First foreign tourist JVs get licenses for overseas travel
May-30-2011 By : agxadmin
The National Tourism Administration of China (NTA) gave licenses to organize overseas travel to TUI China Travel Co, CITS American Express Travel Services, and JTB New Century International Tours Co. The three joint ventures involve foreign tour operators from Europe, the United States and Japan respectively. The three are among 14 joint ventures that filed applications for licenses after the Administration and the Ministry of Commerce (MOFCOM) announced the opening of the outbound market to foreign tour operators last September. Previously, foreign tour operators were allowed to operate inbound and domestic travel, but were barred from outbound business, the most lucrative part of the Chinese tourism market, experiencing the fastest growth. Chinese tourists made more than 57 million trips to foreign countries as well as Hong Kong, Macao and Taiwan, and spent USD48 billion last year. The joint ventures are expected to provide more quality and service, while the current outbound market is price-driven. Zhang Wei, General Manager of the outbound department at the China International Travel Service head office, doubted whether foreign tour operators’ experience and purchasing advantage in destination countries would be useful in exploring the Chinese market. “In the short term, I don’t see they will pose a threat to us,” she told the China Daily.
North Korea’s Kim holds talks with Hu Jintao
By : agxadmin
North Korean leader Kim Jong-il has visited China last week, traveling to Mudanjinag (Heilongjiang), Changchun and Tumen (Jilin), Yangzhou (Jiangsu) and Beijing, to study China’s “economic development”. In Beijing he held talks with Chinese President Hu Jintao. Premier Wen Jiabao told South Korean President Lee Myung-bak Kim’s trip would “offer the opportunity to understand China’s development and utilize it for the DPRK’s development”. China has for years been urging North Korea to experiment with market reforms. U.S. envoy for human rights, Robert King, paid a week-long visit to North Korea to assess the severity of its food shortages. It is the first visit to Pyongyang by an American official in 17 months, and the first by a rights envoy since 2004. He is assessing whether the U.S. should resume its food aid program to the country, which was suspended two years ago.
Short news
By : agxadmin
Finance
- The yuan will be “almost” fully convertible in five to 10 years, according Dr Liao Qun, Chief Economist and Strategist at Citic Bank International, but authorities were still cautious about liberalizing capital markets. Apart from Hong Kong and Macao, Singapore could become the next offshore yuan center for settling trades and to provide yuan services primarily to Southeast Asia.
- The United States should reduce its dominant voting share in the International Monetary Fund (IMF) to give emerging economies more of a say in deciding who will take the helm of the IMF, Xia Bin, Member of the Monetary Policy Committee of the People’s Bank of China (PBOC), said. “It’s not an issue of who will be the candidate for the IMF managing director. The problem is that the voting share of the United States is too big,” he said. The U.S. has 17.67% of the voting quota at the IMF.
- Industrial and Commercial Bank of China (ICBC), China’s No 1 bank by assets, has obtained a license to open a branch in Mumbai, the first foray by a top Chinese bank into India. ICBC’s return on equity in China is about 22%, while only about 14% for its overseas operations, according to Barclays Capital. ICBC has also said it would open five more European branches, and has applied to open branches in Peru and Brazil.
- The China Banking Regulatory Commission (CBRC) has circulated draft guidelines on the development of the credit derivative market. Proposals include allowing credit default swap contracts to be written on companies, in addition to their debt, in line with international standards.
- Bank of China (BOC) Executive Vice President Zhou Zaiqun has resigned and is being reassigned to Hong Kong.
- China Development Bank Capital Co has agreed to purchase a stake in the U.S. buyout company TPG Capital. The buyout firm, which manages about USD48 billion, has invested USD8.1 billion in Asia since the start of 2008, more than rivals Carlyle and KKR & Co, according to the Asian Venture Capital Journal.
Foreign investment
- Senior overseas executives and hi-tech personnel in Guangzhou will be able to apply for multi-entry visas valid for 2 to 5 years after the new Implementation Guidelines for Promoting the Use of Foreign Investment come into effect later this year. In addition to simplified exit and entry procedures for foreign executives and hi-tech talent, domestic employees of the foreign-funded companies can apply for multi-entry travel documents to visit Hong Kong and Macao.
Foreign trade
- China’s exports of coal-fired power generating equipment are expected to exceed USD2 billion this year amid increasing demand from emerging markets such as India, according to UBS. “Looking solely at the domestic market, the power generating equipment makers are grappling with oversupply,” said Patrick Dai, a UBS Securities Analyst. “But a good sign is that the companies are going outbound to tap foreign markets.” Equipment sales this year will likely have a total capacity of 22 gigawatt (GW) against 16 GW in 2009.
Macro-economy
- Hong Kong’s inflation accelerated to a 32-month high of 4.6% in April from a year earlier, driven by higher food and housing rental costs. The government boosted its estimate for inflation this year to 5.4%, from a previous forecast of 4.5%, which would be the highest since 1997.
- Shanghai’s producer prices posted a faster rise in April due to higher labor costs and more expensive commodities. The Producer Price Index (PPI) rose 3.3% from a year earlier, up from 3.2% in March. The national average was 6.8% in April. Shanghai’s Consumer Price Index surged to a two-year high of 5.1% in April, bolstered by a 9.9% rise in food costs.
- The State Grid Corp of China will add 337,000 kilometers of power transmission lines with a voltage of more than 110 kilovolts between 2011 and 2015, as part of plans to build a smart grid. Links to new sources of energy would also be improved so as to double new energy efficiency by 2020. The power distributor is planning to invest USD44 billion in ultra-high voltage transmission technology by 2012, making China the world’s largest market for advanced transmission lines.
- China’s current account surplus dropped 18% to USD29.8 billion year on year in the first quarter, while its capital account surplus soared 82% to USD111.4 billion in the same period, the State Administration of Foreign Exchange (SAFE) said. China posted USD42.6 billion in new inflow of direct investment in the first quarter, a slight gain from USD39.1 billion in the final three months of 2010. The country’s foreign exchange reserves grew by USD138 billion to USD3 trillion by the end of March.
- A gradual withdrawal of fiscal stimulus by the central government would be the biggest factor affecting private businesses in the country this year, Coface Chief Economist Yves Zlotowski said. The conclusion is the result of a survey of 1,071 Chinese companies, 59.5% of which were private firms, 26.1% wholly owned foreign enterprises, 8.6% joint ventures, 4.8% state-owned enterprises, and 1% collectively owned. Zlotowski said the markets used to think SOEs were most vulnerable to a withdrawal of fiscal stimulus but the study showed firms in the private sector felt they were just as exposed.
- Factories and department stores in Shanghai will be required to close when there is a power shortage this summer, as households will get priority to keep the air conditioning running. The maximum power load is estimated at 28.5 gigawatt under extreme hot weather conditions in July and August, while the maximum supply is 27.4 GW, including 8.7 GW brought from other provinces.
- There are reports that businesses are moving their operations out of Wenzhou in Zhejiang province, posing the threat that the city will lose the advantage of being China’s prime manufacturing base. More and more money is poured into real estate and financial investments, where profits are higher. Last year, more than 2,000 enterprises in the city closed down, more than half involved in manufacturing.
Real estate
- Ronnie Chan, Chairman of Hang Lung Properties, has been named as the first Asian to lead the Asia Society, the influential New York-based institution promoting ties between Asia and the United States. He will share the leadership with Henrietta Holsman Fore, a former U.S. government official, as Co-chairpersons. The decision to appoint Co-chairpersons from Asia and the U.S. aimed to “reflect the rise of global interdependence and growing regional partnerships”, the organization said.
- The developer of one of Beijing’s most expensive residential communities said that one of the 106 flats costs CNY300,000 per square meter, although the average price of the apartments in the community was between CNY100,000 and CNY160,000 per sq m.
- There will be more than 13,000 houses subject to property tax this year in Chongqing, amounting to a combined CNY100 million in tax. Chongqing began to levy a property tax on private homes on January 28. In the first quarter of this year, the city saw housing sales of 8.99 million square meters, an increase of 17.4% over the same period last year.
- The number of residential projects to be released in Shanghai next month is set to fall 39% from this month, with most of the supply being developments in outlying areas. A total of 37 projects ― 29 apartment developments, seven villa projects and one mixed development ― are scheduled for sale in June across the city. About 84% of the new supply, or 31 developments, will be sited beyond the city’s Outer Ring Road, with a quarter in Qingpu district in west Shanghai. 112 residential projects may offer discounts to buyers next month, according to Soufun.
Retail
- Two top executives of Wal-Mart Stores China – CFO Roland Lawrence and COO Rob Cissell – have resigned, two days before an announcement on the final acquisition of Trust-mart. Industry insiders suspect the resignations are linked to unsatisfactory performance of the company. Wal-Mart’s revenue in China was 2% of the total last year. It is planning an expansion in China.
- The Chinese government is trying to make it easier to pull unsafe food products from the shelves with tough changes to the country’s recall regulations. A draft by the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) tries to plug loopholes in regulations from 2007. The amended regulations stipulate that food products should be recalled if they do not meet safety standards.
- Sportswear retailer Li Ning has announced that three senior executives resigned in the past two months, resulting in a further drop of the company’s shares. The company is plagued by an inefficient distribution system with 90 distributors and 2,700 retailers across the country. About 55% of these retailers operate only one store.
- After being fined CNY2 million by the NDRC for disclosing future price increases, Unilever is still planning to raise the prices of its products. Unilever’s brands in China include Dove and Lux personal hygiene products, Lipton tea and Omo washing detergent. The company had a market share of 12% for shampoo, 12.6% for hygiene soap and 15.2% for detergents. Other companies are covertly raising prices by reducing the content of packages.
- Private consumption accounts for only about 37% of China’s GDP – the smallest share of any major economy. By focusing on job creation, wage increases, and the social safety net, the 12th Five Year Plan could spark a major increase in discretionary consumer purchasing power. That could lead to as much as a five-percentage-point increase in China’s consumption share by 2015, according to Economist Stephen Roach.
- Home appliance retailer Gome posted a higher-than-expected profit gain of 66% in the first quarter to CNY552, as revenue rose 16% to CNY13.6 billion for the period. The retailer said that the growth was mainly driven by favorable government policies that fueled domestic consumption, allowing it to expand its sales network. Rival Suning recorded a net profit of CNY1.12 billion and revenue of CNY20.5 billion for the same period.
- Shiseido, Japan’s top cosmetics firm, is aiming to expand its Chinese cosmetics business faster than the market and is considering boosting the use of Chinese raw materials to cut production costs. Shiseido has 5,000 points of sale in China. Just over half of the raw materials used at its two Chinese factories come from China.
Science & technology
- Three of the top five Asian universities are in Hong Kong, while the other two are in Japan and Singapore, according to rankings published by career and education network QS. The Hong Kong University of Science and Technology overtook the University of Hong Kong to take the top spot, while the Chinese University of Hong Kong was fifth. Peking University was ranked 13th and Tsinghua University was placed 16th. The QS Asian University Rankings list Asia’s top 200 universities.
- A classrooms building at Tsinghua University has been named after an Australian clothing company, Jeanswest, sparking an outcry from students who say naming a public building after a private company makes the campus too commercial.
- In the latest ranking of China’s universities, Tsinghua University loses its top spot for the first time in 14 years. The two top universities are Zhejiang University in Hangzhou and Peking University, with Tsinghua in third place.
- Statistics from the latest census show the illiteracy rate fell from 6.72% in 2000 to 4.08% last year – meaning China still had 54.6 million illiterate people by the end of October. It needs to further reduce the illiterate population by 11.6 million in the next five years to meet its target under the United Nations’ Millennium Development Goals to halve the number of illiterates. A person should be able to write at least 950 Chinese characters to be considered literate.
- About seven million Chinese students are expected to graduate from the country’s universities this summer, a five-fold increase over the number 10 years ago. China has overtaken the United States as the biggest conferrer of PhDs in the world, with 50,000 new ones in 2009, compared to 10,000 just 10 years earlier. Last year, 285,000 Chinese went abroad to study, 24% more than in 2009. Most popular is the U.S., followed by Australia, Japan, Britain, South Korea, Canada and Singapore.
- A total of 485 candidates are in the running for 60 academician vacancies at the Chinese Academy of Engineering this year. The list triggered controversy as it includes many senior officials from government and state-owned enterprises. There are now 739 academicians in the academy, including a few foreigners.
- A newly published 100-volume collection of works on Buddhist medicine was unveiled at Shaolin Temple in Henan province. The Chinese Buddhist Medicine Collection, compiled in 101 volumes and comprising 70 million characters, includes more than 3,000 documents on the theories and practices of Buddhist medicine. The oldest among the works date to the Han dynasty (202BC to AD220).
Stock markets
- Xie Fenghua, former Executive Manager of the Investment Department of Citic Securities Co, has been put on Interpol’s “red notice” wanted list, while his second wife, An Xuemei, former Executive Director of Huatai Securities Co, has been arrested for inside trading. The Securities Times said Xie fled China to New Zealand in March last year.
- Shanghai’s soon-to-be launched international board will help trim China’s USD3 trillion foreign exchange reserves, according to Ernst & Young Partner Terence Ho. It is still unclear if the proceeds raised through the board will be allowed to be invested overseas or domestically. HSBC and Standard Chartered hope to be among the first companies to list on the board.
- Citic Securities will sell a 51% stake in China Asset Management (CAM) to meet regulatory requirements, in a deal that could bring China’s biggest brokerage a one-time gain of CNY6.5 billion. The China Securities Regulatory Commission (CSRC) stipulates that a firm can own up to 49% of a domestic fund management firm and more than half of a Sino-foreign joint-venture fund management firm. Z-Ben predicts the 51% stake will be sold to several investors, each taking a small part of CAM. CAM had a market share of 9.38% at the end of March, up from 9% at the end of last year.
- Shanghai’s stock index suffered the longest decline in 11 months last week. Guoyuan Securities Co Analyst Kang Hongtao said the likelihood of a rebound in June is low as companies’ earning reports for the second quarter wouldn’t be encouraging to investors. They are also worried about credit controls that make it harder for small companies to borrow money.
- MGM China Holdings will fetch a maximum HKD11.66 billion in its Hong Kong listing. It is the fourth largest initial public offering of a gambling concern on record, and the fourth biggest new listing on the Hong Kong stock exchange this year, according to data from Dealogic. Applications exceeded the shares on offer by 19 times. Gaming revenue in Macau grew 58% year-on-year last year, but is expected to slow to about 35% this year.
- Founder Securities, a mid-sized Chinese brokerage, plans to launch an initial public offering (IPO) on the Shanghai Stock Exchange that is expected to raise about CNY10 billion amid a market downturn. It plans to float 24.6% of its enlarged capital. It will be the first Chinese brokerage to go public this year. The Hunan-based company owns 66.7% of Credit Suisse Founder, a joint-venture investment bank with Credit Suisse. A total of 16 brokerages are traded on the Shanghai and Shenzhen exchanges.
- Bocom International Holdings, the overseas securities unit of China’s fifth-largest lender, plans to hire staff from foreign rivals to help it reach a target of doubling investment banking revenue this year. It plans to add 60 bankers to its 300-plus workforce, Chief Executive Tan Yueheng said. The Bank of Communications unit rented an extra 11,000 sq ft of office space in Hong Kong this year. “Chinese investment banks tend to pay less to bankers than foreign peers. We do want to narrow the gap to lure talent,” Tan said.
- Pansy Ho, daughter of billionaire casino tycoon Stanley Ho, may raise as much as HKD11.7 billion from an initial public offering (IPO) of Macao casino operator MGM China Holdings. Billionaires John Paulson and Kirk Kerkorian, the founder of MGM Resorts International, are among the cornerstone investors in the offering and have committed to buy USD125 million worth of stock. MGM China will use the funds to repay debt. As of December, the company had an 11.4% market share of the 33 casinos that operated in Macao.
Travel
- Foreigners who want to buy high-speed railway tickets are advised to go to railway stations as ticket offices elsewhere are only equipped to accept the newest Chinese ID cards. Starting on June 1, high-speed train tickets can only be bought on presentation of identification certificates. Copies are accepted only at railway stations.
- HNA Group has agreed to set up a CNY3 billion joint venture in Chongqing with Chongqing Yufu Asset Management Co to increase investments in West Air, which was set up in 2006 in Chongqing with HNA holding a 35% stake. The airline will open overseas routes next year to Hong Kong, Macao, Taiwan, South-east Asia, Japan and South Korea, and expand its fleet size to 40 aircraft by 2015. West Air Holding will also launch a business jet company next year.
- China is set for the first time to export light-rail trains for urban areas to Europe in October. A contract between the CSR Zhuzhou Electric Locomotive Co and the city government of Izmir, Turkey, puts the value of the order of trains and support facilities at about CNY350 million.
- Passengers flying on domestic routes started paying higher fuel surcharges last week. Fuel surcharges on routes longer than 800 kilometers rose to CNY140 from CNY90, and those on shorter routes climbed to CNY80 from CNY60. It is the second increase after the National Development and Reform Commission (NDRC) raised the ex-factory price for jet fuel by CNY500 a ton to CNY6,840 on April 7. The current fuel surcharge level is the second highest on record.
- Budget hotel chain Home Inns & Hotels Management is close to buying Morgan Stanley’s 59% stake in Shanghai Motel Management, operator of the brands Motel 168 and 268. The company could be valued at up to USD500 million. Morgan Stanley is selling control of the budget hotel chain five years after its real estate fund first invested in the company. Home Inns reported its net income fell 30% to CNY32.5 million for the first quarter of this year.
- 500 Chinese workers are building the A2 motorway connecting Berlin and Warsaw. Poland has become the first country in EU to open its doors to a Chinese company on a public works contract, thanks to the China Overseas Engineering Group’s controversial low bid beating out several European competitors. The company will lose money on the contract, according to Wojciech Milusi, President of the Polish Chamber of Road Builders, but probably hopes to have a good reference for bidding in other building tenders in the EU, he added. The Chinese group says it can build a kilometer of motorway for €6.6 million, underbidding the price of its most expensive rival by nearly 200%.
- InterContinental Hotels Group (IHG) has signed an agreement with state-owned developer Poly Real Estate Group to develop and manage more hotels in China. Poly Real Estate would invest more than USD565 million in six hotels in Guangdong and Jiangxi with a total of 1,773 rooms. The hotels, to be completed between 2014 and 2015, will be managed by three of IHG’s brands. The move is expected to strengthen IHG’s presence in emerging second- and third-tier cities and resort areas that have huge potential for development.
- Shanghai plans to raise taxi fares and introduce a fuel surcharge. In one proposal, the flagdown fare will rise to CNY13 from CNY12, while charges after the first 3 kilometers will remain at CNY2.4/km. In the other, the flagdown rate will remain unchanged, but the per/km fee after the first 3 kilometers will be CNY2.7. The city also plans to apply a separate fuel surcharge for the taxi industry, a measure already adopted in other cities, including Beijing.
- The first five-star hotel – Lhasa St Regis Hotel – has opened in Tibet. Construction of the Shangri-La Hotel and InterContinental Hotel would start this year. There will be five five-star hotels in the region by 2015.
VIP visits
- Myanmar’s President Thein Sein paid a three-day visit to China, his first bilateral trip abroad since assuming office in March. An economic and technological cooperation agreement was signed during the state visit. Two-way trade last year totaled USD4.4 billion, a 53% increase over the previous year. China is Myanmar’s second-largest trading partner and biggest foreign investor. Myanmar is to attract more foreign investment, expand foreign trade and strengthen private enterprises.
One-line news
- A painting with a couplet by Chinese artist Qi Baishi set a record for modern art and calligraphy in China when it sold for CNY425.5 million at auction on May 22. The price meant its value had risen more than 2,000% in six years. It was the second highest price fetched by an artwork in China, after the CNY436.8 million paid for a Song dynasty calligraphic work by Huang Tingjian in 2009. China ranked first in global art sales last year, ahead of the United States and Britain and up from third place in 2007.
- Wu Jianwen, former President of Shanghai Pharmaceutical Group, went on trial, accused of corruption, embezzlement and misappropriation of funds. He stands accused of taking bribes equaling CNY12 million and embezzling more than CNY38 million.
- The Saudi Arabia Pavilion at the Shanghai World Expo 2010 will reopen soon for at least a year. During the 184-day Expo, some people had to wait for up to nine hours to enter the pavilion that featured a 15-minute film on a 360-degree, 1,600-square-meter screen. The China Pavilion will be closed until the end of the year.
- Chongqing police chief Wang Lijun has been promoted to Deputy Mayor of the city. He has led a successful anti-triad crackdown. His promotion indicates that Party Secretary Bo Xilai has further consolidated his power base in the city.
- U.S. Commerce Secretary Gary Locke, tapped to be the next American ambassador to China, has vowed to win more access to Chinese markets, press for a flexible yuan and push for more action against counterfeiting of American products in his confirmation hearing before the Senate Foreign Relations Committee. The full Senate is expected to confirm his nomination.
China to become leader in 2G biofuels
May-26-2011 By : agxadmin
China can become a leader in the production of second-generation (2G) biofuels, made from agricultural waste instead of foodstuffs, such as sugar, starch and vegetable oils, Michael Christiansen, President of Novozymes (China) Investment Co said. “The United States is the biggest producer of first-generation (1G) biofuels. Regarding 2G production, no other country has shown leadership, so maybe China will move faster on this because it has been put on the political agenda,” he said. The Denmark-based Novozymes is the largest provider of industrial enzymes and market leader in enzyme technology for biofuels. Christiansen said Novozymes has a market share of about 50% in China in 1G biofuel production, but more opportunities will be created as the 12th Five Year Plan places a heavy focus on 2G production. By developing 2G technology, China can reduce the import volume of crude oil, and reduce CO2 emissions by 90% from current levels, he said. Christiansen suggested that between 2.4% and 2.8% of China’s total energy consumption could be produced from biomass (organic material) by that date. Currently, Chinese annual biofuel production stands at 2 million tons, he estimated. Food security concerns have led the government to restrict grain-based ethanol production and to promote non-grain-based fuel ethanol instead. Novozymes is also eyeing China’s biochemical market. In April 2010, Novozymes and Dacheng Group, a leading corn processor located in Jilin province, reached an agreement to make plastics from agricultural waste. Christiansen predicted the company will maintain an annual growth rate of around 20% in the biofuel and biochemical business in China over the next five years.
China to investigate solar panel quality
By : agxadmin
Chinese authorities are to launch an investigation of quality standards in China’s solar panel industry, the largest in the world, underlining growing efforts to regulate runaway growth among clean energy manufacturers. The solar panel industry lacks a domestic certification program for panels, or photovoltaic modules. “A nationwide quality investigation will be done soon,” said Ma Xuelu, Chief Strategy Officer of Yingli Solar and Council Member of the Chinese Renewable Energy Institute. “China’s photovoltaic industry is fledgling, so the survey will facilitate the standardization of the industry and healthy development of solar firms.” China’s solar module production capacity has tripled in the last two years to reach 17.6 GW this year, or 62% of global manufacturing capacity, according to data provider iSuppli. Of that capacity, roughly 22% is for “tier three” producers who would be most likely affected by a quality crackdown. Analysts say 2010 was such a good year for solar manufacturers globally that it prompted a wave of copycat entrepreneurial activity in China as businessmen set up small solar manufacturing firms. Solar manufacturers had been braced for a tough year ahead as governments cut solar energy subsidies. Any crackdown on quality was likely to have the greatest impact on smaller, lower end manufacturers selling into the Chinese market. China’s largest solar panel manufacturers already meet U.S. and European Union standards and sell primarily to overseas markets.
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