Singapore to drop all COVID tests for fully vaccinated travelers

Singapore will drop all Covid-19 tests for fully vaccinated travellers while further easing domestic restrictions in an "important milestone" as it forges ahead with its plan to live with the virus.

Currently, those travelling to the city state are required to take a pre-departure test two days before arrival but this rule will be dropped from April 26.

"With this move, it will mean that fully vaccinated and well travellers will not require any tests to enter Singapore," the health ministry said in a statement on Friday.

Joy, free beer, parties: Singapore makes post-Covid shift, but many remain wary

Tourists coming into Singapore will also be allowed to pay for Moderna Covid-19 jabs.

Domestically, more restrictions will also be relaxed from next Tuesday - bringing the country almost back to the state of affairs before the pandemic.

Current limits capping social groups to 10 will be removed, all workers can return to the workplace, and safe distancing will no longer be required. The number of places people are required to use the "TraceTogether" contact-tracing application will also be slashed.

"Today is really a happy day that marks a very important milestone," health minister Ong Ye Kung said. "We know the danger is of course, not over, but we can all breathe easier now."

The city state, with one of the world's highest vaccination rates, has progressively relaxed its pandemic restrictions. The health ministry reported that the seven-day moving average of daily infections had fallen from 18,300 at its peak to under 3,100 in the past week. Hospitalisation numbers have also dipped to about 266.

Lawrence Wong, the country's finance minister and a co-chair of the virus task force, stressed that while the outdoor mask mandate had been lifted, it was still necessary to retain the measure for indoor settings.

"Mask wearing is effective and it will be one of the last few measures that we will do away with," he said.

Hong Kong to allow non-residents to fly into city from May 1

Just last month, Singapore took its most decisive step yet in reopening its borders by allowing all fully vaccinated travellers - from any country or region - to enter quarantine-free.

It also removed the requirement for on-arrival Covid-19 tests.

Authorities expect the move to boost air passenger volumes to at least 50 per cent of pre-pandemic levels. The civil aviation authority reported that numbers were at 31 per cent last week, with particularly strong traffic growth to and from Australia, Malaysia, Indonesia and Thailand.

Singapore's move to remove pre-departure testing will make travelling almost like it was during the pre-pandemic era. Other countries in Southeast Asia that rely heavily on tourism have also started revising their testing guidelines.

Thailand on Friday announced that it would replace its mandatory on-arrival PCR test, to a voluntary self-administered antigen swab.

Singapore aims to be Asia's busiest airport as Hong Kong delays easing travel curbs

Wong, who last week was given the nod by the ruling People's Action Party as the putative successor to Prime Minister Lee Hsien Loong, said that the easing of measures was a "well deserved breather after two very difficult years" of battling the pandemic.

"But let's always remember we are getting closer to the finish line, but the race is not over," he said.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

Oppo, Xiaomi rise in smartphone rankings, filling the Huawei void left by US sanctions

Chinese smartphone makers Oppo and Vivo have risen in the rankings at home, with Xiaomi seeing big gains overseas, benefiting from the struggles of Huawei Technologies Co amid harsh US sanctions.

Oppo became China’s No 1 smartphone brand in January for the first time, making up 21 per cent of the market, according to the latest data released by Counterpoint Research on Friday. The company’s sales grew 33 per cent over the previous month, aided by the launch of the Reno 5 series of smartphones in the affordable premium segment, along with Huawei’s decline. Vivo came in second place with 20 per cent market share. Vivo and Oppo, along with OnePlus and Realme, are owned by BBK Electronics.

Huawei, which once held a dominant lead in China’s smartphone market, fell to third place, tied with Apple and Xiaomi at 16 per cent market share each.

“Oppo’s growth was in part also driven by Huawei’s decline, a trend that also benefited Xiaomi and Vivo,” Counterpoint analyst Varun Mishra said in the firm’s report. “Xiaomi is benefiting the most from the decline in Huawei’s online share, while Oppo and Vivo have been capturing the offline segment.”

Even after the initial US sanctions against Huawei in 2019, it was able to fend off rivals. The Shenzhen-based company’s hardware was widely praised and it benefited from nationalist pride at home. Being cut off from Google apps and services bruised international sales, but that was not a problem in China, where Google is blocked and Google Play Services are not preloaded on Android phones. However, tightening US sanctions last year banned foreign chip makers that use US technology from selling to Huawei without approval, cutting the company off from foundries needed to make its high-end Kirin processors, leading the company to sell its budget smartphone brand Honor to a consortium of partners in November.

“The good thing for Huawei in China is that the lack of Google services is not an issue there, but the company still faces a diminishing stockpile of smartphone components,” said IDC vice-president of client devices Bryan Ma. “Even if it can secure new agreements with suppliers this year, those will likely be for older technologies like 4G rather than leading-edge parts that it could’ve used to show that it is ahead of the curve.”

Counterpoint’s Mishra said Huawei’s decline will continue in 2021, with other smartphone makers continuing to fill the gap.

Competitors are already capitalising on Huawei’s misfortunes. Oppo sped up its mobile chip making capabilities with a hiring spree last May. The smartphone maker boosted production by over 50 per cent, business news publication Caxin reported in September.

Huawei also faces continuing decline overseas. Oppo and Vivo surpassed Huawei in January to capture the fourth and fifth spots in the global market, respectively, according to Counterpoint.

Counterpoint analyst Yang Wang said Xiaomi and Oppo are also set to benefit the most from Huawei’s fall globally, with their sales projected to increase by around 30 per cent each in 2021, followed by Vivo.

“These three brands have been aggressive with market entry initiatives around the world throughout 2020, most notably in Asia Pacific, Europe, and the Middle East,” Wang said. “It is also worth noting that these three brands are traditionally strong in the mid-tier segments, which also happened to be where Huawei was most active in overseas markets.”

Fourth quarter numbers from IDC show Huawei’s global market share tumbled 42.4 per cent compared with the same period in the previous year, which Ma said included shipments of Honor phones. Honor accounted for up to a third of Huawei’s volumes at some points last year, he added.

“Western Europe is a good example of Huawei’s woes,” Ma said.

Huawei was the second-largest smartphone brand in Western Europe in the first quarter of 2019 with 28.3 per cent of the market, according to Ma. By the last quarter of 2020, it had fallen to No 4 with 3.9 per cent.

The biggest winner in the region was Xiaomi, which saw sales in Europe grow 90 per cent last year, according to Counterpoint.

In Latin America, Xiaomi became the third-largest brand for the first time in the fourth quarter of 2020, behind Samsung and Motorola, according to a separate report by Counterpoint last week. It came in fourth in the region for the whole year.

Huawei was still the third-biggest smartphone brand in Latin America for all of 2020, but it fell out of the top five in the fourth quarter.

“Samsung, Motorola and Xiaomi all took advantage of Huawei’s weakening position,” said Counterpoint analyst Tina Lu.

Huawei’s fall last year was precipitous. Just last summer, the company briefly became the world’s top smartphone seller, wresting the crown from South Korean giant Samsung Electronics. But new sanctions from the US in August quickly took a toll, effectively cutting off Huawei from most global chip suppliers.

Huawei is forecast to be able to produce only 70 to 80 million handsets this year, according to a report by Nikkei, a significant decline from the 189 million units that IDC shows the company shipped last year. Research company TrendForce predicts that the smartphone maker will fall to seventh place globally in 2021.

Plunging supplies of Huawei phones are also forcing franchise retailers to close stores in China or switch to selling other domestic brands.

Despite offloading Honor, the company has been unwavering in its support for its own branded smartphones.

Huawei founder and CEO Ren Zhengfei said in February that the company will not give up on its “terminal devices” business, which analysts say is an integral part of the company’s overall business strategy.

-South China Morning Post

Huawei plummets as Apple becomes world’s No 1 smartphone seller on China boost

Huawei Technologies Co tumbled down the rankings of global smartphone sellers in the last quarter as it struggled under US sanctions, while Apple shot to the top on the back of strong demand for its latest iPhones.

Smartphone manufacturers around the world shipped roughly 4 per cent more units year on year in the fourth quarter of 2020, reaching almost 386 million units, according to research firm IDC. Huawei, which came second in the previous quarter, sank to the fifth place with around 32 million handsets shipped.

Analysts at Canalys placed Huawei’s ranking even lower at the sixth place, marking the first time in six years that the Chinese giant has fallen outside the top five.

More than half of those shipments went to China, where Huawei retained the top spot but saw its market share drop 22 per cent from 41 per cent in the third quarter, Canalys figures showed. Those shipments included handsets made by Honor, the sub-brand that Huawei sold in November.

“It is possibly Huawei’s toughest time as it is restrained to even serve its home market,” said Canalys vice-president of mobility Nicole Peng in a report.

“Huawei’s sell-in shipments shrunk by nearly half sequentially despite huge demand for Huawei devices, as the vendor is unable to fulfil this demand in the foreseeable future. Other vendors are eyeing this opportunity.”

The dramatic decline underscores the challenge that Huawei is facing under increasing US pressure. Just last summer, it briefly became the world’s top smartphone seller, wresting the crown from South Korean giant Samsung. But the Shenzhen-based telecoms equipment maker has since struggled under fresh sanctions from Washington that cut off its access to vital chips made with US software or technology.

Huawei was expected to fall further this year to the seventh place in global smartphone shipments, according to a forecast by research company TrendForce in January.

The outlook could not look more different for Apple, which reached a historic milestone last quarter.

The Californian titan topped global rankings with nearly 82 million handsets shipped worldwide, according to Canalys. IDC put the number at over 90 million – the most units that any vendor has shipped in a quarter since the firm started tracking smartphone shipments.

In China, Apple also recorded remarkable performance. While it still lagged market leader Huawei, Apple grew its share from 15 per cent a year ago to 18 per cent in the fourth quarter, Canalys estimated.

“Apple had a great year in China, where full-year shipments finally returned to the 2018 level, driven by both iPhone 11 and iPhone 12 models,” said Canalys analyst Amber Liu.

On Wednesday, Apple reported its highest ever quarterly revenue in Greater China, which includes Hong Kong and Taiwan. Strong demand for Apple’s first 5G phones – the iPhone 12 series that launched in October, a month later than usual – contributed to a 57 per cent jump in China sales.

Apple CEO Tim Cook attributed the record sales to Chinese consumers’ affinity for 5G. The country has been pushing ahead with the expansion of 5G networks and most flagship smartphones launched by major Chinese brands last year included 5G.

“Keep in mind that 5G in China is … well established. And the overwhelming majority of phones being sold are 5G phones. And so I think there was some level of anticipation for us delivering an iPhone with 5G,” he said on the earnings call.

Experts said Apple also benefited from the challenges facing Huawei, its primary rival in premium phones. Even though Samsung competes with Apple in the high-end segment elsewhere, it has a negligible market share in mainland China.

Despite its edge, Apple did not skimp on marketing efforts for the iPhone 12, said Canalys’ Liu.

“Aggressive online promotions across e-commerce players, coupled with widely available trade-in plans and interest-free instalments with major banks, drove Apple to its stellar performance,” she said.

-South China Morning Post-

Tencent to invest $70B in new digital infra, backing Beijing’s stimulus

Chinese internet giant Tencent Holdings plans to invest 500 billion yuan ($70 billion) over the next five years in new digital infrastructure, a major hi-tech initiative that would bolster Beijing's efforts to drive economic recovery in the post-coronavirus era.

That massive investment will focus on fields that include cloud computing, artificial intelligence (AI), blockchain technology and Internet of Things, as well as the infrastructure to support them like advanced servers, supercomputers, data centers and 5G mobile networks, according to an announcement on Tencent's official WeChat account on Tuesday.

Shenzhen-based Tencent's new digital infrastructure program followed its move to raise fresh capital for general corporate purposes. The company plans to issue medium-term notes, with a maximum limit of $20 billion, to certain professional investors, according to its filing with the Hong Kong stock exchange on Monday. It said $12 billion of these notes were already outstanding.

The company's infrastructure program includes development across the country of a new network of large-scale data centers, with a million servers deployed at each site, according to the company's WeChat post. That would follow the company's construction of its largest data center complex on a 51-hectare site, which includes more than 30,000 square metres of tunneled areas inside a 100-metre-high hill, in southwest Guizhou province.

A design sketch for the Guian Seven Stars Data Centre complex, the largest facility of its kind developed by Tencent Holdings, located in southwest China's mountainous Guizhou province. Photo: Handout

Citing an interview of senior executive vice-president Tong Taosang with state-owned newspaper Guangming Daily, the Tencent post said the company will also escalate collaborations with "internal scientific research experts and laboratory resources at top universities" to cultivate talent, tackle scientific issues and take part in the formulation of industry standards.

A Tencent representative said the company does not have any further details to share beyond its WeChat post.

The latest initiative by Tencent, which runs the world's biggest video games business by revenue and China's largest social media platform, represents a strong commitment from the nation's hi-tech sector to support economic recovery, following the disruptions caused by the COVID-19 outbreak across the country and around the world.

"This new infrastructure is set to play a more important role amid the global economic slowdown, the disrupted supply chains as well as weak domestic and foreign demand," said Pang Ming, head of macro and strategic research at China Renaissance Securities. He indicated that the scale of new digital infrastructure investments could grow larger, as more companies pursue a similar strategy as Tencent and invest in data centers, AI, advanced communications and other hi-tech programs.

Such moves would follow the direction set by Premier Li Keqiang last Friday, when he announced details of the Chinese government's fiscal stimulus package of nearly 3.6 trillion yuan at the National People's Congress. Beijing will also issue 1 trillion yuan of special treasury bonds for the first time since 2007 as part of that program.

In March, Tencent's Tong highlighted the company's intent to "explore the value of digital infrastructure" across different industries.

Tencent already ranks among nine major tech companies in the world that are driving the future of AI and development of critical digital infrastructure, according to a recent report by American think tank Future Today Institute. The other firms are Google, Microsoft Corp, Amazon.com, Facebook, IBM Corp, Apple, Baidu and Alibaba Group Holding, the parent company of the South China Morning Post.


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Stock markets and COVID-19: 5 questions every investor should ask

Simon Powell watches fever hotspots in America. Stephen Innes pores over real-time measurements of vehicle traffic -- or the lack of it-- in cities around the globe. And, Mark Galasiewski studies stock performance charts from the time of Sars and the 1968 flu pandemic.

The three financial analysts are tapping diverse and sometimes quite esoteric data to try to predict how the spreading coronavirus pandemic will affect the price of assets -- everything from stocks on Hong Kong's Hang Seng Index to gold and orange juice futures.

Even obesity rates in the US may be worth pondering because they might explain why young people seem to account for a higher portion of infections in America than in China. That, in turn, has implications not only for short-term stock prices but also for the future of the US workforce.

And those orange juice futures? They spiked, signaling a surge in demand for Vitamin C just when supplies were getting harder to transport.

"Economics in the time of Covid-19 is a different beast, with the best data being real time that provides insight into the extent of the slowdown," said Thailand-based Innes, chief global asset strategist at AxiCorp, who finds himself up before dawn to check data from other parts of the world.

"I'm using more real-time data now than I ever have before. I would never ever care about initial (US unemployment) claims, but it is huge now. ... I would never wake up at 2 a.m. (to check it) on such a regular basis," he said.

"One of the more interesting ones is traffic data from TomTom. It shows the speed with which Houston went into a virtual shutdown, which both illustrates the ghost town outlook due to the collapse of the shale industry and mobility restrictions," he explained.

Coronavirus turns stock markets into the wildest ride on the planet " and that's not likely to change soon

Even from a strictly financial perspective, this moment is like being trapped in the early chapters of a Stephen King horror novel, he says. And the saga of this pandemic is unfolding in terrifying twists and turns that are buffeting the portfolios handled by professionals and family investors alike.

Here are five questions investors should be asking.

1. When will markets hit bottom?

Volatility is generally expected to continue in Hong Kong and elsewhere for at least the next few weeks.

Powell, the global head of thematic research at Jefferies, thinks global markets have further to fall.

"What the market is trying to figure out is, 'Are we in for a global recession? Could it actually be a thing that starts with a 'D' -- a depression? And how much stimulus might be needed to dampen the impact on people's lives?

"If the economy grinds to a halt globally, then maybe there could be another leg down in markets ... This shock could be bigger than anything we've seen since WWII in terms of shock to global trade and global demand," Powell said.

Some analysts believe a bottom is likely already behind us " at least in Hong Kong and China, and possibly in the US.

"From now on, the (Hong Kong) market will stabilize a bit, because the wave of panic selling and liquidation is over," said Alex Wong, director of asset management at Ample Capital.

Twice in recent weeks -- on March 19 and March 23 -- the Hang Seng Index closed below 22,000. It won't go lower, Wong predicts, saying it will now trade between 22,000 and 26,000, as traders finish shifting to more promising sectors and gain confidence in making larger bets.

2. Is anywhere a fairly safe place to invest?

Predictably, analysts point in different directions.

In Hong Kong, avoid retail, local property, as well as airlines, restaurants, casinos and anything else connected with tourism, argues Wong of Ample Capital.

Last week saw investors shifting out of those sectors and into social media giant Tencent and other new-economy stocks likely to thrive on lockdowns and work-from-home directives.

Could coronavirus lockdown have big upside for China's new economy stocks as users and smartphones become BFFs?

Yet casino operator Galaxy Entertainment is one of the pummeled stocks liked by Morningstar's Lorraine Tan. She also points to Anta Sports, which like Galaxy is listed in Hong Kong, and US-listed Ctrip.com, a Chinese online travel agency.

"It has been difficult to keep on top of the rapidly shifting environment, but collectively we find more opportunities to buy than sell shares at the current level," said Tan, Morningstar's director of equity research, Asia.

"We think there are a number of names with strong competitive advantage that investors should consider adding to their portfolios as well as heavily sold-down stocks that could see a good post-virus bounce," she added.

China's health care, infrastructure stocks lure global bargain hunters even as coronavirus pandemic roiled equity markets in March

In the US, Wong likes e-commerce giant Amazon, Microsoft, and Netflix.

Internet-based companies are seeing a surge in traffic, Goldman Sachs analysts note.

Those include Tencent Holdings, China Literature, office software maker Kingsoft, all listed in Hong Kong, and Chinese game-streaming platform Huya, and Baozun, which helps foreign brands sell to online Chinese customers, both of which are listed in the US.

3. Is a virus-triggered downturn different from an ordinary financial crisis?

In many ways, yes.

US Federal Reserve chairman Jerome Powell stressed that the US economy, the world's largest, was fundamentally strong before the pandemic and predicted that it will rebound quickly once the virus's spread is controlled. That makes today's situation different from, say, the 2008-2009 global financial crisis, which was caused by underlying financial problems.

But the modern world has never been assaulted by a pandemic of this scale, and its threat to global GDP is undeniably real, as is the danger -- pointed out by US infectious disease expert Anthony Fauci -- that this coronavirus come back until there is a vaccine.

"We're dealing with a pandemic economic crisis that, at this stage, is medically unstoppable, which is flat-out scary, which we only thought existed in Stephen King's horror stories," AxiCorp's Innes said.

"We tend to overlook that during the (2008) Lehman(Brothers' bankruptcy) crash, outside the financial sector, life went on. In essence, restaurants took bookings; taxis took rides; shops were still bustling. This time around, the entire world is on the precipice of shutting down. Unemployment will soar," Innes said.

Indeed, US unemployment already has, skyrocketing to an unprecedented 3.3 million claims last week alone -- up from about 200,000 just 3 weeks ago.

Yet Galasiewski, chief equity analyst for Asia and emerging markets at Elliott Wave International, is positively bullish. His study of infectious diseases has lead him to see them as long-term buy signals in the local markets. Sars in 2002, for example, led to a tremendous bull run in Hong Kong. He is now especially bullish on stocks listed in China, where the coronavirus outbreak began.

"A big advance has begun in the main Asia and emerging market indexes. This is not just a rebound. It's the early stages of a secular bull market," he said, referring to a long period of rising stock prices due to policy supports.

4. What data might offer clues for smart asset management?

Analysts are closely watching Italy's new infection totals to see whether its containment efforts are beginning to work. The numbers coming out of Italy will help analysts project the length and depth of the crisis in the world's largest economy, where the pandemic is much newer.

The US Federal Reserve and government have thrown in the "kitchen sink" to try to keep businesses and workers afloat. So analysts are looking for economic indicators that show that the US effort is having the desired effects of increased lending and stable stock markets, for example.

And, of course, analysts are watching for news of promising therapies and a vaccine, generally not expected until next year.

Unusual windows into the virus include TomTom.com, which shows real time traffic around the globe, Kinsa's tracking of fevers in America through smart thermometers (healthweatherus.com), and the Centre for Disease Control and Prevention's website, which is tracking infections and deaths, as well as outbreaks of influenza-like illnesses on its FLUVIEW chart.

"I never thought I would be looking at the collective body temperature of people in the US," said Jefferies analyst Powell.

5. What are the 'what ifs' ahead?

What if the pandemic dies away but comes back with equal fury?

What if people who recover remain infectious?

What if the disease causes permanent lung damage to young people? "Could we end up with a generation of people who are disabled and sick as a result of what this virus does?" Jefferies' Powell asks.

What if the pandemic explodes in India, a country with 1.3 billion people, an inadequate health care system and little sanitation for many countless slum dwellers?

India, now under a nationwide lockdown for 21 days, is the world's largest supplier of generic drugs. It has already halted the export of ventilators and an antimalarial drug used with some success against the new coronavirus.

What if a vaccine simply can't be found?

Despite everyone's endless "what ifs" about the future health of the world's people and finances, Powell, an experience yachtsman's who has weathered frightening tempests before remains hopeful.

"I am hugely optimistic that humankind can turn a veritable firehose of intellectual property and money and research and development at this virus to understand it and find a therapy and find a vaccine and get it out. Humankind has defeated many pandemic viruses ...

"But investors do need to be cautious."


Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

Huawei boss raises research budget to $20 billion, defying pandemic

Huawei Technologies is stepping up investments in research and development this year, despite challenges from the coronavirus pandemic and US government sanctions.

The world's largest telecommunications equipment supplier and China's biggest smartphone maker expects to raise that investment to $20 billion, up from $15 billion last year, according to Ren Zhengfei, the company's founder and chief executive.

"Over 200,000 scientists, experts and engineers worked overtime during the Lunar New Year holiday because we're racing to develop new (technologies)," Ren, 75, said in an interview with the SCMP this week. Without elaborating, he referred to the work in progress as "something which will keep us ahead of the global competition".

Shenzhen-based Huawei was already on the front foot before the coronavirus outbreak gripped China and spread around the world because of pressure from Washington on its 5G network equipment business.

"The US will continue to increase sanctions on us, and we will have to complete (the new technologies) before that happens," Ren said.

The Trump administration added Huawei to the US trade blacklist in May last year, restricting the company's ability to buy hardware, software and services from American hi-tech suppliers.

While Washington has since granted 5 license extensions to Huawei that allowed it to temporarily access American suppliers, US President Donald Trump earlier this month signed legislation to bar the country's telecoms carriers from using government subsidies to buy network gear from the Chinese company. The US has also continued to urge its allies in Europe to ditch Huawei equipment in their roll-out of 5G mobile networks.

"It's not a problem for us to survive as a company, but it's questionable whether we can keep our leading position," Ren said. "We won't be able to lead the world in the next three to five years if we cannot develop our own technology."

Still, Ren said neither the US sanctions nor the pandemic has had a major impact on Huawei's operations: "We believe the impact is minimal, and we can pull through it."

Huawei has resumed more than 90 percent of its production and development operations, he said. The company has also kept its supply chain mostly intact by helping provide its partners with protective gear for workers to keep production going.

China turned to hi-tech tools in a big way to provide the nation with a sense of normalcy in the face of the coronavirus outbreak. That approach is predicted to become the norm across the country, as businesses reopen after being shut down during the height of the crisis.

"The outbreak has exposed the vulnerability of some offline businesses," said Frank Yang, a senior analyst at research firm Analysys. "There will definitely be a need for new online, digital development."

While online working and learning are nothing new in China, wider acceptance of these tools could expedite the digitization of businesses and whole industries " a major part of Beijing's hi-tech ambition to establish a powerful digital infrastructure for the world's second largest economy.

A glimpse of that next stage in China's development emerged after the country's technology sector literally served as a lifesaver, as it rushed to the fore on many fronts: robots in hospitals, heath code apps, online education and remote working.

Some of the most popular business apps in February, for example, included Alibaba's Dingtalk, Tencent's WeChat Work and Tencent Meetings, Huawei's Welink, ByteDance's Lark and Pinduoduo's Knock. Alibaba is the SCMP's parent company.

"Protracted disruption amid the pandemic will force most firms to make up their minds and go digital," said Zhang Xinhong, a research director at government think tank the State Information Centre of China, in a recent webinar. He said remote working, e-commerce, online education and other digital services "will now become new options for more companies".

Chinese smartphone giants pause manufacturing in India

China's major Android smartphone vendors, including Xiaomi, Oppo and Vivo, have suspended manufacturing operations in India, following a 21-day nationwide lockdown ordered by Prime Minister Narendra Modi on Tuesday to stop the coronavirus from spreading.

That directive is expected to result in a decline this year in India's smartphone market, the world's second largest after China, as manufacturers comply with the order and domestic consumption slows down during that period, according to analysts.

Apple's main iPhone assemblers, Foxconn and Wistron, as well as South Korea's Samsung and LG have also temporarily halted work at their plants in India in line with the directive.

A man uses a phone with Chinese Oppo brand at a shopping mall in Chennai, India, Oct. 8, 2019. Photo: Xinhua

"In the worst-case scenario, the Indian smartphone market could see a 4.2 per cent decline in 2020," said Nicole Peng, vice-president of mobility advisory services at Canalys. Smartphone shipments in India grew 8 per cent to 148 million units last year, Canalys data showed.

The projected slowdown may prove to be a bigger a concern for China's major Android smartphone companies, which sell the most popular models in India.

Canalys' Peng, however, indicated that the pause in manufacturing may have been expected by these companies based on their experience in China, where many factories were shut down at the height of the outbreak.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

Tycoon behind Teenage Mutant Ninja Turtles toys dies, aged 87

Hong Kong tycoon Chan Tai-ho " the founder of Playmates toymaker which gave the world the Teenage Mutant Ninja Turtle action figures " died on Thursday aged 87.

His wife called police after a domestic helper found Chan unconscious in bed at his luxury flat at Altadena House, Barker Road on The Peak shortly before 12.30pm.

He was taken to Ruttonjee Hospital in Wan Chai, where he was declared dead at 1.20pm, police said.

A force spokesman said initial investigation found nothing suspicious about the death and an autopsy would be carried out to ascertain its cause. It was understood Chan had an illness.

Chan, born in 1932, established Playmates in the city in 1966, running a factory in Tuen Mun.

The company set up a network of distributors in the United States in 1978 to sell a range of dolls and preschool toys marketed under the Playmates brand name.

In 1984, Playmates Holdings became the first toy company to list on the Hong Kong stock market.

The company's greatest successes came in the 1980s with its Teenage Mutant Ninja Turtles figures, as well as Baby Crawl-Away and Cricket dolls. It also produced figurines from The Simpsons and Star Trek television shows.

The action figures from the comic book and television show, which chartered the adventures of four anthropomorphic turtles named after Italian Renaissance artists, was launched in 1988 and went on to become one of the most successful brands in the history of the toy industry, according to the company's website.

Playmates was also involved in property and investment from the 1970s, when it developed and managed an industrial premises for its own use, then covering more than 300,000 sq ft in floor space, before moving deeper into the sector and other business activities.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

Asian banks brace for bad loans spike as virus batters region's economies

Asian banks are bracing for a rough ride in the coming 6 months as the coronavirus epidemic disrupts businesses across the region, likely prompting a spike in bad loans and ultimately dealing a blow to their bottom lines.

Lenders from DBS, Singapore's biggest bank, to HSBC, the largest of 3 currency-issuing banks in Hong Kong, have warned in the past 2 weeks that they will have to set aside additional provisions for loan losses in the first quarter " a risk they say is short term and manageable.

China's biggest banks are not scheduled to update their guidance for 2020 until next month, but credit ratings agency S&P Global Ratings has forecast that the peak questionable loan ratio for China's 285 trillion yuan ($40.5 trillion) banking sector "may almost double" in a worst-case scenario.

"We have also seen it can take years to restore standards in (non-performing loan) recognition, and in the quality of the financial statements, once such standards are loosened," S&P analyst Ryan Tsang said in a research note. "We see a risk that companies may exploit relaxed standards to drag out repayments for years."

HSBC, which counts Hong Kong as its largest market and has made a big bet on growth in the Greater Bay Area, said last week it expects about $600 million of provisions for additional loan losses if the coronavirus outbreak drags on into the second half of the year " its worst-case scenario.

"There will be revenue impact, which will become progressively more acute, if the coronavirus was to continue beyond the next month to six weeks," Ewan Stevenson, the HSBC chief financial officer, said on a conference call on February 18. "We think that the Q1 impact, as we sit here today, is probably rangebound in the order of about $200 million to $500 million relative to our previous planning assumptions."

DBS said it expected credit costs " the amount set aside for bad loans " to increase by 4 to 5 basis points for the year.

Credit ratings agency Moody's Investor Service said on Tuesday that non-performing loan (NPL) ratios at DBS and its Singapore rivals Oversea-Chinese Banking Corporation and United Overseas Bank were likely to rise to 1.6 percent to 1.7 percent this year as a result of economic disruptions from the outbreak, from 1.5 percent at the end of 2019.

Economists have warned China's economic growth, which was already slowing, could dip to as little as 4.4 per ent in 2020 and weigh on the regional economy. China's gross domestic product (GDP) grew at 6.1 percent last year, its slowest pace in 29 years.

Standard Chartered said the coronavirus could potentially affect 42 percent of China's GDP because of its effects on the electronics, automobile, construction, retail, transport, accommodation, catering, real estate and recreation sectors.

"There is ample evidence that the outbreak has taken a heavy toll on these sectors," Wei Li, the bank's senior China economist, said in a research note Friday.

The People's Bank of China and other financial regulators have urged banks to lend more to support struggling businesses, with the central bank saying a "small increase" in NPLs would be "tolerated" to get companies back to work as soon as possible. Banks in Hong Kong and Singapore also have announced measures to support struggling small businesses and retail customers, including interest-only payments on mortgages and commercial loans.

Paul McSheaffrey, a partner at accountancy firm KPMG said banks in Hong Kong were likely to see higher impairment provisions as support measures are rolled out.

"Those loans may not actually be bad. The principal could be repaid, but the fact that it's delayed and that there's a separate agreement with the borrower will cause a perception of higher risk and that will be a higher provision," McSheaffrey said. "We will undoubtedly see some losses and higher losses coming through, particularly in Hong Kong and China."

To be sure, banks' balance sheets in the region are relatively robust. NPL ratios at lenders in China and other economies hit hard by the outbreak, including Hong Kong, Japan, South Korea and Singapore, are some of the healthiest in the region.

China's NPL ratio was 1.8 percent at the end of the first quarter 2019, the latest set of data available, while Hong Kong's NPL ratio was 0.6 percent and Singapore's was 1.3 percent, according to the International Monetary Fund.

By comparison, the NPL ratio in India, the third-largest economy in the region behind China and Japan, was 8.9 percent at the end of last year's first quarter and 0.9 percent in the United States.

The bulk of the coronavirus cases are in mainland China, followed by South Korea and Japan. Singapore has the biggest number of confirmed cases in Southeast Asia with 90 afflictions at last count, more than the 81 confirmed cases and two fatalities in Hong Kong.

A JPMorgan analyst said investors should remain constructive on the financial sector as bank stock valuations remain attractive, balance sheets are robust and the industry is likely to benefit from improving economic conditions in the second half of the year.

"Our base case view is the virus outbreak will not derail the economic activity for more than a few months," JPMorgan analyst Mslav Matejka, said in a research note on Monday.

For the moment, many banks are forecasting the coronavirus outbreak to be a temporary drag on the region's economy, with several citing their experience during the severe acute respiratory syndrome (SARS) outbreak in 2003 as a potential template.

DBS said the outbreak was likely to affect it for one quarter as it did during Sars. "Even if it was double that, it would imply an incremental credit cost of $250 million to $300 million. The general allowances that we have built up over the past year have been robust," Piyush Gupta, the DBS chief executive said, on a conference call on February 13.

Still, the epidemic comes at a challenging time for Asia's banks. Margins are already being pressured by easing monetary policy by central banks in the region and a slowdown in global growth following the US-China trade. Several markets, including Hong Kong and Singapore, also are expected to see the debut of new virtual banks that could further cut into profits this year.

"That downward pressure will continue to bite," Andrew Gilder, EY's Asia-Pacific banking and capital markets leader, said. "I don't see markets in this region going to negative rates, so there's only so low (policymakers) can go. But, the market demands a lower rate on the cost side. If the deposit rates are floored at zero in the region, the borrowing rate for the bank's customers isn't and can continue to go down a bit. That squeezes the margin."


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China's ride-hailing giant Didi readies dividers in cars vs coronavirus

BEIJING -- Didi Chuxing, China's largest ride-hailing services provider, is ramping up efforts in its industry to help stop the spread of the deadly coronavirus, with a nationwide program to install protective dividers between the driver and passenger seats in cars.

Beijing-based Didi plans to invest about 100 million yuan ($14.3 million) in this safety measure, which involves installing protective plastic sheets that are expected to prevent droplet transmission of the COVID-19 disease, according to the company's statement on Wednesday.

"Didi is implementing this and other anti-coronavirus initiatives, as public health officials call on citizens to use public transportation with caution," the company said. "This measure is popular among drivers and riders."


With guidance from medical professionals, Didi initially rolled out its protective divider program in a number of cities, including the southern coastal city of Shenzhen, Taiyuan in northern Shanxi province and in Wuhan, capital of central China's Hubei province and epicenter of the coronavirus outbreak.

Didi drivers can choose to install the protective screens in selected locations or on their own using the instructions provided.

A spokesman for Didi Chuxing declined to comment on the total number of cars under the ride-hailing platform, but said the company supported 30 million drivers as of 2018.

Didi's expanded safety measures have come amid industry difficulties in China, the world's biggest ride-hailing market, where the coronavirus outbreak has led to a slowdown in demand.

Despite aversion to using mass public transport at the present time, even ride-hailing is facing new problems after reports earlier this month of multiple drivers being diagnosed with coronavirus, clouding prospects for an industry already hit hard by government-imposed travel restrictions across the country.

There were more than 74,000 confirmed coronavirus cases and more than 2,000 fatalities across mainland China as of Wednesday morning, according to data released by national and provincial health authorities.

Didi has already set up service stations for sterilizing cars, monitoring the temperature of drivers and distributing free facial masks in more than 148 cities across the country.

Other technology companies have also stepped up their own precautionary measures to help stop the coronavirus from spreading. Food delivery giant Meituan Dianping and Dida Chuxing, a rival of industry leader Didi, have each launched app-based systems that require commuters to provide their personal information by scanning QR codes. The data gathered details where people have been to determine if they have traveled with a person confirmed or suspected to have the coronavirus.

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China to destroy banknotes from coronavirus-hit sectors

The Guangzhou branch of China’s central bank said it would destroy all banknotes collected by hospitals, wet markets and buses to ensure the safety of cash transactions as the country battles a coronavirus epidemic.

Financial news outlet Caixin reported on Saturday that officials at the People’s Bank of China’s (PBOC) branch in the southern city ordered that all paper currency from sectors with high exposure to the coronavirus be withdrawn for destruction.

Commercial banks in the province should put banknotes from these sectors aside, disinfect them and hand them in to the PBOC.

The order comes after Fan Yifei, deputy governor of the central bank, said on Saturday that 600 billion yuan ($85.6 billion) of new banknotes had been distributed throughout the country since Jan. 17, including 4 billion yuan in fresh notes sent to Wuhan at the center of the outbreak before the Lunar New Year.

The central bank said that in general it would use high temperatures or ultraviolet light to disinfect cash, and store the currency for more than 14 days before putting it back in circulation.

Nearly 3 billion yuan in new banknotes was injected into the southern province of Guangdong, excluding Shenzhen, between Feb. 3 and 13, while 7.8 billion yuan was withdrawn from circulation, the PBOC said.

The banking industry extended 270 million yuan in cash through 1,249 transactions to government agencies, epidemic prevention and control related enterprises and other frontline units, Caixin reported. Cash withdrawals amounted to 800 million yuan through 6,186 transactions.


Central banks routinely collect and destroy old coins and banknotes in exchange for new ones. This does not affect the money supply, and is done to maintain a healthy amount of usable currency.

Caixin cited an unnamed deputy chief at a large joint stock bank in Guangzhou as saying that customers would be required to confirm the origin of the banknotes being deposited at their branches but in reality, “it would be difficult for such a measure to be completely effective”.

Fan also said that China had pledged extra funds to banks, prodding them to help manufacturers and businesses pull through headwinds from the China-US trade war and the nation’s worst health crisis in nearly two decades.

Economic growth, which already slowed to 6 percent in the fourth quarter, is likely to sputter further in the three months ending in March, with an estimated 50 million workers forced to stay home since late January, disrupting production of everything from clothing to toys and crucial components.

The State Administration of Foreign Exchange said it had help fast-track 1,370 foreign exchange transactions in China between January 27 and February 12, including 70 for imports into Hubei, mainly for the purchase of masks, protective gear and production materials.

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Huawei defies odds after 180 days on US trade blacklist

When the US government added Huawei Technologies to its trade blacklist on May 16, the Trump administration expected to hobble the Chinese telecommunications gear maker's business by restricting its access to American hi-tech components.

Fast-forward to the present and Huawei has not only recalibrated its operations under the stringent conditions of Washington's Entity List, but the company has continued to push its global agenda for 5G " the next-generation mobile technology that will help power advances such as the industrial internet, autonomous driving and smart cities.

Shenzhen-based Huawei will mark 180 days under the US trade blacklist on Sunday, a dubious milestone that has been tempered by efforts to stabilze its operations.

The privately-held company last month reported total revenue of 610.8 billion yuan (US$86.8 billion) for the nine months ended September 30 and more than 60 commercial 5G network supply contracts to lead the industry, which puts it in a position to surpass US$100 billion in sales this year.

This performance has defied early predictions that Huawei would stumble under the US trade ban, which restricts the company's access to American-origin technologies such as software and semiconductors.

However, Huawei's septuagenarian founder and chief executive Ren Zhengfei, may need to double down on initiatives to bolster confidence in the world's biggest network gear maker, as political and economic headwinds still threaten to push its overseas business off a cliff.

"Our strong results in the third quarter show that we continue to have the trust and support of our clients and customers," Huawei said in an emailed statement. "Despite the challenges, we have continued to achieve quality growth."

Separate interviews with 5 current Huawei employees, who have direct knowledge of recent initiatives and who spoke on condition of anonymity, described how the company, with Ren taking a more hands-on approach, has made a united stand against the US government's campaign to undermine its business around the world.

The initial strategy involved a sharper focus on media relations which involved maintaining a consistent message: Huawei does not spy for Beijing and will not share user data with the Chinese government.

Within days of the US Commerce Department announcing that Huawei had been added to its blacklist, a crack team was formed by the company's carrier business group, including staff from legal, product marketing, global sales, supply chain and technical support.

Their mission was to immediately respond to all relevant inquiries " at any time, seven days a week " from Huawei's partners and customers in more than 170 countries worldwide.

Meanwhile Ren, the son of schoolteachers and a survivor of China's great famine between 1958 and 1961, has put himself front and center in Huawei's increased media relations effort, as the company seeks to project a more transparent and open image.

Before his daughter Meng Wanzhou, Huawei's chief financial officer, was arrested in Vancouver in December last year at the request of the US government, Ren had never given a television interview. Nor did he often speak to journalists because he was content to let his lieutenants do all the talking.

Now he is everywhere. Since January, Ren has spoken with journalists from both foreign and domestic media organizations. These engagements escalated after Huawei's blacklisting in May, which led Ren to talk more with various international media in a bid to regain control of the narrative and assuage the concerns of its more than 194,000 employees worldwide.

"Honestly, I was in shock when I learned about the US ban," said a Huawei employee surnamed Yang, who works as an engineer at one of the company's research and development teams.

"I was not familiar with the Entity List in the past. I thought that it could hit Huawei's business hard. However, I don't have any choice but to continue to work hard."

Huawei has expanded its international public relations team to provide a stronger infrastructure for staging campaigns such as "Coffee with Ren" as well as presentations at various industry events, especially in Europe.

More than 10 new recruits have been added over the past several months.

Ren has spoken openly of his concerns, including describing the company as a "damaged plane", and the corporate communications team has not stopped his soul-searching.

Ren, for example, said in September that Huawei was ready to share its 5G technology with potential Western buyers, as the company remains mired in the middle of the US-China trade war.

Huawei also arranged at least two major visit tours for many of its major clients and business partners at home and abroad in the first three months since the US trade ban.

The tours were designed to highlight that operations are normal and that the company's supply chain network remains strong, according to people familiar with the matter.

Social media, however, may also have played a part in helping Huawei to get its message across to a wider audience.

Soon after news of Huawei's blacklisting spread, a memo written by Teresa He Tingbo, the president of semiconductor subsidiary HiSilicon, about this unit's contingency plans, became one of the top-trending topics on Chinese microblogging service Weibo.

One such scenario was the US cutting off access to advanced chips and technology.

Though hopeful that a situation in which the US cuts off access to advanced chips and other technologies would never happen, HiSilicon devoted significant resources to building a backup that would ensure the survival of the group, according to He's memo.

That backup plan has now been initiated to "ensure the strategic safety of most of the company's products and the continuous supply of most products", He said.

HiSilicon has been designing systems-on-a-chip devices, based on technology from British firm ARM, since at least 2012. Fast-forward to September this year and Huawei has started making 5G base stations without US components.

It said total production of 5G base stations should more than double next year, as the company had aimed to start scaling production since October. Last month, HiSilicon also started selling its 4G Balong 711 chip on the open market.

While research firms like Haitong and Canalys have reported that Huawei has been stockpiling critical US components for almost a year, restricted access to American-made software such as Google's Android operating system has proved to be a trickier issue for Huawei.

Huawei was forced to delay the release of its new flagship Mate 30 series smartphones in Europe, its biggest market outside China, because the handsets have no access to Google apps and services under the US trade ban.

While Google apps are not an issue in China's restricted internet market, they are of critical importance to Huawei's overseas smartphone business.

Although Huawei unveiled its own operating system, Harmony, in August, the company said it had no plans to install that software on its smartphones yet because Android remains its top choice and it wants to protect the current app ecosystem.

Richard Yu Chengdong, chief executive of Huawei's consumer business group, said Harmony was capable of supporting a range of products and its own ecosystem, and is compatible with all Android apps and existing web applications.

"It will take years to build a viable app ecosystem for Harmony and convince consumers outside China to use it instead of Google services," said Jean Baptiste Su, a principal analyst with Atherton Research in San Jose, California.

Microsoft also stopped accepting new orders from Huawei in response to the trade blacklisting, according to a South China Morning Post report in May, citing people familiar with the matter.

The negative publicity over the US trade ban, combined with a global slowdown in the smartphone market, may have forced Huawei to reduce orders for new handsets from Foxconn Technology Group, the world's largest electronics contract manufacturer, according to people familiar with the matter, who asked not to be named because the information was private.

They said Foxconn, which also assembles smartphones for Apple and Xiaomi Corp, stopped several production lines for Huawei handsets in May, after the US blacklisting.

Smartphone contract manufacturers have flexibility built into their production schedules and can increase, or reduce, orders to meet changing conditions, and it is not clear whether the decreased production is temporary or part of a longer-term cut, the people said.

In response, Huawei said that its "global production levels are normal, with no notable adjustments in either direction".

Despite these travails, Huawei has shown plenty of resilience since the US blacklisting in May, according to Atherton analyst Su.

"We believe that Huawei's growth will continue in the last quarter of the year " and beyond " for its enterprise and telecoms carrier businesses," Su said.

"The company has been able to replace most of the US components used in its enterprise and carrier products with either non-US or home-grown parts."

Huawei's latest financial results showed that the company was in better shape than Ren initially predicted in June, when he said that Huawei was unlikely to see much growth, with total sales capped at around US$100 billion this year and in 2020 because of the trade ban.

A sharper focus on its home market has also helped lift the company's financial results.

The company targeted a significant increase in its share of China's smartphone and telecoms network equipment markets to help offset potential losses overseas because of the US blacklist, according to people familiar with the matter.

Given the economic environment this year, Huawei's ability to ship 200 million smartphones ahead of its previous target represents a significant milestone for the company, according to Thomas Husson, a vice-president at Forrester Research.

On October 23, Huawei said it shipped 200 million smartphones since the start of this year. That was 64 days earlier than when the company shipped the same number of handsets last year.

"Its P30 and Mate 30 range of devices demonstrate Huawei's ability to master technology innovation," Husson said. Still, he indicated that Huawei's smartphones shipments are likely to suffer in Europe because of the lack of Google services under the US trade ban.

Washington has also provided a sliver of good news. US companies will be allowed to start selling to Huawei "very soon", according to US Commerce Secretary Wilbur Ross in an interview with Bloomberg that aired last Sunday.

Ross said the US government had already received 206 requests from US suppliers " more than what was initially expected.

To be sure though, Huawei's Ren has said that a clearer picture of how the company has held up under the trade ban will not likely emerge until next year.

"If you come talk with me at this time next year, you will see if we are still growing," Ren said this week. "We have to focus on our business for the next three to five years ... to lead the market."

That is why it is important that other countries foster alternative hi-tech supplies, as the US limits access to American technologies to certain companies, according to Ren this week.

He called on hi-tech suppliers in Europe and Japan for support, without elaborating on the identity of these firms.

In the meantime, Huawei has also had to deal with employee complaints about working conditions at the Shenzhen-based technology giant.

Hu Ling, a member of the human resources team at Huawei's elite 2012 Lab research unit, recently posted a letter of complaint on an internal message board (later deleted) that accused the company of encouraging overtime work that was above the maximum allowed by law.

The letter, which was leaked externally and went viral online, also described how the previous head of human resources had asked for permission to lay off employees who had complained about corporate welfare issues, such as the quality of canteen and shuttle bus services.

Ren has called for vigorous internal debate on these issues but has asked employees to keep these concerns within the Huawei community.

In the end, while Huawei has so far managed to survive the difficulties of being caught between the US and China's trade dispute, it is hard to avoid the conclusion that its ultimate fate is inextricably tied to the sort of trade deal that the world's two biggest economies reach in ongoing negotiations.

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Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.

iPhone 11 launch marred by claims Foxconn factory broke labor laws

One day before the launch of the iPhone 11, Apple and its Chinese supplier Foxconn have been accused of violating labor laws to produce the new model.

New York-based China Labor Watch (CLW) released a report on Monday detailing a string of alleged violations at Foxconn’s Zhengzhou factory, in the central province of Henan, mostly relating to the employment conditions of temporary workers.

According to the report, temporary workers – recruited through contracted agencies – now make up half or more of the workforce at the Zhengzhou facility, with workers putting in at least 100 overtime hours a month.

China’s labor laws stipulate that temporary workers “shall not exceed 10 percent of the total workforce” and that “monthly overtime work hours shall not exceed 36 hours”.

The report also found temporary workers allegedly did not receive the same benefits as full-time employees, including paid sick leave, paid holidays and social insurance which provides medical, unemployment and pension coverage.

Chinese labor regulations require temporary workers – who should not be recruited for primary roles – to be paid the same level of salary, insurance and other benefits as permanent staff.

Foxconn started recruiting temporary workers – also known as “dispatch workers” – in 2016 through the use of labor hire companies which typically offer one-off “bonuses” to attract the workers they recruit. The employees have no direct employment relationship with Foxconn until they sign a contract with the factory, usually after working there for three months.

“Apple has done very little to improve the rights of workers in their supplier factories,” CLW said. “Apple claimed they care about every worker on the production line but, in fact, workers are paid wages that are close to or equivalent to the local minimum wage.”

Zhengzhou Foxconn – dubbed Apple’s “iPhone City” – is the biggest iPhone factory in the world and has previously come under fire over working conditions at the 1.4 million square meter (15 million sq ft) facility, where half the world’s iPhones are made. A series of suicides and protests by workers – allegedly over payment and harsh working conditions – have made headlines over the years.

In January 2018, a temporary worker jumped to his death from Zhengzhou Foxconn’s dormitory complex, apparently because he did not receive his bonus. In December, hundreds of temporary workers took to the streets of Zhengzhou claiming they had been cheated by the recruitment agencies out of their $870 bonuses.

Photographs and videos posted online showed groups of workers holding placards which read: “Illegal agents with Foxconn cheated migrant workers. Give me back my money.” One video showed people chanting, “We want our bonus money”. The protests were broken up by police.

CLW said its investigators, who had been employed at the factory for years, found working conditions had remained relatively unchanged. The base wage was still 2,100 yuan (US$295) which was insufficient to sustain a family living in Zhengzhou. Social insurance contributions had increased from 2015 to 2018, but still fell short of legal requirements, CLW said.

Other violations CLW found included recruitment of student workers, a lack of adequate personal protective equipment and safety training, and a failure to report work injuries. Supervisors also commonly used verbal abuse, the report said.

Apple conceded the number of dispatch workers was high, but dismissed most of the report.

“We did find during our investigation that the percentage of dispatch workers exceeded our standards and we are working closely with Foxconn to resolve this issue,” Apple said.

“We looked into the claims by China Labor Watch and most of the allegations are false. We have confirmed all workers are being compensated appropriately, including any overtime wages and bonuses, all overtime work was voluntary and there was no evidence of forced labor.”

Apple also said robust management systems were in place, including training on workplace rights, on-site worker interviews, anonymous grievance channels and ongoing audits.

Foxconn Technology Group confirmed that a recent review of its Zhengzhou operations had identified some workforce compliance issues, but also rejected the bulk of CLW’s claims.

“At no time did we find any evidence of forced labour and we can confirm that this facility currently has no interns working overtime,” Foxconn said.

“We did find evidence that the use of dispatch workers and the number of hours of overtime work carried out by employees, which we have confirmed was always voluntary, was not consistent with company guidelines. We did determine that the affected workers were paid all earned overtime and related bonus payments.”

Foxconn said work continued to address the issues identified at the Zhengzhou facility, which was being closely monitored. “We will not hesitate to take any additional steps that might be required to meet the high standards we set for our operations.”

Foxconn said it worked hard to comply with all relevant laws and regulations. “In all cases, and with all types of workers, we offer an industry-competitive salary and related benefits that significantly exceeds government-mandated levels.”

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