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China Market Watch: Internet of Things and 7 New FTZs

Young Chines man looking down at his tablet and reading about latest China's industry news
(Photo credit): Dai

Rundown of the latest business and industry news from China

Chinese telecom providers to scrap domestic roaming fees

This July, China Telecom, China’s third biggest telecom provider, announced that it would cancel all domestic roaming fees. The country’s largest provider, China Mobile, as well as China Unicom followed suit shortly after. This move is expected to increase competition in the market, and drive telecom fees down, ending the monopoly that the three big telecom providers have consistently maintained in recent years. Currently, consumers are charged RMB 0.6-0.8 per minute for roaming services within the PRC outside of their local service area, double the standard charges, accounting for 10 percent of the company’s net profit. The ability to provide free roaming services stems from technological improvements, but also pressure from the industry regulator, the Ministry of Industry and Information Technology (MIIT).

Chinese manufacturers increased spending on Internet of Things

Manufacturers’ expenditure on the Internet of Things is expected to grow by an annual average rate of 14.7 percent, reaching US$ 127.5 billion by 2020. Included in the 13th Five Year Development Plan, the “Internet of Things,” which allows electronic objects and devices to interact with each other via means of the internet, is a strategic emerging industry in China. Many Chinese manufacturers are already starting to utilize the Internet of Things in order to improve production efficiency and also to evolve their business models, and will continue to grow.

China establishes a further 7 pilot free trade zones

The Central Party Committee (CPC) and the State Council have approved plans to establish seven more pilot free trade zones in Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan and Shaanxi, bringing the total number in China to 11. This expansion comes three years after the first free trade zone in Shanghai was launched. They will be able to utilize their own unique geographical and industrial advantages to further progress with wider reforms. Work will be done to launch the new free trade zones after relevant procedures have been completed, but a timeframe has not been provided.

China soon to top U.S. for Australian wine imports

China’s food and wine culture is evolving, mainly due to the rise of the middle class, and demand for foreign wine has thus increased over recent years. In particular, Australian wine has seen a steep increase in popularity, with a 50 percent increase from 2015 to 2016 to AU$ 419 million (RMB 2.1 billion) Alibaba’s is to launch a wine store, featuring Australian wines, and is expected to further boost the popularity of Australian wines because of the reach Tmall has in China.

This article first appeared on China Briefing. Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates.

Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN.

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