China Business Blog
Putting China Business News in Context. From China Business Services.



Anti-Monopoly Law Put to the Test (Jun 19)
Microsoft (the “small flaccid” one) is reported to be in the firing line of China’s antitrust investigators under the Anti-Monopoly Law, which we reported on here (see more background on China Law Blog here). ChannelWeb reports: “China state media on Wednesday reported that the Chinese government’s State Intellectual Property Office has launched antitrust investigations against Microsoft and several other software vendors for allegedly charging more for their products in China than in other countries. According to AFP, a source quoted by China’s Shanghai Securities News said a package consisting of one copy of Windows and one copy of Office can cost more than $1,000. The Chinese government passed a law last year specifically designed to address the high cost of genuine software, and it’s possible that lawsuits against Microsoft and other vendors could follow after the law takes effect August 1, the source said.” Microsoft knows a thing or two about anti-trust investigations (so...


Stat Wrap (June 08) (Jun 19)
The latest stats (with the usual warnings) to come out of China include: Trade:
AP reports “China’s trade surplus shrank 10 percent in May from a year earlier, the second straight monthly decline…The $20.2 billion surplus for May was still relatively large — up from a $16.7 billion gap in April and $13.4 billion in March — and larger than analysts had predicted…The trade surplus for the first five months of the year was $78 billion, down 8.6 percent from the $85.7 billion surplus in January-May 2007”. Foreign Direct Investment:
China Daily reports: “China used US$ 42.78 billion of foreign direct investment (FDI) in the first five months this year, an increase of 54.97 percent from the same period last year, the Ministry of Commerce (MOC) said.” Inflation:
AFP reports: “China’s inflation rate was 7.7 percent in May, easing from April’s 8.5 percent, the government said Thursday, as analysts cautioned that some prices had been kept artificially in check.” Forbes adds: “The World ...


China Mobile’s Big (Procurement) Call (Jun 19)
China is a big place, used to big deals. It is also fast-moving, and nowhere more so than in the (recently restructured) telecoms sector. Not everyone going to China gets it right – and Apple got bruised recently in its negotiations with China Mobile. However significant successes do some to some – with that very same company – which is suddenly on something of a policy-induced shopping spree. China Daily reports: “Sun Microsystems Inc also announced a framework agreement with China Mobile on IT products and services projects in 2008. Sun will provide China Mobile with IT products and relevant services at an estimated price of some 34.8 million dollars” The FT notes another China Mobile deal: “Alcatel-Lucent on Tuesday trumpeted a framework agreement with China Mobile that could lead to $1bn of additional revenues.” Good news for them perhaps, but the FT goes on to reveal the hard end of the deal: “…But brutal competition means margins tend to be wafer thin.” As Apple found...


McKinsey: Chinese Companies Competing. Globally? (Jun 10)
Two new reports from McKinsey are flagged by China Challenges: These things are always good reading. And this time they are about one of our favorite subjects – Chinese companies going global. McKinsey’s own report outlines are below: Competition from China: Two McKinsey surveys “Executives around the world expect competition from Chinese companies to increase, mainly because of their low production costs, yet surprisingly few are acting to meet the threat, a McKinsey survey shows. A separate survey of executives based in China reveals widespread global ambitions and concerns about finding the talent to reach them.” How Chinese companies can succeed abroad “Chinese companies are on the threshold of becoming truly global. A few—fewer than might be suspected from the headlines—have already passed through the door by moving to acquire resources, talent, intellectual property, and customers beyond China’s borders. More will follow as the successes accumulate. To succeed abroad, C...


China Plane Plan Takes Off (Jun 10)
The plan to get a Chinese passenger jet to market entered a new phase recently with the set-up of a US$2.7 billion company. Times of India notes: “Government sources said that the new company, Commercial Aircraft Corporation of China (CACC), will be responsible for researching, developing, manufacturing and marketing a made-in-China large passenger aircraft. The government is the largest shareholder after investing six billion yuan out of the total share capital of 19 billion yuan. Two of the major shareholders of the new company are state-run aircraft makers, China Aviation Industry Corp I (AVIC I) and AVIC II. The new firm is expected to produce the first set of aircrafts by 2020. The Shanghai city government is the second biggest shareholder after investing five billion yuan. AVIC I is investing four billion yuan. Four other companies- AVIC II, Baosteel Group Corp., Aluminum Corp. of China and Sinochem Corp.- are putting in one billion yuan each.” Seattle PI adds a quote f...


Will the Quake Shake the Economy? (Jun 10)
While China stood in silence to mourn the human impact of the earthquake (and even netizens took time off), and the physical devastation locally, the wider economic impact also needs to be addressed as part of the recovery plan. Euronews reports: “US investment banks Merrill Lynch and Goldman Sachs say the quake should not have as much of an impact as the huge snow and ice storms that hit much of the country during the winter. Sichuan is not a major economic centre. It accounts for 4.3% of China’s GDP and 0.6% of the country’s exports. The region’s economy grew by 14.5% in the first quarter compared with the same period last year - that’s faster than the national average - and direct economic losses there are forecast to be around 6.5 billion euros. Transport, power, water and gas supplies have been disrupted and as up to 20 million people from Sichuan work as migrant labourers elsewhere in China there could be an impact on the overall economy as some of them return home to help...


Bell (Finally) Rings for Telecoms Reform (May 30)
It has been a long wait (we flagged it back in November 2006), with lots of talk, lobbying and political positioning, but the long-expected reforms of Chinese telecoms sector have now been announced. The Economist reported: “BY ANY measure—revenues, employees, customers—it is the largest industrial reorganisation ever. And, reflecting how business is done in China, it was announced in the most modest way, with a posting on a government website on May 24th. The country’s telecoms industry, with nearly 600m mobile subscribers, 360m fixed-line customers and $244 billion in revenue, will be reconfigured. Six companies will be collapsed into three, each spanning mobile, fixed and broadband services. China Mobile, the world’s largest mobile operator by subscribers, will merge with China TieTong, the smallest fixed-line operator. China Telecom, the country’s biggest fixed-line operator, will acquire one of the mobile networks run by China Unicom, which will merge its remaining mobile op...


How to Lose Friends and Alienate (1.3 billion) People (May 30)
Well done Sharon Stone – for providing a classic example of what not to say (see the link below for how she thinks the earthquake was a result of bad karma). The media, and the Chinese people, have been quick to react to La Stone’s almost unbelievable comments. Forget the obvious confusion about politics, religion and national boundaries – what about a little bit of humanity?! While the things that ill-informed Hollywood celebrities say might not really matter in the grand scheme of things, Stone’s comments have already had a business impact – many Chinese will choose not to watch Stone’s movies again, but, more importantly (as the movies are likely to be pirated copies anyway!), Dior has been quick to drop Stone from its advertising in China. And the company (good for it) was quick to react – a lesson that has been learnt the hard way by others. SFGate reports: “…bosses at Christian Dior have banned ads featuring the star in China. A spokesman at the company’s Shanghai headqu...


Sichuan Earthquake: Blog (and Business) Aid (May 21)
As the scale of the tragedy in Sichuan has become apparent – with over 40,000 killed, and millions now homeless - people around the world have responded with generous support for the victims and their families, and for all of China. Donations have been coming thick and fast - most of it from within China - according to AP: “In the week since the quake, donations have totaled $1.3 billion — 85 percent raised within China, the Xinhua News Agency said Sunday, citing the Ministry of Civil Affairs.” The international corporate world has also been active in helping the relief effort, and those doing business in China, and in particular in Sichuan, have a chance to play an active and positive role for a long time to come. In terms of corporate donations, Xinhua reports that: “China has received 1.3 billion yuan (185.7 million U.S. dollars) in cash and goods for earthquake relief from multinational corporations (MNCs), joint ventures and Hongkong, Macao, Taiwan-based enterprises as of ...


Stat Wrap: Trade, Inflation & FDI (May 21)
While all eyes are rightly on the situation in Sichuan, long-term worries about the economy – especially inflation – continue to rumble in the background, and the impact on agriculture in Sichuan could put more pressure on food prices. AP reports: “China’s inflation rebounded in April to near decade-high levels…Consumer prices in April were up 8.5 percent compared with the same month last year, the National Statistics Bureau reported. That was up from March’s 8.3 percent rate and just short of February’s 8.7 percent, the highest inflation rate in nearly 12 years.
Prices have jumped since mid-2007, driven by rises in food costs that hit 22.1 percent in April. The government has been trying to cool price rises for pork, grain and other items by increasing supplies and has imposed price controls on basic goods. …A senior economic official, Vice Premier Wang Qishan, said Friday that Beijing will stick to tight monetary policies to prevent inflation from escalating. But he announced n...