Founder Group bets big on digital publishing revenues

Founder Group bets big on digital publishing revenues


Fang Zhonghua
Digital publishing solutions provider Founder Group is planning to build the largest digital library in China and expects digital publishing to account for 20 to 30 percent of its IT business in the near future, said a senior company executive.
Fang Zhonghua, senior vice president of the group, said digital publishing business could generate revenue of 2 billion yuan for the group over the next three years. The group reported a total revenue of 45 billion yuan in 2008, about half of which came from its IT business.
Founder is now stepping up efforts to make its digital book portal Fanshu.com the largest digital library in China and increasing its stock of copyrighted digital books from 500,000 to 1.8 million.
The group is also in talks with several investors and hinted that the digital publishing business may get venture capital investment by the end of the year.
Starting as an IT solutions provider for publishing houses, newspapers, and magazines, Founder moved into digital publishing in 2000. Currently 500 publishing houses and 700 newspapers use Founder’s digital publishing system to deliver electronic copies. About 4,500 schools, institutions, and public libraries are equipped with Founder’s digital library.
Earlier this month, Internet giant Google came under fire after it scanned more than 20,000 books by 570 Chinese authors without paying them or getting consent. The company said it was difficult to contact each and every author due to the huge number of books scanned.
“Internet is likely to have a major impact on traditional publishing. It’s only a matter of time,” said Fang. “What we have to do, besides criticizing Google, is to do the work better.”
Founder launched Fanshu.com with Zhongsou.com, a search service provider, this July, aiming to build China’s Google Books, a platform integrating searching, reading, and purchasing books.
Fang said a large user base in China ensures a highly potential e-book market, which Founder expects to cash in on.
According to research by China Book Business Report and the domestic e-paper technology firm Sursen, China had 79 million e-book readers at the end of last year propping up a 226.3 million yuan market.
Readers can purchase e-books on Fanshu.com or go to online bookstores to buy paper ones by following links on the website. Founder makes money through e-book selling and part of the paper book sales.
“The success of these kind of websites lies in a good profit-making model which can benefit different players in the industry, and rich copyrighted content that satisfies the different needs of customers,” said Zhang Yanan, an analyst with Analysys International.
With Fanshu.com in its early stage, Founder’s e-readers, launched in October, will be a main revenue-generator for the group’s IT business next year.
“Hopefully we can sell 1 million e-readers in 2010,” said Fang.
According to research firm DisplaySearch, China’s e-reader sales are expected to grow about 800,000 this year to 3 million in 2010, accounting for nearly 20 percent of the world total. Jennifer Colegrove, an analyst from DisplaySearch, expects China’s e-book reader market to surpass that of the United States before 2015, according to Forbes.com.
Besides Founder, other players have also increased their efforts in the e-book market. China Mobile, the world’s largest telecom carrier by subscribers, has cooperated with 10 publishing houses to build an online book platform. China Unicom also said it plans to launch an e-book service. Some e-reader makers, such as Datang Telecom and Hanwang, have launched their 3G e-readers. Hi-tech company Aigo also entered the market this month.

Philips lines up $54m investment

Philips lines up $54m investment

Electronics company Royal Philips Electronics yesterday said it would invest $54 million to set up an Industrial Campus for imaging systems in China over the next five years, to cash in on the nation’s healthcare reforms.
Located in the Suzhou Industrial Park, Jiangsu province and covering 62,000 sq m, the Industrial Campus for imaging systems will have the integrated facilities of R&D, manufacturing, assembly and sourcing in one site.
The campus mainly produces intermediates for the Chinese market and is adapted to the requirements of local hospitals. It will produce 64-slice CT and 1.5T MR machines, which are mainstream imaging systems equipment in most of China’s provincial and city level hospitals, as well as X-Ray equipment for mid-sized hospitals.
“The move will perfect the current healthcare product lines, and further enhance our healthcare presence in the country,” said Steve Rusckowski, executive vice-president and chief executive officer of Philips Healthcare.
Besides the campus, Philips Healthcare has two other sites nationwide that integrate the facilities of R&D and manufacturing, the joint venture with Neusoft and the recently acquired company Shenzhen Goldway. The two sites focus on patient monitoring and home healthcare business respectively.
“The Industrial Campus in Suzhou, together with the other two sites, will make us better positioned to help improve the accessibility and affordability of healthcare services in China with a complete product portfolio that serves both the market requirements for the value segment as well as more advanced specialized applications,” Rusckowski said.
Earlier this year, the government said it would invest 850 billion yuan over the next three years to revamp the country’s healthcare system. Nearly one-third of the funds would be used to establish new hospitals or medical service centers, and upgrade existing healthcare facilities.
According to research firm Frost &Sullivan, China’s medical equipment market revenue touched 83 billion yuan last year, accounting for one-eighth of the country’s total healthcare industry.
Analysts said the rapid growth of the Chinese healthcare industry and the ongoing medical reform are expected to create huge demand for medical equipment such as X-ray machines, CT scanners and ultrasound scanners.
Healthcare business accounted for nearly 29 percent of Philips’ overall sales last year and was the second largest contributor to sales.

Sina open to spin-offs of specialized portals

Sina open to spin-offs of specialized portals

Web portal Sina Corp yesterday said it remains optimistic on advertising growth next year and said it may consider spin-offs of some of its specialized portals.
The web portal said its third quarter net revenue fell 9 percent to $96.4 million year-on-year. Its net profit fell to $16.7 million from $18.85 million a year ago.
Sina’s advertising revenue fell 16 percent in the third quarter, but rose 10 percent from the previous quarter to $63.8 million. The company said it expects advertising revenue of between $60 million and $62 million in the fourth quarter.
“We are seeing strong signs of recovery in the advertising market in China during the second half,” said Charles Chao, chief executive of Sina, in a statement.
He said he expected the momentum to continue as the Chinese economy gathers steam.
China’s online advertising market had been severely hit after the Beijing Olympic Games last year as companies cut their advertising and marketing budgets due to the global economic slowdown.
But the market saw signs of recovery recently after the government’s 4 trillion yuan ($586 million) economic stimulus package started to boost consumer spending.
Chao expected advertising sentiment to improve further next year due to the World Expo in Shanghai and other major sporting events in the country. “If the Chinese economy continues its current pace of recovery, we expect the online advertising market in the country to post strong growth next year,” he said in an earnings conference call yesterday.
Sina has for long been trying to copy its success in other sectors such as online games to reduce its reliance on advertising. But most of its previous efforts failed as it lacked a clear expansion strategy while its ownership remained highly scattered.
Last year, Sina announced plans to merge with advertising conglomerate Focus Media Holding to form China’s biggest private media firm. But the effort was later scrapped after months of government stonewalling over the $1.4 billion deal.
In September, the company announced that an investment group led by its management team including CEO Charles Chao would buy about 10 percent of the company for $180 million, which experts said would significantly increase the management team’s confidence in the future of the portal.
The company’s joint venture with E-House Holdings, targeting China’s real estate business, was listed on the NASDAQ last month.
According to domestic research firm Analysys International, the turnover of China’s online advertising market reached 4.16 billion yuan in the third quarter of this year, an increase of 24 percent over the same period last year.

TCL setting up new LCD production line

TCL setting up new LCD production line

Shares of TCL Corp surged to the daily trading limit of 10 percent yesterday, to 4.57 yuan (67 cents), after the appliance and top TV maker said it was setting up a thin film transistor-liquid crystal display (TFT-LCD) production line in alliance with the Shenzhen government.
The new 8.5-generation technology production line would be set up with an investment of nearly 24.5 billion yuan, said company executives.
TCL plans to form a 50-50 joint venture with the Shenzhen government-owned Shenchao Technology Investment Ltd. Both the firms would contribute 5 billion yuan each as registered capital for the venture.
The TV maker is also planning to sell 1.5 billion new shares to 10 specific investors at a price of 3.46 yuan per share through a private placement, to finance the project.

The remaining 14.5 billion yuan will be raised via bank loans and other methods, said Chairman Li Dongsheng.
Construction of the TFT-LCD panel project is scheduled to begin in January and production likely to start in the third quarter of 2011. The new venture is likely to get full returns from its investments in 10 years.
“That is comparatively a long gestation period, even though the 6.23 percent return on investment looks promising,” said Zhu Lijun, an analyst with China Galaxy Securities. The main challenge for the venture would be the management’s ability to cater to the ever-changing market demand.
Zhu said the government subsidies for buying consumer appliances has triggered demand for liquid crystal displays. He expects the demand to continue for three years as most TV sets in the country would be replaced by new ones during the period.
“Domestic TV makers were until now reliant on LCD imports to cater to the growing demand. However, most of these companies are now setting up their own production lines to reduce costs,” said Zhu.
But the major stumbling block for most of these firms has been the inability to make the large-size TFT-LCDs. With 60 to 70 percent of the costs going toward import of LCDs, there was hardly any room to make profits, TCL said in a statement.
TCL’s announcement comes just a few weeks after its foreign rivals disclosed plans to build advanced LCD facilities in China. These include LG Display Co’s $4 billion 8th-generation joint-venture in Guangzhou, Samsung Electronics Co’s $2.3 billion 7.5th-generation panel plant in Suzhou, and Sharp Corp’s 6th-generation plant in Nanjing, reported the Wall Street Journal.

Burberry to boost market presence in China

Burberry to boost market presence in China

The British luxury group Burberry is planning to further boost its presence in China by expanding the number of franchised stores to 100 in the country in the next couple years, said Chief Executive Angela Ahrendts in London on Tuesday.
She told Xinhua in a foreign journalist press conference that Burberry would increase its investment in emerging markets, especially in China, because the country has a huge purchasing potential.
So far, the company has operated 90 stores in emerging markets, the majority of which are currently under franchise. In China, the company has 44 franchise stores now, following seven openings in the first half of the financial year.
Ahrendts said that Burberry is continuing to perform well in China, with strong double-digit comparable store sales growth in the first half.
In addition, the company is also planning to increase its presence in the Americas.
Burberry reported a fall of 19.6 percent in pre-tax profits for the six months to the end of September from 97 million pounds ( about $163 million) to 78 million pounds.
But its total revenues were up by 6 percent to 572 million pounds in the first financial half year, about 10 percent of which was from emerging markets. During the period, retail sales accounted for 54 percent of total revenue, while the proportion of the wholesale revenues was 38 percent.
The 153-year-old group Burberry, which now has 122 mainline stores, 255 concessions and 90 franchised stores across the world, is planning to increase retail selling space by 10 percent a year.

CIMC set to purchase YRSL stake

CIMC set to purchase YRSL stake

CIMC reported a loss of around 50 million yuan in the third quarter of this year.[China Daily]

China International Marine Containers (Group) Ltd (CIMC) will spend $1.7 billion to buy stakes of Yantai Raffles Shipyard Ltd (YRSL) to strengthen the group’s marine engineering business, company executives announced yesterday.
The container provider is expected to get controlling rights for the biggest production base of drilling platforms in China through the unconditional voluntary cash tender offer.
Bright Day Ltd, a wholly owned subsidiary of CIMC Hong Kong, will buy up to 44.79 percent of YRSL’s floated shares at a price of $1.41 per share. CIMC Hong Kong and its wholly owned subsidiary, Sharp Vision Holdings Ltd, hold 18.3 percent of YRSL shares.
According to the deal, if CIMC Group purchases of YRSL shares were less than 50 percent, one of the bigger shareholders would sell an 8.5 percent stake to CIMC Hong Kong.
At present BT Entities (Leung Kee Holdings Ltd and Bright Touch Investments Ltd) holds 36.91 percent of YRSL’s listed shares while DnB NOR Bank ASA holds 37 percent, and Platinum Nominee Ltd 7.4 percent.
CIMC said the stake buy would increase the company’s investment and capital in marine engineering, a sector it entered in 2008. The stake buy would also help make YRSL’s strategic development goals more consistent with the group’s operational plans.
“Taking into consideration the development of the global marine engineering sector, particularly in China, and the subsequent demand growth for relevant equipment, we expect the deal to bolster profits in the long run,” the company said in its disclosure statement. CIMC also expects to cash in on the excellent resources of YRSL.
During the third quarter of this year, CIMC reported a loss of around 50 million yuan ($7.32 million), with total net profit in three quarters falling nearly 50 percent year-on-year to 776 million yuan.
“The company has always been seeking chances to shift its focus from container manufacturing to industries with higher added value like energy equipment. The deal looks good at current prices, as the shipbuilding industry has been languishing due to the economic crisis,” said Guo Yaling, an analyst with CITIC Securities.
Guo said CIMC’s cost control advantage largely due to its long experience in managing the low-profit container industry, would suit YRSL, a company of excellent products but with higher costs.

Founded in Singapore in 1994 and based in Shandong province, YRSL went public in May 2006 at the Norwegian over-the-counter market, floating 273 million ordinary shares. It is experienced in building ships for the offshore crude oil and natural gas market, including self-elevating drilling platforms, semi-submersible platforms, floating production, storage and offloading vessels, floating cranes, pipe laying vessels and so on.
For the period ending June 30 this year, YRSL reported revenue of S$440 million and nearly S$23.6 million as net profit.
CIMC is the biggest container provider in China, with businesses extending to the manufacturing of trailers, tank equipment and airport equipment.
The company had 47.327 billion yuan sales and 1.407 billion yuan net profit in 2008. It has 100 subsidiaries and 47,000 employees in China, North America, Europe, Asia and Australia.

BYD to invest heavily on testing center

BYD to invest heavily on testing center

China’s battery and electric car producer BYD Co said yesterday that it would invest 1.5 billion yuan ($219.71 million) to build China’s largest vehicle testing center, in a bid to strengthen its research and development capability as well as to enhance the quality of its offerings.
The center in Shaoguan, Guangdong province, which will include an auto parts production base as well, is scheduled to begin operations before 2012. Upon completion, the output value of the center is expected to exceed 1 billion yuan.
According to BYD, the testing center, the largest in the country, will help it break into the top ranks of the global automobile industry in terms of R&D capability and vehicle quality control.
The Warren Buffett-backed automaker currently has a nationwide quality control and R&D system, including vehicle inspection lines, at its manufacturing bases in Xi’an and Shenzhen; a vehicle crash testing lab in Shanghai and an R&D center at its headquarters in Shenzhen.
BYD announced in late September that a high-speed curved cycling track in Shenzhen, the fifth such proving ground in China, had gone on-stream, making it the first Chinese automaker to have its own circuit.
“BYD always attaches much attention and invests hugely in R&D and quality control as we believe the quality of our products is vital to our long-term development,” said Xu An, BYD’s public relations manager. “We have seen beneficial results from insisting on quality control, especially in making the auto parts ourselves, during previous years.”
Currently, BYD produces all the auto parts, except the windshield and tires, for its cars. This is seen as a smart way to shorten the turnover period of sourcing parts and supply, and promises comprehensive quality control of its products and speeds new model launches.

Profits up for flu vaccine makers

Profits up for flu vaccine makers


Primary school students receive injections of anti-H1N1 influenza medicine in Hunan province. GlaxoSmithKline (GSK) has received orders for 1.2 million packs of its anti-H1N1 influenza medicine, Relenza, from the Chinese government. [Asianewsphoto]
International pharmaceutical companies are cashing in on China’s efforts to protect its people from the H1N1 pandemic with anti-influenza medicines.
GlaxoSmithKline (GSK), a leading international pharmaceutical company and China’s largest by sales volume, received approval from the State Food and Drug Administration for its anti-H1N1 influenza medicine to enter the China market in July.
Since then, GSK has prepared 1.2 million packs of the anti-H1N1 influenza medicine called Relenza available for governments at all levels in China. The governments are storing the anti-virus in anticipation of a massive flu outbreak in coming months.
“GSK expects very strong demand for Relenza this year in China,” Mark Reilly, general manager of GSK China, told China Business Weekly.

Chen Zhaorong, area medical manager at GSK China, also predicted that GSK will receive more orders in the months ahead.
“Compared with that from the other nations worldwide, China’s orders are still small (for GSK),” Chen said.
Actually, the production capacity for Relenza is around 60 million packs. GSK has contracts in place to supply Relenza to over 60 economies. Of which, at least 10 percent of its new production have been allocated for developing nations.
But Chinese rules require that only governments can purchase the anti-H1N1 flu medicine. Relenza is still unavailable for sale to consumers.
As the weather turns colder, China is now bracing for a major H1N1 flu case outbreak. As of Nov 11, more than 62,871 cases were reported in 31 provinces, municipalities and autonomous regions of the Chinese mainland. About 32,000 cases were reported just since Oct 12.
“Many regions are entering the traditional period for possible flu outbreaks, which will last for two to three months, and prevention and control work is becoming tougher,” said Liang Wannian, vice director of the health emergency office under the Ministry of Health.
The Chinese government plans to allocate 1.09 billion yuan ($159.65 million) for prevention and treatment of the flu, including purchases of vaccinations, anti-viral medicines and medical instruments.
The huge investment is attracting global players like GSK. To meet the growing demand for anti-virals in China, GSK is considering investing in a manufacturing facility to produce Relenza for the country, said the GSK’s Reilly, declining to elaborate.

Nissan mulls yet more expansion

Nissan mulls yet more expansion


The popular Teana from Dongfeng Nissan.
After announcing a 5-billion-yuan expansion plan in July, Japanese carmaker Nissan Motor Co is mulling even further expansion in the southern city of Guangzhou to meet the blistering pace of demand for its cars, according to CEO Carlos Ghosn.
Nissan’s joint venture with Dongfeng Motor Corp is building a new 240,000-unit plant in Guangzhou that will boost production capacity in the city to 600,000 passenger cars a year by 2012, according to the plan.
Ghosn said 600,000 cars will be enough to meet short-term demand, but insufficient in the long run due to the rapid growth of China’s car market.
“We need more capacity in the mid term,” he said.
“We see that the China market will continue to grow significantly in the next years – the Chinese government is taking very good measures to stimulate the economy and demand for vehicles.”
Nissan will give priority to China for investment and introduction of new products because the country is one of the most important markets for the Japanese carmaker in the mid term for both sales and profits, he added.
Sales of Dongfeng Nissan, the passenger car unit of the joint venture, surged by 52.6 percent year-on-year to 422,460 units in the first 10 months of this year.
Inspired by the stronger-than-expected performance, the company has upgraded its 2009 passenger car sales target to 500,000 units from the previous 388,000 units.
Ghosn said the passenger car plant in Guangzhou has been a “benchmark” for Nissan’s global plants and it will be one of the Japanese carmaker’s “biggest, best and busiest” bases.
The joint venture has another passenger car facility in central Hubei province with an annual capacity of 100,000 units. Its current passenger vehicle lineup includes the Teana, Sylphy, Tiida, Livina, Qashqai and Geniss.
The joint venture also produces commercial vehicles under the Dongfeng brand.
Last year, it announced a plan for the year of 2012 to move a total of 1 million vehicles, including 600,000 passenger cars and 400,000 commercial vehicles.
“We will design cars mainly for China and eventually export to other markets,” he said.
To meet the goal, Nissan will give the joint venture more responsibility for car design. The venture has a technical center in Guangzhou.
Electric vehicles
Ghosn said Nissan’s plan to introduce its zero-emission electric cars into China in 2011 will need government support.
The company will first bring “a limited number” of electric vehicles and batteries as imports into Chinese cities and wait for conditions to mature for local production and mass marketability of electric vehicles, he said.
“We need some kind of incentives for consumers in China from the government to start the electric vehicle market,” he said.
He suggested the Chinese government should subsidize electric car buyers like in the US, Japan and France because electric cars are much more expensive than conventional cars.
US carmaker General Motors announced earlier this year that it would introduce its Chevrolet Volt electric car into China also in 2011.
Domestic carmakers, such as BYD, SAIC and Chery, are also preparing to launch electric cars.

BAIC launches new energy auto subsidiary

BAIC launches new energy auto subsidiary

Beijing Automotive Industry Holdings Co (BAIC), China’s major carmaker, launched a new energy company in Beijing Saturday to produce pure electric and hybrid cars.
The affiliated Beijing New Energy Automotive Company is responsible for the R&D, manufacture and sales of key auto parts, electric cars, hybrid cars and charging systems, according to BAIC.
The company is expected to have an annual output of 20,000 to 40,000 new energy cars in 2011 with its own brand “Beijing.”
BAIC displayed a “Beijing” electric car numbered “BE701″at the launching ceremony. The maximum speed of the car is 160 km per hour and it can run 200 km once charged up to its full, which takes one to 10 hours depending on the charging mode.
The “Beijing” electric car costs 12 kilowatt-hour electricity every 100 km. It can save more than 5,000 yuan ($732) fuel costs every 15,000 km compared with the gasoline-driven cars.
BAIC is expected to have an annual sales revenue of 15 billion yuan from the new energy cars in 2015, accounting for 5 to 10 percent of its total sales revenue.