f reign trade

JUN. 2012 No. 523
CHINA’S
Sponsored by CCPIT Since 1956
F REIGN TRADE
The Export-Import Bank of China:
Want to Be the Best in A Better World
Special report
FDI Drops for
Six Months
SURVEY
China’s Aging
Population
Brings Opportunities
for Insurers
Leeshan Birney,
founder and
chairman of Stone
Mountain Properties
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Policies
China to timely fine-tune monetary policy
China will maintain a prudent monetary
p ol ic y i n t he mo nt h s
ahead, while timely and
appropriately fine-tuning
the policy, the People’s
Bank of China (PBOC),
or the central bank, said
on May 10, Xinhua reported.
The government will
make its monetary policy
more targeted, f lexible
and for wa rd-look i ng,
said a repor t released
by the PBOC to address
the country’s monetary
policy adopted in the first
quarter.
The statement came
as the world’s second
largest economy is trying
to cool inf lation while
s u s t a i n i ng e c o nom ic
growth. Its first quarter
GDP growth hit a nearly three year low of 8.1percent caused by sagging exports
and domestic tightening efforts.
The economy still has many favorable conditions and positive factors to
support steady growth, the report said, citing an improving external market and
rapid development in the country’s central and western regions, it said.
But it also faces lingering uncertainties, which include a correcting property
market that will affect growth in the short term, and fluctuating consumer prices,
the report said.
Consumer prices may rebound, as prices of labor-intensive agricultural
products, service products and resource products tend to surge on rising labor costs, and
a volatile global commodity market has kept
imported inflationary pressure in place, the
report warned.
While checking changes in foreign exchange funds and market credit demand, the
PBOC will use combined monetary tools
such as open market operations and banks’
reserve requirement ratio (RRR) to flexibly
regulate banking liquidity, it said.
China to expand high-end
equipment manufacturing
sector
China is looking to expand the sales revenue of its high-end equipment manufacturing sector to six trillion yuan ($951 billion)
by 2015, according to the industry’s 12th
Five-Year Plan (2011-15) published on May 7
by the Ministry of Industry and Information
Technology, China Daily reported.
Sales of high-end equipment will account for 15 percent of the overall revenue of
equipment manufacturing industry, and help
generate 28 percent of industrial added value,
together with alarger share of the global market, according to the plan on the ministry’s
website.
By 2020, the proportion of revenue will
expand to 25 percent, while the industrial
added value part will grow another two percentage points, which will make high-end
equipment manufacturing a pillar industry of
the world’s second-largest economy.
Figures
1.1b
The Chinese government has allocated
a total of 1.1 billion yuan ($174 million) from
the central budget to the National Publication Foundation since 2008, according to a
statement from the General Administration
of Press and Publication (GAPP).
6th
Foreign direct investment (FDI) into
2
China fell for a sixth straight month in
April amid global economic woes.
51.1%
Macao’s visitor arrivals in package tours
surged by 51.1 percent
year-on-year to 754,163
i n Ma rch 2012, according to the figures
released on May 14 by
the city’s Statistics and Census Bureau.
47,415
Shanghai General Motors Co., Ltd. (Shanghai
GM ) will recall 47,415
Chevrolet Aveo-model cars
over faulty brake fluid reservoirs, China’s consumer
quality watchdog said on
May 11.
Quotes
High-end equipment mainly refers
to aviation equipment, satellite and
applications, railway transportation
equipment, marine engineering equipment, and intelligent manufacturing
equipment.
China to expand property
tax to more cities
The State Council has decided to
expand property tax to more pilot cities this year, Shanghai Securities News
reported on May 10.
It is unknown which cities will
be pilot cities and what taxation plan
will be adopted, Qin Hong, director of
the Policy Study Center of Ministry
of Housing and Urban-Rural Development of China, told Shanghai Securities News.
Taxation for owning a property and
trading a property will both be considered, the Shanghai Securities News
reported, citing Xie Xuren, Minister of
Finance.
The Ministry of Finance, State
Administration of Taxation and the
Ministry of Housing and Urban-Rural
Development are evaluating the effects
of property taxation in the pilot cities
of Chongqing and Shanghai, according
to the Shanghai Securities News.
The “Shanghai model” may be applied in new pilot cities, the newspaper
reported, citing an unnamed analyst.
10%
The Ministry of Industry
and Information Technology
announced on May 11 that the
country’s gold output in the first
three months of the year reached
80.8 tonnes, up 10 percent year on year.
2.1%
Macao’s domestic loans to local private
“China can achieve this year’s development goals”
China has the confidence, conditions and capabilities to achieve
this year’s development goals, Premier Wen Jiabao said at a trilateral
business summit between China,
Japan and the Republic of Korea,
Xinhua reported.
Wen noted that the Ch i nese
e conomy is cu r re ntly e njoy i ng
sound development moment um,
and people’s living standards and
market confidence are continuing to
improve.
China will accelerate the transition of the country’s development
mode, adjust the economic structure, strive to expand domestic demand,
promote energy conservation and emissions reduction, develop the green
economy and realize sustainable development, the premier said.
“China’s economy must advance on two legs”
Today State-owned and private enterprises are playing coordinated, not
contradictory, roles in China’s economy. State-owned economies, many of
which are resource, capital, or technology intensive, should concentrate on
competing in the global arena, and take the leading role in key industries.
Private enterprises, which rely more on labor, should help create employment and stimulate regional development, and join the international market
if possible, said Hu Angang, director of the Center for China Studies at Tsinghua University.
Competition, as well as coordination, of State-owned and non-Stateowned sectors is an indispensable prerequisite of China’s remarkable economic growth. This is how China was able to break the US’ monopoly in
manufacturing, he said.
sector in March increased 2.1 percent month-on-month to 170.4
billion patacas (21.3 billion
U.S. dollars), according
to figures released by
the Monetary Authority
of Macao on May 10.
26.01b
China’s foreign exchange regulator
said it has approved quotas worth a total of
26.01 billion U.S. dollars for 141 qualified
foreign institutional investors (QFII) as of
May 8.
3.15t
A report released on May 10 showed
that China’s local gover nments sold
333,900 hectares of land to be used for
construction in 2011, with the total value
of the sales contracts reaching 3.15 trillion
yuan (501 billion U.S. dollars).
3
Policies
Green credit criteria taking shape
China is working on criteria with which to evaluate the implementation of
its green credit policy by banks and enterprises, according to the China Banking
Regulatory Commission, China Daily reported.
A green credit policy means using loans as a stimulus for green industries
and projects, while it also requires banks to deny loans to energy inefficient and
polluting enterprises. It has been advocated by international organizations like the
International Finance Corporation of the World Bank Group for years.
Enforcement of the policy will be tied to restrictions on doing business in certain areas, and the commission can deny promotions to top executives for failing
to carry it out.
Bad performers might even be identified on a black list, a senior official of
China’s top bank ingregulator said on May 16.
Wang Zhaoxing, vice-chairman of the commission, said that China will issue
an evaluation and system of rewards and punishments when the time is right.
“We will evaluate the enforcement of the green credit policy by China’s financial institutions and use it as a reference for regulatory rating, institutional access, business access and the promotion of top executives,” Wang said.
China to fix copyright law draft amendment
The National Copyright Administration (NCA) will revise a draft amendment to China’s copyright law that has stirred controversy since being circulated
to seek public opinion, according to an announcement by the NCA. The NCA has
received 1,560 comments concerning 81 articles in the draft amendment since
itwas published on March 31, according to the administration.
The NCA will therefore revise the draft amendment based on the public’s
suggestions, as well as those from a committee of experts, and publish the revised
version to seek more opinions before the end of May, an NCA official said.
The draft amendment has triggered heated discussion among members of the
public. It has also drawn wide attention from trade organizations and businesses
from the United States, the European Union, Britain and Japan, as well as from
Hong Kong and Taiwan.
Public feedback has mostly concerned statutory licensing, collective management of copyrights, the review obligations of network service providers, legal
liability for non-exclusive license users, compensation for damages and the registration of
copyrights. Chinese music composers have
expressed anger regarding the draft amendment, as they believe it will diminish their
professional rights if passed.
Article 46 of the document stipulates that
music producers may use a musical work from
another recorded product, as long as it has
already been published for more than three
months, in their own productions without
having to obtain consent from the copyright
holder. The article says producers must report
the use to relevant government authorities and
fairly compensate the original artist.
The draft says that if the copyright holder
does not state otherwise, royalties for such use
will be collected through collective copyright
management organizations.
Composers have complained that the
draft may deprive them of their copyright interests.
Industry insiders have also expressed
concerns that the provisions will make record
Figures
4.7%
100b
Hong Kong’s composite Consumer
Price Index (CPI), a gauge of inflation,
rose 4.7 percent in April from a year
earlier, easing from 4.9 percent growth
in March, the city’s statistics department
said on May 22.
The construction of a 100-billion yuan
(16 billion U.S. dollars) high-tech zone was
jointly launched on May 8 in southwest
China’s Sichuan province by the provincial
government and a Singapore company.
1.33%
China’s auto sales dropped from the
4
previous year in the first four months of
2012, as the slowing economy, the removal
of subsidies and high fuel prices deterred
buyers.
1.65t
Sales of the top 100 chain stores in
China totaled 1.65 trillion yuan (238.63
Quotes
companies less willing to invest in record promotion.
China issues policies to
raise wellbeing of working
women
A new regulation, made public on
May 7, provides employed Chinese
women with better welfare policies,
including extended maternity leave and
higher workplace protection, Xinhua
reported.
According to the regulation adopted by the State Council in April,
maternity leave has been extended from
90 days to 98 days, which is in line with
the 14-week minimum standard set by
the International Labour Organization.
The regulation more clearly specifies leave granted to women who have
miscarriages. According to it, a female
employee will get 15 days of leave if
their miscarriage occurs within the first
four months of pregnancy and 42 days
of leave if it happens later.
Under the regulation, female employees should be paid either by the maternity insurance programs they have
joined or by employers during their
maternity leave.
The regulation also expands the
categories of jobs that pregnant women
and breast feeding mothers are banned
from working for, while removing restrictions on what jobs married women
at the childbearing age should take.
billion U.S. dollars) last year, according to
data released by an industry association on
May 7.
6.7%
Trade between the Chinese mainland
and Taiwan in first three months totaled
35.12 billion U.S. dollars, down 6.7 percent
from the same period last year, according
to latest figures from the Ministry of Commerce.
“US ruling on solar panels ‘unreasonable’”
China on May 18 rejected
a US a nt i- du mpi ng r uli ng
against Chinese solar power
equipment, calling it “unfair”
and “unreasonable”, as Chinese manufacturers warned
that possible higher tariffs
might hurt efforts to promote
clean energy, China Daily reported.
Shen Danyang, spokesman for the Ministry of Commerce, condemned the US anti-dumping tariffs as trade protectionism.
“By deliberately provoking trade friction in the clean energy sector, the
United States is sending the world a negative signal about trade protectionism,” Shen said in a statement.
“Leading China indicators signal economic uptick”
Leading indicators in China are already showing signs of an uptick in
the economy, a senior statistics official said, in stark contrast to downgrades
of growth estimates by investment banks after disappointing data, according
to Agencies.
“Forward-looking indicators are starting to recover. At least we can say
in the future, the Chinese economy will not have a sharp slowdown,” said
Pan Jiancheng, deputy director-general at the China Economic Monitoring
& Analysis Center under the National Bureau of Statistics (NBS).
Pan pointed to an uptick on a monthly basis in leading indicators such
as the new orders and input purchasing sub-indexes in the NBS’ Purchasing
Manager Index, as against a slide in manufacturing output, which measures
past economic performance.
17.3%
Hong Kong’s total retail sales value in
March was provisionally estimated at 36.6
billion HK dollars (about 4.72 billion U.S.
dollars), increasing 17.3 percent over a year
earlier, the city’s Census and Statistics Department announced on May 3.
3%
China’s top economic planning agency
said on May 9 it will cut gasoline and
diesel prices by 3 percent per metric ton
for the first time since October after international crude price declines since late
March.
5
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08
The FDI index has suffered a negative
growth for 6 consecutive months.
2012/06 No.523
Special report
08 FDI Drops for Six Months
09 Why FDI Falling Down?
10 Change of Foreign Capital Distribution
12 Future Remains Bleak
13 A Long-Term Decline Ahead
14 China Expecting a Long-Term Slowdown of FDI Inflows
15 Analysis: China’s Utilization of Foreign Capital in 2012
ECONOMY
20 Financial Reform after the Crisis: An Early Assessment
24 Survey on Chinese Enterprises’ Outbound Investment and Operation (I)
44
Building energy conser vation
presents both demand and market.
27 Why Chinese Enterprises’ Overseas Investment Fails Sometimes?
28 Data Watch: China’s Foreign Trade and Investment in the First Four Months of 2012
Industrial Watch
32 China reports spike in agricultural trade with Africa
42 Tainted Spirulina Investigation
43 China’s IT Expense to Surpass Japan in 2013
44 Building Energy Conservation Presents both Demand and Market
46 China Sports Goods Industry: Big but Not Strong
survey
48
The rapidly aging population in China
presents opportunities for insurance
companies.
48 China’s Aging Population Brings Opportunities for Insurers
Case Study
52 How to Address Privacy Concerns of Internet Users?
REGIONAL TRADE AND INVESTMENT
54 Consensus Outweighs Divergence on the China-Japan-Korea Free
Trade Area
56 Greece Starts the Dominos ?
57 Multi-Lose Eurozone if Greece Secedes
58 German Companies Confident with Chinese Market amid Challenges
60 2012 State of American Business in China
88
Fascinating Chinese sceneries in
blockbuster films.
62 UNDP Chief Values China’s Sustainable Development
63 Int’l Cooperation Zone under Construction in Jilin
COVER STORY
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Published by (出版)
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70 Pierre Cardin: Surprise Myself Constantly
72 Wang Xiaoling’s Love with Wing Lai Yuen
74 Yang Bingqing: Oil Industry Is Her Lifelong Career
InfoRMATION
76 2012 China Market Suppliers List
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FDI Drops
for Six Months
By Yang Wei
Chart: China’s FDI growth from March 2011 to April 2012
40%
32.90%
30%
18.57%
20%
10%
0%
Mar, 2011 Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec Jan, 2012
Feb
Mar
Apr
-6.10%
-10%
-12.73%
-20%
T
he FDI statistics issued by the Ministry of
Commerce on May 15 show that in April
the paid-in foreign investment in China
accounted for 8.401 billion USD, down by
0.74% year-on-year. So far the FDI index has suffered a negative growth for 6 consecutive months.
Experts say that the gloomy economies of the European countries and the U.S., increasing costs and
slower economic growth of China, and also competitions from other developing counties will exert
continuing pressures on China’s FDI condition. It
will be a long trend that the inflow of investment will
slow down.
According to Ministry of Commerce, 7016
foreign-invested companies have been founded from
8
Data Source: Ministry of Commerce, PRC
January to April, down by 13.94% on a year-on-year
basis; the paid-in foreign investment reaches 37.881
billion USD, down by 2.38% year-on-year. As of the
end of this April, 745,000 foreign-invested companies have been approved to establish, with paid-in
foreign investment totaling 1.2 trillion USD.
Meanwhile, the distribution of foreign investment in China has been undergoing subtle changes.
On the one hand, manufacturers with low profit
margin and higher costs have chosen to exit the
Chinese market; on the other hand, more and more
foreign companies have established R&D or marketing centers in China to grab new opportunities in the
emerging industries. Special Report of this issue will
explore more on what behind the falling FDI.
External reasons
Accord ing to X in hua net.com, t he re-
By Alice Yang
“Two factors have contributed to the continuous negative growth of FDI”, said Shen Danyang,
spokesman of the Ministry of Commerce, at a
routine press conference on May 15. One the one
hand, the growth of the world economy has become
sluggish, exerting heavy impacts on the global FDI.
According to a report issued by the trade and development council of the UN, the scale of Greenfield
investment and transnational M&A have become
dropped during the first quarter this year, lowering
global expectations about the FDI prospects. On the
other hand, the U.S. and European countries have
encouraged the return of industries and some developing countries have adopted more favorable investment inviting policies, increasing the FDI competitions.
If we explore further by industry, the manufacturing industry in absorbing FDI in April experienced the largest drop, down by 4.4%, according to
Ministry of Commerce. Also, the FDI of service industry and agricultural, forest, husbandry and fishing
industry have dropped by 3.1% and 0.9% respectively.
If we look at the data by region, the FDI of China’s
west region and east region have dropped by 15.2%
and 2.5% respectively.
To compound the situation, the rising of factor costs of China have weakened its advantages in
operational costs. Bai Ming, deputy director of the
international market research department of the
Ministry of Commerce, said that “besides the European debt crisis and other negative external factors,
the Chinese economic adjustment has also lowered
the investment willingness.” According to up-to-date
data provided by the National Bureau of Statistics,
the PPI (Producer Price Index) has dropped by
0.7% on a year-on-year basis, showing the economic
slump to the bottom.
Also, the structure and quality of FDI, rather
than its pure scale, have been given more and more
attention. “In many regions it is not about inviting
foreign investment, but selecting the right investment, which may also impact the scale of foreign
investments,” Shen said.
Li Zhongzhou, a WTO expert, remarked that
besides the above-mentioned reasons, the control
and management of domestic real estate market have
constitute another important reason for the shrinking FDI. Data shows that the real estate industry has
accounted for 25% in terms of paid-in foreign investment, while the control of the real estate market has
lowered the paid-investment of real estate market for
the first quarter by 6.3%.
Teng Tai, chief economist of Minsheng Securities, said that the quality has replaced scale as the
most calculated factor in attracting FDI. The Chinese people have paid more attention to the production and management technology when inviting the
foreign investment, while some foreign companies
are unwilling to see the technological transfer, which
will lower the amount of investment. Also, the competitive advantage in labor costs, less favorable FDI
policies, and a more intense focus on environmental
protection in China have pushed the adjustment of
foreign investment structure, during which the FDI
scale will naturally.
Why FDI Falling Down?
Domestic reasons
9
cent “Global Investment Trends Monitor” issued by the
UNCTAD (United Nations Conference on Trade And
Development) on April 12, the global FDI in 2011 amounts
to 1.66 trillion USD, up by 16% on a year-on-year basis, but
still 25% less than the peak of 2007. Also the FDI condition
has improved this year; investors are still cautious facing the
fragile world economy.
It shall be noticed that the gloomy European economy
has delivered huge impacts on its investment in China. Data
shows that during January to April the investment from 27
European countries has greatly dropped, with paid-in investment shrinking to 1.9 billion USD, down by 27.9% yearon-year, again leading to the negative growth of China’s
FDI. “Because of the impacts from European debt crisis, the
investment from the European Union to China has been falling down. Also, the bilateral exports and economic relations
between China and the European Union have also turned
gloomy under such a background.” said Shen.
“The fragile recovery of the world economy has made
the pie of world FDI much smaller, while the European
Union and U.S. are encouraging the return of industries, and
emerging countries including BRIC have promoted more
favorable investment policies, splitting the stream of international capital.” said He Manqing, director of the Transnational Corporation Research Center of the Ministry of
Commerce. She added that China is placing more focus on
the quality and efficiency of investment because of the rising
labor costs and restraints by environmental protections.
Bian Weihong, senior analyst of the International Finance Research Institute of the Bank of China, commented
that as the largest trading partner of China, the EU is suffering a serious debt crisis with negative growth for 2 quarters. The recession of the European economy has lowered the
local willingness to invest in China. Also, the U.S. growth
rate for the first quarter is lower than expected, and the
recent economic data also turns negative. These factors combined have contributed to the negative growth of China’s
FDI.
Zhou Yu, director of the international financial currency research institute, Shanghai Academy of Social Sciences, said that the economic meltdown of the U.S. and EU
have made their companies unable to expand financially,
leading to the decrease of FDI scale. Most companies have
to adjust their investment according to demands, but facing
the unclear economic prospects, most companies will choose
slowing down the investment and decrease the scale.
Cheng Dawei, chief expert of WTO affairs center in
Beijing, told reporter that “the current domestic economic
condition will make the investment slowdown continue,”
she mentioned that this is mainly about the pressure from
the world economic environment: the EU debt crisis has no
appropriate solution, and the investment ability of European
companies is decreasing. The policies adopted by the U.S.
government to encourage the reflux of capital show that the
U.S. economic recovery is not as rosy as the report describes.
Besides, emerging countries are promoting more favorable
policies to attract foreign capital, causing split of the international capital.
10
Rising labor cost
A responsible person at an American-funded electronic company in Suzhou shared with the reporters that
the current rising speed and magnitude of China’s labor
costs would have been unimaginable three years ago. The
escalating costs and the high turnover rate it triggers have
brought huge pressures on the operation of foreign-funded
companies in China. But he also mentioned that the company he worked for will not exit from China in the short
run, because the Chinese market still outperforms those
at the Southeastern countries in terms of infrastructural
facility and quality of human resources, although the labor costs of the latter may be lower. But if the rise of labor
costs continues, they would consider moving the factories
to other regions. Another Japanese-funded car company
in Zhejiang also said that it will place more focus on the
R&D and design at the Chinese market, and move the
component R&D center to China.
“Currently China still have labor cost advantage, but
such advantage is shrinking. The rising labor costs here
have forced those low-cost investments into other markets,” Said Zhou Yu, director of the international financial
currency research institute, Shanghai Academy of Social
Sciences. The labor costs, technological ability, infrastructural facility and distribution of high-stream and lowstream industry chain are important factors considered by
investors. Therefore, those small companies more susceptible to the labor costs but less susceptible to the industry
chain will easily move to regions where the labor costs are
low.
Such change has been felt by many foreign-funded
Change
of Foreign Capital
Distribution
By Economy Reference News
companies. In 2012 U.S.-China Commerce Chamber for the first time
raised the question “whether the labor costs will impact company operation” in the annual “Business Environment Investigation Report”. The
result shows that 82% people think the labor costs will impact the company operation.
But Zhou also mentioned that those companies who have high
requirements about high-stream and low-stream industry chain will
choose to stay. It is said that companies of this type would finally return
to China.
Hu Ke, director of the trade development department of the Management Committee of the Suzhou Industry Park, told reporters that the
companies introduced into the industry park are mainly global top 500,
whose core competency lies in their brand and technology. Once established in the industry park, these companies are stable and less sensitive
to costs. Hu added that his years of experiences in inviting commercial
capital show that those “migrant” companies mainly belong to companies
with low added values, weak competitiveness and high sensitivity to the
change of costs. The more comprehensive the company is; the more stable
it will be. Many foreign-funded companies in the industry park not only
function as production base, but also as corporate headquarter, R&D
center or design center.
“They need this market”
Zhang Xiangchen, director of the Policy Research Institute of the
Ministry of Commerce, also discovered that it will be a natural process
for the low-end manufacturing business to maintain their investment level in China or move to China’s middle and west regions or even overseas.
For the medium-level manufacturing industry, the U.S. and European
companies will expand their investments because they need the Chinese
market.
Zhang remarked that the U.S. government has adjusted its policies by encouraging the development of local manufacturing industry
and also the return of overseas capital.
Boosted by such policy change, Ford,
Carlyle and NCR Corporation have
decided to move its overseas capacities
back to the U.S. He confessed that this
will bring certain pressures to China,
but the survey shows that the number
of U.S. companies moving back is small
and it is only restricted to those industries or products highly dependent on
the U.S. market. Many big American
companies, including GE and Apple,
will further expand their investment
and capacities in China. Therefore, “in
general, China’s market potential and
industry condition have huge attractions
to the overseas manufacturers.”
But the “Business Environment
Survey Report” issued by AmCham
China in 2012 also shows that although
the costs have been rising in 2011, more
than 75% people still predict the sales
revenue of foreign companies in China
will rise in 2012, 39% U.S. companies
say that the profit margin in China is
still highest in the world, and 78% U.S.
companies listed China as one of the
three investment targets of the world.
“Obviously the foreign-funded companies do not want to leave China.” the
report indicates.
Shen Danyang also mentioned
that although the U.S. and some European countries will call back the capital
and reduce their investments to China
due to the impact of the manufacturing
industry strategy, the Ministry of Commerce says there has been no large-scale
exit of foreign investors from the Chinese market.
Shen added that “we are still optimistic about the prospect of China’s
inviting and using foreign investments,
because the investment environment
here has been improving.” He said that
according to the “2011 Questionnaire
Survey Report of Japanese Manufacturing Companies’ Overseas Business”
issued by JBIC, the Japanese manufacturers are speeding up their overseas
expansion, and China and India will
be their investment priority. Also, the
“Medium-sized Company Business
Climate Survey” issued by Singapore
UOB Group also shows that China will
be the primer choice for the business investment of Singaporean medium-sized
companies.
11
Future Remains
Bleak
By Economy Reference News
C
h i ne s e g o v e r n me nt h a s
recently introduced more
f lexible policies on foreign
investment, which can help
to partially restore the development of
foreign inflows in China but can hardly
resume its previous growth speed.
Bian Weihong, a senior analyst from
the Institute of International Finance
of the Bank of China, believed that,
given the current conditions, the situation for foreign investment absorption
in the second half of the year will still
stay complicated. Bian also pointed out
that in the previous phase, as the European debt crisis stops deteriorating and
the U.S. sees a relatively fast economic
growth and rapid decline in the unemployment rate, foreign investment in
China is actually showing signs of stable
rebounding. At this stage, however, the
overall situation is far from promising.
If the European situation keeps going down, China’s foreign investment
development will be adversely affected.
Therefore, within the coming months,
the FDI in China is expected to remain
in a slightly downward trend.
At the same time, the continuous
negative growth of FDI and occasional
negative growth of the monthly funds
outstanding for foreign exchange
also confirms the judgment of a longterm slowdown in capital inflows on
the market. According to the statistics released by the People’s Bank of
China (POBC), after three consecutive months of negative growth in
the fourth quarter of 2011, from the
February of 2012, new financial institutions has started to see a positive
growth in their funds outstanding for
foreign exchanges. However, the latest
data released on May 15 shows that by
12
the end of April, the balance of foreign
exchange funds of financial institutions was 25.589 trillion yuan, 60.571
billion yuan less than in March. This
is the first negative growth point in
the foreign exchange funds this year.
Bian said, the variation of foreign
exchange funds, to some extent, is correlated with the variation of the RMB
exchange rate. Despite of the fact that
RMB continued to appreciate in April,
the expectation of the market for the appreciation of RMB saw a reversal while
foreign investment is determined by
the expectation for RMB appreciation,
besides, as western media continuously
magnify the pessimism for the prospects of China’s economic development,
the capital inflow into China tends to
gradually weaken. “As for the growing surplus in April, we must be clear
about whether it is an occasional singlemonth rebound or a trend for a continuous growth in the coming months. In
addition, as the expectation for RMB
appreciation has been lowered, some
enterprises would not exchange RMB
as rapidly as before and the foreign exchange inflows would also be reduced.”
Bian Weihong said in an interview with
the Economic Information Daily.
The slowdown of capital inflow has
showed the change of the long-lasting
“double surplus” pattern in the balance
of payments. Liu Weiming, an international financial market expert from
China CITIC Bank said, “as the global
financial markets are still volatile and
the European debt crisis still unstable,
it will become quite complicated for the
cross-border capital flow in the future.”
According to the Cross-Border
Capital Flow Monitoring Report 2011
released by the State Administration
of Foreign Exchange (SAFE), fundamental factors for the surplus in China’s
balance of payments still exist. However, due to the unprecedented complexity and severity of the international
economic and financial situations, the
cross-border net capital inflow may drop
in China and suffer fluctuations. SAFE
also points out that the European debt
crisis is still evolving and the global
finance is in a process of deleveraging,
which will significantly increase the
risks of large-scale cross-border capital
flows.
Analysts believed that the continued decline of FDI has released
the pressure of funds outstanding for
foreign exchange, leaving room for the
central bank to cut the deposit reserve
ratio in the future. Li Huiyong said,
the European Central Bank (ECB) has
required European banks to raise their
adequacy ratios of core tier-1 capital
to 9% before June 30. To meet this requirement, the EU will become more
cautious in overseas investment and it
is expected that the FDI before July
will continue a negative growth. FDI
is a part of foreign exchange funds and
its decrease will possibly lead to the
decline of these funds. In such cases,
the government will need to loosen the
domestic monetary policy by cutting
the deposit reserve ratio or resorting to a
reverse repurchase. Li also predicts that
the central bank will cut the deposit reserve ratio twice this year.
Teng Tai believes that FDI decline
will become a trend within this year and
this will result in a decrease of domestic
capital. It is necessary for the government to lower the deposit reserve ratio,
so as to further release the liquidity of
capital.
Decline Ahead
of environment and public interests.
The “labor dividend”, which was once a
great attraction for FDI, is also weakening. Various factors has made China
a less attractive destination for foreign
investments.
It is worth noting that these negative factors affecting FDI in China
cannot be possibly eliminated within a
short period. Some factors even appear
to be irreversible. In the international
environment, the financial crisis has left
those western capitalist powers struggling with their own economic problems and a few years after the crisis, the
outbreak of European debt crisis proves
that the prospect for the end of the financial crisis is actually not as positive
as expected.
As to the domestic situation,
regulation of the real estate market
is far from the moment to wind up
and as the government systematically
strengthens the management of the labor market and proposes to reform the
income distribution mechanism, the
once appealing “labor dividend” can no
longer bring high profit to foreign investors investing in China. Apparently,
China cannot attract FDI, like some
local governments did in the past, by
providing super-national treatment and
even at the expense of public interests
any more. It has become an objective
fact that Chinese market is becoming less appealing to investors, which
would inevitably cause FDI in China to
go through a long-term decline.
A Long-Term
I
(Author: from BWCHINESE)
By Zhou Junsheng
n the past three decades, China, as an
emerging market, has attracted the great
inflow of foreign investments. Foreign
Direct Investment (FDI) has also become an important tool promoting China’s
economic growth. Nevertheless, at present,
FDI in China is continuously decreasing,
which, on the one hand, indicates that the
overseas investment capacity of foreign investors is declining, and on the other hand,
shows the Chinese market is becoming less
attractive for foreign investments. As a matter
of fact, both the external and internal environment are posing a severe challenge on the
FDI situation in China.
In terms of the external environment,
the ongoing global economic downturn in the
wake of the financial crisis is slowing down
the pace of cross-border investments, especially with no hope of the European debt crisis which started at the end of last year being
resolved, EU investment in China decreased
by 31.3% in the first quarter of this year. The
“Select USA” plan launched by the Obama
administration is also causing an obvious
return of worldwide investments, which also
affects the investments in China. At the same
time, some developing countries, especially
the other four “BRICS” countries, are also
introducing some favorable policies to attract
cross-border investments, which will inevitably result in the diversion of cross-border
investments.
As for the domestic environment, the
deepening real estate market is also affecting
the interests of foreign investors in China. In
the past two years, China’s real estate sector
used one-fourth of the total foreign investments, but due to market regulation, foreign
investments on this sector make no profits.
The w ithdrawa l of
these investments has
brought a direct impact on FDI.
Mo r e i mp o rtantly, with the adjustment of China’s economic structure, longlast ing overheated
investment in China
is being curbed. Especially, the government
lowered this yea r’s
GDP growth target,
basically abandoning
the previous system of
blindly pursuing GDP
growth at the expense
13
China Expecting
a Long-Term Slowdown
of FDI Inflows
By Liu Xiaozhong
I
n recent years, the development of
FDI in China has demonstrated
two major characteristics: the pace
is slowing down, even continuously
showed negative growth; disguised foreign investments account for an excessively high proportion. Investors from
countries and regions in Asia, especially
Hong Kong and Macau and some dutyfree islands, have dominated the FDI
in China for a long time. In the last two
months, investing capital flowing out
of these areas added up to US$15.379
billion, accounting for 88.67% of the
total amount of FDI in this period.
However, a large proportion of FDI
from these areas are “disguised FDI”,
which comes from domestic sales of
commodities originally produced for exports. It actually has greatly reduced the
international technology spillover effect
of FDI and affected the overall quality of FDI entering China. As a matter
14
of fact, China’s economic development
and continuous growth of its total factor
productivity, since the reform and opening up, are the result of productivity liberation to some extent. But mainly, they
rely on the technology and management
spillover brought by FDI.
The major cause for the ongoing
negative growth of FDI in China, we
think, is not the adjustment of China’s
FDI policies. Instead, it is because that
the marginal rate of return on investment income in China is gradually
decreasing to the level of other countries
and regions. To be specific, along with
an aging population in China, some resource managements have a high degree
of external dependence and under the
high inflation pressure, wages and factor
prices are also rising, especially the price
of some energies monopolized by stateowned enterprises, which is now close
to and even higher than the price on the
international market. For example, the
domestic oil price is now significantly
higher than that in Europe and the
United States. Obviously, these factors
have greatly reduced the marginal rate
of return on capitals in China, as well as
the appeal of China to foreign investors.
After the global financial crisis,
European countries and the United
States suffer from an economic downturn and great loss of job opportunities.
The relatively high unemployment has
reduced the wage level in these countries. Besides, other factors, such as the
relatively higher labor productivity in
Europe and the United States and the
high cost for logistics and cross-border
trade, have all made it economically
possible for European and US manufacturers in China to return to their
homeland. In the second half of last
year, there was an obvious ref lux of
foreign capital and decrease of FDI,
mainly US investment. This year, EU
investment reduction is more prominent. The latest statistics released by the
Ministry of Commerce showed that, in
the first two months, the actual input of
US capital was $525 million, a year-onyear increase of 0.87%, but compared
with the once input of $906 million, it
has decreased by 33.32 %. The reflux of
European and US capital, on the one
hand, has led to a continuing weakening of offshore RMB exchange rate
since last September, and on the other
hand, slowed down the accumulation
of China’s foreign exchange funds,
even causing negative growth. This has
also caused tight liquidity within the
domestic formal financial institutions
and finally pressured the central bank to
cut the deposit reserve ratio to ease the
liquidity of the financial system.
In addition, other reasons why
China is attracting less FDI include
that, in recent years, the state-owned
capital becomes increasingly strong, reform of the key sectors lags behind, the
turnover tax puts a heavy tax burden on
foreign investors and the protection for
intellectual property rights is not effective and sufficient. First, the expansion
of state-owned enterprises has not only
compresses the investment space of the
domestic private enterprises, but also
limits the investment of foreign capital.
Second, due to the monopoly of state-
Main factors affecting China's FDI
tors:
From the perspective of domestic fac-
Analysis:
(Author: from The 21st Century
Business Herald)
In 2012, impacted by several
factors such as changing domestic investment environment and
international economic situation,
China’s foreign direct investment
(FDI) may slow down.
China’s Utilization of
Foreign Capital in 2012
owned enterprises in financial and energy
area, the price of some factor resources is
soaring, increasing the operation cost of
FDI, reducing the return on investment and
thereby, impeding investors’ willingness to
invest in China. Third, the turnover-taxdominated tax system in China puts a much
heavier burden on foreign investors than other
countries and once the return on investment
in China decreases, foreign investors have to
carry an excessively heavy turnover tax burden. Therefore, they are more willing to shift
their investment to their own countries, or
to Vietnam and India. Fourth, although in
recent years, China has strengthened the protection of intellectual property rights, some
intellectual property infringement are still not
effectively curbed, which also, to some extent,
weakens the willingness of foreign investors
to invest in China.
The weakening ability to absorb FDI of
China also reflects the fact that, along with
the aging trend of the whole world, all the
countries are facing the common problems of
dropping savings rate and widening savings
gap. That means, the slowdown of FDI inflow in China will be a long-term trend, instead of a short-term effect. In the future, all
the governments will take efforts to cut tax,
release regulations and adopt other policies to
attract foreign investment, so as to boost the
development of the economy.
Nowadays, as China’s vast population is
aging rapidly, the continuous decline of the
savings rate in China is inevitable. Therefore,
absorbing more foreign investment to boost
domestic economy is beneficial to the longterm interests of China. To effectively attract
foreign investment and make full of external
savings, China should deepen its domestic
reform, break the monopoly of state-owned
enterprises in key sectors and guide the
SOEs to withdraw from these competitive
areas. In the meantime, it should clarify the
boundaries between the government and the
market, and ease government regulations, so
as to reduce economic and social operation
cost. Apparently, these pragmatic reformative measures will contribute to more foreign
investment inflows and at the same time,
stimulate the vitality of domestic capital and
restrain the outflow of domestic capital that
is caused by the lack of investment channels
within the country.
First, the national economy has ushered in a new stage for development and thus
requires more stringent standard for foreign
investments.
In recent years, the national economy
has experienced rapid development with
remarkable achievements. As early as 2011,
China’s aggregate GDP totaled USD 7.3
trillion, which consolidated China’s status
as the world’s second largest economy; with
a per capita GDP over USD 5,400 in 2011,
China was in the course of entering the
high-income country rank from the medium-income countries; China’s foreign exchange reserve exceeded USD 3.18 trillion;
the FDI utilized by China rose by nearly 2.5
times to USD 116 billion from USD 46.9
billion in 2001. Undoubtedly, FDI has made
great contribution to the domestic economic
development, industrial structure upgrading and industrial system construction.
However, as China has become stronger in
economic power, the “dual gap” at the beginning of the implementation of the reform
By Sang Baichuan
and opening up policy has changed to “dual
surplus” and therefore China has naturally
unveiled stricter standards for foreign investments. Attracting foreign
investments is not mainly for making up the “dual gap”, but for competing for the highly competitive carriers defining by advanced technologies,
management expertise and sound corporate governance system in a bid to
serve promotion of technological progress, structural upgrading and institution transition.
Second, “mode transformation and structure adjustment” has become
a significant topic for domestic economic development, which requires a
structural transformation of foreign investments.
To adapt to the requirements for transforming economic growth
mode and adjusting economic structure, China will continue to encourage
foreign investments to go into such industries as high-end manufacturing,
new and high technological industry, modern service, new energy as well
as energy saving and environmental preservation, and China will still have
strict threshold for the high-energy-consumption, high-pollution and
high-resource-consumption projects. Besides, China will encourage the
foreign-funded enterprises to set up in China such functional headquarters as regional headquarters, R&D center, purchasing center, financial
management center, settlement center as well as cost & profit settlement
center and more cooperation in terms of R&D between the domestic en15
terprises and their foreign counterparts
will be encouraged. In the revision of
“advantageous industry catalog for foreign investments in Central and West
China”, more entries will be added for
the labor-intensive projects; the foreignfunded enterprises will be encouraged
to develop in the central and western
areas the labor-intensive industries in
line with requirements for environmental protection, and both the domestic
enterprises and the foreign counterparts in the western areas will continue
to enjoy the preferential policies for
corporate income tax; more preferential
policies as well as technical and capital
support will be in place for the foreignfunded enterprises in the eastern regions to shift to the central and western
regions. All of these will impact the
industrial structure and regional structure of foreign investments.
Third, under such circumstance as
stabilizing price and controlling housing price, economic growth has slowed
down and investment cost faces upward
pressure, which dents the influx of foreign investments
With tight corporate capital chain
and increasing risk for economic downside, although the domestic monetary
policy has got looser this year, the
national economic growth will slow
down due to under high pressure for
inflation no fast growth in money supply, persistent policy for housing price
control and slower investment growth
in real estate and related industries. As
a result, the time that a couple of years
ago foreign investors capitalized on the
high housing price to massively nudge
into the domestic housing sector has
gone. In the mean time, China’s rising
labor cost, high raw material price and
RMB appreciation will push up investment cost, which will inevitably deter
the growth of foreign investments.
From the perspective of international factors:
F i r st, t he world economy is
gloomy for recovery and great uncertainties exist for economic growth,
therefore, foreign investors now become
cautious.
In the wake of the financial crisis,
the world economy has been struggling
out of the slump, but sluggish. The
unpredictable international political
16
environment, turbulent situation in the
Middle East and North Africa, chaotic
South Asia and South China Sea areas,
as well as intense battle among big nations across the world have made things
worse for the world economy to step out
of the crisis. According to the IMF’s
analysis, the world economic growth in
2011 did not live up to the prediction
at the beginning of the year, declining
to around 4% from above 5% in 2010;
the real GDP in the economic powers
remains grim — the real GDP growth
was as low as around 2% in 2011 and
this year the real GDP is forecasted to
rise 2%. The depressed world economy
will necessarily lead to lower enthusiasm
and input for the foreign countries to
invest in China, which will be a major
constraint for attracting inbound FDI.
Second, the US economy is in a
downturn and its “re-industrialization”
strategy impact its investments in China.
As the world’s largest economic
power, the US was heavily hit by the
2008 financial tsunami with high unemployment rate and fiscal deficit as
well as slowing economic growth. The
IMF forecasted that this year the US
would still have a high fiscal deficit, accounting for as high as 6.1% in its GDP.
The debt problem will be a mediumand long-term constraint for the US
economic recovery. On the one hand,
the cap for issuing national bonds needs
to be raised so as to avoid debt defaults
and then debt crisis; on the other hand,
at the time for presidential election, economic decline should be avoided, and a
loose fiscal policy with higher corporate
tax cannot be implemented. Consequently, the debt problem will be a longterm bottleneck for the US and thus
economic recovery will be very slow.
Unemployment is the biggest
challenge confronting the US. The
IMF’s prediction revealed that in 2011
the US unemployment rate was 8.8%9.1% and it would remain as high as
8.3%-9% in 2012. In spite of a string of
pro-employment acts that the Obama
administration has raised, the effects of
these acts are not satisfactory enough.
As a result, unemployment will become
the biggest obstacle for the US economy to recover.
Confronted with so many difficulties, the US economy has seen some
growth, but it is still in the downturn.
The IMF predicted that in 2011 the US
GDP growth rate was 1.7%-2.1% and
in 2012 it would probably rise to 2.6%3.3%. Against the backdrop of the US
“re-industrialization” strategy to rejuvenate economy, China’s inbound foreign
investments will necessarily sink and
even backflow of some foreign investments will resulted.
All in all, the US economic trend
and its internal policies will become a
key factor affecting its investments in
China this year.
Third, as the European sovereign
debt crisis escalates, it will be difficult
for the EU economy to recover in a
short period and the EU will be weaker
to invest abroad.
In 2011, the European sovereign
debt crisis kept spreading, which meant
that the crisis passed on from the periphery countries including Ireland and
Greece to the core EU member countries such as Italy, Spain and Portugal.
Three international credit rating agencies have kept downgrading the credit
grade of the EU member countries and
even France, the core member in the
EU has no way to be not involved.
As the bailout mechanism the EU
formulated can only solve the liquidity
problem for the countries trapped by
the crisis in the short run, but cannot
improve their solvency in the real sense,
the default risk for these countries is
mounting; the EU debt crisis may
transmit to medium- and large-sized
economic entities from small-sized
ones. In particular, Italy’s debt problem has tremendous potential risk; the
European banking sector, with a 53%
asset in the global banking sector, holds
a huge amount of bonds worth more
than EUR 500 billion in the PIIGS
(Portugal, Italy, Ireland, Greece and
Spain), so there exist risks for the debt
crisis to evolve into a banking crisis. In
2012, the EU is very likely to face a difficult year for addressing the sovereign
debt crisis.
The EU is deeply hit by the crisis
and has no way to step out of the crisis
by itself. The escalation of the European sovereign debt crisis this year will
impose persistent impact on the EU
economy, making it hard to recover in
a short time; even if the EU sovereign
debt crisis will not escalate, the
EU’s countermeasure — tight fiscal policy will decrease the public
fiscal expense in the EU, cut social
welfare, deter growth in public
investments and consumption and
even result in frequent individual
strikes, which will impact the social economic growth. All of these
will slash the EU’s investments in
China.
Outlook on China’s Inbound FDI
Due to the changes and impact
of both the domestic and international
economic framework, it will not be optimistic for China to attract FDI in 2012.
First, the foreign investment
scale is projected to decline a bit on an
overall stable basis.
In 2011, China’s actually utilized
FDI showed negative growth during
the last two months, suggesting that
the financial crisis and the European
sovereign debt have imposed obvious
impact on China’s attracting FDI. In
2012, as the world economy will remain
gloomy and it will be hard for such
developed countries as the US and Europe to rejuvenate economy in a short
time, China’s inbound investments
will continue to slow down; heavily
affected by the US and European economic situation, the 10 Asian countries
and regions that accounting for over
80% of China’s FDI will also have a
slowing economic growth and weaker
power to invest abroad; besides, China
has stricter requirements for FDI, but
its own economic growth slows down
and investment cost rises, therefore,
we make such a prediction: in 2012
China’s actually utilized FID will show
a stable trend with a little decline, but
if the world economy and political environment worsen, foreign investments
will drop dramatically.
Second, the industrial structure
for FDI will be further adjusted.
Since January 30, 2012, China
began to implement the new Industry
Directory for Foreign Investments,
which will develop modern industrial
mechanism by channeling inbound investments to such domains as modern
agriculture, new and high technological industry, advanced manufacturing,
new energy and modern service. The
foreign-invested companies are encouraged to cooperate on R&D with the
domestic counterparts, and when utilizing foreign investments, China may
enhance its independent innovation capability. At the same time, China will
strive for energy saving and emission
reduction and will strictly constrain or
forbidden the high-energy-consumption, high-pollution and high-resourceconsumption foreign investment projects. Under the guidance of the national
industrial policy, more foreign investments are projected to go into agriculture, forestry, husbandry and fishing in
2012, but the ratio in these industries
are still very low; constrained by its
own development level and affected by
the “re-industrialization” strategy in
the US and Europe, growth in foreign
investments for manufacturing will
slow down with a lower ratio; as such
domestic service sectors as finance,
logistics, tourism, medical service and
cultural industry become more open
and experience faster development, the
service sector will utilize much more
foreign investments than manufacturing to account for half of the total FDI
China has attracted and thus it claims
as the major player for FDI.
Third, the regional structure of
FDI will be changed faster.
The domestic regions attracting
FDI are obviously out of balance. The
majority of FDI concentrates in East
China, while the central and western
regions account for a smaller ratio.
However, with improving investment
environment, the central and western
regions will attract foreign investments
at a faster rate. Particularly, the revised
Industry Directory for Foreign Investments points out to bring the superiority of the central and western regions
in terms of land, energy resources and
labor force into full play, and it encourages the foreign investors to develop
labor-intensive industries in line
with environmental protection in
the central and western regions. In
2012, it is projected that the central
and western regions will continue
as last year to have greater attractiveness for FDI and more foreign
investments will go to the core
economic zones of the central and
western regions, and the regional
structure of FDI will be further optimized.
Fourth, risks are increasing for
foreign investors to withdraw investments from the labor-intensive sectors in the coastal regions.
Due to rising labor cost, high
prices of raw materials and energy as
well as RMB appreciation, the foreigninvested enterprises concentrated in the
coastal regions are under more pressure
with rising cost yet lower return on investment. It’s more likely for the foreign
investments settling in the coastal areas
to exit China. Besides, the depressed
and unbalanced world economy confronts some foreign-invested enterprises
with capital shortage, which poses more
risks that these enterprises will exit the
Chinese market.
Under complicated internal and
external economic circumstances, China needs to further promote investment
liberalization and facilitation, keep attractiveness for foreign investments and
to strive for steady growth in foreign investments; the combination of economic structure upgrading with utilization
of foreign investments will be helpful
for the optimization of foreign investment industrial structure and regional
structure; the local governments in the
eastern and western regions are encouraged to become “twin governments” in
a bid to help the labor-intensive foreigninvested enterprises in the coastal areas
shift to the central and western regions
especially the core economic zones in
the central and western regions. In this
way, synergy effect will be achieved in
these core economic zones, promoting
industrialization in the mainland.
(Author: Dean of Institute of International Economy of University of
International Business and Economics and Council Member of China
Association of International Trade)
17
ECONOMY
Financial Reform after the
Crisis: An Early Assessment
By Nicolas Véron
F
inancial reform has been a core
dimension of the initial global
policy response to the financial
turmoil of 2007–08. At the
first G-20 summit of heads of state and
government in November 2008, more
than four-fifths of the action points in
the final declaration were about financial regulation. Obviously, the crisis is
not over at the time of writing, and the
cycle of financial reform it triggered is
very far from complete. But it can be
said confidently that the crisis has been
transformational for financial regulatory
policy, at least in the United States and
Europe.
One of the key lessons of the crisis
20
is the close interdependence between
the detailed features of financial systems and macroeconomic outcomes.
Thus, the tight separation of financial
and macroeconomic issues, which is
entrenched both in academia and in
the policymaking community, needs
to be overcome. Initiatives to better
analyze “macro-financial” linkages and
to conduct “macro-prudential” policy
have mushroomed since the start of
the crisis, although they generally fall
short of a fully joined-up framework.
From this perspective, the focus of
this paper is financial regulation in an
old-fashioned sense, understood as a
cluster of interrelated policies designed
to ensure the proper functioning and
integrity of financial systems. This scope
includes public regulation and supervision of bank capital, leverage, liquidity,
and risk management; control of moral
hazard and financial industry incentives;
protection of the customers of financial
services; and the regulation of capital
markets. Other reform areas such as
capital-f low controls, prevention of
money laundering, and the taxation of
financial activities can overlap with this
agenda, but are not considered here part
of it in a strict sense.
The general impetus of financial
reform as a reaction to the crisis, in the
United States and Europe, has been toward more regulation, or re-regulation.
This is admittedly too simplistic a
generalization: This policy area is multidimensional and cannot be reduced
to a simple choice between less or more
regulation. Nevertheless, there was a
clear turning point in 2008 with the renewed realization that financial systems,
including banking systems, could not be
left to their own devices, both because
of the large potential economic cost of
financial crises and because public expenditure is often a key component of
their resolution. For a variety of reasons
this age-old wisdom was neglected in
the preceding decade in both the United
States and Europe more than in the rest
of the world, including Australia, Canada, Japan, and emerging economies.
Financial regulation is a complex
thicket of highly technical policy challenges, often subject to the use of mutually incomprehensible jargons even as
they are mutually interrelated. The devil
is generally in the details, and elegant
quantitative models of policy tradeoffs are rarely available. Analytical
frameworks tend to be similarly fragmented across different academic silos,
including economics, financial research,
accounting, political science, and sociology. From an economic research perspective, this is a less mature field than
other policy areas such as fiscal, trade,
or labor. Hopefully, the crisis itself will
result in new avenues for research, the
results of which might start to become
available in a few years’ time.
The dynamics of financial
reform
In the European Union, a distinct
driver of financial reform in the two decades preceding the crisis was the effort
to create a single market for financial
services, particularly after the introduction of the euro in 1999. Landmark corresponding pieces of legislation include
the 1989 Second Banking Directive,
which encouraged the creation of crossborder branches; the 1993 Investment
Services Directive, which established a
single “passport” regime for investment
banking operations throughout the
European Union; the 2002 Regulation
on International Accounting Standards,
which paved the way for the European
Union’s adoption of International Financial Reporting Standards (IFRS) in
2005; the 2004 Markets in Financial
Instruments Directive (MiFID), which
broke the monopoly of national stock
exchanges and established the basis for
EU-wide competition among trading
platforms; the 2006 Capital Requirements Directives, which transposed the
Basel II Accord and paved the way for
a harmonized regulatory framework for
bank capital requirements; and the 2009
Solvency II Directive (the preparation
of which started long before the crisis),
which established a parallel capital
regulation framework for insurance
companies.
EU harmonization efforts have
themselves been a powerful stimulant
or enabler for global regulatory projects.
The two most prominent pre-crisis examples in this respect are IFRS and the
Basel II Capital Accord. In the case of
accounting, the European Union’s decision to adopt IFRS, made at the political level in 2000, finalized through the
above-mentioned 2002 regulation, and
implemented in 2005–06, was the trigger for their subsequent adoption by a
significant number of jurisdictions that
now represent about half of the aggregate market capitalization of large companies worldwide. In the case of Basel
II, the European Union was instrumental in the negotiation of the accord in
the first place, and was among the first
to implement it with the adoption of the
Capital Requirements Directives and
subsequent rulemaking in individual
member states. According to the Basel
Committee on Banking Supervision, by
September 2011, implementation of the
Basel II Accord was complete in 21 of
the committees 27 member countries,
with at least two more countries planning to join in 2012.
global authorities. One case in point is
the FSB’s report on the “shadow banking system,” published a week before the
2011 G-20 summit in Cannes. Many
of this report’s recommendations are
addressed not to individual jurisdictions but to global bodies that are FSB
members, particularly the Basel Committee and the International Organization of Securities Commissions. Such
patterns mean that assessing the FSB’s
contribution to the policy process is far
from straightforward. In some cases,
the FSB’s work can be little more than
reporting initiatives of its members; in
other cases, FSB leadership is essential
for pressing other bodies into taking action. In practice, there appears to be a
continuum of situations between these
two extremes.
The IMF and the FSB
Challenges and outlook
While the G-20 is by its very nature a political body, the coordination of
the global financial regulatory agenda
during the crisis has been mostly the
joint preserve of the IMF and FSB,
these being “the principal institutions
of governance of the global financial
architecture”. The IMF has played a
significant role through its Financial
Sector Assessment Program (FSAP).
The FSAP, which is conducted by the
IMF alone in developed economies and
jointly with the World Bank in developing and emerging economies, is a
comprehensive assessment of a country’s
financial-sector stability. In September 2010, the FSAP was made a more
regular feature for 25 jurisdictions, for
which the assessment will be renewed at
least every five years. This meant an end
to the de facto exception under which
some large countries escaped the scrutiny of the FSAP until the crisis: The
first FSAP of the United States started
in June 2008 and was completed in
July 2010; and the first FSAP of China
started in August 2009 and was completed in June 2011.
The FSB’s role is multifaceted and
still to a large extent, a work in progress.
It has set up numerous working groups
and coordinates work on multiple fronts,
often at the explicit request of G-20
leaders. However, the actual work of
standard setting and rule making generally remains at the level of specialized
It is far too early to present a
settled picture of post-crisis financial
reforms and their impact on the global
financial system. Huge challenges remain and it is still unclear how they
will be met. First and foremost, the
crisis has not yet been resolved, and the
interaction between crisis management
and long-term reform creates uncertainties of its own. Second, in spite of
widespread calls for “macro-prudential”
approaches, the interaction of financialsector policy with other dimensions of
economic policymaking remains largely
unsettled. Third, how to effectively
regulate cross-border financial firms
remains a fundamentally unanswered
question. Fourth, other reforms will be
difficult to implement in an internationally consistent manner, raising concerns
about the possible fragmentation of the
global financial space. Fifth, the reforms
will affect the financial system’s contribution to economic growth in multiple
ways, which on the whole remain poorly
understood.
Ongoing crisis management
The most obvious uncertainty is
that the financial crisis is far from over.
Although it was partly overcome in the
United States in 2009, it is still worsening in Europe and could again spillover
to other parts of the world. This creates
a triple risk of forbearance, populism,
and irrelevance.
21
ECONOMY
Concerns about financial instability in jurisdictions where the financial
crisis remains unresolved, including
much of continental Europe at the time
of writing, can easily lead to excessive
forbearance as has been the case in
several past episodes of systemic banking fragility, such as in Japan in the
1990s. For example, large continental
European countries such as Germany
and France were widely reported as being reluctant to tighten the definition
of capital and impose higher minimum
capital requirements in the negotiation of the Basel III Accord and in the
subsequent discussion of SIFI (systemically important financial institution)
surcharges. Similarly, the first draft of
the EU legislation transposing Basel III
softens some of the Basel Committee’s
tightening of the definition of capital,
and prohibits the voluntary application
of higher capital requirements by individual member states. The same factor
was at play when European policymakers forced the IASB in October 2008 to
amend the IAS 39 standard on financial
instruments and allow more flexibility
in the classification of financial instruments by struggling European banks.
This is especially important as the European Union prepares to introduce legislation on banking crisis management
and resolution. A proposal is expected
from the European Commission in
early 2012. It is arguably impossible to
eliminate moral hazard from banking
sector policy frameworks, but it is arguably even more difficult to prevent it
when such frameworks are prepared in a
climate of systemic instability.
The risk of populism complements
that of forbearance, and the two can
be simultaneous. As the ongoing crisis
creates a political demand for action,
and action at a fundamental level is prevented by the bias towards forbearance,
policymakers can be tempted to adopt
a punitive attitude toward the financial
sector, in response to popular perceptions rather than in-depth policy analysis. This has arguably been the case with
initiatives, particularly in the European
Union, to put hard limits on the scope of
remuneration practices in the financial
industry and to impose specific taxation
on aspects of financial activity. In certain cases, such impulses can be aligned
22
with strategies of “financial repression,”
namely the forced investment of domestic savings in government securities,
or in other forms of repression of market mechanisms for price setting and
capital allocation, such as the attempts
to discourage some forms of hedging
against sovereign risk or to suspend the
publication of credit rating decisions
affecting troubled countries. Given the
complexity of financial regulation, it can
be difficult to disentangle such populist
motivations from other drivers of financial reform. Nevertheless, they are likely
to gain in prominence if the European
crisis worsens and leads to more financial and economic dislocation.
Furthermore, embarking in longterm financial reform while a major
f inancial crisis is still ongoing and
unresolved creates a risk of irrelevance
of the corresponding legislative and
regulatory initiatives, to the extent
that the eventual crisis resolution can
be expected to usher in a new round of
reform to ensure that “it never happens
again.” Examples in the European
Union are the successive rounds of
amendments to the Capital Requirements Directive of 2006, or the three
consecutive regulations to create a
tighter legal framework for the activity
of credit rating agencies.
Each of these three factors, in
certain circumstances, can contribute
positively to the quality of policymaking. Forbearance can be a rational calculation to minimize financial dislocation,
even though it increases moral hazard.
Populism can help assert the autonomy
of financial reform against pressure
from the financial industry. Successive
rounds of regulatory reform can result in
gradual improvements of the regulatory
framework and correction of past missteps. But each of them can also easily
have negative consequences in terms of
the sustainability and efficiency of the
financial policy framework.
Financial systems and growth
Finally, one of the most open
questions of all is how the post-crisis
financial reform agenda might affect the
ability of the financial sector to contribute to overall economic growth. This
issue too has multiple dimensions.
As mentioned above, the conse-
quences of tighter capital requirements
on economic growth have been a matter
of heated controversy in the context of
the preparation of Basel III, with a stark
contrast between simulations conducted
by the financial industry that predicted a
devastating effect of the proposed rules
on future output (IIF 2010), and those
of the supervisory community that forecasted a much milder impact (MAG
2010 and BCBS 2010a). Ultimately, the
G-20 leaders implicitly endorsed the
Basel committee’s more sanguine assessment when they adopted Basel III at
the November 2010 Seoul Summit.
However, this quantitative argument fails to capture the complexity
of the impact of financial reform on
growth. In most countries in the developed world at least, large companies
have fairly easy access to international
capital markets, and their funding conditions are not overly affected by domestic
regulatory frameworks. Smaller companies and other borrowers, by contrast,
including younger firms which have
the greatest growth potential, have no
such access, and their ability to mobilize
external finance is likely to be most affected by financial reforms. What is at
stake is not just the aggregate volume
of credit, but how this credit is allocated by heterogeneous intermediaries
towards heterogeneous firms and other
borrowers. Regulated banks are only
one part of this picture, which includes
the loosely defined “shadow banking
system” and interacts with the broader
economy in ways that existing economic
models generally fail to describe comprehensively.
In particular, the impact of the ongoing movement towards re-regulation
on global financial integration could
materially impact economic trends, to
the extent that financial openness is associated with higher levels of economic
growth. Also, how regulation might
encourage or limit competition among
financial intermediaries, innovation in
financial services, and the allocation of
capital to risky new ventures, remains
poorly understood, especially given the
large number of interrelated recent or
ongoing financial reform initiatives.
(Author: from Peterson Institute
for International Economics)
ECONOMY
Enterprises’ Outbound Investment and Operation (I)
Survey on Chinese
By Market Research Division, Economic Information Department, CCPIT
T
he year of 2011 marked the
beginning of China’s 12th
Five-Year Plan period, and
a lso the 20th year of the
country’s implementation of its “going
global” strategy. In the past decade,
Chinese enterprises’ outbound investment has witnessed the gradual transition from rapid growth to steady growth
and from quantity based growth to
qualitative based improvement. In 2011,
against the backdrop of increasing turmoil in the global political and economic environment, the ongoing deepening
of the European debt crisis, and an
increasing complex international investment climate, Chinese enterprises’ outbound investment maintained a stable
growth momentum. Domestic investors
made non-financial outbound direct
investment in 3391 overseas enterprises
in 132 countries and regions around the
world, and the cumulative direct investment amounted to US$60.07 billion, up
1.8% Y/Y. Going into 2012, domestic
enterprises are actively more involved
in overseas investment. In January and
February, domestic investors made
US$7.435 billion of non-financial outbound direct investment in 706 overseas
in 97 countries and regions around the
world, up 59.9% y/y.
Since the initiation of reforms and
opening-up, especially after China’s
accession to the WTO, for both “attracting inwards” and “going global”,
Chinese enterprises have become closely
related with economic globalization in
terms of operations and development.
The Chinese market has been playing
an increasingly important role in the
reorganization of global industrial and
production networks. Under the pressures arising from the post-financial crisis, rapid domestic market development,
and industrial transformation and up24
grading, Chinese enterprises are enduring new challenges, and becoming more
willing to consider new opportunities to
enhance their prospects for survival and
development. According to the questionnaire survey on Chinese enterprises’
outbound investment situation and intention carried out by the China Council for the Promotion of International
Trade (CCPIT) which was carried out
consecutively from 2007 to 2012, in
order to “go global”, Chinese enterprises
in the initial start-up stage strive for the
best investment modes, business philosophy, communication channels, and
ability to adapt in various investment
destinations around the world. Quit a
few of them have established favorable
cooperation and win-win situation with
foreign companies, and also made some
contribution to local economic development.
In combination with the survey of
the cases involving participation from
the member enterprises of local subcouncils of CCPIT, it is forecasted that
over the next few years, Chinese enterprises will see great changes in outbound investment targets, strategy, environment, risk and management. There
the 2011 CCPIT Questionnaire Survey
of Chinese Enterprises’ Outbound Investment shifted its previous focus from
expert-oriented enterprises to the actual
operating conditions of those involved
in “going global”.
The going-global trend
and domestic development
environment
1. Improving the scope for development is the major reason behind enterprises’
going global trend
The respondents evaluated the “degree of restriction of domestic market
environment and policy environment on
enterprises development”. Among the
factors for market environment, the top
three restricting factors are surging domestic costs, the high degree of market
competition and difficult access to talent. Most of the enterprises going global
consider they are greatly restricted in
eight out of the 11 indicators under
the survey when it comes to domestic
expansion. This somewhat reflects the
suggestion that restrictions on domestic
development and need for expanding
the scope for future development constitute the major reasons behind why
Chinese enterprises are going abroad.
See Figure 2.1
It is noteworthy that rising cost
tops the list of factors restricting domestic expansion of enterprises. Apart from
that, difficult access to talents, capital,
technologies and raw materials are also
among the major factors hampering
their domestic development. In addition, Figure 2.2 shows the differences
between private enterprises and stateowned enterprises in the evaluation of
their development prospects at home.
A comparison indicated that private
enterprises find the domestic access to
financing and raw materials much more
difficult than state-owned enterprises.
See Figure 2.2
2. Drivers for the going global move by
private enterprises
To better understand the domestic
business environment of the surveyed
enterprises going global, an investigation into the performance indicators
related to the domestic business of
surveyed enterprises over the past three
years was made. Figure 2.3 shows that
57.5% of the respondents are satisfied
with domestic sales, 49.3% satisfied
with domestic market shares and 47%
satisfied with profitability of domestic
sales. In terms of growth rates, 53.3%
of the respondents are satisfied with
domestic sales growth, 50.2% satisfied
with domestic market share growth and
44.5% satisfied with the profit growth
rate of domestic sales.
See Figure 2.3
According to a comparison of the
degree of satisfaction with domestic
business development between private
enterprises and state-owned enterprises
illustrated in Figure 2.4, private enterprises show less satisfaction than stateowned enterprises in six aspects, namely
domestic sales, domestic sales growth,
domestic market share, domestic market
share growth, domestic profitability and
profit growth rate of domestic sales.
See Figure 2.4
In a conclusion, first, the enterprises going global generally feel good
about domestic business development,
but nearly half of the enterprises are not
so satisfied with various indicators of
domestic business. This serves as a major force that drives them to go global.
Secondly, private enterprises are obviously less satisfied with domestic business when compared with state-owned
enterprises, showing that private enterprises face more severe restrictions and
competition in the domestic market. It
can be said that the going global move
by private enterprises to some extent are
motivated by the pressure of development at home.
Purposes of going global
1. Chinese enterprises engage in overseas investment to expand market expansion
rather than acquire resources
Enterprises conduct outward direct investment to optimize the allocation of resources worldwide and expand
markets both at home and abroad.
Chinese enterprises with potential in
overseas investment mainly include
three types: i) State-owned energy and
resources enterprises, which the aim to
stabilize domestic resource supply and
benefit from rising prices of raw materials by mobilizing upstream resources; ii)
High-tech enterprises, mainly including those in communications and IT
industries, which hope to participate in
global competition and gain technological resources; iii) Enterprises with comparative advantages, mainly including
textiles, clothes and home appliances
Rising rates of production costs
76.8%
High degree of competition in the domestic
market
Great difficulty to obtain high-level
personnel within the industry
73.1%
65.6%
High degree of perfection of upstream
and downstream industries
Great difficulty of financing from
the domestic market
63.6%
61.7%
Great domestic market growth potential
59.1%
Great difficulty to obtain the technology
that product innovation required
58.8%
High degree of government regulation
51.0%
Great competitive pressure from foreign
multinational corporations
46.1%
Great access restrictions of the industry
45.9%
Great difficulty of domestic access
to parts and raw materials
38.9%
30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80%
Figure 2.1 Evaluation of the enterprises going global
regarding their domestic development prospects
High degree of competition
in the domestic market
High degree of perfection of upstream
and downstream industries
69.6%
85.7%
73.1%
58.1%
73.1%
74.6%
Rising rates of production costs
Great difficulty to obtain high-level
personnel within the industry
Great difficulty to obtain the technology
that product innovation required
67.2%
63.3%
56.4%
64.2%
62.9%
56.9%
Great domestic market growth potential
55.9%
53.0%
High degree of government regulation
Great access restrictions of the industry
43.8%
Great competitive pressure from
foreign multinational corporations
Great difficulty of financing
from the domestic market
Great difficulty of domestic access
to parts and raw materials
53.7%
50.7%
44.2%
48.5%
66.1%
33.8%
41.1%
30%
40%
State-owned firms
50%
60%
70%
80%
90%
Private firms
Figure 2.2 Evaluation of state-owned enterprises and private
enterprises regarding domestic development prospects
enterprises, which desire to penetrate
international markets and circumvent
trade restrictions. Investment motives
of the said three types of enterprises can
be further broken down into two types:
overseas market-seeking and resourceseeking motives.
According to responses to survey
questions measuring the importance of
various functions offered by overseas
branches of outward-investing enterprises, the most important functions
served by these branches are aimed at
creating new market opportunities, in-
cluding manufacturing and promoting
products for parent companies (66.1%),
providing after-sales services to parent companies (57.6%), improving the
reputation of parents in host countries
(54.2%), obtaining internationally
famous brands (45.2%) and avoiding
barriers in major destinations of export
(40%). Functions ref lecting the motive to obtain overseas resources, such
as obtaining parts or raw materials for
parent companies (38.1%), manufacturing products of parent companies
based on local cost advantages (35.8%),
25
ECONOMY
57.5%
Domestic sales
Domestic sales growth
53.5%
Domestic market share growth
50.2%
Domestic market share
49.3%
Profitability of domestic sales
47.0%
Profit growth rate of
domestic sales
44.5%
40%
42%
44%
46%
48%
50%
52%
54%
56%
58%
60%
Figure 2.3 Proportions of the enterprises going global that are satisfied with domestic business over the past three years
Domestic sales
68.7%
54.0%
Domestic sales growth
64.2%
51.7%
Domestic market share
59.1%
46.6%
Domestic market share growth
56.1%
49.1%
Profitability of domestic sales
55.2%
46.9%
Porfit growth rate of
domestic sales
55.2%
44.6%
40%
45%
50%
State-owened firms
55%
60%
65%
70%
Private firms
Figure 2.4 Proportions of state-owned and private enterprises going global which
are satisfied with their domestic business over the past three years
Sell the parent company's
products in the host country
Provide after-sales service
for the parent product
Improve parent company's reputation
in the domestic market
Obtain international famous brands
Avoid trade barriers from main
export destination countries
Obtain parts or raw materials
for the parent company
Use local cost advantage to produce
parent company's products
Use local technological advantages
to research and development
Use local policy to reduce taxes
for domestic business
To invest in the domestic
market as foreign capital
66.1%
57.6%
54.2%
45.2%
40.0%
38.1%
35.8%
34.3%
31.6%
20.9%
0%
10%
20%
30%
40%
50%
60%
70%
Figure 2.5 Proportion of overseas branches of enterprises going global by importance of functions
conducting R&D activities using local
technological advantages (34.3%), and
investing in the domestic market as for26
eign capital (20.9%), are less important.
From figure 2.5 we can see that all the
functions that reflect market-seeking
opportunities rank ahead of those that
ref lect the motive to obtain overseas
resources. Survey data show that the
importance of seeking market opportunities is greater than the importance
of obtaining overseas resources for surveyed Chinese enterprises going global.
This also shows that the Chinese enterprises carry out overseas investment
with the aim to expand markets rather
than contend for resources.
See Figure 2.5
2. Importance of internationalized operations to private enterprises
Based on the comparison of stateowned enterprises and private enterprises in terms of relative importance
of various functions undertaken by
their overseas branches, we see that all
the functions, except the function of
obtaining parts or raw materials, are
more important to private enterprises
than to state-owned enterprises. This
indicated that for private enterprises, the
importance of either seeking for market
opportunities or obtaining overseas
resources is greater than that for stateowned enterprises. This also signifies
that the success of internationalization
is more important to the development of
private enterprises.
3. Differences in purposes of investment in European & American countries and
in Africa.
According to a comparison between overseas branches established in
European and American countries and
those in African countries in terms of
the importance of various functions,
overseas branched in European and
American countries mainly aim to produce and promote products for parent
companies, provide after-sales services
to parent companies, improve the local reputation of parent companies and
explore other market opportunities.
Reflecting strategic-asset seeking motives, overseas branched in European
and American countries mainly intend
to conduct R&D activities using local
technological advantages and invest in
the domestic market as foreign capital.
By contrast, overseas branches in Africa
mainly hope to circumvent trade barriers in major destinations of export and
manufacture products for parent companies by exploiting the cost advantages
of local areas.
Why Chinese
Enterprises’ Overseas Investment
Fails Sometimes?
By Audrey Guo
A
ccording to McKinsey’s report, 67% of the domestic
enterprises’ overseas investments have failed. Compared with other countries’ overseas investment failure proportion, is China’s
67% high? Why does China have such
a high failure ratio? What kind of barriers do the Chinese enterprises often
encounter in transnational M&A and
how do they overcome these barriers?
And how do Chinese enterprises deal
with those barriers? Mr. Tay Woon
Teck, Director from Stone Forest Corporate Advisory gave a detailed analysis on Chinese enterprises’ efforts to go
global.
When the reporter asked whether
this ratio is higher than that of other
developed countries? Mr. Tay told the
reporter that 67% was quite high, compared to countries such as US, UK and
Singapore. Mr. Tay said that the whole
M&A process was generally divided
into three phases—preliminary phase,
full investigation and negotiation phase
and post integration phase. Each and
every detail in every phase cannot be
ignored. Mr. Tay said, “the enterprises
in Europe and the US have detailed
evaluation guidance and plans for every
phase whereas the Chinese enterprises
generally are not adequately prepared
to undertake a comprehensive risk assessment and investment evaluation of
the target companies. They generally
do not conduct detailed analysis on the
operating synergies of acquisition and
the risk related to the acquisition. They
also do not spend sufficient time planning and organizing the appropriate
level of resources to implement the postacquisition integration.
Mr. Tay also pointed out that China and the West differ greatly in negotiation style. “In negotiation among the
British and Americans, they are more
structured and they focus on identifying the risks and operating synergies of
the target companies. Chinese companies generally look into how to achieve
a quick negotiation and didn’t spend
enough time examining the risks and
operating synergies of the acquisition.
Mr. Tay advised that the Chinese companies be better prepared and should
spend more time examining the operations and management qualities of the
target companies.
During the post-acquisition and
integration phase, Mr. Tay advised that
the Chinese enterprises should spend
more time to understand and comply
with the local rules, laws and regulations and spend more time to build a
localized management team that can
understand and deliver the vision of the
Chinese enterprises. He explained that
the failure of some M&A cases lies in
non-compliance by the Chinese enterprises with the local laws and regulations.
At last, he stressed that it is important for the Chinese entrepreneurs
to look into how to decentralize power
to an appropriate degree to allow for innovation. He said, “It’s easier said than
done, but it’s a challenge for many domestic enterprises to go global.”
27
ECONOMY
Data Watch：
Foreign Trade
and Investment
China’s
in the First Four Months of 2012
China’s foreign trade in the first four
months of 2012
According to statistics of the Customs,
China’s exports and imports in the first four
months of 2012 reached $1.16718 trillion, up
by 6.0% over the same period of last year. Specifically, exports stood at $593.24 billion, up
by 6.9% year on year; imports $573.94billion,
up by 5.1%. The four months saw a trade surplus of $1.93 million.
Significant increase in trade with emerging markets. From January to April of the year,
28
China’s bilateral trade with Russia and Brazil
reported 27.7% and 14.4% increases over the
same period of last year to reach $28.69 billion
and $25.07 billion respectively. The nation’s
trade with Europe jumped by 4.7% to reach
$170.53 billion; that with the United States up
by 9.2% to $146.1 billion; and that with the
ASEAN up by 6.7% to $117.65 billion. China’s
trade with Japan fell by 1.5% to $107.18.
Significant increase in exports of central
and western China. Exports of Central and
Western China jumped by 23.6% and 39.9%
respectively, compared with the 4.1% increase
•
in Eastern China. Exports of Chongqing City, Henan, Guangxi, Sichuan and
Jiangxi Provinces expanded by 1.9 times,
1.2 times, 29.3%, 62.8%, and 38.35 respectively. Guangdong exports increased
by 5.5% to $168.61 billion. Jiangsu and
Zhejiang Provinces and Shanghai City
reported exports volume of $95.8 billion,
$65.29 billion and $63.57 billion, increases of 1.7%, 4.2% and 1.2% respectively.
Exports volume of Shandong province
fell by 0.3% to $38.62 billon, while those
of Fujian Province and Beijing City expanded by 7.6% and 2.9% to reach $27.3
billion and $17.7 billion respectively.
Steady increase in exports of
mechanical and electrical products. In
the first four months of the year, China
exported $346.79 billion worth of mechanical and electrical products, 8.5%
higher than that of last year, 1.6 percentage points higher than the increase
rate of the nation’s total exports. In
specific, the country exported $140.29
billion worth of electrical appliance
and electronic products, an increase of
5.5% over the same period of last year;
exported $115.05 billion worth of mechanical equipment, up by 11% from
the same period of last year. Among the
labor-intensive goods, the country exported $39.97 billion worth of clothing,
up by 1% year on year, $28.85 billion
worth of textiles, down by 0.3%, and
$12.4 billion worth of shoes, up by 4.2%.
Slowdown of the expansion rate
of exports under the general trade.
From January to April of the year, China’s general trade value jumped by 6.8%
year on year to $617.06 billion. Specifically, exports reached $280.29billion, an
increase of 7.3% year on year; imports
increased by 6.5% to $336.77 billion.
The country reported a general trade
deficit of $56.48 billion, an increase of
2.7% over the same period of last year.
The nation’s processing trade value
jumped by 3.3% year on year to reach
$412.99 billion. Specifically, exports
rose by 5.3% to $266.11 billion, while
imports dropped by 0.3% to $146.88
billion, resulting in a surplus of $119.23
billion, an expansion of 13.1% from the
same period of last year.
Utilization of foreign
investment
In the first four months of 2012,
China approved the establishment of
7,016 new foreign-invested enterprises,
a decline of 13.94% year on year. The
nation utilized $37.881 billion worth
of foreign capital, a decline of 2.38%
from the same period of last year. In
April alone, China utilized $8.401 billion worth of foreign capital, a decline
of 0.74% from the same period of last
year. By the end of April, China had
approved the establishment of 745,000
foreign-invested enterprises on an accumulative basis and received $1.2 trillion
in paid-in foreign capital.
Significant increase in the utilization of foreign capital by some of
the service sectors. In the first four
months of the year, the service industry
made an actual use of $17.71 billion,
a decline of 3.1% year on year and accounting for 46.8% of the nation’s total
utilization of foreign capital, more
than the share of the manufacturing
industry. Among the service industry,
such sectors as software application,
comprehensive technology and financing have reported over 30% increase in
the utilization of foreign capital. The
sectors of agriculture, forestry, animal
husbandry, and fisheries made an actual
use of $610 million in foreign investment, a decrease of 0.9% year on year
and accounting for 1.6% of the country’s total utilization of foreign capital.
The manufacturing industry made an
actual use of $17.02 billion in foreign
investment, a decline of 4.4% over the
same period of last year and accounting
for 44.9% of the national total.
Continuant increase in investment in China from Japan; significant
decline in investment in China from
the EU. Investment from Japan continued to rise from January to April of the
year, amounting to $2.7 billion. Paidin capital from the 27 European Union
nations fell by 27.9% to $1.9 billion.
Investment from the United States rose
by 1.9% to reach $1.05 billion. Paidin capital from ten Asia nations and
regions (Hong Kong, Macau, Taiwan,
Japan, the Philippines, Thailand, Malaysia, Singapore, Indonesia, and South
Korea) amounted to $33.08 billion, up
by 0.6% year on year.
Significant increase in paid-in
foreign capital to central China. In
the first four months of the year, the
central regions made an actual use of
$3.05 billion, an increase of 12.6% and
accounting for 8% of the national total.
The western regions made an actual use
of $2.47 billion in foreign investment,
a decline of 15.2% year on year and accounting for 6.5% of the national total.
The eastern regions made an actual use
of $32.36 billion in foreign investment,
a decline of 2.5% year on year and accounting for 85.4% of the national total.
Overseas investment and
economic cooperation
China’s outbound FDI In the
f irst four months of 2012, China’s
domestic investors invested directly in
1,445 overseas corporations in 109 nations and regions, with a total of nonf inancial outbound FDI of $23.16
billion, an increase of 72.8% year on
year. $8.8 billion worth of direct investment was made in the form of merger,
making up for 37.7% of the total FDI.
By the end of April, China had made
$345.1 billion worth of FDI on an accumulative basis.
Overseas-contracted projects In
the first four months of the year, China’s
overseas-contracted projects reported a
turnover of $29.11 billion, an increase of
17% year on year. April reported a turnover of $8.22 billion, up by 4% from the
same period of last year. $35.34 billion
worth of new contracts were signed
from January to April, down by 19.1 %
year on year. In April alone, $7.04 billion worth of new contracts were signed,
down by 45.8% year on year. By the
end of April, China had signed a total
of $877 billion worth of agreements on
contracting overseas projects, and realized $568.1 billion in turnover.
Foreign labor service cooperation
In the first four months of 2012, the
number of all kinds of labor sent abroad
was 132,000, a drop of 2,000 from the
same with last year. 66,000 of them are
working on overseas contracted projects, and 66,000 of them are for labor
cooperation. At the end of April, there
were a total of 814,000 Chinese working abroad, 39,000 more than the same
period of last year.
(Source: Press Conference of
the Ministry of Commerce of China
on May 15, 2012)
29
Industrial Watch
AGRICULTURE
China reports spike in agricultural trade with Africa
Industrial Watch
A
ccording to Xinhua on May
20, China-Africa trade on
agricultural products has gone
through years of fast grow th
and the trade volume reached
US$4.78 billion in 2011, a Chinese official said.
The figure marked a 40.2
percent rise from the trade volume of the previous year and
was 7.7 times that of 2001, said Wang Ying, the director of
the Department of International Cooperation of the Ministry of Agriculture.
Wang delivered a speech during the China-Africa
Business Cooperation Forum, which was held on May 19 to
encourage further cooperation on agriculture between the
two sides.
China exported US$2.45 billion in agricultural prod-
ucts to African countries in 2011, up 35.7 percent year-onyear, and imports increased 45.2 percent to reach 2.33 billion U.S. dollars, according to Wang.
To help Africa raise local agricultural productivity and
enhance food security, China has also set up 25 agricultural
demonstration centers and trained more than 4,000 agricultural technicians and practitioners there since 2006. The
bilateral trade value exceeded US$160 billion in 2011, according to a document presented at the forum.
Comment
As Africa’s largest trading partner, as
well as the continent’s top FDI source,
China will continue to promote cooperation on
farming technology and personnel training and
encourage more domestic companies to invest in
Africa.
China farm produce prices rebound slightly
X
inhua reported on May 2 that China’s farm produce
prices mostly rebounded, ending a five-consecutiveweek downward trend as persistent rainfall limited market
supplies, new data has shown.
The wholesale price of 18 types of vegetables rose
2.4% during the week ending April 29, with prices of white
radishes, rapes and tomatoes up 14.4%, 11.8% and 9.8%,
respectively, the Ministry of Commerce said in a statement
on its website.
The wholesale price of eight staple aquatic products
edged up 1.1% last week, while those of peanut oil, colza oil
and bean oil increased 0.6%, 0.1% and 0.1%, respectively.
Meanwhile, rice prices inched up 0.2% and the price of
flour stayed unchanged, according to the ministry.
However, pork and eggs prices continued to decline.
Pork went down 0.1% week on week and 14.1% cumulatively since late January, while eggs dropped 0.5% last week
and 8.9% cumulatively since the beginning of the year.
Food prices have a one-third weighting in the calculation of China’s consumer price index (CPI), the major gauge
of inflation. China’s CPI rebounded to 3.6% in March, after
easing to a 20-month low of 3.2% in February.
Comment
Food price is still one of the most important elements for the government
to manage inflation.
China invests 600 bln in farmland improvement
A
ccording to Xinhua on April 24, China’s government
will invest around RMB600 billion (US$95 billion)
between 2011 and 2015 in turning the nation’s scattered
and dilapidated rural lands into efficient farming areas, under Ministry of Land and Resources plans unveiled.
Dong Zuoji, director of the ministry’s planning department, said at a press conference that the fund will help
establish 400 million mu (around 26.7 million hectares) of
efficient farmland across the country by 2015.
The investment will also help newly create 24 million
mu of agricultural land in the period, Dong said. The official estimated the campaign will boost the nation’s grain
output by 25 million tonnes.
32
The government will optimize the layout of construction land in rural areas and urge local regions to use land
more frugally, according to the plans. Meanwhile, farmland
damaged by construction will be reclaimed, Dong said.
Comment
To ensure grain secur i t y, China
strives to keep at least 1.8 billion mu
of farmland for grain production. However, the nation faces increasing challenges to maintain the
quota as official data has showed the country’s
total acreage of farmland stood at 1.826 billion mu
in 2010, down from 1.945 billion mu in 1998.
METALS
China grants extra quotas for rare earth exports
T
he Ministry of Commerce announced on May 17 additional export quotas for rare earth minerals totalling
10,680 tonnes, as China.org.cn reported.
Of the added quotas, 9,490 tonnes were light rare
earths, and 1,190 tonnes were medium and heavy rare
earths, a statement on the MOC website said.
The added quotas would be provided to a total of 12
companies which had recently passed examinations by the
Ministry of Environmental Protection, the statement said.
The companies included Baogang Group, the country’s largest light rare earth producer, and the Aluminum
Corporation of China, the statement said.
The quotas would be addition to the nation’s first batch
of rare earth export quotas, the statement said.
On December 27 last year, the ministry announced
the country’s first batch of rare earth export quotas totalling
10,546 tonnes for 11 qualified companies in 2012.
The ministry also noted that companies that had yet
to pass the environmental examination would not get the
export rights if they failed to meet the second round of environmental examinations before the end of July.
China supplies more than 90 percent of the world’s
rare earth metals, but its reserves only account for about
one-third of the world’s total.
Comment
Faced with widespread environmental challenges, it is justified for China to set production caps,
stricter environmental standards and an export quota system for rare earth metals in recent
years to protect the environment and preserve the exhaustible resource.
New platform gives iron ore traders muscle
An iron ore trading platform made
its China debut on May 8 as the world’s
biggest buyer of the commodity sought
to enhance its price-setting influence,
according to China Daily report.
Trading volume is expected to
reach approximately 100 million tons by
the end of this year. This will account
for about 14 percent of China’s annual
iron ore imports, said Xu Xu, chairman
of the China Chamber of Commerce of
Metals, Minerals & Chemicals Importers & Exporters, one of the organizers
of the platform.
Just a few minutes after its official
launch, the platform saw its first transaction with 165,000 tons sold for $145
a ton, including freight. This was in line
with market expectations, analysts said.
China, with a leading role in the
market, has long argued that it should
have a greater say in pricing.
The platform helps it wrest some
control from top miners such as Vale,
Rio Tinto and BHP Billiton.
The exchange said the platform
will offer contracts settled in US dollars
and yuan. The exchange will charge
a commission fee for both buyers and
sellers of 0.125 yuan or $0.02 per ton.
The exchange has said banks and
financial firms would not be allowed to
participate in a bid to stem speculation,
and there will be no trading of derivatives.
Currently, trading in the spot
market for seaborne cargoes is done directly between buyer and seller. Global
miners e-mail or fax prospective buyers
whenever they sell cargoes via spot tenders, a system deemed efficient and free
of broking fees.
Traders say unless China offers
incentives, such as tax rebates or commission discounts, they are unlikely to
migrate to the platform anytime soon.
The platform has more than 150
companies as members so far. Top
international mining conglomerates,
along with major Chinese steel producers including Baosteel, Hebei Steel
and Wuhan Steel, have all signed up as
members of the electronic platform op-
erated by China Beijing International
Mining Exchange.
Zhang Lin, senior researcher of
Lange Steel Information Research
Center, forecast that the platform will
come into its own when it can attract
about half of China’s imports.
Angang Steel, which is a member
of the platform, will put up to 30 percent of the company’s iron ore for trade
on the platform, said Li Daguang, deputy general manager of Angang Group
International Trade Corp.
Foreign miners were adopting a
wait-and-see approach.
“We believe the new system will
bring more transparency because prices
are not created by the platform, but reflect real transactions,” said Luiz Meriz,
president of Vale Minerals China Co
Ltd. “So, we are very supportive.”
Comment
With grow th in
Chinese demand
for iron ore this year slowing,
along with the overall economy,
the pricing dynamic is changing
to China’s advantage, whereas
the last few years have very
much been a sellers’ market.
33
Industrial Watch
ENERGY
Several iron ore exporting countries raised tariffs
Industrial Watch
I
t is learned from oversea reports that, Indonesia launched a
20% tariff on 14 mineral products including iron ore since
May 6th. It is reported, in addition to Indonesia, other countries will lift tariffs or limit the export of mineral resources.
Among them, India, Vietnam will increase iron ore export
tariffs, and Australia will levy carbon tax and mineral resource rent tax since July 1st, said National Business Daily.
An industry participant said during an interview with
National Business Daily, rising taxes will not only bring a
higher cost to Chinese steel enterprises, but also restrain their
investments in oversea mineral resources. “China has realized
the necessity to invest in oversea mines or acquire ore mining
rights, but at the same time, resource protection consciousness
in foreign countries is gradually strengthening.”
This is impeding Chinese steel enterprises’ “overseas
mine acquisition”. In recent years, to break the monopoly of
three leading ore traders, Chinese steel enterprises have tried
to diversify the sourcing channel, and made some progress.
According to Lange Steel Information Network, although
Australia is still a major exporter of iron ore, the first two
months of 2012 witnessed an increase of African ores, with
the ratio up from 6.04% at the same time in 2011 to 6.95%.
Meanwhile, imports of South American ores increased
slightly, up from 24.27% to 25.92%.
“As the three leading miners monopolize global iron
ore market, China try to break the monopoly by expanding imports of other ores. However, when more and more
non-traditional countries begin to limit exports of mineral
measures, China will encounter challenges.” Umetal iron ore
analyst Tang Jing said.
Comment
With many countries carrying out in succession policies to increase tariffs or restrict exports
of certain mineral resources, Chinese steel enterprises will face more challenges in acquiring
overseas mines. Therefore, how to avoid foreign policy barriers, and explore oversea market effectively, is the
problem facing Chinese steel enterprises.
Oil and other five minerals have an external
dependence of over 50%
B
eijing Business Today reported that while the foreign dependence of
oil and iron ore continue to rise, exports of refined aluminum, refined
copper, sylvite and other bulk minerals are increasing because of insufficient “domestic supply”, resulting in an increase of external dependence
of bulk minerals in the past 15 years. Minister of Land and Resources,
Xu Shaoshi said, the above five minerals all have a foreign dependence of
more than 50%. And with the global competition for mineral resources
becoming fiercer, the cost and risk of utilizing oversea mineral resources
will increase gradually.
Lin Boqiang, director of China Energy Economics Research Center, said, it is a fact that China has a high dependence and demand for
foreign mineral resources, and increases in mineral prices in recent years
have pushed up the costs for Chinese buyers. Excessive dependence on
imports will certainly affect China’s economic security, so it is quite necessary for China to strengthen mining of mineral resources.
Last October, the State Council approved the Prospecting
Breakthrough Strategy Platform for Action (2011-2020), making
clear the strategic roadmap for prospecting in next 10 years.
Comment
Along with the rapid development of emerging economies, national economic games
and global competition for mineral resources will increase,
and the costs of utilizing oversea mineral resources rise
sharply, so the risk of excessive dependence on imports is
higher and higher. China should focus on developing local
resources while exploring oversea markets.
34
Coal conversion in an era of
high oil prices
A
ccording to China Petrochemical News, the 12th
Five-Year Plan for National Energy Science and
Technology (2011 to 2015) lists coal processing and
conversion as national energy strategy for the first time,
providing technical support and assurance for China to
further reduce dependence on imported crude oil.
Low oil prices era has gone. Due to geopolitical,
debt crisis in Europe and America and other factors,
crude oil prices in international market hiked continuously in recent years. Industry experts expect that
international oil prices will stay high. China has rich
coal but poor oil reserves, and high international oil
prices will boost coal conversion into clean fuel, in order to replace petroleum. It has an important strategic
significance.
Comment
This move not only reflects
the focus on coal conversion,
but also suggests that coal conversion and
utilization will be a key direction for coal industry in next five years, and that China will
continue to increase the input in coal conversion science and technology. The plan
especially emphasized energy saving and
emission reduction in coal conversion process, which is the key to coal conversion.
ENVIRONMENT
Solar insiders upbeat on industry’s future
S
olar industry insiders remain optimistic about the sector’s
future, despite the recent challenges it has faced from a
supply glut and weak demand, China Daily reported.
Shares in solar power companies are falling and some
big players have even gone to the wall. But many insiders say
they are confident that the market will revive, especially with
the growth in Asia and the Americas.
“I believe the market will revive in 12 to 18 months,”
Brian Lau, director of DEK Solar, said at the Sixth SNEC PV
Power Expo.
Oversupply of polysilicon, a key component
in manufacturing solar
panels, has been further
depressing the price of
solar cells. Meanwhile,
European countr ies,
formerly big consumers of solar products, are
slashing subsidies for the
industry due to the financial crisis.
Lau said the production capacity surplus is driving solar
prices down, which makes manufacturers suffer. But it will
push the industry to go forward, as once prices become lower,
there will be more customers.
“After all, the industry cannot always rely on subsidies,”
he said.
“It is painful for manufacturers, as the price falls. But it
is a good thing, as a lower price means solar will be able to
compete with other energies like natural gas or coal. It will
become self-sustained,” said Rhone Resch, CEO of the Solar
Energy Industries Association, the national trade association
of the solar energy industry in United States.
Manz AG, a Germany-based manufacturer of production systems for making crystalline solar cells and thin-film
solar modules, established its biggest plant worldwide in Suzhou, an eastern city close to Shanghai.
“Almost all companies are losing money because of
overcapacity in the sector across the country, including us,”
said Dieter Manz, the company’s founder and chief executive
officer.
“But the user market is growing really fast so we still
see great opportunities. You need quite some investment to
achieve economy of scale, which is notably critical to the industry,” he added.
Due to technological advances, the cost of solar power
has substantially lowered so he foresees a quick pickup in
demand in the near future, with thin-film solar modules rebounding first, because its potential for cost reduction is far
bigger than crystalline solar cells.
Comment
The growth of solar energy in Asia
and the Americas and the price falling
is good news for solar power companies though
they are still suffering from overcapacity.
China’s nuclear industry reeling
J
apan’s nuclear emergency of last year has left a mark on Chinese nuclear manufacturers, which have since seen billions of
yuan worth of orders postponed, a senior industry official was
cited as saying by China Daily.
“Work stalled on 14 of the 27 reactors that were under
construction before Japan’s nuclear emergency, causing orders
worth 50 billion yuan ($7.9 billion) to be delayed,” said Sui
Yongbin, chief engineer of the China Machinery Industry
Federation, an industrial organization that represents machinery manufacturers.
The country suspended giving approvals to nuclear projects for 14 months starting on March 16, 2011, in response
to the nuclear leak that occurred at a Japanese nuclear plant
following the earthquake and tsunami that struck the island
country in the same month. Work on recently approved projects was also stalled to give the government time to conduct
safety inspections.
Shanghai Electric Group Co Ltd, one of the three largest
nuclear equipment makers in China, said it received no orders in 2011.
“China’s nuclear industry was expanding too quickly before the nuclear crisis last year and that will ultimately end in
diminished quality,” Sui said.
The engineer also warned that Chinese nuclear manufacturers are now dealing with overcapacity as the world nuclear
industry enters a trough, adding that strong competition already exists among Chinese manufacturers.
“Manufacturers can produce 20 pressure vessels every
year and they are competing with each other by offering lower
prices,” Sui said. “In the meantime, we are still importing certain key components from foreign companies.”
China can manufacture 12 nuclear reactors sets annually
whereas the industry needs only 40 sets before 2020, according
to Sui.
Comment
Japan’s nuclear crisis has left a shadow over the use of nuclear energy in
the world. China is no exception.
35
Industrial Watch
TEXTILE
Domestic textile shoes and hats export lose USD 5.5 billion due to technical barriers
Industrial Watch
C
hina Light Textile News reported that on May 14, the
General Administration of Quality Supervision released
the sample survey data of the impact imposed by the overseas
technical trade measures on 2,600 domestic export enterprises.
The data indicates that the domestic export textile shoes and
hats industry is among the top five industries severely impacted
by overseas technical trade measures and the direct loss of the
export textile shoes and hats throughout the year stood at USD
5.541 billion, accounting for 8.9% of the total direct export loss.
The industrial insiders hold that the Chinese textile shoes and
hats export departments and enterprises need to timely take
effective measures and positively respond to overseas technical
barrier measures in a bid to ensure the healthy export of the domestic textile shoes and hats.
It is learned that in 2011, 35.16% of the export enterprises
are impacted by the overseas technical trade measures to different degrees; the direct loss from export reached USD 62.259 billion last year, USD 4.018 billion more than 2010, accounting for
3.27% of the export volume during that period, and 0.42% less
than that in 2010; in response to the overseas technical barrier
measures, the domestic enterprises spend USD 25.962 billion
more, up by USD 1.571 billion over that in the previous year.
The sampling shows that the technical barrier measures
implemented by the major trade partners impacting the Chinese
industrial products exports can be categorized into five classes—
certification requirement, technical standard requirement, limit
of toxic and hazardous substances, label identifying requirement
as well as packaging and materials.
Comment
Confronted with more impact from various overseas technical trade measures, the Chinese foreign
trade enterprises should keep abreast of the latest development and the new regulations of the
overseas technical trade measures and timely formulate targeted countermeasures so that the impact on the
domestic foreign trade imposed by the overseas technical trade measures can be minimized. In the mean time,
relevant governmental departments are supposed to establish sound technical trade barrier warning and speedy
reaction mechanism in a move to create favorable conditions for the exports of the domestic enterprises.
Household textile and clothing enterprises seeking new development potential
by turning to E-commerce
T
he Household Textile and Clothing Exhibition was
held during May 1 to 5 at the 3rd Session of the
Canton Fair. Due to the declining macro economy, in the
first three months the household textile industry saw the
biggest negative sales growth over the past 10 years. Stepping into such a trough, how can the domestic household
textile export enterprises react? At the Canton Fair, the
reporter found in interviews that some traditional household textile enterprises began to turn to e-commerce. The
domestic export enterprises need to address the industrial
dilemma by transformation and upgrading through channel innovation.
Shanghai Homes Household Textile Co,. Ltd. (hereinafter referred to as Homes), well known as China’s “supermarket
king” in the domestic household textile sector, begins to fully
enter e-commerce sales. On the occasion of the opening of
the 3rd Session of the 111th Canton Fair in early May, Dong
Fulong, President of Homes and Vice Chairman of Shanghai Household Textile Products Association, announced that
Homes reaped RMB 10 million from online sales in April,
achieving sales channel transformation and upgrading. Dong
said that so far Homes had successfully combined online sales
with offline sales and in future supermarket supply and export
OEM ratio will decrease, while online sales will increase to account for a ratio of around 50%.
36
Industrial insiders point out that at this year’s Canton Fair,
Homes, the “supermarket king” in the Chinese household textile
announced in a high profile its launching into e-commerce along
with its operation objective, which undoubtedly has landmark
implications in the household textile sector. This signals that the
domestic textile sector begins to accelerate sales channel transformation and upgrading and that the household e-commerce
era has already come.
At the 111th Canton Fair, the gloomy industrial situation
made many household textile enterprises feel stressful and begin
to turn to e-commerce so as to respond to industrial changes.
Such brands as Lovo and Fuanna have opened their own B2C
e-commerce business and set up flagship shops on Jingdong
and Taobao shopping platform. It is an inevitable trend for the
household textile enterprises to nudge into online sales on a full
scale.
Comment
Entering e-commerce provides more
potential market for the traditional
household textile export enterprises and in the upcoming years, the proportion of e-commerce sales
volume of the household textile industry will gradually rise to 10% in the entire sales volume. In more
years to come, the proportion may jump to 50%.
AUTO
China readies more incentives for EV development
C
hina, the world ’s biggest emitter of greenhouse
gases, said it will take additional steps to promote development of electric cars and plug-in hybrids, according to
Bloomberg report.
The government will broaden pilot programs, build recharging facilities and develop a plan to recycle batteries, the
State Council said in a statement on its Web site in April.
The subsidies are part of the government’s drive to have
500,000 such vehicles by 2015, rising to 5 million units by
2020.
“This clarifies the direction for all participants, carmakers, consumers and regulators,” said Thomas McGuckin,
the Shanghai partner who oversees the Asia
Pacific automotive practice at PricewaterhouseCoopers. “The price
point, infrastructure and
consumer usage patterns
ultimately will determine adoption.”
General Motors
and Volkswagen AG
have announced plans to
introduce EVs and hybrids
in China, which seeks to cut
smog and its reliance on imported oil. BYD Co., the Chinese
carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., this week will introduce the first EV model developed by its venture with Daimler AG.
The State Council said in the statement that development should be built on existing production capacity and that
the industry should guard against “blind, low-quality investment and wasteful construction.”
The government wants to lower the average fuel consumption of passenger cars to 5 liters per 100 kilometers by
2020, according to the statement.
Government subsidies
Buyers of energy-efficient cars in Shanghai, Shenzhen
and four other Chinese cities qualify for a 60,000 yuan ($9,500)
subsidy.
This has happened even though the central government
offers a paltry 3,000 yuan ($475) subsidy for conventional
hybrids. By contrast, the government offers subsidies up to
60,000 yuan for an electric car and 50,000 yuan for a plug-in.
Electric-car sales in China are forecast to exceed those
in the United States by 2020, Boston Consulting Group Inc.
said in a report last June. Such cars may account for as much
as 7 percent of total auto sales in China, the world’s largest vehicle market, by 2020, Boston Consulting said in the report.
China imports more than half of its crude oil consumption, and it is the world's second-largest importer of oil after
the United States, giving it incentive to encourage use of more
fuel-efficient vehicles.
The country also is trying to reduce smog. Air quality in
all of the 32 Chinese cities that track pollution falls short of
World Health Organization guidelines, with Beijing among
the world’s most polluted cities.
GM, the largest foreign carmaker in China, introduced
its Chevrolet Volt plug-in hybrid car in the country on Nov.
21. The Volt will complement an all-electric car that GM is
developing with its Chinese partner, SAIC Motor Corp., the
automaker said.
Volkswagen plans to mass-produce EVs in China in
2018, VW China CEO Karl-Thomas Neumann said on
Feb. 14. Nissan Motor Co., which leads Japanese carmakers
in China sales, plans to export its all-electric Leaf car to the
country for fleet sales, Nissan said in last September.
Comment
It is Chinese government’s goal that
China would be the world’s largest EV
market. However, it is still far away from the target.
China ranked fifth globally behind Japan, the United
States, France and Germany in the adoption of batterypowered vehicles, falling from third place in 2010, according to a McKinsey & Co. report released April 20.
A lack of consumer demand, limited models
and inadequate charging stations were other reasons contributing to the decline, McKinsey said.
Also, China built about 16,000 charging points last
year, less than 5 percent of the government’s 2015
target for 400,000 charging stations, according to
McKinsey.
“Consumer sales of electric vehicles in China
face the same obstacles as in the United States:
high prices, limited driving range, and an inadequate recharging infrastructure.” said Alysha Webb,
a former China correspondent for Automotive News.
“In the near future, most of those EVs will be owned
by the government fleets, not consumers. It’s unclear when, if ever, Chinese consumers will warm to
electric vehicles,” Webb said.
37
Industrial Watch
CONSUMER
China’s wine investment market cools down
Industrial Watch
C
hina, the world’s fifth largest wine consumer, has shown
the sign of a cooling wine market, the Oriental Morning
Post reported on May 14.
Shanghai, China’s main distribution center for imported
wines, have seen declining wine imports for five consecutive
months, Xinhua News Agency reported.
The Shanghai Customs District imported 29.63 million
liters of wine in the first quarter of this year, and the average
price dropped to $9.8 per liter. March imports were 7.35 million liters, a month-on-moth decrease of 11.3 percent according to the Xinhua report.
By contrast, in the second half of last year, the domestic
wine market was extremely hot, and the average price reached
$11.6 per liter.
According to industry insiders, China’s wine market is
returning to rational, said the Oriental Morning Post report.
Affected by the cooling high-end wine investment market, prices of products from Chateau Lafite Rothschild, a topnotch French vineyard plummeted. As of May 8, the bonded
price of a 2008 Lafite product tumbled 53.4 percent to 7,230
yuan ($1,143.79) from 15,500 yuan and the bonded price of a
2004 Lafite product fell to 2,850 yuan from 4,900 yuan.
The report also quoted Wang Jiaqi, business development
director of Shanghai Wine Exchange, as saying that before
February 2011, prices of Lafite products had been skyrocketing, with buyers from China being an important force for its
boom.
According to previously published data from the French
Bordeaux Wine Industry Associations in 2010, China replaced
the United Kingdom and Germany for the first time to become the largest importer of Bordeaux wine in 2010.
Comment
China’s booming wine market is returning to rational after the market
frenzy.
China’s online third-party
payment booms in Q1
China’s e-shopping market to top world in 2013
T
he transaction size of China’s online shopping
market will surpass Japan in 2012, and exceed
the United States by 2013, becoming the world’s
largest online trading market, reported Economic
Information Daily on May 17.
The report cited the China Business Development Report Forecast (2011-2012) released by the
National Academy of Economic Strategy of Chinese
Academy of Social Sciences (CASS).
The report noted that even if China becomes the
world’s largest online trading market in the next year, the
thriving online shopping market is not enough to cover up problems in the general Chinese circulation industry.
According to Jing Linbo, vice-president of the National Academy of Economic Strategy of CASS, the fundamental reason lies in unclear positioning of
China’s circulation industry.
He stated that other problems include market segmentation, enterprises
scattered with low concentration, a less competitive market, a lack of theoretical research to guide the practice, and the need for improvement of personnel
training.
Comment
38
Though the online shopping market is thriving in
China, it has to confront with many problems, include
those in the circulation industry.
C
hina’s online third-party payment
market reached 758.3 billion yuan
($120.49 billion) in the first quarter of
2012, a major tech and Internet information provider was quoted as saying by Xinhua on May 7.
The figure represents a 90.9 percent
year-on-year increase, and 2.7 percent
increase compared to the last quarter of
2011, according to the results of a seasonal
survey of China’s online third-party payment market conducted by Analysys International.
The quarter-on-quarter decline in the
industry’s growth rate was due to the holiday season and the overdrawn consuming
ability in the previous year-end sales promotion, said Zhang Meng, an analyst with
the firm.
Comment
The burgeoning online shopping drives
the growth of thirdparty payment.
ELECTRONICS
Foxconn builds Chinese mainland headquarters in Shanghai
X
inhua reported on May 10 that the Foxconn Technology Group, a main supplier of electronic components for
Apple, started construction on its Chinese mainland headquarters in Shanghai.
The headquarters, located in the Lujiazui financial district, will function as a research and development center and
facilitate the company’ step toward a new business model,
Gou said, adding that the company also plans to set up an ebusiness center in Shanghai’ Minhang district.
Foxconn is the world’ largest maker of computer components and is responsible for assembling products for Apple,
Sony and Nokia.
Comment
The construction of the headquarters
represents a shift for the company, as
it will focus more on the domestic market and less
on exports.
ZTE sets its sights on Europe
A
ccording to China Daily on May 1, ZTE Corp plans to
strengthen its position in the European market in the
fields of telecom infrastructure, smart phones and government and enterprise solutions, according to company officials.
Since being established in China’s southern coastal cityShenzhen in 1985, ZTE has grown into a telecom-hardware
giant, the fourth-largest mobile phone maker by shipments
and fifth-largest telecom equipment maker by sales - competing with the likes of Sweden’s Telefon AB L.M. Ericsson and
Paris-based Alcatel-Lucent.
Because of a global decline in telecom carrier spending
on network construction, ZTE diversified its core businesses
in recent years to explore new markets, such as mobile phones
and enterprise IT solutions.
Last year, its overseas revenue was nearly RMB 47 billion (US$7.5 billion), 54.2 percent of its total revenue. The
European and North American market grew the most last
year, 42.2 percent year-on-year to RMB 20.45 billion.
With nearly one-fourth of its revenue coming from Europe and the US, it has become increasingly dependent on the
growth there, Dai Shu, director of corporate branding and
communications at ZTE, said.
“ZTE aims for a steady increase in market share in European countries,” Dai said. The European market is mature
and well-regulated. Meanwhile, many European-based telecom operators, such as Telefonica and France Telecom, conduct business globally, and may introduce extensive business
opportunities for ZTE.
“Since European-based telecom carriers combined occupy more than half of the world’s telecom network market,
ZTE will benefit in the short and long run from cooperation
with those multinational operators,” Dai said.
As early as 2000, ZTE had set up offices in various European countries. However, they didn’t really take off until
2006 to 2007, when it finally won the trust of the major European telecom carriers.
ZTE employs around 1,000 people in Europe, more than
60 percent of whom are citizens of the countries where they work.
ZTE’s telecom system equipment has been imple-
mented by nine of Europe’s top 10 operators, according to its
2011 financial report. The company is also seeking to provide
telecom operation services to European customers, said He
Shiyou, ZTE’s executive vice-president, at the company’s annual analyst conference in Shenzhen last month.
But ZTE’s most notable business in Europe remains
in consumer devices. It was the world’s fourth mobile phone
vendor in the fourth quarter last year, shipping 18.9 million
units, according to research firm Gartner Inc.
It could be shipping 100 million smart phones a year
by 2015, according to Reuters. Europe will be a major target
market for its mid-level to high-end smart phones as it tries
to reverse a decline in its gross profit margin, He said.
“We’ll do more promotions for our mobile phones in Europe this year,” Dai said. ZTE is boosting advertising because
many European consumers still know little about the company.
By cooperating with local carriers, it has secured
about a 10 percent share of the mobile phone market in
many European countries. Sales of the Blade 880, a ZTE
entry-level smartphone, have approached 10 million units
worldwide since it debuted in the United Kingdom in late
2010.
ZTE’s third focal point in Europe is said to be the government and enterprise businesses, specifically, in telecommunication and IT solutions to clients from governments and
the energy, transportation and education industries.
Xu Ming, ZTE vice-president, said the company is
aiming for more than US$6 billion in government and enterprise business sales by 2015, up from $1.6 billon last year.
Overseas markets are likely to contribute more than 60 percent of its total government and enterprise business sales by
2015, he added.
Comment
The construction of the headquarters
represents a shift for the company, as
it will focus more on the domestic market and less
on exports.
39
Industrial Watch
CREATIVITY
Short films show strong life during fair
Industrial Watch
M
ore than 1,000 short films from the Chinese mainland
and overseas were assembled in Shenzhen, Guangdong
province, on May 17 and 18 for the third China International
New Media Shorts Festival and KingBonn Award Competition,
China Daily reported.
The annual event, put on by the State Administration of
Radio, Film and Television and the Shenzhen government since
2010, attracted almost 30,000 short films from 63 countries this
year. Awards in 11 categories will be given to the best of them,
going to the films deemed to be the best dramas, animations and
documentary shorts, among other superlatives.
The biggest award will go to “the Best Short” and will
come with 300,000 yuan ($47,000) in prize money.
Beyond winning awards and gaining international exposure, film producers who attend the event are also looking for
business opportunities.
Zheng Dingwen, deputy general manger of Shenzhen
Media Group, the main organizer of the festival, said, “I have
a feeling that people came last year just to be onlookers but this
year have come with more real intentions to buy. The potential
buyers are mainly traditional TV stations, big video websites,
and the most popular products are short dramas and animations.
“Short films are a new offering and have only become popular in the last two or three years, but the future for them is very
bright. It’s a trend that is keeping up with changes in our lives.”
Zheng said China Mobile in 2010 introduced a program
called GkerGshooting, which allows subscribers to shoot videos
using their mobile phones and then upload them. The program
generated 5 million yuan in revenue in its first year and more
than 60 million yuan in its second.
“It (the film festival) presents a good opportunity,” said Li
Xusheng, general manager of Shenzhen BOX Digital Animation.
For a second year in a row, he has come to the festival to
promote his short 3D animations, which he makes money from
by implanting ads in them.
“Several companies and organizations contacted me after
the event last year with the intention of cooperating, including
some from France and Hong Kong,” he said. “They want to sell
their short films through our channel.”
Comment
In the fast-paced society, the appearance of short films satisfies people’s
various needs with their flexibility.
Animation industry “still lagging”
T
h e animation and cartoon
industry is booming in China
but experts say there is still a long
way to go before it will make a big
impression on the international
market, according to a China
Daily report.
A total of 260,000 minutes of
animation material was produced
in the country in 2011, an increase of 18 percent from 220,000
minutes in 2010, according to the
State Administration of Radio,
Film and Television. The growth is
almost twice as much as the increase in China’s gross domestic product last year of 9.2 percent.
However, experts said the gap between Chinese and
foreign markets remains huge and the domestic development
is not only constrained by lack of talented and creative people
but also the absence of a complete industrial chain.
“We have seen significant growth in quality and quantity
of the made-in-China products. However, there is a long way
to go to before the nation can take a strong role in the international market,” said Jin Delong, director of the publicity
management department at the State Administration of Radio, Film and Television during the 8th China International
40
Cartoon and Animation Festival.
The festival is the largest of its
kind in China and involves seminars
and exhibitions. It is held annually in
Hangzhou, Zhejiang province. This
year’s event ended on Thursday.
“Many products can be further
improved in terms of content and
design. Currently we have very few
products that qualify as special. Many
are mediocre,” Jin said.
In 2011, the cartoon and animation industry garnered a revenue of 60
billion yuan (9.52 billion U.S. dollars).
In contrast, the sales reported by Walt Disney Co reached 40
billion U.S. dollars last year.
Experts said the lack of a complete value-making chain
has become problematic for Chinese animation and cartoon
makers seeking profitability. Currently, many companies expect profits to come from broadcasting.
Comment
China is a large country of animation
works, but not a strong one. To speed
up the development of this industry, a complete
value-making chain is necessary.
FINANCE
China to buoy QFII inbound investment more aggressively
A
ccording to Xinhua on May 20, China will grant investment quotas by overseas funds in its domestic securities
markets in a more swift and aggressive way before the country
fully opens up its capital market with a convertible currency,
according to the foreign exchange regulator.
The State Administration of Foreign Exchange (SAFE)
will adopt fast-track procedures to approve investment quotas
by medium- and long-term overseas funds, such as investment
funds with foreign government background, overseas pension
funds and insurance capital, the SAFE said in a statement on
its website.
All overseas investment funds will be approved under the
scheme of the Qualified Foreign Institutional Investor (QFII),
which is launched in 2002 by the Chinese government to allow
licensed foreign investors to buy and sell the A-shares when
capital accounts are still controlled in the country.
To encourage the inflow of overseas investment funds, the
SAFE promised to allocate more quotas for those mediumand long-term QFII funds when they first apply, while appropriately simplify the management process of foreign currency
and Renminbi capital accounts.
The SAFE’s bolder move came after the State Council,
or China’s Cabinet, hiked the country’s total QFII quotas
from previously 30 billion U.S. dollars to 80 billion dollars last
month.
According to the QFII scheme, the China Securities
Regulatory Commission grants QFII licenses and market access to foreign investors, while the SAFE approves quotas for
individual QFII funds.
“The QFII operations over the past 10 years showed the
scheme is an important measure to facilitate the open-up of our
capital market and promote the yuan’s convertibility,” Sun Lujun, director of the Capital Account Management Department
with the SAFE.
Investment quotas totaling 26.01 billion U.S. dollars for
138 QFII funds have thus far been approved in China as of last
week, according to SAFE data.
Comment
QFII scheme has played an active role
in helping improve China’s institutional
frame work, investment concept, corporate governance, risk control, technologies and custodian and
brokers’ service quality.
New yuan lending drops, monetary loosening expected
X
inhua repor ted
o n M a y 11 t h a t
Chinese financial institutions lent less-thanexpected new loans in
y uan in April as the
economy continued to
slow, streng thening
expectations for further
monetary loosening.
New yuan-denominated loans reached RMB 681.8 billion (US$108.2 billion) in
April, down RMB 61.2 billion compared with a year earlier,
China’s central bank said.
The figure was far below market estimates of around
RMB 800 billion, following weak monthly data on investment, industrial output and consumption released.
April’s yuan lending was also the lowest this year, compared with RMB 1.01 trillion loaned in March, RMB 710.7
billion in February and RMB 738 billion in January, according
to the People’s Bank of China (PBOC).
Financial regulators should unleash liquidity, drive down
market interest rates, reduce corporate financing costs and
speed up bank lending.
China’s imports edged up only 0.3 percent year-on-year
in April while exports climbed 4.9 percent, both well below
market estimates.
Urban fixed-asset investment rose 20.2 percent from the
year before in the first four months, the slowest pace since the
17.4 percent growth recorded in 2002, the National Bureau of
Statistics (NBS) said.
In April, industrial value-added output grew 9.3 percent
year-on-year, its lowest pace in nearly three years, while retail
sales climbed 14.1 percent, lower than the 15.2-percent increase in March.
The PBOC reiterated its stance of maintaining a prudent
monetary policy in the months ahead, saying inflationary risks
still deserve attention.
Analysts expect more reductions in the reserve requirement ratio for banks in the short term and interest rate cuts
in the second or third quarter, but note that the central bank
remains wary of price rebounds.
China’s consumer price index, a main gauge of inflation,
rose 3.4 percent year-on-year in April, easing slightly from the
3.6-percent rate registered in March, the NBS said.
Comment
Of the new yuan lending, medium- and
long-term loans now account for less
than 25 percent, well below the 50 percent level in
previous years, showing large companies’ borrowing
demand has shrunk markedly.
41
Industrial Watch
HEALTH
Tainted
Industrial Watch
Spirulina Investigation
By Alice Yang
C
hina is stirred with spirulina
investigation by government
and media. Early this year,
many doubts rose from media
and public on spirulina products in the
market, concerning if these products
contained lead, arsenic, and mercury.
The concerns were directed at some very
famous brands in China, such as Byhealth and Green A.
State Food and Drug Administration (SFDA) conducted a special investigation into the spirulina products in
February, and released its official report
on its website on March 30. This report
claimed that they investigated 13 brands
of spirulina products, and three of them
are fake products (from Conice, Onice,
and Hongyangshen), and one product
from Cont-healthy had high-levels of
heavy metals. Among them, Conice
and Cont-healthy were advertised as US
brands, and Onice from Australia.
The other spirulina products including those from Green A, By-health, Jinaoli, Chenghai Lake, Green Classic, B&H,
Shengaolikang, Gaozhi, and Shiruian,
were claimed to be within national limit, i.e.
2.0mg lead in 1kg of product, which was
said to be the standard for health products
mainly based on algae.
However, that was not what the
media expected to see. On February 29, it
was reported in an internal SFDA notice
to state and provincial levels that all the
named 13 products failed to meet China’s
standards and thus were classified as
adulterated. However, when SFDA released its final report on March 30, many
were shocked to see that nine of the companies that failed were now considered up
to standards. This followed by rumors of
corruption and finger pointing.
Many speculated that prior to
March 30, these nine companies most
likely visited SFDA, and persuaded
them to revise their findings. Some
doubted that the independent testing
42
center was fair and objective in conducting their tests and that SFDA played too
much of an influencing factor. Everyone
questioned why the final results landed
where they did.
The Economy Reference, a local
newspaper within Xinhua national news
agency group, also reported that on
March 5, another notice inside SFDA
system on fish oil products stated that
eight products were disqualified, however when it was officially released on its
website on March 30, there were only
three left and all of them were titled as
fake products. They were Ruideli fish
oil capsule, Amway fish oil capsule, and
Olilailuomai fish oil soft capsule. The
Economy Reference asked, “Where are
the results for the rest of products?”
The national standard regulation
that should be followed is the General
Standards for Health/Function Food,
issued by the former State Bureau of
Technical Supervision in 1997. It says,
for general products, the lead limit
should below 0.5mg/kg; for general capsules, 1.5 mg/kg; for the drink powder
and capsules based on algae, 2.0mg/kg.
“How about the spirulina tablet?”
The Beijing News asked in its report. There
is no clear standard for the tablet so far.
“If we use 0.5mg/kg as the national limit,
Green A and Jinaoli spirulina tablets were
tested to contain 0.9mg/kg lead, which is
80% over the standard, By-health which
contains 1.0mg/kg exceeds the standard
for 100%,” the report explained.
SFDA can hardly keep silent in this
wave of media probing. On April 10, they
released a statement in reference to the
results of the spirulina products they made
days ago, arguing that the 2.0mg/kg as
lead maximum limits for spirulina
tablets was approved by many
industrial experts, who view the
tablet as the same dose as drink
powder. They also quoted that the
EU uses 3.0mg/kg as the standard
for their dietary supplements.
“But, just one month ago,
officials from SFDA told reporters that they used 0.5mg/kg as the
standard,” the Economy Reference said
in its report, which also pointed out that
many spirulina manufacturers and some
provincial food and drug administration
departments understood they should be
following the 0.5mg/kg standard.
Tong Min, Director of Health
Product and Cosmetics Department of
SFDA, said in an interview with The
Economy Reference that, “Once a problem comes, the first responsible person
is the enterprise itself, the second, local
supervision department, and the third
is SFDA.” Another anonymous industrial person remarked in the report that,
“SFDA can easily push aside its responsibility to local level, or they can fudge the
results of reports which can put-off its supervision responsibility and at same time
ensure the involved enterprise no-harm.”
The report questioned that “If all
the steps and power, including regulation
establishment, administrative licensing,
approval, market supervision, testing,
penalty and sanction, are all in SFDA’s
hand, how can there be transparency
and efficient regulation in China?”
Wang Lianglan, the spokesperson
of SFDA stated on April 11 that SFDA
would study the related report from media and promised to be more open and
transparent in the future work.
However, the public credibility
of SFDA has already been questioned.
Some discussion on the internet asked a
third testing party to redo the investigation and release an authorized report to
get to the bottom of the situation.
ICT
China’s IT Expense to
IT suppliers to increase resource input in order to
expand their urban markets; breakthroughs have
been made for the integration of the “three
networks” (telecommunication network, Internet and television net work); the digital
business based on broadcasting network has
begun to develop and intelligent television has
been initiated. Some provinces and cities such
as Jiangsu and Beijing have begun to establish
charging system for this kind of services; the
smart grid will stimulate IT investments. By
the end of 2011, the first two batches of smart
grid pilot projects have been accomplished and
in 2012 the smart grid project will be implemented in a larger scope across the country,
all of which will drive the development of the
IT market; the Internet of things has entered
a stage for rapid development, stimulating integration of information systems and growth
in various IT products and promoting the fast
development of embedded system and communication system markets; in the domain of
energy saving and environmental preservation, IT has ushered in speedy development
and the development of the Internet of things
will promote upgrading of energy saving solutions featuring information and technologies.
Huo concluded that, “The growth in the
total investments in the IT sector during the
12th Five-year Plan period will surpass that in
the 11th Five-year Plan period. With the government’s support and consumers’ increasing
demands for IT products and services, China will
rise to become the largest IT consumer in Asia
Pacific (including Japan) in 2013.”
Surpass Japan in 2013
A
By Yu Ruili
s China gains more regional superiority
and its economy keeps surging, China
will achieve another key indicator: it
will surpass Japan to become the largest consumer of IT products and services in Asia
Pacific. The IDC’s latest IT forecast shows that
China’s IT expense is gradually reaching Japan’s
level; by 2013, China’s IT expense will total USD
173 billion, 4% more than that in the Japanese
market. The IDC attributes China’s IT expense
growth to two key factors: consumers’ increasing
IT demands and the IT opportunities brought by
the “12th Five-year Plan” proposed by the Chinese government.
“Individual consuming electronic products
will become intelligent day by day and will expand
into the medium- and small-sized cities. Consumption upgrading, intelligent home furnishing,
intelligent cars as well as intelligent housing and
property management will drive rapid growth in
manufacturing, retail business and the service industry along the industrial chain, which will eventually stimulate staggering IT demands. Driven
by the growth engine — intelligent terminal, the
individual IT consumption market is expected
to gain a 29.8% growth this year; such individual
appliances as intelligent smart phones and tablet
PCs will keep the momentum for rapid growth.
End-users’ application demand will promote the
development of the corporate-level IT market, and
consumers’ use of mobile application and corporate
individual consumers’ mobile application will drive
the development of corporate-level hardware, software and integrated services,” said Wu Lianfeng,
Assistant Vice President of IDC China.
“The major programs in the Chinese government’s 12th Five-year Plan have brought lots
of IT opportunities. For instance, in order to
enhance the overall informationization level of
the society, the government will be in support of
the steady and fast development of e-commerce.
E-payment and online shopping will drive
investments in infrastructure of the banking
sector. Online shopping will not only stimulate
investments from the professional e-commerce
companies, but it will also spur investments in
infrastructure in manufacturing, retail, tourism,
finance and other sectors,” added Huo Jinjie,
General Manager and Research Vice President
in Great China of IDC China.
On the other hand, the national demands
have constantly raised new requirements for
the IT sector: the cloud scheme in the regional
medical service sector will create tremendous demands; the intelligent cities or digital urban planning introduced by the municipal governments
at all levels have become a major drive for the
growth of the IT market, which have enabled the
43
Industrial Watch
CONSTRUCTION
Industrial Watch
Building Energy Conservation Presents both
Demand and Market
By Guo Yan
“B
uilding energy conservation presents
both demand and market,”said Yao
Bing, deputy director of China Energy-saving Association, on the Sixth
Overseas Investment Forum for Chinese Enterprises which has ended recently. It is estimated that the
global demands for environmental-protecting products and services have reached 1.3 trillion USD. As
the scientific consensus of reducing greenhouse gas
emission is translating into real actions, the world
economy is undergoing a remarkable transformation
into low-carbon development model.
Globally speaking, the EU, U.S. and Japan
have listed architectural industry as the development focus of low-carbon and green economy. In
Oct. 2008, Al Gore the U.S former vice president
wrote an article, in which he mentioned that 10%
of the world’s carbon dioxide emission is caused
by architectural low efficiency, and it is necessary to change the heating-shielding and sealing
performance of the buildings. In 2009, the British
government released a plan of “constructing lowcarbon, highly energy-saving buildings”, aiming
to achieve zero carbon emission by the year 2050.
Since February, 2006, the German government has
begun to test new technology ideas about building
energy conservation and heat preservation, to have
a better control of energy consumption and building conservation structure. China has issued a
series of documents and requirements on building energy conservation. In 2009, President
Hu Jintao gave a commitment to the world
44
on the World Climate Change Forum, saying that
China will save 620 million tons of standard coal
and reduce emission of carbon dioxide by 1.5 billion
tons in the future five years.
Yan Libing, vice director of the Economic Information Department of the China Council for the
Promotion of International Trade, pointed out that
in recent years, China’s “Twelfth Five-year Plan”
gave priority to developing emerging strategic industries, which combine high-end technologies with
emerging industry, and represent the future trend
of technological innovation and industry development. The building industry is an industry where
China has been long involved into global competition, and has accumulated strength. The integration
of the building industry and emerging industry will
focus on the building energy conservation featuring
new material and new sources of energy. This is the
future development trend of international building
industry and also the international cooperation.
Yao continued that energy-saving building material is an industry which includes industrial heatinsulating material, glass door and window industry, walling material industry and other associated
industries, like water proof sealing industry. Strictly
speaking, the building materials shall meet the
demands of energy saving and gas emission. Currently, the building energy conservation has made
clear requirements on the climate conditions of
different regions, and these requirements have become stricter as the building energy-saving industry
develops, so the energy-saving building materials
are more and more important. However, Ye Jing
thinks that nowadays China is strong in heat insulating material and has low production costs, but
still lags behind the developed countries in terms
of product quality. Many developed countries have
made use of the tax subsidy policy to promote solar
power generation, and feed the electricity into the
national electricity grid. Ye also mentioned that
his company will introduce the foreign advanced
technology into its production process.
Now China is the world’s largest solar water
heater producer, with the annual production twice
of Europe and four times of North America. It
keeps an annual growth rate of 20%. Also as the
world’s largest PV producer, China boasts 40% of
the world total production, with 96% of its products
for export. The renewable energy has been used to
building process to solve the high energy consumption problem. Director Yao said that if the buildings
could transform the solar power into electricity, and
form a photo electricity building industry, it should
require the integration of technologies in both PV
and building industries, and there is still a lot of
work to do.
Also, Yao said that new buildings will be the
most worthy of investments. The commercial residential building, indemnificatory housings should
also consider the energy savings. There were 10
million newly-built houses last year, and this year
it will be 7 million houses. During the “Twelfth
Five-year Plan” period, we still have 36 million set
of houses to build. The construction or reconstruction of large public facilities will be the section
where we will have largest energy-saving potentials. Both developing and developed countries
will have such demands.
Li Zheng, vice director of the construction
industry sub-council, China Council for the Promotion of International Trade, told reporters that
since the reform and opening-up policy was implemented, the international trade has been undergoing a rapid growth, especially the construction
industry. The value of foreign contract projects has
been growing from 450 million in 1983 to 103.4
billion in 2011, growing by 239 times and even
faster than the export growth rate. This shows the
great role that has been played by the construction
industry in the international trade. Now Australia
still has 200 thousand houses in deficit, which
might impact the residential needs of the people.
Demands for houses will be much higher in developing countries, especially the affordable houses
provided by the government. Take the relocation
of city slums in Brazil for example, Li said that the
Brazilian president has promised to build 2 million
low-price houses before 2014, which is very difficult for local governments. Salvado plans to build
75,000 houses with 24-30 sq. m floor space and
3,000 USD in price. The western countries
are unwilling to undertake such projects but we
could construct these houses with renewable resources. Now we are signing a cooperation agreement with them, which is being implemented.
According to Li’s introduction, our country
is now providing integration buildings, which
are assembled on site in the production factories.
Compared with Japan, we use more light wood
structure, low-cost straw and phosphorous or
magnesia cement. The container housing has been
growing very fast in recent two years. For example,
at the Guangzhou Model Exhibition, the exhibition space of container housing has doubled. Most
of the survived houses in the Japanese earthquaketriggered tsunami are belong to container housing
or steel structure housing. Regarding demands for
houses, the China Council for the Promotion of
International Trade organized a foreign exhibition
of domestic houses in 2010, in which the strawmade house (15 sq. m. model) is very popular
among local public. Our houses even captured the
headline of local papers, showing great potential
demands for such products.
Li thinks that nowadays the foreign market
has the following demands for the construction
industry products: the first, the building material
products, which should be manufactured by factories. Some products displayed and sold at the exhibition feature roof with solar panel and glass that
absorbs solar power to generate electricity. Products
like this will have huge market demands. Second,
City construction products that include water or
garbage treatment products and equipment, twice
purification factory, sewage water factory. Third,
city greenery products featuring multi-layer greenery technology or equipment, which will play an
importance role in city environment improvement.
Fourth, urban traffic products, in the scientific exhibition last year, which is broadcasted by CCTV,
one of our business partners bring the multiple
decker bus, with the upper decker holding walking
passengers, and the below decker for automobiles.
We will also present a multi-layer parking lot in a
new parking facility exhibition in November. Fifth,
the solar energy products featuring solar power
equipment.
As a conclusion, Li said that our country
has huge demands for the construction industry
products. So we have to organize the industry
and pave the way leading to the global market.
If our products could be exported to foreign
countries, it will greatly change the product
structure of our country’s export.
45
Industrial Watch
EXPO
Industrial Watch
China Sports Goods Industry:
Big but Not Strong
By Cui Xiaoling
C
hina, though not the largest consumer
market of sports commodities, has
20,000-plus producers of sports goods.
A reshuffle of the industry to retain the
strong ones and eliminate the weak is going on,
said Ma Jilong, vice-Chairman of China Association of Sports Goods Industry, during the 30th
China Sports Show held from May 17 to 20 in
Beijing.
Asked about the unique features of this
expo, Ma said that it has grown from a pure show
of sports goods into one that features sports culture, financing, release of trade standards, and
auction of sports collection. Yao Ming attended
the show, as an investor instead of a sportsman.
Yao said he was interested in some creative mass
sports programs initiated by young entrepreneurs.
The first day of the show received 20,000
visitors, most of whom are professionals in the
industry. There are also foreign visitors, mainly
from India, Pakistan, Turkey and the Middleeast.
The reporter learned that most of the large
companies participated in the show to showcase
their strength and boost their company image.
While, small ones were there to make real business. “I have attended three China Sport Shows.
I met with 50 potential clients a day on average
during the show. A quarter of them became my
clients after further contact. I am very satisfied,”
Zhang Yi, deputy manager of Shenying Carbon
Fiber Bicycles told the reporter.
“In order for a small sports goods enterprise
to survive, it has to focus on a market niche, have
a narrow business scope, and offer the best quality
possible,” Hebei Galaxy Sports Goods Corporation told the reporter. “In Galaxy, we focus on
Ping-Pong bat and rubber, and take more than
half of the market share.”
46
Olympic atmosphere
One of the highlights of the show is the display of the Olympic spirit as the London Games
approach. Famous brands such as Li Ning, Anta,
361, Double Fish, Double Happiness had all integrated the Olympic elements into their booth.
China Sports Delegation released at the show the
clothes to be worn by Chinese players when accepting prizes during the London Games. They
were sponsored by Anta. “The majority of my
company’s budget for advertisement goes to sponsorship of major sports events. This is the most
effective way to boost our brand recognition. Our
tables will be used for the table tennis test events
during the London Olympics,” Liang Zhixiong,
marketing director of Guangzhou Double Fish
Sports Group, told China’s Foreign Trade.
Blossom of fitness and family health
care equipment
Another major feature of the exhibition is
the impressive presence of the fitness and family
care equipment, which took half of the 10,000
square meters exhibition space in the New China
International Exhibition Center.
As the natural environment deteriorates,
and the work pressure increases, Chinese people
are growingly aware of the importance of sports
and health, resulting in the blossom of the fitness
and family health care equipment industry. The
U.S. economist Paul Pilzer said the health industry is becoming the 5th wave of wealth after the
IT industry. Faced with tough competition, companies have to focus on innovation and technology development. The reporter learned from the
exhibition that established companies in the industry are those with
innovative, high-tech products.
Chinese sports goods
industry pressured to
upgrade
The Report on China Sports
Goods Industry in 2010 and 2011
was released during the exhibi-
tion, the first one of its kind. According to the
report, China-made products take 65% of the
world’s sports goods market. However, the
Chinese sports goods industry is big but not
strong.
Due to high inventory and rising costs, the
expansion rate of the industry is declining, which
will intensify competition.
A good thing to note is that China’s sports
goods industry is increasingly concentrated in
Guangdong, Fujian, Jiangsu, and Zhejiang provinces, Beijing and Shanghai, with a concentration
rate of over 85%.
The report said that sports equipment has
outrun sports shoes and clothing in terms of sales
and growth rate. In 2010, the eight sports goods
listed companies reported a revenue of 16.146
billion yuan in the sports clothing business, an
increase of 25.89% year on year; 13.198 billion
yuan in the sports shoes business. While, sports
equipment enterprises above the designated size
realized a revenue of 83.043 billion yuan. Sports
equipment also made the greatest contribution to
China’s exports of sports goods. In 2011, China
exported $15.916 billion worth of sports goods,
with a trade surplus of $15.24 billion. Sports
equipment contributed 28.87% to the exports
volume.
The high-end sports shoes and clothing
market is dominated by foreign brands. But local
brands have started to participate in the competition, and some of them are competitive. The huge
mid- and low-end market is dominated by local
brands. In contrast, the sports equipment market
is dominated by local brands, with foreign ones
having little voice.
The report pointed out the challenges facing
the industry. First, Chinese enterprises are in lack
of core competitiveness, and recognized brands.
They are still at the bottom of manufacturing of
the global ladder of labor division. Second, shoddy and counterfeit products are rampant, and the
competition among companies has overheated.
With the erosion of the advantages in labor cost,
Chinese sports goods producers have to upgrade
their industrial structure.
Li Ning, Anta and other Chinese sports
brands should design more function-specific
clothes and shoes, according to Weijishan, chairman of the World Federation of Sports Goods
Industry. Currently, the Chinese market does
not have a huge demand of functional clothes
and shoes, which are often expensive. However,
with the growth of the economy, people will have
more professional needs and function-specific
products will be in need. He added that he was
glad to see the growing popularity of mass sports
in China.
47
China’s Aging Population
Brings Opportunities
for Insurers
By Richard Zhu
T
he rapidly aging population in China is a great
challenge for the country’s
development and social
security system, while it presents opportunities for insurance companies,
according to a recent report by The
Boston Consulting Group (BCG)
and Swiss Re.
“Insurance companies must develop a concrete plan for where and
how to participate to take advantage
of the challenges and opportunities
of aging,” said the report.
The aging population
Aging is a global phenomenon,
and China is no exception. For decades, China has benefited from a
“demographic dividend.” Its robust
population structure has driven a
prolonged period of socioeconomic
growth. However, as China’s workforce ages and moves towards retirement, the country will join many
others in facing up to the challenges
of supporting an aging population,
said the report.
Over the next five years, the
growth of China’s workforce, which
has long contributed to the expansion of the country’s booming economy, will finally slow down and eventually become negative. The working
age population will peak in size in
2015 and then begin to decline.
Indeed, the silver segment is
growing fast in China. By 2050, this
group will represent more than onethird of the country’s total population, an eye-popping 439 million
48
people, a far greater number than
even in Japan, another nation facing
severe demographic shifts.
“By 2050, China will be most
‘aged’ among BRIC countries with a
much larger 60-and-over population
size,” said Robert Wiest, President of
Swiss Re China.
The scale of China’s aging population is much greater than that of
other RDEs. The silver segment as a
percentage of the total population will
nearly triple from the current 12 percent to 34 percent by 2008, a much
higher increase
than those forecast for other BRIC
countries and far exceeding the estimated increase in
developed countries.
In China, as elsewhere, the
aging population is driven by both
lower fertility rates and increased
longevity. Life expectancy at birth
increased from under 45 years of age
in 1955 to 73 years of age in 2010,
a level approaching that of developed countries. Four specific factors
are responsible for the fact that the
impact of aging in China will be
particularly severe: the rise of the
middle class, the “One Child Policy”,
the 4-2-1 (four grandparents, two
parents, one child) family structure
and urbanization.
Overall, the report pointed
out that China’s aging population
will have three major implications
for companies and for the country’s
economy:
Historically, China’s economic
growth has largely been driven by
workforce increases and productivity improvements. Without further
major breakthroughs in productivity,
economic growth is expected to slow
down due to a much lower or even
negative workforce growth.
Bot h t he mi x and prof i le of
consumers in China will change substantially as the population ages. In
particular, the silver segment and the
lower socioeconomic class possess
distinct needs. Companies seeking to
thrive in the coming decades must be
prepared to cater to these segments and
win their loyalty.
An altered and flatter population
structure will increase the inter-generational burden on both a family and
national level, testing the sustainability
of the current pension system.
The current social security
system amid challenges
According to the report, China’s
aging dynamics will place major pressures on the country’s social security
system. In the pension system, the
mandatory social insurance scheme’s
benefits will not keep pace with the
rising cost of living, yet the market
for voluntary pensions is still underdeveloped. In health care, the system
is stymied by limited coverage and a
lack of adequate resources, particularly
regarding long-term care which will
become increasingly important as the
population ages. Finally, demographic
shifts have led to a weakening of the
traditional family support network due
to the mass rural-urban migration and
the 4-2-1 family structure.
China’s social security system
faces pressure on two fronts: the rapidly aging population and increased
life expectancy. In the coming decades, the system will be expected to
cope with large numbers of retirees
departing the workforce—people who
will require long-term pension payouts and health care. Without major
reform, the current social security system appears unsustainable. But reform
will come. The alternative millions
of Chinese people spending their old
age without adequate pensions, health
care, or family support — is unthinkable for government planners.
China’s pension system is based
on three pillars: mandatory social insurance , voluntary employer enterprise
annuity and group pension schemes
and voluntary personal pensions, including commercial pension insurance,
supplemented by the government’s
minimum-livingstandard guarantee
(Dī Băo), personal savings, and family
support.
The report indicated that compared to mature markets, China’s Pillar
II and III are largely underdeveloped.
As of February 2011, these two pillars
combined were estimated to have USD
$80 billion to $100 billion in assets
under management, equivalent to 1.7
percent of China’s total GDP and approximately the size of Pillar I individual accounts. This figure is significantly
lower than that of developed countries,
such as the Netherlands with (134 percent) and Switzerland (126 percent).
The report expected substantial
growth potential for Pillar II and III
going forward. This expansion will be
driven by inadequate coverage of Pillar
I, the rise of Chinese middle-class and
affluent consumers, and the weakening
of the family support network. But it
expected changes to be gradual. Concerted action from both the government and insurers will be required to
develop this market.
China’s healthcare system had
achieved roughly 95 percent coverage
of the population by the end of 2010,
up from around 15 percent in 2000.
However, this system is still limited in
terms of the scope of treatments, services, and medicines. Notably, there is
no long-term care (LTC) component
in China’s current healthcare system.
As the size of the silver segment
increases in China, so will the demand
and costs for health care. This demand
will add to the government’s financial
burden and in turn reduce the funding available for seniors and affect the
quality of healthcare services.
The LTC gap has not gone unnoticed, however. Unless LTC is rolled
out in the near future, Chinese people
will need to rely on commercial insurance to provide them with protection.
And most LTC products currently sold
49
in China offer a fixed sum rather than
the coupling of commercial insurance
with caring services and do not eliminate the risk of potential price increases
in LTC services.
“China’s ability to deal with these
challenges will have a significant impact on its prosperity level for decades
to come,” said Richard Huang, a BCG
partner based in Beijing. What is more,
failure to address the difficulties could
have dramatic consequences such as an
onerous public-deficit burden, a delayed
retirement age, and a reduction in retiree benefits. The worst-case scenario
would be a full-scale rupture of the
country’s social security net.
The scope of this problem should
not be underestimated. Finding solutions will require a concerted effort
among the public and private spheres.
Indeed, the Chinese government will
need to drive meaningful reforms of
the social security system and corporations will have to take more initiative
in providing post-retirement services.
Consumers, for their part, will need
to adopt a longer-term view on savings
and investments.
“It takes the efforts of all stakeholders — the Chinese government,
corporations, and insurers — to meet
the challenges posed by China’s aging
population,” Jia Jingwei, Head of China
Business Development of Swiss Re.
“Insurance companies, in particular,
will need to play a larger role.”
Implications for insurers
China’s social security system is
unlikely to be able to cope with the
challenges of an aging population.
Therefore, the report suggested the following solutions.
Proactively Lobby for Reform
and Educate Consumers. The role of
commercial insurance must be expanded through the development of voluntary employer and personal pension
systems (Pillars II and III) in order to
address the shortfalls of the mandatory
system.
The same principle applies to commercial healthcare and long-term care
insurance (to complement the national
healthcare system).
Regulatory reform must be undertaken to create a more robust pension
50
and health care system. Insurers should
proactively drive and support reforms,
particularly changes that could be catalysts for the development of voluntary
pension systems. Such reforms could
include tax incentives, the portability of
pensions, and the construction of a risk
trading platform for insurers, reinsurers, and other investors.
The importance of fiscal incentives
in prompting corporations and individuals to join voluntary, complementary
insurance schemes is widely recognized.
Indeed, Germany provides a good
example of the impact that fiscal incentives can have. Since the beginning
of 2002, Germany has carried out a
series of pension reforms known as the
Riester plan to foster the development
of private personal pensions (equivalent
to China’s Pillar III).
Under this plan, private retirement savings are promoted both by
state subsidies and by tax-deductions
for contributions and purchases of bank
and insurance investment products.
As a result of this plan, the German
commercial pension market has grown
tremendously — from around four million pension contracts in 2002 to over
14 million in 2011.
At the individual level, the most
critical necessary change in China is
the adoption of a longer-term view on
savings and investments. Currently,
Chinese people tend to focus more
on short-term profit opportunities,
neglecting investing in their post-re-
tirement income, health care, and longterm care needs. Insurers can play a key
role in educating individuals about the
increasing challenges that they will face
to sustain their standard of living and
how they can successfully clear these
hurdles through personalized financial
planning and investment/savings offerings. The good news is that China’s
savings rates, standing at an average
of around 50 percent of GDP, are very
high, representing huge opportunities
for insurers that can successfully channel these savings into the right investment and insurance products.
Cooperate with the Social Security System. Besides lobbying the government for reforms, insurers should
also collaborate with the social security
system to help the government manage
its pension and healthcare systems at
lower levels of risk and cost.
China’s national pension funds, as
well as corporate pension schemes, are
exposed to different degrees of longevity risk. By Swiss Re’s estimation, an
additional mortality improvement of
1 percent per annum would increase a
pensioner’s liabilities by roughly 5 percent to 6 percent. Insurers, reinsurance
companies, and capital markets can
play a significant role in helping transfer part or all of the longevity risks of
China’s national pension system.
“Joint risk management” between
insurers and the government can
strongly support the development of
healthcare system in China. Some local
governments with limited experience
in health insurance have decided to
involve insurers in managing and limiting their risks. In exchange, insurers
are allowed to increase their premiums
(or limit their coverage and payouts)
whenever the medical claims reach
a certain threshold. In the event that
insurers make a profit, the government
can claim a share of the profits. Such
public-private partnerships have helped
enhance the management of social
medical funds. We have already witnessed good examples of cooperation
such as the ZhanJiang social medical
system, in which a specialized health
insurer contributed expertise in terms
of claims management and risk control,
giving the local government a cushion
for its liabilities.
Further Understand Customer
Insights and Innovate with Products
and Channels. Shifts in demographic
structure directly change the profiles of
mainstream consumers and their needs.
The fast-growing group of relatively young middle-class and affluent
consumers that will become the silver
segment in 20 to 30 years time will
become more and more inf luential,
with substantial purchasing power and
unique needs. To succeed in the future
with this segment, insurers should actively explore innovations in products,
marketing, and distribution.
For example, insurers may consider de-averaging customer groups
through segmentation, which could
enable them to identify niche segments
with distinct risk-pricing profiles, all
the while bearing in mind the differences between more-developed and
less-developed provinces. For customers
in each segment, insurers can also customize value propositions to differentiate their strategies.
Overall, innovative products can
be developed to meet the silver segment’s higher expectation for life quality and security after retirement.
Finally, insurers could try to establish dedicated pension sales and
cooperate with HR consulting firms
to address the key needs of the rising
silver segment. Innovative distribution
channels could also be adapted to this
segment’s lifestyle (e.g., distributing
through hospital networks, or collabo-
rating with pharmaceutical companies’
distribution networks).
Develop Managed Long-Term
Care Services. There is a significant
gap in long-term care insurance, services, and facilities in China. Investing in
long-term care can offer synergies and
advantages for insurers. The clearest advantage is the ability to offer long-term
care products with services, rather than
fixed payments, as benefits. Also, insurers’ investments act as a natural hedge
against the risk of increasing costs in
long-term care services.
Manage for Profitability and
Risks. Economic growth is expected to
be hindered by a shrinking workforce
and associated productivity losses.
A prolonged climate of low real
interest rates is a likely scenario, which
would have an adverse impact on insurers’ profitability
levels. Looking at
Japan’s experience,
s e v er a l i ns u rance companies
went bankrupt
due to a prolonged low
interest rates
env ironment,
while others managed to adapt and
thrive. Chinese
insurers can learn
from the Japanese
experience and
take steps to better prepare themselves in
asset/liability management and in company operations. Several levers are available to mitigate the impact of prolonged
low rates, including:
The other major risk that insurers in China will be facing is longevity
risk. In order to assess this risk, insurers
should consider adopting robust forecasting approaches and disease-based
actuarial models. A potential solution
to limit longevity exposure on insurers’
portfolios is to pass some or all of this
risk to another insurer or reinsurer with
better funding and resources to meet
the long-term commitment.
The entire insurance industry,
including reinsurers, should push
the public sector to create diversified
capital-market solutions, which would
potentially allow the transfer of longevity risk in their annuity/pension
portfolios.
Prepare for the Impacts of Aging
on Their Own Workforce. Insurers in
China will face challenges in their own
human resource management. With a
stagnant workforce inflow and a much
faster workforce outflow, insurers will
find it more and more difficult to recruit young talent and maintain a stable
employee structure.
Insurers have a vital role to play in
reducing the negative socio-economic
threats from aging in China. Ongoing reforms are encouraging private
participation in pension and healthcare
provision, and insurers need to position
themselves to take advantage of this
window of opportunity. Developing
provincial and national
lobbying strategies will
be critical, as will educating consumers. More
focus needs to be put on
innovating product and
distribution channels to
better serve unmet needs,
and better access customers — either as individuals or through employers.
And building robust data
to support accurate pricing of both medical and
longevity risks will be an
essential strategy.
In addition, insurers will be grappling with
their own challenges. Some of these,
like workforce demographic risk, are
similar to those that other industries
will face. However, others — such as
a prolonged period of low real interest
rates — will have direct impact on insurers’ profitability.
In conclusion, the report proposed
that insurance companies should develop a concrete plan for where and
how to participate to take advantage
of the challenges and opportunities of
aging. They need to start building the
capabilities and relationships that will
be required to win. And they need to
put in place HR strategies to manage
the impact on their own workforce.
Those that move fast and boldly can
catch the wave — and truly turn silver
into gold.
51
case Study
How to Address
Privacy
Concerns of Internet Users?
— An overview of China’s Legal Regime for Online Privacy Protection
By Liang Tao
W
hen walking into a familiar restaurant near
your home, you must
be glad to see a waiter
knowing your name, calling you by it
like an old friend, and furnishing your
most favorite dishes and beer without
your specific instructions. However,
how would you feel if you were in a
large crowd and a stranger called your
name loudly and exactly? You might
feel shocked and offended. If finally
finding that such person is a sales agent
who totally didn’t have any connection
with you before, you might feel unsafe,
angry, or even desperate when it happens repeatedly. This story reflects the
difference between customized services
provision and privacy infringements.
Where does law enforcement draw the
line between privacy infringements
and legitimate data collections aimed
at providing tailored services, especially
under the internet environment?
What’s going on?
According to the China Internet
Network Information Center, the state
network information centre of China,
driven by strong economic growth, the
number of internet users in China hit a
new record high of 513 million and the
number of websites operated in China
reached 2.3 million by the end of 2011.
However, fierce and unregulated competitions among commercial websites operators and weak protection for personal
information have put hundreds of mil52
lions of users’ online privacy right at risk.
In December 2011, personal information of over 6 million registered users
of China Software Developer Network
(one of the biggest online community
of software developers in China, or
“CSDN”) was leaked. Many famous
internet companies in China, such as
Renren Network, a Chinese social
networking service provider similar to
Facebook, were involved in such hacking case. It is reported that the personal
information leaked from the CSDN has
been used to seek profit by cheating and
advertising.
On April 23, 2012, Pony Ma,
founder and CEO of Tencent which
is the most popular instant messaging
services provider in China, said he was
highly concerned about the risk of privacy infringements, while he was having
a public conversation with Kevin Kelly,
co-founder of Wired which is a magazine
reporting on impact of new and developing technology. Indeed, Pony has a good
reason to pay attention to the online privacy protection. Since 2010, Tencent has
been involved in a high-profile and painful legal battle with Qihoo, an antivirus
giant in China’s internet market. Among
other charges, Tencent is accused of
scanning users’ computers and uploading
users’ personal information for the purpose of driving its corporate profits. Such
dispute and legal battle between Tencent
and Qihoo further draw public attention
to the protection of personal information
and online privacy.
China currently has not enacted a
comprehensive law specifically addressing the issue of personal information
and privacy protection, or a national
level law that delineates how an internet
company can legally collect, process,
retain and utilize users’ personal information. However, many important rules
relating to online personal data and privacy protection are scattered in diverse
laws, regulations, industry rules and local ordinances. Although the foregoing
rules do not address the privacy issues
in a direct, coordinated and systematic
way, such legal authorities shall be carefully assessed and considered when carrying on online business in China.
Criminal Law
On February 28, 2009, the Seventh Amendment to the PRC Criminal
Law (“Criminal Law Amendment”) was
promulgated and became effective. This
is the first law criminalizing the sale
or unlawful provision of certain kinds
of personal data. The Criminal Law
Amendment imposes criminal charges
on governmental officials and employees
in the financial, telecommunications,
transportation, education or medical
sectors who sell or illegally provide any
citizen’s personal information obtained
in the course of performing their duties and responsibilities. Additionally,
under the Criminal Law Amendment,
obtaining citizens’ personal data by theft
or other illegal means also constitutes a
crime.
In summary, persons or entities
who engage in the following three activities will be subject to criminal liability
up to three year’s imprisonment and/
or criminal fines: (i) sale of citizens’ personal information; (ii) illegal provision
of citizens’ personal information; and
(iii) illegally obtaining citizens’ personal
information. In April 2012, China’s
police authority launched a campaign
to crack down on infringing on citizen’s
right of personal information, with 1,936
suspects arrested. In August 2011, the
Beijing Second Intermediate People’s
Court issued its ruling on a famous case
concerning selling, illegally providing
and obtaining personal information. In
this case, 23 defendants were accused
of engaging in illegal actions leading to
selling, illegally providing and obtaining
personal information, and would face
prison terms or suspended sentences.
Particularly, among these 23 defendants,
5 defendants were employees of China
Mobile, China Unicom and China
Telecom which are the three biggest telecommunications carriers in China. These
cases indicate China’s law enforcement
agencies are increasingly taking measures
to protect personal information.
Civil Law
At present, a unified and overarching civil law has not been codified in
China. Over the past twenty-six years,
the General Principles of Civil Law
(“Civil Law Principles”) has played an
important role governing the civil relationships among civil entities. The Civil
Law Principles do not provide for a
separate right of privacy or personal information, while the Supreme People’s
Court merges the privacy right with
the reputation right by interpreting the
provisions of the Civil Law Principles.
That means a victim can not sue to protect his/her privacy right unless his/her
reputation has also been damaged.
Such rules was overturned when
the Tort Liability Law (“Tort Law”)
was enacted on December 26, 2009.
Under Tort Law which entered into
force on July 1, 2010, the privacy right
became a unique type of right independent from other civil rights. A victim
whose privacy and personal information
has been infringed is entitled to sue to
demand cessation of such infringement,
reputation rehabilitation, elimination
of adverse impact, issuance of apology
and payment of damages. The most
important provision under the Tort Law
for the website operators is the Article
36, stipulating that a victim whose civil
rights are infringed due to information
disclosure via internet may ask relevant
website operators or internet service
providers to delete or block such information in order to avoid any further
loss. If the website operators or internet
service providers fail to take necessary
actions on a timely basis, they may
jointly and severally bear any additional
losses caused to such victim.
Besides t ypical civil laws and
regulations, other laws or rules also
shed light on the privacy and personal
information protection. Although the
Consumer Rights and Benefits Protection Law (“Consumer Law”) issued by
state-level lawmaker does not contain a
provision relating to consumers’ privacy
or personal information protection, local consumer protection regulations
in China have extended protection
over customers’ personal data. Certain
provincial-level rules implementing
the Consumer Law have impacted the
collection and use of customers’ personal data, by prohibiting commercial
enterprises from disclosing customers’
personal information without their consent or collecting consumers’ personal
information irrelevant to the goods or
services they purchase. Additionally, it
is reported that a draft amendment to
the Consumer Law creates an explicit
right to privacy of consumers.
Rules specifically applicable to
internet industry
In addition to complying by the
general criminal or civil laws, website
operators or internet service providers
need to pay attention to the privacy and
personal information protection rules
issued by regulators specifically for the
internet industry. With respect to the
online privacy protection, the Computer
Information Network and Internet
Security, Protection and Management
Regulations (“Computer Regulations”),
which was issued by the Ministry of
Public Security and became effective in
1997, stipulated that the freedom and
privacy of internet users is protected by
law and can not be infringed by any entity or person. The Computer Regulations also urge entities connected to the
internet to take solid measures to ensure
the security of information.
Recently, the Ministry of Industry
and Information Technology (“MIIT”)
promulgated the Several Provisions on
Regulating the Market Order of Internet Information Services (“Market
Order Provisions”) which entered into
force on March 15, 2012. Under the
Market Order Provisions, the issue of
users’ personal data protection is highlighted. Pursuant to the Market Order
Provisions, website operators are prohibited from providing users’ personal
information to third parties, unless otherwise specified in laws or regulations.
Website operators are also prohibited
from collecting users’ personal information without users’ consent. Website
operators are requested to duly retain
users’ personal information and take
remedial measures immediately when
users’ personal information has been
leaked or may be undermined by the
risk of leakage. Since other key rules
keep silent on the internet privacy issue,
the Market Order Provisions will have
a pro-founding impact on China’s internet privacy protection practice.
Future
Given the rapidly changing landscape of the internet industry, it is difficult for lawmakers to devise rules which
can always address upcoming issues
timely and soundly. It is reported that
China will issue the Guideline for Personal Information Protection as a noncompulsory industrial standard in late
2012. But, there is no sign showing a
comprehensive personal data protection
law will be adopted in the near future.
In order to contain potential risks
associated with online privacy and personal information protection, website
operators or other market players in the
internet industry may develop a set of
best practice, such as assessing the types
of personal data collected, keeping the
proper internet security measures in
place, scrutinizing the purpose of use
of personal data, obtaining necessary
consent regarding data collection, and
limiting scope of persons who have access to personal information database.
53
Regional Trade & Investment
ASIA-PACIFIC
Consensus Outweighs Divergence on the
China-Japan-Korea Free Trade Area
By Hu Wenxiu
O
n May 13, heads from China, Japan
and Korea held a 5th conference in
Beijing, where they agreed to officially launch talks within this year
on the China-Japan-Korea Free Trade Area
(CJKFTA). The substantial achievement of the
conference was the three countries’ signing of
the Agreement on Promoting, Facilitating and
Protecting Investments, which was the first
agreement on investments among these three
countries.
Since 2007 when talks on an investment
agreement among China, Japan and Korea
were initiated, 13 rounds of official negotiations and several unofficial consultations have
been held over the past five years and the negotiations were eventually rounded off in late
March. Some exporters have once commented
that nearly 10 years had gone for initiating
the CJKFTA negotiations and now time was
mature, which signals that Northeast Asia will
step out of the backwardness in regional economic integration.
The China-Japan-Korea Investment
Agreement in total consists of 27 articles and 1
additional protocol and it covers all the important content that the international investment
agreement generally includes, including such
provisions as investment definition, scope of
application, most-favored-nation treatment,
national treatment, expropriation, transferring,
subrogation, taxation, general exceptions and
dispute settlement. The signing of the SinoJapan-Korea Investment Agreement has landmark implications for the economic and trade
cooperation among these three countries. The
investment agreement is the first legal document and institutional arrangement for these
three countries to boost and protect investments, which serves as an important basis for
the construction of the CJKFTA.
The investment agreement, a significant
outcome of this year’s conference, was highly
valued by the heads of the three countries and
54
it was appreciated by the Chinese Premier Wen Jiabao as “an
important strategic decision”. The Japanese Prime Minister
Yoshihiko Noda regarded the investment agreement as “a talk
for close Sino-Korea and Sino-Japan cooperation”. The Korean
President Lee Myung-bak held that the decision concluded at
this year’s conference “had profound implications for the future”.
According to incomplete statistics, So far there are more
than 1,200 FTAs across the world, including 425 in 15 developed countries and 775 in 67 developing countries. The influential ones include North American Free Trade Area (NAFTA),
Free Trade Area of Americas (FTAA), Central European
Free Trade Agreement (CEFTA), ASEAN Free Trade Area
(AFTA), EU-Mexico Free Trade Area as well as China-ASEAN Free Trade Area (CAFTA).
If China, Japan and Korea can establish a free trade
area, advantages will be very obvious. Once the CJKFTA is
established, covering a population of 1.5 billion and representing 70% of the Asian economic aggregate, it will be the third
largest FTA only next to the North American FTA and the
EU. The FTA will greatly promote intra trade and personnel exchanges among these three countries. Specifically, these
three countries are highly complemented, as China is featuring
labor-intensive industries, while Japan and Korea are dominated by technology-intensive industries. China’s industrial and
commercial enterprises are believed to benefit a lot from the
FTA. The FTA will also become an important procedure for
establishing the East Asian FTA in future, which is good news
of great importance for the economic development of the entire
East Asia.
Zhang Jiuheng, CPPCC Member and Former DirectorGeneral of the Asian Affairs Department of the Ministry of
Foreign Affairs, and Director of the Asia-Pacific Studies Center of China Foundation for International Studies, introduced
to the reporter that as a matter of fact China, Japan and Korea
had spent as long as 10 years to prepare for initiating the FTA
negotiations. As early as 2002, the three countries had conducted feasibility research on the FTA negotiations. Seven years
later, the three countries drew a preliminary conclusion in early
2009 that the establishment of the FTA would be conducive
to eliminate trade barriers, expand intra-regional market, drive
regional economic development and to achieve a triple-win result. Therefore, the three countries resolved to push forward the
joint research on the CJKFTA participated in by the govern-
ASIA-PACIFIC
ment, industrial sector and the academic domain. Eventually, the three countries reached
a consensus in early 2012 that it was time to
initiate the FTA negotiations as all the conditions for initiating the FTA negotiations had
matured. “We should say that this is a very
natural process,” said Zhang.
According to Zhang, China, Japan and
Korea have all signed free trade agreements
with the ASEAN. However, there exist no
bilateral or multilateral free trade agreements among China, Japan and Korea, and
inter-country investments among the three
countries merely account for 6% of the three
countries’ aggregate outbound investments,
which does not match the three countries’
status in the global economy and which also
reflects the Northeast Asia’s backwardness
in regional economic integration. At this
year’s conference, it was determined to initiate the FTA negotiations, which is a step
forward and which is of great significance to
boost economic integration and to achieve a
commonly beneficial result among the three
countries.
It is learned that China, Japan and Korea boast an aggregate GDP of USD 14 trillion and a total foreign trade volume worth
USD 6.3 trillion. However, the economic
integration course in Northeast Asia is relatively backward, and the inter-country investments among China, Japan and Korea only
account for 6% of these three countries’ total
outbound investments.
Ten years later, China, Japan and Korea
have eventually signed the investment agreement which however does not mean that
free investments can be immediately realized
among these three countries. The investment agreement’s taking effect requires the
three countries to transfer the content of the
investment agreement into their own laws
and regulations and to accordingly formulate
internal legal procedures. Only in this way
can the investment agreement come into force
and then take effect.
Will the establishment of the CJKFTA
impact some domestic industries, what will
be the economic and social cost, and whether
will the opening issue of the sensitive sectors
become an obstacle for the three countries to
deepen trade. The investment agreement was
signed firstly, which may be in the benefit of
Japan and Korea, while as China is less competitive in the service and investment domain
and its commodity trade may be impacted.
Although China, Japan and Korea have
announced that the FAT negotiations will
be initiated, the negotiation process is destined to be long and it may be even
possible for the negotiations to last for another 10 years. Japan and Korea
fear the impact imposed by China’s farm products, while China concerns
that Japan and Korea will squeeze the domestic service and investment sector. Agriculture is the most severe challenge in the FTA negotiations. Japan
and Korea put much protectionism on agriculture, and if they insist on not
opening the agricultural products market, China will have no way to bring
its comparative advantage on agricultural products into full play. If China,
Japan and Korea cannot reach a consensus on the agricultural issue, it will be
a bottleneck for the establishment of the FTA.
Fukukawa Shinji, Chief Japanese FTA Negotiator stressed in the interview that China, Korea and Japan needed to initiate the FTA negotiations as
soon as possible, as against the backdrop of the sluggish world economy only
the establishment of the CJPFTA can power the recovery of the world economy and promote economic integration in East Asia. In the course of negotiations, a comprehensive framework is definitely ideal, which however is not
that easy to be achieved. But it is unnecessary to stubbornly require the “onepackage” approach to solve all the problems at one time. The negotiations can
be flexibly carried out by tackling the easy section prior to the difficult section and by focusing on consensus to gradually expand the FTA plan. In the
mean time, to develop industrial cooperation, inter-corporate connection is
the source of economic dynamism. Therefore, it is of great importance to create fair competition conditions and to attach great importance to innovation.
According to Zhang Jianping, Director of the International Economic
Cooperation Department of the Foreign Economic Research Institute of
the National Development and Reform Committee, it is a breakthrough for
China, Japan and Korea to officially sign the investment agreement, which
deepens regional economic cooperation, makes the ties among the three
countries closer and delivers a trip-win result. The signing of the agreement
reflects respect to the objective economic law and also the trend for international industrial transfer. The three countries unanimously agree to initiate
the FTA negotiations within this year—which have been prepared for nearly
10 years—and each step is not easy. Zhang suggested that the FTA can not
only be treated by which country and industry are benefited most, but by a
new strategic perspective on the long-term development of the three countries. The establishment of the FTA is of great significance to stimulate trade
and investment, make the three countries more competitive and to facilitate
economic structuring of the three countries.
55
Regional Trade & Investment
EUROPE
Greece Starts the
Dominos ?
By Li Mingzhu
D
iscussion about Greece’s secession from the Eurozone is officially put on the table. Several economists commented that if Greece secedes from the
Eurozone, other countries in the same boat may
follow suit, in which case stability of the EU will become impossible, global financial markets will be affected remarkably,
and emerging markets like China also can’t be spared.
Greece’s secession from the Eurozone will
trigger a chain reaction
Ting Lu, the chief economist in Greater China of Bank
of America Merrill Lynch believes that Greece’s secession
from the Eurozone is a possible, but there is no exact timetable for it. Once Greece decides to secede from the Eurozone, it may be confronted with financial
chaos and loss of investor confidence.
Meanwhile, Greece’s secession will cause
a chain reaction in the Eurozone, further
deteriorating the debt crisis.
Pu Yonghao, the chief investment
strategist in the Asia Pacific region of
UBS Wealth Management predicts that
in the next 12 months the probability of
Greece’s secession from the Eurozone is
about 20%~30%, and that Greece will still be very likely to
secede in the next two or three years.
Haibin Zhu, the chief China economist in JP Morgan
alleges that there is a probability of over 50% that Greek will
secede from the Eurozone, and that Spain may be the next.
Greece’s secession from the Eurozone will provide momentum for its economic growth in the short term, as the internal
competitiveness will be gradually built up with the devaluation of its national currency. However, after the secession of
Greek, other countries may follow suit, which can be a disaster for the Eurozone.
China’s exports may be affected adversely
Zhu Haibin, the chief China economist in JP Morgan
reveals to Securities Times that according to internal research
data, China’s exports to the Eurozone will decline by 7% with
a decrease of 1% in European economic aggregate. Negative
growth of European economy will have an extremely adverse
impact on China’s exports.
Ting Lu points out that once the debt crisis in Europe
56
exacerbates again and affects China’s exports adversely,
China’s economic growth this year will be further hindered. China’s economy may continue to decline in the
second quarter, and the quarterly Gross Domestic Product
(GDP) will witness a year-on-year decrease from 8.1% to
7.6%.
Pu Yonghao also holds that Europe is a major exporter
of China, and once happens, the negative growth in China’s
exports to Europe will directly affect China’s economy; in
terms of capital supply, as Eurobank has been providing
credit supply to the Asia-Pacific region and Hong Kong, the
credit funds will be withdrawn to Europe along with the
de-leveraging of the Eurobank; if the debt crisis in Europe
continues to deteriorate, it will encumber the development of
the global financial markets and ultimately affect the stock
market of the Asia-Pacific region.
Emerging markets may become new engines for
economic development
Speaking of the future global economic situation, Pu
Yonghao claims that the scenario of global economic growth
is crystal-clear: Europe suffers a negative growth, and the
European economy falls into a recession; the economic situation in the United States is relatively optimistic with an increasing rate of 2%~2.5%, but the fiscal contraction following
this year’s presidential election will bring about uncertainties
to next year’s economy; growth in emerging markets will be
favored, but it’s not wise to intensively stimulate the economy
because internal inf lation pressures in
China, wage increase pressure for instance, are still tremendous.
Jian Chang, Asia economist in Barclays believes: the global economy will
bottom out in the next few months, and
will slowly recover in the second half
year; the U.S. economy will be all right
on the whole with its decreasing unemployment rate, and gradually growing
consumption and real estate markets; the Eurozone will be
confronted with greater risks and its economy is bound to decline; as for the Asia-Pacific region, his prediction on China’s
economic growth is still 8%~8.1%, and he is optimistic about
the emerging markets. It is predicted that China's export
growth rate this year will be 10%, which is based on a 2% increase in exports to the United States and a negative growth
of 0.4% to the Eurozone; in case of slower growth than predicted, China’s export growth rate may be single-digit.
American economists of Merrill Lynch indicate that
the U.S. economy is recovering, but the pace is still very slow.
The United States will be confronted with fiscal retrenchment
resulting from expiration of tax cuts policy, which will have
adverse impacts on the U.S. economy, thus this year the U.S.
economy will increase in the first place and then decrease;
the global economic growth engines are still China and other
emerging markets, yet the emerging markets are not likely to
be spared in case of severe recession in developed economies.
(Author: from Securities Times)
EUROPE
(Author: Researcher in the Gold Research
Center of Bank of Communications)
By Lu Zhiming
ence on their close neighbors, namely the SouthEastern Europe countries.
However, seeing from a
more fundamental point of
view, decline of the Eurozone reflects that Germany
and France’s great attempt
to make the Europe “speak
with one voice” encounters
great obstacles. Thereafter,
synergy and cohesion of the Eurozone will be greatly
reduced. The European countries, having their own
economic and political interests in mind are much
more likely to ignore the EU and act alone, and it is
very difficult for Germany and France to find a reasonable excuse to dominate other European countries.
With the decline of the Eurozone, all the other
parties, the United States in particular will reinforce
their influences in Europe; without Eurozone as the
“amplifier”, Germany and France can hardly be on
an equal footing with the United States, and they can
neither continue to use the European Commission as
a big stick to attack their competitors. The ripple effect
of Greece’s secession from the Eurozone may combine
with the fueling of external forces to lead to a multilose situation in the Eurozone.
As for China, on the one hand, it needs to reassure its trading partners in the Eurozone, because as
the largest trading partner of China, EU’s chaos in
economy and politics will make China’s declining exports worse still. On the recent Canton Fair, a certain
degree of decline has taken place in the number of
institutional and individual participants from the EU,
as well as the trading volume. In addition, if a big upheaval takes place in the Eurozone, the recovery of the
world economy will face even greater uncertainties.
One the other hand, China also needs the power
of the Eurozone to contend with America, Japan and
other forces. Now it is the most optimal timing for
China to step up its negotiation with the EU; if the
Eurozone lifts its control over its high-tech product
exports to China and admits China’s market economy
status, China is able to greatly enhance its initiative
in the negotiations with the United States and Japan.
Moreover, China can also take this opportunity to
reinforce its “going out” to the Europe, and improve
domestic industrial structure through management,
technology and service update.
From another perspective, the contentions within
the Eurozone can only be regarded as a political gaming because Greece’s secession from the Eurozone will
lead to a multi-lose situation; currently, it’s not wise to
come to a conclusion on Greece’s secession from the
Eurozone.
Multi-Lose Eurozone if Greece Secedes
T
he ripple effect of Greece’s
secession from the Eurozone may combine with the
fueling of external forces
to lead to a multi-lose situation in
the Eurozone. If a big upheaval takes
place in the Eurozone, the recovery
of the world economy will face even
greater uncertainties.
The mode of “paying old debts
with new debts” is not sustainable, and
Greece may be the first to default in a real term among
the debt-stricken European countries.
Recently, as Greek President Karolos Papoulias
has failed in forming the cabinet and the radical leftist alliance is against joining in the unity government,
central bank officials in the Eurozone have begun to
discuss how to deal with Greece’s potential secession
from the Eurozone for the first time. In an interview
with Greek media, Weidman, the German central
banker alleges: “if Greece secedes from the Eurozone,
it will be faced with much severer consequences than
other countries of the Eurozone”.
In case that Greece does secede from the Eurozone, for countries of the Eurozone there will be
hardly any real winner.
First of all, both the political and economic situations in Greece will be increasingly severe. Whether
restarting its old national currency or employing a new
currency after seceding from the Eurozone, Greek will
inevitably suffer from a sharp currency depreciation.
Consequently, debt service pressure of international
borrowing will rise in no time, both public and private
economic sectors will face the threat of bankruptcy,
welfare of domestic citizens can’t be guaranteed, and
the so-called left-wing’s political stunt of protecting
the interests of the people will be hobbled.
Secondly, for European countries which shoulder
debt in intermediate level like Spain and Italy, Greece’s
secession from the Eurozone may mean a chain reaction. The international community, especially the U.S.
hedge fund has long been planning to short the euro,
and Greece’s secession may become its long-awaited
timing for action. Countries like Spain and Italy that
are in precarious situation and rely on euro for sheltering will be directly exposed to the threat of international shorting selling. As a result, the economic and
political conditions of European countries with debt
problems will plummet, though the Eurozone is not
likely to fall apart.
Thirdly, core countries such as Germany and
France with adequate immunity will also have their
international influences greatly reduced. For Germany
and France, even if the Eurozone collapses, all they
have to do is to restart their national currencies, and
there will be not really much of a fatal injury in their
economy. Relying on the geographical advantages,
Germany and France can still maintain a certain influ-
57
Regional Trade & Investment
EUROPE
German Companies Confident with
Chinese Market amid Challenges
By Zhu Zijun
G
erman companies are confident with the growing Chinese market and are aiming
to f ur ther expand their
business operations locally, according to
a recent report by Euro Asia Consulting (EAC) and the German Chamber
of Commerce in China (GCC).
The further expected growth in
China is fueled by an increased demand
from Chinese customers. 70 percent
of the German companies interviewed
expect a growing demand, either due
to the Renminbi appreciation or overall
growing economy and increasing wealth,
said the study based on 30 German
companies doing business in China.
However, they also realize that
domestic competition will increase significantly, mainly due to a better access
to foreign markets and technologies
and improved domestic cost structures.
Domestic companies have gained
in number and size and have also been
able to significantly improve their product quality in the past.
“Local companies are getting better and better (often through trial and
error) and also more innovative. They
have managed to greatly improve their
quality level already,” said a company
representative of the chemical industry.
The Renminbi appreciation forces
Chinese enterprises to become more
competitive in an international comparison. “Made in China” can no longer only be competitive based on cost
advantages due to rising prices abroad
caused by the strengthening Renminbi.
Local companies can also benefit
from the Renminbi appreciation by
getting cheaper access to foreign technology as well as potential acquisition
targets and international markets.
58
Investments of Chinese companies abroad will increase significantly to
get more presence in and access to international markets as well as to acquire
more technology and know-how.
“Local competitors have looked
at a number of different technologies
abroad and have applied them to their
own processes afterwards,” said a company representative of the electrical
industry.
Apart from the domestic competition, the foreign competition is also
expected to increase in China. The
interviewed company representatives
expect growing foreign investments in
the Chinese market. Many also see the
market saturated to a certain extent already, said the report.
As such, the companies involved
in the study agreed that they have to
become both, more efficient and innovative in the future to stay competitive. Being highly localized, many
German companies in China have adjusted their China strategies to the local
market and do therefore barely see any
measures to be taken due to the past,
present and future Renminbi appreciation. Due to the growing market in
China however, many see the need to
not only focus on the high-end market
segments anymore, but rather move towards a broader mid-end market.
Most companies talked to in the
survey are also strongly focusing on
further increasing their market share
in China. They all see a huge growth
potential of the Chinese market, want
to be a part of it and further profit from
such development.
In order to realize such goals, a
number of strategies measures have
been introduced by the companies
included in the survey. Such strategic
measures include a variety of different attributes, covering aspects of local
adaption, process improvements and
expansion.
However, many enterprises talked
to in the course of the study realized
that in the past they have not always
worked on constant improvement of
their China strategy. For many years,
the operations in China grew simply
based on the signif icant economic
growth in China. With rising operational costs described earlier however,
those companies have in the past 2 – 3
years again focused on China as their
major growth engine, the report said.
“We have been in this market for
more than 10 years already, but didn’t
really focus on actively growing until
the last 3 years. Now we have a real
strategy and are trying to achieve an
annual growth of about 20 per cent,”
said a company representative of the
machinery industry:
However German companies are
still confident of themselves with their
identified specific advantages, such as
high quality, service & reliability, high
brand image, technological know-how
and innovation. Many German companies involved in this study still see
themselves ahead of local competitors
by at least 2 years and up to 10 years
depending on the industry.
“China will gradually move away
from its image of being a low-cost/
low-wage country, and will increasingly
develop towards a country focusing on
R&D and innovation. Hence, over the
long-term, China will catch up, for now
however, made in Germany still wins,”
said a company representative of the
automotive industry.
Industrial Watch
Industrial Watch
The first Sino-US Innovation and
Entrepreneurship Summit of Carnegie Mellon
University held in Pittsburgh
Jointly organized By Sino-US Innovation and Entrepreneurship Summit Organizing Committee of Carnegie Mellon University (CMU), the Chinese Students
and Scholars Association (CMU-CSSA), and Huayuan
Science and Technology Association (HYSTA), the first
Sino-US Innovation and Entrepreneurship Summit of
Carnegie Mellon University was held on April 28-29 in
Carnegie Mellon University, Pittsburgh, Pennsylvania
state of the United States. A great number of talents of science and business from both China and the United States
attended the summit, exchanged in-depth ideas on SinoUS innovation in such fields as information technology,
new energy, health care industry, and financial industry,
as well as gave valuable suggestions on how to stimulate
entrepreneurial enthusiasm of Chinese students studying
in the United States and guide them to make better use
of their own advantages in improving the success rate of
entrepreneurship.
This summit was sponsored by well-known enterprises such as Sinopec, and Verizon, and got much
support from Mr. Kai-fu Lee, a famous alumni and the
current CEO of the Innovation Works and Mr. Xu Xiaoping, the founder of Zhen Fund and co-founder of New
Oriental. In addition, many leading figures in such fields
as IT, finance, medicine, biotechnology, energy & environment, and entrepreneurship & investment participated
in this summit, including Mr. Huang Shu, a Managing
Partner of Yuandu Investment and Consulting Inc., Mr.
Song Anlan, China Managing Partner of Softbank, Mr.
Jiang Xiaodong, China Managing Director of NEA, and
Charles Kennedy, Chief Investment Officer of Carnegie
Mellon University. Six sub-forums was set up in the summit, and more than 30 industry elites will discuss with the
audience on the following topics respectively: information
and digital entertainment technology, cloud computing
and security technologies, energy and environment, financial and capital markets, medical and biotechnology, and
innovation and entrepreneurship.
Ma Rui, founder and Chairman of the summit
holds that the mission of this summit is to make institutions from both China and United States get together via
CMU, the leading global education platform, in a view
to enhancing better mutual understanding, creating po32
tential business opportunities, boosting pragmatic SinoUS cooperation, promoting the popularity of CMU and
Pittsburgh in China as well as improving their regional
influences.
Chairman Ma tells reporters that in the past few decades, China has successfully transformed into the focus
of global political and economic development. The rapid
economic growth has made China the world's second
largest economy only second to the United States, and
at the same time established China’s important position
in international relations. Rapidly growing middle class,
well-educated graduates, as well as the world’s leading
innovative companies indicate that China will usher in
a better future. Although the U.S. economy has been
greatly affected by the financial crisis in recent years, the
United States remains a major driving force in the global
economy. Therefore, it has become a common understanding that sound Sino-US cooperation will benefit the
global economic growth.
At last, he indicates that depending the mutual
understanding between China and the United States will
further promote bilateral cooperation, which helps to
produce a comprehensive solution for problems and challenges facing both countries. Therefore, the high-profile
summit becomes an excellent platform for bilateral exchanges, as it brings together famous entrepreneurs, corporate executives, venture capitalists, and researchers from
both countries to discuss and resolve major economic and
technological issues, and seek for new partnerships. To
this end, the Carnegie Mellon Summit and the China-US
Innovation and Entrepreneurship Forum came into being.
Carnegie Mellon University was established in 1900
by Andrew Carnegie. Andrew Carnegie also produced
CMU’s school motto “My Heart is in the Work” which
enjoys popular favor and has become a firm belief of the
students and teachers in the pursuit of truth. Meanwhile,
innovation and entrepreneurship is an eternal hot topic on
CMU campus.
Pittsburgh was praised by U.S. President Barack
Obama as the model for economic development in the
21st century. After the successful G20 summit in 2009,
Pittsburgh has drawn more and more attention. And now,
Pittsburgh is ready to bridge China-US exchanges.
Regional Trade & Investment
NORTH AMERICA
2012
State of American
Business in China
By Lesley Cui
A
mid rising costs and moderating economic
growth, there is increasing urgency for China
to enact market reforms in order to transition to a more innovative and sustainable
economic model, according to the 2012 State of American Business in China White Paper released by the
American Chamber of Commerce in China (AmCham
China).
The annual White Paper, now in its 14th edition,
is written by representatives from over 1,200 member
companies of AmCham China. It outlines key developments and challenges across a wide range of industries
in which US member companies operate in China, from
agriculture to financial services to retail. It also contains
suggestions for both the US and Chinese government
on how to improve the business climate.
As China’s economy grows, market conditions remain good for business, and AmCham China members
report strong revenues and good profit margins. AmCham China members remain strongly committed to
business growth and participation in the China market.
However, the 2012 White Paper identifies growing uncertainties over the future pace and direction
of economic reform and the impact on operations in
China.
China’s progress toward a market economy has
slowed in recent years and the outcome of ongoing
efforts to rebalance the economy to create a market
based on domestic demand and sustainable innovation
remains uncertain. “AmCham China commends the
government for the many successes it has achieved, but
the transition to a new economic growth model presents
new challenges. A new commitment to deepen market
reforms and extend a truly market economy to additional sectors of the economy will ensure more sustainable
economic growth in the future and create new opportunities for companies and consumers,” said AmCham
China Chairman Ted Dean.
As China enters a transition phase in its economic
development, the 2012 White Paper outlines policy recommendations that will benefit China’s economy and
advance China’s development goals. “To position itself
for the coming decades of growth, we believe China
60
should promote more vibrant competition. It could
do so by opening up market access across the many
industries that remain restricted to foreign investors,
completing the transition to a market economy, and
promoting greater consistency and transparency in government policies around the country,” said Ted Dean.
Specific policy recommendations in the 2012
White Paper for improving the business and investment
environment include a focus on human resource challenges, improving regulatory coherence across China, increasing licensing opportunities for member companies
and improving intellectual property rights protection.
Rising labor costs
Eighty nine percent of member companies believe
China is losing its competitive advantage due to rising
costs, up 11 percent from last year. 82 percent of respondents said the cost of social benefits would hurt their
operations, compared to 53 percent a year ago.
Management-level human resources are seen as the
leading business challenge and nonmanagement-level
constraints rank third, while other inputs such as the
cost of land, rent, raw materials and transportation are
also rising. China is losing its competitiveness in labor
costs and that will eventually lead to a structural change
in manufacturing and trade, but it is also a positive
outcome of ongoing efforts to rebalance the economy,
AmCham China said.
Strong commitment of US companies to the Chinese market is subject to China’s future policy choices
and development path, as well as external risks such as
another global economic slowdown, according to Ted
Dean, chairman for AmCham China.
Stronger competition from Chinese
enterprises
The growing strength of Chinese companies both State-owned and in the private sector - has been
highlighted in the report. 68 percent of respondents
said they had faced increased competition from Chinese
firms, with a third saying that this competition had
“increased greatly”. The period measured was between
2011 and 2010.
NORTH AMERICA
AmCham claims some of the competition unfair,
saying that Chinese companies often receive preferential treatment in terms of credit, taxation and regulatory
policy.
However, regulatory factors are unlikely to be the
only reason for increased competition.
Some argue the financial crisis, which has forced
many Western companies to cut back on investment,
has caused a shift in the balance of power. Meanwhile
Chinese companies, often cash-rich and less dependent
on capital markets to raise funds, have taken advantage
of depressed asset prices in Europe and the United
States and have strategically bought companies to boost
their competitiveness.
A new factor, however, is that China's private sector is rapidly upscaling from low-tech export-oriented
manufacturing to more high-tech sectors, which was
once solely the preserve of foreign companies. The
Chinese private sector is being driven into making this
change largely by rapidly rising labor costs.
Concern over China’s long term growth path
The report showed that the chief concerns of US
companies have shifted from the investment climate to
the country’s medium-term economic growth path.
China’s course over the next decade as it seeks a
structural shift has become a big concern for the foreign
business community. They may think that there are
some ambiguities and uncertainties, but in fact, China
has given clear information, AmCham said.
“The government is on track to make progress
toward a market economy by actively promoting the
liberalization of interest rates and further improving
the exchange rate mechanism, as well as deepening the
reform of State-owned enterprises,” Dean said. “China
has no doubts about sticking to opening-up and gradually advancing its reforms in a cautiously optimistic way.
A ‘shock type’ reform, expected by some people, is impossible in China.”
IPR enforcement to be strengthened
Seventy nine percent of respondents rate China’s
enforcement of intellectual property rights as ineffective. The percentage of respondents who rated China’s
IPR enforcement as effective declined 9 points from last
year. “At the time of the survey, respondents reported
seeing little progress on IPR protection, though new
government initiatives announced last year may yield
improvements,” said AmCham China Chairman Ted
Dean.
Continued commitment to China
After several years of strong growth, US companies in China have begun to temper their growth outlook due to increasing concerns about slower economic
growth, rising labor costs, tougher competition and
future uncertainties.
Despite these pressures, China is increasingly
viewed as a major growing market: 82 percent of respondents
surveyed plan to increase investment in their China operations
in 2012, with 66 percent saying their goal is to produce goods
and services for China, an 8 percent increase from two years
ago.
U.S. companies remained relatively optimistic about China’s market, while most of the surveyed companies expected to
grow faster than China's real GDP this year, as they did in 2010
and 2011.
Besides, nearly three quarters of respondents believe that
slow or unstable Internet access affects their ability to efficiently
conduct business in China.
The White Paper is AmCham China’s most important
and authoritative policy document. It is widely distributed and
referred to by officials in the Chinese and US governments, and
will be used by AmCham China as a basis for policy discussion
and dialogue for the next 12 months.
AmCham China is a national non-profit organization
representing the interests of nearly 1,200 companies and 3,000
individuals doing business throughout China. Headquartered
in Beijing, it has chapters in Tianjin, Northeast China (Dalian)
and Central China (Wuhan).
61
Regional Trade & Investment
LOCAL
Helen Clark and Wen Jiabao
UNDP Chief Values China’s
Sustainable Development
By Zhu Zijun
C
hina had made great achievements in sustainable development, and China’s experience
can be shared with other
developing countries, said Helen Clark,
Administrator of the United Nations
Development Program (UNDP).
She made the remarks during her
four-day official visit to China from
May 16. Clark met with Premier Wen
Jiabao to discuss the vital role that China will play in determining the success
of the sustainable development agenda,
as well as UNDP’s strengthened partnership with China.
Earlier in 2010, Clark signed an
agreement with Premier Wen which
signaled out further strengthening
South-South Cooperation and sharing
China’s development experiences as one
of her key priorities as UNDP Administrator.
China has outlined plans to cut its
carbon intensity by 40- 45 percent by
2020 and enhance its natural resources
management.
However, China still has a long
way to go in realizing modernization.
China will continue to open up to the
world, conduct reforms and promote
comprehensive, coordinated and sus62
tainable development, Wen was quoted as
saying by Xinhua News Agency, adding
China is ready to strengthen exchanges and
cooperation with the UNDP.
“China has enjoyed a period of tremendous growth and has learned many lessons along the way,” said Clark.
“It is important that we work together
to share these experiences in a way that is
most beneficial to developing countries, and
I have been encouraged by China’s willingness and commitment to do so,” she added.
Clark also met with Xie Zhenhua,
Vice-Chairman of the National Development and Reform Commission (NDRC),
in order to gain a better understanding of
how UNDP can help promote balanced
socio-economic development in China.
Later, she attended the launch of the
China-India Country Study on Low Carbon Development, a joint initiative that
brings the National Development and Reform Commission of China and the Energy
and Resource Institute of India (TERI)
together to examine existing barriers and
solutions to promoting low carbon development on a global scale.
In her other engagements, Clark
held discussions with Wan Gang, Minister of Science and Technology, on SouthSouth Cooperation for poverty alleviation
through technology exchanges and
the development of a green economy; and with Li Liguo, Minister of
Civil Affairs, to discuss China’s experience of and expertise in disaster
risk management and sharing with
other developing countries. During her visit, Clark also
attended an event to promote a new
UNDP initiative aimed at encouraging the private sector to enhance
their Corporate Social Responsibility (CSR) profiles, as well as integrating the three pillars of sustainable development – economic, social
and environmental – within their
business operations.
“To succeed in the 21st century, businesses must pursue a ‘triple
bottom-line approach’, namely,
businesses must see the economic,
social and environmental dimensions of their operating costs,” Clark
said in her speech.
At this event, U NDP announced a new mechanism
designed to assist Chinese enterprises in enhancing their ability to
perform CSR by facilitating the
exchange of successful experiences
with other developing countries under the framework of South-South
Cooperation. Amid China’s growing overseas business interests, this
initiative will pilot “pre-departure”
CSR training for Chinese companies intending to invest in other
developing countries.
Clark also interacted with the
members of media and the public.
For the first time, she engaged in a
microblog (weibo) chat with the online community in China, sharing
her thoughts on sustainable development and the future she envisions
over the next 20 years. It is the fourth time Clark has
visited China since her appointment
as UNDP Administrator in 2009.
She previously served as New Zealand’s prime minister for three terms
from 1998 to 2008.
As China prepares to engage
with the world at the Rio+20 Conference on Sustainable Development in June, Clark’s visit signals
the importance she attaches to
China.
LOCAL
for the development of Tumen River Region, with
Changchun-Jilin-Tumen as the development and
opening-up pilot zone. Progress has been made on
regional cooperation and development in Tumenjiang River region in the past 3 years.
The construction of Rason Economic and
Trade Zone jointly developed and managed by
China and DPRK was launched in June 2011.
China-Russia Channel of road and port was
implemented. Great Channel between China and
Mongolia are under speedy construction. Active
progress has been also made in the construction of
Changchun-Jilin-Tumenjiang Development and
Opening-up Pilot Zone. Changchun and Jilin are
integrated in terms of urban planning, investment
attraction, infrastructure construction and information sharing.
“Hunchun plays a better role as a window
to the outside. It has started the establishment of
Russia, Japan, ROK and Jigang Industrial Park,
and has a good foundation for the development of
export-oriented economy,” said Chen Weigen, Vice
Governor of Jilin Province.
The railway between Hunchun and Kameshovaya of Russia will resume operations in June.
A passage that connects Jilin with Busan and
Niigata via Zarubino was developed. It then will
take only 1.5 days from Jilin to Busan, and 22
hours to Niigata. In the past, it took 5 days and
3.5 days respectively. The main part of the reconstruction of Won Jing Ri-Rajin port road was
finished. Commodities can now be transported
from Hunchun to Shanghai (Ningbo) Port via
Rajin Port, charting an economical and convenient sea transportation channel for northeast
China.
“In the future, we will reinforce infrastructure
constructions, establish international logistics system and introduce more foreign direct investment,”
said Li Longxi, Mayor of Yanbian where Hunchun
is located.
Int’l Cooperation Zone
under Construction in Jilin
A
By Zhu Zijun
n international cooperative demonstration zone is to be built in Northeast China’s Jilin Province to boost cross-border
cooperation in the region, according to a
press conference held in Beijing on May 21.
The zone, named Tumen River Area (Hunchun) International Cooperation Demonstration
Zone, is located in Hunchun, a port bordering
Russia and DPRK. It covers 90 square kilometers
and includes four functional zones in terms of foreign trade cooperation, international industrial cooperation, Sino-DPRK and Sino-Russia economic
cooperation.
The zone is centered in Hunchun facing
Northeast Asia, with the city group ChangchunJilin-Tumenjiang as the supportive base. It will
function as a major transportation hub and a logistics center in Northeast Asia. Also, in future, the
livable and ecological city clusters with prosperous economy and enjoyable environment will be a
growth pole of Northeast China.
“The construction of the zone will further
the development and opening-up in Tumenjiang
River area, accelerate the revitalization of the old
industrial base in Northeast China, and upgrade
the opening-up in China’s border areas,” said
Shen Xujian, deputy regional development director under the National Development and Reform
Commission, adding that “It will promote China’s
economic and trade cooperation with neighbor
countries, especially with DPRK and Russia.”
The zone is to mainly promote trade, logistics
and cross-border tourism, with the priority in a
transportation network facing the Northeast Asia.
It is expected to serve as a model for international
cooperation in Northeast Asia and for the development and opening-up of border areas in China.
The construction of the zone will be aided by
various supportive policies, including those related
to fiscal, industrial layout and investment, land usage, infrastructure construction, finance, customs
supervision and port construction,
technology innovation and talent cultivation, customs clearance facilitation
and special funds.
The Tumen River in Hunchun
straddles the borders of China, Russia
and the DPRK. In April of this year,
the Chinese government announced
that it has approved the establishment
of the demonstration zone.
It can date back to 1992, when
China, Russia, DPRK, ROK, and
Mongolia jointly initiated the Tumen
River Region Cooperation and Development Project.
In 2009, the State Council approved and implemented the outline
63
This inspiring story reminds us that well-rounded success
– in business, family, and community – need not be elusive,
especially when diligence, imagination, and love are in
abundance. Leeshan Birney, an immigrant from Taiwan, saw
her dreams come true in America. She successfully created
a growing business, nurtured a lasting marriage of 44 years,
raised three talented children, and became a leader and
role model in her community. In addition, she inspired
her husband and son to join her in the business,
creating a family company led by
strong shared values. Now her
dream is to inspire other women
to become entrepreneurs
themselves, while also finding
success and happiness in their
families and communities.
An Oriental Rose
ge
osta
US p
China
postag
e
Blossoming in the U.S. Real Estate Industry
— Leeshan Birney, founder and chairman of Stone Mountain Properties
By Alice Yang
T
hirty-one years ago, an immigrant housew ife from
Taiwan, with three young
children and no previous
business experience, decided to start a
company. She found her way into real
estate, creating Stone Mountain Properties. Her determination, drive and
can-do attitude resulted in major successes, attracted her husband and son
to join her in the business, and eventually led to her recognition, domestically and internationally, as a leading
entrepreneur and role model. This is
the story of Mrs. Leeshan Birney, an
award-winning Chinese American
entrepreneur, who amongst those who
66
know her, is legendary for her extreme
determination, inexhaustible dedication, and warm kindness.
East meets west: A love story in
America
Leeshan Chuang was born in
Taiwan. Leeshan was passionate about
school, and her passion rewarded her
dramatically when her employer encouraged her to study abroad. In 1963,
she headed to New York City for an
exciting new life journey. While studying nutrition at Columbia University,
she met a tall American named James
Birney. They fell in love, and in August 1968, despite the disapproval of
his family, James married Leeshan at a
simple but solemn wedding ceremony.
Determined to prove herself, she eventually won not only her in-laws’ acceptance but also their love, and she helped
the Birney family to prosper.
Her eldest son Ceyan was born on
Christmas Eve in 1970. One year later,
she received her second master degree,
an MBA degree in Economics from
New York University. Her two daughters Mayling and Shanlenn were born
over the next several years. To care for
her growing family and provide a good
stable home, she decided to become fulltime devoted mother and wife. Leeshan
says, “I never regretted my decision to
stay home for ten years. My children are
very happy, and I could share that time
with them. This is more important to
me than anything else.”
More than ten years later, Leeshan woke up one day to find herself
an entrepreneur. She had not intended
to start a business, but simply to help
her sister in Taiwan find a real estate
investment in US. After significant
analysis and evaluation, they had
identified a modest 18-unit apartment
building located in South Orange, NJ,
adjacent to Seton Hall University. They
had also identified a property manager,
but just one day before the closing
date, the agreement with the manager
fell through. Leeshan couldn’t sleep
that night. She did not want to lose
the deposit and a good investment. So
when she woke on May 1, 1981, she
had made a sudden decision that would
change her destiny. Despite her complete lack of business experience, she
would manage the property by herself.
Working quickly, she arranged for
her father to help them to buy out the
property manager’s share. Then, bravely, Leeshan called her husband to join
the closing at 4pm that day. James was
proud of her, but extremely busy in his
own firm, so she knew she would have
to manage her new real estate business
completely on her own.
At the beginning, the revenue was
unstable and challenges significant. The
day after she took over the business,
a tenant complained about necessary
repairs. Leeshan called some names she
found in the phone book and quietly
observed how they handled the repairs.
After watching various repairs, she
soon started going to the hardware shop
to buy materials and tools so that she
would handle similar problems, such as
repairing a toilet or leaking water, not
asking for outside help unless absolutely
necessary.
During the following five years,
with financial assistance of James, Leeshan was able to purchase more than a
hundred apartment units, which laid the
foundation for the future Stone Mountain
empire. The new acquisitions included
28 units in Hoboken in 1982, which she
extensively renovated in 1984; 44 units in
South Orange, New Jersey in 1983; and a
further 56 units in South Orange in 1985.
Although the company was still small
and resources limited, Leeshan ran it well
and the occupancy rate was high. She
also made improvements, renovating the
interiors and exteriors, and profits poured
in due to increasing revenues and sensible
cost controls.
Encouraged by her husband, who
would always tell Leeshan to think bigger, she seized on an exciting chance to
more than double the company assets in
1985. A large apartment complex with
133 units and 10 acres of land was for
sale and conveniently located near the
primary school her youngest daughter
attended. If she purchased the apartments, it would be easier for her to care
for her littlest one, and this part really
tempted Leeshan. However, the selling
price was quite high for the company
then – nearly $10 million. And the additional challenges were significant:
if they purchased the property, they
would have to spend more money to
make much-needed renovations; finally,
the banks would only offer a 50% loan,
thereby requiring an additional large
capital investment. From a conventional
return on investment analysis, the project did not seem worth it.
Despite the challenges, and especially excited by the possibility of more
quality time with her little daughter,
Leeshan decided to imagine the possibilities. She saw its growth potential,
even though it was unclear to others,
and she set to work trying to round up
the serious capital required to buy the
apartment complex.
Eventually she was able to gather
enough. Her agents gathered the seller,
the buyer and their respective lawyers
to see if a deal could be reached. After
9 hours of negotiations, they finally
signed the deal. The agent offered to
lend her the commission, and the seller
offered $2 million loan to Leeshan.
But the rest of the $7.4 million had to
be funded through bank loans, and
the banks still had to be convinced to
provide the loans. Leeshan found experienced real estate experts to make
appraisals, and they pointed out the
great potential value increase through
their analysis of the market, rental demand, and the community’s top school
system. Leeshan approached the bank
with this appraisal report, arguing that
current low rent would increase by
about $200 per unit to align with market prices. Leeshan also promised to
renovate the apartment with funding
from her husband’s successful career.
She joked that the bank could easily
oversee the management and operation
of the apartment as their offices overlooked it! Touched by Leeshan’s enthusiasm and persistence, as well as her
love for her daughter, the bank finally
agreed to issue a $6 million loan to her.
Using money from the refinancing
of her other properties in South Orange
and Hoboken, she was finally able to
raise the rest of the capital to purchase
the property. Her innovation and focus
had paid off. These apartments, Short
Hills Terrace, have since served as the
NJ headquarters for Stone Mountain Properties. They are also a fine
symbol of Leeshan’s brave efforts and
SunBlossom Cottages Apartments
Leasing office
SunBlossom at Woodlake Apartments
Innovation and focus: The
challenge of starting a business
67
determination, her smart business sense
and most fundamentally, her love as a
mother.
Business expansion
By 1989, Stone Mountain owned
more than 300 rental units in New Jersey, spread throughout four cities. The
operation scale was more than enough
for the management capacity of Leeshan and further business expansion
came to a standstill. This timing also
coincided with when her husband James
decided to leave his job on Wall Street.
The U.S. real estate market hit a
new low then, which provided a good
opportunity for large scale purchase of
properties. As James joined the management of Stone Mountain, the couple
decided to expand their business to
Houston, TX, as the real estate market
there was poised for a quick recovery
and long-term growth. As a harbor city
with many immigrants, Houston has
strong demand for renting housing. As
the fourth largest city in the U.S. and
the largest city in the southern U.S., it
also demonstrated strong development
potential with interesting niches fueled
by diverse multicultural elements, large
congregations of foreign consulates, and
renowned medical centers.
Since their f irst purchase in
Houston, Walden of Westchase property, they expanded to include more
than 2,000 apartment units. The
SunBlossom International Village
in Chinatown has become the prime
choice for Asian immigrants due to its
convenient location, fair price and careful service. Leeshan has even become
known as the “Queen of Apartments”
in the overseas Chinese circles.
During the past three decades,
Leeshan has successfully expanded the
business of Stone Mountain Properties
68
with her excellent wisdom, great endurance and smart investment strategy
that endures in any market condition.
Today, besides the properties she owns
in New Jersey, she also owns nine
apartment complexes in Great Houston
Area, two commercial centers, two office buildings and several undeveloped
commercial lands, with the total rental
area exceeding 2 million square feet.
The business is poised to continue its
success into the next generation of her
family.
Unique operation concepts
Stone Mountain Properties would
not become a well-established brand
without the unique operation approaches used by Leeshan.
It is rather difficult to manage
an apartment featuring multi-ethnic
dwellers, but Leeshan holds the view
that kind and honest care can bridge
the gap among any ethnic groups.
When selecting employees, Leeshan
would hire multilingual talents who
could speak Chinese, Vietnamese, Burmese, or Spanish, to make the communication with residents easier.
Leeshan and James drew upon
their ow n persona l passions and
strengths to imbue their properties
with distinctive identities. After joining
the management in 1987, James vastly
upgraded the technology and corporate
management systems at Stone Mountain, as well as investing significant
capital into the refurbishment of firstclass apartments in New Jersey and
Texas. These assets proved critical after
buying the properties in Houston, especially after the market turned sour.
James used his knowledge and passion
for computers to create a unique rental
environment at Walden targeting the
high tech community, resulting in a
New York Times feature story. In addition, Leeshan learned how to leverage
her knowledge of Asian immigrants, to
provide valuable services and products
targeting their unique needs.
James is very fond of landscaping
design. Whenever the company would
buy a new piece of land, he would
develop a blueprint of a unique new
landscape design theme and beautifully
transform the environment. He often
included Asian cultural elements in
his design, creating gardens and office
environments with distinctive oriental
design elements. The exceptional landscape design of Walden of Westchase
won the National Landscape Design
Gold Medal Award.
The Birneys later developed SunBlossom International Villages, which
provides beautiful apartments and innovative services that appeal to new immigrants, such as high-speed internet and
education, orientation and community
programs. SunBlossom Gardens was chosen as a principal community model for
the Asian community tour of The Neighborhood U.S.A. Conference hosted by the
City of Houston in May 2002.
Whenever a resident of a new
country moves into the International
Village, a flag of their country is raised
on the property, helping to provide a
sense of belonging to the new guests.
Today, dozens of flags proudly wave
outside along the front of the property
greeting guests. The Stone Mountain
staff is especially skilled at helping new
immigrants, who have never lived in
the United States, settle into their new
home, helping them with everything
from applying for a telephone line to
applying for driving licenses. They also
provide other services, such as free
English language classes, job training
classes, and cultural orientation services.
Leeshan understands that her talented staff is one of the most invaluable
assets of the company, and she treats
each employee as part of an extended
family. For example, if an employee
comes to her with an urgent need, the
company will offer no-interest loans
until the employee can pay. Sometimes
the company also offers employees free
airline tickets to allow them to go back
home to visit their families or relatives.
The staff can also qualify for rent-subsidized housing as well. As evidence of
this family nature, the staff often calls
Leeshan “Birney Mother.”
Continuity: Stick with your
career and strive forward against
the wind
As the world financial crisis was
sweeping through the U.S. in 2008,
Stone Mountain Properties also faced
the most difficult period in its history.
Facing potentially difficult challenges,
James and Leeshan took further measures to competitively differentiate their
apartments through renovations and
service improvement. For example,
many of their apartments are equipped
with the highest internet network speed
possible, which attracts high quality and
professional residents. They also spend
significant time in shaping the apartment environment, including special
landscape design and bold, bright paint
colors on the buildings. The differentiation works well, catching people’s eyes
as they drive by and clearly distinguishing their properties from the masses.
Other thoughtful changes also
make a difference. To better match
residents’ preferences, Leeshan installed
ceramic tiles and laminate wood floors
in the apartments, instead of carpet, as
the latter is often thought to be harder
to clean, hot and a source of allergies.
These improvements helped to dramatically increase the properties popularity,
competitiveness, and most importantly,
their occupancy rate.
The economic slowdown also led
to higher unemployment rate, and many
people living in the Birneys’ apartments
lost their jobs, finding it hard to pay
the rent. Leeshan was sympathetic to
the residents’ predicaments and worked
hard to try and create job opportunities
for her residents. She opened up more
positions within the company and used
her network to help residents find jobs.
She also worked with several charity
organizations to help apply for rent subsidies for the residents when they qualified. For those new immigrants who
do not speak English, Leeshan would
find ways to provide jobs that need no
English knowledge, like mowing grass
or painting. Leeshan also hired aroundthe-clock security guards, to improve
the security of residents returning home
late at night. As a result of these efforts,
she won the “Golden Lantern Award”
from Asian American Family Services.
Noting that people’s needs were
changing, Leeshan adjusted the closing
time of the work day to 7pm in the high
rental season in summer, to help clients
who need to rent houses after work. She
also studied the financial reports to cut
unnecessary costs when maintaining
the housing quality. Moreover, taking
into consideration the instability of the
Selected Press Reports on Leeshan Chuang Birney
* The New York Times – “A Real Estate Mogul’s Unusual Path” (2005)
* Houston Chronicle –“Stone Mountain Breathes New Life into Area Apart-
ment Communities” (2009)
* Chinese Fortune – “Renowned
South US ‘Apartment Empress’ Leeshan
Chuang Birney” (2010)
Awards of Leeshan Chuang Birney
* Chinese21.com – Outstanding Female Chinese- American Entrepreneur
(2012)
* S-B-S.Net & China.com – Entrepreneur and Role Model Award, US Portrait Postage Stamp and Post Card – Leeshan C. Birney issued by US Post Bureau
(2011)
* Asian American Family Services –
Golden Lantern Award (2011)
* International Leadership Foundation – International Leadership Award
(2011)
* World Chinese Venture Model Association - World Chinese Top 10 Enterprising Models / World Chinese Model Celebrities Portrait Stamp issued by China State
Post Bureau (2011)
* World Chinese Model Entrepreneur
Association - The Title of Chinese Star Top
100 (2011)
* Chinese21.com – Outstanding Chinese Entrepreneur Award (2011)
* International Leadership Foundation – Regional Leadership Award (2010)
* The State of Texas – Yellow Rose of
Texas (2010)
* Chinese Community Center – The
Excellence of Community Development
Award (2009)
* Texas State Representative – Commendation: SW Houston and Chinatown
Improvements (2009)
* Chinese Professional Club – Corporate Impact Award (2008)
* University of Houston Law Center
- Arrivals Awards for Immigrant Achievement (2007)
current economic climate, Leeshan cancelled the 6-12 month contract system,
to offer more flexible short-term leases
to dwellers. She also provides temporary
corporate housing that includes home
furnishings and extra services.
Always an entrepreneur, Leeshan diversified her investments into
* Chinese Community Center – Salute
to Asian American All Stars Family Award
(2006)
* OCA (Overseas Chinese Association)
- Honors outstanding Asian Americans
(2006)
* State of Texas Governor’s Award –
Global Business Achievement Hall of Fame
Recipient (2005)
* Asian Chamber of Commerce (Houston) Entrepreneur of the Year Award (2002
& 2005)
* Mayor Bill White Award for publishing Crime Prevention Booklet in Chinese and English (2004)
* Global Federation of Chinese Business Women (GFCBW) – the Top 10Chinese business women in the world. – Taipei,
Taiwan (2001)
* American Association of University
Women International Fellowship, 2 years
* NYU-GBA Research Assistantship;
NYU-GBA Tuition Academic Scholarship
other areas during the financial crisis,
including mineral water projects in
Changbai Mountain, China. Also the
reputation of her enthusiasm for public
service has helped Stone Mountain
to withstand the financial crisis and
march on towards a path of further
growth.
69
People
Pierre Cardin:
Surprise Myself Constantly
By Guo Yan
P
ierre Cardin, the French famous
designer, is not only the first European designer to hold a fashion
show in China, but also the first
one to educate the Chinese on fashion.
Three decades ago he had predicted the
commercial potentials of this ancient civilization and China, in his opinion, would
become a competition arena featuring
various international brands.
Some people say that every fashion
show by Pierre Cardin is like an international tour that brings people to different
sceneries of every corner of the world; other
people say that the fashion show by Pierre
Cardin is like a great feast where people
will enjoy the legendary lives of creativity.
In early April, 2012, which was also the
33rd year since Pierre Cardin’s fashion
show entered China, he hosted at Water
70
Cube in Beijing
a new fashion
show called “City
of Light”, where
he designed by
himself a l l the
garments for the
show, including
120 female and
60 male dresses.
Prior to the press
conference, the
reporter was lucky
to interview Mr.
Pier re Ca rd in,
who shared his
thoughts in a wide
range of aspects including the theme
of show, his design
history, Chinese
fashion show development and the
relationship between design and
commerce.
Q: what is special about this “City
of Light” show at Water Cube?
Pier re Cardin: Well, the
theme of this fashion show is to combine
life and nature with people’s feelings and
create wonderful scenes.
The first series would be “invisible
dress”. When all the lights went out, the
models will step on the catwalk wearing
“dress of light”. The audience would only
see the moving of five-color lights, which
sketch the flower-shape patterns on the
dresses; the second series would feature
“Pierre Cardin Classics” daily dresses,
which use classic but newly-designed
geometrical patterns. The last two series
include little black dress and evening
gown, to bring out the sculpture modeling of the skirt dresses. I have integrated
architectural materials into the fashion
design and included the heat-preserving
sponge, a normal material in interior
decoration, with the elastic fabrics in the
design of the bottom of the skirt. As the
model walks, a three-dimensional effect
will be created, featuring the dynamic
shape of sculpture.
Most of the clothes for the fashion
show use lycra material, which have
rich and shining color and creates eyecatching effects with the lights.
Q: You mentioned the “City of
Light” is not just a fashion show. In
what way do you mean this?
Pierre Cardin: I am not just
a fashion designer. I have a wide range
interests in movie and drama, but these
items account for different proportions
of my life. I am very fond of architecture, and I have planned many projects
in the Drama Theater, ancient castle and
sphere architectures. The “City of Light”
not only serves as background of the
show, but a comprehensive building featuring the functions of hotel, apartment,
shopping mall, entertainment and villa.
The underground construction has 240
meters in deep and the part on the floor
has 250 meters in height. The whole
building is equipped with the solar
energy system, and it is a revolutionary
breakthrough in the construction of ecological buildings featuring energy saving
and low-carbon environmental protection. This is the first-of-its-kind building
in the world that uses solar power as its
energy. The 1/5 of all the energy used by
“the City of Light” will come from the
sun, while the rest 4/5 will derive
from the wind power. I intend to
bring the city of light projects into
Hainan, Qingdao and Xiamen,
and I am talking about this
with local authorities.
Q : Yo u
are 90-yearold this year.
How do you
sustain your
interests into
work?
Pierre
Cardin: I have a
lot of interests, but my
job is still focused on fashion
design. Some people say that I am old,
or even dead, but I am still alive in the
fashion circle. I am one of the youngest
designers when I entered the fashion
field, and many of my contemporaries
have passed away. So I become one
of the oldest in the circle. I have been
working for 70 years, and please don’t
worry about my old age, because I have
a very young and excellent design team.
The “City of Light” project is run by
my nephew. My motto is “always create
surprises”, and I am aware that I will do
something to make my life full of vigor
and vitality.
Q: Do you think the Pierre Cardin brand will win the heart of young
people?
Pierre Cardin: I visited Beijing
30 years ago to host a fashion show, and
that was my first visit here. China then
had experienced great transformations,
but it was rather difficult for me to bring
my brand into the Chinese market. Now
Pierre
Cardin has
been undergoing
steady growth in China and
the rest of the world.
The fashion clothing
market is highly competitive,
but I think I am still capable
of those things difficult for
others. Many of my design
work was so creative that many
of the concepts were hard to
understand then. I am not the
type of person copycatting other
people or themselves. I know
much better about the past and present of the fashion industry than most
designers. They think their wearing
represents the fashion and I appear quite
old-fashioned in their eyes. I don’t know
how social culture becomes this and I
feel responsible for awakening the public
consciousness.
Q: How do you evaluate Chinese
fashion designers?
Pierre Cardin: China is a very
large country and I am happy to see so
m a ny y ou n g
designers are
growing. I believe you Chinese people are
also proud of
this, and in the
future the Chinese designers
w i l l a c h ie v e
h igh accomplishments in
the world. I am
also an longtime admirer of
Chinese people’s courage
and capability,
and also China
the great nation. The new
generation
of de sig ner s
represents the
hope of China’s
fashion industry’s future. 32
years ago when I came to China for the
first time, the Chinese market was like
a grain of sand in my eye, but now it is a
huge pie for almost every brand.
Q: How do you achieve balance
between design and commercial business?
Pierre Cardin: I have been
involved in various industr y plans
associated with fashion, and accumulated rich working experiences in
a wide range of areas. I use more of
my capability and power to chase my
dream, not the help from others. I
need more time to be alone. As master
of the Pierre Cardin brand, I work for
myself and this is not like other luxury
brands, whose creator has sold out the
brands to other people. I am different
from other designers in the way that
I not only do the designing, but also
have certain knowledge of many technical fields. For example, I have tried
to make buttons before. Every day
during the past 70 years I have always
been working, and work is the largest
happiness of my life. I never feel tired
for work and on the contrary, I will
feel very exhausted to travel or be involved in so-called entertainments.
71
People
Wang Xiaoling’s Love with
Wing Lai Yuen
Wang Xiaoling (far left)
By Richard Zhu
I
n Hong Kong, there have been
many small restaurants. However,
few of them can last three generations and become well-known in
the world. Wing Lai Yuen Chan Fung
Ying Limited (hereinafter referred to
as Wing Lai Yuen), with its 64 years of
history, is an exception. It has turned to
an international catering group from a
family run operation.
With its historical and traditional
cooking style, Wing Lai Yuen becomes
one of the most famous Sichuan restaurants across the world. It is Wang Xiaoling, CEO of Wing Lai Yuen, has made
it a great success.
Wang Xiaoling’s fame has thus
been widespread. Her various titles in72
clude state-level judge for China’s hotel
industry, honorary president for World
Chinese Food Chef Exchange Association, 2010 APEC Top 10 leader, the 6th
China’s Top 10 outstanding entrepreneur
in 2008…Nearly 20 honors and awards
showcase the successful entrepreneur.
People may be impressed by her
legendary success. While, it is her 30
years’ efforts and hard work that contribute to her success with Wing Lai Yuen.
The prelude of the restaurant
Wing Lai Yuen was set up in 1947.
Mr. Yeung Din–wu, the apprentice
of the chef of Qing Dynasty and the
founder of Wing Lai Yuen, created lots
of particular dishes. The best of all and
the most popular is the Dan Dan Mian
(handmade Sichuan-style noodles).
In her young days, Wang Xiaoling sometimes visited Wing Lai Yuen
for the delicious noodles. With the time
passing, she became familiar with the
family who run the restaurant. And
later, she became a wife of the son of the
owner.
In 1988, the village where Wing Lai
Yuen was located had to be removed as a
tunnel was to be built there. Hence many
of the village restaurants were affected,
including Wing Lai Yuen. Luckily, Wing
Lai Yuen was one of the 10 percent of the
restaurants which were left. At first, the
restaurant could earn only HK$300 per
day. It was difficult to survive.
Wang Xiaoling knew it was because of the removal that left the village
out of recognition. Many customers
might believe the restaurant had been
removed. Then she managed small free
buses to pick up the customers and offered discounts for them. Since then the
business got better and better.
In 2000, the restaurant had to be
closed due to the removal of the whole
countryside at last. Hearing the news,
Wang Xiaoling was not intended to continue her business at first thought. However, at her mother-in-law Chan Fung
Ying’s deathbed, she promised to operate
Wing Lai Yuen instead of her. She kept
her words and the restaurant was able to
continue.
improvement. She invited first-class
chef in the mainland to Hong Kong for
cuisine innovation and development of
new cuisines.
“In the first years since the opening of the new restaurant, I kept myself
in the kitchen day and night for the
research of how to keep the products’
quality. Sometimes I was too busy to eat
anything,” said Wang Xiaoling.
Winning world fame
Under the leadership of Wang Xiaoling, Wing Lai Yuen has won many
inf luential awards across the world,
including the Champion of Hong Kong
Sichuan-style Restaurants and International Chinese Restaurant.
The Dan Dan Mian of Wing Lai
Catering to customers
Yuen was praised by the Japanese paper
In addition to her promise, custom- Asahi Shimbun as owing world staners’ support was also a driving force of dard, even much better than the noodles’
Wang Xiaoling’s continuing operation. birth land—Southwestern China’s SichJust before t he
uan Province.
close of the old
Once the Vice
Wing Lai Yuen,
Gover nor of
she conducted
Sichuan paid a
a questionnaire
visit to Wing
survey among 100
Lai Yuen durcustomers. The
ing his stay in
result turned out
Hong Kong
that all of them
A fter a taste
said they would
of the food, he
visit the restaurant
kept praising
again if it could
that “The noorestart its business
dles here is so
elsewhere. Wang Xiaoling
delicious that we should
was so moved that she kept
learn from it.” Hearthe questionnaire in a safe With its historical
ing these praises, Wang
afterwards. Thus, the story of and traditional
Xiaoling felt happy and
Wing Lai Yuen could go on cooking style,
proud. Her years of hard
and on.
work had paid her.
At the opening of the Wing Lai Yuen
Furthermore,
new Wing Lai Yuen, old becomes one
Wi n g L a i Yuen f reand new customers poured of the most
quent ly becomes t he
in. The long queue, coupled famous Sichuan
w inner in lots of inwith other reasons, added
te r n at ion a l c o ok i n g
their waiting time. Some restaurants across competitions. Chicken
even complained. In face the world. It is
w it h du mpl i ng soup
of the complaints and criti- Wang Xiaoling,
in casserole, deep fried
cism, Wang Xiaoling did not
marinade duck, deep
CEO of Wing Lai
retreat. She found the root
fried sweet and sour fish
cause of the problems and Yuen, has made it in squirrel style, sliced
solved them.
loin in spicy Sichuan
a great success.
Wang X iaoling was
source and the steamed
known for her innovation. Despite wax gourd with chicken soup are all its
keeping the delicious taste of the champion dishes.
noodles, she also pursued continuous
Wing Lai Yuen had since then
enjoyed more fame in and beyond Hong
Kong, thus attracting many politicians
and celebrities. They also brought with
them some cooperation opportunities
once in a while. In August 2005, its first
overseas branch was opened in Macau.
Presently, Wing Lai Yuen has set up
branches in Japan and Australia, and
will open new branches in the US and
the mainland.
However, when choosing cooperation partners, Wang Xiaoling was cautious. “If the partner with huge funds
did not care about the operation, I will
not consider it,” said she.
Caring for employees and
charity
A restaurant’s success is closely related with employees except the leaders.
Wang Xiaoling attributes her success to
the employees. In addition to material
rewards, she still concerns the employees’ personal needs. Hence she is also
loved by the employees.
According to her, Wing Lai Yuen’s
achievements today contribute only 10
percent to herself, with the Heaven, the
hardworking employees and the Hong
Kong people each taking 30 percent. To
thank the customers’ years of support,
she had not raised prices during the past
15 years though the cost of the noodles
was five-fold. Only since last year, the
price has been raised from HK$18 to 20
due to the rent rise.
Wang Xiaoling is also known for
her benevolence. She often offers free
noodles for the old and the handicapped,
and subsidizes for nonprofit organizations for such people in Hong Kong.
Still, she also donates for schools and
welfare agencies in the mainland.
A few years ago, she was praised for
her donation in the recovery of the Great
Wall. But she attributed this honor to all
the Hong Kong people.
She is intended to establish a foundation in the name of Chan Fung Ying
to help the old and the handicapped in
different areas.
Wang Xiaoling spends years of her
life in Wing Lai Yuen, where she has
gone through countless hardships and
also has made many achievements. She
wants to tell those youngsters to understand the true meaning of success, which
is no pains, no gains.
73
People
Yang Bingqing:
Oil Industry Is Her Lifelong Career
By Li Zhen
I
n 1998, Yang Bingqing went to
America with her husband and
finally acquired her bachelor degree in California State University.
After graduation, Yang Bingqing took
part in many interviews but proved
hard to find her ideal job as a matter of
language and cultural differences. Influenced by her family from childhood,
Yang Bingqing hoped to do something
challenging and creative, thus deciding
to start her own business. From startup in 2005 to a huge success in 2012,
the story of Yang Bingqing deserves our
care.
Hard beginning
In 2005, Yang Bingqing worked as
a foreign exchange trader in a company
located in San Francisco. Six months
later, Yang Bingqing felt that the foreign exchange industry was extremely
risky, and she must endure overwhelming pressure everyday. In an accidental
74
chance, Yang Bingqing encountered an
American oilfield development company selling oilfield while attending a
foreign exchange exhibition.
Born and bred in Sichuan oilfield,
oil industry was not new to Yang Bingqing. Yang Bingqing contacted this company and displayed her interest when
she was home. In the meantime, Yang
Bingqing began to study oil industry
in America with the convenient help of
Internet, from tax law, ownership and
government regulation. In that period,
Yang Bingqing went to Jim Rogers’
speech about how to profit from commodity investment, which made her
determined to start oil business. When
she met Jim Rogers afterwards, she told
him that his speech totally changed her
life.
After making up her mind, Yang
Bingqing started her own business journey. At first, Yang Bingqing telephoned
many oil companies and showed her
will and interest to help them tap overseas Chinese market in San Francisco.
As most of the American oil companies
are located in south and middle America where information was not spread as
fast as possible, even many companies
did not have their own websites. With
Yang Bingqing’s painstaking efforts, a
company finally promised to give Yang
Bingqing a chance.
From then on, Yang Bingqing
worked as an agent of the company in
San Francisco. Though with no fixed
income, Yang Bingqing was full of passion and motivation to do the job well.
To find investors as quickly as possible,
Yang Bingqing began to make speeches
every where. She still remembered
vividly her first speech. It was held in
a conference room in Hilton nearby
the headquarter of Luca International
Energy Group. More than 70 people
attended that speech which made Yang
Bingqing realized the great potential of
oil market.
Clear investors’
misunderstandings
In that process, Yang Bingqing
conducted a great deal of studies on
America’s oil industry. She constantly
carried out f ield investigation with
investors and gradually attained their
recognition. When exchanging with investors, Yang Bingqing discovered that
there was a lack of basic knowledge of
oil industry in America among overseas
Chinese. Even misunderstands existed
in many aspects. For example, oil was
prohibited from exploiting in America.
Oil industry was full of risks. Oil industry in America was monopolized by
several big companies. But this was not
the case.
According to Yang Bingqing,
investing in oil industry was a strange
topic for most of the people. However,
investment in oil exploration in the
mainstream of American society has
been popular for nearly a hundred years.
The United States is a private ownership
country, the vast majority of mineral
resources are privately owned. Drilling
for oil on private land was protected by
law, and also encouraged by the government. In the U.S., individuals have the
opportunity to own oil wells.
First, the exploitation of oil wells
is not only a high-risk but also highreturn business due to the use of the
advanced technology of exploration
and development of mining technology. In the United States, up to 90% of
oil wells are successfully exploited. In
other words, the probability of investors
lose all their investment cost is 10%.
Second, investment in oil exploration
in the United States is encouraged and
supported by the State and Congress.
Congress passed a special tax law to exempt 15% of the income of the oil from
taxes. Relative to other investments,
investors in oil exploitation do not have
to participate in the daily management,
and can enjoy 100% tax relief. Third,
due to the private ownership of oil field,
exploitation is a capital-intensive industry. It is hard to form an oil monopoly in
the United States, therefore the United
States has no national oil companies,
SMEs produce 50% of U.S. oil and 60%
of the gas.
It is known to all that more than
80% of global energy supply consists
of coal, oil and natural gas. Oil is nonrenewable resources, so far no other
resource can be completely replaced by
the extensive and efficient use of oil, and
no one industry can be relatively easy to
bridge a huge gap between supply and
demand as the oil industry.
As far as Yang Bingqing is concerned, investment in oil exploration is
a very profitable choice, but also quite
strange for the Chinese community.
Fortunately, Luca International Energy
Group, as a pioneer of oil field development, provides a platform for overseas
Chinese to enter the U.S. oil industry.
Luca International Energy Group has
its own well-organized team of experts,
including geological experts, geologists, petroleum engineers, accountants,
investment analysts, and professional
management. Luca International Energy Group is a professional, efficient
and trustworthy company.
Hard work paid off
To accommodate the rapidly expanding business in 2008, Yang Bingqing decided to move out of her home
office to an A-level office. But it was difficult to find one, since she, as a student
back then, had no credit record or bank
deposit. Luckily, amidst the start of the
burst of the housing bubble, a company
wanted to lease one of their offices to
cut costs. After some time, Yang Bingqing felt the off ice was not spacious
enough and started looking for a bigger
one in the building. She was startled to
be asked by the landlord to move out of
the office immediately, with all of her
deposit confiscated. Yang Bingqing had
no choice but to seek legal help. Her
claim upheld, Yang Bingqing drove the
landlord away and got the office back.
This event taught Yang Bingqing the
difficulty and risk of doing business in
the U.S., and how to respond to them.
In early 2009, the plummeting of
the oil price from $148 to $35 a barrel dented investors’ confidence in oil
exploitation, putting Yang Bingqing
in severe liquidity shortage. All of her
four employees left. Facing the greatest
adversity since the start of the company,
Yang did not back off, and managed to
weather the crisis. Things started to get
better since the later half of 2009. The
company evolved into Luca International Energy Group.
Yang Bingqing introduced China’s
Foreign Trade reporter to the state of
Luca International Energy Group in
2012. It holds five oil-gas fields which
are worth $2.6 billion, with stakes ranging from 60% to 1000%; a Regional
Center approved by USCIS to develop
oilfield, which could help 400 families
immigrate to the States by way of investment; 11 subsidiaries, with licenses
to develop oilfields in Texas and Louisiana states. The group company focuses
on oilfield prospecting and exploitation, and at the same time sells and
buys oilfield assets, offers investment
and financing services, imports and
exports oil equipment. Headquartered
in the United States, Luca International
Energy Group is present in Mainland
China, Taiwan, Hong Kong, Japan, and
Europe, with offices in San Francisco,
Oakland, Los Angeles, Huston and
Beijing.
Optimistic about the Chinese
market and Luca’s Future
Luca International Energy Group
set up a subsidiary company in Beijing
in 2010, to tap into the Chinese market.
Yang is optimistic about Luca’s market
potential in China. In recent years, the
country has developed from strength to
strength, transitioning from a capitalimporting nation to an exporting one. It
is playing an increasingly important role
on the world stage. This is why Yang
started to do business here. However,
she noted that the Chinese have yet to
fully understand the oil exploitation industry in the U.S., and it takes time for
them to appreciate the business model
of Luca International Energy Group.
Yang Bingqing is not complacent
about the great progress Luca has made.
She has a clear vision of its future. She
hopes that it goes public within five
years. Yang told the reporter that Luca
strives to be a leader in oil exploitation
in the United States, and is committed
to promoting exchanges between China
and the States in oilfield development,
offering the most professional service,
and achieving win-win outcome with its
clients.
75
INFORMATION
Tel: 0755-25693000
Fax: 0755-25693999
2012 arket
M
a
n
i
h
Cuppliers List
S
Company Name: Shenzhen
Newest Industrial Co., Ltd
Company Profile: Shenzhen
Newest Industrial Co., Ltd is specializing in manufacturing and exporting
daily porcelain. Guangxi Baian Porcelain Factory is a large joint-stock manufactory enterprise with self supporting
right of export, which was found by
Shenzhen Newest Industrial Co., Ltd
in Guangxi China in 1996. After 15
years active operation and development,
it has become a large-scale exporter and
manufacturer with annual output of
more than one hundred million pieces.
Now we have already come out on the
very front of the list of all Guangxi porcelain factories.
Our products are selling well in
coutries from Europe, South America,
Middle East and Southeast Asia.
Meanwhile, Shenzhen Newest Industrial Co., Ltd is the most important
opening window directly towards the
international market. We offer our professional manners with high efficiency
to our customer, and we also have enjoyed a satisfaction and good reputation
from our customers for not only good
quality products but also competitive
prices, excellent service and punctual
delivery. All friends and customers are
warmly welcomed to visit our office and
factory to have business discussion for
mutual-benefit cooperation and bright
progress together.
Add: Rm.90, Block A, 9th Rd,
Tairan, District Futian, Shenzhen,
China
76
Company Name: Shenzhen Superteco Technology Co., Ltd
Company Profile: Superteco is
the Shenzhen-headquartered company,
recognized as the professional global
one-stop-shop supplier of household
appliances and IT products & accessories. The Company provides sophisticated supply chain solutions relate
to design, development, sourcing and
distribution. Best price, perfect service,
wonderful product are what we’d like to
always present to our customers.
Superteco is committed to the
highest operational standards to meet
customers’ specific needs, it conducts
our business with integrity and good
corporate governance practices. Over
the years, Superteco has won numerous
accolades for its performance, governance and sustainability. Sustainability
considerations are embedded into our
corporate policies and risk management
systems. Security and efficiency are the
permanent performance what we’d always done for our customers.
Add: Honglong Century Plaza,
No. 4002 Shennan Road East, Luohu,
Shenzhen
Tel: 0755-82388070
Fax: 0755-82388525
Company Name: Tangshan
Bestmee Ceramics Co., Ltd
Company Profile: Tangshan
Bestmee Ceramics Co., Ltd. which
was established in 2009, is engaged in
the designing, developing, producing
and distributing fine bone china. Our
company is located in hi-tech development zone, Tangshan, Hebei Province,
China. We own 164 feet full automatic
bisque tunnel kiln and an automatic
glazing tunnel kiln as well as a 124 feet
stamping kiln reaching a capacity of
8,000,000 pieces of product per year.
Our products are mainly targeted at
super department stores in medium and
large cities, star hotels and government
offices.
We are commonly recognized of
superb quality in our products, which
contains bone charcoal as much as
45.7%. We have been engaged in developing and producing lead-free products
using sophisticated technology and this
has earned us a good reputation all over
the world. We believe that a good enterprise must base on a good reliability
and high quality in the products.
Add: No. 57, Ronghua Road,
Tangshan City, Hebei Province, China
Tel: 0315-3851218
Fax: 0315-3851966
Company Name: Shenzhen
Godsend Stationery Co., Ltd
Company Profile: Shenzhen
Godsend Stationery Co., Ltd is a professional manufactory which produces
several of stationery such as set-packing
stationery, office stationery, and stationery tape and so on. We have more
than ten years experiences in design
and manufacture so have mature technology. More than 90% of our products
are exported to international market
and all of them are welcome by our
clients. We're taking ISO9001 Quality
System seriously and will always give
you high quality products on best price.
With your support we'll have a better
tomorrow!
Add: Rm.1302, KINT Building,
No.238, West Zhongshan Avenue,
Tianhe District, Guangzhou
Tel: 020-85571080 /
18927594387
Fax: 020 - 85571050
Company Name: Foshan Ruixin
Non Woven Co., Ltd
Company Profile: Rayson Non
Woven is a excellent brand under Rayson Global Inc, Established in 2007 , it
is a Sino-US joint venture company, has
more than 400 workers, located in the
centre of Guangdong-Nanhai District
Foshan city with space over 80,000 sq.
mt, and only 30 mins driving Distance
to Guangzhou Baiyun International
Airport and Canton Fair Exhibition
Hall.
Rayson mainly produces spunbonded non woven fabric ,non woven
products( like non woven bag ,gift
bag ,storage bag ) , mattress inner
springs, and mattress. Rayson has its
own import-export authority, Closed
SUPPLY INFO
by Foshan port, Guangzhou port and
Shenzhen port, 90% of the products are
exported to oversea markets with the
export volume more than 100 millon
RMB per year. Relied on good prestige
and service, we have been well-known
as a trustful supplier and partner in
Asia, Australia, Europe, Africa, also
have built up a link with famous sales
network. Rayson is a preferred supplier
for purchasing the non woven fabric,
mattress inner springs, non woven bag
and mattress, its product quality is convinced by the oversea customers day by
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Add: Rayson Industrial Zone.
Hongxing Villiage,Guanyao,Nanhai
District
Tel: 0757-81196638
Fax: 0757-81192378
Company Name: Shandong Orcal Housefitting CO., Ltd
Company Profile: Shandong
Oreal Housefitting Co., Ltd is established in 2007, and it is located in the
beautiful city of Jinan springs. It’s a
professional company which is specialized in kitchen glassware; we have a
group of highly educated, high-quality
professionals. We can design a variety
of household glass products and followup process by ourselves. Our company
main products are glass candleholder,
lantern, container, storage jar, spice
bottle, oil and vinegar bottle, all kinds
of condiment bottle, glass mug, glass
bottle, glass plate As well as other glassware, etc. more than 30 series and more
than 1,000 varieties of products, can
supply decorated, hand-painted, sets of
skin, carving and other deep-process.
The company has strong technical
strength of professionals and only 3-7
days of new product development. The
company has numbers of decorated,
painting, outline in gold, hand painted,
thermal transfer and many other production lines. Shandong Oreal Housefitting adhering to the “innovation,
quality, service” business purposes, and
won the trust and support of customers,
products exported to Europe, America,
Southeast Asia, the Middle East, more
than 20 countries and regions. Oreal
Housefitting always for the majority of
merchants set up to provide the latest
ideas, the most high-quality products,
the most perfect service.
Add: No.149, Jiqi Road, Huaiyin
District, Jinan
Tel: 0531-82665279
Fax: 0531-85991571
Company Name: Haining Xing
Ying Furniture
Company Profile: Ha in ing
Xing Ying furniture limited company
is located in Haining Jianshan new
area, is Sen Bridge Group Holdings of
the Sino-foreign joint ventures, covers
an area of 1500 acres, more than 3000
employees, with an annual output of
100000 sets of the living room and
80000 sets of solid wood bedroom
furniture production enterprises, is
China’s largest solid wood furniture
export enterprises. The company paid
great attention to product quality, not
only by the person featured in Europe
and the United States production oak,
beech, birch, birch and other high profile wood as raw materials, and the investment from Germany, Italy, Taiwan
and other countries and regions of the
introduction of advanced equipment
more than 300 Taiwan, built 6 modern
production lines, cutting boards, logs
from the blanking, molding, painting
and machining process are the realization of automation, product quality
and the production efficiency can be
greatly improved. Companies pay attention to the core competitiveness of
enterprises. Namely uses the old with
the new, the division with only traditional practices, and implement the
management by objectives, ISO9001
quality management system, budget
management and advanced management methods, improve the management level. And with an efficient and
pragmatic, innovation, has the sense
of responsibility of the management
team, the team determined to make
progress, innovation, with advanced
hardware and excellent management
team to support, it is with the market
oriented, strain every nerve to meet
customer demand.
Add: NO. 8 Jinniu Road Jianshan
Haining
Tel: 0573-87800335
Fax: 0573-87801660
Company Name: Shenzhen Tenas Electronic Co., Ltd
Company Profile: Founded in
Dec 1998, is a hi-tech enterprise engaged in the research, production and
marketing of high frequency electronic
tuners, radio-frequency modulators, and
DVB-S/T/C which are widely used in
such fields as cable TV, digital TV, satellite TV, bus AV and multimedia.
Located in Baotian, Bao’an District, Shenzhen, the company has a
standard plant with 5800 square meters, over 500 workers and more than
30 researchers. Introducing the production techniques from Philips and the
automatic insertion production lines,
high-precision inspection instruments
and intelligent production lines from
Japan, Tenas has annual production capacity of up to 10 million products.
Based on the tenet of “Focusing on
digital products to better meet the market
demands” and the quality philosophy of
“Customer first, quality uppermost”, we
are striving to be a celebrated brand name
in this industry. With innovation as the
motivation, key technology as the base,
platform as the main business, Tenas is now
constructing its advantage by introducing
modern management philosophy to balance
the hardware and software environments.
The sound performance, excellent
quality, competitive price and perfect
after-sale service of our products have
brought us enormous prestige from
our customers. Along with expanding
domestic markets, Tenas is also active
in developing oversea markets. Today
Tenas is proud to expand its business
throughout more than 30 countries
and regions in Europe, South America,
North America, and Southeast Asia.
In the digital-oriented future, Tenas
will create more value for customers and
diversify in digital products. To build
Tenas a famous multinational enterprise
in the world is what all Tenas people
have been striving for at all times.
Add: Mid-Wing LER Building,
South Area, Hi-Tech Industrial Park,
Shenzhen, China
Tel: 0755-26016881
Fax: 0755-26016881
( Source: Canton Fair Online)
77
InfoRMATION
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& Exp
Energy and Resources, Mining
Industry, Metallurgy, Welding,
Electric Power
2012 The 15th Asian International
Electronic Engineering and Energy
Technology Exhibition
Date: June 6-June 8, 2012
Venue: Hong Kong Convention and
Exhibition Center
Exhibits: Cable, cable tray and circuit
breakers, etc.
Email: [email protected]
2012 The 9th China (Xinjiang) International Coal Industry Expo
Date: June 6-June 8, 2012
City: Urumqi
Frequency: Yearly
Exhibits: Coal, coal chemical, coalbed methane development project display, etc.
Tel: 86-991-2330537
Fax: 86-991-2330537
Email: [email protected]
2012 China International Aluminum
Industry Exhibition
Date: June 6-June 8, 2012
Venue: Shanghai New International
Expo Center
Frequency: Yearly
E x h ibits: R a w m at e r i a l s , s e m ifinished, aluminum production and
processing and surface treatment machinery, etc.
Web: www.aluminiumchina.com
Tel: 86-10-59339000
Fax: 86-10-59339333
Email: [email protected]
78
2012 The 9th Guangzhou Electrical
Power Transmission and Distribution
Technology and Equipment Exhibition
Date: June 9-June 11, 2012
Venue: Poly World Trade
Center
Exhibits: Communication
and information technology,
networking technology, etc.
Web: www.expo-cn.com
2012 The 8th China
(Ningxia) International Coal and Energy Industry Expo
Date: June 12-June 14, 2012
Venue: Yinchuan International Convention and Exhibition Center
Exhibits: Energy, corporate image
display, financing, focus, energy, coal,
etc.
Tel: 86-951-6084155
Fax: 86-951-5058159
Email: [email protected]
Contact: Liu Jia
2012 The 3rd Shenzhen International
Wire, Insulation Material Exhibition
Date: June 23-June 25, 2012
Venue: Shenzhen Convention and
Exhibition Center
Exhibits: Copper clad steel wire, bare
copper wire, glass envelope, etc.
Web: www.cn.made-in-china.com
Tel: 86-20-37599008
Fax: 86-20-37599151
Email: [email protected]
Furniture, Household Decorations, Woodwork Floor Decorations
2012nThe 3rd China (Chengdu) Floor
Heating Technology and Equipment
Exhibition
Date: June 2012
Venue: Chengdu New International
Convention and Exhibition Center
Exhibits: Decorative doors, solid
wood doors, steel doors, paint doors,
security doors, etc.
Tel: 86-28-86080319
Fax: 86-28-86080309
Email: [email protected]
2012 The 8th China (Chengdu) Building Decoration Material Exhibition
Date: June 7-June 9, 2012
Venue: Chengdu New International
Convention and Exhibition Center
Frequency: Yearly
Exhibits: Paving materials, cabinets
and bathroom products exhibition, etc.
Tel: 86-28-86080319
Email: [email protected]
Machinery, Machine Tools
CIMES 2012
Date: June 12-June 16, 2012
Venue: China International Exhibition
Center
Frequency: Yearly
Exhibits: Machine, tools and machine,
metal forming machine, sheer metal
processing technology, etc.
Web: www.cimes.net.cn
Add: Room 15, Floor 5, Xinyuan Ping
An International Finance Center,
No.1-3, South Road, Chaoyang District, Beijing, 100027
Tel: 86-10-59339072
Fax: 86-10-59339099
Email: [email protected]
Auto Tools and Fittings
2012 The 14th China (Chongqing) International Automobile Exhibition
Date: June 7-June 11, 2012
Venue: Chongqing International Convention and Exhibition Center
Frequency: Yearly
Web: www.autochongqing.com
Tel: 86-23-68634132
Fax: 86-23-68631388
2012 International China (Xi’an) Automobile Exhibition
Date: June 15-June 17, 2012
FAIR & EXPOS
Venue: Xi’an International Exhibition
Center
Exhibits: Automobile, parts, car derivatives, etc.
Tel: 86-29-88862066
Fax: 86-29-88862066
Email: [email protected]
2012 China Shanghai International
Automobile Parts, Manufacturing
Equipment, Maintenance Equipment
and After-sale Service After-market
Products Exhibitions
Date: June 12-June 15, 2012
Venue: Shanghai New International
Expo Center
Frequency: Yearly
Exhibits: Auto parts, components,
accessories and fittings, auto-related
manufacturing equipment, materials
and tools, car-related measurement,
testing, diagnostic equipment, etc.
Web: www.autopartschina.org
Tel: 86-21-61457953
Fax: 86-2161457952
Email: [email protected]
The 16th South China International
Industrial Automation Exhibition
Date: June 20-June 22, 2012
Venue: Shenzhen Convention and Exhibition Center
Exhibits: Industrial automation, information technology and software, etc.
Email: [email protected]
Glass, Ceramics, Plastic, Rubber
2012 Shenzhen International Ceramics
Industry Forum/Expo
Date: June 2012
Venue: Shenzhen Convention and Exhibition Center
Exhibits: Fine ceramics, alumina ceramics, etc.
Web: www.zj123.com
Tel: 86-20-62371251
Fax: 86-20-62371259
Email: [email protected]
Public Security and Fire Control
2012 The 8th Xinjiang International
Public Security Products & Technological Equipment Expo
Date: June 6-June 8, 2012
Venue: Xinjiang International Exhibition Center
Frequency: Yearly
Exhibits: Human safety equipment,
explosion-proof safet y inspection
equipment, counter-terrorism equipment, etc.
Web: www.china360.cn/exploir_detail51775.htm
Tel: 86-20-23362358
Fax: 86-20-23362358
Email: [email protected]
Electronic Intelligence
The 18th China International Power
and Electronic Transformer Exhibition
Date: June 2012
Venue: Shenzhen Convention and Exhibition Center
Exhibits: Electronic power supply
components, printed circuit boards,
power management IC, etc.
Tel: 86-20-62371251
Fax: 86-20-62371259
Email: [email protected]
2012Shanghai New High-End Electronic Procurement Exhibition
Date: June 26-June 28, 2012
Venue: Shanghai New International
Expo Center
Frequency: Yearly
Exhibits: Entertainment, video, mobile phone, etc.
Email: [email protected]
Information Technology, Network, Communication, Broadcast
2012 International FPD Exhibition
Date: June 11-June 13, 2012
Venue: Taipei World Trade Center
Frequency: Yearly
Exhibits: FPD Panel/ Module, process
equipment, software and service, etc.
Tel: 86-755-36951155
2012 Shenzhen International Innovation and Application of Integrated Circuit Exhibition
Date: June 21-June 23, 2012
Venue: Shenzhen Convention and Exhibition Center
Exhibits: IP providers, IC design,
EDA tools, etc,
Email: [email protected]
2012 The 8th China (Shenzhen) International Touch Screen Exhibition
Date: June 28-June 30, 2012
Venue: Shenzhen Convention and Exhibition Center
Exhibits: ITO conduction glass, conductive film, touch panel, etc.
Web: www.5icmp.com
Tel: 86-20-85556058
Fax: 86-20-85551758
Email: [email protected]
2012 The 4th Shanghai International
Signage Show
Date: June 27-June 29, 2012
Venue: Shanghai World Expo Pavilion
Exhibits: Digital signage, network
advertising, multimedia information
system, etc.
Web: www.chinadigitalsignage.org
Tel: 86-21-34080278
Fax: 86-21-54306576
Email: [email protected]
Wedding Dress, Photography
2012 Taiwan Photonic Festival
Date: June 19-June 21, 2012
Venue: Taipei World Trade Center
Nangang Exhibition
Frequency: Yearly
Exhibits: Compound semiconductor,
photovoltaic element components, optics, etc.
79
InfoRMATION
Tel: 86-755-82821135
Fax: 86-755-83288453
Email: [email protected]
Textile and Clothing
2012 Hong Kong Fashion Week Spring
Summer Fair
Date: July 4-July 7, 2012
Venue: Hong Kong Convention and
Exhibition Center
Frequency: Yearly
Exhibits: Men and women, infants
and children clothes, sports and leisure
wear, handbags, fashion magazines,
testing inspection and certification services, etc.
Tel: 852-22404056
Fax: 852-28240249
Email: [email protected]
2012 China (Qingdao) International
Sewing Equipment Exhibition
Date: June 26-June 28, 2012
Venue: Qingdao International Exhibition Center
Exhibits: Sewing machines, sewing
and finishing pre-treatment equipment
and system, etc.
Tel: 86-532-85011486
Fax: 86-532-85012624
Email: [email protected]
Fur, Leather, Shoes
2012 The 13th China International
Leather, Shoe Machine Expo
Date: June 26-June 28, 2012
Venue: Qingdao International Exhibition Center
Exhibits: Leather, synthetic leather,
shoe, shoe lining, etc.
Tel: 86-532-85011486
Fax: 86-532-85012624
Email: [email protected]
Toys, Gifts and Craftwork
HKTDC Summer Gifts, Houseware &
Toy Fair
Date: July 4-July 6, 2012
Venue: Hong Kong Convention and
Exhibition Center
Exhibits: Gifts and premiums, household items, home decorations, toys and
80
games, holiday and party decorations,
etc.
Tel: 852-22404056
Fax: 852-28240249
Email: [email protected]
2012 Chengdu Home, Leisure Product
and Gift Exhibition
Date: June 15-June 17, 2012
Venue: Chengdu New International
Convention and Exhibition Center
Exhibits: Household items, home textiles, home decoration, etc.
Tel: 86-755-33989238
Fax: 86-755-33989239
Email: [email protected]
Contact: Li Xiaolin
2012 The 3rd China International Gift
& Craft Home Product Expo
Date: June 15-June 17, 2012
Exhibits: Creative life, low-carbon
green gifts, artistic gift with China
characteristics, etc.
Venue: China Import and Export Fair
Center
Web: www.cghhe.com
Food and Additives, Beverage,
Drinks, Seasonings, Dairy Products
2012 The 6th Guangxi Food Trade Fair
Date: June 2012
Venue: Guangxi Exhibition Center
Exhibits: White wine, red wine, rice
wine, fruit wine, etc.
Tel: 86-771-5085339
2012 Weihai Food Fair
Date: June 18-June 20, 2012
Venue: Weihai International Exhibition Center
Web: www.weihaishipin.com
Tel: 86-631-5335149
Fax: 86-631-5182509
Email: [email protected]
The 14th Asian Food IngreModldnts
China Exhibition
Date: June 26-June 28, 2012
Venue: Shanghai New International
Expo Center
Frequency: Yearly
E x hibits: Food add it ives and ingreMoldnts, healthy natural ingreMoldnts, health food ingreMoldnts,
etc.
Tel: 86-21-64371178
Fax: 86-10-58036317
Email: [email protected]
Medical Care, Health Care
2012 China Shanghai Oral Care and
Equipment Exhibition
Date: June 7-June 9, 2012
Venue: Shanghai World Expo Pavilion
Frequency: Yearly
Exhibits: Toothpaste, tooth powder,
dental floss, etc.
Web: www.jtmedexpo.com
Add: Room 2203, No.6259 Humin
Building A, Shanghai, 201100
Tel: 86-21-54133201
Fax: 86-21-64126798
Email: [email protected]
2012 Home Medical Supplier Sourcing
Fair
Date: June 7-June 9, 2012
Venue: Shanghai World Expo Pavilion
Exhibits: Child blood pressure, blood
glucose monitoring device, etc.
Web: www.jtmedexpo.com
Tel: 86-21-54133201
Fax: 86-21-64126798
Email: [email protected]
2012 17th China International Dental
and Seminar Material Exhibition
Date: June 9-June 12, 2012
City: Beijing
Venue: National Convention Center
Exhibits: Dental shared device class
FAIR & EXPOS
Packaging, Paper, Printing and
Publication
2012 China World Pharmaceutical
Machinery, Packaging Equipment and
Materials Exhibition
Date: June 26-June 28, 2012
Venue: Shanghai New International
Expo Center
Frequency: Yearly
Exhibits: Pharmaceutical machinery
and auxiliary equipment, etc.
Tel: 86-21-64371178
Fax: 86-21-64370982
Education, Training, Culture
and Art
device class of oral medicine, oral surgery equipment category, etc.
Web: www.sinodent.com.cn
Add: Wudongdalou Chegongzhuang
Block B3, Xicheng District, Beijing,
100044
Tel: 86-10-88393922
Fax: 86-10-88393924
Email: [email protected]
Contact: Zhang Haixia
The 12th CPHI China
Date: June 26-June 28, 2012
Venue: Shanghai New International
Expo Center
Frequency: Yearly
Exhibits: Pharmaceutical raw materials, active intermediates, fine chemicals, excipients, animal and plant extracts, custom manufacturing, etc.
Web: www.cphi-china.cn
Tel: 86-10-58036298
Fax: 86-10-58036317
Email: [email protected]
2012 The 47th National Trade & Special Product Fair
Date: June 28-June 30, 2012
Venue: Nanjing International Expo
Center
Exhibits: Prevention and treatment of
major infection diseases, protein drugs,
generic drugs, etc.
Web: www.newdrugschina.com
Email: weibin.guo@reedsinopharm.
com
Venue: Xi’an International Exhibition
Center
Exhibits: Hi-tech, new industries, etc.
Tel: 86-29-88350391
Fax: 86-29-88350391
Email: [email protected]
The 5th China (Shenzhen) International Adhesive Trade and Protective Film
Exhibition
Date: June 25-June 28, 2012
Venue: Shenzhen Convention and Exhibition Center
Exhibits: Industrial tape, optical tape,
electronic tape, cloth tape, adhesive
labels, etc.
Web: www.dgjzd.cn
Tel: 86-20-85554957
Fax: 86-20-85554957
Email: [email protected]
2012 The 6th China (Shanxi) International Education Fair
Date: June 11-June 13, 2012
Venue: Xi’an Qujiang International
Exhibition Center
Host: Shanxi International Education
Exchange Association
China (Taiyuan) International Culture
Collection Expo 2012
Date: June 9-June 12, 2012
Venue: China Taiyuan Shanxin Coal
Museum
Frequency: Yearly
Exhibits: Antique furniture, rosewood
furniture, rosewood furniture, antique
screen, etc.
Web: www.bjth.net
Commercial Trade, Chain operation, Agency, Import and
Export
2012 The 20th China Kunming Import
and Export Fair
Date: June 6-June 10, 2012
Venue: Kunming International Convention and Exhibition Fair
Tel: 86-871-6998973
Others
2012 The 7th China (Xi’an) International Hi-tech Fair
Date: June 2012
2012 The 3rd Shenzhen International
Wire and Industrial Material Exhibition
Date: June 18-June 20, 2012
Venue: Shenzhen Convention and Exhibition Center
Exhibits: Micro-motors, small motors,
fractional horsepower motors, etc.
Tel: 86-20-62371255
Fax: 86-20-37599151
Email: [email protected]
2012 The 9th China International
Vending Systems Exhibition
Date: June 27-June 29, 2012
Venue: Shanghai World Expo Pavilion
Exhibits: Automatic Vending, ticketing, etc.
Web: www.selfservicechina.com
Email: [email protected]
81
InfoRMANTION
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a
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i
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C
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Inv
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i
Project Name: Nanpai Industrial Project Area in
Bailin Town
Project Organizer: Bailin Township Government
Project Location: Wangxingtou Village, Bailin Town
Person in charge: Huang Yinxing 86-593-7376066
86-13706022898
Contact Person: Zhan Huashou 86-593-7371455 8613959386006
Fax: 86-593-7371154
Project Overview: Bailin Town is a key industrial town
of east Fujian Province and features a coastal highway and
Wenfu Railroad extending in north-south direction. Nanpai Industrial Project Area is only 5 (a second-class road
is connected with the inter-linking exit, which enables a
direct and convenient transportation to the Project Area)
and 15 kilometers away respectively from highway interlinking exit at Bachimen and the city center. Bachimen
1000-dwt Terminal which is the inner part of Shacheng
Port and where the Project Area is located links with
all ports at home and abroad and thus enjoys convenient
transportation on land and in water. This Project Area
covers an area of 1500 mu and various supporting facilities
for water and power supply here are under construction.
Besides, pollution-free and high-tech enterprises will be
invited to build plants for production as is planned.
Construction Scale: land for project is planned to cover
an area of 1500 mu
Total Investment: RMB 1.5 billion
Cooperation Mode: Sole investment
Preliminary Work: A controlling detailed planning has
been completed and procedures for the approval of using
the land and waters are underway
Project Name: Dongqi Industrial Project Area
in Dianxia Town
Project Organizer: Dianxia Township Government
Project Location: Dongqi Village, Dianxia Town
Person in charge: Hong Rong 86-593-7293088
86-13509591199
82
Contact Person: Liu Xinquan 86-593-7291055
86-13950510566
Fax: 86-593-7292777
Project Overview: Dianxia Town is the central town
in Fuding’s coastal economic zone. 42 kilometers away
from downtown, the market town is planned to cover an
area of 12 square kilometers with Yangqin second-class
road and Bachimen-Yangqi road running though it. With
Shacheng Port in the east and joining to Yangqi Terminal, Berth 16 of a 50000-dwt terminal in Yangqi work
zone of Shacheng Port has been under construction. This
Industrial Project Area is planned to cover an area of
4000 mu. At present, overall planning of land has been
completed and road construction within the area is underway. The introduction of first-class and second-class
enterprises is welcomed.
Construction Scale: land for the project is planned to
cover an area of 4000 mu
Total Investment: RMB 4 billion
Cooperation Mode: Sole investment
Preliminary Work: The overall planning of the land has
been completed and procedures for the approval of using
an area of 1800 mu are underway
Project Name : Long’an Project Area
Projec t Organi zer: Management Commit tee of
Long’an Development Zone
Project Location: Long’an Development Area
Person in charge: Chen Shixiao 86-593-7283366 86l5259328866
Contact Person: Zhang Dehe 86-593-7285828 86l3905938088
Fax: 86-593-7297661
Project Overview: Located in the southeastern coast
of Fuding and with Shacheng Port in the east, Long’an
Project Area is 14 kilometers away from Taimu Mountain inter-linking exit of Shenhai railroad, 12 kilometers
away from Qinyu railway station of Wenfu railway. It is a
coastal industrial new town which is multifunctional with
storage area of terminal operations, industrial park and
business area gathering here. The Project Area possesses a
5000-dwt land-island terminal, a 3000-dwt terminal pier
at war and a 500-dwt mixed terminal, and additionally a
50000-dwt terminal is under construction. Currently, the
area has developed and utilized land of 200 hectares, and
has introduced 41 above-scale projects, including mainly
chemical engineering, synthetic leather and upstream and
downstream products. There are 170 hectares of industrial
land open for the enterprises of plastic, chemical engineering and PU leather fine processing to invest and build
plants here.
Investment Intensity: RMB 1.5 million-2 million per mu
Cooperation Mode: Sole investment
Preliminary Work: Part of the infrastructure construction such as road network and hydroelectric power has
been completed.
INVESTMENT
Project Name: White tea Industrial Science and
Technology Park in Diantou Town
Project Organizer: Diantou Township Government of
Fuding City
Project Location: Dashanxia, Mayang Village, Diantou
Town, Fuding City
Person in charge: Zhan Zhaoyu 86-593-7675175 8615859323366
Fax: 86-593-7675675
Project Overview: Diantou town is a main producer of
white tea in Fujian province. With more than 150 tea processing enterprises, the current tea plantation here covers an
area of more than 30 thousand mu and produces more than
21 thousand tons of tea leaves in a year. In order to give full
play to the advantage of being the origin of white tea and
promote the development of tea industry further, the town
sets the development of a characteristic tea industry with “scale
base, standard plantation, cluster process” as its goal and plans
to establish a high-tech first-class fine processing park of tea
in large scale and introduce a group of brand-mark tea processing enterprises of above-scale, raising the technical level
of tea processing and competitive capability of tea products.
Construction Scale and Content: Land for project is planned
to cover an area of 1000 mu. 20 above-scale white tea fine
processing enterprises are going to be introduced and a standard white tea science park will be established.
Total Investment: RMB 300 million
Economic Results Analysis: Once the project park is
put into operation, annual processing output is estimated to
RMB 1 billion, annual profits and tax paid may reach RMB
80 million, more than 2000 jobs will be created. The project
will bring about outstanding economic, social and ecological
benefits.
Cooperation Mode: Foreign investment
Preliminary Work: Land pre-requisition is underway and
procedures for approval of land use are carried out.
Project Name: Annual Production of 150 thousand tons of Synthetic Resin and Additives in
Long’an Project Area.
Project Organizer: Management Committee of Long’an
Development Zone
Project Location: South Industrial Road of Long’an Industrial Project Area
Person in charge: Chen Shixiao 86-593-7283366 86l5259328866
Contact Person: Zhang Dehe 86-593-7285828 86l3599189996
Fax: 86-593-7995733
Project Overview: Long’an Industrial Project Area plans
to cover an overall area of 22.3 thousand mu. The Project Park
undertakes the industrial transfer from the developed area
like south Zhejiang and Yangtze River Delta, establishing an
industrial zone with local features. Currently, the project area
has developed and utilized land of more than 3500 mu and
introduced more than 41 above-scale projects which include 31
synthetic leather projects. The synthetic leather processing base
has been initially established and 300 thousand tons of resins
are demanded annually. Waterborne resin is an economical
and environmental friendly new product which replaces DMF
with water as its solvent. The introduction of the project will be
a great innovation in synthetic leather industry.
Construction Scale: Land for project is planned to cover
an area of 100 mu
Total Investment: RMB 110 million
Economic Result Analysis: The project will bring about
considerable economic and social benefits.
Cooperation Mode: Sole investment
Preliminary Work: Project planning and land submission
have been completed.
Project Name: Baisheng New District Construction Project, Fuidng City.
Project Organizer: Construction Headquarter of Baisheng
New District, Fuding City
Project Location: Baisheng village, Shanqian street, Fuding City
Person in charge: Wen Yuezhong 86-593-7809399 8613905932166
Fax: 86-593-7809399
Project view: Baisheng New District is 3 kilometers away
from downtown with Shuangyue Project Area of Fuding
Industrial Park in the east, Chaoyin Island Development
Zone in the north, Ziguo Tourist Resort in the west and
Chaoyin Island Development Zone in the north. Enjoying
an advantage in geographical location, the project focuses on
developing and utilizing resources of mountain and sea. On
December, 2007, in order to promote the strategy of “expanding eastward, moving southward and forwarding to the sea”,
municipal party committee and municipal government have
decided to develop Baisheng New District to be an auxiliary
service area of finance, business and residence for Shuangyue
Industrial Park. The latter covers an area of ten thousand mu.
Construction Scale and Content: The land for Baisheng District is planned to cover an area of 3000 mu. The total construction area covers about 2 million square meters, among
which residential building covers 14 million square meters.
Total Investment: RMB 6 billion
Cooperation Mode: Sole investment for business projects
and Build Transfer (BT) model for public infrastructure construction
Preliminary Work: Constructions of trunk road, sea filling
and part of platform excavation have been completed and procedures for the approval of land use are carried out. The basic
condition for development and construction has been provided.
(Source: Investment Attraction Department of Fuding Municipal Government, Fujian Province, China)
83
ART & GALLERY
Lifestyle
Contemporary Art and Classical Art
Shining at the Same Art Fair
By Audrey Guo
A
s one of the most influential
art fairs in Asia, “Art Beijing
2012” was closed on May 2
in Beijing Agriculture Exhibition Center. This year, “Art Beijing
- Contemporary Art Fair” and “Art
Beijing - Classical Art Fair” were held
jointly.
According to the statistics from
Art Market Research Center (AMRC),
the four-day Art Beijing 2012 art fair
had an exhibition area of 20,000 square
meters (with a year-on-year growth of
46%), 160 exhibitors (35%), with the ratio of domestic and overseas exhibitors
being 5:1. This year, the number of visitors totaled 52,000 person times, up by
30%. More than 90% exhibitors made
deals, and the contract amount came to
300 million RMB in total, up by 57%
from a year ago, accounting for 85% of
the gross contract amount of art fairs in
China during the first half. Meanwhile,
these art fairs generated an economic
benefit of nearly 500 million RMB for
the related sectors. At Art Beijing 2012,
five top Asian auction companies organized auction previews, and held 12
art lectures. Two charity projects raised
funds of 700,000 RMB, which will be
used to fund autistic children and left84
behind children in poverty-stricken
areas, winning praises from the public.
Galleries had a great sales result.
For example, Leng Jun’s Bundled
Rhino presented by Triumph Art Space
was sold at 5.5 million RMB, and Stars
by Zhao Erjun presented by Shanghai
Grand Theater Gallery was sold at 1.8
million RMB. By the evening of May
Day, Beauty Tao International Art
Institution had had a turnover of approximately 4 million RMB. Eastation
Gallery, Hanmo Art Gallery, Gallery
Cinquini, Hagemann (Germany) Gallery, Xiang Xie Shan Fang, LanLi Gallery, and other exhibitors all had good
deals.
Art Beijing always takes promoting and introducing young Asian artists
as the duty, and this art fair has more
than 30 young artists from China and
South Korea who are active in contemporary art. Image Beijing theme exhibition exhibited works of contemporary
artists from China, USA, UK, Italy,
Japan, South Korea, Vietnam and other
countries. These works and the subtle
space design together with a unique
exhibition visiting way — watching
image art by lying down, bring a new
visual and space experience.
Art Beijing continuously focuses
on both the academic and commercial
influence. This year, Art Beijing joined
Phoenix Art Palace for “Beyond Painting - Invitation Exhibition of Chinese
Oil Painters”, which exhibited key art
works by 18 contemporary oil painting
artists including He Duoling, Wang
Keju, Yan Ping, Wang Yuping and so
on, who integrate oriental spirit with
western oil painting. Three ink painting
special exhibitions, “Standing Apart Chinese Contemporary Ink Painting
invitational Exhibition”, “Quintessence
of Nature - Xu Longsen Shanshui Art
Exhibition” and “The East -the East,
Chinese Contemporary Ink Painting
of Guan Yuliang”, exhibited works of
more than ten representative contemporary ink painting artists, demonstrating
the creation and achievements in ink
painting.
A principal from Beijing Municipal Bureau of Culture said, Beijing art
market is in the core of Chinese art
market, taking a market share of 70%
to 80%. It’s their target to make “Art
Beijing” to have a greater influence, attract more social attentions, and reach
higher contract amount, therefore form
unique and distinct features of its own.
ART & GALLERY
Buddha Jumps over the Wall-ZHANG Ding Solo Exhibition
Duration: Jun 2- Jul 1, 2012.
Opening: 4PM-7PM, Jun 2, 2012.
Venue: Top Contemporary Art Centre, Room 101, Bldg. 5, 18 Wuwei Rd.,
Shanghai
Artists: ZHANG Ding
On June 2nd 2012, ZH ANG
Ding’s Solo Exhibition Buddha Jumps
over the Wall will be on view in Top
Contemporary Art Centre (Building 5,
18 Wuwei Road, next to ShanghART
Taopu Warehouse). The exhibition lasts
until July 1st during which viewers
will once again be able to experience
a unique atmosphere a la ZHANG
Ding.
The abundant content of ingredients and the complex production processes in the cuisine Buddha Jumps over
the Wall become the starting point of
this time’s ZHANG Ding Solo Exhibition. From 2007 until today, the artist
has been continuously pursuing the
self-consistent evolution of his aesthetic
system. Both biological and societal
characters of eating as a daily behaviour
are constantly interspersed throughout
this exhibition. From getting food to a
feast on carnival, from a disorderly party to energy dissipation, Buddha Jumps
over the Wall involves a simple system
with an abundantly dramatic character.
The exhibition continues the tradition
of controlling force on the site since
Close to the Sea and The
Revival of the Snake
YANG Fudong Solo Exhibition: 12th May to 15th June
2012 in ShanghART Beijing and
ARTMIA Gallery. This show
will be Yang Fudong’s first Beijing solo show and the premiere
of the works in China.
The Revival of the Snake
(2005)
This work tells the end
of the story of a soldier going inti exile. On a sunny
winter’s day, the icy ground
is stared with snow and life
seems as peaceful as the
weather. A soldier, escaping from a battlefield, comes to this deserted place which is
plagued with the smell of death, He is wandering, attempting
to leave this uninhabited world. The only option left to him,
however, is walking, ceaselessly and endlessly. What is waiting
for him? A hibernating snake is startled awake from its nice
dreams and then sees a human, eyes blindfolded and hands
bound on the back, kneeling on the freezing ice-covered lake.
Who is sentenced to death by the sound of gunshots reverberating around the mountains?
ZHANG Ding solo exhibition Opening in 2011. At the same time, neither
the implementation of the performers
nor the participation of the viewers can
default the relations and effects on the
site. Buddha Jumps over the Wall will
be a genuine art feast which shouldn’t
be missed this June in Shanghai.
All That Is Solid Melts into Air-SHI Qing Solo
Exhibition
Duration: 1PM-6PM, May 26–Jun 30, 2012.
Venue: ShanghART H-Space, Bldg 18, 50 Moganshan Rd.,
Shanghai
Artists: SHI Qing
All That Is Solid Melts into Air, a solo exhibition of
SHI Qing, will be presented in ShanghART H-Space on
May 26th, 2012. The exhibition title is a sentence which is
frequently quoted from Karl Marx’s work. And it is a series
of artist’s practical clues about art productions and exhibitions in recent years, as well as intervention and criticism
for today’s art consumption system. In exhibition, artist
displays work materials from studio, experimental models,
semi-finished works, and reproduced exhibited works together. All these are mixed in the space and partly covered
by green plants. Through paths across the exhibition, every
viewer becomes a referee to identify and redefine the art
works. The work forms come from landscape images in
different historic time
or from public experience. Using a stage
like setting, it pushes
the background-like
display to the front
desk after the subject
of work was taken
away.
85
ON STAGE
Lifestyle
NCPA Drama Jane Eyre
Time: 2012/6/13-6/24
Venue: NCPA-Theatre
Price: VIP/580/500/420/300/180 RMB
Tickets are available at 64177845
NCPA Drama Jane Eyre
Production: National Centre for the Performing Arts
Co-produced by National Centre for the Performing Arts, National Theatre of China
Presenter: National Theatre of China
The silent piano, closed suitcase...under the spotlight, Jane Eyre, in a long grey skirt, bursts
into the still life-like stage. In the misty fog, standing outside the Thornfield manor gate, Jane
Eyre unintentionally starts the fate engine of the people in this old manor.
In June 2009, Jane Eyre pioneered by NCPA was staged for the first time, and this was also
the first interpretation of Charlotte Bronte’s classical novel of the same name on the stage of drama in China. Wang Xiaoying and Yu Rongjun served as the director and the writer respectively.
With undiluted poetic language and excellent stage effect, thousands of audiences were immersed
into the amazing 160-minute play, and quickly identified with the characters of the play.
Since the premiere, the play has been staged for 56 times and toured in major cities including Chongqing and Shanghai in 2011. It enjoyed a full house in every performance and was
highly praised by media and experts.
China National Opera House Tannhauser
Time: 2012/6/27-6/29
Venue: NCPA-Opera House
Price: 100/180/280/400/460/520/580/VIP
Tickets are available at 64177845
Richard Wagner’s opera T annhauser with three acts was created during 1842-1845. Its
full title is Tannhauser und der Sangerkrieg auf der Wartburg, for which Wagner wrote a script
according to the ancient legend. This opera was premiered at the Dresden Court Theatre on October 19, 1845. Tannhauser is free from the influence of Italian opera, without encoding form of
Italian opera. Its various parts adopt transitional approach as mentioned by Wagner. Story plots
are full of dramatic conflicts, while every character has distinct personality. Since this opera,
Wagner began to pay attention to comprehensive integration of dramatic ideas and music, and
started to focus on the effect of stage design. It can be said that Tannhauser is a typical masterpiece with Wagner’s style.
Animal Carnival: Family Concert at CCOM
Time: 2012/6/09-6/10
Venue: CCOM Music Hall
Price: 150/200/300/540(200*3)/720(300*3)
Tickets are available at 64177845
Dress your kids up, enjoy the classic music and have fun - This is one concert where the audience won’t have to sit still!
At Concert Hall of Central Conservatory of Music, Director/Conductor Wing Ho and
Radetzkymo Chamber Orchestra invite your family to join the journey through the timeless classic
music tailored for young listeners. Audiences young and old will recognize these classical favourites
such as Hungarian Dance No.5, Carnival of the Animals, Flight of the Bumble Bee, Dance of the
Four Swans.
Warm up with pre-concert face painting (free), pattern hunting of Chinese architectural details and dress-up competition, and see how a violin is made - Learning about music should always
be this much fun!
86
FEATURE
“Charming Women”
make contests more interesting
By Audrey Guo
I
n r e c e nt y e a r s ,
we saw more and
more Chinese
faces in international T stage shows,
and they shine among
the blondes l ike angels. “Angels” stand out
through various model
selection contests, and then
step on international stages.
As the only contest held duri ng Ch i na Fa sh ion Week
each year, China Super Model
Competition, provides a great
number of great new models to
the fashion world.
Not long ago, the 7th Top
Model of the World, which was
hosted by China Fashion Association and Guangxi Television Station, jointly sponsored by China
Bentley Culture Development
Co. Ltd, Guangxi TV City
Channel, China Fashion Association Professional Fashion Model Committee, and named
by Shanghai Gold Partner Biological
Technology Co., Ltd. (“Gold Partner”)
was held during the famous domestic
fashion event, “China International Fashion Week”.
This contest broke the traditional
mode, and made innovation in the evaluation procedure and the content. And
for the first time the contest adopted a
promotion method, instead of traditional
selection approach. Usually, juries grade
players according to their performance
and then elect winners. For this contest, 30 players were promoted through
knockout match, and they competed for
top three super models and individual awards by several
shows including opening suit, swimsuit, fashion dress, evening dress, etc.
Besides, the contest introduced the popular micro
movies to present the different beauty of models through
outdoor scenes. Action T, a micro movie of “Spy War of
Beauty”, displayed a story of “women gang”, which featured the contest and integrated stage lighting and fashion
shows. At the same time, the movie brought back bold
innovation to the transition and rhythm of different parts
of the contest. The mysterious code case, the target of spy
pretties, was taken to the stage and opened, answering audiences’ puzzle.
The juries of the contest were selected from fashion,
movie and television, media and other sectors, and they can
assess the performance of players in different aspects, which
had a higher requirement on the comprehensive abilities of
the players. Finally, No. 28 player, Zhang Jing from Inner
Mongolia competition area won the champion. Song Kexin,
No. 8 player from Beijing, ranked the second, and No. 16
player Li Jiayi the third. In addition, the competition had
two other awards: namely “Wonderful ok Star” by No. 28
player Zhang Jing, and “Gold Partner Charity Ambassador”
by No. 15 player Wang Yibo from Tianjin.
The five winners of the competition will participate
in the year’s Asian super model final contest on behalf of
China, and compete for Asian Top Models with 36 professional models from other ten Asian countries and regions.
87
THIS IS
HINA
Fascinating
China Sceneries
in Blockbuster Films
By Lesley Cui
I
t feels good to watch a well-made film with touching plot
and enchanting scenes, and only better to see in real the
impressive images it leaves in your head. This issue of This
Is China will take you to the beautiful places where beloved
films Avatar, Kong Fu Panda, Crouching Tiger Hidden Dragon,
and Hero were shot.
88
Zhangjiajie National Forest Park-Avatar
morning or after rain. It soon becomes apparent that the
claim to being one of the two most beautiful towns in the
whole of China is more than justified; the other town is
Chang Ting in Fujian Province.
Phoenix Ancient Town is a wonderful example of
what villages were like prior to the onset of modernization.
Here dozens of alleys paved with flagstones run between the
houses, each showing wear caused by the feet of generations
of local people who have used them when going about their
daily business. For the visitor, these alleys are the way to see
the typical high gabled wooden houses built on stilts along
the banks of the Tuo Jiang River at close quarters.
In many ways, life has not changed here for centuries
and this is typified by the tough, hard working yet simplehearted people. Phoenix Ancient Town offers visitors from
both home and abroad a view of a quite different China from
anything experienced in the modern cities and large conurbations that are more widely known.
The Zhangjiajie National Forest Park is located in
Zhangjiajie City in northern Hunan Province in the People’s
Republic of China, covering an area of 4,810 hectares. It was
recognized as the country’s first national forest park in 1982,
and listed as a UNESCO Global Geopark in 2004.
The most notable geographic features of the park are
the pillar-like formations that are seen throughout the park.
One of the park’s quartz-sandstone pillars, the 3,544-foot
Southern Sky Column, had been officially renamed “Avatar
Hallelujah Mountain” in honor of the eponymous film in
January 2010. According to park officials, photographs from
Zhangjiajie inspired the floating Hallelujah Mountains seen
in the film. The film’s director and production designers said
that they drew inspiration for the floating rocks from mountains from around the world, including those in the Hunan
province.
The sandstone pillars are the result of many years of
erosion. The weather is moist year round, and as a result, the
foliage is very dense. Much of the erosion which forms these
pillars is the result of expanding ice in the winter and the
plants which grow on them. These formations are a distinct
hallmark of Chinese landscape, and can be found in many
ancient Chinese paintings.
Phoenix Ancient Town-Kong Fu Panda
Phoenix is regarded in the Chinese culture as a mythical bird of good omen and longevity that is consumed by fire
to be re-born again from the flames. Phoenix Ancient Town
is so called as legend has it that two of these fabulous birds
flew over it and found the town so beautiful that they hovered there, reluctant to leave.
The town is situated on the western boundary of Hunan Province in an area of outstanding natural beauty where
mountains, water and blue skies prevail. Upon entering the
town the visitor will be impressed by its air of mystery, elegance and primitive simplicity. The bridges over the water
and unique houses built on stilts display a harmony that is
so often portrayed in traditional Chinese paintings. This is
particularly true when mist pervades the scene in the early
89
THIS IS
HINA
Hong Village-Crouching Tiger,
Hidden Dragon
Hong Village is a historic, picturesque village on the slopes of Mount
Huangshan in the southern part of
Anhui Province in China. The village
is a popular tourist destination and,
together with Xidi, has been declared a
World Heritage Site.
The village is built next to Jiyin
Stream and nearby are Nanhu and Qishu Suiku lakes. Four bridges cross the
stream in Hongcun forming a network
joining the 150 or so buildings in the
village. Most pictures, like this pan90
orama, show the area at the entrance to
the village where the stream and water
channels flowing through the village
collect in a small lake.
Much of the architecture dates
back to Ming and Qing Dynasties
(15th to 17th centuries) and is said to
be the best of its kind in China. Chenzhi Hall, one of the larger properties
within the village, is open to the public
and contains a small museum.
Tourism to Hong Village has
greatly increased, aided by the designation of the village as a World Heritage
Site and also because much of the film
Crouching Tiger, Hidden Dragon was
shot here.
Anji County-Crouching Tiger,
Hidden Dragon
Known as the “ hometown of
bamboo”, Anji County in Zhejiang
Province is blessed with mountains
covered with bamboo forests, rippling
streams, tea terraces and quaint villag-
es. A three-hour drive from Shanghai,
the county has gone against the trend
of modern development. 75 percent of
its land is forested.
Bamboo is such a big part of Anji
that a “bamboo culture” has evolved
and a museum displays how folk artists
use different parts of bamboo to create
sculptures, statues and even paintings.
Bamboos are practically everywhere.
Even the restaurants serve a variety of
dishes featuring bamboo.
And if the scenery looks familiar,
it’s probably because you’ve seen a film
that was shot in Anji. Many movies
have been filmed here including parts
of the Oscar-winning film Crouching
Tiger, Hidden Dragon. In this film, a
spectacular fight scene amongst a bamboo forest takes place between characters played by Chow Yun-Fat and
Zhang Ziyi.
Going deeper into the county, tourists may be interested in the She ethnic
minority group and their unique tradi-
tions. If you’re lucky, you may be invited
to participate in a She wedding ceremony.
According to tradition, the groom has to
pass four challenges - solve a riddle, drink
bowls of Chinese liquor, catch a chicken
and win a folk song singing competition
- before marrying his bride. She people
love to get tourists involved in the fun, but
don’t worry, it’s not an attempt to trick you
into marriage.
Ejinaqi Banner-Hero
With his 2002 film Hero, director Zhang Yimou made the then unknown Ejina Banner an instant star.
Audiences throughout the world were
mesmerized by the county’s golden
leaves flying all over the sky.
In the northwest corner of Inner
Mongolia, Ejina Banner is one of the
only three extensive poplar forests in
the world and home of 30,000 hectares of poplar trees. Included in Ejina’s
diverse terrain are vast expanses of the
Gobi Desert along with gorgeous poplar forests. Considered a camel hub of
Inner Mongolia, Ejina is also home to
a lengthy history and fascinating nomadic customs.
Tall poplars and thick rose willows flourish in Ejina’s vast wilderness.
Flocks of sheep roam down slopes of
sand dunes and through the woods as
the setting sun produces a glowing silhouette of passing camels. It’s no wonder such scenery attracts picture-takers
from near and far.
From October to November is
the best time to enjoy poplars because
the sudden temperature drop paints
the forests golden. In only a few days,
the woods completely transform from
lush green to radiant shades of yellow.
With the backdrop of blue skies and
vast expanses of desert, the vistas can
be stunning. As the temperature continues to drop, falling leaves become
another big attraction for photographers and tourists. Ejina hosts an annual poplar festival in early October,
during which the photography contest
is a central event.
91
China as an
Important Partner
of Macedonia
By Slavica Krsteva
I
have been in China for
18 years. Every moment
China is changing.
When I decided
to move from my country
Macedonia to China for my
university education in 1995,
the unanimous reaction from
family and friends was an incredulous look accompanied
with expressions like: “Why
on Earth China? What got
into you”? At that time everyone was looking toward
the West especially the US
and Western Europe as places where careers were made
and dreams could come true.
Asia and especially China
were an afterthought. China
was this mythical place on
the map, which no one knew
anything about, apart from
possibly images of bicycles,
kung fu and the Great Wall.
92
Such a contrast to today, where the same people are congratulating me on my foresight in
coming to China “early” to learn the language
and understand the culture.
Arriving in Beijing was both exhilarating and frightening. Wide streets with buildings and signs in Chinese seemed daunting.
At that time no one spoke a word of English
on the streets of Beijing, often leading to
comical situations. I had to use hands, weird
facial expressions and repeated the words in
English as a way of communicating but it was
a fun way of discovering Beijing.
Beijing was changing so rapidly. It actually still is. In July every year we would leave
for summer holidays to Macedonia, and when
we came back in late August we would be
amazed at the change in the city in such a
short time.
Those summer holidays were also a way
for us to stack up on goodies not found in
Beijing, so our suitcases were bursting with
different spices, cheeses, cold cuts, chocolates
and other delicacies. Today the shops and
mega stores seem to hold all the world’s treasures and at times I find myself in a reverse
situation, buying international brands I cannot find at home and taking them back to my
country.
Furthermore, 10 years ago it was not
possible to find decent pizza or a western restaurant in Beijing, but today every cuisine is
represented in this city and it is becoming a
gourmet’s paradise.
The rapid development is maybe most
evident in the expansion of the infrastructure.
In the mid 90s the 3rd ring road marked the
borders of the city; today we have the 6th ring
road. There were only 2 subway lines, so going
from Hadian to Sanlitun meant taking a bus
and subway, and now there are over 10 subway
lines, making it possible to use the subway to
get to any part of the sprawling city.
Still, though these developments were
notable, they could not be compared to the
giant leap which Beijing and the whole country of China made with the organization of
the 2008 Olympic Games, intended as a
showcase to the world of China’s and Beijing’s
newfound confidence and progress, as well as
its rich heritage and culture.
The spirit of the Olympics still prevails
today in this City which is fast becoming one
of the leading economic, political and cultural
centers in the world, but also still retaining its
unique charm and appeal amid the rapid tempo of change which is still a work in progress.
Apart from within China itself, these
days Chinese development can be felt
throughout the globe. Many Chinese businesses and organizations are looking to expand in different regions all over the world.
It would seem that Europe is one the most
attractive places for Chinese businesses. Furthermore, the Chinese people are looking for
undiscovered travel destinations for them.
Today with all the experience that I
have gained by living in China and with the
knowledge of the Chinese language and its
history, I am working for the Government of
Macedonia aiming to increase the investments
and business between China and Macedonia,
as well as to increase the number of Chinese
citizens that visit Macedonia.
The Chinese companies can get a foothold on the European market by investing
and establishing themselves in Macedonia.
Many of them have realized the potential
of Macedonia already, particularly the facts
that Macedonia is a safe and friendly place to
invest and our government is committed to
give all its support to make Macedonia a great
destination for Chinese investment.
These 18 years I have spent in China
have been the most exciting years of my life
but I feel that the coming 10 years are going
to see a bigger change in China. I look forward to continuing my journey with China
and its people together into the future. And
it is indeed a pleasure for me to be able to use
my knowledge and experience of China to
help further improve and develop the SinoMacedonian relationship.
(Author: Head of International Office
- China Agency for Foreign Investments
and Export Promotion of the Republic of
Macedonia)
Trust or Not?
I
n recent press there have been various reports alluding to the conduct
of foreigners in China. These have
ranged from the disgraceful and unseemly, notably the behaviour of a British
man who drunkly molested a Chinese girl,
to the frivolous, best illustrated in the antics
of a rude Russian cellist refusing to move
his feet on a train – something that bewilderingly received nationwide coverage in a
country the size of a continent.
The increased reportage and interest in such stories, which are also finding
their way into social media platforms such
as Weibo, suggests that the Chinese may
now be saying out loud what they have
been thinking privately for some time, that
those who are guests in the country should
behave as such and not abuse the privilege.
Some say that an uncharacteristic impatience is emerging exemplified by the startling remarks of Yang Rui, one of CCTV
News 9’s foremost hosts who outlashed
against ‘snakehead’ foreigners and aimed
direct expletives towards a respected female
journalist. This was particularly surprising as his presenter role is with a foreign
language CCTV station and is essentially
meant to help facilitate understanding of
both Chinese and foreign culture.
Undoubtedly a small minority of foreigners do take advantages and liberties
that they would not attempt at home. At
the same time, we shouldn’t overlook the
behaviour of some Chinese who look to exploit foreigner’s naiveties and wallets. Most
foreigners would say that a local business
partner is not only essential but desirable.
But I have heard others say that they are reluctant to trust Chinese partners. We need
to explore why. Is this genuine mistrust or
an anxiety about language or cultural exclusion. Many Chinese business people believe
that with an international business partner
or overseas presence, their business gains
credibility, yet others dismiss the idea as
foreigners can never “understand” the local
marketplace.
So, what does all of this mean for business? Should business partners of different
nationalities, or more importantly cultures,
be trusted? Can they be trusted? Unfortu-
nately the nature of the media is that stories
peddling bad experiences sell better than
good ones – so you rarely hear of the many
and far more common successes and benefits that such joint ventures and cooperation
enjoy.
Recently a Chinese prospective business partner approached me, he cited that
in his view I ‘understand’ China as the reason for doing so. In a literal sense, this is of
course untrue, it would be wildy foolish of
either of us to believe I understand China,
having only lived here for two years. What
he meant however, was that I was making
the effort and trying to ‘understand’ China.
From a man who has established a successful career in developing links with China
and foreign countries it was my endeavours
and enthusiasm to learn about China and
local business practice that attracted his
interest. It was intent rather than achievement that provided the foundation of his
trust and what could grow into a long term
business relationship.
This experience is probably atypical.
Trust is usually established over a period
of time rather than immediately and this is
evident in international and local Chinese
business behaviour. It is quite natural to favour people of your own culture and everyone has heard horror stories of trade scams,
missed payments, financial default and late
deliveries. Too often these are wrongly attributed to the cultural aspects of partnership when in fact the fault lies with the
naive and the dishonest. Individuals, not
culture, not language. Yet an initial basis
and opportunity must be allowed for people
to demonstrate dependability. Whether
the relationship goes on to develop from
personal likeability, robust financial performance or professional capability is almost
incidental, it is probable that as long as
there is fair treatment between the parties,
and an enduring effort to understand and
work together there will be trust.
When frivolous stories such as the one
concerning the Russian cellist are given
sensationalist news coverage in an attempt
to exploit or distort more serious issues, we
forget that economies and cultural exchange
grow and rely on cooperation with people
By Lewis McCarthy
from different backgrounds
who may also behave differently. Singling out for disproportionate attention the
actions of a handful of feckless foreigners can do wider
damage to our perceptions
of and our trust in our (potential) foreign partners.
O f cou r s e , t h is e xample is something of a
caricature but you get the
drift….a local businessman
or a small enterprise may be
influenced by such nonsense
to think again about working w ith foreigners who
they come to regard as not
fit for partnership or purpose. So let us have more
positive news, a bit more
trust and a more enlightened insight into the unreported skills and talents of
feet planting foreigners.
93
Culture
三十六计
sān shí liù jì
Thirty-Six Stratagems (I)
The Thi r t y - Si x S t ra t age ms
(三十六计 sān shí liù jì) is a Chinese
essay used to illustrate a series of stratagems used in politics, war, as well as in
civil interaction, often through unorthodox or deceptive means. No one really
knows who the author was; instead, the
prevailing view is that the Thirty-Six
Stratagems may have originated in both
written and oral history, with many different versions compiled by different
Chapter Ⅰ 胜 战 计 shèng zhàn jì mán tiān guò hǎi
Deceive the heavens to cross the
ocean
Comment: 备周而意怠，常见则
瞒天过海
不疑，阴在阳之内，不在阳之对。太阳，
太阴。
bèi zhōu ér yì dài, cháng jiàn zé bù
yí, yīn zài yáng zhī nèi, bú zài yáng zhī
duì. tài yáng, tài yīn.
Prepare too much and you lose
sight of the big picture; what you see
often you do not doubt. Yin (the art of
deception) is in Yang (acting in open).
Too much Yang (transparency) hides
Yin (true ruses).
wéi wèi jiù zhào
Besiege the state of Wèi to rescue
the state of Zhào
Comment: When the enemy is
too strong to be attacked directly, then
attack something he holds dear. Know
that he cannot be superior in all things.
围魏救赵
94
authors throughout Chinese history.
The Thirty-Six Stratagems has
six chapters containing six stratagems
each. The first three chapters generally
describe tactics for use in advantageous
situations, whereas the last three chapters contain stratagems that are more
suitable for disadvantageous situations.
They are in the form of four-character
idioms. Each proverb is accompanied
by a short comment, no longer than a
sentence or two, that explains how said
proverb is applicable to military tactics.
These 36 Chinese proverbs are related
to 36 battle scenarios in Chinese history and folklore, predominantly of the
Warring States Period and the Three
Kingdoms Period.
The Culture column of this issue
will share with you the first three chapters of the essay, (to encourage you to
win), and then the rest three chapters in
July issue, (in case you stand in disadvantageous situation in a battle).
Winning Stratagems
Somewhere there is a gap in the armour, a weakness that can be attacked
instead.
jiè dāo shā rén
Kill with a borrowed knife
Comment: Attack using the
strength of another (in a situation where
using one's own strength is not favourable). Trick an ally into attacking him,
bribe an official to turn traitor, or use
the enemy's own strength against him.
Stratagem
借刀杀 人
yǐ yì dài láo
Leisurely await for the laboured
Comment: It is an advantage to
choose the time and place for battle. In
this way you know when and where the
battle will take place, while your enemy
does not. Encourage your enemy to
expend his energy in futile quests while
you conserve your strength. When he
以逸待 劳
is exhausted and confused, you attack
with energy and purpose.
chèn huǒ dǎ jié
Loot a burning house
Comment: When a country is
beset by internal conflicts, when disease
and famine ravage the population, when
corruption and crime are rampant, then
it will be unable to deal with an outside
threat. This is the time to attack.
趁火打劫
shēng dōng jī xī
Make a sound in the east, then strike
in the west
Comment: In any battle the element of surprise can provide an overwhelming advantage. Even when face
to face with an enemy, surprise can still
be employed by attacking where he
least expects it. To do this you must create an expectation in the enemy's mind
through the use of a feint.
声东击西
Chapter Ⅱ 敌 战 计 dí zhàn jì Enemy Dealing Stratagems
wú zhōng shēng yǒu
Create something from nothing
Comment: A plain lie. Make
somebody believe there was something
when there is in fact nothing.
无 中生有
àn dù chén cāng
Openly repair the gallery roads,
but sneak through the passage of Chencang
Comment: Advancing secretly
by an unknown path. Deceive the enemy with an obvious approach that will
take a very long time, while surprising
him by taking a shortcut and sneak up
to him. As the enemy concentrates on
the decoy, he will miss you sneaking up
to him.
暗渡陈仓
gé àn guān huǒ
Watch the fires burning across the
suffers the consequences so that the rest
do not.
Comment: Delay entering the
field of battle until all the other players have become exhausted fighting
amongst themselves. Then go in at full
strength and pick up the pieces.
xiào lǐ cáng dāo
Hide a knife behind a smile
Comment: Charm and ingratiate
yourself to your enemy. When you have
gained his trust, move against him in
secret.
隔岸观 火
river
lǐ dài táo jiāng
Sacrifice the plum tree to preserve
the peach tree
Comment: Palming off substitute for the real thing. There are circumstances in which you must sacrifice
short-term objectives in order to gain
the long-term goal. This is the scapegoat stratagem whereby someone else
李代桃 僵
Chapter Ⅲ 攻 战 计 dǎ cǎo jīng shé
Stomp the grass to scare the snake
Comment: Do something unaimed, but spectacular ("hitting the
grass") to provoke a response of the
enemy ("startle the snake"), thereby
giving away his plans or position, or
just taunt him. Do something unusual,
strange, and unexpected as this will
arouse the enemy's suspicion and disrupt his thinking. More widely used as
"[Do not] startle the snake by hitting
the grass". An imprudent act will give
your position or intentions away to the
enemy.
打草惊蛇
jiè shī huán hún
Borrow a corpse to resurrect the soul
Comment: Take an institution,
a technology, a method, or even an
ideology that has been forgotten or
discarded and appropriate it for your
own purpose. Revive something from
the past by giving it a new purpose or
bring to life old ideas, customs, or traditions and reinterpret them to fit your
purposes.
借尸还魂
diào hǔ lí shān
Entice the tiger to leave its mountain
调虎离 山
lair
Comment: Never directly attack
an opponent whose advantage is derived from its position. Instead lure him
away from his position thus separating
him from his source of strength.
yù qín gù zòng
In order to capture, one must let
欲擒故纵
loose
Comment: Cornered prey will
often mount a final desperate attack.
To prevent this you let the enemy believe he still has a chance for freedom.
His will to fight is thus dampened by
his desire to escape. When in the end
the freedom is proven a falsehood the
enemy's morale will be defeated and he
will surrender without a fight.
笑里藏刀
shùn shǒu qiān yáng
Take the opportunity to pilfer a goat
Comment: While carrying out
your plans be flexible enough to take
advantage of any opportunity that
presents itself, however small, and
avail yourself of any profit, however
slight.
顺手牵羊
gōng zhàn jì Attacking Stratagems
brick") and obtain something valuable
from him in return ("get a jade gem").
qín zéi qín wáng
Defeat the enemy by capturing their
擒贼擒王
chief
Comment: If the enemy's army
is strong but is allied to the commander
only by money, superstition or threats,
then take aim at the leader. If the commander falls the rest of the army will
disperse or come over to your side. If,
however, they are allied to the leader
through loyalty then beware, the army
can continue to fight on after his death
out of vengeance.
pāo zhuān yǐn yù
Tossing out a brick to get a jade gem
Comment: Bait someone by
making him believe he gains something
or just make him react to it ("toss out a
抛砖引玉
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