The day's top China business headlines
1. Dolce & Gabbana postpones Shanghai fashion show after furious ad backlash
Italian fashion label Dolce & Gabbana has cancelled a Shanghai fashion show after a controversial advertising campaign drew fury from Chinese social media, with dozens of local celebrities pledging to boycott any event, the Wall Street Journal reports.
The video ad, portraying a glamorous Chinese model attempting to eat Italian food with chopsticks, was deemed racist by many in China’s online community. Movie stars quickly announced withdrew from the upcoming event, including actress Zhang Ziyi, who said that she “will not buy or use” any D&G product in the future.
It went from bad to worse after screenshots of Instagram messages by Stefano Gabanna surfaced, showing a string of derogatory remarks toward China from the Italian designer. Gabanna claims that the comments were not his and that his account was hacked.
Dolce & Gabbana has apologised for any offence caused, confirming that the incidents do not reflect its “love and passion for China.”
“What happened today was very unfortunate not only for us, but also for all the people who worked day and night to bring this event to life,” the company founders said.
2. China proposes cutback to stock market trading halts
The Shanghai and Shenzhen stock exchanges have made proposals to reduce the time that listed companies can suspend their shares, Bloomberg reports, amid concerns that some firms are using the tool to avoid volatile markets.
Trading halts to allow for restructuring will be limited to 10 days if the proposals are confirmed, according to the exchanges, down from three months under the current system.
Share halts have created anxiety for some onshore investors who have found themselves unable to offload holdings for several months despite losing faith in the company. During the 2015 crash, nearly half of China’s stock market was suspended in this way, drawing criticism from index-maker MSCI Inc. and other international bodies.
Earlier this month, the China Securities Regulatory Commission announced plans to cut the maximum trading halt period, saying that such practices were too frequent in China compared with more developed markets.
3. China tightens laws on daigou industry
New regulation requiring unofficial overseas importers, or daigou, to sell goods on licensed shopping platforms subject to tax could be a windfall for foreign brands in China’s fast-growing consumer market, the Financial Times reports.
Many Chinese shoppers have leveraged personal contacts abroad to send or buy foreign goods on their behalf, due to a lack of trust in domestic brands and poor availability of foreign products. Some analysts estimate the daigou market to be worth tens of billions of dollars a year.
The new law, to take effect in January, would mean all daigou with online advertising to register with the central government and pay full import taxes. The aim of the legislation is encourage e-commerce sites to take greater responsibility for fake goods sold on their platforms, according to the FT.
For foreign retail brands, the move could boost sales in China as taxes reduce the competitiveness of daigou-peddled products.
4. JD.com used students as warehouse workers during Singles’ Day rush
The Financial Times has reported that e-commerce giant JD.com used hundreds of students from a local vocational school in its warehouses to manage Singles’ Day orders, paying them as little as Rmb 14 ($2) per hour.
Students said that they were made to work 12- to 16-hour shifts, including overnight stints, being told they would not graduate if they did not complete the work.
“On Singles’ Day we were provided with food. As soon as we finished eating, we got back to work,” said one student interviewed. Many said that on Singles Day shifts extended to 18 hours, breaking laws for student labour.
In one of the warehouses, in Kunshan, the minimum hourly wage is Rmb 18.5, to which vocational school interns are entitled to at least 80%, according to federal law.
One technical college who sent its students to work in the Kunshan warehouse said that “all the students doing overtime are doing it voluntarily.” Another said that the experience helped the students embrace “the spirit of hard work.”
BANKING & FINANCE
5. Meituan Dianping plans to issue $700 million of asset-backed securities
Chinese tech giant Meituan Dianping has received clearance to issue $722 million worth of securities backed by loans to small businesses despite the ongoing crackdown on microlenders in China, Caixin reports.
Meituan says it is ready to issue its first RMB 500 million ($72 million) batch of securities, which are backed by small loans provided by a Meituan financial subsidiary to merchants that use Meituan’s platform. The funds raised through the asset-backed securities (ABS) sale will be used to provide more low-interest loans to merchants, according to the company.
Meituan is not the only tech company in the ABS space. Ant Financial, the financial services affiliate of Alibaba, raised RMB 293 billion through issuing ABS last year.
However, Ant has drastically scaled back its ABS issuance this year after regulators began scrutinizing this practice much more closely than previously.
BMW to launch China ride-hailing service by December [Reuters]
The German automaker is the first foreign brand to gain approval to operate ride-hailing services in China, hoping to have cars on the road by the end of the year.
China’s central bank must strengthen communications to shore up financial markets, says IMF [SCMP]
The People’s Bank of China must improve communications with market players to ensure financial stability, according to a paper published by the International Monetary Fund (IMF).
China hawk Navarro will not attend Trump-Xi meeting [SCMP]
White House trade policy adviser and Death by China author Peter Navarro will not be invited to the much-anticipated meeting between presidents Donald Trump and Xi Jinping at the G20 summit in Buenos Aires on December 1.
China cracks down on African swine fever reporting [Reuters]
New rules issued Wednesday will incentivise reports of new outbreaks from whistle-blowers, as authorities fear the disease is more prevalent than currently estimated.
Hema fires Shanghai boss for switching expiration date tags [TechNode]
Staff at a Shanghai branch of the up-market grocery store Hema Fresh were caught switching the expiration dates on bags of carrots to make them appear good to eat. Media are calling the incident “labelgate”.
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