In the news: GSK China plans 1,000 layoffs, the CBRC announces restructuring and eight companies begin credit reporting

GSK China to lay off 1,000 employees

GlaxoSmithKline's China operations is planning to lay off up to 1,000 employees this year as it deals with a sales slump after last year's bribery scandal, according to sources close to the company. A total of 450 employees will be cut in the first quarter, followed by a larger cut in the second. The company was handed a record fine of Rmb3 billion in September 2014 and said in its third quarter financial report that it will conduct an internal restructuring to save costs. Its US division also announced plans to lay off 900 employees this year. But it isn't the only foreign drug company making cuts in China. Bristol-Myers Squibb began laying off 1,000 workers in November and Merck will cut 8,500 globally, including some of its Chinese managers. The crackdown on the pharmaceutical industry and possibly the lengthy approval processes for clinical trials and drug registrations in China may be taking their toll on these foreign firms' revenue…

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CBRC announces trust industry restructuring

The CBRC released a plan on January 20 that involves closing its training and information centres, merging its staff into other departments and opening two new offices – one to regulate investment trusts and the other to oversee city commercial banks, urban credit unions and privately owned banks. Devoting an office to investment trusts was critical as the industry holds almost Rmb13 trillion in assets, said an official. This is the first major reorganisation the CBRC has had in its 12 year history. The restructuring will leave the regulator with 22 departments. With more reforms aimed at liberalising the financial market and decreasing state intervention, changes such as replacing the investigation bureau with one for checking banking institutions makes sense. But, at the same time, so does effectively coordinating the departments in light of the growing number of trust products. Let's hope the CBRC doesn't take too long resettling and adjusting to the new structure.

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Confusion surrounds emerging credit reporting industry

The PBOC has asked eight companies, including subsidiaries of Alibaba and Tencent, to begin preparing personal credit reporting operations as part of the government's longstanding plan to bring the private sector into the market. But it is unclear whether they will open formal credit bureaus anytime soon due to incomplete regulations and vague industry standards. The only official credit bureau in China at present is the state-controlled Credit Reference Centre, which holds information from 850 million individuals and 19.6 million companies – the largest credit organisation of its kind. However, the private sector has many other types of personal credit information that has never been formally scored, and much of it is buried in the mounting piles of consumer and transaction data owned by the major e-commerce platforms (like Alibaba). China needs more credit bureaus to lower borrowing costs and default risks in the market. And whether they want to report the credit data or not, it doesn't seem like the selected private companies have much of a choice.

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