China Economy Forum

[Brotherhood]

OECD invites China, Russia to join new aircraft financing agreement - People's Daily Online February 26, 2011

The Organization for Economic Cooperation and Development on Friday invited China and Russia to join a new aircraft financing agreement during a signing ceremony in Paris.

"Russia is becoming a prominent commercial aircraft producer and China will begin production in the next few years," Angel Gurria,secretary-general of the OECD, said at the fete attended by negotiators from Brazil, Canada, the European Union, Japan and the United States.

Participation of all the players in the new rules could make the market function "on a level playing field," Gurria said.

Russia and China last year participated in discussions concerning the agreement but have not yet decided to join.

The agreement aims to unify differences in financing terms and conditions between large and regional jets, and to establish mechanisms to smooth sharp market movement.

Source:Xinhua

 

[中国万岁-ProsperThroughCo-]

Turmoil carries risk but promise of huge rewards for Beijing

Toh Han Shih
Feb 27, 2011

Eighteen months ago, during celebrations to mark Libyan leader Muammar Gaddafi's 40 ye
ars in power, the colonel and Italian Prime Minister Silvio Berlusconi witnessed the ceremonial laying of tracks in Tripoli for a coastal rail link to be built by China Railway Construction Corporation (SEHK: 1186) (CRCC).
Now the Chinese government is evacuating 30,000 Chinese nationals from the troubled North African state as Gaddafi's hold on power looks increasingly tenuous.

"It is clear Gaddafi is in his final days as the net closes around him. The regime is seen as falling and opposition groups are starting to develop regime-change plans," said Hugo Williamson, managing director of the Risk Resolution Group, a British risk-control consultancy.

Gaddafi did not trust the Libyan army and relied on foreign mercenaries and international bodyguards, Williamson said.

Analysts said the instability in Libya and other countries in North Africa and the Middle East would hurt China's interests in the short term, but in the long run China would be an economic force in the region.

Unrest has swept across the Middle East and North Africa. Demonstrations began in Tunisia in December, resulting in Tunisian president Zine el-Abidine Ben Ali fleeing the country on January 14. Late last month, protests began in Cairo against Egyptian president Hosni Mubarak, who resigned and fled Cairo on February 11. Amid fighting in Libya, Gaddafi looks likely to share a similar fate. Demonstrations have also broken out in Bahrain and Yemen.

At stake for China is its reliance on the Middle East and North Africa for most of its oil imports as well as billions of dollars of investment by Chinese state firms in infrastructure and oil projects in the region.

In the short and medium terms, Williamson said, there was a risk of anti-Chinese sentiment and possible violence against Chinese nationals in North Africa. "There are some attacks against Chinese nationals and business interests, although it is unclear if this is xenophobically motivated," he said.

Michael Ackerman, president of the Ackerman Group, a US risk consultancy, said the insurgency in Libya had not shown any signs of xenophobia against Westerners or Chinese.

"If xenophobia were to develop, it would almost certainly be directed at Westerners, not Chinese," he said.

But Libya, which is largely tribal, could be on the brink of a devastating civil war which would affect oil prices, Ackerman warned.

Barry Sautman, associate professor of social sciences at Hong Kong University of Science and Technology, said the eastern part of Libya, the country's main oil producing region, had fallen to rebels.

Libya accounts for only 3 per cent of China's oil imports, but Sautman said the north African nation's dwindling exports were pushing up oil prices in international markets. "It will take quite a while before Libya's oil production gets back to normal," he said.

The price of Brent crude oil futures for April rose from US$102.50 per barrel on February 18 to hit US$119.79 per barrel on Thursday, its highest level in 2-1/2 years.

The revenue and profits of Chinese infrastructure projects in North Africa, including Libya will be hurt, Sautman said. "Huge numbers of skilled Chinese workers in infrastructure and petroleum projects have been evacuated," he said. "Who knows when they will be back?"

Infrastructure projects were paid according to their progress so any delay would hurt revenue, Sautman said.

Chinese state-owned enterprises have more than US$14 billion worth of infrastructure and oil projects in Libya, including CRCC's 352 kilometre coastal railway and 800 kilometre north-south railway - worth a combined US$2.6 billion.

CRCC, listed in Hong Kong and Shanghai, halted all its projects in Libya, manager Yu Xingxi said.

He said the state-owned enterprise had more than 3,000 Chinese staff in Libya and because it would be difficult to evacuate so many workers it was not sure how many would leave the country.

Libya is the North African country where CRCC has the most workers and largest projects. CRCC has a smaller number of workers in Algeria, where it is involved in railway projects and the 1,216 kilometre East-West Highway.

In Egypt, China National Materials (Sinoma), a Hong Kong-listed cement company, employs more than 1,000 people who are building two cement plants. The recent Egyptian unrest had no major impact on Sinoma's cement plant projects, as they were six hours' drive from Cairo, the main theatre of protest, a Sinoma spokesman said.

Ackerman said the outcome in Egypt had been the best that could be hoped for because the army had remained cohesive and had been able to maintain order.

In reaction to the unrest in various North African nations, Chinese companies initially pulled senior staff out of the region, but were now considering sending staff back, especially to Egypt, said Ben Simpfendorfer, managing director of China Insider, an economic consultancy.

North Africa was a major market for China, he said, with more than 35 per cent of China's exports to the continent destined for North Africa.

"So the change in North African governments creates commercial opportunities, especially for Chinese construction companies," he said.

For instance, the new Egyptian government remained committed to a market economy and was expected to accelerate infrastructure spending. With Western companies expected to be cautious about sending employees back to the region, Simpfendorfer said opportunities would be created for Chinese companies to fill the gap.

Liu Wensheng, chief economist at China Communications Construction (SEHK: 1800), China's largest port construction firm, said the impact of the Libyan unrest on Chinese companies should not be great because China had friendly relations with Libya.

"China's relations with Libya should be stable whatever happens," Liu said.

The Hong Kong-listed firm has more than 1,000 Chinese employees in residential and road construction projects in Libya.

Williamson said one of China's key competitive advantages, which had helped it gain a foothold in Africa, was its policy of non-interference in the affairs of governments on the continent. "China has not wanted to be overtly critical of ongoing events, as it wants to keep leaders on its side," he said.

Williamson said the Chinese had been slow to publicly criticise Gaddafi's government for its aggressive crackdown on protesters, which the colonel likened to the Tiananmen Square crackdown in Beijing in 1989, in contrast with the United States, the European Union and the United Nations.

"In the longer term, whether China will be punished for this is probably doubtful," he said.

Chinese investments in Libya are already significant and the need of any Libyan government for oil revenues would probably overshadow concerns about China's relationship with Gaddafi, he said.

"Ultimately, China's focus is on oil," Williamson said. "China will likely rearrange its policy and court whoever ends up in power."

However, Mark Sorbara, an associate at Africa Risk Consulting, said the triumph of people power in North Africa would see its governments and citizens - keen to address local youth unemployment - question mainland companies' use of Chinese workers.

Chinese companies might have to become more transparent in their dealings with North African leaders. "Democracy means increased transparency," Sorbara said. "Chinese companies will have to move towards transparency in their business dealings, just as elites in North African countries will be forced to."

As far as I know, at least some Chinese workers have been robbed by Libyans. Let's hope the situation will calm and development return, for both sides sake.

 

[aimarraul]

China eyes 7-pct annual growth, focusing on living standards
English.news.cn 2011-02-27 17:40:03 FeedbackPrintRSS

By Xinhua Writers Meng Na, Zhang Zhengfu

Chinese Premier Wen Jiabao (L) holds an online chat with Internet users at two state news portals in Beijing, capital of China, Feb. 27, 2011. The two portals, namely 中华人民共和国中央人民政府门户网站 of the central government and ???_???? ???? of the Xinhua News Agency, jointly interviewed Premier Wen on Sunday with questions raised by netizens. (Xinhua/Pang Xinglei)


BEIJING, Feb. 27 (Xinhua) -- China's government will set its annual gross domestic product (GDP) growth target for the 2011-2015 period at 7 percent, and make the improvement of living standards a fundamental aim.

Premier Wen Jiabao, in an on-line chat with the public Sunday, said the GDP target for the 12th Five-Year Program period (2011-2015) was lower than the 7.5 percent target for the 11th Five-Year Program period (2006-2010), when China's economy grew at an actual annual rate of about 10 percent.

"We'll never seek a high economic growth rate and size at the price of the environment, as that would result in unsustainable growth with industrial overcapacity and intensive resource consumption," Wen said.

His chat on the websites of the central government (中华人民共和国中央人民政府门户网站) and Xinhua News Agency (www.news.cn) came six days before the opening of the annual session of the National People's Congress (NPC), the country's top legislature.

The central government would adopt new performance evaluation criteria for local governments and give more weight to efficiency, environment protection and living standards, said Wen.

"We should change the criteria for evaluating officials' work. The supreme criterion for assessing their performance is whether the people feel happy and satisfied, rather than skyscrapers," the premier noted.

Netizens raised about 400,000 questions for Wen. He answered about 20 during the two-hour session, during which he said the government would strive to continue to raise pensions, make medical services accessible to every citizen, build more high-quality rural schools, and ensure fair income distribution.

He vowed that "every citizen should share the fruits of the reform and opening up drive."

Wen also revealed the aim to reduce China's energy consumption per unit of GDP by 16 to 17 percent by 2015 from the current level.

Analysts said Wen's comments highlighted the government's resolution to implement the "Scientific Outlook on Development" in the 12th Five-Year Program period.

"They show the Chinese government will focus on scientific development in the next five years and pay more attention to improving living standards and sustainable development," said Prof. Zheng Yongnian, director of the East Asia Institute of National University of Singapore.

Improving living standards was extremely important, as it related to social stability and would help boost domestic demand and help transform the economic development pattern, Zheng said.

NARROWING INCOME GAP

Wen said that income distribution had a direct bearing on social justice and stability and ensuring fair income distribution was an important task for the government in the next five years.

"We will ensure people's incomes keep pace with economic growth and their salaries keep pace with increased productivity."

Wen said the government had been working to establish a social security system that would address concerns about pensions, medical services, employment and living allowances, and aim to reduce the income gap and let more people enjoy the fruits of economic growth.

"However, we still have a long way to go," said Wen.

He said the government would narrow the income gap by increasing the salaries of low-income groups and the minimum living allowances and containing salaries in industries with higher incomes.

"We will roll out measures in all these aspects, including tax policies, to make China a country of equality and justice where each citizen lives with the security net," said Wen.

In response to questions about whether the government would raise the threshold of personal income tax, Wen said the State Council, the Cabinet, would discuss proposals to do so on Wednesday.

He said the plan, which would be delivered to the National People's Congress for review, would benefit China's medium and low-income groups.

The government last raised the threshold for individual income tax from 1,600 yuan to 2,000 yuan in March 2008.

UNIVERSAL HEALTH COVERAGE

The government will increase spending in the medical insurance system to make medical services accessible to every citizen, said Wen.

He said China would boost government subsidies this year for insurance premiums to 200 yuan per person, and inpatient medical fee reimbursement rates for urban residents and farmers will be lifted to 70 percent.

The government would work on policies to ensure patients were reimbursed for special medical programs such as renal dialysis, he said.

More than 1.2 billion Chinese are covered by the country's medical insurance system. More than 90 percent of rural population and 89 percent of urban people are covered by government-sponsored health insurance.

In two years, government subsidies for insurance premiums for rural people would be raised to 300 yuan per person and 80 to 90 percent of their medical fees would be reimbursed, said Wen.

If the maximum reimbursement for rural patients reached 80,000 yuan or 100,000 yuan, most serious illnesses would be covered, but separate policies were still needed to cover illnesses such as cancer, he said.

"We will never allow lack of money to keep any citizen from being treated," said Wen.

Wen also revealed measures to narrow the income and pension gap between retirees from companies and government departments.

Retirees from government departments and institutions have long enjoyed better treatment than those retiring from businesses, giving rise to discontent among the latter.

The government would continue to raise incomes and pensions for retired company employees, especially those with higher education degrees, and order enterprises that practiced the yearly-salary mechanism to set aside a certain portion as incomes for retirees, Wen said.

COOLING CONSUMER PRICES

Wen reiterated his determination to tame rising consumer prices and runaway housing prices during his tenure, vowing he "will not allow consumer prices to rise unchecked."

China's statistics agency said January inflation remained high at 4.9 percent despite a series of measures to dampen price rises, including three interest rate hikes since October last year.

"I check the price index everyday and I know very well the prices of grains, oil, meat, eggs and vegetables," said Wen. "I know clearly the impact of prices on the country."

The premier also sounded firm on reining in housing prices.

"We have to contain excessive price growth and keep housing prices at a reasonable level," Wen said.

China's housing prices have been climbing steeply since June 2009, fueled by record bank lending and tax breaks. The monthly year-on-year growth rate hit a record 12.8 percent in April last year.

However, housing prices are still rising, with prices of new properties in 68 of 70 major cities up from a year earlier again in January.

According to the National Bureau of Statistics, 10 of the 70 surveyed cities reported double-digit increases in new home prices.

Wen said the government would work to increase housing supplies, with 36 million affordable homes planned by 2015, including 10 million this year. Last year saw the building of 5.9 million affordable homes started.

The central government had signed strict agreements with provincial governments to guarantee the construction of 10 million subsidized apartments this year, Wen said.

The government would also step up efforts to develop low-rent public housing, said Wen. With its huge population and limited land, China's property policy should be appropriate to its situation and it did not mean that every Chinese owned their own homes.

Wen also said the government would "resolutely" curb demand of home purchases for investment and speculation.

"I am still confident that we will achieve the goal of our policies."

It was Wen's third on-line chat jointly hosted by the websites of the central government and Xinhua News Agency. Previous sessions were held on Feb. 28, 2009, and Feb. 27, 2010.

At the end of Sunday's web chat, Wen said to netizens that he treasured every such opportunity.

"Through the chats, I learn people's wishes and thoughts, while I tell them what government is thinking, what policies we have taken, and what kinds of problems still exist in our work." said Wen.

 

[中国万岁-ProsperThroughCo-]

Taiwan lets mainland invest in technology

By Robin Kwong in Taipei
Published: February 27 2011 12:49 | Last updated: February 27 2011 12:49
Taiwan will for the first time allow Chinese investors to take stakes in its prized technology companies, a major step towards opening its economy to mainland China as cross-Strait relations improve.

Taiwan's Ministry of Economic Affairs has proposed allowing Chinese investment of up to 10 per cent in Taiwanese technology companies, and up to 50 per cent in new technology-sector joint ventures, one person familiar with the situation said.

The proposal is set to be approved by the cabinet and would soon be announced publicly, the person added. Another person confirmed that the proposals had been sent to the cabinet.

The new rules would give Chinese investors access to some of Taiwan's most globally competitive companies. Taiwanese manufacturers, for example, make 9 out of every 10 notebook computers in the world. Taiwan Semiconductor Manufacturing Company is the world's biggest contract chipmaker, while Hon Hai, the Taiwan-listed parent of Foxconn, is the world's largest electronics manufacturing services provider.

For Taiwanese companies, the new rules will make it easier to forge strategic alliances with their customers or suppliers in China, which is already by far Taiwan's biggest export market. AU Optronics, the world's third-biggest flat-panel maker, is for example increasingly selling to Chinese TV brands such as Haier and Changhong and recently received approval from Taipei to set up its first-ever plant in China.

One senior Taipei-based banker, who hailed the move as positive for Taiwan, said: "Technology is a capital intensive business and China definitely has the downstream [manufacturers] and the end market, so these new rules could lead to more alliances".

Politically, it is also a sign of greater comfort in Taiwan with establishing closer economic ties with mainland China. Taiwan has long viewed its technology sector as a 'national champion' and a matter of national security and had previously been wary of Chinese participation in the sector.

A deal in 2009 by China Mobile to take a 12 per cent stake in Far Eastone, a Taiwan telecom operator, was blocked and would remain illegal even under the new rules.

While Taiwanese businessmen have long invested in China, Chinese investment was forbidden in Taiwan until the first-ever round of opening in 2009.

Even then, the liberalisation was limited to just 99 sectors, and led to only $137m of Chinese investment into Taiwan, versus a cumulative total of more than $200bn of Taiwanese investment into China.

Chen Yunlin, China's top negotiator to Taiwan said last week that Chinese investment in Taiwan "has not been very ideal ... we need to re-evaluate this" and make a bigger effort.

One senior Taiwanese official said the government was more cautious in the first round of opening but is now acting more boldly because "events proved that [opening to Chinese investment] is a positive move".

However, bankers and industry executives caution that it is too early to say, – besides is symbolic significance – whether the rules would actually unleash a flurry of cross-Strait deals. One executive at a big Taiwanese tech company pointed out that "we have so many foreign investors, who knows if some of them are already Chinese money?"

 

[中国万岁-ProsperThroughCo-]

China?s Bullet-Train Network Creates Major Economic Benefits In 2011 And Beyond

China’s Bullet-Train Network Creates Major Economic Benefits In 2011 And Beyond

8:38 am

As reported in a recent Businessweek article, 2011 is set to be a historic year for China when its bullet trains and their network of tracks will begin to race across the full expanse of the nation, pulling China forward into the next phase of its rapid progression supported by unprecedented infrastructure development.

It is staggering to think that China already has more than 5,000 kilometers (3,106 miles) of high-speed rail in operation. The problem has been that these rail lines are relatively segmented, and to date they have not linked together the country’s most well-known cities. In 2011, however, this will change dramatically. In the months ahead, China will progressively unveil many of the key links to form a true bullet-train network stretching across the nation.

I have recently experienced the benefits of these new rail lines watching the speedometers tick up to just under 400km/h while in transit and cutting the travel time from Shanghai to Hangzhou and Nanjing; as well as the travel time from Beijing to Shijiazhuang, to commutable distances. These connections, most of which are manageable as business or leisure day trips, are among many that greatly support the further development of many Tier 2 and 3 regions of China, while serving the needs of the new highly mobile Chinese population.

The 105-kilometer Guangzhou-Shenzhen line will open in May, followed by the 1,318-kilometer Shanghai-Beijing line in June. By December, the opening of the 1,107-kilometer Beijing-Wuhan line will complete the north-south route between the Hong Kong border and Beijing. Also by December, the final links of the east-west route between Shanghai and Chengdu will also be operational – a 2,078-kilometer route that winds through mountain ranges and river valleys as it connects China’s commercial capital with the gateway city of west China and home to ARC China’s first office outside of Shanghai.

While other countries debate the deployment of high-speed rail, it is already a reality in China. Over the next four years, Japanese bank Nomura projects the Chinese government will spend $113 billion per year on railway infrastructure. The new high-speed line connecting Shanghai to Hangzhou, opened in late October 2010, had a cost of $4 billion and took just two years to build—an astonishingly rapid rate, given the pace at which large infrastructure projects proceed in most nations.

As China generates more and more educated talent, the economic benefits will be significant given the billions of travel-hours these educated workers can shift from unproductive driving time to productive time on a train. Making trains wireless is also quite simple, whereas installing wireless internet access on planes is more costly and complicated.

In the mean time, pulling slow passenger trains off the existing rail networks will free up capacity for freight and ease current bottlenecks. Reducing passenger travel times will allow the reconfiguring of the national holiday calendar—which currently consists of several long “golden week” holidays designed to enable migrant workers to make long train journeys home. Connecting Chinese markets and people will open up new opportunities: For example, Beijing businesses will be able to draw from the human resources of Tianjin, just a 30-minute ride away by high-speed rail. And the greater availability of freight capacity will make more feasible the task of shifting work to factories in China’s interior and introducing just-in-time manufacturing practices.

In essence, China’s big infrastructure networks are platforms upon which new industries are layered, greatly multiplying the economic value of the projects themselves. They create new markets by making it easier to reach consumers and stimulating new customer needs and behavior. They also reconfigure the economics of operating in China by reducing shipping costs and making new locations more attractive for business.

Many industries in China stand to benefit significantly from the investment in high speed rail. Consumers will be exposed to more markets than before, thus resulting in consumption of more products and services. Shorter travel time makes tourism easier and more appealing to consumers with less time to spend. Retail sales in metropolis cities are anticipated to benefit from increasing number of tourists. Coffee shops and fast food restaurants will be built at the bullet train stations.

As China continues to make the investments in infrastructure that the governments of other major economies are unwilling or unable to make, the outlook for future growth and productivity becomes even more positive and the separation between China’s prospects and those of other major economies becomes more and more prominent. Such are the benefits of having a healthy government balance sheet to allow the flexibility to make such investments, a luxury that other major economies in the world no longer possess.

Adam Roseman
Founder & Managing Partner
ARC China

 

[Brotherhood]

Reconstruction in Zhouqu to pick up in April - People's Daily Online February 28, 2011

Reconstruction work in landslide-stricken Zhouqu County in northwest China's Gansu province will be in full swing in April.

A total of 164 reconstruction projects are included in the post-disaster reconstruction plan, which will receive 5 billion yuan in fund. The reconstruction work is scheduled to be completed before the end of 2012.

At present, plans for geological disaster prevention, urban construction, ecological restoration as well as urban and rural housing reconstruction have been prepared. The initial implementation of the reconstruction project is progressing well.

By People's Daily Online

 

[Brotherhood]

Construction of China's IPTV platform going "smoothly": official - People's Daily Online February 28, 2011

The project to build a national IPTV platform is going "smoothly," said a senior Chinese official in Beijing Monday.

Building a broadcast and control platform in Internet Protocol Television (IPTV) services is to integrate the Internet, TV and telecom networks, said Zhang Haitao, deputy chief of the State Administration of Radio, Film and Television (SARFT), at a press conference held in Beijing.

The planned IPTV broadcast and control platform will not only carry TV broadcasts but also Internet, data transmission and IP phone-call services via cable networks.

The platform is divided into two tiers, namely, the central level, which will provide programs and services catering to all audiences throughout the country, and the local level, which will be designed for audiences in specific regions.

All 12 pilot cities, chosen by the SARFT to build local IPTV platforms, had finished the construction and linked their platforms to the central-level platform late last year, Zhang said.

Traditional cable TV networks must be digitalized in order to operate IPTV services.

The country has speed up updating cable TV networks over the past five years, Zhang said.

About 50 million households in China have access to the interactive digital cable TV services and people in 308 cities have access to digital TV programs, he said.

Source:Xinhua

 

[Brotherhood]

China to make Xi'an major int'l port with free trade zone - People's Daily Online February 28, 2011

Reporters from the management committee of Xi'an International Port District indicated that the Xi'an Free Trade Zone was approved by the State Council on Feb. 27.

It is the only free trade zone in northwestern China. These zones function as externals port and also provide bonded logistics and export processing. International trade enjoys the most favorable terms in China's free trade zones.

The Xi'an Comprehensive Free Trade Zone is located in Xi'an International Port District within an area of 6.17 square kilometers. At the same time it will include a standard factory building with an area of 1.2 million square meters.

Zhou Fengqin, a commissioner with China's customs bureau, said it will become the most important supporting platform in the international inland port after it is inspected and accepted by the state. The free trade zone will help Xi'an to become a major international port city in the near future by reducing the number of intermediate links for the transportation of imports and exports and speeding up customs clearance.

By Zhang Qian, People's Daily Online

 

[no_name]

China to make Xi'an major int'l port with free trade zone - People's Daily Online February 28, 2011

Reporters from the management committee of Xi'an International Port District indicated that the Xi'an Free Trade Zone was approved by the State Council on Feb. 27.

It is the only free trade zone in northwestern China. These zones function as externals port and also provide bonded logistics and export processing. International trade enjoys the most favorable terms in China's free trade zones.

The Xi'an Comprehensive Free Trade Zone is located in Xi'an International Port District within an area of 6.17 square kilometers. At the same time it will include a standard factory building with an area of 1.2 million square meters.

Zhou Fengqin, a commissioner with China's customs bureau, said it will become the most important supporting platform in the international inland port after it is inspected and accepted by the state. The free trade zone will help Xi'an to become a major international port city in the near future by reducing the number of intermediate links for the transportation of imports and exports and speeding up customs clearance.

By Zhang Qian, People's Daily Online

Reconnect Xian up with the silk road.

 

[CardSharp]

Reconnect Xian up with the silk road.

Ever Westward! Sort like the 1870-1900 period of the American west.

 

[no_name]

Ever Westward! Sort like the 1870-1900 period of the American west.

It makes sense. It is hard to look eastward right now. We don't need to go head on with it.

 

[中国万岁-ProsperThroughCo-]

FT


China brand has eye on the past

By Patti Waldmeir and Louise Lucas in Shanghai
Published: February 28 2011 20:25 | Last updated: February 28 2011 20:25

Shanghai Jahwa United chairman Ge Wenyao says: ‘In the past 20 years, Chinese consumers have changed a lot’

Nostalgia for China’s pre-communist past is bursting out all over Shanghai, but the mainland’s most stylish city is resurrecting not just its art deco buildings – it is reviving one of Shanghai’s most famous brands.

Shanghai Jahwa United, the Shanghai government-owned skincare company, is betting that its Shanghai VIVE (Two Sisters) brand – established in 1898 and familiar to every Chinese person – will help the company tackle foreign competitors that have long dominated the China skincare market.

From cars to trainers, homegrown Chinese brands are posing an increasingly credible challenge to global brands that have long been able to rely on a Chinese consumer preference for foreign products.

Building domestic brands is part of Beijing’s plan to boost domestic consumption and transform China into more than just a cheap factory for foreign export goods.

But Shanghai Jahwa United, which plans to shake off the shackles of state control and go into fully private hands, believes Chinese brands no longer suffer from that handicap. “In the past 20 years, Chinese consumers have changed a lot,” says Ge Wenyao, chairman.

“The younger generation’s main focus now is on the quality and character of a brand, not where it comes from.”

That generation has money, and is willing to spend a high proportion of its income on personal care. Shanghai VIVE is trying to capture a larger percentage of that spend for China, with its high price tag, elegant art deco packaging and its boutique in the newly renovated Peace Hotel, a symbol of style and decadence in old Shanghai. Regenerative face cream costs Rmb1080 ($164).

It is too soon to tell how well nostalgia will sell face cream, analysts say. Shaun Rein, of China Market Research in Shanghai, says: “The pre-communist era was not seen as a stylish time for most Chinese.”

But Shanghai VIVE claims to be new cream, albeit in old bottles: Jahwa says the brand’s old formulas do not even exist – all products are newly formulated at its 120-employee research and development centre.

Its Herborist line of skincare products, which had sales of about €2m ($2.8m) in Europe last year, takes a similarly modern approach to an old concept, incorporating traditional Chinese medicine in a way that sets Jahwa apart from foreign competitors, the company says.

Wang Qun, director of the Shanghai VIVE brand, says the goal is to create products as good as those of multinational competitors – but make them unique by linking them to Chinese culture and tradition.

“Being a Chinese company, we have the ability to understand TCM (traditional Chinese medicine) more deeply,” says Sun Peiwen, head of Jahwa research and development. Multinational companies can use TCM, “but you have to be rooted in Chinese life” to exploit the full market potential of TCM in skincare, he insists.

Jahwa plans to increase spending on R&D (the core of which is TCM), and as much as triple its marketing budget over the next five to six years, says Mr Ge, who adds that Chinese technology in many areas is world class “but that Chinese companies do not yet have good marketing skills”.

And like increasing numbers of Chinese companies, Jahwa will compete with foreign rivals in the jobs market too.

Mr Ge predicts that after privatisation, the company will be able to offer higher salaries than L’Oréal and P&G.

Still, it will take a long time to transform Jahwa into a global brand.

“We have hopes, but turning hopes into realities could take more than 10 years.” Although now, he says, the competition can begin in earnest.

Additional reporting by Shirley Chen

 

[no_name]

If you want you're brand to stand out in the world market, you gotta have your own style. The brand has to be chinese characteristic identifiable. Like how sushi has become big across the world.

 

[CardSharp]

If you want you're brand to stand out in the world market, you gotta have your own style. The brand has to be chinese characteristic identifiable. Like how sushi has become big across the world.

Sushi got big because of healthy trend and Orange county wives needed something to eat while staying thin.

 

[Brotherhood]

Higher personal income to aid the needy - People's Daily Online February 28, 2011

China's central government will send a bill to the National People's Congress for approval that raises the threshold of taxable personal income to help Chinese households cope with rising cost of living.

Premier Wen Jiabao said during an online chat with a surging number of Chinese Netizens Sunday, that the threshold raise will be discussed by the State Council, the cabinet, Wednesday and then delivered to the NPC for review and approval.

The announcement immediately gets a roaring warm response from Chinese Netizens, who have long argued for the raise of threshold of taxable income. The last time Beijing raised the starting line in 2008 from 1,600 yuan to 2,000 yuan.

Though Wen did not reveal by how much the threshold is going to be raised this time, analysts have predicted it will rise to 2,500 yuan or even 3,000 yuan.

Experts believe that the move will act like hitting two birds with one stone: to aid average Joes combat rising inflation with a fatter income, and to help expanding domestic consumption and give a boost to China's economy at a time Beijing has implemented a spate of a dministrative measures to restrain a bubbling housing market.

The move will also help social tranquility and stability, as Chinese residents have more to spend, experts say.

The raise of the threshold shall partially offset the negative impact of a cooling real estate sector on the overall economy, experts said.

Premier Wen Jiabao also said that Beijing has planned to pursue 7 per cent GDP growth rate during the next five years or the 12th Five-Year Plan period. China achieved an annual 10 percent economic growth during the previous Five-Year Plan period.

China started to collect individual income tax in 1980 for monthly incomes that exceeded 800 yuan. In 2008, the taxable starting line was hike to 2,000 yuan when residents' income in urban areas has risen accordingly.

Inflation has jumped since the second half of 2010, and experts said it may peak in spring this year. In January the CPI rose to 4.9 percent, and is expected to stay there for a couple of months.

The country collected 483.7 billion yuan in personal income tax last year.
Rising cost of living has Chinese households tighten their wallets, which will drag domestic consumption and negatively impact economic growth. By raising the threshold of taxable personal income, people will have more income in their pockets which encourage them to consume.

People's Daily Online