As reported in the Financial Times, Chinese manufacturing activity expanded at a record pace in the first quarter of this year in yet another sign of the country’s strong recovery due to rebounding external demand and growing domestic consumption. According to the HSBC/Markit Economics survey released this week, Chinese manufacturing activity in the first three months of this year was the fastest since the series began in 2004.
New orders expanded for the 12th straight month, with the reading the third strongest in the survey's history.
Chinese shares rebounded to a ten-week high and copper rose to the highest level in almost three months.
Lu Ting, China economist at Bank of America Merrill Lynch, said manufacturers would continue to expand activity despite a scaling down of government stimulus. Officials in Beijing are just controlling investment to avoid over-heating. The rest of the economy is still strong,” said Mr. Lu.
Chinese activity rose to 57 in March from 55.8 in February. As you may know, a reading above 50 signals an expansion, while one below that threshold represents a contraction. Chinese producers have boosted their manufacturing in part because the country’s exports have rebounded strongly. Chinese exports in February were almost one and half times their level a year ago. China also released its official PMI figures which showed the index rose to 55.1 in March from 52 in the previous month, the thirteenth straight month of expansion.
Qu Hongbin, China chief economist at HSBC, said the robust PMI numbers and export growth suggested that the Chinese economy would grow at an annualized rate of 11 percent in the first quarter this year.
Last month, Wen Jiabao, the Chinese premier, said China would maintain “proactive fiscal policy and moderately easy monetary policy” while implementing “strict controls” over new infrastructure investment.
The manufacturing data led to renminbi forwards rising on optimism the government will permit the currency to strengthen for the first time since mid-2008. Twelve-month non-deliverable forwards reflected bets the currency will strengthen 2.5 percent from the spot rate of 6.8263, according to data compiled by Bloomberg.
The renminbi may appreciate to 6.74 per dollar by the end of June and 6.66 by the end of September, Helen Qiao and Song Yu, Hong Kong-based economists at Goldman Sachs, said in a research note published this week.
The recent data regarding China’s economy provides many reasons for optimism over the remainder of this year and into 2011. We are seeing many opportunities through our network in the second and third tier cities at low valuations that offer significant future returns. The nature of the current deal flow and the recent strong economic data continue to affirm our belief that China provides the most favorable environment for investment in the world today.
Adam Roseman,
Founder & CEO
ARC China
China's Industrial Profit More Than Doubled In First Two Months
Profits in China's major industrial enterprises more than doubled in the first two months this year compared with a year earlier, the National Bureau of Statistics (NBS) said.
The NBS attributed the strong growth to economic recovery, growing demand and a low comparison base during the corresponding period last year, when profits contracted 37.3 percent.
The combined profit of major industrial enterprises with annual business revenues exceeding RMB 5 million ($732,064) was RMB486.74 billion from January to February, up 119.7 percent, the NBS said. Driven by growing demand, the producer price index (PPI), a major measure of inflation at the wholesale level, rose 4.9 percent in the first two months, rebounding from a decline of 3.9 percent in the same period last year.
Profits of foreign-funded enterprises and Hong Kong, Macao and Taiwan invested enterprises increased 125.1 percent year on year to RMB 140.64 billion. Profits of private enterprises hit RMB 118.62 billion, rose 66.3 percent.
Profits of the country's power generators increased more than 17-fold in the first two months year on year, while profits of the chemical fiber sector grew over 87-fold, it said.
The combined profits of iron and steel plants totaled RMB 17.67 billion, rebounding from losses of RMB 720 million in the same period last year. Revenues from major businesses of these industrial enterprises rose 39.7 percent year on year to RMB 8.56 trillion in the first two months.
The NBS did not provide industrial profit figures for the whole of 2009, but said during the first 11 months last year, industrial profits rose 7.8 percent from the same period a year earlier.
Source: Xinhua Net
China Beats US In Green Investment
China has taken the lead in investments in clean energy, spending nearly double what the US did in 2009, as it ramps up projects in both renewable and traditional energy, a report said.
China's investment and financing for clean energy rose to $34.6 billion in 2009, out of $162 billion invested globally, according to the report by the nonprofit Pew Charitable Trusts. The US ranked second in spending on renewable energy, at $18.6 billion, with European nations also recording strong growth. "Countries are jockeying for leadership. They know that investing in clean energy can renew manufacturing bases, and create export opportunities, jobs and businesses," Phyllis Cuttino, who directs the Pew Environment Group's Global Warming Campaign said.
The US still leads the world in installed renewable energy, with 52.2 GW of wind, small hydroelectric, biomass and waste generating capacity, the Pew report said. But China is quickly closing the gap, as a doubling in wind energy capacity alone boosted its own installed renewable energy capacity to 49.7 GW in 2009. Germany trails with 30.9 GW.
It said much of the impact from $184 billion in stimulus spending earmarked for clean energy by governments of the Group of 20 industrial nations has yet to come. Of that amount, China is due to spend nearly $47 billion on improved energy efficiency, clean vehicles, installation of solar power and improvements to electricity grid. Spending on clean energy is forecast at $200 billion for 2010, up about 25 percent
The report noted that the US still dominates venture financing and technology innovation for clean energy, but in manufacturing it lags behind China, which has become a powerhouse in production of both solar cells and wind turbines.
Source: China Daily
Chinese Official Hints at Currency Accord
Beijing may adjust its policy of pegging its currency to the dollar provided a visit this month by Chinese President Hu Jintao to Washington goes smoothly, according to a top adviser to China’s central bank.
Li Daokui, a professor at Tsinghua university and a member of China’s central bank monetary policy committee, said as long as the US respected China’s “core interests” the currency disagreement could be easily solved.
Barack Obama and his Chinese counterpart talked for an hour on Thursday evening, during which Mr Hu stressed that the “proper handling of Taiwan and Tibet” was the biggest factor in Sino-US ties, according to China’s state media.
“As long as this is understood, everything else will be easy to handle and we will find the key to unlock the exchange rate problem,” Mr Li told the Financial Times.
Mr Hu will attend a summit on nuclear security in Washington on April 12-13, just days before the US Treasury is scheduled to issue a report on whether China has been manipulating its exchange rate to boost exports.
There is rising speculation in Washington that the Treasury report will be delayed to avoid the administration having to announce such a politically explosive decision close to Mr Hu’s visit.
Larry Summers, economic adviser to Mr Obama, on Friday said that exchange rates were “going to have to be an area for international consideration”.
According to analysts, Mr Hu’s decision to attend the summit sends a strong signal that the administration will not name China a currency manipulator, potentially heralding broader co-operation on issues such as Iran.
China allowed the renminbi to appreciate 21 per cent against the dollar between July 2005 and July 2008, but then repegged the currency to help its export sector during the economic crisis.
In comments to Bloomberg Television, Tim Geithner, US Treasury secretary, said he was “confident” China would decide that allowing a more flexible currency was in its interest: “We’re going to maximize the chance that they move quickly.”
Source: Financial Times
China's Environmental Industry Output Value To Hit RMB 1 Trillion
The output value of China's environmental protection industry is expected to exceed RMB 1 trillion and account for more than 3% of GDP this year and will likely exceed RMB 2 trillion in 2015, the last year of the 12th five-year plan, said Wang Yuqing, director general of Chinese Society for Environmental Sciences.
Wang added that China will have invested a total of RMB 4.5 billion in the development of advanced science and technology in the environmental protection industry by the end of the 11th five-year plan, which lasts until the end of 2010.
In the past three years, a total of RMB 2 billion has been invested in key environmental protection projects such as water pollution control and wastewater treatment, according to Wang.
During the period from 1997 to 2008, the industry's output value swelled from RMB 45.92 billion to RMB 790 billion, and the annual growth exceeded 15% on average.
Source: China Knowledge
Geely Seals Deal To Buy Volvo From Ford
Ford Motor signed a $1.8bn deal to sell its Volvo brand to Geely in a move seen as emblematic of the shift in the global car industry’s center of gravity from the US and western Europe to China.
The transaction, signed in Sweden, will see Zhejiang Geely Holding Group, the parent of the Chinese carmaker, acquire 100 percent of Volvo and its assets. Geely said the deal would nearly double its sales to 600,000 in five years, largely by building market share in its home country.
The deal marks the largest acquisition of an overseas carmaker by a Chinese company and is China’s biggest foray into ownership of a big luxury brand. Ford and Geely said they expected the deal to close in the third quarter of this year, pending regulatory approvals.
Geely vowed to maintain Volvo’s manufacturing presence in Europe, where it has two car plants in Sweden and one in Belgium, but said China would become “Volvo’s second home market”.
Li Shufu, Geely’s chairman, likened the Gothenburg-based producer of famously safe and solid estate cars and executive sedans to a “tiger” in a zoo that would be freed to pursue new opportunities. “We need to liberate this tiger,” he said.
The deal ends more than a year of uncertainty for Sweden’s car industry since Volvo and Saab were put up for sale by their US owners. General Motors sold Saab to Spyker cars of the Netherlands last month.
Ford said the sale of Volvo would net it “significantly” less cash than the $1.8bn sale price because of adjustments to be made for pension deficits, debt, cash and working capital at the deal’s expected closing date.
Geely, which is mindful of protecting Volvo’s premium image even as it shifts more of its operations to China, said it intended to run the Swedish carmaker as a separate company with its own management team based in Gothenburg and a new board of directors.
Ford paid $6.45 billion for Volvo in 1999 when it was split from the truckmaking group of the same name. It was profitable then but has lost money ever since. Geely did not say how it planned to finance the deal, but, according to a person briefed on its business plan, it had lined up financing from Chinese state institutions and provinces where it planned to build at least three plants.
Source: Financial Times
China's Gold Demand To Double Within 10 Years
Chinese demand for gold is set to double in tonnage terms within ten years, according to a report released by the World Gold Council (WGC).
The report titled "Gold in the Year of the Tiger" is the first-ever report of China's gold market by the London-based organization.
China's demand for gold had increased an average of 13 percent per year over the past five years, and China was the second largest consumer market for gold in the world, and also the world's largest gold producer since 2007.
In 2009 alone, cumulative gold demand in China was worth more than $14 billion, or 11 percent of global demand. Within the next decade, Chinese gold consumption could double from 2009 levels, it predicted.
Gold demand in China was likely to continue to accelerate in the long term, as buyers' appetite would keep growing despite higher gold prices. Further momentum could well result from the Central Bank increasing its gold reserves.
A majority of gold demand in China had been satisfied by domestic gold production in the past, but the growth of Chinese gold demand had outpaced domestic production growth since 1992, the report said.
Source: China Daily
Derivative Transaction Will Be Important Part Of China's Financial Market
Derivative transactions will become an important part of China's financial market in the future, said a financial expert.
Eugene Zheng, Managing Director of Asia Affairs at Chicago Board Options Exchange (CBOE) said: "The current situation of China's financial market is at a similar level of the US financial market in the 1980s. The derivative transaction market, for example, stock index futures, is still at its budding stage. The swappers and investors are not familiar with the process of utilizing lever strength to maximize capital benefit within a reasonable scope. There are still certain barriers between the Chinese financial market and global financial market."
He further explained, "in the US, currently derivative market has gradually achieved the same important position as the stock market," noting that the New York Stock Exchange's income from derivative has surpassed its income from stock transactions.
Stock index future, which will be launched in China soon, is only the simplest type of financial derivatives. Derivative transactions may decompose and dodge risks, enhance the quantification degree of transactions, and promote the flow of information, Zheng said. In addition, "derivative transactions can help reduce the fluctuation of the stock market, enhance the market effectiveness, and cultivate a group of market trading experts who truly depend on information transaction. To certain extend it may eliminate the abnormal transactions based on insiders' information. Therefore, it is beneficial to the value discovery and healthy development of China's stock market," the financial expert added, "China needs its own derivative market. It needs to cultivate and establish its own organizations that can deal with two different kinds of financial systems. China also needs top tier talents who are capable of integrating the two systems."
Source: China Daily
China To Set Up Foreign Investment Review Board
China is planning to establish a foreign investment review board, the agency will be similar to the Committee on Foreign Investment (CFIUS) in the United States, and will regulate foreign mergers and acquisitions which impact on China's national security, a source revealed.
The agency will be similar in structure to an "inter-ministerial joint conference," and would likely include representatives from the National Development and Reform Commission (NDRC), Ministry of Industries and Information Technology (MIIT), Ministry of Commerce (MOC), Commission for Science and Industry for National Defense and other ministerial agencies. The party responsible for its coordination will likely hold vice-premier level status.
"In 2008, the Ministry of Commerce founded an Anti-monopoly Bureau, but this only pays attention to the market concentration of particular enterprises and does not look into questions of industrial or national security," the source continued. The proposed "higher level agency" will be responsible for reviewing these kinds of concerns.
"The new agency will work independently of the current anti-monopoly investigation system," the above source revealed.
The source said: "The agency will judge M&A activity on a case-by-case basis depending on the sector in which the deal is taking place as well as the size of the deal. A list of strategic and sensitive industries has been drawn up; but due to the large discrepancies between the sensitivity of industrial sectors, there will be no universal standard that dictates how big a deal or what percentage of market share needs to be involved before a review is considered necessary."
Source: Economic Observer
Shanghai Chips Away At PE Currency Barrier
The Shanghai Municipal Government is to introduce a pilot program enabling up to 50 percent of the total capital of RMB-denominated funds domiciled in its area to be converted from foreign currency, according to a client note from the Hong Kong office of law firm Debevoise & Plimpton.
Currently, foreign currency conversion for the purposes of investment is restricted in China under a 2008 law from the State Administration of Foreign Exchange (SAFE) called Circular 142.
This remains one of the major hurdles for foreign investors seeking access to China's booming private equity market, since foreign-denominated investment into Chinese companies, for example from a USD fund, is subject to lengthier and more stringent approval processes than RMB-denominated investment. As such, the Shanghai pilot scheme would be a significant step in leveling the playing field between foreign and domestic funds. The note says that GPs meeting "certain experience and capital-under-management criteria" will be able to obtain foreign exchange "quotas" for GP and LP commitments to RMB funds domiciled in Shanghai Pudong. "Each quota would be expressed as an amount of foreign currency that an approved person is pre-approved to convert into RMB," it added. Under the terms of the pilot programme, up to a total of 50 percent of any RMB fund's capital will be able to be converted from foreign currency. Within that 50 percent foreign exchange limit, GPs themselves will be able to convert and commit a maximum of 5 percent of the total of the fund.
This policy is a second advance for Shanghai in tackling the foreign currency problem. In November last year, the municipality reached an agreement with SAFE allowing GPs themselves to convert up to 1 percent of total capital commitments to a fund from foreign currency.
Source: Zero2IPO
China Railway Wins $4.8 Billion Indonesia Deal
China Railway Group has won a $4.8bn contract to build and operate an Indonesian coal railway, the latest in a string of offshore contracts for China’s state-controlled rail companies.
They have been winning rail projects across the world, including in the Middle East, Southeast Asia, Latin America, Africa and Australia. Chinese companies have also been snapping up global coal assets for the country’s power stations.
China Railway, listed in both Hong Kong and Shanghai but majority owned by the state, said it won the 24-year contract to design, build and manage the railway in South Sumatra for Indonesia’s Bukit Asam Transpacific Railway Corporation.
China Railway owns 10 percent of Bukit Asam Transpacific Railway. Privately-owned Trans-pacific Group owns 80 percent and Indonesian coal mining giant Bukit Asam owns the rest.
Beijing has made the transfer of sophisticated technology a prerequisite for international rail companies trying to enter the huge Chinese market and in the process, Chinese companies have rapidly become technologically competitive while offering much lower prices than their global rivals.
China Railway announced on a “strategic co-operation” agreement with state-owned Agricultural Bank of China to fund the railway. The bank will provide up to Rmb110bn ($16bn) in financing over the next three years to support China Railway projects, including its overseas contracts and projects related to exploiting natural resources.
Bukit Asam said it and its partners were in talks with four Chinese lenders to finance 70 percent of the railway and the rest will be financed internally.
Source: Financial Times
China Is An Incubator For Female Billionaires
Half the world's 14 self-made female billionaires--that is, those who didn't benefit from inherited fortunes--have struck it rich on China's mainland. They include Hong Kong entrepreneur Chu Lam Yiu, who peddles ingredients to China's tobacco companies, and Xiu Li Hawken, a U.K. citizen who helps run below-ground shopping centers in China. Hawken is one of three self-made women to debut on this year's billionaires list after their companies went public on Asian stock exchanges in the past 18 months. Another real estate fortune belongs to Wu Yajun, who took her Longfor Properties public in November and is now the world's richest self-made woman.
A variety of circumstances has led to the increasing success of female entrepreneurs, says Linda Xinrong Kausch, a Shenzhen-based writer who is writing about a book about how 12 Western businesswomen achieved success in China. The development of a hospitable social and economic environment has been crucial, she says, which not only allows but also encourages women to get an education and start their own companies. Another factor is the constantly changing market regulations of a developing economy, which afford more flexibility and less red tape than a place like Europe. Plus, she adds, it's a matter of pride for these women to make a tangible contribution to their family and to the nation.
"Most of the Chinese working women will say, 'I'm proud that I work,'" Kausch says. "Chinese women are always very ambitious, and it's in their nature to be hard-working people. And they are finally being rewarded for it."
While some major sectors--such as banking, steel, telecommunications and electricity generation--are still essentially state-owned, a sizable chunk of new wealth being created comes from entrepreneurs working hard in a variety of fields such as real estate, retail and consumer goods.
"Hundreds of thousands of new Chinese companies have made this country the world's most competitive business environment," Edward Tse, Greater China chairman of consultancy Booz & Company, writes in his book, The China Strategy: Harnessing the Power of the World's Fastest-Growing Economy. "China is now the world's largest and fastest-growing source of entrepreneurial startups."
In China female workers make up about nearly 50% of the enrollment at universities and 36% of the total labor force, according to state media. Women now contribute about half of household income, up from 20% in the 1950s, says Shaun Rein, founder of the Shanghai-based China Market Research Group.
A 2002 survey of Chinese female entrepreneurs found that many build up business acumen and managerial skills by holding high posts at large state-owned enterprises, and that it is through these sorts of connections that entrepreneurs are able to raise the capital they need. Others gain experience in the private sector. Most, the study says, are highly educated, either at domestic universities or abroad.
Take Zhang Xin, 44, who with her husband Pan Shiyi started property developer Soho China. The daughter of ethnic Chinese immigrants from Burma, Zhang grew up poor and worked in a Hong Kong factory as a teenager before making her way to Cambridge University. With a master's in developmental economics she got a job at Barings in Hong Kong, analyzing the emerging private market of her native China. She went on to work on Wall Street, where she says she grew disillusioned and opted to return to China. After meeting Pan in Beijing, the pair decided to start their own real estate business. Zhang says that she brought more money to the partnership, from her Wall Street savings.
Source: Forbes
Leading Groups Add To Their Portfolios, Anticipating Boom
Luxury hotel groups are expanding in China after predictions of a boom in the sector.
Ritz-Carlton will open a new hotel in the Pudong district of Shanghai in April and also one in Hong Kong in November, bringing to eight the number of hotels and resorts the company operates across the nation.
This year, Hilton Worldwide will also accelerate its business expansion in China, with nine new hotels opening in China including the first airport hotel in the country, the Waldorf Astoria Shanghai-luxury brand of Hilton Worldwide, which is entering the Chinese market for the first time.
Timothy Soper, vice-president of Hilton operations Greater China told China Business Weekly: "Hilton is going to open 200 new hotels across China within the next 10 years since China is the market with the biggest potential for Hilton's business."
Shangri-la, Asia's largest luxury hotel, is opening five new premises worldwide this year, three of which will be in China. These will be located in Beijing, Shanghai and Guilin.
Secondary markets in China are also attractive to luxury hotel companies.
Kempinski, a German luxury hotel brand, is opening three hotels in second-tier cities, Yinchuan, Huizhou and Guiyang this year.
Rainer J. Burkle, vice-president of Ritz-Carlton China and general manager of Ritz-Carlton Shanghai, Pudong, said:"Last year, 70 percent of Ritz-Carlton China customers were Chinese people. In Ritz-Carlton Sanya the number was much higher - 90 percent were local."
China is now central to the Ritz-Carlton's hotel chain's plans. The country is now its largest market after the US, where it has 31 hotels.
Source: China Daily
Pension Fund Spreading Wings Abroad
The Social Security Fund (SSF), the nation's largest pension fund, is planning aggressive investments in overseas markets, including private equities, Dai Xianglong, chairman of the National Council for Social Security Fund, said.
"The SSF is keen on expanding its overseas footprint through its investments in stocks, bonds as well as new avenues like private equities," said the chairman.
The fund can invest as much as 20 percent of its total assets abroad, Dai said. The fund's holding of overseas assets including stocks and bonds were just 6.54 percent of its total portfolio at the end of last year.
Dai said the fund's role would be that of a financial investor and it does not intend to seek control of the investee companies.
"There is enough room to improve our overseas investments," said Dai. The fund's next few moves will help diversify the nation's huge foreign exchange holdings of $2.4 trillion, he said.
The pension fund's assets are set to increase to 2 trillion yuan in 2015 from 776.5 billion yuan last year, the chairman said. The pension fund started with assets of just 80 billion yuan a decade back.
The SSF got investment yields of 84.9 billion yuan on its investments in 2009, with a return rate of 16.1 percent, according to figures posted on the fund's website. The realized gains on its investments stood at 42.6 billion yuan by the end of last year.
The SSF's total investment yields rose to 244.8 billion yuan in 2009, with an average annual return rate of 9.75 percent. It had total assets of 776.5 billion yuan, an increase of 38 percent from the previous year.
The pension fund is seeking a yield that exceeds the increase in the consumer price index by a "wide margin", the chairman said.
Source: China Daily
China Lodging Surges In Nasdaq Debut
Shares of discount Chinese hotel chain China Lodging Group Ltd rose as much as 27 percent above their initial public offering price on March 26 as investors bet that rising incomes in China would increase travel.
The shares opened at $13.62 and rose as high as $15.50 in their Nasdaq debut. They closed at $13.92. The company sold 9 million American Depositary Shares at $12.25 each on March 25, raising $110.25 million.
China Lodging Group rents budget hotel rooms in China through three chains. Its website, ir.htinns.com, sports photos of hotel rooms, including one with bunk beds.
Most of China Lodging's hotels are in big cities in the industrialized eastern part of the country, where business travelers have helped to ratchet up the market for budget hotels, analysts said.
Lily Ng, a senior vice president at Jones Lang LaSalle Hotels in Shanghai, said domestic as well as foreign travel may increase in China.
"Traveling among Chinese is also becoming more frequent as incomes increase. Another factor driving hotel demand is increasing commercial and trading activity, which is spurring the development and expansion of companies in China."
As China's hotel sector expands, analysts have expressed concern that growth could be too rapid, leaving a glut of rooms without sufficient demand.
Media inside China have reported that the Chinese government could take steps to cool the hotel sector.
When China wanted to slow growth of its real estate sector, the government said it would require some large State-owned enterprises whose core business was not in the property sector to withdraw from the business.
China Lodging, sharing characteristics with other Chinese IPOs, said in its prospectus that it might not be in compliance with certain Chinese laws.
It wrote in its prospectus that it does not hold land-use rights for any of its properties, and it holds some leases without the permission of the property owners or government authorities. It also wrote that it may be afoul of labor law.
In the run up to China Lodging Group's IPO, IPOfinancial.com President David Menlow said such non-compliance issues were apparently not a major concern, given that Goldman Sachs and Morgan Stanley were proceeding with the offering.
The company's founder and executive chairman, Qi Ji, also has experience in the industry, having co-founded online travel services provider Ctrip.com and Chinese discount hotelier Home Inns & Hotels Management Inc.
China Lodging runs three hotel chains in China: HanTing Express, its main chain; HanTing Seasons, its premium chain; and HanTing Hi Inn, its discount chain.
At a Seasons hotel in downtown Shanghai, for example, rooms rent for RMB 300-400 ($43.95-$58.60) a night. The hotel is less than a four minute walk from a shopping mall and subway.
Aimed at mid-level executives and business owners, a room at the Seasons features modern wooden furniture, a black leather chair and large windows. "It is not bad. It is quite an okay hotel, better for young people. We chose it because our conference is just opposite. It is clean, good for a short trip," said Zhang Lihun, 46, who works in the export business and was in town for a three-day conference.
The hotel group aims for broad appeal, not just business people, and this is reflected on its website, which features an animated cartoon horse.
An employee of China Lodging Group explained that the horse is a nod to the chief executive, who was born in the year of the horse. "It is representative of Chinese history and symbols," the employee said.
Source: China Daily
Coca-Cola Gets Into Tea With Spritea
The Coca-Cola Company, the world's largest beverage maker, has launched a new innovative tea-flavored beverage in China to enhance its product portfolio and further tap the huge beverage market.
Coca-Cola's Sprite brand launched Spritea, a carbonated blend of local green tea flavors. "With Spritea, we plan to further enhance the Sprite brand in China," said Andres Kiger, senior marketing director of Coca-Cola Greater China.
"We have spent a lot of time and resources through massive consumer testing to fine-tune the taste of Spritea, including having the right amount of sweetness and percentage of bubbles," said Ella Liu, Sprite Brand director for Coca-Cola in China, adding that the company is confident that Spritea will be welcomed by Chinese consumers."
With Chinese consumers' enduring love for tea, ready-to-drink tea consumption in China has increased over 30 percent annually in recent year.
And in general, tea and sparkling beverages make up over 20 percent of the entire Chinese beverage sector.
Source: China Daily
Wal-Mart Sets Up New Subsidiary In China
The official website of China's Ministry of Commerce reports that the international retail giant Wal-Mart has set up a new wholly-owned subsidiary in Hebei. This move is reportedly designed to help Wal-Mart's smooth expansion and localization of Wal-Mart in China.
Since 2009, Wal-Mart has set up more than ten wholly-owned subsidiaries in Chinese cities and provinces, including Hunan, Chongqing, Hubei, and Dongguan. Before setting up these regional subsidiaries, Wal-Mart cooperated with Chinese companies for expansion in China. However, the complicated operating processes slowed down the retailer's expansion. With the help of these new subsidiaries, Wal-Mart opened nearly 40 new outlets in 2009 and the total number of Wal-Mart stores in China exceeded that of its competitor Carrefour for the first time.
The company will continue to speed up its expansion in China in 2010 and in the future the Chinese market is expected to have the most Wal-Mart stores worldwide, exceeding even its domestic American market.
Source: China Retail News
Ferragamo Expects ‘Double-Digit’ China Sales Growth
Salvatore Ferragamo Italia SpA, whose shoes are worn by celebrities including Jennifer Lopez and Zhang Ziyi, expects sales in China to expand as it opens more stores, CEO Michele Norsa said.
The company will open as many as 10 stores in China this year, including its biggest outlet in Asia outside Japan on April 27 in Shanghai, and shops in Suzhou, Hangzhou and Guangzhou, Norsa said. It opened eight stores in China last year, he said.
Greater China, including the mainland, Hong Kong, Macau and Taiwan, may overtake Japan as the company’s largest market after the U.S. by the end of this year, Norsa said. Western luxury companies are looking to China for growth as consumption surges in the world’s fastest-growing major economy.
Worldwide spending on high-end apparel and other goods may rise 6 percent this year, driven by China, where the super-rich and middle class “want to show off their status in life,” HSBC analysts Erwan Rambourg and Antoine Belge wrote in a report. China may account for 35 percent of the industry’s growth in 2010, they said.
The size of Ferragamo’s Greater China market is now “very close” to Japan’s, and it’s “possible” that it will overtake Japan by the end of this year, Norsa said. China is a more important market than the U.S. because of its growth potential, he said.
Source: Business Week
China To Export 15%+ More Photovoltaic Goods In 2010
China's export of photovoltaic goods will expand at least 15% this year, predicted Sun Guangbin, who is in charge of the solar cell business of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. The nation exported $15.4 billion and $1.5 billion worth of solar power products in the whole of 2009 and January 2010 respectively, up 147.8% on the previous year and 92.2% on January 2009, according to Sun. "The prices of photovoltaic exports that hinge heavily on imported polysilicon high in purity are currently experiencing a downward trend," added Sun. "Up to 58.6% of China's photovoltaic exports is low value-added processing for trade."
Source: China Perspective
China To Build 28 More Nuclear Power Reactors By 2020
China, the world's second-biggest energy user, approved the construction of 28 more nuclear power reactors under a revised target for 2020 to meet rising demand for clean energy and to accelerate development of the industry.
Each of the one-gigawatt reactors will cost as much as RMB 14 billion ($2.1 billion), said Mu Zhanying, general manager of China Nuclear Engineering Group. One gigawatt is enough to power 800,000 average US homes.
Under the original plan announced in 2005, China was to spend RMB 400 billion to add 40 gigawatts of nuclear capacity by 2020 to help reduce reliance on more polluting coal and oil. The country's capacity will rise to more than 70 gigawatts by then under the revised plan, Wang Binghua, chairman of the State Nuclear Power Technology Corp said.
Construction of 20 of the 28 reactors has already begun, Sun Youqi, vice president of China National Nuclear Corp, said. It would take 50 months to build one reactor, Mu said.
The country currently has 9 gigawatts of nuclear capacity in operation, the China Electricity Council said.
About 200 gigawatts of nuclear capacity is planned or being built worldwide as governments turn to non-fossil fuels to fight global warming, Nomura International said in a report in January. Currently, 372 gigawatts of nuclear power capacity is in operation, according to the World Nuclear Association.
Source: China Daily
U.S., China Are Top Clean Energy Markets, Ernst & Young Says
The U.S., China and Germany are among the most attractive markets for developers of renewable energy technologies, according to Ernst & Young.
The U.S. scored of 70 out of 100, followed by China, scoring 67, on the Ernst & Young All Renewables index. The index, rates countries based on the attractiveness of their renewable energy markets, infrastructure and support for specific technologies.
Provisions in the 2011 U.S. budget, including a proposal to increase the number of wind and solar energy projects built on government-owned property, are likely to boost clean energy development, Ernst & Young analyst Michael Bernier said in the report. Foreign developers may benefit from a new national renewable energy development fund in China, the report said.
Potential solar tariff cuts in Germany may drive investors away, the accounting firm said. The U.K. boosted its rank to fifth place on the index, tying with Spain, after Britain rolled out plans to extend its renewable obligations system to 2037 and pledged to support new projects for up to 20 years. India ranked fourth on the index.
Source: China Mining
Chinese Group Set To Buy Brazilian Ore Mine
East China Mineral Exploration and Development Bureau (ECE) is expected to acquire an iron ore mine in Brazil, the 21st Century Business Herald reported.
The ECE signed an intent agreement with Bernardo de Mello on March 25, offering $1.2 billion to buy the entire property rights of the Jupiter project in Minas Gerais of northeastern Brazil, where most of Vale's iron ore mines are located.
The deal is likely to be completed by the end of the year, Shao Yi, head of ECE told the paper. ECE will seek domestic strategic partners on the project, and plans a backdoor listing to finance the deal, Shao said.
He estimated the project will bring in $800 million in revenue and $300 million in profit every year. Return on the investment could reach 20 percent, according to Shao.
The strip-mine's proven iron ore reserve comes to about 500 million tons, with prospective reserve reaching 1.39 million tons.
It puts out 3 million tons of iron concentrate annually, and Shao said the annual output capacity could reach 220 million tons after further investment.
Source: China Daily
China CNR Expands Urban Train Business
China CNR Corporation Limited (CNR), a leading provider of locomotive and rolling stocks, hopes to develop its urban rail business with the acquisition of a 50 percent stake in a Shanghai train manufacturer. The deal signed late last month agreed that China CNR will buy 44.79 percent equity in Shanghai Rail Traffic Equipment Development Co (SRTE) from Shanghai Electric Group for RMB 365 million. CNR will then inject RMB 85 million that will result in it owning half of SRTE. The company hopes to accelerate its access to urban rail operations, and to increase its competitive-ness. CNR has won contracts to supply bullet trains for the high-speed railway line between Shanghai and Beijing, but currently takes less than five percent of its business from urban rail.
On completion of the transaction, Shanghai Electric's holding will be reduced to 34.91 percent and Shanghai Electric's controlling shareholder, Shanghai Electric (Group) Corp, will own the remaining 15.09 percent.
SRTE was established in 2003. Its main businesses include design, manufacture, sale, leasing, maintenance for rail vehicles and parts, electromechanical integration of rail transportation equipment, and project contracting. China's urban rail sector is a growth area, expected to be a total length of 4,500 km by 2020.
Source: China Daily
Bailian To Buy Remaining Stake In Hualian GMS From KPI
China Bailian (Hong Kong) Ltd, a subsidiary of Bailian Group, will spend RMB 441.76 million to acquire a 60% stake in Hualian GMS Shopping Center Co Ltd from K.P.I. Co Ltd to become sole owner of the target firm, according to a statement released by the Hong Kong-listed company. When the sale is complete, K.P.I. will have only about 170 convenience stores in Beijing. The firm's share price sharply declined 7.69% to HK$0.42 on March 24.
Established in 1996 with a registered capital of RMB 800 million, Hualian GMS Shopping Center's main assets are 18 large shopping malls, most of which are in Shanghai, Jiangsu Province and Zhejiang Province. The enterprise reaped HK$1.78 billion in operating revenue in 2008, and its net profit before tax reached HK$18.3 million.
An insider in the general merchandise industry said that Bailian Group will probably transfer most of the assets of Hualian GMS Shopping Center into Lianhua Supermarket Holdings Co Ltd, one of its five listed subsidiaries.
Source: China Knowledge