China remains a highly desirable destination for investment and a major global priority for US companies despite some concerns, the American Chamber of Commerce said in a report published on Monday.

More than 91 percent of the surveyed companies said they were optimistic about their outlook for the next five years in China.  Nearly 79 percent said their comnpany will expand investment in China this year, and more than 51 percent indicated that investment growth would exceed 10 percent.

“China’s economy still has the potential for rapid growth over the medium term, propelled by its second and third-tier cities, and assuming an appropriate policy mix,” the chamber said in its annual White paper on the stae of American business in China.

China Daily Business – 27th April 2010

Although the global investment environment is improving, Chinese investors are still very prudent and are unlikely to spend large amounts overseas in the short term, according to a report by the China Council for Promotion of International Trade (CCPIT).

The report, due to be published on Tuesday, said that 26 percent of corporate interviewees had plans to invest overseas in the next 12-months, while 30 percent said they had no plans to do so.

Their outlook was more bullish in the medium term, with 61 percent of companies saying that they would increase their overseas investment over the next two to five years.

But the investment volume is unlikely to be large, with 33 percent predicting they will inject funds of less than $1 million in the medium-term, and 36 percent planning to invest between $1 million and $5 million.

China Daily Business – 27th April 2010

Nation now third in terms of voting power at multilateral organisation

The World Bank has agreed to increase the voting power of China and other major developing countries in a move that analysts said marks the start of a gradual but new change in global economic governance.

China’s stake at the World Bank, in terms of voting power, has gone up to 4.42 percent from 2.78 percent, lifting it to the third spot behind United States and Japan in the 186-nation lending organisation.

This ranking is above a host of Western countries.like Germany, France and the UK, all having their voting power cut to a varied level.

The US’ share, however, remains unchanged at 15.85 percent, effectively still giving it the veto power.  Japan is in second place with a 6.84 percent stake, down from 7.62 percent.

China’s Minister of Finance Xie Xuren welcomed the move and said it increases the rationality of the World Bank governance structure and lays foundation for further reforms aimed at equalising voting power between the developed and the developing nations.

“This is the first time in the history of the World Bank that a reform of governance structure is mainly targeted at promoting representation and voices of developing countries,” he told reporters on Sunday.

China is expected to surpass Japan to become the second largest economy in terms of GDP this year.

China Daily Business – 27 April 2010

Japan’s largest carmakers made more cars in China last fiscal year than ever before, as surging demand in the booming Asian nation continued to drive a global recovery in car manufacturing.

Due in part to the global financial crisis, China has passed Japan and the US to become the world’s No 1 car market.  Carmakers are ramping up production in China to offset declining or stagnant developed markets.

Toyota Motor Corp said on Monday its China manufacturing rose 47 percent in the fiscal year through March 2010 from the previous year, to about 722,000 vehicles.

That was a new record for the Chinese market and its biggest increase outside of Taiwan, where it makes far fewer cars.

Toyota rolled out its first Camry made in China just four years ago.  It has partnerships with several domestic, state owned carmakers.

Chief rival Honda Motor Co also said it set a record for Chinese production last fiscal year, with output rising 28 percent to 652,596 vehicles.

Japan’s No 3 manufacturer, Nissan Motor Co, also made more vehicles in China than ever before, with production there soaring 58 percent to 613,183 vehicles.

Singapore Business Times – 28th April 2010

Chinese carmakers may have the world’s largest market to play in but face many hurdles including a shortage of original models, an overcrowded industry and a lack of overseas acquisition targets before they can challenge for global leadership.

None of this has dimmed the ambition of the country’s leading entrepreneurs, however.

BYD Co chairman Wang Chanfu, who has become China’s richest man after US billionaire investor Warren Buffet invested in his company, has said he wants to build BYD into the world’s biggest car company by 2025.

To be sure, the swift growth in car sales in China in the past couple of years has been nothing short of breathtaking.

Sales rose almost 50 percent last year to 13.7 million vehicles and are up 76 percent for the first three months of 2010.

But translating that strong growth at home and taking on the likes of Toyota Motor Co, General Motors and Ford Motor Co on the global stage is a mission that could take China’s top carmakers decades.

“Topping China’s market is relatively easy, but topping the world market by 2025? I would say that’s a shot too far.” said Anil Sharma, a car sector researchh analyst at Hybridev.com.

One condition that a carmaker must meet before it succeeds globally is a dominant position in its domestic market.

“History has shown that all car manufacturers who were successful in the export market (did so) after they had a strong position in their home market,” said Klaus Paur, director at TNS’ North Asia automotive division.

Singapore Business Times – 28 April 2010

Nearly 150 years after American railroads imported thousands of Chinese labourers to build raillines across the West, China is poised once again to play a role in American rail construction.  But this time it would be an entirely different role, supplying the technology and engineers to build high-speed rail lines.

The Chinse government has signed cooperation agreements with California and General electric (GE) to help build such lines.  The agreements, both of which are preliminary, show China’s desire to become a big exporter and licensor of bullet trains travelling 215 miles an hour, an environmentally friendly technology in which China has raced past the United States in the past few years.

“We are the most advanced in many fields, and we are willing to share with the United States,” Zheng Jian, the chief planner and director of high-speed rail at China’s railway ministry said.

the Singapore Business Times Wed 28 April

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A new chinainsight689.com website is being designed, including improved Chinese search engine Baidu recognition.  A test site can be found on http://www.womlive.co.uk.  Comments, suggestions and feedback would be gratefully received.

The China Insight website is being updated.   We also want to make it more Chinese search engine, Baidu, friendly.   A test site can be temporarily found at http://www.womlive.co.uk.   Your comments, feedback and suggestions for the new website would be very welcome.

While China’s National People’s Congress in a rubberstamp legislature, its annual plenary session – which kicks off Friday – offers a good window into the thinking of the nontransparent Chinese Communist Party elite.

This year’s theme is the economy.  That in itself isn’t news, but the economic focus is shifting.  While the 2009 NPC harped on attaining an 8% growth, the priority for this year’s session is to ensure a more equitable distribution of national income.  In a talk with China’s netizens last week, Premier Wen Jiabao said “while it is the government’s responsibility to expand the ‘pie’ of national wealth, it is the government’s conscience to distribute it in adequate manner.”  Mr Wen warned that “if wealth in a society is concentrated in a minority of people, this society will be neither just nor stable.”

The use of the word “stable” is significant.  Apparently the Party is starting to worry that if income inequality grows too wide it could lead to greater disaffection with Party rule.  So while Beijing has talked about distributive justice since the mid-2000’s, the leadership under President Hu Jintao seems motivated by a higher sense of urgency this time.  In a recent speech , Mr Hu used the phrase “speed up” 50 times as he urged cadres to move faster on issues such as going up the technological chain, encouraging consumer spending and buttressing the income of workers and peasants.

Wall Street Journal – 3 March 2010

Chinese automobile dealer Zhongsheng Group Holdings Ltd has shelved its planned US$1 billion Hong Kong initial public offering due to volatile market conditions, a person familiar with the situation said Tuesday.

The switch is the latest blow to the Hong Kong market, which has seen a number of weak IPOs in recent weeks due to market saturation and – in some cases – uncertainty about the economic situation in the Chinese mainland.

Zhongsheng’s shelved offering would have been the largest IPO in Hong Kong since Russian aluminium company UC Rusal Ltd’s US$2.55 billion share sale in January.

The company, which focuses on luxury and mid-to-high-end automobile brandslike Mercedes-Benz, Lexus, Audi and Toyota was origonally scheduled to kick off order taking this week and likely to list at the end of the month, said the person familiar with the matter.  Company officials weren’t available for comment.

Wall Street Journal – 3 March 2010

China will target a higher budget deficit this year of more than one trillion yuan (S$205 billion), a senior lawmaker said yesterday.

Yin Zhongqinq, deputy head of the financial and economic committee of the National People’s Congress, China’s largely ceremonial parliament, also said that Beijing would again permit provincail governments to issue their own bonds this year.

The sum would be similar to the 200 billion yuan issued in 2009, Mr Yin told a forum.

China undershot its 2009 budget deficit target of 950 billion yuan.  The actual shortfall was about 740 billion yuan, or about 2.2 per cent of gross domestic product, according to Ministry of Finance figures.

“The fiscal deficit this year will be larger than last year, and will probably exceed one trillion yuan.”

Turning to the yuan, mr Yin said that China needed to change expections that the currency can head only higher.  He did not say how this could be done.

“So many years of one-way upward expectations have set China in a dilema in its foreign exchange policy, with very limited flexibility.” Mr Yin said.

Beijing has in effect re-pegged the yuan around 6.83 per US dollar since mid-2008 when the global financial crisis intensified.

The Business Times – 3rd March 2010

Diageo PLC’s bid to buy a larger share in the maker of China’s Shui Jing Fang brand white liquor may provide the world’s largest alcoholic beverage maker with a major new influence over a leading Chinese consumer brand.

But Diageo will likely have only a minority stake, a fact that also highlights how foreign investors remain heavily constrained in one of the largest cash-generating sectors of the global drinks market.

Diageo – producer of Guiness beer, Smirnoff vodka and Johnnie Walker whisky – announced Monday it has agreed to become, indirectly, the largest single shareholder in the liquor brand Shui Jing Fang.

In the complex deal, Diageo will pay about $21 million to lift its stake to 53% from 49% in Sichuan Chengdu Quanxing Group, a holding company that owns about 40% in Shanghai-listed Sichuan Swellfun Co., which makes Shui Jing Fang.

Diageo said it will gain greater influence in China’s large market for baijiu, a white spirit that Diageo said accounts for about half the nation’s alcoholic-beverage consumption by volume.

Shui Jing Fang is the fourth-largest producer of premium baiju in China, with reported net sales of about $171 million in 2008.

A statement published by Swellfun, also know as Sichuan Shui Jing Fang Co., said the transaction reflects “wishes to further strengthen the cooperation between the joint venture partners in the Chinese white spirits industry.”

Completion of the deal is subject to approval by several Chinese agencies.  The Commerce Ministry didn’t respond to questions Tuesday.

China has permitted foreign ownership in a number of famous brands – Asahi Breweries Ltd and Anheuser-Busch InBev NV each own minority shares in brewer Tsingtao Brewery Co., for instance.

But the government has taken a dim view of full foreign takeovers of big-name consumer brands.

A year ago, Chinese authorities cited antimonopoly concerns in rejecting a $2.4 billion bid by Coca-Cola Co to buy all of a major Chinese soft drinks maker, privately owned Huiyan Juice Group Co.

The rejection was widely seen by many lawyers and analysts as a protectionist measure designed to keep a valuable Chinese brand out of foreign hands, although Chinese officials denied that.

Wall Street Journal – Feb 2010

King Stone Energy Group, a chemical and optical products maker diversifying into coal mining, plans to grow its coal output capacity fivefold by developing existing mines and through acquisitions.

The company aims to spend 452.9 million yuan (US$ 66.4 million) to raise the capacity of its first mine near Ordos, Inner Mongolia Autonomous Region, to 6.5 million tonnes by the end of next year from 1.2 million tonnes now and four million tonnes by the year’s end.

Chief executive Wang Dayong yesterday said that the company was constructing a second mine next to the first one, with an initial capacity of 1.2 million tonnes.

The planned addition of a third mine, with a capacity of 1.2 million tonnes, would raise the company’s capacity to nine million tonnes by the end of 2012, he added.

King Stone is in talks with the local government to acquire mining rights for the third mine.

The company plans to make mine acquisitions this year and next year with a view to raising its coal output capacity to 20 million tonnes in the longer term.  ”Inner Mongolia will be our first target for acquisition, but given our management and advisers’ background, we will also look for opportunities in Shanxi and Shaanxi provinces,” Wang said.

Initially focussing on power station coal, King Stone will try and expand Shanxi Coking Coal Group, the mainland’s largest coking coal producer.

South China Morning Post – 2nd March 2010

More than 2,000 assembly line workers in Dongguan staged a three-day strike after state newspapers reported that authorities were considering raising the manufacturing heartland’s minimum wage amid a labour shortage.

Workers at Lacquer Craft Manufacturing in Daling Mountain town complained their Taiwanese employer had refused to pay them a reasonable wage even though nearby factories had raised workers’ base salaries by nearly 20 per cent.

Most workers walked out of the factory, but some were forced to stay after supervisors locked the door, the Guangzhou Daily reported yesterday.  A spokesman for the factory told the South China Morning Post yesterday afternoon that many workers had returned to work.

Dongguan is facing a severe labour shortage.  Although overseas orders have risen since the 2008 global financial crisis, many migrant workers dissatisfied with the low salaries and high cost of living planned to seek opportunities elsewhere after the Lunar New Year holiday.  Manufacturers are reportedly offering up to 600 yuan (US$ 88) to middlemen for each migrant worker they recruit.

But Lacquer Craft insisted that a pay rise would harm the industry, which it said had already been hit by rising production costs and paper thin margins.  ”No (manager) should make a concession at this stage…..otherwise, the domino effect of a pay rise would undermine other manufacturers,” a senior manager told the South Metropolis News.

Authorities blamed the strike on the newspaper reports, published a day earlier, which said the city proposed raising the monthly minimum wage from 770 yuan (US$ 115) to 1,000 yuan (US$ 150).

South China Morning Post – 2nd March 2010

Premier Wen Jiabao should be more upbeat than a year ago when he delivers China’s version of the state of the union address at the opening of the legislature’s annual session on Friday and then faces the media at its close.

Wen’s annual report to the nearly 3,000 national People’s Congress deputies will spell out this year’s broad economic, social and foreign policy goals.

He is expected to declare that China has become the first major economy to recover from the global economic downturn after withstanding its toughest test since the Asian financial crisis that began in 1997.  Last year the world’s third largest economy registered the world’s fastest growth, expanding by 8.7 per cent – and outpacing Wen’s 8 per cent target – as most countries slowly struggled along the road to recovery.

Despite concerns about the sustainabilty of the mainland recovery, louder voices hailed the country for overtaking the United States as the biggest car market, surpassing Germany as the No 1 exporter and potentially replacing Japan as the world’s second largest economy.

With the world dazed by banking and property collapses, China still has a purse full of money as the superlatives kept coming last year.  For the first time in history China has the richest banks in the world, the largest phone companies, the biggest internet population, the most nuclear power plants under construction and possibly the biggest middle class.

South China Morning Post – 2nd March 2010

A joint editorial in 13 mainland newspapers has called on the nation’s top legislative body to abolish the hukou system – strict population controls that have split the country into rural and urban areas for decades.

The editorial appeared in metropolitan newspapers from 11 provinces and areas yesterday on the eve of the annual meetings of the National People’s Congress beginning on Friday, and the Chinese People’s Political Consultative Conference, beginning tomorrow.

The papers include The Economic Observer in Beijing, the Chongqing Times, The Southern Metropolitan News in Guangdong, the Inner Mongolia Morning News, the Dahe Daily in Henan and the Southeast Express in Fujian.

The joint editorial said the hukou regulation was unconstitutional and a flagrant violation of human rights.

The hukou system was introduced in 1958 when the central government issued the first set of resident-registration regulations since the founding of the People’s Republic in 1949.  It put a lid on free migration flow, particularly from rural areas to cities.

But as the mainland has developed in recent decades, concerns have been expressed that the system may be doing more harm than good with the divide between the urban and rural populations growing into a chasm.

The editorial said the hukou system had led to unfair competition between urban and rural people and was a breeding ground for the corrupt sale of urban residence permits.

South China Morning Post – 2nd March

PLA officer urges Beijing to topple US as global champion, despite hopes of peaceful rise

China should build the world’s strongest military and move swiftly to topple the US as the global “champion”, a senior officer says in a new book reflecting swelling nationalist ambitions.

The call for China to ambandon modesty about it’s global goals and “sprint to become world No. 1″ comes from Senior Colonel Liu Mingfu of the People’s Liberation Army (PLA), who also warns that his nation’s ascent will alarm Washington, risking war despite Beijing’s hopes for a “peaceful rise”.

Colonel Liu writes in his Chinese-language book, the China Dreams: “If China in the 21st Century cannot become world No. 1, cannot become the top power, then inevitably it will become a straggler that is cast aside.

His 303-page just published bookstands out for its boldness even amid a recent chorus of Strident Chinese voices demanding a hard shove back against the United States over trade, Tibet, human rights as well as arms sales to Taiwan, the self-ruled island that Beijing claims as its own.

“As long as China seeks to rise to become world No. 1… then even if China is more capitalist than the US, the US will still be determined to contain it,” writes the professor at the elite National Defence University, which trains rising officers.

Rivalry between the two powers is a “competition to be the leading country, a conflict over who rises… to dominate the world”, writes Col Liu.  “To save itself, to save the world, China must prepare to become the (world’s) helmsman.

The China Dream, however, does not represent government policy, which has been far less strident about the nation’s goals.  Even in the military, it represents only the hawkish camp.

Straits Times – 2nd March

Both China and the United States need to work hard together to ease mounting trade tension to prevent an ‘unpeaceful year’ for bilateral economic ties, Chinese Premier Wen Jiabao said yesterday.

He is the most senior Chinese leader to have commented on the issue.

“We believe that trade frictions between the two countries should be solved through negotiations conducted with equality, not through sanctions,” said Mr Wen, in a wide-ranging online chat with Chinese netizens, in which he also pledged to tamp down inflationary pressure and surging property prices in China.

In recent months, Beijing and Washington have been locked in a series of tit-for-tat moves slapping tariffs on each other’s products making trade a key irritant in tense bilateral ties.

Last week US senators called on Washington to hit Chinese exporters with more levies to compensate for the unfair advantage they get from an undervalued yuan.

Avoiding the prickly topic of yuan revaluation, Mr Wen reiterated Beijing’s oft-made call for the US to ease restrictions on exports of technology products as a way to narrow China’s trade surplus.

Recalling a joke he made in a speech while on a US visit, he said: “I told them, ‘The US exports two things to us: soya beans and aeroplanes…but you can’t keep having Chinese eat soya beans on aeroplanes’.”

Mr Wen’s two-hour chat with netizens – webcast live on the government’s www.giv.cn and the state news agency Xinhua’s www.xinhuanet.com – comes just days before the annual session of China’s Parliament, the National People’s Congress.

Sunday Times – Feb 28th

With his wire-rim glasses and sombre suits, Mr Zhu Min looks more like a low key academic than a hot-shot banker who has just been admitted into the inner circle of the International Monetary Fund (IMF).

In fact, a common reaction from those who meet the private unassuming Mr Zhu for the first time is: “He doesn’t look like the deputy govenor of China’s central bank at all,” according to the Oriental Morning Post, a newspaper in Shanghai, where Mr Zhu was born in 1953.

Growing up during the Cultural Revolution (1966-1976), he had to forgo his studies for a few years to work as a truck driver and mover at a sugar factory.  He enrolled in Fudan University in 1982 to study finance.  He continued a brilliant academic career at Princeton University  and later at John Hopkins University in the United States where he received a doctorate in macro-economy and international finance.

After working from 1990 to 1996 at the World Bank, he decided to return to China.  “I needed my motherland,” he once told a Shanghai TV station in an interview.

He joined Bank of China in 1996 and has now capped his career with a new appointment as a “special adviser” to the IMF – a position some say may catapult him to the No.1 or No.2 post at the Fund next year.

Mr Zhu has been lauded as “a man worth listening to” by the Britsh paper the Guardian for being a lone voice of reason at the World Economic Conference in Davos, warning about the risks of massive asset bubbles in 2007, a year before the global credit crisis errupted.

While speaking on his pet topic of international finance at a major forum in 2007, he was reminded by the moderator that his time for speaking was up.  His answer in Mandarin raised chuckles from the audience: “This is an important topic to me, please allow me to be romantic and wax lyrical for a while more!”

Mr Zhu is also a doting father, who reportedly exchanges e-mail or telephone calls at least once a day with his only daughter who is studying in Princeton University.

Sunday Times – Feb 28th

As China’s current account surplus cooled last year, did its ardour for US Treasurys?

That is the headline story from the latest data on foreign ownership of US Government debt.  Mainland China’s holding fell to $755.4 billion at the end of December from a peak of $801.5 billion last May.  The country also shifted into longer-dated Treasurys.  Japan is, on paper, again the largest foreign holder of US government debt.

Behind those bare facts, however, the picture gets murkier.  in fact, it isn’t clear that China is shifting out of Treasurys at all, while firm conclusions over its preference for short or long term US debt are hard to reach.

How so?  The key is to look at US Treasury holdings in the UK and Hong Kong.  Both have at least doubled in the past year.  At the end of December, the UK holdings totalled $302.5 billion, and Hong Kong’s were $152.9 billion.  In the Treasury International Capital data analysts suspect a large portion of the holdings from those places – perhaps as much as half – in fact originate in China.  The problem arises because Treasurys are often held on behalf of clients in financial centres like Hong Kong or London.  For the data compliers it is hard to unearth the ultimate owners of the debt.

Wall Street Journal – 18 Feb 2010

When Mei Saichun hosts visitors to his handset factory, he has a surprise for them. After a tour of the decidely low-tech assembly lines, the general manager of Shenzhen Xinghuabao Electronics returns to his office and opens a door behind his desk. On the other side is a cleanroom where workers in white protective clothing are assembling handset displays behind windows and airlocks. The high-tec lab, which opened only in December, highlights a strategy shift. After years of competing on price only, Xinghuabao is trying to move upmarket. “We are legitimate set makers now. We are building our own brand,” says Jin Hongxiang, president of SOP, Xinghuabao’s parent company. “We are expanding upstream to have more control over the quality of our components.” The company’s move is part of a broader trend. As Shenzhen’s “bandit” handset makers have started flooding the global market, they are meeting increasing regulatory and cost issues that are forcing them to adapt. Financial Times – 17 Feb 2010

A consortium including China Unicom yesterday bid $2.5 bn for a majority stake in Nitel, Nigeria’s former state telecoms monopoly, in what would be one of the largest privatisations in Africa and rank among China’s biggest investments on the continent.

Officials in one of the world’s fastest-growing telecoms markets said the consortium, which also comprises Minerva of Dubai and GiCell, understood to be a small Nigerian telecom, has 10 days to pay 30 percent of the fee and a further 50 days to secure a 75 per cent holding in Nitel.

Financial Times – 17 Feb 2010

A group of Chinese grey market handset makers is to consider manufacturing in India in an attempt to be recognised as legitimate suppliers in their most important export markets.  The decision also reflects the effects on business of India’s uneasy relationship with its eastern neighbour.

The Shenzhen Mobile Communications Association intends to take a dozen of its members to visit India this month to negotiate related ventures.

“The goal is to set up several production or assembly lines with a total capacity of up to 10m units”, Tang Rujin, executive president said.  The manufacturers hope production will help them gain political capital in the country, and comes after India last year started to crack down on Chinese-made grey market handsets.

Financial Times – Feb 17 2010

In recent months Beijing has been cracking down at home and lashing out abroad.  China watchers are perplexed about the origins and implications of the new assertiveness.  Many believe a threshold has been breached and that China is going to become more difficult to deal with.  Others see merely the 30-year pattern of fang and shou, opening and closing, in which one step back is followed by two steps forward.

Since the adoptions of a fairly progressive decision on intra-party democracy at September’s plenary session of the Chinese Communist Party Central Committee, political reforms have stalled.  The foreign business climate has also deteriorated bady, with multinationals complaining of a host of new operating constraints and protectionist measures.  Some western executives with long experience in China say it is the worst they have since 1989-92.  Meanwhile the country’s trade and currency surpluses continue to balloon.

Financial Times – Feb 17 2010

Sorry no ‘Peter Hemming’ posts on Twitter.com recently but cannot access from Beijing and Shanghai.  Flying to Singapore tomorrow so hope to resume normal service in a couple of days.

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There is no singular company operating a nationwide bus service in China.  Instead, dozens of small companies ply the country’s highways.  However this segment of the country’s transport sector may prove to be an attractive investment target as the highway system expands, tourist numbers increase and rural Chinese continue migrating to urban areas.

China’s intercity bus market is largely controlled by regional leaders like Shanghai Bashi and Beijing Public Transport Holdings, but deals have allowed foreign capital to gain a foothold.  Already 15 years on China’s roads, Spanish-based ALSA was the only foreign player in the local coach travel market until summer 2009 when Singapore’s Mass Rail Transit (SMRT), the city state’s largest transport operator, spent RMB 320 million on a 49% stake in ZONA, the Shenzhen subsidiary of National Express Transportation Group.

China International Business – Nov 2009

Former Google China President Kai Fu Lee cemented his career transition from manager to entrepreneur last September with his own early-stage investment fund and start-up incubator, Innovation Works.

Lee’s new company will provide angel funding for Chinese start-ups, unlike most funds in China which prefer to invest in mid- to- late-stage companies.  Lee plans to hire over 100 graduates from China’s top universities who are eager to build up their own businesses, giving them scope to develop projects from scratch to implementation and expansion.  Lee’s company has already attracted investment from many famous Chinese entrepreneurs including Steve Chen (co-founder of YouTube), Guo Taiming from Foxconn Technology Group, Liu Chuanzhi founder of Lenovo and New Oriental Education & Technology Group’s Yu Minhong.

Drawing on his strong background with Apple, Microsoft and Google, Lee aims to pursue three major directions for his company; e-commerce, cloud computing and mobile computing.  He believes that these businesses are at an inflection point in China and that now is the time to develop them further.

Lee joined Google four years ago after a highly publicised legal battle between the company and Microsoft, which later sued Google claiming that Lee violated his employment contract when he switched jobs.  He successfully built up a working team for Google China, despite Google only capturing a small share of the online search market from Baidu.  Confident in the success of Innovation Works, he maintains that he won’t snatch talent from Google China and that new talent will be offered enticing share options upon joining the new company.

China International Business – Nov 2009

The global economic crisis may have dampened enthusiasm for luxury cars in the West, but in China car sales, especially luxury models, have remained impressively strong.  Mercedes-Benz, one of the leaders in the Chinese luxury car market, saw its business grow by 50% in the first eight months of 2009.  The company introduced six new models to the market, in addition to new variants of popular designs like their S-Class luxury car.

Leading the company’s China sales and marketing efforts is Bjorn Hauber.  Below are some comments from an interview.

“The target audience for Mercedes-Benz is constantly extending.  At the start of 2009 we introduced the first B-Class – our first car below RMB 300,000.  We did that for various reasons, one being to attract a totally new clientele; young people , those that are just about to get married and moving out (of their family homes) for the first time.  These are people we have not yet had within our customer area before, and now with the B-Class we’re able to attract these young people.

The same is true for the Smart brand, which is a separate brand.

If we are talking in general, then the target group for Mercedes-Benz is entrepreneurs and senior executives in the companies – those who understand the value of Mercedes-Benz and are able to afford one of our cars.”

“The average of our customers is 40.  We have a very young customer base in China, which also partly explains why we have so many first-time buyers.”

“Chinese buyers are very different from those in other parts of the world.  First of all, everybody pays cash, so the product needs to be available when somebody walks into the dealership.  Brand plays an important role, but its also a bit fragile because this market is so young.

Brand building is important because the Chinese customers are not yet so familiar with our reputation and with the value that the brand stands for so they don’t yet have the same loyalty as they would in the more developed markets.”

“If you look at the way cars are equipped here in China, you will find the equipment standard is very high.  Chinese customers are very demanding when it comes to car equipment; they want to have everything inside the car.  A good example for us is the S-Class; we offer it in nine different versions compared to the US where the product portfolio is a lot thinner.

The Chinese are very demanding; they tend to go for a fully-equipped car.  There are still a high number of chauffeur-driven cars in China, so the rear seat area is much more important than in Europe where, of course, you are more often driving the car yourself.”

“If you look at the Chinese customers they develop their needs very fast, and the way they use their cars.  A couple of years back it was important to drive from A to B.  Today it’s more important how you drive from A to B, so there’s a weekend car; there’s a family car; there’s a business car.  They develop their scope, and that’s why we also continuously increase our product portfolio because this need has developed strongly over the past couple of years.”

China International Business – Nov 2009

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An IPO is often the quickest way to the top of the Rich List, and 2009 has seen several businessmen jump up the ranks with their company’s listings.  Liu Zhongtian of Zhongwang jumped up to number 10 on the list after he led his company to raise USD 1.3 billion in the world’s largest IPO in 2009.  The IPO’s of Baoli, American Dairy, Fujian Peak Group and Chigo Air Conditioners have respectively propelled Zhu Gongshan, Leng Youbin, Xu Jingnan and Li Xinghao up the list.

Two other business leaders pushed up the list, from their already high positions, with spin-off IPO’s.  Timothy Chen Tianqiao hit 34 on the list after Shanda Interactive rose USD 1 billion by spinning off a subsidiary onto NASDAQ, while Charles Zhang Chaoyang hit 176 when Sohu spun off its gaming subsidiary Changyou in April.

Over the next 12 months plenty more of China’s wealthy will be getting even richer from IPO’s.  Xu Jiayin of Evergrande, Xu Jiankang of Powerlong, Su Meng of Gold Tak Land, Li Hua and Li Xiaoping of Excellence and Huang Chaoyang of Zhongjun all have IPO’s in the pipeline, which, with friendly markets, could mean a nice paycheck for each.

China International Business – Nov 2009