Dewu dominates China luxury 💰 Peru opens mega port 🚢 Novartis signs $1.1B cancer drug deal 💊

2024-10-07 | subscribe | homepage

Welcome back to this week’s edition of the China Insights Weekly Newsletter!

Here are the key takeaways from this week in China’s business and tech sectors:

• Chery Takes Flight: Chery unveils its autonomous flying car and completes a 50-mile test flight.

• Dewu Dominates Luxury: China’s resale app Dewu grows by 19%, taking a bigger share of the luxury market.

• Novartis’ $1.1B Deal: Novartis signs a USD1.1 billion global licensing deal with China’s Baiyu Pharma for a cancer drug.

• Peru’s Chinese-Built Mega Port: The Chinese-built Chancay mega port in Peru will cut 12 days off China-bound cargo routes.

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 or Facebook.

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🚀 Headlines

Chery unveils autonomous flying car, completes 50-mile test flight (link)

Chinese automaker Chery has introduced its autonomous flying car prototype, the ‘Land and Air Vehicle’, at the Chery Global Innovation Conference. This modular system includes three key components: the aircraft, an intelligent cockpit, and an intelligent chassis. The vehicle, which operates without a steering wheel or accelerator, successfully completed a 50-mile test flight. It offers both autonomous driving on land and vertical takeoff and landing capabilities in the air.

Chery, China’s largest passenger car exporter for 21 consecutive years, exported 937,148 vehicles in 2023, a 101.1% increase from the previous year. While the company has been less prominent in the domestic electric vehicle (EV) market compared to competitors like BYD and NIO, it continues to expand its new energy vehicle (NEV) lineup. Chery’s exports primarily target emerging markets such as South America, the Middle East, and Africa, as it strengthens its global automotive presence.

French bank Credit Agricole to buy 50% of Chinese car giant GAC’s leasing unit, french and US insurance groups secure market entry approval (link, link)

Credit Agricole is planning to buy a 50% stake for CNY2.1 billion (USD299 million) in the leasing unit of Chinese carmaker Guangzhou Automobile Group (GAC) as part of a broader deal that makes the French bank a partner of GAC to finance its car sales in Europe. The same division and its subsidiary CA Auto Bank will also become GAC’s financial partner to help with the Chinese automaker’s sales of electric vehicles (EVs) in Europe from January 2025. State-owned GAC is among China’s largest automakers and is targeting 500,000 overseas sales by 2030. It is planning an electric SUV tailored to the European market and exploring manufacturing of EVs in Europe to avoid EU tariffs.

In other financial news, France’s BNP Paribas and USA’s Prudential Financial have secured approval from China’s National Financial Regulatory Administration (NFRA) to set up separate insurance ventures. The joint venture between BNP Paribas and Volkswagen Financial Services aims to capitalize on the rapid growth of China’s insurance industry, which saw total insurance assets reach USD4.2 trillion (RMB 29.82 trillion) at the end of 2023.

Switzerland’s Novartis licenses China’s Baiyu Pharma’s novel cancer drug in USD 1.1 billion global deal (link)

Chinese innovative drug developer Chengdu Baiyu Pharmaceutical has awarded the exclusive global rights to develop and market its small molecule anti-tumor treatment worldwide to Swiss pharmaceutical giant Novartis. Baiyu will receive USD70 million in installments, up to USD1.1 billion in milestone payments, and tier loyalties from Novartis. The treatment is a DNA damage response therapy that detects DNA damage and mediates its repair in different types of DNA lesions, including those caused by chemotherapy and radiation treatments. It has already completed the first phase of clinical trials. The collaboration with Novartis will help Baiyu make its potential anti-tumor drugs available to global patients. In the first three quarters of the year, more than 80 innovative medicine deals were signed in China. In January, Novartis acquired SanReno Therapeutics and inked two development authorization deals potentially involving USD 4.2 billion.

Germany’s Bayer opens Shanghai Innovation Center to develop health products for Chinese consumers (link)

Bayer Consumer Health, a division of the German drug and biotech giant, has opened an innovation center in Shanghai that will develop novel health and self-care products tailored to the needs of Chinese consumers. The inauguration ceremony for the EUR20 million (USD21.7 million) China Center of Innovation and Partnership (CCIP) was held on Oct. 16. The CCIP is located in the Shanghai Biomedical Frontier Industry Innovation Center. This life sciences incubator provides full support from concept to final product. It was co-founded by Shanghai Pharmaceuticals and leading local universities and research institutions. Bayer Consumer Health also signed an agreement with Shanghai Pharmaceuticals to combine the pair's resources to co-develop new healthcare products. Bayer is building a new consumer health supply center in Qidong, a city neighboring Shanghai, which will likely be ready by 2028. The project's CNY600 million (USD84.2 million) first phase will be finished in 2026.

Indonesia forms USD 1.2 Billion battery venture with China’s CATL (link)

Indonesia announced a joint venture with China’s Contemporary Amperex Technology Co. Ltd. (CATL) to invest USD 1.2 billion in battery production in the Southeast Asian country. The Chinese cellmaking giant, through its subsidiary CBL International Development, formed the venture with government-owned Indonesia Battery Corporation. The Karawang, West Java project aims to scale up battery production to 15 gigawatts a year. The government has looked to leverage its vast production of nickel, a key ingredient for some batteries, to draw in foreign investors to the EV sector. Earlier this year Korean companies Hyundai Motor and LG Energy opened the first-ever battery cell plant in the country. At the same time, China’s BTR New Material Group launched an anode material plant.

USA’s Hyatt partners with China’s CR Land to speed up hotel expansion in the Chinese market (link)

Chicago-based hospitality giant Hyatt Hotels and property developer China Resources (CR) Land have set up a joint venture to accelerate the expansion of the hotel brand's portfolio across China. The JV, which was named Yuen Kai Holdings, will develop and manage hotels, including six existing Mumian hotels in Beijing, Chengdu, Hangzhou, Rizhao, and Shenzhen and two new ones in Shanghai and Shaoxing. Hyatt and CR Land will jointly build more Hyatt-branded hotels and cooperate on other key projects, such as Park Hyatt Xi'an and Andaz Dongguan. Founded in 2003, Mumian Hotel is a hotel brand owned by CR Land responsible for the construction and operation of residential properties, shopping malls, space operations, and hotels. Hyatt entered the Chinese market more than 50 years ago. It had over 165 hotels in China as of June 30.

Peru's Chinese-built mega port to soft launch in late November with Shanghai route reducing Asia-bound cargo by 12 days (link)

The first phase of the mega port Chancay in Peru will officially be inaugurated next month, with operations expected to start in 2025. Chancay is set to become the largest deep-water port on the western coast of South America, capable of handling the world’s largest vessels. The port is expected to significantly reduce shipping times and costs: cutting 12 days off travel time between Peru and China and 20 days for western Brazil. The Chinese company COSCO which will operate the port holds 60% and the Peruvian mining company Volcan, controlled by Swiss-based Glencore, holds 40%. After the port's inauguration in mid-November, it will initially ship two container ships a week on a direct route to Shanghai and later will ship to other points in the Asian market. Cabotage routes will be opened with smaller ships from Colombia, Ecuador, and Chile, whose cargo will later be shipped to Asia from Chancay.

Chinese hit luxury reseller app is increasing market share in 2024 at the expense of major global brands (link)

Dewu (also known internationally as Poizon), founded in 2015 by Jiangxi-born billionaire Yang Bing as a platform to buy and resell sneakers, has become the beating heart of China’s vast luxury goods grey market, where goods bought outside the country are re-sold at prices well below those in flagship stores. The app has been downloaded 350 million times in China. Sales of top brands on Dewu now account for more than 70% of sales for some luxury labels. Shanghai-based Dewu saw sales across 48 brands rise 19% year-on-year in the second quarter, exceeding RMB 7 billion (USD 1 billion). Dewu’s growth reflects Chinese consumers’ heightened price sensitivity. Combined with slowing global luxury sales, this has led to significant discounting, resulting in a surge of luxury products entering China. The implication is that grey market revenue in China will form a larger portion of brand revenue in 2024 than in 2023.

🎁 Bonus Stories

136th Canton Fair to boost global trade with new records in exhibitors and activities (link)

The 136th China Import and Export Fair (Canton Fair), set to take place from October 15 to November 4 in Guangzhou, China, will feature new records in exhibitors and activities. Spanning three phases with both online and onsite exhibitions, the Fair aims to serve high-quality development and promote greater opening up. Covering a total exhibition area of 1.55 million square meters, the Fair will feature approximately 74,000 booths organized into 55 exhibition sections. Over 30,000 companies are participating in the onsite exhibition, including 29,400 export companies, an increase of nearly 800 from the previous session. Among them, almost 4,600 are first-time exhibitors. The online exhibition has expanded significantly, with about 48,000 enterprises showcasing around 3.75 million products—marking a 60% increase in the number of companies and a 50% increase in products compared to the last session. The Fair will also host record over 750 trade promotion events. The Fair will organize over 250 "Trade Bridge" matchmaking events across 65 countries and regions, including the United States, France, Brazil, Indonesia, Kenya, Australia and more.

China’s 700-meter underground neutrino observatory to complete construction by the end of November (link)

China hopes a giant laboratory 700 meters (2,300 feet) underground is key to discovering the secrets of the universe’s most mysterious particles–neutrinos. Slated for full completion next year, after over a decade of construction, the roughly USD 311 million Jiangmen Underground Neutrino Observatory (JUNO) relies on a nearly 35-meter (115-foot) wide stainless steel and acrylic spherical machine designed to help measure small subatomic units that move almost at the speed of light. Despite blanketing the universe (100 trillion are believed to pass through your body every second), very little is known about neutrinos and their behavior due to how difficult it is to detect them. Chinese physicists intend to solve what’s known as the “mass hierarchy” problem. They hope to build a complete standard model of particle physics and expand our knowledge of the inner workings of planets, stars, and supernovas. JUNO’s potential mass hierarchy findings may even force physicists to reconsider established scientific facts, particularly in quantum mechanics.

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