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Editorial Editor Jamshed Ullah News Editors Summer Wong Ji Long Mike Lincoln Jenny Alvin Research & Analysis Wang Aiguo He Cheng Shi Chengwei leon Ludwig Uzma Zafar
Designing & Layout Asmat Ullah Khan Awais Shehzad Raja Pervaiz Technical Support Sultan Haroon Iqbal Bukhari Co-ordination Sobia Noreen Internet Edition John Nelson Rehmat Chughtai
FM’s amazing move
A
ccording to news reports, China’sForeign Minister Wang Yi has turned to a Hongqi H7 sedan as his official car, instead of using any luxurious foreign
model. The Hongqi H7 sedan, priced at between 299,800 Yuan ($48,950) and 479,800 Yuan, is a newly developed sedan of the First Automobile Works Group Corp, marketed to officials at the ministerial level or above. at a time when China's domestic automobile industry was going relatively weak, the decision by the Chinese Foreign Minister to use local car for his official use appears to be not merely a patriotic move but a bid to promote country’s Auto sector and to restore local and international confidence in abilities and capabilities of Chinese carmakers despite the fact that the Chinese government has already been introducing different ways and means to promote the production of the local Auto industry. it remains a fact that most of China's official cars are foreign made, despite the 2002 Government Procurement Law stipulating that domestic brands should be purchased. In 2012, the Ministry of Industry and Information Technology published an official car procurement manual, which included more than 400 different Chinesemade cars. We believe that the decision that the Chinese FM has taken and is being followed by his other colleagues from the government is an amazing example to be followed by the world leaders to promote their respective local industries. We also believe that such decisions would have a great impact on china’s economy in coming years and it would come as a great booster for the local industry.
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Editor
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in this issue 23 to 28 July 2013 04
Cover Story
An expat's dating class in China 06
Memorial tablet brings soldiers' souls home
BEIJING-Ixia recently participated in China Network World's independent testing programme to validate the new Cisco ASR 1000 series routers, developed for enterprises and service providers.
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in this issue 09
Small banks take initiative with small companies
NestlÊ Inaugurates New NESCAFÉ factory in Laixi
12
Why China Mobile May Not Partner With Apple
Solar companies see brighter first half
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Society
An expat's dating class in China CED Monitoring BEIJING-Alex Edmunds had a relationship problem."I found generally the kind of girls when I meet in bars are not the kind of girls who are good, classy women a guy would look forward to spending the rest of his life with," he said, explaining it's hard to tell which ones have the same life aspirations with you and which ones just want to get a green card and go to the United States. Edmunds would seem like a great catch for any girl, a Princeton graduate of mathematical economics, who has worked at investment banks and in the IT industry. He looks like someone who stepped right out of The Dead Poet Society, a stereotypical valedictorian in a high-ranking private school. His resume is impressive too. At the current stage, Edmunds is working on a startup project, an online dating site that offers offline events to the "leftover" men and women in Beijing, trying to introduce American dating culture to China. Edmunds came to China in 2009, working for the Wild China Travel, doing development and information technology for the company. When he first moved here, he was single. He and his for04
eign friends all found it hard to meet a girl and have a meaningful relationship. Then a friend recommended Shiji Jiayuan, a popular Chinese dating site. Edmunds thought it was interesting and created an account. Edmunds went to an offline event hosted by the dating site. At a bar at the west gate of the Worker's Stadium, 320 people sat down in tables of about 15 or 20. The organizer called out, "Let's play a game!" So everybody stood up and started massaging the back of the person to their left. "A girl puts her hands on my shoulder and she's rubbing me," Edmunds said. "I didn't talk to her at all. I'm massaging the girl in front me ‌ this would never happen in America, absolutely never happen." Next in the dating process came the Chinese-style introduction. "We all went around, one by one and I said, 'Hey I'm Alex, I'm from LA, I'm in IT, I earn about 8,000 yuan monthly, I'm looking for someone aged 24 to 26.' Then I sat down and the woman sat down." he said. "I had to do that for two and a half hours." It was the first time Edmunds had experienced a Chinese-style dating service. He went to a cou-
ple of different ones, such as Baihe.com, and found they were all more or less the same. The idea of a dating culture two people having intimate dinner, and having in-depth conversations - seems to be missing in China. The idea of introducing American dating culture to China started forming. He thought about creating a website with offline activities. The idea was supported by some of his friends, and he recruited people to work with him in putting together coucou8.com. Edmunds sees his project as more of a networking and friendmaking opportunity rather than the traditional, hardcore marriage-partner search the Chinese services offer. He feels like there should be more to dating than surface questions about salary and education. Beneath the label of "Princeton graduate" and "IT guy, 8,000 yuan per month," Edmunds also enjoys many other activities. He serves on an amateur basketball team that's made up of mostly British people and plays water polo. In fact, that's how he met his current girlfriend of three and a half years, Stephanie Hsiao, who is also a Princeton graduate. For market research, Edmunds went to many other dating site services to gather information
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Society
on what the need of so-called "leftover" are. Hsiao said she tried to support his work. "Some of my friends hear this and say, 'Oh my gosh, your boyfriend is going to dating site events?' and it's totally fine with me," she said. "He's good at communicating and would inform me beforehand." The first event coucou8.com organized took place last year. A 06
group of about eight people, all friends or acquaintances, all Chinese, gathered for lunch, and that was then Edmunds quickly found out he can't directly copy the American dating culture and bring it to China. "At the fist event, everyone sat down and started playing on their phones," he said. They were too shy to talk to each other. He then realized just bringing people at the dinner table in small
groups wasn't enough, he had to make a few changes, such as getting an event hostess who gave directions on what to do and what games to play. In the process of making changes to the styles of eventhosting, Edmunds said he also learned a great deal about how the dating game works in China. "Western guys are usually more open," he said. "They would lead with questions when they
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meet a girl, but I've found Chinese guys are shyer." Getting a hostess was the first step to help with this problem; Edmunds also thought about introducing some of the games people in the West play to the events, to break the ice. In a video clip of their last event, around 10 people sat at a round table, with a hostess at the head, playing the popular college drinking game Moose, except
without alcohol. Everyone in the crowd made hand gestures and laughed. It is a constant learning process for him, Edmunds said. "For example, in the US guys usually get wine when they are on a date, it helps them relax," he said. "But at the coucou8 events, I ask guys what they would like to drink, they all said naicha (milk tea)." Even though the project isn't
making money at this stage, Hsiao said Edmunds isn't that worried, saying it takes years before a startup can really start profiting. Edmunds said he hasn't calculated the success rate of the events he organizes, which is also something people ask him for. But he is happy with each pairing. "I feel like a hongniang (matchmaker)," he said. "I constantly had to give the guys a little push." 07
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Finance
Memorial tablet brings soldiers' souls home HENGYANG, Hunan -- Although he is in his 90s, Tan Rongsheng remains strong and robust. He likes to outfit himself in militarygreen clothing, so he'll never forget his days as a soldier in the China Expeditionary Army. At 16, Tan joined the newlyestablished China Expeditionary Army and participated in the War of Resistance Against Japanese Aggression (19371945) in Burma, now Myanmar, in 1942. He and his comrades-inarms saved more than 7,000 English soldiers, American clergy members and journalists in the famous Battle of Yenangyaung, a battle that took the lives of over 200 soldiers. Seventy-one years later, he finally saw a memorial tablet dedicated to those soldiers who 08
died in battle sent from Myanmar to their hometown, Hengyang City, central China's Hunan Province, on Sunday. Sunday was also the 76th anniversary of the Lugou Bridge Incident, which marked the beginning of the nationwide War of Resistance by the Chinese People Against Japanese Aggression in 1937. Inscribed with a dedication to "the 202 officers and soldiers who died in the Battle of Yenangyaung," Tan and other volunteers escorted the 1.5meter-high and 40-kilogram wooden tablet into Nanyue Memorial Hall, which is also used to commemorate officers and soldiers of the Kuomintang (KMT) during the war. "Most people who attended the war in Burma were natives of
Hunan. Placing the tablet in the memorial hall in Hunan means to revert the souls of the deceased to their origin, just like fallen leaves should return to the roots," said Liu Weimin, son of Liu Fangwu, a regiment commander of the army. For various historical reasons, the remains of the soldiers who died in the battle could not be properly settled or worshipped, Liu said. "Only after waiting there for 71 years, can they return to China, their country, and back to Hengyang, their hometown, where their relatives and friends live," Liu said. "In recent years, amid the development of the Chinese economy and a deepening understanding of history, an increasing number of volunteers
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and descendants of those soldiers have paid more attention to this issue. They repaired graves and reconstructed memorial tablets for those departed soldiers," Liu added. According to incomplete statistics from a website devoted to promoting the history of, and raising awareness about, the China Expeditionary Army, 500 to 600 soldiers from the army are still living in the country, but all are very old. "As people have become more concerned about the history of that time, the old soldiers get more concern and help from
society," said Shu Hongjian, the website's managing editor. The Ministry of Civil Affairs recently said governments at all levels should help and raise awareness about elderly former servicepeople, including former KMT soldiers. According to statistics from the civil affairs department of Hunan, the province is home to more than 500 former KMT soldiers, as it was a major battlefield during the War of Resistance Against Japanese Aggression during World War II. Meanwhile, an assistance program for veterans was
launched recently, offering every confirmed veteran 10,000 Yuan (1,630 U.S. dollars) annually. "However, there are still a lot of surviving soldiers in need of care and help. It is the conscience of society and also the responsibility of history to take care of them, as their sacrifices and bravery defended the dignity of the Chinese people, as well as the territorial integrity of the country," said Zheng Jianbang, vice chairman of the Revolutionary Committee of the Chinese Kuomintang (RCCK) Central Committee. (XINHUA) 09
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Finance
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Singapore State investor optimistic about China
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Finance
CED Monitoring BEIJING-Temasek Holdings Pte Ltd remains optimistic about investing in China because the country remains one of the most promising opportunities in the world, the company said at a news conference. Apart from involvement in China's banking sector, the Singapore state investor said it will also increase investment in China's State-owned enterprises and other 12
projects related to the country's urbanization process. According to Temasek's annual report for the fiscal year 2013 released last week, China remains the most important foreign investment destination for the company, accounting for 23 percent of its total investment after the Singapore market, where the proportion is 30 percent. "We are generally satisfied with investment returns from the
Chinese market," said Ding Wei, head of operations at Temasek China. Temasek holds stakes of almost $18 billion in China Construction Bank Corp, Industrial and Commercial Bank of China Ltd and Bank of China Ltd, making it the biggest foreign investor in Chinese banks. "It's inevitable that one would invest in the Chinese banking sector during the process of investing
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in China in the future," Ding said. Temasek regards the finance sector, especially the banking industry, as the epitome of the real economy, representing the nation's potential and trend, according to Ding. "Although some risks now exist in the fast-developing Chinese banking industry, we are optimistic about the potential of the sector thanks to the solid foundation and driving force of the Chi-
nese economy," said Ding. Last month, the interbank money market suffered a cash squeeze causing the overnight rate of the Shanghai Interbank Offered Rate to soar. The potential crisis ended after the central bank said that it would ensure there would be sufficient liquidity in the market. Active measures have been taken by the Chinese government to tackle the expanding scale of
credit and a concentration on certain companies so it is necessary to make such an adjustment, Ding said. Temasek's holdings in China Construction Bank slipped to 8 percent from 10 percent in 2012 because of currency rate and market fluctuations. In addition to those in the finance industry, Temasek's acquisitions in China also include investments in Alibaba Group 13
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Finance
Holding Ltd, China's biggest ecommerce company, and Kunlun Energy Co, a gas transmission company under China National Petroleum Corp, Kweichow Moutai Co Ltd and Shanghai Pharmaceutical (Group) Co Ltd. 14
"A new investing area will be China's State-owned assets amid the restructuring and reform of SOEs, which are part of the country's economic development transformation in which we will absolutely invest," said Ding.
Gu Yanfei, managing director at Temasek China, said the company has also been cooperating with the State-owned Assets Supervision and Administration Commission to improve the management and operational
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skills of both Chinese SOEs and Temasek. New investment opportunities include industries such as energy, resources, telecommunication, media, life sciences, consumer goods and technology, according
to the company. Projects include the ChinaSingapore Jilin food production zone and Singapore-Sichuan hightech innovation park, which are under construction. Those investments were made because of
confidence in China's urbanization process, according to Ding. "Most projects relating to China's urbanization are largescale and being developed with the cooperation of local governments," said Ding. 15
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Finance
Small banks take initiative with small companies 16
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Finance
CED Monitoring BEIJING-When large Chinese banks remain reluctant to extend loans to small and micro enterprises (SME), smaller banks have already changed their way of thinking and have begun treating smaller businesses as important customers. Furthermore, the small banks, including city and rural commercial banks along with some regional banks, are learning how to find customers which were once neglected by the traditional financial system. China Minsheng Banking Corp Ltd, a national joint-stock commercial bank established in 1996 by a few non-State-owned enterprises, has realized an accu18
mulative SME loan balance of 317 billion Yuan from February 2009 to the end of 2012, according to the bank's website. Bai Jing, general manager of the bank's section for small and micro enterprises said at the Micro Bank & Cloud Finance forum that his bank was forced to transform itself as it could not grow in traditional areas such as mortgage loans due to its status as a nonstate-owned bank. The two-day forum was cohosted in Beijing beginning June 29 by the Guanghua Management School of Peking University and 9F Microfinance and Retail Banking Service Co Ltd, which helps banks restructure and improve marketing efficiency.
A total of 105 people from 49 small banks attended the forum to learn more about small and micro financing. The forum's attendees included 15 chairmen, and 25 bank presidents. Bai said the bank has learned that it is good to look upon small and micro businesses and focus on small companies, which has been an effective strategy for Minsheng. Bai said the company mainly develops their customers in business clusters or along industrial chains to make SME loans a wholesale business to lower the cost of each loan. For example, the bank has provided loans worth 700 million Yuan to many clothing wholesalers in the Bairong Clothing Market in
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Beijing and provided point-ofsales settlement services to these small businesses in the same market. Mingsheng also carried out salary payments for Bairong Group which operates the clothing market. In another style, Baoshang Bank, which was set up in Inner Mongolia in 1998, mainly develops its micro-level customers one by one, Duan Nan, general manager of the Micro Finance Department at the bank's Baotao branch, said on the forum. The bank has 1,239 SME loan officers and has extended 70.4 billion Yuan in loans as of 2005 to May 2013 and has earned 6.17 million Yuan in interest.
Duan said the bank earned zero profit in the first two years from its small and micro finance pursuits but things have improved and SME loans have taken a larger part within its entire loan structure. The regional bank extended 11.74 billion Yuan in loans in the year 2011 with SME loans accounting for 40 percent and extended 8.57 billion Yuan in loans in 2012 with SME loans accounting for 52 percent, Duan said. Duan also added that the bank estimates its newly-added loans this year may amount to 8.4 billion Yuan and SME loans could total 58 percent. Hu Lan, general manager of the Credit Center for Small Companies at Longjiang Bank said at
the forum that her bank mainly develops its customers according to the life cycle of different companies. Longjiang Bank is a provincial commercial bank located in Northeast China's Heilongjiang province that was established at the end of 2009. The bank, which has 30 branches and operates only in Heilongjiang province, has 192 SME credit officers and has already issued 18 billion Yuan in SME loans. Hu said that during their startup period, his bank provided easy loans to small and micro companies and encouraged them to learn how to work with banks. During this growth period, the bank issued cheap loans to these small 19
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IT
companies. So when these companies mature, they will have an adequate financial record and will be able to contribute to the bank that has accompanied their growth, Hu added. The bank also follows a "3688" rule which means the bank operates 365 days a year from 8:00 am 20
to 8:00 pm.. "This work-hour extension has facilitated a lot of small and micro companies and has differentiated this bank from other banks, which has helped us build a good reputation," Duan Nan from the Baoshang Bank said the economic slowdown
has had a larger effect on small and micro companies and the bad-loan rate for her bank is at two percent. The rate for Minsheng is 0.3 percent. Setting the interest high enough to cover all risks has become a common option. Baoshang sets its interest rate at 18 percent, while Mingsheng
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has set theirs at 15 to 16 percent. Bai explained that small and micro businesses worry more about whether and when they can get the loan than how much the loan actually costs. Duan said Baoshang has the capability to issue a loan under 1 million Yuan within three days. In addition to high interest
rates, Minsheng tries to extend as many loans as possible while making the credit line for each loan as small as possible, thus following the Law of Large Numbers in statistics, Bai said. "If the bank extends a loan bigger than necessary, the micro company will transfer the amount of money to other areas such as
real estate rather than their core business area. The average SME loan value has decreased from 1.8 million to 800,000 and may reach 500,000 later," Bai said. Longjiang Bank's Hu Lan said it is during the beginning stages of the credit officer and micro company contact that is the best time for controlling risks. 21
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IY
Why China Mobile May Not Partner With Apple 22
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IT
CED Monitoring BEIJING-As an Apple shareholder I would like to see a China Mobile deal sooner rather than later but I have my doubts that it will occur any time soon. The reasons for this include China Mobile’s reluctance to agree to Apple’s terms, China Mobile customers buying iPhones and hacking it onto its network, its ability to grow its customer base with the 24
iPhone and not having a 4G network. China Mobile is a huge opportunity for Apple since China Mobile has over 735 million subscribers and it has the largest number of 3G subscribers. Umeng estimates that there are over 300 million 3G users on the China Mobile (129 million), Chine Unicom (96 million) and China Telecom (88 million) networks vs. 175 million
a year ago. It estimates that there are over 160 million Android users with 80 million plus on iOS. There has been widespread speculation of an Apple/China Mobile deal over the past few years. While at times China Mobile has said that it wanted to wait for updated technology at other times it has been business model issues (read subsidies and minimum order quantities)
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from reaching a deal. In a recent note Wedge Partners’ Brian Blair said that he expects a low-end iPhone to utilize TD-SCDMA and be launched in the second half this year with 10 million in the first production run. Katy Huberty at Morgan Stanley wrote in May that she expects an Apple/China Mobile phone by the end of the year which could triple Apple’s potential smart-
phone market in China. In October 2011 China Mobile reported that there were over 10 million iPhones on its network and it updated the number to 15 million in March 2012, or about one million added per month. I have not seen an official update but it would not surprise me that there could be 25 million China Mobile subscribers using
iPhones. China Mobile has also seen good growth in its customer numbers. It continues to add an average of five million new subscribers per month and has seen an acceleration of 3G subscribers this year. Its 3G customer base was 51 million at the end of 2011, 88 million at the end of 2012 (an increase of 37 million) and was over 129 million at the end of May (an 25
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IT
increase of 41 million in just five months). Given this large adoption of iPhones and upturn in 3G subscribers it doesn’t appear that China Mobile needs to agree to Apple’s terms. China Mobile uses a proprietary network architecture, TDSCDMA, which has limited iPhone users to 2G speeds. While users can get around the limited speeds by using WiFi for more data intensive apps this does limit the usefulness of a smartphone. 26
Qualcomm’s newest chipset supports TD-SCDMA. However it is the first version to do so and China Mobile and/or Apple may want it to get implemented on other carriers to shake out the bugs before it rolls out on China Mobile’s network. Since China Mobile’s TDSCDMA runs at 3G speeds it could turn out that a China Mobile iPhone may not launch until its TD-LTE 4G infrastructure is in the midst of rolling out. While China Mobile has done some 4G testing in smaller
cities it only recently launched a 4G trial in Shanghai with 5,000 customers. It appears that it will be at least a year if not longer until its 4G network is broadly available. I believe the main and potentially the only reason that there isn’t a China Mobile Apple iPhone is that the two companies have not been able to agree to business terms. While there have been technical limitations for users of an iPhone on China Mobile’s 2G network it hasn’t deterred millions of customers.
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Given that China Mobile’s subscriber growth has remained constant at five milllon new users per month, its 3G base is growing rapidly and users seem to be willing to buy an unlocked iPhone and hack it onto China Mobile’s network I’d say that Apple needs China Mobile more than China Mobile needing Apple. One has to believe that Apple has and will continue to develop an iPhone that works on China Mobile’s network and probably has been working with China Mobile to do this. It
behooves both companies to have it working so that if a business agreement can be reached (subsidy, no subsidy and minimum purchase numbers) an iPhone can be quickly delivered. Apple has even tweaked the iPhone before to fix technical problems for the China Mobile network. Last year there were some signal issues with China Mobile SIM cards and iPhones. Apple made some changes so that at least 4S iPhones would not have the problem. However, what if the two
companies can’t come to an agreement? Since at least 15 million and probably 25 million or more China Mobile customers have been willing to hack an iPhone onto the network why not launch an iPhone that works on it? In many ways it benefits China Mobile since it would not have to subsidize the phone or agree to purchase any. Yes, from a customers perspective it would be easier if China Mobile were to sell and support it but this hasn’t stopped millions from doing so already. 27
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IT
China Network World taps Ixia to validate Cisco routers 28
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IT
CED Monitoring BEIJING-Ixia recently participated in China Network World's independent testing programme to validate the new Cisco ASR 1000 series routers, developed for 30
enterprises and service providers. Ixia services were used to test the performance of the Cisco routers and under real-world conditions created by high loads of network traffic, including increasingly used technologies such as cloud
computing and bandwidthheavy mobile applications. The Cisco ASR 1000 routers are mid-range routers that support converged cloud connection, application sense, and comprehensive security and pol-
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icy control. Cisco and CNW selected the Ixia BreakingPoint FireStore, XM12 testing platform and IxNetwork services to test for maximum load and simulation of real-life application traffic. Ixia services simulated a
variety of application traffic with more than 160 complex real-world user applications and 34,000 security attacks available in Ixia's Application and Threat Intelligence Library. Using Ixia services, CNW con-
firmed that the Cisco ASR 1000 routers achieved 120Gbps network throughput with up to twelve million concurrent sessions at a rate of 480K new sessions per second.
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Industry
Nestlé Inaugurates New NESCAFÉ factory in Laixi
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CED Monitoring BEIJING-Nestlé has held the inauguration ceremony of its state-ofthe-art coffee factory in Laixi, Qingdao, Shandong Province. The construction and commissioning of the new factory took 13 months. The total investment is RMB 880 million and covers an area of 226,000 square meters. The project involves a NESCAFĖ coffee extraction and spray drying production line as well as all necessary industrial services and Infrastructure facilities. Initially the factory will produce coffee powders to be used for producing and processing mixed coffee drinks at Nestlé's coffee factory in Dongguan and its beverage factory in Shanghai with potential for expansion and finished goods production in the
future. The factory is adjacent to Nestlé's existing Laixi liquid milk facility which has been operating successfully since 1996. Paul Bulcke, CEO, Nestlé S.A., said "The position of the Chinese market in Nestlé's global strategic growth will be enhanced. The newly built factory fully demonstrates Nestlé‘s continued commitment in the Chinese market and lays a solid foundation for the company's future development." One Shandong Provincial leader said, "Our province has gained rapid industrial development, thanks to giant enterprises, with their brands and products, such as Nestlé. Nestlé started investment and construction of factory in Laixi in 1994. After 20 years of development, Laixi's dairy herds now total 92,000. The
income of local farmers grows by RMB 450 million per year. Laixi City's total production of meat, eggs and dairy products ranks No.1 in Shandong Province and is developing in a stable manner. The city is also rated as China's cutting-edge food industry city. Today, the inauguration of the freshly invested coffee factory will lay a new foundation and create new advantages for Nestlé's market expansion and fast development. Meanwhile, it will inject energy and vitality to Shandong, further spurring its food industry's growth." Roland Decorvet, Chairman & CEO, Nestlé GCR commented: "Nestlé has been investing in a dairy-base in Laixi since 1996. Our Nestlé Qingdao factory not only produces high quality and
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Industry
delicious foods for consumers, but has also greatly contributed to developing an area that previously had no dairy farming tradition into a productive and efficient milk district. Nestlé's success is inseparable from the continued support of the local government. The new investment is another important milestone for our win-win friendly partnership between Nestlé and Laixi." Nestlé's 34
development vision in China is to provide local consumers with products they need. NESCAFĖ's new factory, same with its dairy factory, will continue to Create Shared Value for local economy and community development. Nestlé commenced selling NESCAFĖ in China in the mid 1980's. It quickly became popular and Nestlé decided to proceed with local production. In 1988, Nestlé established Nestlé
Dongguan Ltd. in Dongguan, Guangdong Province to produce NESCAFĖ and NESCAFĖ COFFEEMATE. Hereafter, Nestlé increased coffee production line in Nestlé powdered beverage factory in Shanghai in 2008. NESCAFÉ was awarded "The Most Loved Brand" by Chinese University Students during the past 6 consecutive years. NESCAFÉ's coffee development program in Yunnan Province won recogni-
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tion from various social sectors and was awarded the United Nations' 2012 Global Business and Development Award. It was also rated as the Best Practice to Promote Societal Development by the UN Global Compact Network China the same year. Nestlé is the world's foremost Nutrition, Health and Wellness company with sales of CHF 92.2 billion in 2012. The company was one of the first multinational
companies to enter the Chinese market in a fully committed way after the open door policy. In 1990 Nestlé started its local production by establishing its first factory in Shuangcheng, Heilongjiang Province. Today, Nestlé operates 33 state-of-the-art factories in the Greater China Region and employs 50,000 regular employees. 90% of Nestlé products sold in China are locally manufactured.
Nestlé business activities are guided by its commitment to Creating Shared Value for both the company shareholders and the local communities. The company's signature Creating Shared Value examples in China are milk district development in Inner Mongolia, Heilongjiang and Shandong and the coffee development program in Yunnan Province. 35
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Industry
Solar companies see brighter first half CED Monitoring BEIJING-Many listed Chinese solar companies experienced a turnaround in the first half, even as the industry remained mired in near-depression amid a supply glut and trade disputes. Of 22 listed companies, 10 have released interim statements indicating a recovery based on expansion in new markets and the domestic market. The other 12, including Hareon Solar Technology Co Ltd and Xi'an LONGI Silicon Materials Corp, warned of profit declines or outright losses in their interim statements, according to data provider WIND Information, the China Securities Journal said on Monday. Zhejiang-based Zhejiang Sunflower Light Energy Science & Technology Llc, known as SUNOWE, said in a statement last Thursday that first36
half net profit reached 20 million Yuan ($3.26 million) to 35 million Yuan, compared with a year-earlier loss of 170 million Yuan, as prices stabilized or rose. It also noted a "successful expansion "in emerging markets. "By emerging markets, we mainly refer to Japan and Australia,"said a company executive surnamed Li, manager of the securities department. SUNOWE has been exploring new markets after the United States imposed anti-dumping and anti-subsidy duties on Chinese solar products. The company recently reached agreement with a Japanese company to export 40 megawatts of modules, she said, adding that product prices are up more than 50 percent since the fourth quarter. Chinese solar manufacturers account for 70 percent of the global
output of solar panels, and 90 percent of the products were for export in 2010. But aggressive capacity expansion, cuts in European Union subsidies and the imposition of US duties have forced China's solar companies to undergo a painful restructuring and consolidation. "The possibility of EU duties triggered a rush to buy from European customers in the second quarter, which pushed the product price higher and helped some Chinese firms. "But uncertainty over the EUChina trade dispute will make most companies take a wait-and-see attitude. Product prices will be stable or decline a little bit in July, "said Zhang Sou, new energy analyst with Guosen Securities. The European Commission announced in early June it is imposing temporary anti-dumping levies on
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Chinese solar panel imports, based on a charge that Chinese firms are unfairly undercutting rivals. The duties will reach an average of 47.6 percent in August and last for five years from December, if China and the EU fail to reach agreement on the dispute. Reuters reported on Friday that officials from Europe and China said more than two weeks of negotiations in Beijing were going well and they aimed to agree to an annual
quota and a minimum price for Chinese importers above their production costs, although numbers are still fluid. On the other hand, China's big solar companies, including Trina Solar Ltd and Canadian Solar Inc, have said they will shift manufacturing abroad, dodging penalties imposed by the EU. Zhang said the domestic market is another significant factor that affects companies' financial reports.
China's National Energy Administration has announced a program to set up distributed solar photovoltaic demonstration power plants across the country. The plants will be constructed before July and operated in national economic development zones and industrial parks in China. SUNOWE's Li said her company sees the program as a great opportunity to tap the domestic solar market. 37
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Automobile
Passenger car sector outlook brightens 38
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Automobile
CED Monitoring SHANGHAI-China's passenger vehicle sales maintained stable double-digit growth in the first half, raising industry hopes of improvement in the remainder of the year. First-half sales of cars, sport utility vehicles, multi-purpose vehicles and minivans jumped 16.7 percent year-on-year to 8,178,417 units, the China Passenger Car Association said on Friday. In June, which is usually a slow time for the industry because of a lower number of working days, the Dragon Boat festival and national entrance examinations for universities, 40
1,289,665 passenger vehicles were delivered to local consumers, up 12.3 percent yearon-year. Though sales dipped 3.4 percent from May, the market performance "was actually better and indicated an upward trend for the coming month," said Rao Da, secretarygeneral of the association. "More important, looking back to the first half, except February, monthly sales all showed strong double-digit growth, demonstrating that China's automobile market is on track to healthy and sustainable development," said Rao. He also expressed optimism about sales in July and the sec-
ond half overall. "China's new leadership is leveraging a stable economy policy, without stimulus packages this year. This might have a slightly negative impact on the vehicle market. "However, from a long-term perspective, it supports the sustainability of the sector," said Rao. He said month-on-month sales growth in July would probably be unusually high "as there are more working days and the market is rebounding". "Continuously increasing sales will ease the inventory build-up at dealers, which followed a sudden slowdown last year," he added.
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The promising market environment has also led vehicle producers, hit by last year's stagnant market, to relax a bit. General Motors Co, the largest foreign automaker in China by sales, set sales records in June as well as in the first half. In the first six months, the US-based auto giant delivered 1,567,392 vehicles in China, up 10.6 percent year-on-year. Sales in June were also up 10.6 percent to 236,207 units. "We have seen strong vehicle demand across China, particularly in the mid-size, upper-medium, luxury and SUV segments," said Bob Socia, president of GM China. "We ex-
pect demand for our line-up of passenger cars and commercial vehicles to remain robust through the end of the year." Driven by strong demand for its new Focus and several SUV models, another US-based vehicle producer, Ford Motor Co, also reported record June sales of more than 75,000 vehicles in China, up 44 percent year-on-year. Ford's first-half sales in China surged 47 percent to more than 407,700 vehicles. Though the premium vehicle sector saw fierce competition with price wars due to shrinking market demand, British premium carmaker Jaguar Land Rover said on Fri-
day that its first-half sales maintained strong growth of 16 percent, surpassing 42,000 units. It attributed the robust market performance partly to efforts to expand its distribution network. In the first half, the British company expanded its dealership network by 31 percent to 170 locations nationwide, mostly in lower-tier cities. Mercedes-Benz also achieved better sales in the first half after it integrated the distribution channels for domestically produced and imported vehicles. Sales in China rose 10 percent year-on-year to 76,000 units in the past four months.
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Automobile
HONGQI SUV TO DEBUT IN 2016 CED Monitoring SHANGHAI-"Hongqi hybrid H7 and Hongqi SUV are now in development, and will probably debut in 2016," said Guo Shijun, Hongqi business department's secretary at First Automobile Works Car Corp. As for future product plans, "Hongqi will introduce a lineup of models, embracing three grades— C, D, and E. Hongqi H7 belongs to grade C, and we will further develop hybrid cars and SUVs," Qq.com reported, citing Guo. Hongqi introduced H7 to the market on May 30, whose outstanding appearance received wide appreciation from customers. Zhang Xiaojun, general manager of FAW Car Marketing Corp, said that before the debut, Hongqi had already sold nearly 1,000 units to the government market. Currently, the top priority is to attract individual consumers. Zhang indicated that Hongqi's target consumers are those who love Chinese culture and like models with traditional Chinese characteristics. In terms of after-sale services, Zhang said, "Initial after-sale services will be in a Hongqi special zone inside Benteng 4S shops, allowing customers to enjoy high-end services. By the end of this year, Hongqi special zones will reach 36."
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Construction
YANGTzE RIVER WATER RUNS THROUGH YELLOW RIVER
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Construction
SPECULATORS NOT WITHOUT MERITS
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JINAN -- Water from the lower reaches of the Yangtze River, China's longest and world's third longest river, was able to run through the lower reaches of the Yellow River, China's second longest river, thanks to the progress of China's south-north water diversion project. That was a landmark success of the first phase of the eastern route of the southnorth water diversion project, which kicked off in 2002 and is
expected to send water in the third quarter of 2013. The water from the Yangtze River is expected to arrive in the Datun Reservoir in east China's Shandong Province, the northern end of the project, within 72 hours, according to the provincial construction management bureau of the south-to-north water diversion project. Datun Reservoir, located in Wucheng County, is more than 700 km away from its
starting point in Yangzhou city of the neighbouring Jiangsu Province to the south of Shandong. Some 1.5 billion cubic meters of water from the Yangtze River is expected to be sent to Shandong each year after the operation of the first phase of the eastern route project, which will ease the serious water shortage in the booming province. The south-north water diversion project was first con-
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Construction
ceived by former Chinese leader Mao Zedong in 1952 and the State Council, or China's Cabinet, approved the ambitious project in December 2002 after debates that lasted nearly a half century. The project, with an estimated total cost of 500 billion yuan (81 billion U.S. dollars),
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has aroused global concerns over land use, possible regional climate changes, environmental damage, impact on agriculture and human suffering in the wake of massive relocations. The project plans to divert 44.8 billion cubic meters of water annually from the Yangtze through eastern,
middle and western routes to relieve water shortages in north China by 2050. The construction of the 1,467-km-long eastern route began in December 2002 and is expected to supply water to northern China by the end of 2013.(XINHUA)