Daily Archives: September 8, 2009

New Yuan Bonds To Debut In Hong Kong

Yuan-Backed Sovereign Bonds Seen As Major Step In Building Market For Yuan As A Global Currency

Recent moves show that the internationalization of the yuan is a major priority for the Chinese government

Recent moves show that the internationalization of the yuan is a major priority for the Chinese government

The Shanghai Daily reports today that the Hong Kong SAR government is set to debut a new class of bonds denominated in the Chinese RMB, a move seen as a significant milestone in China’s ambitious plan to make its yuan a more global currency. While articles about the yuan’s potential status as a major currency have multiplied in the last year, particularly following People’s Bank of China director Zhou Xiaochuan’s call earlier this year for the US dollar to be replaced as the world’s de facto reserve currency, less-publicized moves such as China’s currency swap agreements with several countries, and an expansion in the issuance of yuan bonds from commercial banks, have largely flown under the media radar.

With the announcement of these new yuan-denominated bonds, it is clear that China hopes to make Hong Kong even more of an international financial hub. Although the territory has, for decades, been a major financial power in the region, with its more relaxed political and financial system, Hong Kong looks to be one of the most accessible areas for China to experiment with some of its more long-term financial projects. With the strong linkage between Hong Kong and Shanghai — sometimes playfully referred to as “Shangkong” — if this program is successful it may mean more fluid and regular investment in yuan bonds by foreign investors as well as a simultaneous boost to the yuan’s reputation abroad.

As the Shanghai Daily article explains, the Chinese Ministry of Finance will offer $878 million (6 billion yuan) worth of the bonds to retail and institutional investors beginning on September 28:

Peng Wensheng, head of China research at Barclays Capital, said that while the amount is not large, it is a significant development in the internationalization of the yuan and for the development of the Hong Kong bond market.

“The issue broke new ground in an effort to promote the domestic currency as an international currency,” Peng said yesterday.

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“Bourgeoisified Proletariat” Takes Center Stage In Shanghai

Exhibition Gathers More than 40 Contemporary Chinese Artists In Shanghai’s Songjiang District

Shanghai Songjiang Creative Studio will host the expansive "Bourgeonisified Proletariat" art show from September 10-14

Shanghai Songjiang Creative Studio will host the expansive "Bourgeonisified Proletariat" art show from September 10-14

As summer turns into fall, we’re seeing a lot of action on the Chinese contemporary art front. With upcoming auctions set to take place in Hong Kong and elsewhere, and plenty of chatter about upcoming gallery exhibitions and projects, a new exhibition, “Bourgeoisified Proletariat,” will run between September 10-14 in Shanghai’s Songjiang District — an area which has become increasingly popular as one of China’s major art epicenters in recent years.

According to Artipedia, the exhibition is comprised of works in a wide range of mediums, from video to painting, by more than 40 contemporary Chinese artists and art organizations. As interest in Chinese contemporary art continues to grow among Chinese art enthusiasts and collectors, this exhibition will be a great opportunity for these people to see a wide range of works up-close, giving younger artists some much-needed exposure:

Since 1997, a curating team composed of 10 artists has organized numerous art exhibitions in China and abroad. In September 2009, they will present Bourgeoisified Proletariat, a large-scale independent show featuring outstanding works by more than 40 Chinese artists and art organizations. Featured in the exhibition will be new productions embracing varied media from installation, video, cine film, sculpture, performance to painting, photography, shown alongside with on-site projects. The title “Bourgeoisied Proletariat” was inspired from a letter sent by Engels to Marx in 1858.

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Automotive Brand-Building In China: Opportunities And Challenges Abound

Western, Chinese Brands Vie For Customer Loyalty As Emerging Middle Class And “Nouveau Riche” Demand Continues To Grow

Buick has capitalized on its reputation for quality and luxury in the Chinese market, enjoying massive success and launching China-only models like the Excelle

Buick has capitalized on its reputation for quality and luxury in the Chinese market, enjoying massive success and launching China-only models like the Excelle

As demand for new vehicles has remained sluggish in developed markets over the past two years, major automakers have rightly looked to retool their strategies to draw customers and build their brands in new markets. As we’ve written before, selling your brand in markets like China, where customers expect different things — and derive status from very specific brand attributes —  represents both a major opportunity and a new challenge. A good example of an automaker that has benefitted from the “blank slate” allowed it by entry into the young Chinese market is Buick, which has a reputation as a car for older, or middle-aged, drivers in its native market, the USA, yet has — through aggressive branding and advertising efforts — developed a reputation as a sleek, luxurious, youthful brand in the Chinese market.

So how can car brands optimize their brand equity in China? Depending on where they come from, their strategies differ greatly. While American car makers like Ford have had great success in overseas markets like Europe by pushing their reliability and value, in the Chinese market imported cars are, generally, chosen by buyers to be a status symbol, rather than “inexpensive.” Ford, then, cannot compete on price alone, as Chinese automakers like Chery and Geely — which have sizeable lineups of entry-level models — will always be able to undercut them. As a result, it is important for foreign car makers to not just build their brand in China, but to build a strong brand in China, one that speaks to Chinese consumers in a way that domestically-produced autos cannot. To break it down further, foreign automakers need to build a strong, distinctive brand — a German car must fit Chinese conceptions of German cars, Japanese cars Japanese attributes and so on.

In practice, how are foreign automakers faring in their Chinese branding strategies? Today, Reuters looks into the “uphill road” these brands are traveling in China, and how they have refocused their branding strategies to varying degrees of success. Using the example of a “nouveau riche” car buyers who has traded his BMW in for an Audi  — since the Audi has developed a strong reputation in China as a car for bureaucrats or (comparatively) “old money” while BMW is considered a brand for the nouveau riche (a group into which the buyer in question is loath to be grouped) — the article provides valuable insight into the particularities of a market so new that even seasoned marketers and branding execs are often at a loss to develop long-term strategies.

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