BRIEFS

GENERAL

Corning aims for China growth

Aiming to capitalize on its sales of glass used in LCD panels for computer monitors and .at-screen televisions, Corning Inc said it is target-ing its China sales this year to grow at two to three times the rate of the Chinese economy, Reuters reported, citing Corning Greater China Chief Executive Clark Kinlin. With the Chinese economy expected to grow by more than 9 per-cent this year, Corning's target would translate to an 18 percent or greater growth rate. Kinlin declined to specify Corning's China sales last year, but in 2003 its China sales reached about US$134 million. Corning, which produces half of all LCD glass worldwide, is also considering investing in a glass-making facility in China where the LCD panel industry is growing rap-idly.

Ad spending up 20 percent

Advertising spending in China grew 20 per-cent in the half of 2005, with spending on television, newspaper, and magazine ads across 166 cities totaling US$17.7 billion, as marketers continue to sell to an increas-ingly sophisticated consumer base, the Wall Street Journal reported, citing VNU's Nielsen Media Research. Foreign firms accounted for about 30 percent of the ad expenditures. Some industry experts expect China to become the world's second largest market for advertising by 2010.

Investor compensation scheme launched

A stock rescue fund to compensate investors who get caught up in the collapse of mainland brokerages is to be launched by regulators, state media reported. A company was set up in early September to manage the fund, overseen by five government agencies, including the China Securities Regulatory Commission, the Ministry of Finance and the People's Bank of China. Ana-lysts believe the fund, which will be financed by small portions of stock trading commissions from the Shanghai and Shenzhen stock exchanges, as well as brokerages, could be worth up to US$6.2 billion.

Nan Yue will buy 62 percent bus firm stake

Nan Yue Logistics Company, the logistics arm of state-owned Guangdong Provincial Com-munication Group (GPCG), Guangdong's pri-mary expressway operator, said it will buy a 62 percent stake in the Motor Transport Company of Guangdong and Hong Kong (GDHK), a com-pany owned by GPCG, Hong Kong's Standard reported. GDHK runs 53 bus routes with a .eet of 169 buses and made profits of US$28.5 million last year, an increase of 21 percent from 2003, according to vice chairman Zeng Hong An. Nan Yue chairman Lu Mao Hao cited Guangdong province provincial government's plans to build 8,800 kilometers of expressways and 550 kilometers of intercity railway traf.c network before 2030 as proof of huge business openings in logistics in the province.

Chinasoft secures Microsoft backing

Software giant Microsoft Corp and International Finance Corp (IFC) are to invest a combined US$35 million over three years in Chinasoft International, the South China Morning Post reported. Chinasoft hopes that Microsoft's in-volvement will help it become a major outsourc-ing services provider, with outsourcing orders from Microsoft alone expected to increase from US$1.2 million to US$5 million this year. As of the end of June, the company was 24.4 percent controlled by Far East Consortium International deputy chairman David Chiu Tat-cheong and Far East Technology managing director Dun Chiu Te-ken. State-backed China National Software and Services has a 20.2 percent stake.

Laundering legislation to spread net wider

Anti-money laundering efforts will be expanded to include the insurance, securities and real estate sectors as well as the sale of precious jewelry, as part of a campaign to rein in corruption, state media reported. In the past, policing efforts have focused on banks, with China's 17 commercial banks making more than 650,000 reports of suspicious transactions involving US$108 billion since the central bank established its anti-money laundering unit in April 2004. About 1,500 of these cases were handed over to the authorities for investigation.

Hisense helps out Kelon

Troubled appliance maker Guangdong Kelon Electrical Holdings will receive a US$74.2 million cash injection from its new control-ling shareholder, the Hisense Group, the South China Morning Post reported. Over the next six months, Hisense will purchase up to US$173 million worth of white goods from Kelon and resell them on the mainland, with the purchases being offset against its prepay-ment to Kelon. Kelon, listed in Hong Kong and Shenzhen, is the mainland's biggest re-frigerator maker and a leading air-conditioner manufacturer.

ECONOMY

Urban fixed asset investment up 28.5 percent

China's urban fixed asset investment grew faster than expected at a rate of 28.5 percent in August from a year earlier, the Wall Street Journal (WSJ) reported, citing the National Bureau of Labor and Statistics. August's growth remains much lower than the soaring 40-50 percent growth rates seen in 2003 and parts of 2004, suggesting the government won.t feel the need to curb growth by tight-ening monetary policy, the WSJ said, citing economists.

China brings in record amount of FDI

Foreign direct investment (FDI) in China rose to a new high of US$61 billion in 2004 from US$54 billion in 2003, making it the world's third largest investment destination, according to a United Nations study. Only the US, with an FDI of US$96 billion, and the UK, with US$78 billion, recorded higher totals. But these figures, which contrasted a 14 percent overall drop in FDI flows to industrialized countries, can be explained by increased activity in the volatile merger and acquisitions market as opposed to Asia's .greenfield. investments. China and Hong Kong accounted for two-thirds of all foreign investment coming into Asia.

China: trade surplus to top US$90 billion

China's Commerce Ministry has predicted a trade surplus of US$90-$100 billion for 2005, with the country's bilateral foreign trade expected to reach US$1.4 trillion, the International Business Daily reported. The ministry's foreign trade department forecast exports in 2005 would rise about 30 percent over the previous year to total US$750 billion, while imports would rise about 18 percent to US$660 billion. China registered a trade surplus of US$60.2 billion in the eight months of 2005, nearly double the US$32 billion posted in 2004. The August surplus of US$10 billion was the third biggest on record.

Brazil to investigate Chinese imports

With Brazil's trade surplus with China being eroded by more than half this year by Chinese imports, Brazilian President Luiz Inacio Lula da Silva has authorized the country's trade ministry to investigate whether Brazilian industries have been damaged by alleged unfair competition from China, The AP reported. Once the inves-tigation is completed, the trade ministry can make sanction recommendations, including tariff increases and import quotas. In early October, Trade and Development Minister Luiz Fernando Furlan said Brazil was considering the imposition of trade sanctions against China after failed talks on voluntary quotas for key products like textiles, footwear, toys and auto parts.

Joint auto venture to double in size

Chongqing Chang.an Auto plans to double ca-pacity at its venture with Japan's Suzuki Motor Corp by investing up to US$366 million in a new factory, state media reported. The new plant would have a capacity of 200,000 units annu-ally, the same as the venture's existing factory. Chongqing Chang.an, also Ford's main Chinese partner, holds a 51 percent stake in the joint ven-ture with Suzuki, which mainly makes compact cars such as the Alto. The company expects to unveil two self-designed cars next year as part of ongoing efforts to develop its own research capabilities and move away from relying on foreign partners for car production.

Increase in car taxes expected

A rise in automobile taxes is expected soon to push status-conscious Chinese buyers into choosing vehicles with smaller engines, in line with energy conservation efforts, the Asia Wall Street Journal reported. The new auto-consumption tax, which will include significantly higher rates on large-engined vehicles, is currently being studied by the National Development and Reform Commission. At present, China has a 3 percent one-time con-sumption tax on compact cars with engine sizes of one liter or less, 5 percent on those between one and 2.2 liters, and 8 percent for 2.2 liters and above. Industry observers expect the new policy to charge as much as 20 percent consumption tax on vehicles with engines above four liters.

BoC enters auto market

Bank of China (BoC) said it would take a 50 percent stake in a joint venture with PSA Peugeot Citroen of France and a domestic Chinese auto producer in a deal that will provide .nancing ser-vices for the distribution and purchase of Citroen, state media reported. China Banking Regulatory Commission, China's banking watchdog, issued new rules in 2003 that allow commercial banks to open special car .nancing businesses. BoC will become the Chinese bank to invest in a car .nancing joint venture.

Tianjin eyes its auto future

The north China municipality of Tianjin outlined in its 11th Five-Year Plan for the 2006-2010 period to become, by 2010, the country's third largest auto and auto parts production base after Shanghai and the northeast China province of Jilin, Asia Pulse reported. Under the plan, Tianjin will encourage domestic and global carmakers to set up manufacturing plants, R&D centers and procurement centers in the municipality. Within five years, Tianjin envisions an annual motor vehicle output of 1.1 million units, including one million cars, with a total industrial output value of US$17.3 billion. The municipality's motor vehicle output stood at 224,000 units in 2004, including 220,000 cars, generating a total industrial output value of US$4.2 billion.

AVIATION

Agusta to set up helicopter JV in China

Anglo-Italian helicopter maker Agusta plans to form a helicopter manufacturing joint ven-ture with Changhe Aviation Industries Group (CHAIGC) in Jingdezhen, Jiangxi province, Asia Pulse reported. The new venture, Jiangxi Changhe Agusta Helicopter, will produce the A109E helicopter (China code: CA109). The total investment will amount to US$9 million. According to the agreement, A109E will be in batch production in China at the initial stage and then Agusta will gradually move all the produc-tion activities of A109E to China.

Evergreen group to form cargo JV

Taiwan's Evergreen group plans to form an RMB200 million cargo joint venture with Shanghai Airlines, the Economic Daily News of Taiwan reported, citing chairman of the group Chang Yung-fa. The Evergreen group, mainly represented by EVA Airways and Evergreen Marine Corp, will invest RMB90 million for a 45 percent stake in the venture, which is expected to obtain a business license from authorities in November, said Chang.

BANKING

Deutsche plans Huaxia stake purchase

Deutsche Bank and an undisclosed partner are in talks to buy a 14 percent stake in Huaxia Bank, China's fourth-largest bank in terms of market cap, for US$330 million, though it will likely end up with a 10 percent stake, the Wall Street Journal reported. Deutsche's bid for a share in the Bank of Beijing failed in March when ING bought a 19.9 percent stake. China's banking sector will fully open to foreign companies at the end of 2006. Huaxia has around 250 banking outlets in China.

UBS to buy 20 percent stake in Beijing Securities

As the foreign institution to buy into a mainland brokerage, global investment bank UBS will pay US$210 million for a 20 percent stake in debt-ridden Beijing Securities, accord-ing to the South China Morning Post, citing China Business Post. UBS's 300 million shares in Beijing Securities will make it the largest single shareholder. China Securities Regulatory Commission may pilot new regulations waiving a 33 percent cap on foreign stakes and allowing foreign firms to control select brokerages in an effort to prop up the .agging sector.

CCB prices Hong Kong IPO

China Construction Bank (CCB), the Mainland's fourth-largest bank by assets, priced its initial public offering in Hong Kong between US$0.23-0.29, in what is expected to be the world's largest offering this year, possibly raising more than US$7 billion. The IPO is also expected to be the larg-est-ever overseas listing by a Chinese company, topping the US$5.7 billion China Unicom IPO in 2000. Morgan Stanley and China International Capital Corp are the underwriters of the offering, which could take place by the end of October.

Banks credit ratings rise

Seven mainland banks had their credit ratings raised by Standard & Poor's, which cited expect-ed strong government support and the potential for further improvement in their financial servic-es, the Standard of Hong Kong reported. China Construction Bank, which is planning a US$7.7 billion IPO in October, had its long-term foreign currency rating raised from BBB. to BBB+, the eighth highest of ten investment grades. Bank of China and Industrial and Commercial Bank of China, which are both planning IPOs next year, also moved up two grades to BBB+.

GE to buy into Shenzhen bank

US financial services and industrial giant Gen-eral Electric is set to buy a 7 percent stake in Shenzhen Development Bank (SDB) and wants to eventually boost its level of ownership to the maximum allowed level of 25 percent, the Asia Wall Street Journal reported. According to the bank's most recent share price, the 7 percent stake would be worth around US$100 million. Southern China-based SDB is one of few banks in the country already effectively controlled by foreign investors and GE sees it as a useful vehicle to enter China's developing consumer finance market.

Insurer to buy into Industrial Bank

Ping An Group, the country's second-largest life insurer, plans to buy 4.25 percent of mid-tier Fujian-based Industrial Bank in order to boost its presence in China's financial sector, Reuters reported. The insurance company has agreed initially to buy a 1.75 percent stake, pending regulatory approval, worth US$24.2 million, before purchasing another 100 million shares, or a 2.5 percent stake, due to be sold through a limited auction in Beijing. If completed, the two-stage deal will make Ping An, in which HSBC has a 19.9 percent holding, the fourth largest shareholder of Industrial Bank.

More banks cleared to trade yuan

Approval has been granted to 18 foreign banks. branches and six local lenders to trade onshore foreign exchange forwards in the yuan as Beijing tries to spur trading of the month-old instruments, Reuters reported, citing the China Foreign Exchange Trade System. The newly -approved institutions include the Shanghai branches of Dutch lender ABN Amro, Bank of America Corp and Calyon Corporate and Investment Bank. The forwards were launched on August 15 to provide a benchmark for local expecta-tions of the yuan's longer-term appreciation following its revaluation in July. Only about a dozen forward deals, however, have been made since the launch.

ENERGY

PetroChina to expand pipelines

PetroChina, the listed arm of China energy major China National Petroleum Corp, will spend as much as US$12.35 billion to expand its network of oil and gas pipelines over the next five years in order to meet rapid increases in demand, the Wall Street Journal reported.

Oil import bill rises 36 percent

The cost of China's crude oil imports rose 36 per-cent in August from a year earlier, raising farmers. expenses and increasing losses at re.ners forced by a government-mandated pricing system to sell below cost, Bloomberg reported. Meanwhile, China's oil imports fell 6 percent in August to 8.8 million tons and oil exports rose 22 percent.

Oil and gas reserves to grow steadily

PetroChina's chief geologist said the country's oil and gas reserves would grow steadily in the coming 20 years with crude production reaching 150 million tons in 2010, state media reported. Speaking at the 18th World Petroleum Congress in Johannesburg, Jia Chengzao told delegates that the government plans to further exploration efforts targeted at oil and gas fields in west China. He said the country's remaining onshore recoverable oil resources amount to 13 billion tons with onshore crude production at 143 million tons.

CNPC signs gas project MOU with total

China National Petroleum Corp (CNPC) signed a memorandum of understanding with Total Group, the world's fourth largest oil company, to develop Sulige gas field in the Inner Mongolia region, CNPC said in a statement on its website. The field is reported to have proven natural gas reserves of 60 million cubic meters.

FOOD AND BEVERAGE

Starbucks announces China education fund

Starbucks announced a US$5 million fund to underwrite education in China, part of an effort to raise its pro.le in a market the company hopes will be its second largest after the US, the AP reported. Chairman Howard Schultz said the fund re.ected the Starbucks philosophy of making money while engaging in socially responsible projects in target markets.

Coca-Cola opens plant in north-western China

Coca-Cola opened its plant in northwestern China in late September, Shanghai Daily report-ed. The 5,000-square-meter facility is located in Lanzhou, Gansu Province with an investment of US$12 million. It will serve 58 million consum-ers in Gansu, Xinjiang, Ningxia, Qinghai and Tibet, the company said.

Qinghai and Tibet, the company said.

INSURANCE

Sun Life expanding presence in Greater China

Canadian insurer Sun Life Financial is rap-idly expanding into Greater China, reported Reuters, citing company executives. Sun Life and its Chinese partner, China Everbright, plan to open a new branch in Hangzhou, Zhejiang province later this year and expect to set up branches in Shanghai and Tianjin in the coming year. Later this year, Sun life will also close its acquisition of Commonwealth Bank of Australia's Hong Kong life insurance and financial planning assets for about $500 million to gain a platform into Greater China, said the company.

Aviva receives approval to open Fuzhou branch

Aviva announced that its joint venture, Aviva-Cofco, received regulatory approval to set up a branch in Fuzhou, Fujian province. The world's sixth largest insurer already has branches in Beijing, Guangzhou (Guangdong province) and Chengdu (Sichuan province), and has sales offices in Leshan, Mianyang and Nanchong (Si-chuan province), and in Zhongshan and Foshan (Guangdong province). The license for Fuzhou gives Aviva -mover advantage in one of the most signi.cant regions of economic growth in China and takes the insurer a stage closer to achieving its longer-term ambition of achieving an average 10 percent market share in 10 Chinese cities by 2010, said Charles Anderson, regional managing director of Aviva Asia Pte Ltd.

TELECOMS

China Mobile eyes acquisitions

China Mobile, the world's largest cell phone company by number of users, has provisionally agreed to buy 66.5 percent of China Resources Peoples Telephone in Hong Kong for US$290 million. It is also considering the purchase of a controlling stake in SmarTone Telecommuni-cations Holdings, according to media reports. A successful purchase of Peoples Telephone, the .fth-biggest cell phone company in Hong Kong, from its controlling shareholder, the state-owned China Resources (Holdings) Co, would give China Mobile a foothold in Hong Kong, pitting it against five other mobile operators. Talks with SmarTone, which is seen as a move for China Mobile to obtain a 3G license, which SmarTone holds, were in preliminary stages, the South China Morning Post reported.

mobile phone TV service planned

China Mobile has teamed up with Shanghai Media Group, the only Internet protocol tele-vision licensee in the country, to feed televi-sion content over mobile phones, the South China Morning Post reported. The service, to be delivered through China Mobile's 2.5-generation, GPRS-based data and multimedia platform Monternet, could be launched by the end of this year. China Mobile will become the country's mobile operator and second telecommunications group to offer the service, following Shanghai Media Group's Internet television agreement with fixed-line operator China Telecom.

Nokia wins technology contract with China Mobile unit

Nokia announced that it has signed a contract with Jiangxi Mobile Telecommunications, a unit of China Mobile Ltd, to deliver Nokia Con-nect eRe.ll technology to the Chinese mobile operator. The technology allows operators to offer account top-up via short messaging service (SMS) and balance transfer for its subscribers. The service will cover Jiangxi province.

METALS

Mittal steel plant share purchase approved

Mittal, the world's biggest steel producer, won final approval from China's Ministry of Commerce to purchase a 36.7 percent stake in Hunan Valin Steel Tube and Wire (HVSTW) for US$316 million, Bloomberg reported. The transaction makes Mittal HVSTW's second-largest shareholder, giv-ing it a footing with which to access the Chinese steel market.

Gibraltar Industries buys metal prod-ucts plant in Suzhou

Gibraltar Industries purchased a manufac-turing facility in Suzhou, Jiangsu province, Reuters reported. The plant produces cop-per and copper alloy-based powder metal products and will become an SCM (slightly compressible material) Metal Products affili-ate of the US-based metals manufacturer and processor. The China facility is expected to support sales of about US$20 million by 2007, the company said.

Sandvik buys into Chinese metal pow-der producer

Sandvik AB announced that its Sandvik Hard Materials unit signed an agreement to purchase a 10 percent equity stake in the Chinese metal powder producer Gesac, based in Xiamen, Fujian province. Gesac mainly produces powders in tungsten carbide and other related materials used for wear-resis-tant components, metal-cutting and mining tools.