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Brief

Global Recall Ordered on Dangerous Laptop Computer Batteries

Lenovo Group Limited has announced an urgent recall of 205,000 laptop computer batteries worldwide—4,000 of them in China—after recent reports of overheating suggested dangers of overheating and fire, Lenovo China said on March 2, 2007.

The computer manufacturer, which purchased IBM’s personal computer (PC) division in December 2004, will offer customers free replacements for all recalled batteries and will use Sanyo and Panasonic batteries as replacements.

The faulty batteries can be found in computers of the R60 and R60e series; the T60 and T60p series; and the Z60m, Z61e, Z61m and Z61p series. But only batteries with the part number FRU P/N 92P1131 are being recalled. Lenovo advised buyers of the faulty batteries to stop using them immediately.

The lithium-ion extended-life cells are made by Japan's Sanyo Electric Company and can become fire hazards if the battery packs are struck forcefully on their corners, according to the United States Consumer Product Safety Commission.

About 100,000 batteries were sold with Thinkpad computers in the United States; about 105,000 were sold globally, according to Lenovo China.

Since last September, a global-scale recall of Sony-made batteries has occurred in the PC industry. Major players in the PC market, including Dell, Hewlett-Packard, Lenovo and Apple, have recalled a combined total of about 10 million computer batteries.

Economy Growth to Slow Down to

8 Percent

China plans to reduce its GDP to 8 percent in 2007 from 10.7 percent in 2006 as it improves the quality and efficiency of its economic growth, said Chinese Premier Wen Jiabao in his government work report at the opening meeting of the Fifth Session of the Tenth National People's Congress (NPC) on March 5, 2007.

The target includes considerations of the country’s employment goals, projected increases in consumer prices and other factors, according to the report.

Experts said that the target should ensure smooth economic growth and protect against excessive fluctuations in the economy.

The Chinese Government has vowed to reduce urban unemployment to below 4.6 percent by creating at least nine million new jobs, while overall increases in consumer prices, an important internationally recognized index for inflation, shall be held to less than 3 percent, according to the report.

A report released by the World Bank on February 14 predicted a 9.6-point growth rate in China's economy in 2007.

China's QFII Investment Quotas Close to Ceiling

China's foreign exchange authority has granted investment quotas valued at US$9.995 billion to 49 qualified foreign institutional investors (QFII).

The March 3, 2007, Shanghai Securities News report said the sum is close to the ceiling of US$10 billion set by the Chinese Government for QFIIs, but three of the 52 registered QFIIs have yet to get their investment quotas.

The State Administration of Foreign Exchange (SAFE) will soon draw up new QFII regulations and will increase investment quotas, the report quoted unnamed analysts as saying.

The new regulations under consideration may raise the ceiling on securities investment by foreign institutions by 5 percent–10 percent of the market value of the yuan-denominated A-share market, meaning US$55 billion–$120 billion could be gradually allowed to enter the A-share market over the next eight to ten years, said the report.

Six QFIIs—Shinko Securities Company Limited, HSBC Investment (Hong Kong) Limited, Sumitomo Mitsui Asset Management Company Limited and GE Asset Management Company—have acquired quotas valued at US$950 million in 2007.

15 billion Mobile Messages Sent During Spring Festival

Chinese mobile phone users went on greeting spree during the Spring Festival, sending out 15 billion short messages over the seven-day holiday, statistics show.

From February 17, Chinese Lunar New Year's Eve, to February 23, an average of 33 short messages were sent from each mobile phone, according to figures from China Mobile and China Unicom, the country's top two mobile operators.

The messaging craze brought mobile companies an estimated revenue of 1.5 billion yuan (US$187.5 million).

Multimedia messages sent during the festival exceeded 170 million, said China Mobile, whose users sent nearly three-quarters of all the messages.

With China's mobile users rocketing to more than 5.6 million on average in each month, text messaging has become an increasingly popular way of saying "happy new year" during each Spring Festival.

In 2006, during Spring Festival mobile phone users sent 12.6 billion short messages: 11 billion were sent in 2005.

China had more than 460 million mobile phone users at the end of 2006.

China's Newly-Weds Spend

125,000 Yuan

China's marriage-related industries such as wedding photography and wedding ceremony services plucked an average of 125,000 yuan (about US$16,000) from the pockets of each newly-wed couple or their parents, more than most couples make in a year, according to a report in Beijing Morning Post on March 4, 2007.

A survey of nearly 60,000 couples conducted by the organizing committee of China Wedding Expo showed that more than 70 percent of the spending was for durable goods such as furniture and home appliances.

Weddings themselves—ceremonies, photography, wedding gowns, honeymoons and jewellery—accounted for less than 20,000 yuan (US$2,600), 15.5 percent of the total, with wedding feasts accounting for the rest of the spending.

According to the survey, overall marriage spending reached a whopping 557,478 yuan (US$72,410) because marriages often include the purchase of an apartment and a car.

The sums involved are huge for newly-weds, as 86 percent of those interviewed earn less than 8,000 yuan (US$1,040) a month.

Forty-seven percent of the newly-weds interviewed admitted that 20 percent–60 percent of their marriage-related spending came from their parents, while a minority, 14 percent, relied on their parents to pay 80 percent–100 percent of their total costs.

Regulator Strengthens Futures

Risk Controls

Brokers are required to ensure investors provide sufficient trading margins for futures contracts as part of an effort to improve risk controls, according to the China Securities Regulatory Commission.

Brokerages also have to check their clients' credit profiles and risk-management abilities. They can order investors to close positions if they don't increase margins as required. What’s more, securities houses must set aside provisions for their clients' portfolios and help cover losses if risks occur, the statement said.

The stock regulator noted that several brokerages lacked proper risk controls, which led to recent cases in which clients hadn't provided sufficient margins. But it didn't name any brokers and said margin shortages had been covered.

The margin is the amount required by a securities exchange to cover any liability resulting from positions held by investors.

The Shanghai Futures Exchange in November 2006 cut the margin for copper to 6 percent of a contract's value from 9 percent in an attempt to make more funds available for futures-contract trading.

Sensible Move: Foreign Firms to Sell Yuan-Denominated Bonds

People’s Bank of China (PBC), China’s central bank, has said it will let foreign companies sell yuan-denominated bonds in 2007, possibly increasing demand for China's currency, according to a senior official of the PBC.

China is seeking to expand its bond market to reduce its companies' reliance on bank loans and to give investors more choice. International Finance Corp, the World Bank's investment arm, and the Asian Development Bank became the first overseas institutions to sell yuan-denominated bonds in China in 2005, Bloomberg News said.

The central bank has let the yuan's gains accelerate since scrapping its peg against the US dollar in 2005.

The yuan weakened to 7.7465 per US dollar as of 5:29 p.m. in Shanghai on March 2, 2007, according to the China Foreign Exchange Trade System. The currency has risen 6.7 percent since scrapping the peg of about 8.3 yuan to the US dollar.

China's currency reserves exceeded US$1 trillion in 2006, the world's largest holdings of foreign currencies. The government won't reduce its holdings of US Treasury bonds and other forms of dollar-denominated debt, according to the official.

Focus Media to Acquire Net Ad Firm

China's largest outdoor media group, Focus Media, said on March 1, 2007, that it will acquire Internet advertising service company Allyes Information Technology for US$300 million in cash and stocks to forge an empire covering outdoor, indoor, mobile and Internet advertising.

Under the terms of the deal, which is expected to be completed in March, Focus Media will pay US$70 million in cash and US$155 million in stock to Allyes.

Allyes, which was established in 1998, will also get up to US$75 million in stock if it meets certain earnings targets from April 2007 to March 2008.

Allyes CEO David Zhu has signed an employment agreement with Focus Media and will remain in his position.

Focus Media, which offers flat-screen TV display ads in stores, offices and apartment buildings, has been expanding since 2006 through several acquisitions that allow it to provide ads in elevators, cinemas and on outdoor electronic billboards and cellphones.

Focus Media's latest report said commercial locations contributed to 63 percent of the company's revenue in 2006, while revenues from in-store networks, in-elevator and cellphone advertising accounted for 12.7 percent, 19.1 percent and 4.6 percent .

Although many applauded the high-profile deal between Focus Media and Allyes, the acquisition smashed Allyes's earlier efforts to seek an independent initial public offering on the NASDAQ stock market.

Experts believe the sluggish performance of Double Click on the NASDAQ, with a similar business model as Allyes, and the robust performance of Focus Media triggered the deal.