a significant departure from his role at Xiaomi, where he previously served as a figurehead. In contrast, Lei Jun is now taking a more hands-on approach, personally participating in promotional activities and even obtaining a racing license to enhance his understanding of the car industry. Prior to the release of the Xiaomi SU7, the company conducted the industry’s most comprehensive real-vehicle road test, with all executives participating and accumulating over 100,000 kilometers of testing. Lei Jun himself participated in over ten instances, accumulating over 5,000 kilometers, including a solo journey from Beijing to Shanghai. This level of commitment demonstrates Xiaomi’s dedication to ensuring the quality and success of its automotive initiatives.
In the annual speech, several new releases were announced.
- Folding screen mobile phone series: Xiaomi released a new generation of folding screen flagship Xiaomi MIX Fold 4 and the first small folding screen mobile phone Xiaomi MIX Flip. Xiaomi MIX Fold 4 is priced from CNY 8999 and Xiaomi MIX Flip small folding mobile phone is priced from CNY 5999
- Other new products, including performance devil Redmi K70 Extreme Edition, Xiaomi Buds5 Headset, Mi Band 9, Xiaomi Watch S4 Sportmi, Home Air Conditioning Pro Series, etc.
Regarding the future product planning, Lei Jun mentioned Smart home products, smart wearable devices, artificial intelligence technology and Internet services
BMW, Mercedes-Benz, and Audi in China Cease Price Wars
In recent months, traditional luxury car brands like BMW, Mercedes-Benz, and Audi have been locked in a fierce price war in the Chinese market. However, this trend appears to be coming to an end as these companies shift their focus from aggressive pricing to preserving brand value and ensuring long-term viability.
On July 12, BMW China said that in the second half of the year, BMW will focus on business quality in the Chinese market. The company will reduce sales volume in order to stabilize prices and alleviate operating pressure on stores. BMW’s strategic price adjustment has resulted in increased operational challenges for dealerships, leading to isolated instances of contract termination. In response, BMW has stated that such occurrences are not widespread and has committed to facilitating negotiations between consumers and authorized dealerships to ensure customer satisfaction and rights protection.
This strategic move is designed to help maintain the luxury brand’s reputation and ensure its continued success in the Chinese market. The shift away from price wars is a response to the realization that while aggressive pricing strategies may generate short-term sales, they do not necessarily lead to sustainable growth or brand loyalty.
By adjusting sales targets and focusing on maintaining brand value, these companies can ensure their long-term viability in the competitive Chinese market. However, due to the ample supply in China and the competition in market, whether the strategy could help ensure the long-term competitiveness will need time to verify.
Market Trends: Guangdong’s Ready-to-Eat Meal
On July 15th, 31 Guangdong enterprises specializing in ready-to-eat meals made their way to Kuala Lumpur to participate in the prestigious Malaysia International Food and Beverage Trade Fair. This event, now in its 21st year, has long been a showcase for the latest trends and products in the food and beverage industry
The global ready-to-eat meals market is currently valued at over 500 billion US dollars and is projected to reach an astonishing 546.61 billion dollars by the end of 2024, according to data from Statista. China, with its vast population and evolving consumer habits, holds the largest share of this market at 148.9 billion dollars, followed by the United States at 47.56 billion dollars and the United Kingdom at 15.83 billion dollars. The volume in the ‘Ready-to-Eat Meals’ segment of the food market in China was forecast to continuously increase between 2024 and 2029 by in total 5.4 billion kilograms (+34.79%). After the tenth consecutive increasing year, the indicator is estimated to reach 20.87 billion kilograms and therefore a new peak in 2029. The ‘Ready-to-Eat Meals’ segment within the food industry has demonstrated consistent growth in recent years. It remains to be seen whether Guangdong-based enterprises specializing in this sector will pursue international market expansion. We will continue to monitor and analyze this emerging trend to identify potential opportunities and market developments.
Data Source: https://www.statista.com/forecasts/1438097/volume-ready-to-eat-meals-convenience-food-market-china
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