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Brief

Law Revised to Reduce Energy Costs

With a failure to achieve its energy-savings targets in mind, China is revising a law to make it possible to impose harsher punishments on those who ignore energy-savings requirements, especially those involving the construction industry.

A statement issued on August 5 said China's growth is resulting in unprecedented energy demand and straining the country's energy resources. The Financial and Economic Committee of the National People's Congress, China's top legislature, and the National Development and Reform Commission (NDRC) are jointly crafting a proposed revision of the Law on the Conservation of Saving Energy Resources, which is expected to be completed later this year. Though the law went into effect eight years ago, no projects have been banned for failing to meet energy-savings requirements and targets set in the 11th Five-year Programme for reducing energy costs per unit of gross domestic product. The revised law is expected to strengthen enforcement and supervision under the law, while relying on incentives for those who save energy and punitive measures for those who won't get with the programme, according to the NDRC. The construction sector, which now accounts for one-third of all energy costs in China, will get a hard look. Construction projects that do not meet energy-use requirements will be sanctioned, sources said.

HSBC to Expand Chinese Mainland Business

Stephen Green, chairman of the global banking giant HSBC Holdings PLC (Public Limited Company), speaking at a press conference held in Hong Kong, said HSBC will invest more to expand its commercial and personal banking operations on the Chinese mainland. The group, which reported US$280 million in pre-tax profits on the mainland in 2005, up 74 percent over 2005, expects to enhance its retail banking business by cooperating with the Bank of Communications. Michael Smith, chief executive of Hong Kong and Shanghai Banking Corporation Limited, said the group will rely on its existing 33 branches on the Chinese mainland and existing policies to advance the company's business, but will also foster new cooperative projects while seeking partners in the securities and insurance sectors. HSBC Holdings PLC reported a 15 percent increase in its net profits during the first half of 2006.

Gome Acquires Paradise

China's biggest home-appliance retailer, Gome Electrical Appliance Holding, Limited, has acquired China Paradise Electronics Retail, Limited, in a transaction valued at HK$5.27 billion (US$675.64 million). Closing on July 25, the move enhances Gome's ability to withstand foreign competition in the sector. Gome agreed to pay HK$409 million (US$52.44 million) and one new share for every 3.08 shares of China Paradise stock. The deal values China Paradise at HK$5.27 billion (US$680 million), which represents a 9 percent premium at China Paradise, based on the closing price of the two companies. Gome Chairman Huang Guangyu, ranked China's richest businessman last year, will remain as chairman of the new company. Current China Paradise Chairman Chen Xiao will become the merged company's chief executive officer. Huang will own 51.2 percent of the new company while Chen will hold a 12.5 percent stake. China Paradise will continue to operate its Yolo brand after the deal, but the new company will consider combining some overlapping stores in the same areas to increase efficiency company officials said. The move will create a retail giant with about US$8 billion in sales, one-tenth of the Chinese consumer electronics market, which is luring an increasing number of foreign giants with deep pockets.

Capital's Second International Airport Planned

Expansions at the increasingly busy Beijing Capital International Airport will not be enough for a rapidly growing Beijing so a second airport for the capital is being planned. The new airport will be built after the 2008 Olympics, China Daily reported on July 31. The National Development and Reform Commission (NDRC) recently told authorities to speed up their consultations on where the new airport will be located. Choices of a site have been narrowed to the City of Langfang, Hebei Province, or at the Nanyuan Airport in southern Beijing, according to Hong Shanyuan, an official with the airport department of the General Administration of Civil Aviation (CAAC). Beijing's existing no-fly zones restrict further development of Beijing's famous international airport. The second international airport will be designed to adjust to the airspace that remains. A search for a second airport site began in 2002, but planning was suspended in 2003 when a decision was made to expand Capital Airport instead, including the construction of a third terminal and runway. Both are scheduled to be completed by the end of 2007 to serve the 2008 Olympic Games. With these expansions, Capital Airport will be able to handle 60 million passengers and 1.8 million tons of cargo per year by 2015. The current airport serves 35 million passengers and handles 780,000 tons of cargo per year.

Cell Phones Help Foreigners Overcome Language Barriers

Intelligent cell phones that could help foreigners overcome language barriers in daily life in Beijing have been made available since July 23 for rental at 94 hotels in Beijing at a price of US$5 per day, according to the Xinhua News Agency. "The cell phone could be a guide and translator for English-speaking foreign people," said Chen Xinxiang, chairman of the Capital Information Development Company Limited, developer of the cell phone. The cell phone provides four types of service: city information, translation assistance, emergency hotlines and tips for living in Beijing. Foreigners can find maps, introductions, addresses and telephone numbers of hotels, scenic spots, shopping malls, hospitals. When an English name of a destination or a dish is chosen, the cell phone is able to voice the Chinese name automatically for taxi drivers or restaurant waiters. Users can also find tips such as where to buy inexpensive goods or how to use chopsticks. In the case of any language problem that foreigners cannot overcome on their own, an emergency hotline for translations is available round the clock. Currently the cell phone may only be used in Beijing.

Crystal CG becomes Olympic Graphic Design Service Supplier

Beijing Crystal Digital Technology Company, Limited (Crystal CG), has been named a Graphic Design Service Supplier to the 2008 Olympic Games, the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) announced on August 2. Crystal CG will provide specialized graphic-design support services for BOCOG, including the preparation of presentations, videos, publications, venue maps, promotional movies, and online promotional materials, BOCOG said in a press release. Crystal CG, one of the largest companies providing applications services for visual technologies in the design industry, was involved in Beijing's Olympic bid campaign. The Suppliership Programme, the third tier of the Beijing 2008 Sponsorship Programme, includes suppliers and exclusive suppliers. The latter get exclusive Olympic marketing rights within its designated product (service) category. Two or more suppliers in the same or similar product (service) category can enjoy co-exclusive Olympic marketing rights. Since BOCOG launched its marketing programme in September 2003, 11 partners, nine sponsors, six exclusive suppliers and one supplier have been signed up.

Mainland Advertising Market Flourishing

China's advertising market is expanding rapidly. In 2005, companies spent 150 billion yuan (US$18.7 billion) on advertising on the Chinese mainland, with Shanghai, Beijing and Guangzhou accounting for nearly 50 percent of the total. This figure would be as much as 390 billion yuan (US$49 billion) if the figures of Hong Kong, Macao and Taiwan were included. Experts believe China's advertising industry will continue to develop rapidly, and more enterprises will place high-quality advertisements. Since China's reform and opening-up programme began, the output value of China's advertising industry has increased by 20 percent annually. More transnational companies have invested in China's advertising market. According to an agreement reached between the Chinese Government and the World Trade Organization, foreign advertising companies began to establish self-funded branches in late 2005. The ten largest advertising corporations in the world have established companies in China.

Beijing to Build First Unmanned Metro

Unmanned metro trains will be used on a new transit line between Beijing Capital International Airport and the Dongzhimen Station in Central Beijing, the first of their kind in China, the Xinhua News Agency reported on August 8. Alstom China will provide automatic control systems for the trains, which will be put into use before the 2008 Olympic Games. Four stations will be set up along the 28-kilometre-long railway, including the Dongzhimen and Sanyuan Qiao stations on the Northeast Second and Third Ring roads in the central urban area. Safety shields will be installed at each station to protect the safety of passengers. The trains will travel at up to 110 kilometres per hour, much faster than the current highest speed of 80 kilometres per hour in the country. Each of the trains' cars will be equipped with monitors to instantly respond to changing conditions.

Land-use Right Curbs Announced

New measures were announced on July 27 to end the excessive use of land for construction and industrial projects. According to a State Council executive meeting presided over by Premier Wen Jiabao, charges for land use rights and taxes on land use will be increased, to curb expanding encroachments of farmland. Revenues from land-use rights transfers will be included in local governments' budgets instead of being held by local land departments as with the current practice. Top local governmental officials will be held responsible for land management and the protection of farmland. Farmers whose land is taken away from them shall be compensated adequately so that they can maintain the quality of their lives. The meeting also noted increasing cases of violations of laws and regulations in land acquisition. Statistics from the Ministry of Land and Resources suggest that one in three construction projects in recent years took place on illegally acquired lands. From October 2004 to May 2005, the figure jumped to one in two projects. At the meeting, Wen urged the recently established nine land inspection bureaus nationwide to strengthen their supervision of land acquisitions.

KTV Clubs Will Pay Use Fees

KTV clubs in China will pay at most 1 percent of their total income in the near future to copyright owners of the music videos they use, a senior official with the National Copyright Administration said on July 27. The charge was initially fixed at 0.5 percent of the yearly incomes of KTV clubs, but this still requires administration approval, Wang Ziqiang, spokesman for the administration, told a press conference. Supervised by the administration, the Music Copyright Society of China and the China Audio-Video Collective Management Association, representing the music and music video copyright owners, will collect the copyright fees. The administration and the two copyright associations will continue to listen to opinions from the music video copyright owners, KTV club operators and the public before fixing a final standard, according to Wang.

New Service Sector Technologies Encouraged

China's Ministry of Science and Technology is drawing up incentives for investment in new technologies for the service sector, particularly those involving electronic commerce, logistics, design and finance. Science and Technology Minister Xu Guanhua said in Beijing on July 25 that his ministry would ensure the development of platform technologies for business. Technological integration and the creation of new business models should focus on upgrading technologies in the service industry. All such new technologies for the service sector must be oriented and tested by the market, according to Xu. In 2003, the government first outlined a technological development strategy for the service industry, which is also included in the long-term national science and technology development plan towards the year 2020. The ministry will focus on information and digital society technologies and technical standards in its support of the service sector. A ministry report showed that since 2000, many developed countries have shifted their development focus from the industrial sector to the service sector. The service industry accounts for 74 percent of the US gross domestic product (GDP) and about 80 percent of its jobs.

Electronic Arts to Offer Second Online Game

Electronic Arts, the world's largest video game publisher, said on July 26 it had licensed its first online game for distribution in China, a top market for such products. The announcement––the second like it this month––comes nearly two years after Electronic Arts entered China with a flourish. It disclosed plans to make China its global centre for online-game development with a 500-person studio that would help it generate US$1 billion in revenue in Asia by 2010. Under its new agreement, Electronic Arts' Chinese partner, Guangdong Tian Yue Network Technology Development Company Limited, will offer the fantasy-themed game Tales Runner in China under license from South Korea's NOWCOM. Earlier this month, Electronic Arts announced that it and Tian Yue would bring a stable of casual online games to the Chinese market, becoming the first Electronic Arts-branded offering in China.

Cathay Plans HK–Beijing Freight Flights

Cathay Pacific Airways Limited, the world's fourth-largest international cargo carrier, plans to begin offering Hong Kong–Beijing freighter flights and to increase its Shanghai service as its rivals also focus on the mainland for expansion. Hong Kong's biggest airline may also add more cargo flights to southern Europe and India over the next few years to meet customer demand, said Ron Mathison, Cathay's general manager for cargo. Cathay earned 25 percent of its sales last year from cargo, as exports fuelled the Chinese mainland's economic growth of 9.9 percent. Deutsche Lufthansa AG, Singapore Airlines Limited and other carriers are forming joint ventures to challenge Cathay, which will add all-cargo flights to Stockholm and Toronto in September, raising its number of freighter destinations to 30. The airline has applied for permission to fly its freighters to Beijing and to increase its daily Shanghai service, Mathison said. Cathay may add flights after a new air services deal between Hong Kong and the mainland comes into effect in October.

Wal-Mart to Help Unionize All Chinese Outlets

Wal-Mart Stores, Inc. has promised to help China's top trade union authority establish unions in all of its outlets across the country, Xinhua News Agency reported. Wal-Mart executives made the commitment during their visits to branches of the All-China Federation of Trade Unions (ACFTU) in Shenzhen and Nanjing, where a total of five Wal-Mart unions have been formed.

A statement released by Wal-Mart on August 9 said the company would cooperate closely with the ACFTU in setting up trade unions in all its 60 Wal-Mart outlets in China. Joe Hatfield, president of Wal-Mart Asia, said "I hope to establish with the ACFTU and local branches a good relationship that would be conducive for our employees and business development.” Hatfield added that it is in line with Chinese Government's efforts to build a harmonious society. The commitment of the world's number one retailer came as the sixth trade union was set up at 10:30 a.m. on August 9 at its Zhongshan store in Shenzhen where its China headquarters is located.

The ACFTU says expanding its presence in private companies is one of its key goals, and it has expressed hope that its success with Wal-Mart will boost efforts to organize workers elsewhere. About 26 percent of China's 150,000 foreign-financed companies have official labour unions, according to the ACFTU. The group says it hopes to raise that to 60 percent this year.