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- Amazon Takes on Temu 🛒 Huawei AI Chip Rivals Nvidia 🤖 World’s Largest Oil Platform Built 🛢
Amazon Takes on Temu 🛒 Huawei AI Chip Rivals Nvidia 🤖 World’s Largest Oil Platform Built 🛢
China Insights Weekly for August 19, 2024. Unpacking China’s Economic and Technological Advances.
Image: Midjourney
Welcome back to this week’s edition of the China Insights Weekly Newsletter!
Some of the key takeaways this week:
German investment surges in China: 1st half 2024 total is higher than full year 2023, Volkswagen & BMW Lead €7.3B surge in China investment.
McDonald’s China USD 559M Innovation Hub: McDonald’s doubles down on digital growth with a new R&D center in Nanjing.
Huawei vs. NVIDIA Showdown: Huawei’s new AI chip set to challenge NVIDIA’s dominance in the Chinese market.
Dive deeper into these stories and more by clicking the headlines below. We value your feedback—let us know your thoughts or suggestions on LinkedIn, X (Twitter) or Facebook.
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🚀 Headlines
German direct investment in China has risen sharply this year. Figures by Germany’s central bank show that German direct investments in China stood at €2.48bn in the first three months of 2024, rising to €4.8bn in the second quarter. That brings the total for the first half of 2024 to €7.3bn, compared with €6.5bn for the whole of 2023. Much of the investment is driven by big German carmakers. More than half of the €19bn in profits made by German companies in China last year was reinvested there. Over the past five years, German investments have consistently accounted for more than 50% of EU27 investments in China. The strong moment is to continue throughout the rest of the year. In recent months, Volkswagen announced a plan to invest €2.5bn in expanding its production and innovation hub in the city of Hefei, in Anhui province, and BMW to invest €2.5bn in its Shenyang Production Base.
On August 8, 2024, McDonald’s China marked seven years since it stepped into the “Golden Arches” era. Just two days earlier, the company unveiled a new technology R&D Center, a state-of-the-art facility that signals McDonald’s deepening commitment to in-house innovation. The sleek, seven-story building, situated in Nanjing’s Baijiahui Innovation Community, spans more than 6,500 square meters. It will house 450 tech experts driving the company’s next phase of growth. McDonald’s China plans to invest RMB 4 billion (USD 559 million) over the next 5 years in digital R&D. Looking ahead, McDonald’s China is setting its sights on an ambitious target: reaching 10,000 restaurants by 2028 from today’s 6200.
Huawei is preparing to launch a new AI chip in October to challenge Nvidia’s H100 amid US sanctions aimed at curbing its tech advances. Potential customers including Chinese internet firms and telecommunications providers are already testing the Ascend 910C chip. TikTok parent ByteDance, Baidu, and China Mobile are among those in early discussions to purchase it. Huawei already received at least 70,000 orders for the 910C, worth roughly 2 Billion US dollars. If the Ascend 910C can catch up to the H100, Huawei will have a substantial advantage in raw graphics prowess. If paired with fast High Bandwidth Memory (HBM) chips, it could also be a potent choice for AI as well. The 910C will compete primarily with Nvidia's H20, which was launched earlier this year to replace the H800 after the US government banned it from China like it did the H100. Nvidia is already seeing competition in the China market with its H20 chip, as it already discounted at least once.
Amazon is pushing to acquire more sellers in China to expand its offerings of affordable products and take on Temu and other Chinese competitors. This year, it opened new offices in the inland cities of Wuhan, Hubei Province, and Zhengzhou, Henan Province. They support sellers in nearby towns and surrounding areas, seeking to do new business with small- and medium-sized sellers such as factories in rural areas. Recently, Amazon held an event in Shenzhen offering to support online sellers entering the global market. On its official WeChat account, it is also working to recruit sellers holding live seminars almost daily. The company will also allow direct shipping of inexpensive daily necessities and clothing to US consumers instead of using Amazon's logistics facilities to reduce costs.
Four companies under the New-York city based Blackstone Group are paying a combined CNY279 million (USD39 million) to buy out the remaining equity in four China-based warehousing and logistics companies to assume total control as part of the US asset management giant’s aim to become a leader in the country’s logistics infrastructure sector. The Blackstone subsidiaries paid Fujian Dongbai, the department store and shopping mall operator a total of CNY1.1 billion (USD151 million) for 80% stakes in the four assets between 2018 and 2020. Two of the companies are located in Foshan, southern Guangdong province while the other two are in Tianjin and Chengdu. Blackstone’s Chinese mainland logistics assets management vehicle DragonCor has a lettable warehousing area of over 5.1 million square meters.
China has built the world’s largest offshore oil platform, which will be used in the Marjan field in Saudi Arabia. At 24 stories high, the platform weighs over 17,000 tons, has a deck the size of 15 basketball courts, and has an annual capacity for 24 million tons of crude oil, about 176 million barrels, and 7.4 billion cubic meters of natural gas. The platform built in 36 months in Qingdao will be transported to the Marjan oilfield off the coast of Saudi Arabia. The structure represents a breakthrough in the country’s development of large-scale offshore energy infrastructure.
Photo: Courtesy of CNOOC
China launched its first large-scale vehicle-to-grid (V2G) interaction across an entire province, involving over 1,000 electric vehicles (EVs) in the eastern province of Jiangsu for off-peak charging and reverse discharging, showcasing EVs’ potential as mobile power banks. EV owners were enticed by charging discounts. That pulled in 1,277 electric vehicles across 482 charging stations. This approach can release a load of 12,000 kilowatts during electricity consumption peak a day, effectively cutting peak electricity consumption by 17,000 kilowatt-hours, enough to power 2,100 households for a day. The concept is simple: electric vehicles have big batteries, cars are parked most of the day (about 95% of the time), and those batteries could be used to help the grid deal with fluctuations in electricity supply and demand throughout the day and night.
Chinese businesses’ overseas expansion strategy is shifting from the usual mergers & acquisitions to a more diversified approach. More companies are choosing greenfield investments, setting up a subsidiary in a different country, or strategic partnerships. Almost all leading New Energy Vehicle companies have set up overseas factories. Chinese pharmaceutical companies usually adopt an out-licensing model. China’s overseas FDI soared 13.2% in the first half from a year earlier to USD85.3 billion, of which non-financial FDI jumped 16.6% to USD72.62 billion. The value of overseas M&As by Chinese firms slumped 20.4%. New contracts signed for overseas projects reached a new high in the first half, soaring 22% year-on-year to USD115.5 billion. Key projects include the China-Kyrgyzstan-Uzbekistan railway, invested by Chinese government, and new data centers that the cloud arm of e-commerce giant Alibaba Group plans to build in South Korea, Malaysia, the Philippines, Thailand, and Mexico.
🏞️ China Snapshot
This photo captures the vibrant skyline of Zhujiang New Town, the pulsating heart of Guangzhou’s modern business district. We took this shot on our visit last week. Surrounded by gleaming skyscrapers, this area has rapidly evolved into a hub for finance, technology, and innovation. As part of the Pearl River Delta, and one of four traditional first-tier cities, Guangzhou plays a vital role in the region’s economic synergy with Hong Kong and Shenzhen.
Did you know you can take a ferry from and to Guangzhou straight from Hong Kong International Airport?
🎁 Bonus Stories
Visa applications by Chinese citizens returned to 70% of 2019 level in the first half of this year, according to a report by VFS Global, agency under US private equity giant Blackstone. The number of visa applications in China surged 88% in the six months ended June 30 from a year earlier. Major destinations for Chinese travelers include Canada, Germany, Italy, the United Kingdom, and the United States. While most Chinese applicants originate in first tier cities, there has been a significant increase in visa applications from lower-tier cities, including Chengdu, Shenzhen, Hangzhou, Nanjing, and Shenyang. Younger generation applicants focus on ‘travel purpose’ rather than just the ‘destination’ when planning outbound trips. Visa applications from China should fully return to the pre-pandemic level next year.
The world’s largest indoor ski resort was completed in the Lingang Special Area of Shanghai and will open to the public on September 6. It covers about 350,000 square meters and incorporates dining, accommodation, entertainment, and shopping with a Nordic inspired design. Wintastar Shanghai has two major areas, one snow-themed and the other water-themed. The resort's snow world covers more than 90,000 square meters with a large indoor ski park and nearly 20 attractions. It boasts four ski slopes of varying gradients. The second has an area of nearly 20,000 sqm and incorporates a massive rooftop water park with pools and waterslides. It will also help the Lingang Special Area achieve its goal of welcoming 15 million tourists annually by the end of 2025.
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