China Market Watch: Business Jet Sector and IIT System Reform

China Television Manufacture Demand Slump

A majority of China’s television manufacturers have released last year’s performance reports, which show a drop in sales. Internet electronics companies such as LeEco and Xiaomi have contributed to the decline in market demand for televisions produced by specialist manufacturers. Electronics manufacturer Konka’s 2015 financial report shows a 14.33 percent fall in its television sector, while TCL Corp, another home appliance manufacturer, did not achieve its 18 percent revenue growth goal last year. Analysts say that the industry might suffer consolidation sooner than expected.

China’s television equipment manufacturing industry generated over US$100 billion in 2015, up 9.3 percent on the previous year, compared to an annual 13.7 percent growth rate over the last five years.  The industry relies heavily on exports, and due to the changing export product structure and global recession, the industry has suffered volatile export growth.

China’s Business Jet Sector to See Further Growth

Although China’s business jet industry has suffered a recent slowdown, the China Business Aviation Special Report 2016 claims that the industry’s long term prospects will not be hindered. According to the report, there are around 1,420 citizens in China who have the potential to buy 1,750 business jets, collectively worth more than US$52 billion; with around 9,000 “super rich” citizens who have the potential to charter a plane, which would have an estimated 205,000 hours of flying time a year. These figures exhibit the huge potential in the business jet industry, with an estimated 1,850 customers expected to buy 2,320 jets totaling to a value of US$71 billion in the next five years. There has been a reported increase of business in the sector during the first quarter of 2016, with factors such as reputation and face being the main driving forces behind customers wanting to own a business jet.

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Rise in Farm Produce Sales on China’s e-Commerce Platforms

According to a report released by AliResearch, farm produce sales on e-commerce platforms in the Alibaba Group reached nearly RMB 70 billion in 2015, up 44 percent compared to the previous year. It added that over 900,000 farm produce sellers have registered on the platforms, with more than 100,000 of them originating from the southern province of Guangdong, where e-commerce consumption reached RMB 8 billion last year. The second and third highest concentrations were in Zhejiang and Jiangsu provinces, respectively. Online retailers have been working hard in the last few years to boost infrastructure in rural areas and to teach locals how to utilize e-commerce services: there are now more than 8,000 stations where rural citizens can bring their local produce to sell online, and also to shop. In addition to farm produce, in 2015, RMB 5 billion worth of farming materials were bought from Alibaba’s e-commerce platforms, up 83.2 percent compared to 2014.

China’s 13th Five-Year Plan to Reform Individual Income Tax System

A proposed reform to individual income tax (IIT) has been submitted to the State Council for review, which includes proposals to allow deductions of costs under a comprehensive categorized tax scheme for certain income brackets. This new system would operate parallel to revisions of the Tax Administration Law, a measure enforced to improve the administration of taxation on high income individuals and aim to balance wealth distribution. These proposals were included in a national economic and social development plan released by the National People’s Congress meeting on the 13th Five Year Plan this month. The plan has a focus on maintaining economic growth and social stability while continuing reform efforts to tax systems, a topic high on the priority list of the Five Year Plan.

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