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Brief2006/07/15
SINOPEC, McDonald's to Open Drive-in Stands SINOPEC Sales Company Limited, a wholly-owned subsidiary of China Petroleaum and Chemical Corporation (SINOPEC), signed an agreement with McDonald's China on June 20 to open drive-in stands at SINOPEC's gas stations around the country. Pilot drive-in stands will be opened in China's major cities and their level of success will determine how many will be opened in future. SINOPEC will offer real estate and McDonald's will operate the restaurants, said a SINOPEC Sales official surnamed Gao. He said the profits will be divided between both sides according to turnover. As China's top oil refinery, SINOPEC operates more than 30,000 gas stations around the country. Developing non-oil products services has become a priority of SINOPEC's sales sector, said Wang Tianpu, president of SINOPEC. McDonald's, which already has 760 restaurants in China, is targeting China's car owners, who generally have higher than average incomes and are more drawn to western-style fast foods. From last December to this January, McDonald's opened three drive-in stands in China, distributed in Dongguan and Foshan cities of Guangdong Province and in Shanghai Municipality.
Rules Governing Major SOE's Investments Issued China has issued its first regulation setting standards for the investment activities of the 166 major State-owned enterprises (SOEs) under the State-owned Assets Supervision and Administration Commission, Xinhua News Agency reported on July 6. These companies, with combined assets of 10.6 trillion yuan (US$1.32 trillion), have critical roles to play in the country's economic health and industrial safety. Although most SOEs already conform to the standards and channel investment into their core businesses, problems such as blind investment and ineffective capital management still exist. About 5 percent of the 1 trillion yuan invested by major SOEs in 2004 went into sideline businesses. A source with the commission said a few companies had branched into "too many sideline businesses" and failed to make good use of their resources. The regulation will apply only to the most frequent activities such as investment in fixed assets, property rights purchases and investments in long-term stockholder's rights. Other activities, especially complicated monetary investments, will be standardized through other regulations.
Siemens Adds Venture Capital Arm Siemens recently established a venture capital unit in Beijing to seek opportunities in China's innovative technology sector. Ralf Schnell, chief executive officer of Siemens Venture Capital (SVC), said the company plans to complete at least two to three deals within the next 12 months. He said opportunities in China are driven by the Chinese Government's "independent innovation" strategy, challenges presented in the sustainable development of China, and the booming venture capital market in China. In 2005 venture capitalists invested US$1.1 billion in more than 200 deals in China, according to Zero2IPO, a venture capital market research company in Beijing. He said in addition to seeking profits by investment in start ups, SVC looks for companies with leading-edge technologies that can benefit Siemens' business and its customers. Since it was launched in 1999, SVC has invested about 700 million euros (US$875.4 million) in more than 100 start ups and 30 venture capital funds, mainly in the United States, Europe and Israel.
China to Invest in International Traditional Chinese Medicine Programmes China's Ministry of Science and Technology announced on July 4 that it will invest 100 million yuan (US$12.5 million) in 50 research and development programmes internationally to develop traditional Chinese medical treatments for major diseases. New drugs would be developed for treating neuropsychosis, cardiovascular and cerebrovascular diseases, tumours and AIDS, according to Shang Yong, vice-minister for science and technology. The ministry would also create a dialogue and cooperation mechanism with the World Health Organization and other international organizations to promote global policies for traditional Chinese medical research. Shang said an international expert committee would be established for coordinating implementation of the research and development programmes. Li Daning, vice-administrator of the State Administration of Traditional Chinese Medicine, said Chinese scientists would play key roles in the global collaboration. Intellectual property and other rights of international partners will be fully protected. The initiatives will enhance the world standing of traditional Chinese medicine in the international community and give a boost to the traditional pharmaceutical industry.
Property, Oil Prices Add to Cost of Living in Beijing The average per capita consumption of Beijing residents rose by 14.8 percent year-on-year to 5,987 yuan (US$738) during the first five months of 2006, or (13.7 percent with inflation counted). Soaring prices in the oil and property sectors of the economy contributed to the increase, according to the Beijing Minicipal Bureau of Statistics. In the first five months of this year, urban residents spent an average 842.5 yuan (US$105.3) on transport and telecommunications, a rise of 18.6 percent from the same period a year ago. Per capita spending on fuel and auto parts was 89.2 yuan (US$11.20), an increase of 79.2 percent. Meanwhile, the city's urban residents spent an average 443.9 yuan (US$55.50) on housing, up 20.7 percent. Stimulated by soaring demands for housing purchases and rentals, the average expenditure on furnishings rose by 53.1 percent to 152.5 yuan (US$19).
Friendship Store to Get a Facelift The Beijing Friendship Store on Jianguomenwai Dajie, built in 1964 to cater to foreigners, is getting a major facelift. The Beijing Xidan Friendship Group and Noble Strength International Limited have signed a deal in Beijing to redevelop the traditional department store into a modern commercial complex. The Beijing company will provide the land, while its partner will be responsible for all the capital needed for the redevelopment. Total investment in the project is expected to be at least 4 billion yuan (US$500 million), according to Macao businessman Stanley Ho. Ho's ACE Brand Investment Limited holds a majority stake in Noble Strength, while Australia-based AustChina Investment and Development Proprietary Limited has a minority stake. The location of the Friendship Store along Jianguomenwai Dajie (the eastern extension of the capital's
More Funding for West China China plans to begin construction of 12 new key projects, involving an investment of 165.4 billion yuan (US$20.68 billion), in its underdeveloped western region, according to the country's National Development and Reform Commission (NDRC), the country's economic watchdog. The projects were announced on June 30. Among the 12 projects, one is a railway between Taiyuan, the provincial capital of Northcentral China's Shanxi Province and the City of Zhongwei in the Ningxia Hui Autonomous Region; others include highways and some small airports. The government will also build several key coal mine projects in the West, including the Shengli No.1 coal mine in Inner Mongolia and the Meihuajing coal mine in Ningxia. Three new hydropower stations and a reservoir are also included in the 12 new projects. The NDRC said the 12 projects are oriented toward infrastructural construction in the western region, especially in poor rural areas. From 2000 through the end of 2005, 70 key projects were launched in the West, involving 1,000 billion yuan (US$125 billion) in total investment.
Beijing Bans Companies in Residential Buildings China's capital city has banned businesses from establishing offices in residential buildings, a move that will have a serious effect on the property market. The Beijing Municipal Administration of Industry and Commerce said in a circular dated June 19 that, effective immediately, no new companies will be granted business licenses if they plan to establish offices in residential buildings. The new policy allows companies already operating in residential buildings to remain where they are. Industrial sources estimate that one-third of private businesses registered in Beijing in 2004 were operating in residential buildings. Reliable information shows that 60 percent of the companies registered in Chaoyang District in the first quarter of this year were based in residential buildings. Residential buildings have in recent years become more and more popular with small companies because space there is less expensive to rent than office space. Beijing authorities, however, have faced increasing complaints from residents, who are annoyed by noise and large number of non-residents with access to their home places. Residents also complain that company offices in their building make them less secure and cause excessive wear and tear on facilities such as lifts.
Warner Music Signs Deal with China Unicom Warner Music Group said on June 20 that it had signed a distribution deal with China Unicom Limited, China's second-largest mobile phone operator, to sell its music over China Unicom's wireless networks. The record company, which has contracts with artists such as Madonna, Green Day and Sean Paul, said the direct catalogue distribution agreement would offer a range of ring tones and voice greetings by Warner artists marketed over the operator's CDMA and GSM networks to China Unicom's 130 million customers. Warner Music said it was the first major record company to establish a full affiliate in China in 2000. A source close to Warner Music said the company had been keen to find a partner with a similar incentive to ensure that the music was distributed safely and legitimately. China's digital music business was reported to be worth 3.6 billion yuan (US$450 million) in 2005, according to the Chinese Audio-Video Association.
System Limits Car Exporters China will limit the number of domestic companies which are able to export cars next year, Zhang Ji, deputy director of the Mechanics, Electronics, and High-tech Industry Department under China's Ministry of Commerce said at an auto forum in Beijing on June 28. According to Zhang, the ministry is drafting a new system to rectify its automobile export system. The new system will come into effect in January 2007. Under the system, the government will limit the number of companies that can export vehicles through the use of export licenses. It is expected that only companies with a large enough export volume will be awarded export licenses under the new ruling, as smaller companies usually use price-cutting strategies to enter foreign markets, which hurts the nation's interest. China's automobile output makes up 10 percent of the world's total, while its export volume accounts for less than 1 percent of the world's total. Southern Airlines Joins SkyTeam China Southern Airlines, one of the top three airlines in China, signed a Global Airline Alliance Adherence Agreement (GAAAA) with SkyTeam on June 28, a key global airline alliance. The event marks a formal and crucial step for China Southern, outlining its commitment to a stringent set of standards officially recognized by members of the alliance. Liu Shaoyong, chairman of China Southern, said his company will take immediate measures to modify its operations and management in strict accordance with the GAAAA. According to Liu, the airline will make efforts to improve handling services, upgrade facilities and offer training programmes to at least 75 percent of its staff, in keeping with the practices of the alliance. China Southern will also put in place bilateral code-sharing, frequent flyer and lounge agreements with each of the SkyTeam carriers before it officially becomes a member of SkyTeam. Membership in the SkyTeam alliance will enable China Southern to integrate its resources with other SkyTeam members, lower operational costs and improve its competitiveness.
Mainland, HK Expand Economic Cooperation The Chinese mainland and Hong Kong signed a third supplementary agreement of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), a senior official from the Ministry of Commerce said. According to the supplementary accord released on June 28, the Chinese mainland will continue to open its services and trade sectors to Hong Kong and the two sides have agreed to strengthen cooperation in trade and investment. As of January 1, 2007, the Chinese mainland will take 15 new measures to open additional services and trade sectors to Hong Kong, including: legal services, exhibitions and conventions, information technology, audio-visual, construction, distribution, tourism, transportation, industrial and commercial services and trades, according to the agreement.
Government Programme Saves Electricity The Green Lighting Programme, initiated by the Chinese Government in 1996, has saved an estimated 59 billion kilowatt hours of electricity through the use of energy-saving lighting, the National Development and Reform Commission (NDRC) said on June 17. China sold 820 million high-efficiency lights in 2004, compared to 51.1 million in 1995, according to He Bingguang, deputy head of the NDRC's department for environment and resources. NDRC figures show that China produced 10 billion lights in 2005, including 2.8 billion fluorescent lamps. In the same year, China produced 1.76 billion high-efficiency fluorescent lamps, the most in the world. The Green Lighting Programme is one of the 10 major energy-saving programs to be undertaken by the government during the 11th Five Year Programme (2006–2010). Priority will be given to the use of energy-saving lights in public utilities, hotels, office buildings, shopping malls, stadiums and homes.
New EU Rules to Hit Chinese Home Appliance Companies A new European Union directive is expected to affect US$56 billion worth of annual exports from more than 5,000 Chinese home appliance companies. Small- and medium-sized companies, which account for 30 percent of China's electronic product lines and which already face pressures from multinational companies and large domestic enterprises, are expected to feel the brunt of the directive, experts said. At a forum focusing on countermeasures to the European Union's Restriction of Hazardous Substances (RoHS) directive, held July 8–9 in Qingdao in East China's Shangdong Province, Huang Jianzhong, a senior official from the Ministry of Information Industry (MII), said Chinese manufacturers needed to increase production standards to seize a bigger share of the world market. "Safe," "healthy" and "environmentally friendly" have become catchwords in the home appliance market, he said. Under the new EU directive, which took effect on July 1, electronic products containing six hazardous substances will not be allowed on the EU market. The regulation allows a maximum concentration of only 0.1 percent by weight of environmentally hazardous substances such as lead or mercury, which are necessary in the production of some electronic and electrical products.
China's Cabinet Allows Insurers to Invest Abroad China's State Council, the cabinet, said in a circular that the country's insurers can invest their funds overseas to expand their investment horizons. The circular, entitled the Ten Suggestions on the Reform and Development of the Insurance Industry of the State Council, says insurers are encouraged to directly or indirectly invest in the capital market with the investment proportion increased step by step, to invest in more types of securities products, to invest in real estate and venture capital on a trial basis and to purchase shares in commercial banks. Official figures show that the total assets of China's insurance industry now exceed 1.6 trillion yuan (US$200 billion) in value. To improve their investment earnings, insurers in April 2006 were given the go-ahead to channel 5 percent to 10 percent of their combined yuan-denomination equity funds into overseas markets.
"Reasonably Priced" Hotel Rooms for Olympic Guests Ensured Olympic guests checking into Beijing hotels for the 2008 Olympic Games will pay much less for their rooms than participants at Athens in 2004. Organisers on June 14 promised that the city's room prices would be kept at a reasonable level. The average price for a five-star hotel room will be US$353, while that for four-star and three-star hotel rooms will be US$272 and US$176. This compares to about 500 euros (US$628.90) for a five-star room during the 2004 Athens Olympics. The prices are based on quotes from all the hotels in 2005 and 2006, the hotel price increase rate in Beijing and its consumer price index. According to Xiang Ping, vice-director of the Games Services Department of the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG), BOCOG has signed services contracts with 112 hotels in Beijing including 38 five-star, 40 four-star and 34 three-star hotels. Together with the Olympic Village, the Athletes' Village and the Media Village, these hotels will accommodate 50,000 accredited athletes, journalists, officials and sponsors. |
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