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Agriculture still vital to China
Xinhua reported on December 28 of 2011 that Chinese
vice Premier Hui Liangyu said China must avoid mishaps in supply of major farm produce because agriculture is vital to ensure stable price levels, fast economic growth and social stability.
Hui said the agricultural sector has witnessed continuous, comprehensive and faster development in 2011, which has played a key role in curbing inflation and maintaining social stability.
The vice premier also highlighted the effective supply of farm produce, fiscal spending on infrastructure building, and farmers’ livelihoods as the major fields on which the country will work next year.
Government data showed grain output rose to record high 571.21 million tonnes in 2011. The figure represented a year-on-year increase of 4.5 percent and marked the eighth consecutive year of growth for the country’s grain output.
It also marked the fifth straight year that China’s total grain output exceeded 500 million tonnes, which indicated a more consolidated foundation for food security in the world’s most populous nation.
“Any slight failure in agriculture will hamper the country’s economic development and social stability,” Premier Wen Jiabao said.
Wen also said that agricultural work is of particular significance next year, faced with the complicated macroeconomic condition and the dual pressures of an economic slowdown and a rising inflation. Meanwhile, he urged more efforts to be taken to protect farmers’ rights in land properties.
Gan Zangchun, a state-land supervisor with the Ministry of Land and Resources, said land requisition must be reformed to ensure farmers’ rights as rapid urbanization has given rise to frequent land disputes in recent years. Scientific and technological advancement and transformation of the agriculture growth pattern will be the key and fundamental solutions to developing a modern agriculture, as environment and resources impose greater constraints.
Organic farming experiment could revitalize China’s countryside
According to Xinhua on January 6, although she grew up
in the posh city of Hangzhou in eastern China, Luo Yi has opted to settle down on a farm in a northern suburb of Beijing.
The 23-year-old woman graduated from college last year with a journalism degree. She was won over by the Little Donkey Farm’s organic farming concept and community supported agriculture (CSA) model, and now she spends her days watering vegetables, making pickles, and learning needlework
While a large number of rural youths have abandoned the traditional farming lifestyle in order to move to cities for more work opportunities, some young people from cities have looked to the countryside for an alternative lifestyle or a new career path.
She has stopped using her mobile phone and no longer shops for new clothes. Instead, she has learned to alter her old clothes into new styles, and she exchanges clothes with her female colleagues at the farm.
“My parents strongly opposed my decision to work in the farm. Over the past few months, they have been shocked by the changes in my life, and they have gradually come to understand me,” she said.
The Little Donkey Farm was founded three years ago by Shi Yan, a young agriculture scholar from Renmin University of China. Shi was inspired by her six-month experience as an apprentice at a CSA farm in Minnesota, United States.
Shi has applied the CSA model to her farm, which grows organic vegetables and sells them directly to individual consumers in Beijing.
Consumers can sign a year-long contract to purchase organic vegetables grown by the farm, and choose to either pick up their produce at various locations throughout the city or have the farm deliver it directly to their door. They can also rent a 30-square-meter plot at Shi’s farm to do their own gardening.
More than 30 young people are currently working for the farm, most of whom are from the cities and had not farmed prior to coming here. They are working side-by-side with about 20 local villagers.
When the farm was established in 2009, only 37 clients placed annual orders and 17 rented their own plots. But now over 460 clients order vegetables and 260 lease land, said Huang Zhiyou, vice general manager of the farm.
Organic farms, which provide more
income for farmers, might attract migrant workers to come home and return to farming. The farm is also a way for urban residents to learn more about rural areas and farming.
China’s gold imports from HK hit record high
Chinese mainland’s gold imports from Hong Kong
surged to a record high in November 2011 as demands continue to grow with the Chinese New Year drawing near and investors turn to gold bars to hedge financial risks, according to China.org.cn.
According to the Census and Statistics Department of the Hong Kong government, mainland China imported
102,779 kilograms of gold from Hong Kong in November 2011, up from the 86,299 kilograms in October. This also marked the fifth consecutive increase. In the first 11 months of 2011, Chinese mainland bought a total of 389,295 kilograms from Hong Kong.
Individuals buying gold bars or jewelleries account for the majority of China’s gold consumption. In the third quarter of 2010, China overtook India as the largest gold jewelry market, according to the World Gold Council. The country is also the world’s biggest producer of gold.
Imports were profitable as prices in Hong Kong mostly traded at a discount to those in China in November. Gold for immediate delivery of 99.99 percent purity on the Shanghai Gold Exchange averaged 356.05 yuan a gram($1,753 an ounce) in November, compared with an average of 434.68 Hong Kong dollars (353 yuan) at the Chinese Gold & Silver Exchange Society.
Xia Bin, adviser to the country’s central bank last month called on China to increase its gold reserves as a long-term strategy to diversify its foreign exchange reserves and promote yuan’s internationalization.
Demand for gold is climbing in China
as individuals seek to protect their
wealth against sluggish property equity markets.
Mining opportunities in Africa
Qingdao Kingking Group, the second-largest candle
maker in the world, plans to invest $100 million to develop gold and copper mines across the world in the next three years, according to China Daily report.
“As part of an expansion plan, the company, together with a trading company from Anhui province, is looking at buying a gold mine in Mozambique,” said Huang Bao’an, administrative vice-president of Kingking Group. The mine occupies more than 100 square kilometers.
The Mozambique gold mine was once owned by a Portuguese company, and Kingking’s partner in Anhui province has obtained development rights from the Mozambique government.
The two companies agreed to exploit the mine together. Kingking is to provide the technology to be used in the venture and recently sent a team to examine the mine.
“Beyond the mines in Mozambique, Kingking is looking at similar sources of gold and copper in South Africa and other parts of Africa,” Huang said.
In January 2009, Kingking bought oil fields occupying 9 sq km from the State of Oklahoma in the United States, marking the first time a Chinese company has bought oil fields in that country.
“The move helped us expand upstream and get a stable supply of raw materials for making candle products,” Huang said.
After the deal, the company purchased six oil fields occupying 290 sq km in the US states of Texas and Louisiana. The six fields contain reserves equal to 600 million barrels of crude oil and 15 billion cubic meters of natural gas.
“Our success (in brokering deals in the US) stems from the global financial crisis, which led to financial troubles for energy-investment companies and also forced the US government to loosen investment restrictions on energy deals,”Huang said.
Chen Suobin, chairman of Kingking Group, was recently quoted by the China Business News as saying that the company plans to concentrate especially on the development of gold mines.
In November 2011, the company announced a plan to buy 80 percent of the shares of Rushan Daye Gold Mine in Shandong province, which owns 16 gold mines.
In March 2011, Kingking began working with a research institute from Baoding in Hebei province, to learn more about gold mines in the province. A large number of energy projects in Africa are in the hands of European companies. Due to the spreading European debt crisis, many European companies find themselves in difficulties and
are looking at halting or withdrawing their investments. This has given Chinese businesses huge opportunities to invest abroad and develop natural resources.
China to increase coal-bed methane output
China aims to increase coal-bed methane output this
year while avoiding coal mine gas leak accidents, a senior official said January 16.
According to Xinhua’s report, the country’s coal-bed methane output is expected to reach 15.5 billion cubic meters in 2012, up from 11.5 billion cubic meters last year, said Liu Tienan, head of the National Energy Administration.
Meanwhile, China targets a 10-percent reduction in major coal mine gas accidents and their resulting death tolls this year, he said.
Rising demand for coal and gas will complicate the country’s efforts to prevent accidents, Liu said while calling for efforts to step up the monitoring of coal mine operations and strengthen innovation of gas control technologies.
China reported 119 mine gas accidents last year with a death toll of 533, down from 155 accidents and 623 deaths in 2010. Production safety should always come first, ever.
China to retrieve more natural gas
China’s output of natural gas is expected to increase by
11 percent in 2012 to reach 113 billion cubic meters, the China Petroleum and Chemical Industry Federation(CPCIF) said on January 11, China Daily reported.
The country is expected to use more than 200 million tons of crude oil, an increase of 1.5 percent from the year before. And it is expected to produce about 280 million tons of diesel fuel and gasoline, an increase of 5 percent, the federation said.
Buoyed by strong domestic demand, the country’s apparent consumption of crude oil - which includes domestic output and imports but excludes exports - is expected to amount to 480 million tons this year. That will be an increase of 5.3 percent from the year before.
The demand for natural gas will call for the use of 148.2 billion cu m of the fuel, an increase of 15.3 percent from a year ago, said CPCIF.
The apparent consumption of crude oil is expected to increase by an average of 5 percent during each year of the 12th Five-Year Plan (2011-15). And the amount of natural gas used is expected to increase by an average of 19.4 percent a year during that time, said Li Shousheng, executive vicepresident of the CPCIF.
The Federation said the amount of China’s refining capacity reached 590 million tons in 2011, an increase of 6.9 percent from the year before. The strict controls the government has placed on diesel fuel and gasoline prices are believed by many to have caused the country’s petroleum-
processing industry to lose 4.98 billion yuan ($788.6 million) from January to October in 2011.
The federation said the apparent consumption of diesel fuel and gasoline is expected to increase by 5.8 percent, hitting 280 million tons this year.
The domestic industry has overcapacity, Li said, adding that the country will continue to consolidate domestic refineries and close down small refineries that are inefficient and have slim capacities, he said. To increase the production is fine, but the more important is to use the energy in a more efficient way.
China says energy consumption is controllable
Local governments have formed a consensus on China’s
overall plan to control total energy consumption, the nation’s energy chief said on January 11, as Xinhua reported.
After some revisions, the plan will be submitted to the State Council, or China’s Cabinet, for approval, Liu Tienan, head of the National Energy Administration (NEA), said at a national energy work conference that concluded that day.
The country aims to establish a unified nationwide index system for energy consumption by 2015, and the system will be included in the performance assessments of local governments, said Liu.
The index system, however, will not include recent additions, including consumption of renewable energy, coal gangue and mud used to generate electricity, coal-bed gas and shale gas, waste heat and excess pressure that works to produce electricity, according to Liu.
The energy chief admitted that the nation is under greater pressure to ensure energy supplies this year as both demand and international competition for resources grows.
He said the nation should improve relevant policies such as industrial, fiscal, pricing and financial regulations to support the energy consumption control plan, adding that authorities are studying a trading system for the energy consumption index.
China’s power consumption, a key indicator measuring the country’s economic vitality, rose 11.7 percent yearon-year to 4.7 trillion kilowatt hours in 2011. Growth in 2012 is expected to slow to 8.5 percent amid the country’s economic slowdown.
Figures on the nation’s primary energy consumption in 2011 have not yet been released. In 2010, China’s primary energy consumption rose 5.9 percent year-on-year to 3.25 billion tonnes of coal equivalent, making it the world’s second largest energy consumer after the United States. In the end of 11th five year plan, some areas in China once shut the daily use of electricity to achieve the goal of “emissions reduction”. Hope it won’t happen again during the 12th Plan.
Officials weighing green benefits of carbon taxation
China is considering levying a carbon tax within the next
three years to tighten its regulations on polluting industries and put the economy on a greener path, according to China Daily.
A draft of a new system of taxation has been submitted by the Fiscal Science Research Center of the Ministry of Finance to the ministry for review. The plan would impose a tax on emissions of greenhouse gases, Su Ming, deputy director of the center, said on Jan. 5.
Su said the tax is likely to be charged at a rate of 10 yuan ($1.59) for each ton of carbon dioxide that a business or other operations discharges. That rate is expected to increase gradually over time.
The main targets of the tax will be large users of coal, crude oil and natural gas, and tax cuts will be given to companies that take steps to reduce their emissions, Su said.
Jiang Kejun, a researcher with the National Development and Reform Commission’s Energy Research Institute, who helped draft the tax proposal, said the tax is likely to be collected only from producers and wholesalers of fossil-fuel based energy. This will make it easier to collect the tax.
“But it may still raise the price of energy,” Jiang said.
China emitted 8.33 billion tons of carbon dioxide in 2010, a quarter of total global emissions, according to a report by the UK energy company BP PLC. During the Durban climate talks last year, China pledged to reduce the amount of carbon dioxide produced for each unit of GDP by 17 percent by 2015.
Even so, the recent Central Economic Work Conference determined that a greater priority should be placed on reforming the country’s tax system in 2012 and on researching the possible effects of imposing taxes to protect the environment.
“But 2012 may not be a good time to introduce carbon taxes, considering the risk (they might introduce) of slowing economic growth,” Su said.
He said the taxes will begin to be collected by the end of the 12th Five-Year Plan (2011-15).
“The carbon tax will bring many benefits,” Jia Kang, who heads the finance ministry’s research center, was quoted as saying by the Economic Information Daily.
“One is to raise companies’ environmental costs and force them to improve their production technology.”
Meanwhile, the additional revenue from a carbon tax will make it easier for the government to lower other sorts of taxes imposed on businesses, such as income taxes, he said. As a large country of carbon dioxide emission, China is duty-bound to adopt strict measures to reduce pollution for a greener economy and environment, though it will take a long time.
China to construct large offshore wind farm in northern province
China will construct an offshore wind farm with an
installed capacity of 300 megawatts (MW) in Leting County, north China’s Hebei Province, making it the country’s largest such project, said Xinhua.
The feasibility report for the wind farm located near Puti Island in Bohai Sea has recently passed expert reviews that were commissioned by the National Energy Bureau(NEB).
Under the program, the wind farm, built with a total investment of 5.76 billion yuan (914 million U.S. dollars), will comprise 100 units of 3MW offshore turbines. The approval authority will complete relevant procedures to sanction the project at the end of this year, and the project will be connected to the grid before the end of 2015.
When it goes into operation, the wind farm will generate 752 million kilowatt-hours (kwh) of electric power annually, as well as 730 million yuan in annual sales revenues. It was also pay 58 million yuan in taxes to the local government.
Leting County has 124.9 kilometers of coastline, or a quarter of Hebei’s total coastline. The county boasts rich exploitable wind power resources, totaling 3.7 gigawatts (GW).
The county government established an offshore wind power development plan in early 2011. The NEB gave its approval for the county to prepare for the 300MW offshore wind power project in June 2011.
The fast-growing wind industry in
China has contributed a lot for the country’s economy and environment. Though, we should focus on its actual use and try to avoid overcapacity.
Cartoon industry gets more animated
The Chinese government announced at the end of last
year that the nation will continue offering value-added tax (VAT) refunds to the animation industry this year in its efforts to boost cultural development, China Daily reported.
For companies that develop and make their own animation software products, VAT at 17 percent will be levied, but the portion of VAT which exceeds 3 percent of the taxpayer’s actual VAT burden will be refunded upon tax collection, the Ministry of Finance said in a statement on its website.
Meanwhile, business tax for animation companies and their income from sales of their copyrights will remain at 3 percent.
The statement said the policies had been in effect since the beginning of this year and will remain in effect for 2012.
Thanks to the country’s supportive policies, China produced 385 animated films in 2010, a 28 percent yearon-year increase. The industry also earned more than 500 million yuan ($79 million) from exports in 2010, marking a rise of 60 percent year-on-year, according to the State Administration of Radio, Film and Television.
China’s central authorities in October released the full text of a guideline adopted by a plenary session of the Communist Party of China (CPC) Central Committee, urging more importance be given to cultural development.
The 17th Central Committee of the CPC held its Sixth Plenary Session in Beijing from Oct 15 to 18, when the plenum discussed issues regarding the reform of the country’s cultural system.
The Chinese animation industry has been striving to achieve international fame and promote Chinese culture through exports, a move that is being seen as part of the government’s plan to strengthen its soft power and extend its influence, industry insiders and experts said.
Industry insiders have also attributed the rapid export growth to an emphasis on originality and creativity among Chinese animators.
The industry previously operated as a mere “manufacturer” of foreign animation products, winning little global recognition, said Ye Zhenghua, a professor from the Guangzhou Academy of Fine Arts. But the industry has managed to quickly restructure itself and shift its focus to creating original products, thus creating a more prosperous market, Ye said. China is making every effort to strength its soft power on the international stage by various means. Cartoon industry is just an example.
Officials call for support of the cultural industry
To compete with foreign rivals,
Chinese cultural businesses should both become stronger and adapt to the international culture market, a senior cultural official was quoted as saying by China Daily.
From 2001 to 2010, the value of China’s exports of cultural products increased 2.8 times and its exports of cultural services increased 8.7 times, according to the Ministry of Commerce.
“In general, there is still a long way to go for the strength of our cultural trade to grow, since it depends on the development of the domestic cultural industry,” said Hou Xianghua, director of the Ministry of Culture’s bureau of external cultural relations. “Among everything that should be improved, Chinese cultural enterprises should play a dominant role.”
In September 2009, the State Council, China’s cabinet, released a Blueprint for Reinvigorating the Culture Industry. In keeping with the document’s goals, the government has placed a priority on developing a central part of the industry: the production of content.
“The cultural industry entails many risks,” Hou said.“Once one product becomes popular in the market, the low cost of reproduction will turn it into a high-profit industry.”
The government is in part supporting the cultural industry by rewarding businesses that have successfully entered the international market and by providing subsidies to emerging companies.
In recent years, the Ministry of Culture has supported domestic cultural companies through the distribution of information pertaining to their business and through the use of financing and training.
“To promote Chinese cultural products on the international stage, the most important thing is to adapt them to the needs of the international market,” Hou said. “That means conveying Chinese culture in a way that might strike a chord among people throughout the world.”
Running a cultural business requires that cultural products be invented, produced, marketed and managed.
China, with its rich historical culture,is seeing more and more changes and innovations in the culture industry. However, that is far from enough. More support including policies and investment is needed.
China’s financial system stable, but potential risks remain
According to Xinhua on January 7, China’s financial
system is running on a stable course despite the global financial crisis. However, apparent problems and potential risks still linger, as the crisis has not ended, Premier Wen Jiabao said.
Wen made the remarks at the two-day National Financial Work Conference. The meeting, held every five years, mapped out development plans for the financial sector in the upcoming five years. Similar meetings were held in 1997, 2002 and 2007.
“China’s economy has maintained stable and relatively fast growth with stabilized consumer prices and improvements in people’s lives. The financial system is running steadily. The good momentum of economic and social development remains unchanged,” Wen said.
In the future, China will stick to the principal of having the financial industry serve the real economy to prevent virtual bubbles from inflating the economy, he noted.
Wen voiced his support for the development of financial innovation, but stressed that this should not escape supervision. “Risk-aversion should be the lifeline of our financial work,” he said.
He pledged to allow market forces a greater say in deciding fund allocation and to more clearly define the government’s role. Financial oversight will be tightened and improved, and banks should establish a more complete and prudent supervision system, he said.
According to a statement released after the meeting, China’s assets in the financial industry totaled RMB 119 trillion (US$18.8 trillion) at the end of November 2011, a 149-percent increase from that at the end of 2006.
As of the end of September 2011, the banking capital adequacy ratio stood at 12.3 percent, 5 percentage points higher than that at the end of 2006, while the non-performing loan ratio was 0.9 percent, 6.2 percentage points lower than that at the end of 2006. China has resolutely pushed forward a series of financial reforms which have set significant historical milestones. Large commercial banks have remarkably improved their capabilities of guarding against risks.
Central bank suspends bill issue ahead of Lunar New Year holiday
Xinhua reported on January 6 that the People’s Bank of
China (PBOC), the country’s central bank, said it will suspend sales of bills in the open market to ensure bank liquidity ahead of the week-long Lunar New Year holiday in late January.
The PBOC said it will conduct short-term reverserepurchase agreement operations “if necessary” to inject money into banks through purchases of securities with an agreement to resell them at future dates.
Increasing demand for cash ahead of the Lunar New Year has already begun to squeeze banks’ liquidity.
The central bank injected RMB 51 billion (US$8.07 billion) into the banking system this week, the biggest liquidity injection in two months, to help banks meet customers’ soaring demand for cash during the holiday.
Banks’ liquidity is expected to tighten further, as only RMB 75 billion in bills and repurchase agreements will be due in the coming three weeks, experts said.
“People tend to spend more during the Lunar New Year holiday, adding to banks’ pressure to meet customers’ cash withdrawal and payment demands,”said Zhao Xijun, a finance professor at Renmin University of China.
A falling monetary base due to the shrinking yuan position for foreign currencies over the past two months also led to tighter liquidity in the market, Zhao said.
“The suspension of bill sales shows that the PBOC hopes to stabilize banking liquidity through open market operations, thus reducing the likelihood for the central bank to scale down banks’ reserve requirement ratio(RRR) in the near term,” Zhao said.
The central bank’s move to suspend bill sales is intended to prevent a tightening of liquidity in the banking system.
Time is right for watchmakers
No matter in which part of the globe you stand, the
chances are that you won’t be far away from a watch shop, and that many of the watches, expensive or not, will have come from one place: Shenzhen, China Daily reported. Over the past 20 years the former fishing village in southern Guangdong province has become the world’s largest outsourcing base for time
pieces.
Watchmaking in Shenzhen began to blossom when the industry in neighboring Hong Kong started to migrate northward into the mainland in the 1980s. About 1,100 watch companies now call Shenzhen home, and they produced 800 million watches in 2010, accounting for more than 43 percent of global production, according to the Shenzhen Watch and Clock Association (SWCA). More than 80 percent were exported, particularly to Europe and the US.
But watchmakers in Shenzhen are no longer content to remain a manufacturing center for overseas brands. They are trying to reshape the old business models by investing heavily in branding their own inde
pendently designed products, aspiring to upgrade Shenzhen from the hub for the world’s watch original equipment manufacturers (OEMs) to a place that produces its own top brands.
“Making our own branded items will not only help to reduce our dependence on overseas orders but, more importantly, will ensure Shenzhen’s watch industry will develop sustainably,” said Zhu Shunhua, secretary-general of the SWCA.
Zhu said the global financial crisis has led to a sharp drop in orders from Europe and the US, where most of the outsourcers are situated, forcing a rethink about Shenzhen’s watch industry.
“Enhancing innovation, research and development capabilities as well as strengthening brand-building efforts, are vital for Shenzhen watchmakers to survive the increasingly intense competition both at home and abroad,” Zhu said.
He added that by the end of last year more than 150 watch companies in Shenzhen had set up their own brands, 37 percent of them having developed about 600 intellectual property rights and patents.
As the world’s largest watch-outsourcing base, Zhu said the quality of Shenzhen-made watches is guaranteed, but the city’s watchmakers will have their work cut out to step into the high-end market because of a lack of brand-awareness.
“The high prices of Swiss-made watches are a result not only of their quality, but also of brand-awareness,” Zhu said.
“Shenzhen watch manufacturers should learn from their Swiss competitors to persuade more people to see ‘Made in Shenzhen’ as a quality seal.”
In the race to upgrade, some watchmakers in Shenzhen have already made big strides.
The Hong Kong-listed Ebohr Luxuries International Ltd is one of a number of pioneering enterprises that have dedicated themselves to creating Chinese watch brands that will be recognized by all.
Ebohr, established in Shenzhen about 20 years ago, started as a processing and assembly factory making watches on order for companies in Europe and the US, but the slim profit margins prompted Tao Li, the founder and managing director, to build his own watch empire.
“We could only earn HK$8 ($1) for each watch we made at that time,” Tao said. He realized that the labor-intensive outsourcing business relied heavily on overseas orders, resulting in restricted room for development in the long run.
Ebohr’s rising popularity has driven up its brand value, which was put at about 1.8 billion yuan($285 million) by the consultancy World Brand Lab in 2010.
But Tao wants more: he would like Ebohr to rank among the world’s top watch brands.
As part of the strategy to realize that ambition, Ebohr has become the first watch business in Shenzhen to start using advanced 3D design software from Dassault Systemes SA of France to optimize its design process.
It also works with Swarovski Crystal of Austria, using its gemstones in its latest watch for women.
Since 2009, the company has hired master designers from Switzerland, who not only design watches, but also provide extensive training for Ebohr’s Chinese staff.
“Even Ebohr’s counter and merchandise displays in department stores are designed by our European professionals,”said Tao.
As more international brands covet the vast Chinese market, the watchmakers in Shenzhen are also facing increasing pressure to win over more consumers in the domestic market, especially in the mid- to high-end segment. Watchmakers in Shenzhen are upgrading the watch industry, a significant step signifying China’s transformation from “Made In China” to “Created in China”.
According to Xinhua on December 20 of 2011, due to
steady global demand for consumer electronics, Taiwan’s export value in November reached US$36.65 billion, up 2.54 percent year-on-year.
However, the figure showed a 560-million-U.S.-dollar drop from that of October due to the EU debt crisis continuing to hit the United States and emerging markets, an official with the department said.
Orders from the Chinese mainland, Taiwan’s largest export destination, registered US$9.2 billion in November, up only 0.14 percent year-on-year, the lowest level since July 2009, the report said.
Among all orders, sales of electronic products expanded by US$220 million, or 2.52 percent, year-on-year, thanks to global demand for consumer electronics that remained steady in November and boosted orders for electronic parts manufactured in Taiwan.
Furthermore, due to strong global demand for Apple’s iPhone and iPad, export orders for Taiwan’s IT products increased by US$100 million, or 1.1 percent, year-on-year. The production of Apple’s major electronic parts has been outsourced to Taiwan and the Chinese mainland where its manufacturers and factories are located. Orders from the Chinese mainland are becoming increasingly vital for Taiwan’s ex
port value thus strengthening economic ties between the mainland and Taiwan.
GOME sues ex-chairman
According to Xinhua on January 5, a Beijing court heard a
lawsuit filed by a leading Chinese home appliance retailer against its former chairman over his allegedly misleading media interview that the company claimed “seriously damaged the firm’s reputation and business operations.”
GOME’s ex-chairman Chen Xiao was accused of giving an interview in May of 2011 to financial newspaper 21st Century Business Herald in which he disclosed the company’s operations and warned investors not to hold GOME’s stocks.
GOME’s executive chairman Zou Xiaochun told the Beijing No. 2 Intermediate People’s Court that Chen breached a contract with the company upon his resignation in March of 2011. The contract allegedly stated that Chen would be paid RMB 10 million (US$1.57 million) to keep his mouth shut about the company. Zou asked the court to order Chen to repay the RMB 10 million.
Chen was not present at the trial. His defense lawyer stated that the sum was paid in the name of “compensation for senior executives” and there was no evidence that the payment was intended to keep Chen silent.
The court was adjourned two hours after the trial started. The judge announced that the trial would be continued and asked both sides to prepare evidence.
Chen, 52, was appointed as GOME’s chairman on Jan. 16, 2009 after GOME founder and former chairman Huang Guangyu was detained by Beijing police over suspicion of illegal business deals, insider trading and corporate bribery. Huang sought Chen’s ouster but was voted down by shareholders in September 2010.
Chen said he resigned “to spend time with his family.” But it was not until his resignation that Chen’s sour relationship with GOME executives surfaced. In China, commercial law is far from perfect so that many people can take fully advantage of the so-called “policy holes” to seek benefit. As far as the GOME case is concerned, trying to find a legal solution is the best way expected.
Microsoft to pull out of Consumer Electronics Show
Xinhua reported on December 21, 2011 that Micro
soft announced to pull out of the annual Consumer Electronics Show (CES) held in Las Vegas, saying the keynote and booth at the upcoming CES will be its last at the event.
The company’s Chief Executive Officer Steve Ballmer will give the final keynote on Jan. 9. Microsoft has been a major participant in CES for 14 years, annually highlighting its products and technology trends during the keynote.
CES, known for technology debuts and product announcements, has been said to have less wow factors in recent years, as more big companies choose their own timeline to introduce new products. Apple, the most popular and innovative in the industry, does not participate in the show.
The Consumer Electronics Association, which puts on CES, said in a statement that it had received expressions of interest for the space Microsoft has used in past years, a major exhibit space at the trade show. CES is a great place to connect with partners and customers across the PC, phone and entertainment industries. With the way that people communicate with each other change in speedy ways, it feels like the right time to put and end to a keynote.
Xinhua reported on December 28 of 2011 that Chinese
vice Premier Hui Liangyu said China must avoid mishaps in supply of major farm produce because agriculture is vital to ensure stable price levels, fast economic growth and social stability.
Hui said the agricultural sector has witnessed continuous, comprehensive and faster development in 2011, which has played a key role in curbing inflation and maintaining social stability.
The vice premier also highlighted the effective supply of farm produce, fiscal spending on infrastructure building, and farmers’ livelihoods as the major fields on which the country will work next year.
Government data showed grain output rose to record high 571.21 million tonnes in 2011. The figure represented a year-on-year increase of 4.5 percent and marked the eighth consecutive year of growth for the country’s grain output.
It also marked the fifth straight year that China’s total grain output exceeded 500 million tonnes, which indicated a more consolidated foundation for food security in the world’s most populous nation.
“Any slight failure in agriculture will hamper the country’s economic development and social stability,” Premier Wen Jiabao said.
Wen also said that agricultural work is of particular significance next year, faced with the complicated macroeconomic condition and the dual pressures of an economic slowdown and a rising inflation. Meanwhile, he urged more efforts to be taken to protect farmers’ rights in land properties.
Gan Zangchun, a state-land supervisor with the Ministry of Land and Resources, said land requisition must be reformed to ensure farmers’ rights as rapid urbanization has given rise to frequent land disputes in recent years. Scientific and technological advancement and transformation of the agriculture growth pattern will be the key and fundamental solutions to developing a modern agriculture, as environment and resources impose greater constraints.
Organic farming experiment could revitalize China’s countryside
According to Xinhua on January 6, although she grew up
in the posh city of Hangzhou in eastern China, Luo Yi has opted to settle down on a farm in a northern suburb of Beijing.
The 23-year-old woman graduated from college last year with a journalism degree. She was won over by the Little Donkey Farm’s organic farming concept and community supported agriculture (CSA) model, and now she spends her days watering vegetables, making pickles, and learning needlework
While a large number of rural youths have abandoned the traditional farming lifestyle in order to move to cities for more work opportunities, some young people from cities have looked to the countryside for an alternative lifestyle or a new career path.
She has stopped using her mobile phone and no longer shops for new clothes. Instead, she has learned to alter her old clothes into new styles, and she exchanges clothes with her female colleagues at the farm.
“My parents strongly opposed my decision to work in the farm. Over the past few months, they have been shocked by the changes in my life, and they have gradually come to understand me,” she said.
The Little Donkey Farm was founded three years ago by Shi Yan, a young agriculture scholar from Renmin University of China. Shi was inspired by her six-month experience as an apprentice at a CSA farm in Minnesota, United States.
Shi has applied the CSA model to her farm, which grows organic vegetables and sells them directly to individual consumers in Beijing.
Consumers can sign a year-long contract to purchase organic vegetables grown by the farm, and choose to either pick up their produce at various locations throughout the city or have the farm deliver it directly to their door. They can also rent a 30-square-meter plot at Shi’s farm to do their own gardening.
More than 30 young people are currently working for the farm, most of whom are from the cities and had not farmed prior to coming here. They are working side-by-side with about 20 local villagers.
When the farm was established in 2009, only 37 clients placed annual orders and 17 rented their own plots. But now over 460 clients order vegetables and 260 lease land, said Huang Zhiyou, vice general manager of the farm.
Organic farms, which provide more
income for farmers, might attract migrant workers to come home and return to farming. The farm is also a way for urban residents to learn more about rural areas and farming.
China’s gold imports from HK hit record high
Chinese mainland’s gold imports from Hong Kong
surged to a record high in November 2011 as demands continue to grow with the Chinese New Year drawing near and investors turn to gold bars to hedge financial risks, according to China.org.cn.
According to the Census and Statistics Department of the Hong Kong government, mainland China imported
102,779 kilograms of gold from Hong Kong in November 2011, up from the 86,299 kilograms in October. This also marked the fifth consecutive increase. In the first 11 months of 2011, Chinese mainland bought a total of 389,295 kilograms from Hong Kong.
Individuals buying gold bars or jewelleries account for the majority of China’s gold consumption. In the third quarter of 2010, China overtook India as the largest gold jewelry market, according to the World Gold Council. The country is also the world’s biggest producer of gold.
Imports were profitable as prices in Hong Kong mostly traded at a discount to those in China in November. Gold for immediate delivery of 99.99 percent purity on the Shanghai Gold Exchange averaged 356.05 yuan a gram($1,753 an ounce) in November, compared with an average of 434.68 Hong Kong dollars (353 yuan) at the Chinese Gold & Silver Exchange Society.
Xia Bin, adviser to the country’s central bank last month called on China to increase its gold reserves as a long-term strategy to diversify its foreign exchange reserves and promote yuan’s internationalization.
Demand for gold is climbing in China
as individuals seek to protect their
wealth against sluggish property equity markets.
Mining opportunities in Africa
Qingdao Kingking Group, the second-largest candle
maker in the world, plans to invest $100 million to develop gold and copper mines across the world in the next three years, according to China Daily report.
“As part of an expansion plan, the company, together with a trading company from Anhui province, is looking at buying a gold mine in Mozambique,” said Huang Bao’an, administrative vice-president of Kingking Group. The mine occupies more than 100 square kilometers.
The Mozambique gold mine was once owned by a Portuguese company, and Kingking’s partner in Anhui province has obtained development rights from the Mozambique government.
The two companies agreed to exploit the mine together. Kingking is to provide the technology to be used in the venture and recently sent a team to examine the mine.
“Beyond the mines in Mozambique, Kingking is looking at similar sources of gold and copper in South Africa and other parts of Africa,” Huang said.
In January 2009, Kingking bought oil fields occupying 9 sq km from the State of Oklahoma in the United States, marking the first time a Chinese company has bought oil fields in that country.
“The move helped us expand upstream and get a stable supply of raw materials for making candle products,” Huang said.
After the deal, the company purchased six oil fields occupying 290 sq km in the US states of Texas and Louisiana. The six fields contain reserves equal to 600 million barrels of crude oil and 15 billion cubic meters of natural gas.
“Our success (in brokering deals in the US) stems from the global financial crisis, which led to financial troubles for energy-investment companies and also forced the US government to loosen investment restrictions on energy deals,”Huang said.
Chen Suobin, chairman of Kingking Group, was recently quoted by the China Business News as saying that the company plans to concentrate especially on the development of gold mines.
In November 2011, the company announced a plan to buy 80 percent of the shares of Rushan Daye Gold Mine in Shandong province, which owns 16 gold mines.
In March 2011, Kingking began working with a research institute from Baoding in Hebei province, to learn more about gold mines in the province. A large number of energy projects in Africa are in the hands of European companies. Due to the spreading European debt crisis, many European companies find themselves in difficulties and
are looking at halting or withdrawing their investments. This has given Chinese businesses huge opportunities to invest abroad and develop natural resources.
China to increase coal-bed methane output
China aims to increase coal-bed methane output this
year while avoiding coal mine gas leak accidents, a senior official said January 16.
According to Xinhua’s report, the country’s coal-bed methane output is expected to reach 15.5 billion cubic meters in 2012, up from 11.5 billion cubic meters last year, said Liu Tienan, head of the National Energy Administration.
Meanwhile, China targets a 10-percent reduction in major coal mine gas accidents and their resulting death tolls this year, he said.
Rising demand for coal and gas will complicate the country’s efforts to prevent accidents, Liu said while calling for efforts to step up the monitoring of coal mine operations and strengthen innovation of gas control technologies.
China reported 119 mine gas accidents last year with a death toll of 533, down from 155 accidents and 623 deaths in 2010. Production safety should always come first, ever.
China to retrieve more natural gas
China’s output of natural gas is expected to increase by
11 percent in 2012 to reach 113 billion cubic meters, the China Petroleum and Chemical Industry Federation(CPCIF) said on January 11, China Daily reported.
The country is expected to use more than 200 million tons of crude oil, an increase of 1.5 percent from the year before. And it is expected to produce about 280 million tons of diesel fuel and gasoline, an increase of 5 percent, the federation said.
Buoyed by strong domestic demand, the country’s apparent consumption of crude oil - which includes domestic output and imports but excludes exports - is expected to amount to 480 million tons this year. That will be an increase of 5.3 percent from the year before.
The demand for natural gas will call for the use of 148.2 billion cu m of the fuel, an increase of 15.3 percent from a year ago, said CPCIF.
The apparent consumption of crude oil is expected to increase by an average of 5 percent during each year of the 12th Five-Year Plan (2011-15). And the amount of natural gas used is expected to increase by an average of 19.4 percent a year during that time, said Li Shousheng, executive vicepresident of the CPCIF.
The Federation said the amount of China’s refining capacity reached 590 million tons in 2011, an increase of 6.9 percent from the year before. The strict controls the government has placed on diesel fuel and gasoline prices are believed by many to have caused the country’s petroleum-
processing industry to lose 4.98 billion yuan ($788.6 million) from January to October in 2011.
The federation said the apparent consumption of diesel fuel and gasoline is expected to increase by 5.8 percent, hitting 280 million tons this year.
The domestic industry has overcapacity, Li said, adding that the country will continue to consolidate domestic refineries and close down small refineries that are inefficient and have slim capacities, he said. To increase the production is fine, but the more important is to use the energy in a more efficient way.
China says energy consumption is controllable
Local governments have formed a consensus on China’s
overall plan to control total energy consumption, the nation’s energy chief said on January 11, as Xinhua reported.
After some revisions, the plan will be submitted to the State Council, or China’s Cabinet, for approval, Liu Tienan, head of the National Energy Administration (NEA), said at a national energy work conference that concluded that day.
The country aims to establish a unified nationwide index system for energy consumption by 2015, and the system will be included in the performance assessments of local governments, said Liu.
The index system, however, will not include recent additions, including consumption of renewable energy, coal gangue and mud used to generate electricity, coal-bed gas and shale gas, waste heat and excess pressure that works to produce electricity, according to Liu.
The energy chief admitted that the nation is under greater pressure to ensure energy supplies this year as both demand and international competition for resources grows.
He said the nation should improve relevant policies such as industrial, fiscal, pricing and financial regulations to support the energy consumption control plan, adding that authorities are studying a trading system for the energy consumption index.
China’s power consumption, a key indicator measuring the country’s economic vitality, rose 11.7 percent yearon-year to 4.7 trillion kilowatt hours in 2011. Growth in 2012 is expected to slow to 8.5 percent amid the country’s economic slowdown.
Figures on the nation’s primary energy consumption in 2011 have not yet been released. In 2010, China’s primary energy consumption rose 5.9 percent year-on-year to 3.25 billion tonnes of coal equivalent, making it the world’s second largest energy consumer after the United States. In the end of 11th five year plan, some areas in China once shut the daily use of electricity to achieve the goal of “emissions reduction”. Hope it won’t happen again during the 12th Plan.
Officials weighing green benefits of carbon taxation
China is considering levying a carbon tax within the next
three years to tighten its regulations on polluting industries and put the economy on a greener path, according to China Daily.
A draft of a new system of taxation has been submitted by the Fiscal Science Research Center of the Ministry of Finance to the ministry for review. The plan would impose a tax on emissions of greenhouse gases, Su Ming, deputy director of the center, said on Jan. 5.
Su said the tax is likely to be charged at a rate of 10 yuan ($1.59) for each ton of carbon dioxide that a business or other operations discharges. That rate is expected to increase gradually over time.
The main targets of the tax will be large users of coal, crude oil and natural gas, and tax cuts will be given to companies that take steps to reduce their emissions, Su said.
Jiang Kejun, a researcher with the National Development and Reform Commission’s Energy Research Institute, who helped draft the tax proposal, said the tax is likely to be collected only from producers and wholesalers of fossil-fuel based energy. This will make it easier to collect the tax.
“But it may still raise the price of energy,” Jiang said.
China emitted 8.33 billion tons of carbon dioxide in 2010, a quarter of total global emissions, according to a report by the UK energy company BP PLC. During the Durban climate talks last year, China pledged to reduce the amount of carbon dioxide produced for each unit of GDP by 17 percent by 2015.
Even so, the recent Central Economic Work Conference determined that a greater priority should be placed on reforming the country’s tax system in 2012 and on researching the possible effects of imposing taxes to protect the environment.
“But 2012 may not be a good time to introduce carbon taxes, considering the risk (they might introduce) of slowing economic growth,” Su said.
He said the taxes will begin to be collected by the end of the 12th Five-Year Plan (2011-15).
“The carbon tax will bring many benefits,” Jia Kang, who heads the finance ministry’s research center, was quoted as saying by the Economic Information Daily.
“One is to raise companies’ environmental costs and force them to improve their production technology.”
Meanwhile, the additional revenue from a carbon tax will make it easier for the government to lower other sorts of taxes imposed on businesses, such as income taxes, he said. As a large country of carbon dioxide emission, China is duty-bound to adopt strict measures to reduce pollution for a greener economy and environment, though it will take a long time.
China to construct large offshore wind farm in northern province
China will construct an offshore wind farm with an
installed capacity of 300 megawatts (MW) in Leting County, north China’s Hebei Province, making it the country’s largest such project, said Xinhua.
The feasibility report for the wind farm located near Puti Island in Bohai Sea has recently passed expert reviews that were commissioned by the National Energy Bureau(NEB).
Under the program, the wind farm, built with a total investment of 5.76 billion yuan (914 million U.S. dollars), will comprise 100 units of 3MW offshore turbines. The approval authority will complete relevant procedures to sanction the project at the end of this year, and the project will be connected to the grid before the end of 2015.
When it goes into operation, the wind farm will generate 752 million kilowatt-hours (kwh) of electric power annually, as well as 730 million yuan in annual sales revenues. It was also pay 58 million yuan in taxes to the local government.
Leting County has 124.9 kilometers of coastline, or a quarter of Hebei’s total coastline. The county boasts rich exploitable wind power resources, totaling 3.7 gigawatts (GW).
The county government established an offshore wind power development plan in early 2011. The NEB gave its approval for the county to prepare for the 300MW offshore wind power project in June 2011.
The fast-growing wind industry in
China has contributed a lot for the country’s economy and environment. Though, we should focus on its actual use and try to avoid overcapacity.
Cartoon industry gets more animated
The Chinese government announced at the end of last
year that the nation will continue offering value-added tax (VAT) refunds to the animation industry this year in its efforts to boost cultural development, China Daily reported.
For companies that develop and make their own animation software products, VAT at 17 percent will be levied, but the portion of VAT which exceeds 3 percent of the taxpayer’s actual VAT burden will be refunded upon tax collection, the Ministry of Finance said in a statement on its website.
Meanwhile, business tax for animation companies and their income from sales of their copyrights will remain at 3 percent.
The statement said the policies had been in effect since the beginning of this year and will remain in effect for 2012.
Thanks to the country’s supportive policies, China produced 385 animated films in 2010, a 28 percent yearon-year increase. The industry also earned more than 500 million yuan ($79 million) from exports in 2010, marking a rise of 60 percent year-on-year, according to the State Administration of Radio, Film and Television.
China’s central authorities in October released the full text of a guideline adopted by a plenary session of the Communist Party of China (CPC) Central Committee, urging more importance be given to cultural development.
The 17th Central Committee of the CPC held its Sixth Plenary Session in Beijing from Oct 15 to 18, when the plenum discussed issues regarding the reform of the country’s cultural system.
The Chinese animation industry has been striving to achieve international fame and promote Chinese culture through exports, a move that is being seen as part of the government’s plan to strengthen its soft power and extend its influence, industry insiders and experts said.
Industry insiders have also attributed the rapid export growth to an emphasis on originality and creativity among Chinese animators.
The industry previously operated as a mere “manufacturer” of foreign animation products, winning little global recognition, said Ye Zhenghua, a professor from the Guangzhou Academy of Fine Arts. But the industry has managed to quickly restructure itself and shift its focus to creating original products, thus creating a more prosperous market, Ye said. China is making every effort to strength its soft power on the international stage by various means. Cartoon industry is just an example.
Officials call for support of the cultural industry
To compete with foreign rivals,
Chinese cultural businesses should both become stronger and adapt to the international culture market, a senior cultural official was quoted as saying by China Daily.
From 2001 to 2010, the value of China’s exports of cultural products increased 2.8 times and its exports of cultural services increased 8.7 times, according to the Ministry of Commerce.
“In general, there is still a long way to go for the strength of our cultural trade to grow, since it depends on the development of the domestic cultural industry,” said Hou Xianghua, director of the Ministry of Culture’s bureau of external cultural relations. “Among everything that should be improved, Chinese cultural enterprises should play a dominant role.”
In September 2009, the State Council, China’s cabinet, released a Blueprint for Reinvigorating the Culture Industry. In keeping with the document’s goals, the government has placed a priority on developing a central part of the industry: the production of content.
“The cultural industry entails many risks,” Hou said.“Once one product becomes popular in the market, the low cost of reproduction will turn it into a high-profit industry.”
The government is in part supporting the cultural industry by rewarding businesses that have successfully entered the international market and by providing subsidies to emerging companies.
In recent years, the Ministry of Culture has supported domestic cultural companies through the distribution of information pertaining to their business and through the use of financing and training.
“To promote Chinese cultural products on the international stage, the most important thing is to adapt them to the needs of the international market,” Hou said. “That means conveying Chinese culture in a way that might strike a chord among people throughout the world.”
Running a cultural business requires that cultural products be invented, produced, marketed and managed.
China, with its rich historical culture,is seeing more and more changes and innovations in the culture industry. However, that is far from enough. More support including policies and investment is needed.
China’s financial system stable, but potential risks remain
According to Xinhua on January 7, China’s financial
system is running on a stable course despite the global financial crisis. However, apparent problems and potential risks still linger, as the crisis has not ended, Premier Wen Jiabao said.
Wen made the remarks at the two-day National Financial Work Conference. The meeting, held every five years, mapped out development plans for the financial sector in the upcoming five years. Similar meetings were held in 1997, 2002 and 2007.
“China’s economy has maintained stable and relatively fast growth with stabilized consumer prices and improvements in people’s lives. The financial system is running steadily. The good momentum of economic and social development remains unchanged,” Wen said.
In the future, China will stick to the principal of having the financial industry serve the real economy to prevent virtual bubbles from inflating the economy, he noted.
Wen voiced his support for the development of financial innovation, but stressed that this should not escape supervision. “Risk-aversion should be the lifeline of our financial work,” he said.
He pledged to allow market forces a greater say in deciding fund allocation and to more clearly define the government’s role. Financial oversight will be tightened and improved, and banks should establish a more complete and prudent supervision system, he said.
According to a statement released after the meeting, China’s assets in the financial industry totaled RMB 119 trillion (US$18.8 trillion) at the end of November 2011, a 149-percent increase from that at the end of 2006.
As of the end of September 2011, the banking capital adequacy ratio stood at 12.3 percent, 5 percentage points higher than that at the end of 2006, while the non-performing loan ratio was 0.9 percent, 6.2 percentage points lower than that at the end of 2006. China has resolutely pushed forward a series of financial reforms which have set significant historical milestones. Large commercial banks have remarkably improved their capabilities of guarding against risks.
Central bank suspends bill issue ahead of Lunar New Year holiday
Xinhua reported on January 6 that the People’s Bank of
China (PBOC), the country’s central bank, said it will suspend sales of bills in the open market to ensure bank liquidity ahead of the week-long Lunar New Year holiday in late January.
The PBOC said it will conduct short-term reverserepurchase agreement operations “if necessary” to inject money into banks through purchases of securities with an agreement to resell them at future dates.
Increasing demand for cash ahead of the Lunar New Year has already begun to squeeze banks’ liquidity.
The central bank injected RMB 51 billion (US$8.07 billion) into the banking system this week, the biggest liquidity injection in two months, to help banks meet customers’ soaring demand for cash during the holiday.
Banks’ liquidity is expected to tighten further, as only RMB 75 billion in bills and repurchase agreements will be due in the coming three weeks, experts said.
“People tend to spend more during the Lunar New Year holiday, adding to banks’ pressure to meet customers’ cash withdrawal and payment demands,”said Zhao Xijun, a finance professor at Renmin University of China.
A falling monetary base due to the shrinking yuan position for foreign currencies over the past two months also led to tighter liquidity in the market, Zhao said.
“The suspension of bill sales shows that the PBOC hopes to stabilize banking liquidity through open market operations, thus reducing the likelihood for the central bank to scale down banks’ reserve requirement ratio(RRR) in the near term,” Zhao said.
The central bank’s move to suspend bill sales is intended to prevent a tightening of liquidity in the banking system.
Time is right for watchmakers
No matter in which part of the globe you stand, the
chances are that you won’t be far away from a watch shop, and that many of the watches, expensive or not, will have come from one place: Shenzhen, China Daily reported. Over the past 20 years the former fishing village in southern Guangdong province has become the world’s largest outsourcing base for time
pieces.
Watchmaking in Shenzhen began to blossom when the industry in neighboring Hong Kong started to migrate northward into the mainland in the 1980s. About 1,100 watch companies now call Shenzhen home, and they produced 800 million watches in 2010, accounting for more than 43 percent of global production, according to the Shenzhen Watch and Clock Association (SWCA). More than 80 percent were exported, particularly to Europe and the US.
But watchmakers in Shenzhen are no longer content to remain a manufacturing center for overseas brands. They are trying to reshape the old business models by investing heavily in branding their own inde
pendently designed products, aspiring to upgrade Shenzhen from the hub for the world’s watch original equipment manufacturers (OEMs) to a place that produces its own top brands.
“Making our own branded items will not only help to reduce our dependence on overseas orders but, more importantly, will ensure Shenzhen’s watch industry will develop sustainably,” said Zhu Shunhua, secretary-general of the SWCA.
Zhu said the global financial crisis has led to a sharp drop in orders from Europe and the US, where most of the outsourcers are situated, forcing a rethink about Shenzhen’s watch industry.
“Enhancing innovation, research and development capabilities as well as strengthening brand-building efforts, are vital for Shenzhen watchmakers to survive the increasingly intense competition both at home and abroad,” Zhu said.
He added that by the end of last year more than 150 watch companies in Shenzhen had set up their own brands, 37 percent of them having developed about 600 intellectual property rights and patents.
As the world’s largest watch-outsourcing base, Zhu said the quality of Shenzhen-made watches is guaranteed, but the city’s watchmakers will have their work cut out to step into the high-end market because of a lack of brand-awareness.
“The high prices of Swiss-made watches are a result not only of their quality, but also of brand-awareness,” Zhu said.
“Shenzhen watch manufacturers should learn from their Swiss competitors to persuade more people to see ‘Made in Shenzhen’ as a quality seal.”
In the race to upgrade, some watchmakers in Shenzhen have already made big strides.
The Hong Kong-listed Ebohr Luxuries International Ltd is one of a number of pioneering enterprises that have dedicated themselves to creating Chinese watch brands that will be recognized by all.
Ebohr, established in Shenzhen about 20 years ago, started as a processing and assembly factory making watches on order for companies in Europe and the US, but the slim profit margins prompted Tao Li, the founder and managing director, to build his own watch empire.
“We could only earn HK$8 ($1) for each watch we made at that time,” Tao said. He realized that the labor-intensive outsourcing business relied heavily on overseas orders, resulting in restricted room for development in the long run.
Ebohr’s rising popularity has driven up its brand value, which was put at about 1.8 billion yuan($285 million) by the consultancy World Brand Lab in 2010.
But Tao wants more: he would like Ebohr to rank among the world’s top watch brands.
As part of the strategy to realize that ambition, Ebohr has become the first watch business in Shenzhen to start using advanced 3D design software from Dassault Systemes SA of France to optimize its design process.
It also works with Swarovski Crystal of Austria, using its gemstones in its latest watch for women.
Since 2009, the company has hired master designers from Switzerland, who not only design watches, but also provide extensive training for Ebohr’s Chinese staff.
“Even Ebohr’s counter and merchandise displays in department stores are designed by our European professionals,”said Tao.
As more international brands covet the vast Chinese market, the watchmakers in Shenzhen are also facing increasing pressure to win over more consumers in the domestic market, especially in the mid- to high-end segment. Watchmakers in Shenzhen are upgrading the watch industry, a significant step signifying China’s transformation from “Made In China” to “Created in China”.
According to Xinhua on December 20 of 2011, due to
steady global demand for consumer electronics, Taiwan’s export value in November reached US$36.65 billion, up 2.54 percent year-on-year.
However, the figure showed a 560-million-U.S.-dollar drop from that of October due to the EU debt crisis continuing to hit the United States and emerging markets, an official with the department said.
Orders from the Chinese mainland, Taiwan’s largest export destination, registered US$9.2 billion in November, up only 0.14 percent year-on-year, the lowest level since July 2009, the report said.
Among all orders, sales of electronic products expanded by US$220 million, or 2.52 percent, year-on-year, thanks to global demand for consumer electronics that remained steady in November and boosted orders for electronic parts manufactured in Taiwan.
Furthermore, due to strong global demand for Apple’s iPhone and iPad, export orders for Taiwan’s IT products increased by US$100 million, or 1.1 percent, year-on-year. The production of Apple’s major electronic parts has been outsourced to Taiwan and the Chinese mainland where its manufacturers and factories are located. Orders from the Chinese mainland are becoming increasingly vital for Taiwan’s ex
port value thus strengthening economic ties between the mainland and Taiwan.
GOME sues ex-chairman
According to Xinhua on January 5, a Beijing court heard a
lawsuit filed by a leading Chinese home appliance retailer against its former chairman over his allegedly misleading media interview that the company claimed “seriously damaged the firm’s reputation and business operations.”
GOME’s ex-chairman Chen Xiao was accused of giving an interview in May of 2011 to financial newspaper 21st Century Business Herald in which he disclosed the company’s operations and warned investors not to hold GOME’s stocks.
GOME’s executive chairman Zou Xiaochun told the Beijing No. 2 Intermediate People’s Court that Chen breached a contract with the company upon his resignation in March of 2011. The contract allegedly stated that Chen would be paid RMB 10 million (US$1.57 million) to keep his mouth shut about the company. Zou asked the court to order Chen to repay the RMB 10 million.
Chen was not present at the trial. His defense lawyer stated that the sum was paid in the name of “compensation for senior executives” and there was no evidence that the payment was intended to keep Chen silent.
The court was adjourned two hours after the trial started. The judge announced that the trial would be continued and asked both sides to prepare evidence.
Chen, 52, was appointed as GOME’s chairman on Jan. 16, 2009 after GOME founder and former chairman Huang Guangyu was detained by Beijing police over suspicion of illegal business deals, insider trading and corporate bribery. Huang sought Chen’s ouster but was voted down by shareholders in September 2010.
Chen said he resigned “to spend time with his family.” But it was not until his resignation that Chen’s sour relationship with GOME executives surfaced. In China, commercial law is far from perfect so that many people can take fully advantage of the so-called “policy holes” to seek benefit. As far as the GOME case is concerned, trying to find a legal solution is the best way expected.
Microsoft to pull out of Consumer Electronics Show
Xinhua reported on December 21, 2011 that Micro
soft announced to pull out of the annual Consumer Electronics Show (CES) held in Las Vegas, saying the keynote and booth at the upcoming CES will be its last at the event.
The company’s Chief Executive Officer Steve Ballmer will give the final keynote on Jan. 9. Microsoft has been a major participant in CES for 14 years, annually highlighting its products and technology trends during the keynote.
CES, known for technology debuts and product announcements, has been said to have less wow factors in recent years, as more big companies choose their own timeline to introduce new products. Apple, the most popular and innovative in the industry, does not participate in the show.
The Consumer Electronics Association, which puts on CES, said in a statement that it had received expressions of interest for the space Microsoft has used in past years, a major exhibit space at the trade show. CES is a great place to connect with partners and customers across the PC, phone and entertainment industries. With the way that people communicate with each other change in speedy ways, it feels like the right time to put and end to a keynote.