One at a time
Feb 24, 2017 (WiC 355)

Call for an Uber in London and you’ll likely get a driver turning up in a Prius – a car favoured for its fuel efficiency. Toyota’s hybrid vehicle has been a worldwide success story except in one place: China.

Sina Finance pointed out in a recent article that only one Prius was sold in China in December. Yes, one. Sina says that consumers are “lukewarm” on the vehicle, noting that the single car sold was the first to leave a Toyota forecourt since May. Citing Bloomberg Intelligence data, it also said Toyota sold just 76 Prius cars in the whole of last year, down from 700 the year before.

Auto analyst Wen Xuhui explains that the Prius does not conform to a design that Chinese consumers are comfortable with. Their familiarity is more with other Toyota models like the Camry and the Corolla – both of which they associate with high quality – and Wen adds that many Chinese consumers are smitten with larger SUVs too.

Making life tougher for the Prius is that Toyota now sells hybrid versions of the Camry and the Corolla in the Chinese market at a similar price to the Prius.

Indeed, Toyota sold 47,000 of the hybrid versions last year out of almost 72,076 hybrids it sold nationwide in 2016 (a record amount).

To reiterate: that’s about 72,000 Toyota hybrids, plus 76 of the Prius.

Another case, perhaps, of what works elsewhere, doesn’t always work in China.

Trump toes the line
Feb 17, 2017 (WiC 354)

“At your request, I will do that,” promised President Trump – meekly, and out of character – in a call last Friday with his Chinese counterpart.

According to the Wall Street Journal, Xi Jinping had just asked him to “uphold” the One China Policy.

The news caused some relief, as Xi had made plain that sticking to the framework was an inviolable precondition for Sino-US relations.

That said, Trump was not giving much away by agreeing to Xi’s request. After all, he was only confirming what every US administration has adhered to since the 1970s – Washington’s agreement to withhold diplomatic recognition of Taiwan. The shock was that Trump had previously questioned this bedrock assumption (see WiC349).

While Trump was drawing praise in Beijing for stepping back from his Taipei threat, not all the authorities were delighted by The Donald. As TVB News points out, a judge with China’s Supreme People’s Court took the unusual step of going on social media to criticise the American leader. This time it was not about Taiwan, but Trump’s Twitter-fuelled rant against a Seattle judge who had smacked down Trump’s executive order banning travel from seven Muslim nations.

Judge He is an expert on the US legal system, says TVB, having translated many books about the Supreme Court into Chinese. He said the American president was entirely wrong to publicly question the ruling as it violated the principle separating the powers of the executive and judicial branches in the American system. And in his online post, the Chinese judge connected the Trump incident with a case that occurred in Guangxi last month where a judge was murdered after a divorce case got messy.

“The president who scolds judges and the thugs who kill judges are both public enemies of the rule of law,” wrote He.

Such is the topsy-turvy world we live in today: in this case of Trump versus He, the leader of the free world has just been chastised for undercutting the rule of law by a judicial representative of a one-party state.

Animal spirits
Jan 27, 2017 (WiC 353)

China’s baijiu sector seems to be more than recovering from President Xi Jinping’s clampdown on graft and extravagance. We reported in May last year that Kweichow Moutai’s share price had hit an all-time high of Rmb260 per share. As of this week it is trading at Rmb345 with a market value of Rmb434 billion ($63 billion).

The strong performance could be partly explained by the Shanghai-Hong Kong Stock Connect. The trading platform allows foreign investors to buy into Shanghai-listed large caps such as Moutai. Since the stock link commenced in late 2014, Moutai’s shares have more than doubled. Shanghai’s key index climbed less than 20% during the same period. Indeed, China Daily noted last week that consumer staples was the only sector on the main stock exchanges with positive returns last year. And according to the Bernstein Global Spirits Guide, high-end baijiu is so profitable that the top four brands are estimated to account for 27% of pre-tax earnings for the global spirits industry.

Sales were previously seen as a proxy for corruption (see WiC172). But since Xi took office baijiu makers have been forced to restructure their businesses. The turnaround, China Daily says, is also buoyed by rising middle class incomes. It reports that surging demand for the spirit to toast in this year’s Lunar New Year has seen classic Moutai increase almost 40% in price to Rmb2,000 per bottle this week.