GM steers China sales to new heights

GM steers China sales to new heights

General Motors Co\’s China sales rose to a record in March, surpassing its US deliveries for a third straight month and cementing the country\’s importance as the world\’s largest auto market.
GM, the biggest foreign automaker in China, boosted sales 68 percent to 230,048 vehicles last month, it said in a statement on Friday. That compares with a 33 percent gain for Japan\’s Toyota Motor Corp and a 47 percent jump by South Korea\’s Hyundai Motor Co. GM raised US sales 21 percent in March to 188,546.
Detroit-based GM aims to increase its China sales to 2 million vehicles this year from 1.83 million in 2009, when government subsidies helped boost the nation\’s auto demand 46 percent from a year earlier, surpassing the US for the first time. Industrywide sales growth in China is forecast to slow this year, even as carmakers raise production capacity.
\”A price war is on the horizon, as automakers face rising competition coupled with slower sales growth for small cars,\” said Zhang Xin, an analyst at Guotai Junan Securities Co. in Beijing. Zhang forecasts full-year vehicle sales will rise 10 to 15 percent.
Toyota, the world\’s largest carmaker, said its China sales increased to 61,200 vehicles last month. Hyundai, the fastest- growing foreign automaker in China last year, sold 61,638 units.
Hua Foley, a Shanghai-based spokeswoman for GM, wasn\’t immediately available for comment.
Sales Tax
China last year halved the sales tax on new vehicles to 5 percent and set aside 5 billion yuan ($733 million) in subsidies for customers who replace old models, helping insulate the country from slumping global demand. The government on Dec 10 announced plans to scale back the measures, including raising the tax on new vehicles with engines of 1.6 liters or smaller to 7.5 percent.
\”There is continuous demand for cars in China,\” said Qin Xuwen, an analyst at Orient Securities Co in Shanghai. \”Sales won\’t be a concern, although carmakers may be forced to cut prices given rising capacity.\”
GM\’s figures include sales of 129,489 vehicles at its minivan-making venture SAIC-GM-Wuling Automotive Co, an increase of 43 percent. Sales at Shanghai General Motors Co, another unit, increased 89 percent to 86,967.
GM has a 34 percent stake in SAIC-GM-Wuling and a 49 percent stake in Shanghai General Motors. SAIC Motor Corp, China\’s largest domestic automaker, owns majority stakes in both of the joint ventures. SAIC Motor said its profit rose 10-fold in 2009 to 6.6 billion yuan.
SAIC Motor Corp
March was the 15th consecutive month that GM reported record sales, the company said in a statement. Its first-quarter tally rose 71 percent from a year earlier to 623,546 units.
Kevin Wale, president of GM\’s China business, said in January the carmaker aims to sell 2 million vehicles in the country this year as it introduces more than 10 new models. Industrywide sales in the nation may total as many as 15 million vehicles, he said at the time.
Volkswagen AG, Ford Motor Co and other automakers have not yet released their March sales numbers. The China Association of Automobile Manufacturers is scheduled to release sales figures later in the month.
In the US, industrywide sales rebounded 24 percent last month to 1.07 million. Toyota raised US deliveries 41 percent as it offered no-interest loans and discounted leases to rekindle demand after recalling more than 8 million vehicles.

Chinas leading liquor producer Kweichow Moutai net profit up 13.5%

China\’s leading liquor producer Kweichow Moutai net profit up 13.5%

Renowned Chinese liquor producer Kweichow Moutai Co., Ltd. announced Thursday its annual net profit in 2009 rose 13.5 percent to 4.31 billion yuan (631 million U.S. dollars) on strong market demand.
Its annual business revenue increased 17.33 percent year on year to 9.67 billion yuan in 2009, the Guizhou-based firm said in its 2009 annual report.
The drought in southwestern Guizhou Province had not affected the firm\’s normal production and liquor prices had not changed, said the report.
The A-share price of the upmarket distiller edged up 0.82 percent to 160.06 yuan per share Thursday. 4

Bright Food raises bid to buy Australian CSR sugar unit

Bright Food raises bid to buy Australian CSR sugar unit

Shanghai Bright Food Group Co has raised its offer to buy the sugar arm of Australian conglomerate CSR to A$1.75 billion (US$1.61 billion) to expand its core business.
CSR has agreed to start negotiations with Bright Food about selling the sugar unit, Sucrogen, after a federal court in Australia in February turned down its plan to spin off the sugar business.
Bright Food\’s new offer is also about 17 percent higher than its original proposal, prompting CSR to reconsider the higher bid following an earlier rejection.
CSR is the biggest sugar supplier in Australia, and analysts said the possible acquisition would further strengthen Bright Food\’s market position in China\’s sugar industry.
Bright Food, which sells about 1.2 million tons of sugar annually accounting for about 10 percent of the total sugar consumption in China, considers the sugar business as one of its core areas for future expansion.
\”Bright Food aims to double its sales in the next three to four years through both organic growth and acquiring new businesses,\” Wang Zongnan, chairman of Bright Food, said earlier.
The company said it will explore mergers and acquisitions to quicken its development.

Comment: Can China live without Google?

Comment: Can China live without Google?

The media\’s mass coverage of Google\’s retreat from China showcased a war between the biggest search engine company and the biggest Internet market in the world. The Washington Post issued a report on Friday with the headline, \”For Chinese people, loss of Google would mean \’nothing but darkness\’\”, which shows the deeply embedded ideology behind the curtain.
According to the report, Google, which has taken a one-third share in the Chinese Internet market, has become deeply rooted in the country and is now a necessity. It said if China refuses to make compromise to Google, it would become marginalized and be an outcast in the world.
The report is interesting. If Google has generated such a compelling power in China, big enough to leave the country fumble in the dark after its retreat, the thing definitely can be regarded as a shocking cultural clash between the West and the East and the Chinese government cannot afford to sit by and watch.
The Reform and Opening-up policy in China has been carried out for 30 years since 1979, with earlier icons like Coca-Cola, and later McDonald\’s, KFC and Starbucks Coffee.
The incoming Western goods also brought Western cultures and lifestyles. For instance, the biggest Internet retailer Amazon named its service in China Zhuoyue (excellence).
The albums of the US pop star Lady Gaga and Britain\’s talent Susan Boyle fly off the CD shelves in China.
All commodities come with some cultures and ideologies. China definitely is influenced by the West, but the influence is mutual. People of a certain culture learn to know a different new thing, but the new thing also has to learn to suit its new customers. That\’s why KFC serves Chinese porridge and McDonald\’s provides Chinese food menus here.
It all shows that China never rejects Western culture, but not all Hollywood movies will be a hit in China like \”Avatar\”.
Google arrived in China in 2005; it got its Chinese name \”Gu Ge\” and Chinese domain name Google.cn the next year. Google then made some compromises to adjust to a different business environment. However, it tried to change the rules after it had gained an \”irreplaceable\” position in China, i.e. demanding the Chinese government change Internet regulations at their request. Google was confident that China would make some concessions.
Google thought it has already \”dominated\” many Chinese people\’s lives, no matter how many more Chinese use Baidu, a local search engine.
I\’m not sure if Google knows that its arrogance can easily remind the Chinese people of the \”big powers\” who cracked open China\’s door by warships and cannons in the 19th century. The reason those invaders could make the Qing government sign unfair treaties is that they owned advance weapons that China didn\’t have. The Washington Post refuted such association by claiming that it was just an unfriendly propaganda by the Chinese government. The reporter of the Post or even Google didn\’t understand that they had been on the road of the big powers again. The only difference was military weapons in the past and Internet service today. The Post has very likely gotten to the nerves of the Chinese government.
Chinese Premier Wen Jiabao once talked about China\’s foreign policies when answering questions from Singapore\’s Lianhe Zaobao. Wen said the Chinese people have suffered a lot in the past 500 years, and that\’s why they have such strong feelings for their country\’s independence, sovereignty and territorial integrity.
China\’s top leaders have a constant policy that stresses opening up to the world. But Google has challenged the Chinese government\’s sovereignty by demanding the government accept Google\’s presumed definition on \”opening up\”. China has always been in a developing mode that shows no signs of stopping.
Ed Burnette, a columnist from adnet.com under the Columbia Broadcasting System Corp (CBS) says it was \”a pity and an avoidable mistake\” for Google to retreat from China. And he also says it\’s \”arrogant thinking to assume that we know what\’s best for China, and our values can still work well in that very different culture; and it\’s an ignorant idea to believe threats and ultimatums can bring positive results, especially from such proud and sufficient people.\”
The current \”China Threat\” theory shows Western countries are actually in fear of being dominated by China one day. The same goes for Google, who is insinuating a \”you can\’t do without me\” message to China. I was wondering whether Google is waiting for China to cater to it or trying get away from it.
(The comment was first published in Hong Kong\’s Chinese newspaper Sing Tao Daily)

ZPMC moves into rail, wind power

ZPMC moves into rail, wind power

 
 
A Shanghai Zhenhua Heavy Industry Co employee supervises the loading of containers at Shanghai port. The company has a 70 percent share of the global port equipment market. [Zhang Haifeng / China Foto Press]

Shanghai Zhenhua Heavy Industry Co (ZPMC), the world\’s largest port equipment maker, is planning to expand into the nation\’s high-speed railway and wind power sectors, making them its new growth engines, company President Kang Xuezeng said on Friday.
\”Our next step is to apply our home-grown electric control systems and gearboxes to the two rapidly growing industries,\” said Kang.
Representatives of China South Locomotive and Rolling Stock Industry (Group) Co (CSR) attended a promotion conference on ZPMC\’s gearboxes, spreaders and drives in Nantong, Jiangsu province, on Friday.
CSR, the country\’s largest trainmaker, is the manufacturer of \”China Star\” and \”Central China Star\” high-speed trains.
\”The market demand for high-speed rail is huge, and we are very interested in participating in this sector,\” said Kang.
\”It\’s no surprise that ZPMC\’s has ambitions in this sector, as most of its products used in ports are compatible with high-speed trains,\” said Zhang Zhongjie, an industry analyst at Essence Securities.
China plans to build 16,000 km of high-speed rail lines by 2020, according to the Ministry of Railways. Forty-two high-speed rail lines totaling 13,000 km will be completed by 2012.
Kang also said ZPMC is currently in talks with several firms to develop gearboxes that can be used in the wind power sector.
ZPMC\’s key businesses, including yard and quay cranes, were hit hard last year as port operators and shipping firms cut capacity due to the global financial crisis.
ZPMC has a 70 percent share of the global port equipment market, according to Kang.
ZPMC forecast in its annual report to the Shanghai Stock Exchange that its net profit would decline by up to 70 percent in 2009. The barge crane manufacturer posted a net profit of 2.55 billion yuan ($374 million) a year earlier.
The market value of the port-related sector declined 60 percent during the financial crisis, Kang said.
The company said that sales of its Global Positioning System products used in yard cranes dropped to 44 units in 2009 from 127 in 2008.
\”We received more contracts during the first months of 2010 compared with the previous year, but difficulties will continue(therefore), we have to adjust our product structure this year, aiming to speed up the promotion of home-grown components with cutting-edge technologies and high added value,\” Kang said.
Essence\’s Zhang pointed out that the profit margin of components is about 20 percent, compared with 8 percent for yard cranes and 15 percent for quayside cranes.
According to Kang, components, most of which are currently made by foreign firms, account for half of the costs of integrated port equipment.
\”We will make more efforts in developing components to cut the overall costs and in turn, improve our competitive edge,\” he said.
But the components market will take time to grow, and may not see a profit in the short term, Kang said.

Beijing Benz starts leasing program

Beijing Benz starts leasing program

Li Hongpeng (left), general manager for sales and marketing of Sino-German car joint venture Beijing Benz, Don Chan (second from left), director and general manager of Fortis Lease (China) Co Ltd for Greater China, and Patrick Chou (third from left), chairman of car dealership Beijing BetterLife Group with a Mercedes-Benz C-Class in a Beijing showroom.
The joint venture between Daimler AG and Beijing Automotive Industry Holding Corp last week forayed into the auto leasing business with BetterLife and Fortis, an affiliate of BNP Paribas.
The new business model will see Fortis provide financing to customers to lease new cars made by Beijing Benz from Beijing BetterLife for terms between three months and three years. When the lease expires, customers can buy the cars or lease other new Mercedes-Benz models. Unpurchased used cars will go onto the second-hand market through dealerships.
The business will mainly target institutional customers such as government organizations, multinational executives and managers in China as well as China\’s State-owned enterprises.
Beijing Benz has delivered 100 cars to BetterLife for leasing, part of its efforts to further propel sales.

Google to exit next month, report says

Google to exit next month, report says

US Internet giant Google will close its business in China next month and may announce its plans in the coming days, Chinese media reported on Friday, after rows over censorship and hacking.
The China Business News quoted an official with an unidentified Chinese advertising agency as saying Google would go through with its threatened withdrawal on April 10, but that Google had yet to confirm the pull-out.
The agency is a business partner of Google, the report said. But it did not specify whether Google would close all or part of its operations in the country.
The newspaper quoted an unidentified Google staff member as saying the company may announce on Monday the details of its exit from China and compensation for its local staff.
Google China spokeswoman Marsha Wang declined to comment on the report, telling AFP only that there had been \”no update\” on the company\’s situation.

Rio Tinto, Chinalco sign JV for Simandou in Africa

Rio Tinto, Chinalco sign JV for Simandou in Africa

Rio Tinto, the giant mining company, struck a deal with Aluminum Corporation of China (Chinalco) on Friday to develop the Simandou iron ore reserve in Guinea in West Africa.
The joint venture agreement covers rail and port infrastructure as well as the mine itself, Rio Tinto said in a statement on Friday.
Rio Tinto owns 95 percent of the Simandou project, with another five percent owned by the World Bank.
According to the agreement, Chinalco will acquire a 47 percent interest in the project by providing 1.35 billion Australian dollars in an earn-in basis through sole funding of ongoing development during the next two to three years.
\”We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit,\” Rio Tinto\’s Chairman Tom Albanese said in a statement.
Albanese described Chinalco as an \”excellent partner\” at Simandou.
Simandou is a huge iron ore project in south eastern Guinea.
\”We believe the Simandou project is a large scale, long life asset and is the single best undeveloped source of high grade iron ore,\” Albanese said.
\”Rio Tinto and Chinalco will now work on finalising definitive and binding transaction documentation,\” the statement said.

US using Google case to act tough

US using Google case to \’act tough\’

The Google case has given the US an opportunity to re-adopt its hard-line approach, and move away from the \”smart\” diplomacy it had used against China of late, experts tracking the issue said on Thursday.
Calling the affair \”politicized\”, the experts also suggested that the government take steps to ensure that a monopoly situation does not prevail in the search engine market. They were referring to the perceived gains Baidu, Google\’s arch rival in China, would make in case the US search giant pulled out of the country.
Professor Jin Canrong, a leading US studies expert at the Renmin University of China, said Washington was adopting a tougher approach, as the \”smart diplomacy\”, coined by Secretary of State Hillary Clinton, had not worked very well.
\”Now, she is focusing more on issues like human rights and press freedom. The Google case is part of that,\” Jin said.
In January, the US-based search engine giant threatened to stop censoring its results on Google.cn and pull out of the country. The company alleged that it had suffered from a series of cyber attacks supported by the Chinese government, without showing evidence to back up its claim.
Though Chinese officials have repeatedly expressed hope that Google would not shut shop, a recent report in the Financial Times said the company was \”99.9 percent certain\” to close Google.cn.
Google\’s top management was \”adamant\” about ending the censorship, the London-based newspaper quoted an unidentified source \”close to the search company\” as saying.
Amid the impasse, Chinese firms selling advertising space on Google\’s search pages have demanded clarity about the search giant\’s plans in China.
A letter purportedly from 27 Google-authorized sales companies showed on Wednesday the wait had gone on for too long, eroding their business, scaring off employees and putting big investments in jeopardy.
\”We see a constant stream of information but cannot predict the future, we see business sliding, but there is nothing we can do,\” according to the letter. \”We are waiting now in incomparable pain and disquiet.\”
Google has received the letter and is reviewing it, spokeswoman Jill Hazelbaker said.
If Google did leave, \”the impact on the Chinese market will actually be limited\”, Jin said, adding others may fill up the space.
Tencent, best known for its flagship product, an instant-messaging program with hundreds of millions of users, is already developing its own search engine, the Wall Street Journal reported recently.
\”The government should oppose Baidu\’s monopoly if Google leaves,\” Jin added.
Yu Guoming, the vice-president of the Journalism School at Renmin University, however, said it would be a huge loss both for China and Google, if the company did leave.
China had a lot to review over the Google case, Yu said. \”China\’s Internet censorship system is not transparent enough,\” he said.
He said strict censorship is reasonable according to China\’s own special characteristics. \”But, the key is that the law enforcement needs to be transparent. Many contents are censored not for national security reasons, but to protect some interest groups.\”
Yu said it would be hard for Google to give up the Chinese market with roughly 400 million Internet users. \”It will come back one day even if it leaves now.\”

China Mobile to reduce capital spending

China Mobile to reduce capital spending

Wang Jianzhou, chairman and chief executive officer of China Mobile speaks at the company\’s 2009 annual results conference in Hong Kong on Thursday. EDMOND TANG / CHINA DAILY
China Mobile, the world\’s largest mobile operator, said on Thursday that it plans to reduce capital spending over the next three years as network expansion for third-generation (3G) services nears a close.
The company will reduce capital spending from 123 billion yuan this year to 80.4 billion yuan in 2012, it said in its quarterly report.
China Mobile will also roll out 80 new 3G handsets that support its TD-SCDMA network later this year.
\’The convergence across telecommunications, Internet, radio and TV broadcasting networks will form a new market beyond the traditional telecommunications industry,\” Chairman Wang Jianzhou said in a statement on Thursday.
He said the company faces \”fresh challenges\” from the global slowdown and the growing saturation of the market.
China Mobile and its two smaller rivals, China Unicom and China Telecom, spent $21 billion on building 3G mobile networks last year, following the much-delayed awarding of 3G licenses last year.
With the country aggressively pushing for 3G services last year, China Mobile saw more revenue coming from value-added services. Its average monthly revenue per user in 2009 rose to 77 yuan for the full year from 75 yuan in the first nine months. That in turn, boosted the company\’s full year revenue to 452 billion yuan, up 9.8 percent over 2008.
China Mobile said on Thursday that the contribution of value-added services to revenues rose in 2009, including more than 10 billion yuan from a new mobile music service.
The company said last week that it will pay 39.8 billion yuan ($5.8 billion) for a 20 percent stake in medium-sized Chinese lender Shanghai Pudong Development Bank as part of its plan to develop mobile banking and other services.
\”It is obvious that China Mobile needs to diversify itself to face the strong challenge from rivals China Unicom and China Telecom,\” said Pang Jun, an analyst from research firm GKF China.
He said increasing revenue from new businesses such as mobile payment and wireless Internet will compensate for its declining revenue from traditional voice services.
According to company figures, China Mobile\’s market share in the new user market fell to 47.63 percent in November from 78.2 percent in January 2009, although the company still far outpaces its two rivals in total user numbers, accounting for about 60 percent.

The company\’s net profit for 2009 rose 2.3 percent to 115 billion yuan from 112.63 billion yuan a year earlier.
Chief Financial Officer Xue Taohai said earlier that more than half of China Mobile\’s new subscribers are in rural areas, where average customer spending is lower. He said that might lower the company\’s profit margins.
Wang also said on Thursday that the company is still in talks with Apple Inc to offer iPhone, adding he wants to sell the handset \”as soon as possible\”.
The carrier rose 1.92 percent to HK$76.4 on Thursday. The stock has advanced 2.6 percent this year, compared with a 9 percent increase for China Telecom and a 7.7 percent decline for Unicom.