- China passes National Defense Mobilization Law to safeguard security
- Despite Pressure, China Still Resists Iran Sanctions
- China conducts yuan rise "stress tests": report
- Schumer Says China’s Weak Yuan Should Prompt U.S. Trade Duties
- Shanghai to get container derivatives mart
- Widespread dry spell hits 11m
- McDonald's to accept rivals' coupons in food fight
Friday, February 26, 2010
Have You Heard...
China passes National Defense Mobilization Law to safeguard security
Source: English.news.cnBEIJING, Feb. 26 (Xinhua) -- China's top legislature passed the National Defense Mobilization Law on Friday after three readings, setting down rules on how and when the military should be mobilized in times of war or emergency.
The Law was approved at the National People's Congress (NPC) Standing Committee's three-day bimonthly session which ended Friday. President Hu Jintao signed a decree to publish the Law, which will take effect on July 1.
The 72-provision law sets out principles and organizational mechanisms for national defense mobilization, personnel and strategic material storage, and the prevention and relief of war-related disasters.
According to the Law, the NPC Standing Committee will declare national or regional mobilization in line with the Constitution and laws "if state sovereignty, unification, territorial integrity or security is threatened."
The president will issue a mobilization order based on the decision of the NPC Standing Committee, the Law stipulates.
The mobilization work will be jointly led by the State Council and the Central Military Committee of the Communist Party of China (CPC), according to the Law.
The country should ensure storage of military articles including facilities, materials and special production devices designed for military use according to the demand of military orders and equipment in wartime, it said.
Male citizens aged between 18 and 60 and females aged between 18 and 55 should provide service for national defense, including giving support to military operations during wartime, engaging in prevention against war-related disasters as well as related relief tasks, and helping to maintain social order, it stipulates.
Drafting of the Law started in September 2000.
The mobilization work will be jointly led by the State Council and the Central Military Committee of the Communist Party of China (CPC), according to the Law.
The country should ensure storage of military articles including facilities, materials and special production devices designed for military use according to the demand of military orders and equipment in wartime, it said.
Male citizens aged between 18 and 60 and females aged between 18 and 55 should provide service for national defense, including giving support to military operations during wartime, engaging in prevention against war-related disasters as well as related relief tasks, and helping to maintain social order, it stipulates.
Drafting of the Law started in September 2000.
Despite Pressure, China Still Resists Iran Sanctions
Source: The New York Times By Mark LandlerDespite intense public and private pressure by the Obama administration, China has not yet shown any sign that it will support tougher sanctions against Iran, leaving a stubborn barrier before President Obama’s efforts to constrain Iran’s nuclear ambitions.
Diplomats from two major European allies said this week that China had refused even to “engage substantively” on the issue of sanctions, preferring to continue diplomatic efforts with Tehran. And one senior diplomat said he believed that the most likely outcome might be a decision by China to abstain from voting on a resolution in the United Nations Security Council.
“An abstention is better than a veto,” said the official, who spoke on condition of anonymity, citing the delicacy of the matter.
Secretary of State Hillary Rodham Clinton expressed optimism this week that China was edging toward the American view that the time had come for tougher measures against Iran. But other administration officials acknowledged that her optimism was based less on tangible evidence than on a belief that China would not want to end up diplomatically isolated.
China, the officials note, has backed all three previous United Nations sanctions resolutions on Iran, overcoming its initial reluctance. Last November, it joined 25 other members of the International Atomic Energy Agency in rebuking Iran for concealing a uranium enrichment plant at Qum.
“I think we’ve made a lot of progress,” Mrs. Clinton said Wednesday in testimony before the Senate, adding that she believed that the Security Council would adopt a resolution in the “next 30 to 60 days.”
In a sign that the administration may be managing expectations in light of China’s stance, she noted that the United Nations was not the only arena for squeezing Iran. The United States and the European Union are expected to impose their own sanctions, she said, and other countries could team up against Iran.
“We will look at additional bilateral and preferably multilateral sanctions with willing nations, on top of whatever we get out of the Security Council,” Mrs. Clinton said Thursday before the House Foreign Affairs Committee. “So, in sum, we believe in a broad approach.”
For now, though, the spotlight is on the United Nations, where she said diplomats were “hammering out” the language of a resolution. The United States, Britain, France and Germany are largely united around sanctions aimed at equipment and financing for Iran’s nuclear and missile programs, with an emphasis on measures against the Islamic Revolutionary Guards Corps, which runs those programs.
Russia is also expected to support a resolution, though diplomats predicted that it would try to water down the sanctions.
That leaves China, which declared again this week that it preferred diplomacy. Experts say Beijing is being driven partly by its commercial ties: it has vast investments in Iran’s oil and gas sector, and Iran is its second largest supplier of oil, after Saudi Arabia. It also has a deep aversion to sanctions, stemming from its own experience after the Communist revolution in 1949.
“China regards sanctions as ineffective, counterproductive and a form of interference in other countries’ affairs,” said Kenneth G. Lieberthal, a China expert at the Brookings Institution.
For all that, some experts said they saw hints that China might be coming around to tougher measures.
That leaves China, which declared again this week that it preferred diplomacy. Experts say Beijing is being driven partly by its commercial ties: it has vast investments in Iran’s oil and gas sector, and Iran is its second largest supplier of oil, after Saudi Arabia. It also has a deep aversion to sanctions, stemming from its own experience after the Communist revolution in 1949.
“China regards sanctions as ineffective, counterproductive and a form of interference in other countries’ affairs,” said Kenneth G. Lieberthal, a China expert at the Brookings Institution.
For all that, some experts said they saw hints that China might be coming around to tougher measures.
It did not object when the Financial Action Task Force, an intergovernmental body that combats money laundering and terrorism financing, put Iran on a blacklist last week. (China is a member of the task force.) Nor did it protest last week when the atomic energy agency issued another report critical of Iran’s efforts to conceal its nuclear activities.
“I took that as a hopeful tea leaf,” said Patrick Clawson, the deputy director of the Washington Institute for Near East Policy. “I don’t see the Chinese as on board with general-purpose sanctions,” he said. “But if you’re willing to go with nuclear-related things, I think you could get a Chinese ‘yes.’ ”
By playing hard to get, a European diplomat noted, China had put itself “at the heart of the process.”
Mrs. Clinton has kept the pressure on China by arguing that its energy security would be threatened by the instability that a nuclear-armed Iran would create in the Middle East.
“I took that as a hopeful tea leaf,” said Patrick Clawson, the deputy director of the Washington Institute for Near East Policy. “I don’t see the Chinese as on board with general-purpose sanctions,” he said. “But if you’re willing to go with nuclear-related things, I think you could get a Chinese ‘yes.’ ”
By playing hard to get, a European diplomat noted, China had put itself “at the heart of the process.”
Mrs. Clinton has kept the pressure on China by arguing that its energy security would be threatened by the instability that a nuclear-armed Iran would create in the Middle East.
Other countries are also pushing: a delegation of senior Israeli officials arrived in Beijing on Thursday, and was expected to raise the Iran issue. Saudi Arabia said last week that it hoped China would back a resolution.
Mrs. Clinton’s sales pitch is not limited to China. Next week, she is scheduled to travel to Brazil, which currently holds a rotating seat on the Security Council and which has said it opposes sanctions. Officials said she would pressure the Brazilian government to fall in line.
The United States has said it wants international solidarity in the campaign against Iran’s nuclear ambitions. But of the 15 countries that now hold seats on the Council, 5 are viewed as reluctant: China, Brazil, Turkey, Lebanon and Bosnia. Nine yes votes are needed to adopt a resolution.
Mrs. Clinton’s sales pitch is not limited to China. Next week, she is scheduled to travel to Brazil, which currently holds a rotating seat on the Security Council and which has said it opposes sanctions. Officials said she would pressure the Brazilian government to fall in line.
The United States has said it wants international solidarity in the campaign against Iran’s nuclear ambitions. But of the 15 countries that now hold seats on the Council, 5 are viewed as reluctant: China, Brazil, Turkey, Lebanon and Bosnia. Nine yes votes are needed to adopt a resolution.
China conducts yuan rise "stress tests": report
Source: ReutersChina is conducting "stress tests" in the country's labor-intensive export sectors to see how much yuan appreciation firms can withstand, the local 21st Century Business Herald reported on Friday.
The newspaper cited industry sources as saying that the results of the test, conducted jointly by the Ministry of Commerce and the Ministry of Industry and Information Technology, would serve as a reference for the government's future yuan policy.
It added that these tests did not mean that Beijing was about to let the yuan appreciate, having frozen it in place against the dollar since mid-2008 as the government has tried to cushion exporters from the global financial crisis.
Nevertheless, the report marks a rare discussion in Chinese media about the feasible scope for yuan appreciation and comes amid rising speculation that Beijing may be on the verge of allowing yuan appreciation to resume.
It added that these tests did not mean that Beijing was about to let the yuan appreciate, having frozen it in place against the dollar since mid-2008 as the government has tried to cushion exporters from the global financial crisis.
Nevertheless, the report marks a rare discussion in Chinese media about the feasible scope for yuan appreciation and comes amid rising speculation that Beijing may be on the verge of allowing yuan appreciation to resume.
According to the initial results of the tests, which focused on textile, garment, shoe and toy exporters, every percentage point of yuan appreciation would erode one percentage point of their profit margin. This would be a serious blow to profitability since their net profit margin is often only 3 to 5 percent, the newspaper said.
China has consistently said it will keep the yuan basically stable, a line that the commerce ministry repeated on Thursday.
A bipartisan group of 15 U.S. senators on Thursday insisted China's currency practices are effectively a subsidy and urged Commerce Secretary Gary Locke to consider action against Chinese imports.
China has consistently said it will keep the yuan basically stable, a line that the commerce ministry repeated on Thursday.
A bipartisan group of 15 U.S. senators on Thursday insisted China's currency practices are effectively a subsidy and urged Commerce Secretary Gary Locke to consider action against Chinese imports.
Source article: http://www.reuters.com/article/idUSTRE61P0GU20100226
Schumer Says China’s Weak Yuan Should Prompt U.S. Trade Duties
Source: Bloomberg NewsChinese exporters should be hit with stiffer U.S. tariffs to compensate for the unfair advantage they get from an undervalued currency, U.S. Senator Charles Schumer and 14 colleagues said yesterday.
The bipartisan group of senators wrote Commerce Secretary Gary Locke, urging him to side with NewPage Corp.’s contention that glossy paper imports from China are being subsidized by China’s intervention in its currency market. A finding in that case could influence future complaints by other U.S. manufacturers, they said.
“China’s mercantilist policies are undermining the health of many U.S. industries,” the lawmakers said in a letter. “There can be no doubt that China’s policy of large-scale intervention in the exchange markets and the significant undervaluation of its currency acts as a subsidy to Chinese exports.”
Schumer, a New York Democrat, and Senator Lindsey Graham, a South Carolina Republican, were sponsors of a measure that would have slapped duties of 27.5 percent on all imports to compensate for the advantage they said China’s weak yuan gives exports. They dropped that proposal in 2006 after analysts said it would violate the terms of the World Trade Organization.
The senators are now urging the Commerce Department to accept the arguments of closely held NewPage that China’s intervention keeps the yuan’s value below what would be determined by the market, providing its exporters an advantage. The case was brought under so-called countervailing duty laws, which protect domestic producers from imports of products that are subsidized. NewPage is based in Miamisburg, Ohio.
Administration’s Response
The Obama administration hasn’t decided if it will investigate that subsidy claim, Commerce Department spokeswoman Parita Shah said in an e-mail. “We share the senators’ commitment to the continued rigorous enforcement of U.S. trade laws.”
The senators are now urging the Commerce Department to accept the arguments of closely held NewPage that China’s intervention keeps the yuan’s value below what would be determined by the market, providing its exporters an advantage. The case was brought under so-called countervailing duty laws, which protect domestic producers from imports of products that are subsidized. NewPage is based in Miamisburg, Ohio.
Administration’s Response
The Obama administration hasn’t decided if it will investigate that subsidy claim, Commerce Department spokeswoman Parita Shah said in an e-mail. “We share the senators’ commitment to the continued rigorous enforcement of U.S. trade laws.”
In 11 previous cases, the Commerce Department declined to investigate complaints that China’s currency policy amounts to a subsidy, according to the letter.
This record “suggests that the department has prejudged the outcome,” the senators said in the letter yesterday.
While China supplanted Germany as the world’s biggest exporter last year, the Chinese government has kept its currency at about 6.83 to the dollar since July 2008 as the global economy faltered. China had allowed the yuan to appreciate by 16 percent over the previous three years.
U.S. President Barack Obama said in a Feb. 9 interview with Bloomberg BusinessWeek that China’s “currency policies are impeding the rebalancing that’s necessary” in the global economy, and also is leading to a bubble in the Chinese economy.
This record “suggests that the department has prejudged the outcome,” the senators said in the letter yesterday.
While China supplanted Germany as the world’s biggest exporter last year, the Chinese government has kept its currency at about 6.83 to the dollar since July 2008 as the global economy faltered. China had allowed the yuan to appreciate by 16 percent over the previous three years.
U.S. President Barack Obama said in a Feb. 9 interview with Bloomberg BusinessWeek that China’s “currency policies are impeding the rebalancing that’s necessary” in the global economy, and also is leading to a bubble in the Chinese economy.
Source article: http://www.bloomberg.com/apps/news?pid=20601089&sid=a57MFLw4NHVU
Shanghai to get container derivatives mart
Source: (China Daily)SHANGHAI: Shanghai Shipping Exchange, based in China's busiest port, intends to set up a container-shipping derivatives market by year-end as the city tries to challenge London as a global center for shipping finance.
The forward freight agreements, or FFAs, which help guard against fluctuations in shipping rates, will be targeted at small- and medium-sized exporters, who don't have the volumes needed for long-term shipping contracts, said Yao Weifu, a director at the shipping exchange. The plan is awaiting government approval.
Morgan Stanley last month backed the first FFA tied to a Shanghai container index, as the shipping exchange attempts to persuade the sector to adopt futures. Unlike in the dry-bulk and tanker segments, container-shipping has rarely used FFAs because the wide variety of cargos and customers using each ship makes it more difficult to accurately track rates, said Jay Ryu, an analyst at Mirae Asset Securities Co in Hong Kong.
"There is some need for hedging because rates recently have been very volatile," said Ryu. "Still, the trading volume will not be as huge as for dry bulk or tankers."
Clarkson Plc, which led the development of FFAs in 1991, helped devise the four-month-old Shanghai Containerized Freight Index to act as a benchmark for container-shipping futures.
The securities arm of the world's largest shipbroker also organized the container FFA between Morgan Stanley and shipping line Delphis NV. The trial deal covered a total of 10 cargo boxes to be shipped this month and next, according to the Shanghai Shipping Exchange's official magazine.
"The first trade has shown that the index is acceptable to global markets and that it can be used for futures," said Yao. "Now it's time to move on and launch derivatives in Shanghai."
Futures index
Clarkson Plc, which led the development of FFAs in 1991, helped devise the four-month-old Shanghai Containerized Freight Index to act as a benchmark for container-shipping futures.
The securities arm of the world's largest shipbroker also organized the container FFA between Morgan Stanley and shipping line Delphis NV. The trial deal covered a total of 10 cargo boxes to be shipped this month and next, according to the Shanghai Shipping Exchange's official magazine.
"The first trade has shown that the index is acceptable to global markets and that it can be used for futures," said Yao. "Now it's time to move on and launch derivatives in Shanghai."
Futures index
The weekly Shanghai Containerized Freight Index tracks spot rates for shipments on 15 routes, including to Europe, the Mediterranean and the US. The data, compiled from 15 shipping lines and 15 freight forwarders, reflects more than 60 percent of global container-shipping, Yao said.
The index rose 19.01 points to 1396.21 on Feb 12.
The exchange will partner with a settlement bank and an electric-trading systems provider to set up the futures trading platform, Yao said.
"Container rates are influenced by more factors than dry-bulk rates, so it's hard to make an index that reflects the market," said Frank Fan, head of investor of relations at China Shipping Container Lines Co. "Once the index gets involved with derivatives and traders, it may lose its accuracy in reflecting the real market situation."
The Baltic Dry Index, the benchmark index for commodity-shipping costs doubled in 2007, slumped 92 percent in 2008 and then tripled last year as trading exacerbated fluctuations in rates caused by shipping supply and demand.
Dry-bulk FFAs are settled against the Baltic Dry Index and other indexes run by the London-based Baltic Exchange, which traces its history back to 1744.
"The Baltic Exchange has always been about tramp shipping, so a container index is not a natural target for us," said Jeremy Penn, the exchange's chief executive officer. Tramp shipping refers to vessels that haul tendered cargoes to different ports rather than operating to a published schedule.
The Baltic Exchange, whose tanker indices are also used for FFAs, is considering a proposal from the London Metal Exchange to jointly set up a new FFA exchange.
The Baltic Dry Index, the benchmark index for commodity-shipping costs doubled in 2007, slumped 92 percent in 2008 and then tripled last year as trading exacerbated fluctuations in rates caused by shipping supply and demand.
Dry-bulk FFAs are settled against the Baltic Dry Index and other indexes run by the London-based Baltic Exchange, which traces its history back to 1744.
"The Baltic Exchange has always been about tramp shipping, so a container index is not a natural target for us," said Jeremy Penn, the exchange's chief executive officer. Tramp shipping refers to vessels that haul tendered cargoes to different ports rather than operating to a published schedule.
The Baltic Exchange, whose tanker indices are also used for FFAs, is considering a proposal from the London Metal Exchange to jointly set up a new FFA exchange.
Widespread dry spell hits 11m
Source: By Guo Anfei in Yunnan and Xin Dingding in Beijing (China Daily)At least 11 million people are short of drinking water because of a drought that has hit 15 provinces and autonomous regions, with the weather not expected to improve anytime soon, officials and meteorologists have said.
More than half of those affected by the dry spell are in Yunnan province, which is suffering its worst drought in six decades.
Nearly 6 million people and 4 million heads of livestock in Yunnan do not have adequate drinking water, the provincial civil affairs bureau said yesterday. In total, nearly 14 million people are affected by the drought.
"Senior villagers said the only brook passing our village had never dried before, but it dried out last year," said Xi Xiaoyang from Fanaga village of Luquan county, near Kunming, capital of Yunnan.
The water cellar of her family, which is used to store rainwater for daily use, has been dry for four months.
Every day, Xi and other fellow villagers walk to a neighboring village 4 km away to fetch water from a brook. Water has become so precious for them that the water they wash their face with is recycled to feed their chickens and pigs.
However, no rain is expected to arrive anytime soon and the drought might stretch to May, when the rainy season begins for Yunnan, the provincial meteorological bureau said.
About 85 percent of the crops in the province are also suffering from water shortages.
The drought has caused at least 10 billion yuan ($1.46 billion) in direct economic loss for the province's agricultural sector, said provincial governor Qin Guangrong.
The weather has also halved hydropower generation and affected related enterprises.
The State flood control and drought relief office yesterday raised the scale of its emergency support to Yunnan to help it counter the disaster, but details on the amount of funds allocated were not available yesterday.
Besides Yunnan, the drought has also hit the Guangxi Zhuang autonomous region and Guizhou, Sichuan, Shanxi, Henan and Shaanxi provinces, as well as the Chongqing municipality.
Official statistics showed that at least 3.56 million hectares of farmland were affected and 11.88 million people and eight million heads of livestock nationwide did not have adequate drinking water as of Feb 20.
Wei Chao'an, deputy minister of agriculture, was quoted by People's Daily yesterday as saying that the latest ministry survey showed winter wheat growth was the worst in five years partly because of the drought.
Besides Yunnan, the drought has also hit the Guangxi Zhuang autonomous region and Guizhou, Sichuan, Shanxi, Henan and Shaanxi provinces, as well as the Chongqing municipality.
Official statistics showed that at least 3.56 million hectares of farmland were affected and 11.88 million people and eight million heads of livestock nationwide did not have adequate drinking water as of Feb 20.
Wei Chao'an, deputy minister of agriculture, was quoted by People's Daily yesterday as saying that the latest ministry survey showed winter wheat growth was the worst in five years partly because of the drought.
The ministry has taken measures to fight the drought and help drought-hit areas prepare for planting later to make up for the losses, he said.
But Zhang Hulin, professor with the Party School of Central Committee of CPC, said the impact on crop yield will be contained as the regions affected by the drought are limited.
He suggested that the ministry invest more on infrastructure to help fight drought more effectively.
But Zhang Hulin, professor with the Party School of Central Committee of CPC, said the impact on crop yield will be contained as the regions affected by the drought are limited.
He suggested that the ministry invest more on infrastructure to help fight drought more effectively.
McDonald's to accept rivals' coupons in food fight
Source: China DailyMcDonald's on Wednesday allowed coupons issued by its competitors to be used on its McWings or fried chicken wings, stepping up the fierce competition in the country's fast-food industry.
Along with lowering the price of a pair of McWings from 7 yuan ($1) to 5 yuan, fried chicken wing coupons from any restaurant, including arch-rivals KFC and Burger King, can be used in McDonald's outlets nationwide to get an additional 10 percent discount.
According to Ren Yuan, a senior public relations manager with McDonald's China, the promotion will last from Feb 24 to Mar 23, and is the first of its kind since the fast food giant's entry into the Chinese market in 1990.
While coupons are frequently used to boost sales, taking coupons issued by competitors is rarely seen in the fast food industry.
"Legally, I do not think McDonald's did anything wrong, as long as it did not make the price too low," said Zhang Huiqing, who specializes in consumer law with Shanghai Wongliping Law Firm. "It is just a type of sales promotion."
According to Ren Yuan, a senior public relations manager with McDonald's China, the promotion will last from Feb 24 to Mar 23, and is the first of its kind since the fast food giant's entry into the Chinese market in 1990.
While coupons are frequently used to boost sales, taking coupons issued by competitors is rarely seen in the fast food industry.
"Legally, I do not think McDonald's did anything wrong, as long as it did not make the price too low," said Zhang Huiqing, who specializes in consumer law with Shanghai Wongliping Law Firm. "It is just a type of sales promotion."
With the discount, the price of a pair of McWings will be 4.5 yuan, while the pre-discount price of chicken wings at KFC and Burger King is 8 yuan.
"I think I will have more chicken wings here in the future, because they are getting real cheap," said a customer surnamed Qin in the McDonald's middle Huaihui Road store.
KFC, which now has more than 250 stores in Shanghai, claims quality is the essential ingredient in a restaurant's success.
"Different companies have different marketing skills, but what the customers care about the most is quality," said a public relations manager surnamed Bai with Yum! Brand China, KFC's parent company.
"I think I will have more chicken wings here in the future, because they are getting real cheap," said a customer surnamed Qin in the McDonald's middle Huaihui Road store.
KFC, which now has more than 250 stores in Shanghai, claims quality is the essential ingredient in a restaurant's success.
"Different companies have different marketing skills, but what the customers care about the most is quality," said a public relations manager surnamed Bai with Yum! Brand China, KFC's parent company.
KFC launched its business on the Chinese mainland in 1987. Industry analysts say its business in China is more successful than McDonald's.
While McDonald's tried to convince skeptical Chinese to buy hamburgers by offering low prices, KFC spiced up its menu with barbecue squid, egg tarts and other items tailored to local tastes.
Today Yum! is China's top restaurant operator, with more than 3,400 outlets. The country accounts for 36 percent of its total sales, just behind the US, while McDonald's had 1,135 stores in China in 2009.
Kenneth Chan, CEO of McDonald's China, said the company plans to aggressively expand the number of its drive-through outlets and McCafes by opening up 150 to 175 new stores in China in 2010.
While McDonald's tried to convince skeptical Chinese to buy hamburgers by offering low prices, KFC spiced up its menu with barbecue squid, egg tarts and other items tailored to local tastes.
Today Yum! is China's top restaurant operator, with more than 3,400 outlets. The country accounts for 36 percent of its total sales, just behind the US, while McDonald's had 1,135 stores in China in 2009.
Kenneth Chan, CEO of McDonald's China, said the company plans to aggressively expand the number of its drive-through outlets and McCafes by opening up 150 to 175 new stores in China in 2010.
Source article: http://www.china.org.cn/business/2010-02/26/content_19479298.htm
Thursday, February 25, 2010
China's military warns Washington, denies hacking
Source: ReutersChina's military warned the United States on Thursday to "speak and act cautiously" to avoid reigniting tensions between the two powers, denying the People's Liberation Army played a part in Internet hacking.
Huang Xueping, spokesman for the Chinese Ministry of Defense, said his government would not reverse its decision to suspend "bilateral military plans" with Washington after it said in late January that it would sell $6.4 billion of arms to Taiwan, the self-ruled island Beijing claims as its own.
In January, the giant Internet search company Google Inc threatened to pull back from China after complaining of censorship and hacking attacks on it and other companies.
Analysts said those attacks were sophisticated operations, possibly overseen or abetted by the Chinese military.
The hacking dispute has added to tensions with Washington over quarrels ranging from trade and the Chinese currency to a meeting last week between U.S. President Barack Obama and exiled Tibetan leader the Dalai Lama, who China reviles as a "separatist" for demanding self-rule for his homeland.
In January, the giant Internet search company Google Inc threatened to pull back from China after complaining of censorship and hacking attacks on it and other companies.
Analysts said those attacks were sophisticated operations, possibly overseen or abetted by the Chinese military.
The hacking dispute has added to tensions with Washington over quarrels ranging from trade and the Chinese currency to a meeting last week between U.S. President Barack Obama and exiled Tibetan leader the Dalai Lama, who China reviles as a "separatist" for demanding self-rule for his homeland.
Huang's remarks, reported by the official Xinhua news agency, shed no new light on how China plans to act on its threats to punish U.S. companies involved in arms sales to Taiwan.
But his comments indicated China has not entirely put aside public ire with Washington, despite allowing a U.S. aircraft carrier to visit Hong Kong last week.
"China demands that the U.S. speak and act cautiously, to avoid causing further damage to relations between the two countries and their militaries," said Huang.
"Linking Internet hacking activities to the Chinese government and military is totally unfounded and utterly irresponsible," he said. "This is stirring up a fuss for ulterior motives."
The Internet hacking dispute made fresh headlines recently after reports that the attacks had been traced to two schools in China, and that the writer of the spyware used had been identified as a Chinese cyber-security consultant.
The prestigious Shanghai Jiaotong University and the previously little-known Lanxiang vocational college, a high-school level institution, have both denied any role.
But his comments indicated China has not entirely put aside public ire with Washington, despite allowing a U.S. aircraft carrier to visit Hong Kong last week.
"China demands that the U.S. speak and act cautiously, to avoid causing further damage to relations between the two countries and their militaries," said Huang.
"Linking Internet hacking activities to the Chinese government and military is totally unfounded and utterly irresponsible," he said. "This is stirring up a fuss for ulterior motives."
The Internet hacking dispute made fresh headlines recently after reports that the attacks had been traced to two schools in China, and that the writer of the spyware used had been identified as a Chinese cyber-security consultant.
The prestigious Shanghai Jiaotong University and the previously little-known Lanxiang vocational college, a high-school level institution, have both denied any role.
Source article: http://www.reuters.com/article/idUSTRE61O0YR20100225
China's Localities Feel Pinch of Tighter Credit
Source: Wall Street Journal by Andrew BatsonBEIJING—China's local governments, which ran up huge debts during the record-breaking lending spree of the past year, are now feeling the pinch as authorities in Beijing tighten credit.
Off-balance-sheet borrowing by cities, counties and provinces helped finance a wave of public-works construction last year that contributed to the nation's growth. Now regulators in Beijing, worried that local governments won't be able to pay back all their loans, are increasing their scrutiny of this kind of debt.
That's likely to constrain the number of infrastructure projects that local governments launch this year, meaning a smaller boost to the economy as the nation's stimulus program enters its second year. The lion's share of that stimulus consists not of government funding but enormous lending by state banks.
"While tighter credit is unlikely to affect most ongoing investment projects, especially since many stocked up on financing in 2009, local governments will have their work cut out to start new projects this year," said Stephen Green, an economist for Standard Chartered in Shanghai.
Estimates of the total debt accumulated by investment vehicles set up by local governments range from six trillion yuan (around $878 billion) widely cited in the Chinese media, to the 11 trillion yuan calculated by Northwestern University professor Victor Shih. Those sums—on the same order of magnitude as all the official debt of China's central government—have drawn high-level concern.
"While tighter credit is unlikely to affect most ongoing investment projects, especially since many stocked up on financing in 2009, local governments will have their work cut out to start new projects this year," said Stephen Green, an economist for Standard Chartered in Shanghai.
Estimates of the total debt accumulated by investment vehicles set up by local governments range from six trillion yuan (around $878 billion) widely cited in the Chinese media, to the 11 trillion yuan calculated by Northwestern University professor Victor Shih. Those sums—on the same order of magnitude as all the official debt of China's central government—have drawn high-level concern.
"If this is handled poorly it could result in local government financing platforms being unable to repay their debts, creating bad assets for banks and other problems," central bank Gov. Zhou Xiaochuan warned in January.
Liu Mingkang, China's chief bank regulator, followed up in a nationwide conference call with bank executives on Jan. 26, telling them to "fully assess and effectively guard against risks from local government financing platforms."
The Shanghai Securities News reported Wednesday, citing unnamed sources, that banks had been ordered to stop issuing new loans to investment vehicles that are backed only by local governments' future revenue and have no registered capital.
Several Chinese banks contacted Wednesday didn't respond to queries about such lending.
Although local governments in China are generally prohibited from going into debt, most manage to circumvent the law by setting up their own companies to do the borrowing. Supported by land holdings and the promises of officials, such firms found plenty of obliging banks during the recent lending spree. And with most tax revenue going to central government coffers in Beijing, local agencies had no other way of paying for the new railroads,bridges and dams called for in the national stimulus. plan.
Liu Mingkang, China's chief bank regulator, followed up in a nationwide conference call with bank executives on Jan. 26, telling them to "fully assess and effectively guard against risks from local government financing platforms."
The Shanghai Securities News reported Wednesday, citing unnamed sources, that banks had been ordered to stop issuing new loans to investment vehicles that are backed only by local governments' future revenue and have no registered capital.
Several Chinese banks contacted Wednesday didn't respond to queries about such lending.
Although local governments in China are generally prohibited from going into debt, most manage to circumvent the law by setting up their own companies to do the borrowing. Supported by land holdings and the promises of officials, such firms found plenty of obliging banks during the recent lending spree. And with most tax revenue going to central government coffers in Beijing, local agencies had no other way of paying for the new railroads,bridges and dams called for in the national stimulus. plan.
The central government has taken several steps to slow down new bank lending this year. Amid the more risk-averse atmosphere, local government companies no longer are favored customers. The country's largest bank, Industrial & Commercial Bank of China, said this month it will "strictly manage" lending to "urban infrastructure projects carried out by local government fundraising platforms."
Local capital markets are also becoming less welcoming. In 2009, domestic bond issues by municipal investment companies totaled 121.2 billion yuan, according to the National Development and Reform Commission, double the pace of previous years. But these bond issues have already fallen off from their peak in early-2009, and could slow further.
Regulators have raised the bar for new bond applications by companies linked to lower-level governments with weaker finances, a person familiar with the situation said. However, the central government is still processing applications for bond issues from these companies, as there is a backlog from last year. "The government isn't shutting down the bond market," this person said. "But there is a growing awareness of credit risk."
The NDRC declined to comment, and the Ministry of Finance didn't respond to a request for comment.
Local capital markets are also becoming less welcoming. In 2009, domestic bond issues by municipal investment companies totaled 121.2 billion yuan, according to the National Development and Reform Commission, double the pace of previous years. But these bond issues have already fallen off from their peak in early-2009, and could slow further.
Regulators have raised the bar for new bond applications by companies linked to lower-level governments with weaker finances, a person familiar with the situation said. However, the central government is still processing applications for bond issues from these companies, as there is a backlog from last year. "The government isn't shutting down the bond market," this person said. "But there is a growing awareness of credit risk."
The NDRC declined to comment, and the Ministry of Finance didn't respond to a request for comment.
Local governments' plans for the year appear to have factored in a tighter fundraising environment. The Wall Street Journal examined the government work reports for 2010 that China's 31 provinces have published over the past two months. Of the 28 provinces that announced a formal target for investment growth this year, 26 are aiming for lower growth in 2010 than in 2009; the remaining two want to keep growth steady. On average, the provinces are targeting an increase in investment for 2010 that is 11 percentage points below what they achieved in 2009.
Curbing local governments' reliance on off-balance-sheet debt isn't a simple task, because they face real financial pressures. For now, some local officials seem willing to accept the central government's tougher line. "We will standardize all varieties of government financing platforms, and focus on preventing financial risks," Shandong Gov. Jiang Daming said in a January speech. Others are still reluctant: Guangxi Gov. Ma Biao said in a speech that he will "give full play to the role of investment financing platforms and expand the scale of fundraising."
The central government's concern is understandable, since it will ultimately have to pick up the tab for any debts the local governments can't sort out themselves. "Beijing is still responsible for the debt risk of local governments, and they are not allowed to go bankrupt under any circumstances,"Xu Lin, director of the fiscal and financial affairs department of the NDRC, wrote in a recent article.
Curbing local governments' reliance on off-balance-sheet debt isn't a simple task, because they face real financial pressures. For now, some local officials seem willing to accept the central government's tougher line. "We will standardize all varieties of government financing platforms, and focus on preventing financial risks," Shandong Gov. Jiang Daming said in a January speech. Others are still reluctant: Guangxi Gov. Ma Biao said in a speech that he will "give full play to the role of investment financing platforms and expand the scale of fundraising."
The central government's concern is understandable, since it will ultimately have to pick up the tab for any debts the local governments can't sort out themselves. "Beijing is still responsible for the debt risk of local governments, and they are not allowed to go bankrupt under any circumstances,"Xu Lin, director of the fiscal and financial affairs department of the NDRC, wrote in a recent article.
NetEase Profit Beats Estimates on ‘World of Warcraft’ Sales
Source: Bloomberg NewsNetEase.com Inc., China’s third- biggest online games provider, reported fourth-quarter profit that beat analysts’ estimates, as the company said its “World of Warcraft” title gained a “positive” response from users.
Net income fell 0.7 percent to 571.8 million yuan ($83.8 million), or 4.39 yuan per American depositary receipt, from 575.9 million yuan, or 4.46 yuan, a year earlier, NetEase said yesterday in a statement. The median of seven analyst estimates compiled by Bloomberg was profit of 531 million yuan.
Revenue rose 61 percent to 1.29 billion yuan from 801.7 million yuan. Profit fell because an 80 million-yuan tax benefit in the year-earlier period wasn’t repeated.
NetEase started offering Activision Blizzard Inc.’s “World of Warcraft” title in September to attract players in the world’s biggest Internet market, as competition from bigger rivals Tencent Holdings Ltd. and Shanda Games Ltd. intensified. The role-playing game, where players explore a fantasy world as an orc, troll, dwarf or human, is the most popular of its type in China, according to Morgan Stanley.
“NetEase’s sales were boosted by one full quarter of contributions from ‘World of Warcraft,’” Timothy Chan, who rates the stock “underperform” at CLSA Ltd. in Hong Kong, said before the earnings. “The company has been increasing spending to market the game.”
Response for the fantasy game was “highly positive,” Chief Executive Officer William Ding said in the statement.
Advertising Climbed
NetEase ADRs rose 2.1 percent to $38.24 in Nasdaq Stock Market trading before the earnings announcement. The shares have gained 1.6 percent this year.
Revenue from online games rose 64 percent to 1.1 billion yuan in the quarter, NetEase said. Sales of online advertising climbed 64 percent to 183.7 million yuan.
Response for the fantasy game was “highly positive,” Chief Executive Officer William Ding said in the statement.
Advertising Climbed
NetEase ADRs rose 2.1 percent to $38.24 in Nasdaq Stock Market trading before the earnings announcement. The shares have gained 1.6 percent this year.
Revenue from online games rose 64 percent to 1.1 billion yuan in the quarter, NetEase said. Sales of online advertising climbed 64 percent to 183.7 million yuan.
NetEase began operating “World of Warcraft” in China on Sept. 19, after taking over from previous licensee The9 Ltd. and gaining approval from the Ministry of Culture. NetEase said this month that the General Administration of Press and Publication accepted its application to offer the title, after a previous rejection by the government agency.
Expenses related to the game will lead to lower gross profit margin this quarter, Acting Chief Financial Officer Onward Choi said in a conference call today.
Gross profit margin, or the percentage of revenue after deducting the cost of sales, declined to 70.8 percent last quarter in the online game division, compared with 88 percent a year earlier, NetEase said, citing royalty and license fees for the “World of Warcraft.
Expenses related to the game will lead to lower gross profit margin this quarter, Acting Chief Financial Officer Onward Choi said in a conference call today.
Gross profit margin, or the percentage of revenue after deducting the cost of sales, declined to 70.8 percent last quarter in the online game division, compared with 88 percent a year earlier, NetEase said, citing royalty and license fees for the “World of Warcraft.
Source article: http://www.bloomberg.com/apps/news?pid=20601089&sid=ak97YaEKIu4g
Rural population could drop to 400m
Source: By Jin Zhu (China Daily)The country's rural population may drop to 400 million from the current 900 million in the next three decades because of rising urbanization, a senior official has forecast.
The rural population currently stands at 720 million, the latest population figures have shown. But the number does not include the 180 million rural residents who have left their hometowns to live in cities for more than half a year, Han Jun, a senior official at the State Council Development Research Center, was quoted as saying by Beijing News.
In the past 30 years, the urban population has increased by 400 million to hit 600 million. Of these people, 27 percent now live in cities but are not permanent residents.
"Currently, one in four residents in the cities come from the rural population. The current movement of labor from rural to urban areas is expected to continue in the future," Han said.
The country has about 240 million migrant workers, with about half of them born after 1980 and 40 million of them born in the 1990s, the latest official statistics show.
"Young migrant workers are reluctant to go back to the countryside and are eager to be new residents in cities," Han said.
A major policy document released last month addressed the young as "a new generation of migrant workers" for the first time and made it clear that the government is "striving for substantial reform of the household registration system" to help them to register in cities where they can then receive more social benefits.
"Hundreds of millions of farmers are now working for the development of cities and contribute a great deal to tax revenues where they live. However, they cannot enjoy the public services offered in cities. It is not fair," said Zhang Hulin, a professor with the Party School of the Central Committee of the CPC.
New-generation migrant workers mostly live in cities and work as security guards, waiters, construction and decoration laborers, and deliverymen.
"More and more citizens have felt the importance of migrant workers to their daily life. But low wages have also made many migrant workers unwilling to stay and work, especially in big cities," Zhang told China Daily yesterday.
So far, 13 provinces and cities such as Hebei and Liaoning have already piloted a unified household registration in rural and urban areas. But many say the reform falls short of offering benefits in education, housing and social security to the new population, Han said.
Source article: http://www.chinadaily.com.cn/bizchina/2010-02/25/content_9502683.htm
Tengzhong withdraws proposed acquisition of Hummer
Source: China DailySichuan Tengzhong Heavy Industrial Machinery Co Ltd (Tengzhong) Thursday announced that it is withdrawing its proposed acquisition of Hummer from General Motors (GM), having been unable to obtain clearance of the transaction from the Chinese regulators within the proposed deal timeframe.
Related readings: GM to shut down Hummer after China deal fizzles Tengzhong mulls new Hummer strategy GM's plan to sell Hummer to Tengzhong delayed Future of HUMMER still on rocky ground
Following talks with GM, both sides have decided to discontinue discussions on the transaction and terminate their definitive agreement. Tengzhong said it was disappointed that the transaction could not be further pursued, but respected the outcome.
Tengzhong worked earnestly to achieve an acquisition that it believed to be a tremendous opportunity to acquire a global brand at an attractive price, the company said.
The renewed investment to be made by Tengzhong and other investors would have provided Hummer's existing management team the ability to build greener utility vehicles that would have been attractive and useful in new markets such as China as well as the existing core markets.
Tengzhong expressed its sincere thanks to GM for working diligently with it. Meanwhile, the company also expressed its gratitude and good wishes to Hummer CEO Jim Taylor and the Hummer team, as well as the 3,000 people who produce and support the brand.
The renewed investment to be made by Tengzhong and other investors would have provided Hummer's existing management team the ability to build greener utility vehicles that would have been attractive and useful in new markets such as China as well as the existing core markets.
Tengzhong expressed its sincere thanks to GM for working diligently with it. Meanwhile, the company also expressed its gratitude and good wishes to Hummer CEO Jim Taylor and the Hummer team, as well as the 3,000 people who produce and support the brand.
Source article: http://www.china.org.cn/business/2010-02/25/content_19472564.htm
China Extends Lead as Top Food Producer--WTO
Source: ReutersGeneva, Feb 25 - China extended its position as the world's leading food producer in 2008, when its agricultural production jumped 30 percent, measured by value, World Trade Organization data show.
Chinese farm production rose to $759.94 billion in 2008, the latest year for which figures are available, from $584.25 billion in 2007, according to a note by the WTO secretariat, circulated on the WTO website and dated Feb. 23.
China is one of the few WTO members to have provided data for 2008.
The latest figure for the 27-member European Union's food output is $248.69 billion in 2000, the year China overtook it with $268.15 billion. Figures from some individual EU members suggest the EU may have regained the lead a year or so later only for China to pull ahead again conclusively by mid-decade.
U.S. agricultural production was $311.23 billion in 2007, the latest year for which data are available, up from $246.57 billion in 2006. China was already ahead of the U.S. in 1995 when the WTO series starts.
Because the figures measure the value not the volume of agricultural production, they say nothing about the 2008 food crisis which led to riots in several countries by poor consumers hit by a surge in prices combined with shortages of some staples.
China is one of the few WTO members to have provided data for 2008.
The latest figure for the 27-member European Union's food output is $248.69 billion in 2000, the year China overtook it with $268.15 billion. Figures from some individual EU members suggest the EU may have regained the lead a year or so later only for China to pull ahead again conclusively by mid-decade.
U.S. agricultural production was $311.23 billion in 2007, the latest year for which data are available, up from $246.57 billion in 2006. China was already ahead of the U.S. in 1995 when the WTO series starts.
Because the figures measure the value not the volume of agricultural production, they say nothing about the 2008 food crisis which led to riots in several countries by poor consumers hit by a surge in prices combined with shortages of some staples.
Wednesday, February 24, 2010
Israel to push China to support Iran sanctions
Source: ReutersBank of Israel governor Stanley Fischer flew to China on Wednesday to urge Beijing to back tough sanctions against Iran over its suspected nuclear weapons project.
Fischer, known to China from his time as a senior official of the IMF and World Bank, was accompanied by Israel's minister for strategic affairs, Moshe Yaalon, and representatives of Israel's National Security Council, Yaalon's spokesman said.
"They will discuss issues of common interest with the Chinese. This includes the Iranian issue, which is important for the Chinese as well as Israel," he said.
Israeli Prime Minister Benjamin Netanyahu this week called for an immediate embargo on Iran's energy sector.
Of the five members of the United Nations Security Council with veto power, China is most resistant to employing global sanctions to force Tehran to abandon its alleged atom-bomb plans, saying diplomacy can resolve the issue.
Beijing sees Iran as an important oil supplier and trade partner and a major strategic actor in the Middle East, where China, the world's No. 2 crude oil consumer, is buying growing volumes of oil.
Iran has the world's second-largest crude oil reserves, but desperately needs investment to develop them. It denies working to develop a nuclear warhead but insists on its right to create nuclear power-generating capacity.
Iran has the world's second-largest crude oil reserves, but desperately needs investment to develop them. It denies working to develop a nuclear warhead but insists on its right to create nuclear power-generating capacity.
Source article: http://www.reuters.com/article/idUSTRE61N2ZG20100224
China postpones some military exchanges with U.S.
Source: Reuters
China has postponed several high-level exchanges between U.S. and Chinese military leaders since Washington angered Beijing by announcing a $6.4 billion arms package for Taiwan, U.S. officials said Tuesday.
The Pentagon has sought to play down the tension over the arms sale, describing Beijing's response so far as limited in scope, and U.S. Defense Secretary Robert Gates said he still plans to visit China later this year.
China has postponed planned visits to the United States by its chief of the General Staff, as well as by one of its top regional military commanders, Pentagon officials said when asked about Beijing's retaliatory actions.
A planned visit to China by the commander of the U.S. Pacific Command has also been put off.
"There are other, as yet unscheduled, events the PRC (People's Republic of China) is not considering for the time being," a Pentagon official said.
But she added: "Nothing has been formally canceled."
In addition to scaling back security relations, China said it would sanction U.S. firms that sell weapons to Taiwan.
China has postponed planned visits to the United States by its chief of the General Staff, as well as by one of its top regional military commanders, Pentagon officials said when asked about Beijing's retaliatory actions.
A planned visit to China by the commander of the U.S. Pacific Command has also been put off.
"There are other, as yet unscheduled, events the PRC (People's Republic of China) is not considering for the time being," a Pentagon official said.
But she added: "Nothing has been formally canceled."
In addition to scaling back security relations, China said it would sanction U.S. firms that sell weapons to Taiwan.
But Pentagon officials and other observers in Washington pointed to signs Beijing wanted to keep a lid on tensions, and a Chinese military expert quoted in a Hong Kong newspaper appeared to echo those views.
Earlier this month, China allowed a U.S. aircraft carrier to berth in Hong Kong, a former British colony and now a self-administered territory under Chinese control.
China has sometimes barred U.S. navy ships from stopping at Hong Kong during times of tension, including in 2007, when the USS Kitty Hawk was denied entry.
Wang Xinjun, a researcher at the Chinese Academy of Military Sciences, a top institute of the People's Liberation Army, said Beijing's decision to allow the latest aircraft carrier visit showed China did not want tensions to spread.
"This move showed China has responded to the U.S. provocations with reason and restraint," Wang told the Ta Kung Pao, a Chinese-language Hong Kong newspaper run by the mainland.
Earlier this month, China allowed a U.S. aircraft carrier to berth in Hong Kong, a former British colony and now a self-administered territory under Chinese control.
China has sometimes barred U.S. navy ships from stopping at Hong Kong during times of tension, including in 2007, when the USS Kitty Hawk was denied entry.
Wang Xinjun, a researcher at the Chinese Academy of Military Sciences, a top institute of the People's Liberation Army, said Beijing's decision to allow the latest aircraft carrier visit showed China did not want tensions to spread.
"This move showed China has responded to the U.S. provocations with reason and restraint," Wang told the Ta Kung Pao, a Chinese-language Hong Kong newspaper run by the mainland.
"Although China-U.S. military ties are experiencing difficulties, and a breakthrough seems hard to find, we have reason to have confidence in the future of those ties," Wang said in an interview with the paper published on Wednesday.
Tensions flared up again last week when U.S. President Barack Obama held a low-key meeting at the White House with the Dalai Lama, Tibet's exiled leader. Beijing accused Washington of damaging ties but did not announce any broader retaliation.
When asked what actions China has taken to curb military-to-military contacts, Pentagon spokesman Bryan Whitman said: "We haven't noticed anything significant."
A Pentagon official said later it was "still early to speculate" on whether the row could affect other military engagements.
"The PRC (People's Republic of China) routinely uses our military to military relationship to express displeasure. Nevertheless, we are committed to maintaining a positive, cooperative and comprehensive relationship with China," she said.
When asked what actions China has taken to curb military-to-military contacts, Pentagon spokesman Bryan Whitman said: "We haven't noticed anything significant."
A Pentagon official said later it was "still early to speculate" on whether the row could affect other military engagements.
"The PRC (People's Republic of China) routinely uses our military to military relationship to express displeasure. Nevertheless, we are committed to maintaining a positive, cooperative and comprehensive relationship with China," she said.
Source article: http://www.reuters.com/article/idUSTRE61N0IU20100224
Diageo may take sip of Swellfun
Source: By Ding Qingfen (China Daily)Diageo, the world's leading premium drink provider, may soon purchase Sichuan Swellfun Co Ltd, a premium Chinese liquor producer by snapping up additional shares in parent company Sichuan Quanxing Group, analysts said yesterday.
Sichuan Swellfun announced that its shares were suspended from trading yesterday as the two major shareholders of Sichuan Quanxing Group, Swellfun's largest investor discuss further cooperation. The two stakeholders are Diageo and Chengdu Yingsheng Investment, owning 49 and 51 percent respectively.
"Since this cooperation would directly impact Swellfun's business, we have suspended share trading to avoid possible price turbulence," said the corporate statement on the Shanghai Stock Exchange. The company's shares will resume trading next Tuesday at the latest.
Swellfun refused to elaborate on the possible cooperation, and Diageo China unavailable for comment yesterday.
Since late 2008, rumors have been circulating over Diageo's alleged plan to become the largest shareholder in Swellfun by gaining a majority share of the liquor producer's parent company, Sichuan Quanxing.
In September 2009, Swellfun shares were suspended for a week after the company said Diageo and Yingsheng were discussing enhanced cooperation, but no progress was reported.
"Further cooperation means Diageo would very likely buy up more shares to become the largest shareholder of Sichuan Quanxing," said Huang Wei, a beverage analyst at China Jianyin Investment Securities.
Teng Wenfei, a beverage analyst from Shanghai Securities, agreed. "China is such an attractive market for Diageo as the consumption of liquor in many other markets worldwide has not recovered (after the financial crisis)," he said.
In December 2006, Diageo entered China's liquor market by purchasing a 43 percent share in Quanxing from Chengdu Yingsheng, the first overseas company to do so. In August 2008, Diageo snapped up another 6 percent.
Diageo entered China in 1995, and its business grew steadily even during the financial crisis when overseas sales were declining.
China's liquor market will see a "20 to 25 percent rise" in 2010, and China's high-end liquor consumption will surge by more than "30 percent", said a report from China Jianyin Investment Securities.
"It's a nice deal for Diageo to get involved in the market when it has a bigger voice in Swellfun,"said Teng.
In China, the profit ratio for high-end liquor producers such as Moutai and Wuliangye, China's top two players, is 85 to 90 percent, he said.
Swellfun is a major Chinese medium- and high-end liquor producer, and its profit ratio is around 40 percent. During the third quarter of 2009, Swellfun's sales grew by 23.2 percent to 400 million yuan, but its profits slid 51 percent to 48.69 million.
However, analysts questioned whether the government would approve the deal even if the two sides reach an agreement given the huge potential of the liquor market - and its fat profits.
Last March, the Chinese government gave the thumbs down to a proposed bid by CocaCola for Huiyuan Juice, China's leading fruit juice maker, citing anti-monopoly laws.
Diageo entered China in 1995, and its business grew steadily even during the financial crisis when overseas sales were declining.
China's liquor market will see a "20 to 25 percent rise" in 2010, and China's high-end liquor consumption will surge by more than "30 percent", said a report from China Jianyin Investment Securities.
"It's a nice deal for Diageo to get involved in the market when it has a bigger voice in Swellfun,"said Teng.
In China, the profit ratio for high-end liquor producers such as Moutai and Wuliangye, China's top two players, is 85 to 90 percent, he said.
Swellfun is a major Chinese medium- and high-end liquor producer, and its profit ratio is around 40 percent. During the third quarter of 2009, Swellfun's sales grew by 23.2 percent to 400 million yuan, but its profits slid 51 percent to 48.69 million.
However, analysts questioned whether the government would approve the deal even if the two sides reach an agreement given the huge potential of the liquor market - and its fat profits.
Last March, the Chinese government gave the thumbs down to a proposed bid by CocaCola for Huiyuan Juice, China's leading fruit juice maker, citing anti-monopoly laws.
Google China Is Hiring as Withdrawal Concerns Ease
Source: Bloomberg NewsGoogle Inc.’s China business is hiring and advertisers are returning, as concerns ease that the government will shut the company’s operations after it threatened to defy censorship rules.
“Things have stabilized,” said Vincent Kobler, managing director at EmporioAsia Leo Burnett in Shanghai, which buys advertising on behalf of clients on Google and Chinese market leader Baidu Inc. Still, the owner of the world’s most popular Internet search engine needs to resolve its future in China quickly to avoid falling further behind its rival, he said.
Six weeks after Google said it planned to stop censoring its Web site in the world’s largest Internet market, the company is recruiting engineers, managers and sales staff. The prospect of an exit, which Kobler said initially boosted advertisers’ spending at Baidu, has receded as executives negotiate ways to keep the company’s business in the country.
“Customers are considering Google for future ad campaigns again,” said Steven Chang, chief executive officer for China at ZenithOptimedia Group Ltd., which buys advertising on Google’s site on behalf of companies.
Clients are returning after Chang said more than 20 percent of Google’s customers in the Asian nation probably switched to alternative paid-search providers in the wake of the U.S. company’s Jan. 12 announcement that it may withdraw from the Chinese market.
Orders Fall
Beijing-based Baidu this month forecast its first-quarter sales will rise more than analyst estimates as Chief Executive Officer Robin Li said clients became more confident about the company following Google’s announcement.
Some Google sales agents said China advertising orders fell 50 percent after the Mountain View, California-based company threatened to close its local Web site, China Business News reported Jan. 29, citing unidentified agents.
Google fell $7.73 to $535.07 at 4 p.m. New York time yesterday in Nasdaq Stock Market trading. The shares have declined 14 percent this year.
“It’s business as usual in Google’s China offices, including hiring,” the company said in an e-mailed response to Bloomberg News today. Google is recruiting for more than 30 posts in China, according to its Web site.
“The hirings are the first since Google’s announcement,” said Li Zhi, a Beijing-based analyst at research company Analysys International. “The hirings show things are returning to normal.”
New Services
The search engine operator started offering travel information for mobile-phone users in China and introduced new messaging services for the Chinese New Year festival earlier this month, according to the company’s blog.
Some Google sales agents said China advertising orders fell 50 percent after the Mountain View, California-based company threatened to close its local Web site, China Business News reported Jan. 29, citing unidentified agents.
Google fell $7.73 to $535.07 at 4 p.m. New York time yesterday in Nasdaq Stock Market trading. The shares have declined 14 percent this year.
“It’s business as usual in Google’s China offices, including hiring,” the company said in an e-mailed response to Bloomberg News today. Google is recruiting for more than 30 posts in China, according to its Web site.
“The hirings are the first since Google’s announcement,” said Li Zhi, a Beijing-based analyst at research company Analysys International. “The hirings show things are returning to normal.”
New Services
The search engine operator started offering travel information for mobile-phone users in China and introduced new messaging services for the Chinese New Year festival earlier this month, according to the company’s blog.
Life at Google’s Beijing office settled back to normal a couple of weeks after the pullout threat, said a female employee who didn’t want to give her name. She said workers had initially panicked when they heard the news in January.
Google’s share of the Chinese paid-search market is expected to remain stable this quarter, Li said. The company’s market share in China increased to 35.6 percent in the fourth quarter from 31.3 percent in the previous three months, according to Analysys. Baidu’s share fell to 58.6 percent from 63.9 percent in the same period, according to the researcher.
Google said Jan. 12 it was subject to “highly sophisticated” cyber attacks from China aimed at obtaining proprietary information and personal data of human rights activists, sparking calls from the U.S. for an investigation. The company said it may have to pull out of China pending censorship talks with Chinese authorities.
Cyber Attacks
The Chinese government has said it doesn’t engage in cyber attacks and is itself a victim of breaches of Internet security.
Google’s share of the Chinese paid-search market is expected to remain stable this quarter, Li said. The company’s market share in China increased to 35.6 percent in the fourth quarter from 31.3 percent in the previous three months, according to Analysys. Baidu’s share fell to 58.6 percent from 63.9 percent in the same period, according to the researcher.
Google said Jan. 12 it was subject to “highly sophisticated” cyber attacks from China aimed at obtaining proprietary information and personal data of human rights activists, sparking calls from the U.S. for an investigation. The company said it may have to pull out of China pending censorship talks with Chinese authorities.
Cyber Attacks
The Chinese government has said it doesn’t engage in cyber attacks and is itself a victim of breaches of Internet security.
Google has started talks with the Chinese government and will be “making some changes” in its operations in China in “a reasonably short time from now,” Chief Executive Officer Eric Schmidt said on Jan. 21. The company was still following Chinese laws and censoring its search results locally, he said at the time.
China censors online content it deems critical of the government or a threat to public order and morals by shutting down Web sites based in the nation and blocking access to overseas sites including those of Facebook Inc., Twitter Inc. and Google’s YouTube. Authorities also censor media through state ownership of all newspapers, television and radio stations.
‘Totally Groundless’
The New York Times reported Feb. 18 that the cyber attacks on Google and other American companies had been traced to hackers in Shanghai Jiaotong University and Lanxiang Vocational School in eastern China’s Shandong province. The reports are “totally groundless,” said Qin Gang, a spokesman for China’s Foreign Ministry.
“Many people, especially some foreign media, used it to attack China’s investment environment,” Wang Chao, China’s Assistant Minister of Commerce said at a briefing in Beijing today.
An exit from China would cost Google, whose revenue growth slowed during the U.S. recession, $600 million in annual sales, JPMorgan Chase & Co. said in January.
China may have 840 million Internet users, or 61 percent of the population, by 2013, according to EMarketer Inc. in New York. The country had 384 million at the end of last year, according to government data.
China censors online content it deems critical of the government or a threat to public order and morals by shutting down Web sites based in the nation and blocking access to overseas sites including those of Facebook Inc., Twitter Inc. and Google’s YouTube. Authorities also censor media through state ownership of all newspapers, television and radio stations.
‘Totally Groundless’
The New York Times reported Feb. 18 that the cyber attacks on Google and other American companies had been traced to hackers in Shanghai Jiaotong University and Lanxiang Vocational School in eastern China’s Shandong province. The reports are “totally groundless,” said Qin Gang, a spokesman for China’s Foreign Ministry.
“Many people, especially some foreign media, used it to attack China’s investment environment,” Wang Chao, China’s Assistant Minister of Commerce said at a briefing in Beijing today.
An exit from China would cost Google, whose revenue growth slowed during the U.S. recession, $600 million in annual sales, JPMorgan Chase & Co. said in January.
China may have 840 million Internet users, or 61 percent of the population, by 2013, according to EMarketer Inc. in New York. The country had 384 million at the end of last year, according to government data.
Source article: http://www.bloomberg.com/apps/news?pid=20601089&sid=arbc4_ButJTs
China To Resume Personal Website Domain Name Registrations
Source: China Tech NewsChina's Ministry of Industry and Information Technology has issued to domain name registrars a circular which asks further work to be done to verify the registration information of websites in the coming weeks.
MIIT issued a circular and initiated a government-led crackdown on pornographic content in December 2009 when it asked domain name service providers to verify domain name applicant's personal information, keep a copy of their valid personal ID certificates, and conduct inspections on the main content, contact details and Internet access information of websites using the .CN and .COM designations within China.
MIIT stated in the new circular, which is intended for local communications management bureau, China Internet Network Information Center, the Internet Society of China and the three major telecom operators in China, that both companies and individuals can apply for domain names, but the person in charge of a website needs to submit a color headshot photo for verification purposes. The circular states that domain name service providers shall review the application materials within 20 working days and issue the registration serial number and access unit to those qualified persons. Meanwhile, they shall make sure that the information of the principal of the website not be disclosed and the application materials be kept confidential.
MIIT required Internet access service providers to set up an on-site verification division by the end of February 2010 and verify the registration information before the end of March for the basic telecom service providers to check in April. MIIT said the authenticity of all registration information will be validated by the end of September 2010.
On December 11, CNNIC enacted a rule which asked for the registration of .CN domain names by individuals to be suspended. Chinese media reports that CNNIC is now drafting regulations to allow individuals to register a .CN domain name. A representative from CNNIC said that the purpose for making the regulation is to retain users and websites while still following the letter of the law.
Tuesday, February 23, 2010
Have You Heard...
- China says Google hacking claims "groundless"
- Google-China Talks to Resume
- Roche Expects China to Account for Half of Drug Sales in Asia
- Safety of food chain ensured at source
- TPG, KKR Said to Near Purchase of CICC Stake in China
- All is fair game in a world of media convergence
- Calvin Klein To Focus On Chinese Market In 2010
China says Google hacking claims "groundless"
Source: ReutersGoogle's assertion that its computers were attacked by hackers based in China was "groundless," Beijing said on Tuesday, hardening its rhetoric in a spat with Washington over Internet freedom.
The remarks from Foreign Ministry spokesman Qin Gang were the first direct rejection of the firm's allegations. China had previously defended its right to censor content on the Internet and brushed aside the hacking accusations, saying Google must abide by Chinese law.
"Google's statement from January 12 is groundless, and we are firmly opposed to it," Qin told a regular news briefing in the Chinese capital, when asked if there had been any development in a dispute that is now more than a month old.
"China administers its internet according to law, and this position will not change. China prohibits hacking and will crack down on hacking according to law," he added.
Google, the world's top search engine, said in January it had uncovered sophisticated China-based attacks on human rights activists using its Gmail service around the world.
Google said other firms had also been affected, and after checks into the attacks, the firm had decided it was no longer willing to tolerate censorship on its Google.cn search engine. Google also threatened to shut its China offices.
"Google's statement from January 12 is groundless, and we are firmly opposed to it," Qin told a regular news briefing in the Chinese capital, when asked if there had been any development in a dispute that is now more than a month old.
"China administers its internet according to law, and this position will not change. China prohibits hacking and will crack down on hacking according to law," he added.
Google, the world's top search engine, said in January it had uncovered sophisticated China-based attacks on human rights activists using its Gmail service around the world.
Google said other firms had also been affected, and after checks into the attacks, the firm had decided it was no longer willing to tolerate censorship on its Google.cn search engine. Google also threatened to shut its China offices.
Washington backed Google and urged Beijing to investigate the hacking complaints thoroughly and transparently.
The dispute about Internet censorship has added to tensions about issues ranging from trade and the Chinese currency, to a meeting last week between U.S. President Barack Obama and exiled Tibetan leader the Dalai Lama.
The issue was pushed back into headlines by recent reports in the Western media that the attacks had been traced to two schools in China, and the writer of the spyware used had been identified as a Chinese security consultant in his 30s with government links.
The prestigious Shanghai Jiaotong University and previously unknown Lanxiang vocational college, a high-school level institution, have both denied any role in the attacks.
The foreign ministry's Qin said the schools' comments showed the reports were false, as were claims of a link with Beijing.
The dispute about Internet censorship has added to tensions about issues ranging from trade and the Chinese currency, to a meeting last week between U.S. President Barack Obama and exiled Tibetan leader the Dalai Lama.
The issue was pushed back into headlines by recent reports in the Western media that the attacks had been traced to two schools in China, and the writer of the spyware used had been identified as a Chinese security consultant in his 30s with government links.
The prestigious Shanghai Jiaotong University and previously unknown Lanxiang vocational college, a high-school level institution, have both denied any role in the attacks.
The foreign ministry's Qin said the schools' comments showed the reports were false, as were claims of a link with Beijing.
"Reports that these attacks came from Chinese schools are totally groundless and the accusation of Chinese government involvement is also irresponsible and driven by ulterior motives," Qin said.
GOOGLE-CHINA TALKS
The official Xinhua news agency lashed out as well, with a commentary saying the stories were "arbitrary and full of bias."
Chinese people know little about online security, and so their computers can easily be taken over by hackers to give the impression that the hackers are based in China, it said.
Google's Chinese-language search engine is still censoring results, but talks between the firm and the Chinese government, on whether the firm might be able to run an unrestricted search service within Chinese law, have restarted, the Wall Street Journal reported on Tuesday.
They had taken a break over Chinese New Year, the biggest holiday of the year when most of the country grinds to a halt.
Qin declined to comment directly on any negotiations, saying he had no details but "relevant officials are having smooth communication with relevant internet companies."
GOOGLE-CHINA TALKS
The official Xinhua news agency lashed out as well, with a commentary saying the stories were "arbitrary and full of bias."
Chinese people know little about online security, and so their computers can easily be taken over by hackers to give the impression that the hackers are based in China, it said.
Google's Chinese-language search engine is still censoring results, but talks between the firm and the Chinese government, on whether the firm might be able to run an unrestricted search service within Chinese law, have restarted, the Wall Street Journal reported on Tuesday.
They had taken a break over Chinese New Year, the biggest holiday of the year when most of the country grinds to a halt.
Qin declined to comment directly on any negotiations, saying he had no details but "relevant officials are having smooth communication with relevant internet companies."
Source article: http://www.reuters.com/article/idUSTRE61M2FM20100223
Google-China Talks to Resume
Source: Wall Street Journal by Jessica E. VascellaroGoogle Inc. representatives are scheduled to resume discussions in coming days with Chinese officials about the fate of Google's China business, said people briefed on the matter.
The schedule and the status of the talks, which are being picked up after a break for the Chinese New Year holiday, are unclear. Among the range of Google officials handling the talks on the ground is Google policy executive, Ross LaJeunesse, said people familiar with the matter.
Any resolution to the matter of whether Google will be able to operate an unfiltered search engine in the country is likely to be at least weeks away, said one of the people.
The talks were triggered by Google's January announcement that it will no longer censor its Chinese search engine, after it discovered it was hit by a cyber attack it traced to the country.
Google at the time said it planned to talk to Chinese officials about the extent to which Google could operate an unfiltered search engine in China. Google acknowledged it may have to shut down its Chinese search engine, Google.cn, and potentially its offices in the country.
Any resolution to the matter of whether Google will be able to operate an unfiltered search engine in the country is likely to be at least weeks away, said one of the people.
The talks were triggered by Google's January announcement that it will no longer censor its Chinese search engine, after it discovered it was hit by a cyber attack it traced to the country.
Google at the time said it planned to talk to Chinese officials about the extent to which Google could operate an unfiltered search engine in China. Google acknowledged it may have to shut down its Chinese search engine, Google.cn, and potentially its offices in the country.
Since then, executives have said little publicly about the sensitive discussions, including about who is involved. In an interview at a conference earlier this month, Google co-founder Sergey Brin reiterated that the company intends to stop censoring political material on Google.cn.
Mr. LaJeunesse, who moved to China in recent months after joining Google in 2008, was formerly deputy chief of staff and senior adviser to California Governor Arnold Schwarzenegger.
A Google spokeswoman Monday declined to comment on any talks. "As we have repeatedly made clear, we are not going to be engaging in a running commentary about discussions we may or may not be having with the Chinese government," she said.
Chinese officials have said repeatedly that Google and other foreign companies operating in China must follow the country's rules, but the government has said nothing about any discussions with Google.
Mr. LaJeunesse, who moved to China in recent months after joining Google in 2008, was formerly deputy chief of staff and senior adviser to California Governor Arnold Schwarzenegger.
A Google spokeswoman Monday declined to comment on any talks. "As we have repeatedly made clear, we are not going to be engaging in a running commentary about discussions we may or may not be having with the Chinese government," she said.
Chinese officials have said repeatedly that Google and other foreign companies operating in China must follow the country's rules, but the government has said nothing about any discussions with Google.
Roche Expects China to Account for Half of Drug Sales in Asia
Source: Bloomberg News By Simeon Bennett and Regina TanRoche Holding AG expects sales of drugs in China to account for about half of all pharmaceutical revenue from the Asia-Pacific region within three years, spurred by higher incomes and the nation’s health reforms.
Sales in China rose more than 20 percent to about 800 million Swiss francs ($743 million) last year, Luke Miels, head of Roche’s pharmaceuticals unit in Asia Pacific, said in a telephone interview from Shanghai yesterday. Asia Pacific sales rose about 12 percent to 1.9 billion Swiss francs, making it the Basel, Switzerland-based company’s fastest-growing region.
Roche, which moved its regional headquarters to Shanghai from Sydney last year, is benefiting as higher incomes and cancer rates in the world’s most populous nation spur demand for its Herceptin and Rituxan oncology drugs. The company expects further gains from China’s 850 billion-yuan ($125 billion) plan to make health care affordable to more people.
“We think this is going to have a fundamental influence on the structure of pharmaceuticals,” Miels said. “When you look at the volumes and the number of patients involved in China, as well as the emphasis that the government is putting on manufacturing quality, we really see the future in China as being high-quality local generics, and high-tech innovation.”
Smokers
Herceptin, against breast cancer, and the lymphoma treatment Rituxan earned Roche more than 200 million Swiss francs each in Asia last year, Miels said. The company is also gaining from sales of treatments for diseases common in the region, such as Xeloda for gastric and colorectal tumors, and Tarceva for lung cancer. One in three of the world’s smokers lives in China, Miels said.
“Where you’re seeing this increase in wealth associated with economic success, then naturally you’re seeing a greater access to more innovative drugs,” he said.
Roche may also benefit from rising rates of heart disease and diabetes in the region if late-stage patient studies of two experimental drugs are successful. The company’s testing dalcetrapib, which raises the level of “good cholesterol” in the body, and the aleglitazar compound for people with diabetes who’ve suffered a heart attack or stroke.
Source article: http://www.bloomberg.com/apps/news?pid=20601089&sid=aFOpV_LittPw
Safety of food chain ensured at source
Source: By Wang Yan and Shan Juan (China Daily)Regulation aims to strengthen supervision of animal feed
Controls on animal feed will be tightened to ensure animal health amid efforts to restore public confidence in food safety.
Animal raisers face a fine of up to 50,000 yuan ($7,320) for improper use of feed and additives, including practices such as adding illegal materials to animal feed and feed additives, and using meat and bone meal for ruminant livestock feed, according to a draft regulation made public over the weekend to solicit public opinion.
The draft regulation also stipulates that animal feed and feed additive companies are obliged to immediately recall products upon discovery of any defect that may harm animals or people.
Other stipulations in the draft include those covering imports and exports. For example, foreign companies are only allowed to sell feed and additives in China through domestic branches or local agents.
The full text of the draft regulation can be found on the website of the State Council Legislative Affairs Office, and feedback can be sent before March 15.
The office said the draft regulation is to meet the increasing public demand for better quality and safety of animal products.
Safety issues dogging the feed industry include illegal additives, lack of quality and safety controls over the production process, and light punishment for offenders, the office said.
"The most common illegal feed additives are protein materials," Wang Dingmian, former chairman of the Guangdong Provincial Dairy Association, told China Daily yesterday.
He said the reason is that the protein level is a major indicator in feedstuff tests.
"The higher the protein level, the pricier the feed."
He said although not all protein additives may result in harm to animals or people, unregulated usage of such materials could lead to other problems.
"Animal feed is the source of the food safety chain. Unregulated feed additives may lower the quality of animal products like meat and milk," he said.
Wang mentioned that after the melamine-tainted milk crisis in 2008, which led to the death of at least six children and sickened over 300,000 others, some of the milk which was not confiscated was sold to feed companies.
"It is dangerous because once melamine goes into animal feed, it runs along the food chain and may finally end up in human bodies," he said.
"So the government is taking action from the starting point," Wang said.
Dairy products are the only animal-sourced material allowed in feed and feed additives, according to the draft.
"It is dangerous because once melamine goes into animal feed, it runs along the food chain and may finally end up in human bodies," he said.
"So the government is taking action from the starting point," Wang said.
Dairy products are the only animal-sourced material allowed in feed and feed additives, according to the draft.
Yan Weixing, deputy director of the National Institute of Nutrition and Food Safety affiliated to the Chinese Center for Disease Control and Prevention, told China Daily yesterday that safe animal feed would help ensure healthy animals and people.
Citing the mass food poisoning case last year in Guangdong province, he said: "About 70 people fell ill after eating organs, mainly liver, harvested from pigs fed with the banned chemical clenbuterol," he noted. Clenbuterol, which is poisonous to humans and could be fatal, is used to prevent pigs from accumulating fat.
Also, malachite green, the chemical which battles fish parasites and fungal infections, is still used in fish farms despite a government ban imposed in 2002, Yan said.
"Some farmers continue to use antibiotics because they are cheap and effective," he said.
With the residue passing to humans through the food, it would raise bacterial resistance and make drugs less effective for treating various human infections.
Citing the mass food poisoning case last year in Guangdong province, he said: "About 70 people fell ill after eating organs, mainly liver, harvested from pigs fed with the banned chemical clenbuterol," he noted. Clenbuterol, which is poisonous to humans and could be fatal, is used to prevent pigs from accumulating fat.
Also, malachite green, the chemical which battles fish parasites and fungal infections, is still used in fish farms despite a government ban imposed in 2002, Yan said.
"Some farmers continue to use antibiotics because they are cheap and effective," he said.
With the residue passing to humans through the food, it would raise bacterial resistance and make drugs less effective for treating various human infections.
TPG, KKR Said to Near Purchase of CICC Stake in China
Source: Bloomberg News Cathy ChanTPG Capital LLP and Kohlberg Kravis Roberts & Co. are in final talks to buy Morgan Stanley’s stake in China International Capital Corp., the first Sino-foreign investment bank, for more than $1 billion, said four people with knowledge the matter.
The U.S. private equity firms plan to equally split Morgan Stanley’s 34.3 percent holding in CICC, the people said, asking not to be identified because the talks are confidential. Bain Capital LLC lost out in bidding for the stake after offering less than $1 billion, one person said.
Selling the stake will allow Morgan Stanley to build its own investment bank in China after being a shareholder in CICC for a decade without having management control. It’s the bank’s second attempt to dispose of the stake, after talks with buyout firms fell apart in early 2008 on disagreements about price. New York-based Morgan Stanley invested $35 million in CICC when it was established in 1995.
“It’s a good profit and Morgan Stanley has been seeking to build its own platform as they can’t exert influence on CICC,” said Liang Jing, a Shanghai-based analyst at Guotai Junan Securities Co. “For the buyout funds, it’s nice choice of investment if you don’t mind being a passive investor.”
Morgan Stanley ceded management control in 2000 and CICC is now run by Levin Zhu, the son of former Chinese Premier Zhu Rongji.
China Fortune
The Chinese government allowed Morgan Stanley to invest in CICC in return for the expertise required to build China’s first investment bank. Elaine La Roche, the last Morgan Stanley- appointed head of CICC, stepped down in June 2000. The partners bickered about compensation, management and strategy and that lack of consensus worked against both firms, she said in a 2005 interview.
Wei Christianson, Morgan Stanley’s chief executive officer in China, declined to comment, as did Joshua Goldman-Brown, an outside spokesman for KKR in Hong Kong, and officials at TPG. The Wall Street Journal and Financial Times earlier reported the two buyout firms are close to acquiring the CICC stake.
Morgan Stanley signed an initial agreement in 2007 to buy a one-third stake in China Fortune Securities Co. Regulators declined to sign off on that venture, partly because Morgan Stanley already owned a stake in CICC, people with knowledge of the matter have said.
“They have to start building the business from scratch and it will take five years before they can expand beyond underwriting business if they decide to be on their own,” Liang said.
Top Underwriter
The China Securities Regulatory Commission said late 2007 that overseas-invested financial firms that had been operating for five years would be allowed to expand into brokerage services.
CICC was last year’s top manager of Chinese domestic equity offerings, rising from No. 2 in 2008, according to data compiled by Bloomberg. Domestic equity and equity-linked sales in China rose to 245.6 billion yuan ($36 billion) in 2009 from 232 billion yuan a year earlier.
Buyout firms including TPG, Bain Capital, CV Starr & Co., J.C. Flowers & Co. and General Atlantic LLC showed interest in the CICC stake in 2008, people familiar said at the time.
Goldman Sachs Group Inc. was the first Wall Street investment bank to gain approval to form a securities venture in China in 2004, followed by UBS AG.
Credit Suisse Group AG and Deutsche Bank AG ventures won approval to underwrite bond and stock sales in 2008 and 2009 respectively, while Macquarie Group Ltd. is in the process of getting regulatory approval. CLSA Asia-Pacific Markets, the regional broking arm of Credit Agricole SA, formed its China venture in 2003.
CICC was last year’s top manager of Chinese domestic equity offerings, rising from No. 2 in 2008, according to data compiled by Bloomberg. Domestic equity and equity-linked sales in China rose to 245.6 billion yuan ($36 billion) in 2009 from 232 billion yuan a year earlier.
Buyout firms including TPG, Bain Capital, CV Starr & Co., J.C. Flowers & Co. and General Atlantic LLC showed interest in the CICC stake in 2008, people familiar said at the time.
Goldman Sachs Group Inc. was the first Wall Street investment bank to gain approval to form a securities venture in China in 2004, followed by UBS AG.
Credit Suisse Group AG and Deutsche Bank AG ventures won approval to underwrite bond and stock sales in 2008 and 2009 respectively, while Macquarie Group Ltd. is in the process of getting regulatory approval. CLSA Asia-Pacific Markets, the regional broking arm of Credit Agricole SA, formed its China venture in 2003.
Source article: http://www.bloomberg.com/apps/news?pid=20601089&sid=a4DsvW9ilYPo
All is fair game in a world of media convergence
Source: By Chen Limin (China Daily)Online game providers and movie companies are entering each other's fields in an effort to increase their presence in China's entertainment market.
Perfect World, the fifth-largest online game operator in China, said it would shoot several more films this year after the success of its first offering.
The firm's first movie, Sofie's Revenge - starring well-known Chinese actress Zhang Ziyi - pulled in 97 million yuan at the box office last year, according to Zhu Qi, president of the NASDAQ-listed company.
That's comparable to the "half year revenue from an online game with 100,000 to 200,000 players", Zhu said, adding that it's a new "revenue-generator".
"There are some 60 million online game players in China, but through movies we can reach many more people," Zhu said.
The company aims to be ranked among the top three movie companies this year, up from fifth position afforded by Sofie's Revenge.
China's online game market hit 25.6 billion yuan in 2009, a year-on-year increase of 39.4 percent, according to the General Administration of Press and Publications. Yet with the market already saturated with nearly 500 online game operators, the days of quick and easy profits may be over.
"The cost of developing, popularizing and operating an online game is much higher nowadays," said Yang Zhen, president of KongZhong Corporation, a NASDAQ-listed online game provider and mobile Internet provider.
"Market share will gradually be limited to just a few large companies," Yang said.
Fierce competition has forced online game providers to launch more competitive products while seeking other profit-making ploys to allay costs.
Perfect World is not the only company to come up with the idea of combining online games and movies. Earlier this month, Shanda Games Ltd, China's second largest online game operator, obtained the rights to develop a movie based upon The Legend of Mir II, the most popular multiplayer online role-playing game in China during 2002-03.
Former Shanda Games CEO Diana Li said the company would expand into movies through cooperation with subsidiaries under its parent Shanda Interactive Entertainment Ltd.
"The cost of developing, popularizing and operating an online game is much higher nowadays," said Yang Zhen, president of KongZhong Corporation, a NASDAQ-listed online game provider and mobile Internet provider.
"Market share will gradually be limited to just a few large companies," Yang said.
Fierce competition has forced online game providers to launch more competitive products while seeking other profit-making ploys to allay costs.
Perfect World is not the only company to come up with the idea of combining online games and movies. Earlier this month, Shanda Games Ltd, China's second largest online game operator, obtained the rights to develop a movie based upon The Legend of Mir II, the most popular multiplayer online role-playing game in China during 2002-03.
Former Shanda Games CEO Diana Li said the company would expand into movies through cooperation with subsidiaries under its parent Shanda Interactive Entertainment Ltd.
Over the past few years, Shanda Interactive has delved into games, literature, music, movies, online videos as well as the tourism industry by setting up joint ventures and making new acquisitions.
Another online game provider, Kingsoft Corporation Limited, also plans to shoot a TV series based on one of its games.
"It's become a trend that not only online games and movies, but also other entertainment industries, will merge with one another in the future," said Yu Yi, an analyst at research firm Analysys International.
China Film Group Corporation, the country's largest film maker, is eyeing the online game market. The corporation will establish a new company and develop online games, said Jiang Defu, general manager of a subsidiary of the corporation.
China Film Group previously made its way into the market earlier by weaving the plots of its movies into online games via cooperation with game developers.
Golden Eagle Broadcasting System, whose Hunan TV has long been a household name among TV viewers, also followed suit to set foot into the online gaming market. It said it may launch its own online game in March or April, and would also act as an operator.
Movie companies can make use of their sway over their actors and actresses, but they also have to deal with technical challenges and already fierce competition when entering the online gaming industry, said Yu.
Chinese box office revenues surged 43 percent to 6.2 billion yuan in 2009, according to the State Administration of Radio, Film and Television. This figure is still small when compared with US box office takings, which were $9.9 billion.
Another online game provider, Kingsoft Corporation Limited, also plans to shoot a TV series based on one of its games.
"It's become a trend that not only online games and movies, but also other entertainment industries, will merge with one another in the future," said Yu Yi, an analyst at research firm Analysys International.
China Film Group Corporation, the country's largest film maker, is eyeing the online game market. The corporation will establish a new company and develop online games, said Jiang Defu, general manager of a subsidiary of the corporation.
China Film Group previously made its way into the market earlier by weaving the plots of its movies into online games via cooperation with game developers.
Golden Eagle Broadcasting System, whose Hunan TV has long been a household name among TV viewers, also followed suit to set foot into the online gaming market. It said it may launch its own online game in March or April, and would also act as an operator.
Movie companies can make use of their sway over their actors and actresses, but they also have to deal with technical challenges and already fierce competition when entering the online gaming industry, said Yu.
Chinese box office revenues surged 43 percent to 6.2 billion yuan in 2009, according to the State Administration of Radio, Film and Television. This figure is still small when compared with US box office takings, which were $9.9 billion.
Calvin Klein To Focus On Chinese Market In 2010
Source: China Retail NewsAmerican fashion brand Calvin Klein has announced plans to open 60 new chain stores in Asia in 2010, mainly targeting its expansion in the Chinese market.
According to reports from Singapore's Channel News Asia, Calvin Klein's current revenues from the Asian areas account for 15% of its income worldwide.
Tom Murry, the president of Calvin Klein, said that the company saw the Asian region growing about 10% in 2009 and China was the biggest growth area. By the end of January 2010, which was also the end of the company's fiscal year, Calvin Klein's growth rate in the Chinese market had reached about 30%.
China is expected to contribute about 70% of Calvin Klein's growth in Asia in 2010. The marketplace currently accounts for about USD1 billion of Calvin Klein's overall global sales of USD6 billion and the proportion continues to grow.
Calvin Klein plans to open about 60 new independent stores in Asia, adding to over 300 existing specialty stores in the region.
Monday, February 22, 2010
Despite China, U.S. says Taiwan air force needs help
Source: ReutersTaiwan's fighter jets would fall short in combat against military rival China, the U.S. government said in a report on Monday that could lead to new weapons sales sure to anger Beijing.
Many of Taiwan's roughly 400 combat aircraft would not work in action due to age and maintenance problems, while protection of the island's airfields little more than 160 km (100 miles) from China was a major issue, the U.S. government's Defense Intelligence Agency said in the report, released in Taiwan.
The one-off report, ordered by Congress, says upgrades are needed as China gets stronger. The United States is Taiwan's top arms supplier but also wants to improve its ties with Beijing.
China reacted angrily last month after President Barack Obama's administration unveiled its first arms package for self-ruled Taiwan, which Beijing claims as its own, saying it would impose unspecified sanctions on the companies involved.
Another jolt in Sino-U.S. relations could shake markets in Asia further after their bout of nerves over the reaction to last month's $6.4 billion U.S. weapons proposal.
"Although Taiwan has nearly 400 combat aircraft in service, far fewer of these are operationally capable," the report says.
"In recent years, the Chinese People's Liberation Army has increased the quantity and sophistication of its ballistic and cruise missiles and fighter aircraft opposite Taiwan, which has diminished Taiwan's ability to deny PRC efforts to attain air superiority in a conflict," it says.
Taiwan is seeking 66 new U.S.-made F-16 fighter jets, but Washington officials wary of another China backlash have hedged on the request, saying they must evaluate Taiwan's overall defense needs.
Congress may use the report to pressure the Pentagon into approving the F-16s, said Wendell Minnick, Asia bureau chief with Defense News.
Beijing has claimed sovereignty over Taiwan since 1949, when Mao Zedong's forces won the Chinese civil war and Chiang Kai-shek's KMT fled to the island. China has threatened to attack if Taiwan tries to formalize its de facto independence.
The United States switched diplomatic recognition from Taipei to Beijing in 1979, recognizing "one China". But it remains Taiwan's biggest ally and is obliged by the 1979 Taiwan Relations Act to help the island defend itself.
"In recent years, the Chinese People's Liberation Army has increased the quantity and sophistication of its ballistic and cruise missiles and fighter aircraft opposite Taiwan, which has diminished Taiwan's ability to deny PRC efforts to attain air superiority in a conflict," it says.
Taiwan is seeking 66 new U.S.-made F-16 fighter jets, but Washington officials wary of another China backlash have hedged on the request, saying they must evaluate Taiwan's overall defense needs.
Congress may use the report to pressure the Pentagon into approving the F-16s, said Wendell Minnick, Asia bureau chief with Defense News.
Beijing has claimed sovereignty over Taiwan since 1949, when Mao Zedong's forces won the Chinese civil war and Chiang Kai-shek's KMT fled to the island. China has threatened to attack if Taiwan tries to formalize its de facto independence.
The United States switched diplomatic recognition from Taipei to Beijing in 1979, recognizing "one China". But it remains Taiwan's biggest ally and is obliged by the 1979 Taiwan Relations Act to help the island defend itself.
Source article: http://www.reuters.com/article/idUSTRE61L1JE20100222
Tsingtao Brewery Sees FY Net Up 75% to 85% From Year Earlier
Source: Bloomberg NewsTsingtao Brewery Co. said its 2009 full year net income is estimated to have risen 75 percent to 85 percent compared with its profit in 2008.
Net income attributable to shareholders calculated under Chinese accounting standards was 699.55 million in 2008, and earnings per share were 0.5347 yuan, the company said in a filing to the Hong Kong stock exchange today.
Tsingtao attributed the growth to improving its “brand integration” and product mix, strengthening management and cutting costs. These factors helped to increase production, sales and profit, according to the statement.
Source article: http://www.bloomberg.com/apps/news?pid=20601089&sid=a.QpCTjGb5sY
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