Joint venture for panel-making plant

Move raises fears about overcapacity

TCL Corp, China’s largest television maker, fired the opening shot yesterday in what could become a rush by Chinese companies into liquid crystal display (LCD) panel manufacturing.

TCL, one of the country’s electronics groups, said it had set up a joint venture with Shenchao Investment, a company owned by the Shenzhen city government, for building a new plant.

The move follows announcements by Smasung, LG and Sharp, three of the world’s leading LCD panel makers, that they would build fabrication plants, or fabs, in China to capitalise on the country’s booming flat-screen television market.

However TCL’s move has intensified fears of a new overcapacity in a notoriously cyclical market.

TCL said it would raise up to Rmb5bn ($732m) in a private placement to finance the venture. Construction will start in January, and the plant is expected to take up mass production in the third quarter of 2011.

Financial Times 18 November 2009

US president in 3-hour Beijing talks with Hu

Tensions over trade and exchange rates

President Barack Obama yesterday urged China to strengthen its currency as tensions over exchange rates and trade broke through a carefully orchestrated show of co-operation between Washington and Beijing.

Mr Obama made his comments after a three-hour meeting in Beijing with President Hu Jintao, during which both leaders pledged to work together on pressing international issues.

However the US president also joined in the growing chorus of international voices calling on China to allow the renminbi to appreciate.

“I was pleased to note the Chinese commitment made in past statements to move toward a more market-orientted exchange rate over time,” he said at a joint appearance with Mr Hu. Such a move would “make an essential contribution to the global rebalancing effort”.

The reference to “past statements” could imply that China did not make any new commitments yesterday.  Mr Hu did not mention the currency issue in his statement, although he did call on both governments to refrain from protectionism, a criticism of recent US measures on Chinese steel pipes and tyres.

Coming at a moment when Chinese prestige is growing and the US is facing enormous difficulties, Mr Obama’s trip has symbolised the advent of a more multi-polar world where US leadership has to co-exist with several rising powers - most notably China.

Financial Times Asia 18 November 2009

A Chinese court has ruled that Microsoft infringed a Chinese software maker’s intellectual property rights in a surprise decision that has renewed worries among foreign patent experts about China’s management of IPR disputes.

Microsoft’s use of two Chinese fonts developed by Zhingyi Electronics, a Beijing-based software company, was not covered by a licence agreement between the two, the Beijing No 1 Intermediary People’s Court said in a verdict, and therefore infringed Zhongyi’s intellectual property rights.

Once the ruling takes effect, Microsoft must stop selling all PC operating systems that use the fonts including the Chinese language editions of the second edition of Windows 98, Windows 2000, Windows XP and Windows Server 2003.

Microsoft said it believed its licence agreements with the plaintiff covered its use of the fonts in question and it would appeal against the verdict: “Microsoft respects intellectual property rights. We use third party IPs only when we have a legitimate right to do so.”

Zhongyi said the verdict had highlighted that every Chinese language Windows operating system included Chinese intellectual property rights because the Chinese character database and Chinese language input system were developed by locals.

“It can be said that the support from the Chinese character database and input system are a pillar for the windfall profits Microsoft is extracting from China,” Zhongyi said.

Microsoft has a long history of fighting for the protection of its own intellectual property rights in China as a lion’s share of the operating systems used on the country’s computers are pirated versions.

Financial Times Asia November 18 2009

Environmentally friendly forests is goal of FSC certification effort.

What Korsnas in northern Sweden and Yong’an in southern China’s Fujian province have in common is tree farms seeking certification from the international Forest Stewardship Council (FSC).

Tetra Pak, a leading food processing and packaging solutions company, linked the two sites to support efforts by operators of the two tree farms to earn certificates in responsible forestry management.

Korsnas is one of Tetra Pak’s 13 suppliers worldwide.  The 13 suppliers deliver 2 million tons of paperboard each year to the packaging giant.

Tertra Pak said the Yong’an project promotes environmentally friendly management of forest resources in China.

The FSC is an independent non-profit organisation that sets industry standards based on promoting environmental protections, recycling and business ethics.

Highest standards

“Our packages are based on renewable resources, wood fibre, and our goal is to have 100 percent of our wood fiber supply coming from forests that are certified to meet the highest standard – currently the FSC,” said Nils Bjorkman, a vice-president of Sweden-based Tetra Pak Group who is in charge of commercial operations and cluster organisations of the group.

So far, all paperboards processed from wood fibre that Tetra Pak uses in China are imported.

Ten global suppliers – three in Scandinavia, five in North America, one in Brazil and one in Russia – provided 98 percent of the paperboard Tetra Pak needed last year.  The remaining two percent was provided by suppliers in Pakistan, Japan and India.

Promotions in China

As early as 2007, Tetra Pak was a partner of the World Wildlife Fund (WWF) to support efforts by Chinese forestry farms to achieve environmentally friendly business operations.

Last July 116,210 hectares of forestlands in Yong’an received FSC certification, making Fujian Yong’an Forest Group the first enterprise with more than 100,000 hectares of FSC-certified forest in southern China.

Based on its success in Yong’an, Tetra Pak is planning soon to launch a new programme in Tengchong, Yunan province.  Carol Yang , vice president of Tetra Pak China, declined to provide additional details.

China Business 15 November 2009

International trade has been an engine of growth for many Asian countries, enabling them to create jobs and raise living standards faster than other countries that were not yet ready to take advantage of surging trade opportunities.

In pragmatic Asia, a nation’s standing is judged not only in terms of military power and diplomatic skill but also how it shapes up as a source of trade, investment and technology. By this yardstick, how does the United States measure up against in particular Asia’s rising giant, China?

Unfortunately the Obama administration has been hobbled in one key area where it should be showing leadership: trade policy. Beset by critics in Congress and the trade unions who claim trade agreements cause job losses and weaken the economy, the US is reviewing policy. The pace has been glacial.

As Mr Michael Green, a former National Security Council official in the Bush administration, wrote recently: “The complete lack of a trade strategy leaves the United States without any tools to counter the growth of exclusive regional economic arrangements within Asia.”

At the end of 2008, just over 400 bilateral and regional trade agreements had been notified to the World Trade Organisation.  Another 400 or so are scheduled to be notified by the end of 2010.  Of the total, 326 are in the Asia-Pacific area.

By far the biggest, the China-Asean Free Trade Area (Cafta) will take full effect in January 2010. With a combined GDP of US$6 trillion and a merchandise trade volume of US$4.5 trillion, Cafta will be the world’s third largest traing bloc after the European Union and Nafta (the North American Free Trade Area linking US, Canada and Mexico).

China says that despite the global slowdown, Cafta trade in the first nine months of 2009 approached US$150 billion, while China/South-east Asia investment reached US$60 billion. Meanwhile, US trade with the region has fallen, its investments have slowed, and it has become a small-time player in determining the future trade architechture in the region.

The US is party to just 20 of the 800-plus trade agreements registered with the WTO. Fifteen are in force and three – including a deal with South Korea – are stuck in Congress.

In March, a group of leading US-based organisations and businesses wrote to Mr Obama and top US trade negotiator Ron Kirk urging them to re-energise America’s leadership role in trade by proceeding with talks on US membership in the Trans-Pacific Strategic Economic Partnership Agreement (TPP).

Strait Times – Michael Richardson – 9th November 2009

President: Nation doesn’t believe in military expansionism, arms race

Aerospace should be used for peaceful purposes only, and China is ready to take part in any interntional cooperation to ensure aerospace security, President Hu Jintao said on Friday.

Hu made the remarks while meeting 30 heads of foreign airforce delegations in the Great Hall of the People in Beijing.

At the opening of the two-day forum, PLAAF Chief General Xu Ciliang urged all airforces in the world to join hands to safeguard aerospace.

The People’s Liberation Army Air Force (PLAAF) invited all the foreign guests to stay for an additional day to watch one of its units during training in Shandong, the home province of Confucious and Sun Tzu, the author of the Art of War.

Xu’s remarks came just a few days after China’s top political advisor Jia Qinglin called for making better use of Sun Zhu’s dialectical philosophy of war to establish lasting peace and promote common prosperity in the world.

English translations of The Art of War were distributed among the delegates at the forum.

Defense Minister Liang Guanglie echoed Xu’s call for harmony and understanding and urged the delegates to work together to safeguard aerospace. His call was in response to some foreign media’s misinterpretation of Xu’s Nov 1 speech as a declaration of China’s plans to put weapons into space.

ACM Chris Moran, commander-in-chief, Air Command of the UK’sRoyal Air Force, said the forum was a platform to enhace understanding, and that the lack of transparency remained the main obstacle to achieve that goal.

China Daily 7th November 2009

Chaoyang district is offering individual cash bonuses of 200,000 yuan ($29,000) in an attempt to attract high-quality overseas talent.

Huang Bo, an official at the central business district overseas talent centre in charge of the application process, said the district wants to attract 100 international professionals to the district over the next five to ten years in its Phoenix Plan.

China Daily Metro 6th November 2009

AVIC Aircraft Corporation Ltd, a major subsidiary of Aviation Industry Corporation of China (AVIC), said it will go public by injecting assets into AVIC’s Shenzhen-listed arm, Xi’an Aircraft International Corp, as part of its plan to complete an overall listing by 2011, amid a restucturing of China’s aviation industry.

“We plan to complete the asset restructuring by the first quarter of next year and use Xi’an Aircraft International as the platform for the listing of AVIC Aircraft,” Hu Xiaofeng, general manager of the AVIC Aircraft Corp said on the first anniversary of AVIC yesterday.

China Daily Business 6th November 2009

REITS may be on cards

Shanghai may introduce real estate invesdtment trusts by the end of the year, the China Securities Journal reported, citing unnamed sources.

Sinochem eyes Kazakh oil

Sinochem Corp is near a deal worthh about $320 million to buy an independent oil firm in Kazakhstan, Reuters reported yesterday, citing unnamed industry sources.

PetroChina ups storage

PetroChina’s north China unit aims to boost its oil storage capacity in the coming three years to ensure energy security, according to China Petroleum Daily.

Juneyao prepares for IPO

Privately-run Chinese carrier Juneyao Airlines will start preparing for its initial public offering later this year, raising as much as 2 billion yuan, Wang Junhao, president of Juneyao Group, said yesterday.

China climbs in IT rankings

Chin ranks 39th worldwide in an IT industry competitiveness index, climbing 11 places, compared to 2008, mainly due to its improved R&D environment and strengthened human capital for the IT industry.

Marine fuel transfer centre

Qingdao port, China’s biggest crude oil transfer base, will start to operate an international transfer centre for marine fuel oil today. With an investment of 200 million yuan from Qingdao Port and 170 million yuan from China Marine Bunker (Petrohina) Co Ltd, China’s largest marine fuel provider, the first-stage of the project includes construction of four 50,000 cu m bonded fuel oil tanks and other supporting transportation facilities.

Agri park open for business

China (Shouguang) Agricultural Products Logistics Park opened for business yesterday in Shandong. The park is expected to be the largest one in Asia whenthe second phase of construction is completed nest year. With a total investment of 2 billion yuan and covering an area of 200 hectares, the park includes a vegetable and fruit market, an e-business sector and an agricultural products processing area.

China Daily Business 6th November 2009

While the world is saving, Chinese women are spending.

Spurred on by rebates and the trickle down of the country’s stimulus package, Chinese housewives, who traditionally control the pockets of their families, are buying the latest fshions, investing in stocks and travelling.

“Chinese women often dominate spending in their family,” said Han Xiangjing, vice-council director of Huakun Woman Consumption Centre, a branch of Women of China magazine.

“They serve as a major indicator of the consumption level in the country,” Han said.

China Daily Nation 6th November 2009

Computer maker Lenovo Group yesterday posted a net profit for the second quarter, ending three straight quarters of losses, as robust demand from emerging markets and a series of cost saving measures helped negate the company’s declining sales in mature markets.

Sales revenue of the world’s fourth largest computer vendor during the July-September period declined 5 percent to $4.1 billion, but surged 19 percent compared with the previous quarter. Its worldwide shipments grew 17 percent year-on-year, beating the industry’s average growth of 2.3 percent.

Yang Yuanqing, chief executive of Lenovo Group, said the company’s share in the world PC market reached an all-time high of 8.9 percent in the second quarter, as its business in emerging markets and the consumer PC business saw rapid growth.

China Daily Business 6 November 2009

Oil major buys stakes in four assets; first by any Chinese firm

China’s leading offshore oil producer CNOOC Ltd yesterday said it agreed to buy small stakes in oil assets in the Gulf of Mexico from Norway’s Statoil, marking its first entry into oil reserves in the gulf.

CNOOC Ltd, through its subsidiary OOGC America Inc, has signed an agreement with Statoil Hydro for four prospects in the Gulf of Mexica, namely Tucker, Krakatoa, Logan and Cobra, the company said in a statement yesterday.

China Daily Business 6th November 2009

Mickey Mouse and friends are on their way to Shanghai after long-awaited plans for a Disney theme park near China’s financial hub got the thumbs-up from central authorities.

The news was announced yesterday by both the company and Shanghai’s municipal government.

The United States-based company and its Chinese partners will now begin detailed talks about the project, which will be based in Pudong New District the government’s information office said in a statement.

Walt Disney Co welcomed the news.

“China is one of the most dynamic, exciting and important countries in the world, and this approval marks a very significant milestone,” said Robert A Iger, the company’s President and CEO.

China Daily 5 November 2009

The World bank yesterday upgraded its forecast for China’s growth this year – from 7.2 percent to 8.4 percent and projected a slightly faster pace of expansion in the coming year.

The Washington-based bank was the latest major international financial institution to upgrade predictions – a reflection of its confidence in the country’s recovery.

But the World Bank sounded a note of caution, pointing out that a sustained recovery will need a shift in the economy to emphasize consumer spending, instead of industry and investment.

Eight months ago, when China’s exports were plunging sharply and its massive stimulus package had not yet had an impact, the World Bank projected this year’s growth would be 6.5 percent .  In June, it upgraded that forecast to 7.2 percent.

China Daily 5 November 2009

Elevator maker Otis is setting up a new factory in the southwestern city of Chongqing to capitalise on the burgeoning growth in the industrial region.

“We want to be closer to our customers and market,” Didier Michaud Daniel, President of Otis Elevator told China Daily after announcing plans to set up the company’s fourth production base.  Otis already has three elevator factories in the coastal regions of the country.

China Daily Business 5 Nov 2009

China, the world’s largest rubber consumer, is expected to import 950,000 tons of compound rubber this year, a surge of nearly 71 percent from last year, an industry report said yesterday.

Compound rubber contains 99 percent natural rubber and although prices are a few cents higher, it attracts a 5 percent import duty in China versus up to 20 percent for natural rubber.

China Daily Business 5 Nov 2009

China Investment Corporation (CIC), the country’s sovereign wealth fund, has begun talks on setting up its first international office in London, a leading investment agency revealed.

The fund, which has $200 billion at its disposal, is known to have been looking for a base outside China for some time, and has been recently very active in the UK capital.

Michael Charlton, chief executive of Think London, the capital’s inward investment agency, said he was in talks with CIC.

China Daily Business 5 Nov 2009

China National Petroleum Corp (CNPC) and British oil major BP on Tuesday signed a technical service contract with Iraq’s state-owned South Oil Company to expand production from the Runaila oilfield, the country’s first major oil deal since the US invasion in 2003.

China Daily Business 5 Nov 2009

Honda Motor plans to add on average about 100 dealers a year in China over the next five years to meet demand CFO Yoichi Hojo said.

The automaker will add about 80 dealerships this year in China to end 2009 at 760.  Honda is producing at full capacity in the country and will likely have to increase its manufacturing ability.

China Daily Business 5 Nov 2009

Saudi-based Southern Province Cement Co said it had signed a preliminary agreement to award Sinoma a $147 million contract to expand its production capacity.

China Daily Business 5 Nov 2009

Shenhua and Dow Chemical announced that they had commenced the project approval process for an integrated chemicals complex in Yulin, Shaanxi province, which has a total investment of over $100 billion.

China Daily Business 5 Nov 2009

Global financial services giant Morgan Stanley is yet again looking to sell its entire holdings in China International Capital Corp (CICC), the country’s first and most profitable investment bank, sources in both the US-based financial advisor and CICC confirmed yesterday.

Two people from the US investment bank and CICC, who did not wish to be identified by name, seperately confirmed the news, saying the CICC stake sale was a precursor to Morgan Stanley setting up another local joint venture.

“Chinese regulators won’t approve a new joint venture unless it sells the CICC stake,” said the sources.

Morgan Stanley is planning to form a joint venture securities firm with Shanghai based China Fortune Securities Co., in which it can have more management say.

China Daily Business 5 Nov 2009

Only 10 years ago the lithium ion battery was limited to the lab experiments of pioneering scientists.  Today the innovative cell is fast becoming the driving force to power the next generation of technology.

Top players, like Shenzhen based BYD and BAK Battery Co. Ltd., are underpinning their global foothold on the back of improving safety conditions and battery reliability.

The Chinese Government recently handed out generous policy incentives to get more electric cars on the road in the next few years.

In a rush to join the party automakers are looking to team up with battery giants.  The US company Miles Electric Vehicles joined hands with Lishen in July in a joint venture deal to build and sell electric cars in the United tates and eventually in China.  The new vehicle, called Coda, has hit the showrooms and is expected to cruise into the market in the near future.

Beijing Review 29 Oct 2009

Overcapacity Redressed – Top economic planner, the National Development and Reform Commission (NDRC) will fight production overcapacity in six sectors, including steel, cement, plate glass, coal-chemical industry, polycrystalline silicon and wind power equipment.  The NDRC also warned of signs of overcapacity in sectors like electrolytic aluminium, ship manufacturing and soybean oil extraction.

CIC’s New Deal – China Investment Corp (CIC), the national sovereign wealth fund announced on October 16 that it had settled the first-phase purchase of a 45-percent stake in Russian oil company, Nobel Oil Group.

Search Engine Alliance – China’s internet search engine Baidu Inc. recently partnered with the country’s second largest mobile phone operator, China Unicom, to offer wireless search services for the carrier’s 3G mobile subscribers in a move to gain ground on Google Inc’s growing presence in China’s mobile arena.

Overseas Search – The first China Overseas Fair, held on November 3-4 in Beijing, will provide a platform for overseas projects to find potential Chinese investors.

Beijing Review 29 Oct 2009

Workers at a factory of the First Automobile Works Group Corp. in Changchun, northeast China’s Jilin Province, signed their names on a new Jiefang truck model, China’s 10 millionth vehicle to roll off the assembly line this year, at a celebration ceremony on October 20th.

China is the third country in the world to have an annual auto output topping the 10 million mark, after the United States and Japan, according to the China Association of Automobile Manufacturers.  The country’s total 2009 output is estimated to reach 12 million.

In January China overtook the United States as the world’s largest auto market.  Its auto sales reached a new monthly high of 1.33 million units this September.

Beijing Review 29 Oct 2009

Lakshmi Mittal, chairman and main owner of the world’s biggest steelmaker, told the Financial Times that he thought the company’s capital investment in 2010 would be $4bn-$5bn, up from about $3bn in 2009.

Countries targeted for an increase in investment include Brazil, Kazakhstan and South Africa.  The company is also keen to boost its presence in China – where it has two production joint ventures with Chinese steelmakers – through investment plans with its partners that are still being finalised.

ArcelorMittal’s presence in China is still small, which is a source of concern to Mr Mittal, because the country accounts for about 40 percent of the world’s steel output and consumption.

Financial Times 29 Oct 2009

No price revealed for Swedish brand – Plans to expand business in China.

Ford Motor yesterday named a consortium headed by Zhejiang Geely Holding Co as the preferred bidder for its Volvo Swedish brand, bringing the Chinese carmaker group a step closer to buying it.

Li Shufu, Geely’s chairman, welcomed Ford’s decision as an “important strategic step” and said the group planned to expand Volvo’s business in China including by enhancing its access to local sales networks and parts suppliers.

Financial Times – 29 Oct 2009

Practising the Chinese martial art of Tai Chi can significantly ease the pain of arthritis a study has suggested.

Researchers found that after just 12 weeks, patients suffered less than half as much pain as before they began performing the exercises.

Researchers from Tufts University in Massachusetts tested the effect of the martial art on patients suffering from arthritis of the knee, a painful condition that affects tens of thousands of Britons and is particularly common in the elderly.

Daily Telegraph – 29 Oct 2009

As massive government investments keep China’s growth engine humming, the entrenched gloom appears to be giving way to a tide of optimism. – Fan Gang – Director of the National Economic Research Institute under the China Reform Foundation discussed these issues in an article recently. Edited excerpts follow:

The Chinese ecomony is shaking off the enormous slack that has accumulated on the export front, making way for a sustainable trajectory out of the economic slump.

The real estate market has seen a remarkable improvement, but a peak in investments will not arrive until next year.

The manufacturing industry has also shown remarkable signs of improvement, lifting itself off a very low floor where it lay only half a year ago.

Demand for Chinese exports remain lacklustre as Western consumers adopt a thrifty, conservative mindset in the wake of the deep recession.

All in all, we have confidence that the Chinese economy will grow at least 8 percent in the next two years, but holding up the longterm prospects will require more policy moves.

Road Ahead

First – The downturn has offered an obvious catalyst for China to shift its economy away from exports and rely more on domestic consumption.

Second – If there is one lesson China should learn fron the financial crisis, it is this, never overlook the manufacturing industry.

Third – China has a reason to press ahead with low-carbon technology advancements and promote the green economy.

Fourth – Emerging economies have contributed more than 40% of the world’s economic growth. Whether many Chinese exporters could survive and prosper amid downturns may to an extent depend onhow well they fare in the emerging markets.

Fifth – The financial crisis offered an opportunity for ambitious enterprises to become global players as they acquire financially distressed foreign assets.  Expansion minded Chinese enterprises must keep a vigilant eye on potential risks, such as cross-cultural differences and management obstacles.

Beijing Review – 15 Oct 2009

Overseas Chinese celebrate the 60th anniversary of the founding of the New China with pomp and performances.

As China grows stronger, a sense of national pride is also rising among overseas Chinese students, who feel a closer tie to their motherland.

At New York University, the Chinese Students and Scholars Association (CSSA) impressed an audience with a special arts gala, a variety show consisting of volunteer performers , at the Frederick P Rose Hall of Lincoln Center on September 27.  As the first students organisation to perform on this world renowned stage, the show attracted hundreds of students from the Greater New York area.

Consul General of China in New York Peng Keyu was present to admire the display of talent in celebration of Chinese culture.

Beijing Review – 15 Oct 2009