site: HOME > > Economic > Digest > Newspaper
Issue 639 10-07-2013
Summary:Demand for Bodyguards Soaring in China, Environmental Tax Scheme Drawn Up and Wahaha Diversifies


Highlights from the EO print edition, No. 639, Oct 7, 2013

Demand for Bodyguards Soaring in China
News, Page 1
~ Shi Xingfeng (释行风), who’s studied martial arts at the Shaolin Temple since he was a child, founded a bodyguard company in 2010. 80 percent of his customers are now entrepreneurs, who mostly need security because of economic disputes.
~ When Shi started his business, he had to face the fact that China’s rich have very little safety awareness. He says that in China, some wealthy people don’t want to hire bodyguards because they wrongly think they’re perfectly safe and won’t encounter any trouble.  Some also worry that hiring a bodyguard will make them and their wealth too conspicuous.
~ The number of super-rich is rapidly growing in China, and many are starting to consider their own security vulnerability. Additionally, famous athletes and entertainment stars – who are becoming wealthier themselves - are also starting to demand better protection.
~ “The demand for bodyguards is related to the overall economic development situation,” said the general manager of a bodyguard company. “From a national perspective, Beijing, Shanghai and some coastal cities have more demand for bodyguards. And the construction, real estate and mining industries have more demand for security personnel than any other industries.”
~ Pan Xianjin (潘显今), the founder of another bodyguard company, guesses that no more than about 5 or 6 percent of the bodyguard companies in China are operating at a loss.
~ However, China’s bodyguard market is still immature. Zhe Meijie (者美杰), founder of a bodyguard company in Beijing, says that the industry still isn’t very standardized or regulated. “We hope the government can introduce relevant policies to guide the development of the industry,” he said. “People in the industry can enhance learning and cooperation and avoid vicious competition.”
Original article: [Chinese]

Environmental Tax Scheme Drawn Up
News, page 4
~ The Ministry of Finance has submitted its environmental tax scheme to the State Council, where it’s awaiting discussion. It won’t likely be implemented until at least 2014.
~ The scheme suggests taxing key sources of pollution. Some analysts predict that this will include papermaking, textiles, electric power and nonmetallic minerals. Chinese media has previously reported that Hubei, Hunan, Jiangxi and Gansu provinces will be pilot areas for the tax.
~ Su Ming (苏明), vice president of the Research Institute for Fiscal Science, said that the implementation of an environmental tax will involve transferring pollution fines into formal taxation and then increasing the rate. “We could designate pilot areas but we could also revert pollution fees into a tax all at once,” Su said. “I’m in favor of the latter option.”
~ Under the current pollution fee system, fines are levied for emitting polluting gas, sewage, solid waste and noise. However, these fees only pay for about half of the costs to clean up the pollution. Also, the collection of these fees has less of a legal mandate, leaving room for negotiation. Thus, the regulative effect is weak compared to an environmental tax. 
~ According to a recent report from the Research Institute for Fiscal Science, now is a good time politically to implement the environmental tax. Because of extreme pollution conditions like smog incidents in Beijing, the public is clamoring for environmental protection. An environmental tax could also conveniently help fill budget gaps left by the slowing economy and reduction of other types of taxes.
~ According to the proposal, the tax revenue would be shared by the national and local governments, with local governments receiving 80 percent. 
~ The key issue of the environmental tax is settling on the best rate so that it’s not so high as to impede economic development, but not so low that it has no significant effect. Su says the rate should definitely be higher than the current pollution fees in order to “make the polluting factories pay the costs.” But it should reach a balance that the companies can bear.
Original article: [Chinese]

Wahaha Diversifies
Corporation, page 25
~ It was recently reported that Wahaha, China’s largest beverage producer, will invest in Guizhou Province’s liquor industry. In early September, Chairman and CEO of Wahaha Group Zong Qinghou (宗庆后) met with the Guizhou government to sign collaboration agreements including the development of the Maotai-flavor baijiu in the city of Renhuai (仁化) and cooperation with other industries including retail and regional airlines.
~ China’s liquor industry, after 10 years of rapid development, is entering a new era of structural adjustment. This presents risks to Wahaha’s investment; especially in the newly-developing Maotai-flavor industry, which has limited market capacity. Wahaha is also facing the challenge of establishing a liquor brand image. Contrary to quick consumption beverages, a liquor brand is more likely to succeed if it has a long history. The high-end marketing strategy typically used in the baijiu industry also differs from Wahaha’s approach to marketing other beverages. 
~ Moving into the liquor industry is just part of Wahaha’s new diversification strategy. The soft beverage industry, where Wahaha has made its fortune, is experiencing a weak growth period. A lack of innovation is one reason. Therefore, Wahaha is seeking new growth points and trying to achieve a breakthrough by marching into other industries - such as children’s wear, milk powder, catering and retail stores. 
~ However, Wahaha has yet to achieve success in any of these industries. The milk powder department is still losing money, and Wahaha’s Waow Plaza inHangzhou is said to be virtually “empty” of customers.Zong Qinghou’s own daughter has even said she “doesn’t support [her father] in the retail industry at all.”
~ Despite these problems, Zong Qinghou still plans to open 100 new department stores over the next three-to-five years.
~ A number of analysts have pointed out that one problem with Wahaha’s diversification lies in management. Zong Qinghou is in charge of every department and extends little trust to his subordinates. One retail expert said that Zong is decisive with a keen market sense, but he doesn’t have the knowledge or ability to excel in the retail industry. 
Original article: [Chinese] 


Related Stories


Comments(The views posted belong to the commentator, not representative of the EO)

username: Quick log-in

EO Digital Products

Multimedia & Interactive