【AstraZeneca】

AstraZeneca to Triple China R&D Investment

March 27 -- AstraZeneca's research and development investment in China is expected to triple this year from 2020 as the British pharmaceutical giant prepares to bring a number of innovative drugs to the Chinese and global markets.

AstraZeneca is tripling its R&D investment in China and is aiming to introduce at least 15 innovative drugs to the Chinese market by 2030, said He Jing, SVP, Head of the firm’s R&D Center in the country.

AstraZeneca has been hiking its investment in China R&D since the London-based firm first entered China 30 years ago, Susan Galbraith, global executive vice president of oncology R&D, told Yicai Global at the second R&D China Science Day last week.

AstraZeneca’s R&D hub in China is expected to have a headcount of 900 by year-end, Galbraith said at the event, which has a special focus on cancer. “The quality of scientists and the level of talent here is rapidly increasing.”

China's huge population offers not only a large talent pool but also a substantial number of oncology patients, such as lung, liver and gastric cancer. Lung cancer is the biggest cause of deaths by cancer in the country.

AstraZeneca’s key R&D pipelines in China are 100 percent in parallel with those worldwide and early-stage development projects account for 20% of the R&D China pipeline, said He. China has begun to lead global R&D in areas like gastric cancer and liver cancer, which are highly prevalent in the country.

AstraZeneca is actively collaborating with local partners, such as Hong Kong-based HutchMed, with whom it developed the oncology drug Savolitinib. The treatment was approved to go to market in China in 2021 and is under review in other parts of the world. AstraZeneca is also teaming up with Shanghai’s Cellular Biomedicine Group to promote cell therapy.

The Cambridge-based pharma giant will focus on translational medicine, which helps ensure that medical findings in the lab make their way to the patient, the sensitivities and resistance of the treatment,and how to work with innovation, said Galbraith.

AstraZeneca introduced CoSolve, which is an open forum where start-ups and early stage biotechs can bring innovative ideas which can be rapidly translated into tangible solutions to real-life research challenges, into China at the first R&D China Science Day last year. Nine challenges were presented and 47 proposals submitted. The scientific novelty of some of the finalists gets us thinking how to solve these challenges, said Galbraith.

“We are going to continue to expand both the R&D capability within AstraZeneca, and also expand our collaboration with the ecosystem that is being built here in China,“ said Galbraith. “This is also an opportunity for China to further accelerate and to become an important source of innovation for the pharmaceutical industry, as the whole global economy recovers from the pandemic.”

【Takeda Pharma】

Takeda Pharma bullish on China biz

China's transformation in its business and innovation environment has proved remarkable, offering great growth potential for multinational corporations in the country, said a Takeda Pharmaceutical Co Ltd top executive.

'China's healthcare reform and development over the past few years have been profound. The country now represents a significant growth driver for Takeda. It is becoming a more important part of our global business and strategy, not only in commercial but in clinical research and development,' said Christophe Weber, president and CEO of Takeda, during the China Development Forum in Beijing.

The pharmaceutical company charted a plan in 2020 to put forward more than 15 innovative products by 2025, which will benefit more than 10 million patients in China. Currently, 10 new medicines have already been approved, making Takeda a leader among MNCs in terms of winning approvals in the country over the past three years. Among the 10 products, seven are included in the National Reimbursement Drug List.

Despite COVID impacts and industrial uncertainties, Takeda delivered robust results. The company said it has been elevating its strategy with a focus on China and is considering making the market its second-largest globally by 2030.

【L’Oreal Group】

L’Oreal to Build Second Smart Operation Center in China

March 27 -- French cosmetics giant L’Oreal Group is already planning to build its second smart operation center in eastern China even before finishing the first one to expand in the Asian market.

The seller of makeup and hair care products recently penned a memorandum of cooperation with the management committee of a development zone in Jiangsu province’s Nantong to break ground on a 45,000-square meter facility there in 2024, Yicai Global learned from the Paris-headquartered company that did not disclose the scale of investment. The hub should be ready by 2025.

Nicolas Hieronimus, who became L’Oreal's chief executive in 2021, presided over the ceremony during his first visit to the country since taking up the reins at the company that has its China HQ in Shanghai.

The Nantong center, which will be equipped with world-leading logistics and robotics technologies, will mainly focus on premium cosmetics while the first one in Suzhou, which should be finished in September, should help the company ship mainstream cosmetics and hair care products more efficiently. The 90,000-sqm Suzhou project began in 2019.

Both centers boast a scale that operation hubs in other markets cannot match, and this is determined by the size of the Chinese market, Pankaj Gupta, L’Oréal’s senior vice president for North Asia and China, told Yicai Global. The Nantong center is slated to handle about 50 million parcels per year, he added.

L’Oreal has raised its investment in China because it is very optimistic about the future of the market and believes that the direct-to-consumer model will pose a great business opportunity, according to Chief Operations Officer Antoine Vanlaeys. As long as the firm acts quickly, at a large scale and with precision, it will be able to seize business opportunities, he added.

China's supply chain is very efficient, and this also brings high efficiency and a great contribution to the global export market, Vanlaeys said, adding that the company ships products from its Chinese plants to Southeast Asia, Japan, South Korea, and other countries.

Most of L’Oreal’s investment projects in China so far are focused on the Yangtze River Delta region, which is an important window for China to open up to the world and to keep introducing high-end brands and products, per the COO.

Currently, L’Oreal has one research, development and innovation center in China as well as plants in Suzhou and Hubei province's Yichang with more than 14,000 employees in total.

【Huawei】

Huawei’s Annual Net Profit Falls 69% Amid Higher R&D Spending But Revenue Edges Up

Huawei Technologies’ net profit slumped 69 percent last year, mainly because of declining revenue from smart devices and surging research and development expenses. But annual revenue at the Chinese telecoms giant rose.

Net profit was CNY35.6 billion (USD5.1 billion) in the 12 months ended Dec. 31, versus CNY113.7 billion (USD16.5 billion) a year before, the Shenzhen-based firm said in its latest earnings report released on March 31. Revenue edged up 0.9 percent to CNY642.3 billion.

Revenue from smart devices fell 11 percent to CNY214.5 billion, accounting for only 38.2 percent of Huawei’s total last year, compared with a ratio of over 50 percent in 2021. The company invested CNY161.5 million in R&D last year, accounting for one-fourth of its annual revenue. R&D spending exceeded CNY977.3 billion in the past 10 years.

“A challenging external environment and non-market factors continue to take a toll on Huawei’s operations,” Rotating Chairman Eric Xu said. “In the midst of this storm, we have kept racing ahead, doing everything in our power to maintain business continuity and serve our customers. We have also gone to great lengths to grow the harvest, generating a steady stream of revenue to sustain our survival and lay the groundwork for future development.”

Huawei’s smartphone business remains the most impacted by US sanctions, as its market share fell from second place, Xu noted, adding that the firm can only make fourth-generation smartphones, as fifth-generation chips are still banned by the United States Department of Commerce.

【China Mobile】

China Mobile Says Its USD6.6 Billion Investment in Postal Savings Bank Will Pay Off

China Mobile’s USD6.6 billion equity purchase in state-owned lender Postal Savings Bank of China earlier this week will help the world’s largest mobile network operator by number of subscribers extend its information technology services into the finance sector and the carrier expects to reap big dividends in the future, The Paper reported today.

In the long term, this investment is expected to bring considerable financial benefits, China Mobile said. The valuation of the banking industry has been low in recent years but the sector will maintain stable growth and the valuation will be adjusted.

China Mobile paid CNY45 billion (USD6.6 billion) for 6.8 billion newly issued shares in Postal Savings Bank on March 29 to gain a 6.8 percent stake. It is now the second-largest shareholder after China Post Group which holds 62.8 percent equity. The new shares have a lockup period of five years.

Financial technology is a key part of China Mobile’s blue ocean of information services, the Beijing-based carrier said. “Information services plus finance” will bring new impetus to the development of the information and finance sectors. Banks’ investment in information technology is much higher than that of other industries, it added.

The close cooperation between China Mobile and Postal Savings Bank will help China Mobile integrate into the banking vertical and provide IT services to Postal Savings Bank, which serves over 600 million customers and has nearly 40,000 outlets across the country, while also providing services to other banks.

The most direct effect of China Mobile’s buy-in is to boost liquidity which will enhance the Beijing-based lender’s ability to serve the real economy and withstand risk, Liu Jianjun, president of the Postal Savings Bank, said at the earnings call today.

In future, the strategic tie-up between the two parties will cover many aspects, including rural revitalization, financial technology, financial and investment cooperation, and financial business cooperation in the industrial chain, said China Mobile, which boasts more than 900 million mobile users, over 200 million home subscribers and more than 15 million government and business customers.

【Tencent】

Tencent Launches Smart Creation AI Assistant, Is Developing ChatGPT-Like Bot

Tencent Holdings has launched an updated version of its artificial intelligence assistant that includes smart creation, and the Chinese internet giant is also working on a ChatGPT-like AI bot.

The new AI assistant’s functions include digital human-like support able to 'clone' images and voices, text dubbing, watermark removal, text-to-video conversion, template creation, and online video editing, Yao Tianheng, vice president of Tencent's content platform department, said at the Nerank conference yesterday.

Content creators can design their digital human avatars with a custom voice by uploading pictures, videos, and audio, allowing them to broadcast videos in no time, Yao said. But most AI creation services are behind paywalls, with only a small part available free of charge, Yicai Global found.

Tencent is also developing a ChatGPT-like bot that can be integrated with its instant messaging applications QQ and WeChat, The Paper reported yesterday, citing Tang Daosheng, senior executive vice president and chief executive of Tencent’s cloud and smart industries group. It will serve corporate users via Tencent's cloud services.

“Tencent will not rush to achieve success, and the first product will be ready after many iteration attempts, which will be a long-term process,' President Martin Lau said on the Shenzhen-based firm's annual earnings conference on March 22.

After OpenAI’s launch of ChatGPT took the AI industry by storm last November, some of the biggest Chinese tech companies have come out with similar products, including Baidu's Ernie Bot, 360 Security Technology's 360GPT, and Huawei Cloud's Pangu Drug Molecule Model.

China's AI expenditure will likely reach around USD14.8 billion this year, equal to about a 10th of the globe's total, according to International Data Corporation. Its AI market size will grow to about USD26.4 billion by 2026, with a compound annual growth rate, or GAGR, of over 20 percent between 2021 and 2026, it added.

【CNPC】

China's oil giant CNPC reports robust profit growth in 2022

BEIJING -- China National Petroleum Corporation (CNPC), the country's largest oil and gas producer and supplier, reported a 62.1-percent surge in net profit in 2022.

Net profit attributable to the parent company reached 149.38 billion yuan ($21.74 billion) last year, the company said in a statement filed with the Shanghai Stock Exchange.

The company's business revenue rose 23.9 percent to about 3.24 trillion yuan in the reporting period, it said.

The company also said that its free cash flow increased by 88.4 percent year-on-year.

【CNOOC】【TotalEnergies】

CNOOC, TotalEnergies Complete First Cross-Border Yuan Settlement of LNG Trade

March 28 -- China National Offshore Oil Corporation and France’s TotalEnergies have reportedly completed China’s first purchase of imported liquefied natural gas to be settled in Chinese yuan through the Shanghai Petroleum and Natural Gas Exchange.

The deal is reported to have an energy content of 3.2 billion to 3.4 billion British thermal units, and the LNG comes from the United Arab Emirates, Shanghai Securities News reported today. It did not mention the value of the deal.

The first international LNG transaction settled in yuan is an attempt to promote multi-currency pricing, settlement, and cross-border payment, SHPGX Chairman Guo Xu said.

The exchange launched international LNG trading in August 2020 and it will continue to play a platform role and strengthen the financial infrastructure for the cross-border yuan settlement business, Guo said.

The SHPGX was established in 2015 and the volume of natural gas traded on the exchange reached 92.86 billion cubic meters last year.

CNOOC, the largest offshore oil and gas field operator in China, is committed to innovating international resource pricing and settlement models, according to Deputy General Manager Yu Jin. The promotion of international resource procurement based on yuan settlement can promote the globalization of energy trading and build a more diversified ecology, he noted.

At present, China’s yuan is the fifth most-used payment currency in the world, and its use in foreign exchange trading has increased to a global market share of 7 percent, the fastest growth among currencies in the past three years.

The scale of China’s oil and gas imports is also growing. In 2022, China imported more than 500 million tons of crude oil and more than 100 million tons of natural gas, including 63.44 million tons of LNG, and the sources are increasingly diversified.

【Shell】

Shell CFO Says Shareholders Focusing More on Energy Security

Shell Plc investors are showing more interest in energy security in the wake of the crisis triggered by the war, according to Chief Financial Officer Sinead Gorman.

New Chief Executive Officer Wael Sawan is preparing to lay out Shell’s strategy at a capital markets day event in June, which could see the company underscoring the role of oil and gas as Europe’s energy crunch spotlights concerns over security of supply. That message may play well with shareholders who benefited from soaring prices last year.

“You see a changing dialog since the crisis with a more balanced perspective between security and carbon,” Gorman said on the sidelines of a conference in Oxford, England.

While the company has faced pressure from climate activist shareholders to take more aggressive action to cut emissions, CEO Sawan said earlier this month that reducing oil and gas production is not healthy. The company is hearing different messages from investors in the US, Europe and Asia and Shell’s priority is to look after all of its shareholders, Gorman said.

Shell is targeting net-zero emissions by 2050, but reaching that goal is dependent on shifts in global energy demand.

Currently, the world is not on track to cut demand for fossil fuels at a pace that would reach global climate goals. Projected emissions from existing fossil fuel infrastructure, without reducing greenhouse gases through technologies such as carbon capture and storage, would exceed the remaining carbon budget to keep average temperatures below the Paris agreement’s 1.5C target, according to a report from the United Nations’ Intergovernmental Panel on Climate Change.

【QatarEnergy】【ExxonMobil】

Qatar takes stakes in two Exxon O&G projects offshore Canada

QatarEnergy said it signed a deal for stakes in two of ExxonMobil's offshore explorations in Canada as the Qatari state-owned firm builds up its global energy portfolio.

The Qatari company first entered offshore exploration in Canada in 2021 with a 40 per cent stake in ExxonMobil's licence for EL 1165A off the coast of Newfoundland and Labrador.

The latest farm-in agreement announced on Wednesday gives QatarEnergy a 28per cent interest in licence EL 1167, with ExxonMobil Canada holding 50 per cent and Cenovus Energy 22 per cent, as well as 40 per cent in licence EL 1162, with ExxonMobil Canada holding 60per cent.

'We are pleased to sign this agreement with our strategic partner, ExxonMobil, to further grow our offshore Atlantic Canada portfolio as part of our international growth drive,' QatarEnergy CEO Saad Al-Kaabi said in a statement.

The company has in recent years expanded internationally, gaining stakes in oil and gas projects around the world by signing deals with major energy companies.

Qatar is already one of the world's largest liquefied natural gas suppliers and aims to expand production to 126 million tonnes annually by 2027 from 77 million tonnes under its two-phase North Field expansion project.

QatarEnergy last year signed five deals with international majors for the North Field project -- ExxonMobil, TotalEnergies, ConocoPhillips, ENI and Shell.

In the Middle East, QatarEnergy has joined TotalEnergies and Eni in a consortium to explore oil and gas in two maritime blocks off Lebanon. It is in talks to acquire a stake in TotalEnergies' oil and gas projects in Iraq.

【ConocoPhillips】

ConocoPhillips to Pay $500 Million to Raise Stake in Australia's APLNG

ConocoPhillips plans to raise its stake in Australia Pacific LNG (APLNG) to 49.9% and become the upstream operator of the company, the U.S. oil and gas producer said on Monday.

The announcement follows the $10.2 billion takeover of Origin Energy by a consortium led by Canada's Brookfield Asset Management.

ConocoPhillips currently holds a 47.5% stake in APLNG, one of the largest suppliers of natural gas to Australia's East Coast.

The transaction is expected to close in early 2024.

【BP】

BP and ADNOC Offer $4B to Jointly Acquire 50% Stake in Israeli Offshore Gas Producer

BP and Abu Dhabi National Oil Co (ADNOC) on Tuesday made an offer to jointly acquire 50% of Israeli offshore natural gas producer NewMed Energy for around $4 billion.

The offer would involve acquiring NewMed's free floating shares and taking the company private and would mark BP's and ADNOC's entry into Israel's growing energy sector.

The two firms said they plan to form a joint venture 'focused on gas development in international areas of mutual interest including the East Mediterranean.'

The offer price is 12.05 shekels ($3.38) per share, reflecting a 72% premium to the pre-deal market price, for a total of 14.1 billion shekels, or $3.96 billion, NewMed said in a statement.

After the deal closes NewMed will become a private corporation equally held by the BP-ADNOC JV and Delek Group (DLEKG.TA), which holds the remaining 50%.

($1 = 3.5669 shekels)

【Alibaba】

Alibaba begins company transformation

Alibaba Group Holding Ltd will become more of an asset and capital operator, rather than a commerce operator, said Zhang Yong, chairman and CEO of the company, at a conference call with investors on Thursday morning.

Zhang said Alibaba's structuring will allow all of its business units to become more agile, enhancing decision-making capability and enabling faster responses to market changes, adding that the company began laying the foundation for this transformation years ago.

Xu Hong, chief financial officer of Alibaba, said on the call that the market is the best litmus test, and each business unit can pursue independent fundraisings and their own initial public offerings when they are ready. The only exception is the Taobao Tmall commerce group, which will remain wholly owned by Alibaba.

Xu said Alibaba will continue to evaluate the strategic importance of these units to the whole group units after they go public, and then decide whether to remain the right of control. 'Going forward, we will assess the stock repurchase program based on the company's cash flow and other investments.'

Alibaba announced on Tuesday night that it will split its business into six main units, the most significant organizational change to the company in its 24-year history. The six units will cover cloud intelligence, Taobao Tmall commerce, local services, Cainiao smart logistics, global digital commerce and digital media and entertainment.

【PICC】

China's PICC reports rise revenue, net profit in 2022

The People's Insurance Company Group of China (PICC), China's leading insurer, registered an increase in revenue and net profit in 2022.

The business revenue of the insurer was 625.8 billion yuan ($91 billion) last year, up 6.9 percent year-on-year, data from the company showed.

Its net profit expanded 12.2 percent from a year ago to about 34.3 billion yuan in 2022, with the total assets reaching 1.51 trillion yuan.

The insurer continued to optimize its business structure last year, with its investment in high-end manufacturing and green financing totaling 32.6 billion yuan and 65 billion yuan, respectively.

In 2023, the insurer will scale up support for rural revitalization, technological innovation, and people's livelihood.

【ICBC】

ICBC to boost international services

Despite facing geopolitical risks, rising unilateralism and protectionism, and strengthened requirements for compliance management this year, the Industrial and Commercial Bank of China will continue to promote international operations, a senior executive of the bank said on Friday.

As China accelerates its opening-up policy, high-quality internationalized financial services will be needed for increasing cross-border economic and trade investment, expanding global industrial and supply chains, and promoting cross-border flows of enterprises and residents, said Guan Xueqing, board secretary of ICBC, at a news conference announcing its 2022 annual results.

As China's largest state-owned commercial lender by assets, ICBC said it will continuously expand and deepen global operations and create new drivers of growth.

During the process, it will ensure that operational risk is controllable, Guan said.

'We will strengthen the linkage management of risks both domestically and overseas, enhance the compliance management capability of our overseas institutions, make proactive risk judgments, and efficiently respond to various significant uncertainties that may arise in the future,' he said.

Last year was the 30th anniversary of the internationalization of ICBC.

Over the last 30 years, the bank has gradually built a global service network covering 69 countries and regions.

【StanChar】

StanChart has big plans for biz in China

Standard Chartered will focus on the further opening-up of China's financial sector while the country, which is at the heart of its operation, will steadily expand institutionalized opening-up with regard to rules, regulations, management and standards, said Bill Winters, group chief executive of Standard Chartered PLC.

'As China's opening-up becomes increasingly more important and prevalent, we think it's a critical area for us to continue focusing on and it has worked well, especially being in the stage of institutionalized opening-up,' said Winters during his first visit to China since 2020 to attend the three-day China Development Forum, which wrapped up on Monday.

'Part of the reason that it's such a pleasure to be in Beijing is that our growth opportunities are very much aligned with China's strategic priorities,' he said.

Standard Chartered has been an active participant in cross-border payments and investments, foreign exchange and risk management, the Belt & Road Initiative, and green and sustainable finance, which has been a key area of focus for the group, he said.

'For us, it has meant a substantial double-digit growth in China in each of the past three years despite the ups and downs of the global economy. We are investing very heavily to further promote our growth and China's institutionalized opening-up, and play our role as a connector between the different markets in which we operate,' he said.

Last year, Standard Chartered announced it would invest $300 million in China-related business in the next three years.

'We've made very good progress so far. We received some new licenses, which will involve further investment,' Winters said.

In January, Standard Chartered Bank (Hong Kong) Ltd obtained regulatory approval to set up a wholly foreign-owned securities company in Beijing, which will further enhance the group's position in China's onshore capital markets.

'We invested heavily in the infrastructure that will support China's institutionalized opening-up, including cross-border payments, currency risk management and domestic payments to support cross-border business. We also continued to invest in our wealth management products and services,' Winters said.

In addition to a technology and operations center in Tianjin, the group set up another such center in Guangzhou, Guangdong province, with a target of hiring 1,000 people, to support its broader China business.

【BCG】

China’s Consumer Market Can Serve as Global R&D Hub for Foreign Firms, BCG Executive Says

As a major consumer market, China is changing the ways it collaborates with overseas brands and foreign companies should use the country as their global research and development center, according to the head of Asia-Pacific consumer products at Boston Consulting Group.

Chinese firms have made great progress in strengthening their brands and creativity in recent years, Josh Ding told Yicai Global. Foreign businesses will lose their advantage in the Asian country without having strong teams and products, he added.

“Because Chinese companies buy foreign brands, it is more common now for local managers to lead overseas teams and offer their thoughts and experience abroad,” Ding noted. BCG previously advised foreign firms on how to manage their China arms, but now it does the opposite, he said.

Foreign enterprises may find it hard to make money in China, as their local rivals are becoming more sensitive to potential global profit makers, Ding pointed out. They should use their strengths, such as global supply chain and designs, to better appeal to Chinese consumers, he said.

China can become the global R&D center for overseas companies, allowing them to access and use the market's data to serve the world.

Chinese firms are better at customer relationship management, and the rest of the world learns from them how to manage crowd data, consumer data, and how to reach more buyers, Ding stressed. They also lead in digitalization, having a digital media and sales approach, and an innovative method of integrating front, middle, and back offices, he noted.

'We found in our research that Chinese customers are the smartest learners,' Ding said when talking about the impact of ChatGPT on the consumer market. 'E-commerce should focus on content to fulfill shoppers' needs, and ChatGPT could be revolutionary, allowing clients to ask more questions, bringing fundamental changes to the decision-making chain.'

【Luckin Coffee】

China’s Luckin Coffee Opens First Singapore Outlets in Overseas Foray

Luckin Coffee opened two outlets in Singapore today and plans to have nearly 10 in trial operation in the Southeast Asian island state by the end of next month following the soft opening of the initial pair, Beijing News reported

“Singapore is Luckin’s first step overseas,” the report cited Guo Jinyi, the Chinese coffee chain’s chairman and chief executive, as saying

The two cafes are situated at Singapore’s fashion hub of Ngee Ann City on Orchard Road and the oceanfront shopping center Marina Square. During the trial phase, customers can use the Luckin app to buy their first cup for just 99 Singaporean cents (74 US cents).

Like in the Chinese market, Luckin Coffee will open pick-up stores and ‘relax’ stores -- casual, sit-down coffee shops -- in Singapore based on different scenarios. The two that opened today are pick-up points.

“Though we’re still in the early phase of exploration and tests, we hope we can be committed to the Singapore market for the long term,” Guo said.