U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 140
The China Commercial Brief is a biweekly publication including summaries about developments in China's various commercial sectors, tips on doing business in China, and U.S. Embassy news. This publication is free of charge: please forward it to your colleagues and friends who are interested in China.
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Editor: Jennifer Chang
Contributors: CS Chengdu, Cao Yue, Xi Xianmin, Wang Ling, Wan Xiaolei, Zhao Peining
News Briefs
In addition to the article summaries provided by CS Beijing, our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit summaries of commercial articles from their local press to the CCB on a rotating schedule. This week we are pleased to feature a contribution from our Chengdu post.
1. More New Hydropower Stations in Southwest China will be Constructed by Private Companies
2. Tianjin Hazardous Waste Treatment and Disposal Center Set Up
3. China's MII to Support Enterprises with Research and Development Capacity
4. Review of China’s Oil Market in First Half of 2003 and Look into Second Half
5. No Government Investment on Beijing Wastewater Treatment Projects
6. China Machine Tool Market Expecting Advanced High-Tech Equipment
1. More New Hydropower Stations in Southwest China will be Constructed by Private Companies
(Sources: China Business Weekly, 08/11/2003 Translated by FCS Chengdu)
In the end of July 2003, the Yibin City Government in Southwest China’s Sichuan province signed an agreement with the Shuifu and Yanjin county governments in neighbouring Yunnan province empowering the Yibin Yili Group to build six hydropower stations on the Hengjing River, a tributary of the Jinsha River in the upper reaches of the Yangtze River.
The Yibin Yili Group will invest RMB2 billion (USD242 million) to build the hydropower stations which will have an installed capacity of 270,000 kilowatts. In seven years when all the stations go into operation , the group’s annual earnings from the power generation is expected to reach RMB400 million (USD48 million) and its taxes and profits is estimated at RMB200 million (USD24 million).
The Yibin Yili Group is one of many private enterprises competing for a market share within China’s power industry in the wake of major reform measures that were initiated late last year. In December 2002, the private Linfeng Group located in Chengdu, the capital of Sichuan province, signed an agreement with U.S.-based Enron Corp to purchase 51 percent of the Sichuan Jialing Power Corporation for RMB400 million (USD50 million). It was the first time that a private firm in Sichuan had entered the power industry after the monopoly was removed. Sichuan Jialing Power Corporation. was set up by Enron International Chengdu Power, Ltd. and Sihcuan Power Corp. Enron International Chengdu Power, Ltd. held 51 percent of the joint venture’s shares and Sichuan Power Corp held the remainder.
Investors from home and abroad have started the largest scale hydropower development in China, pledging a total investment of more than RMB100 billion (USD12 billion) in the China's Southwest. According to the Sichuan Provincial Development and Planning Commission, nearly 10 firms in Zhejiang province, the eastern region of China have signed agreements worth RMB3.5 billion (USD423 million) to build hydropower projects in the cities of Chengdu, Mianyang and Panzhihua.
2.Tianjin Hazardous Waste Treatment and Disposal Center Set Up
(Source: http://tj.xinhuanet.com China Packaging Newspaper, 08/13/2003 - Translated by Yue Cao)
Approved by the National Development and Reform Commission, P.R.C. , the Tianjin Hazardous Waste Treatment and Disposal Center has been recently completed. This center is designed to incinerate and landfill hazardous waste, primarily treating industrial and medical waste. The State Environmental Protection Administration, P.R.C. designated this center as a unique demonstration site in China.
According to the Tianjin Environmental Protection Bureau, four partners are joint investors in this center: China Environmental Protection Company, Tianjin Solid Waste and Toxic Chemicals Management Center, Singapore Purechemonyxpte Company, and Tianjin Jin Neng Investment Company. The total project investment reached RMB 115 million (USD13.91 million). Covering 130 mus (8.6 hectares), the center mainly consists of four large disposal workshops, advanced laboratories, and decontamination workshops. Advanced incineration equipment and disposal systems are up to international standards and have the capability to centrally dispose of the hazardous waste in the Tianjin area.
On August 7, 2003, the Tianjin Municipal Government approved the Notice of Central Disposal of Medical Waste issued by the Tianjin Environmental Protection Bureau. This is the first time nationwide for a municipal government to issue a document to supervise and manage medical waste. Beginning September 1, 2003, medical waste in Tianjin must be centrally disposed and medical institutions must pay the Tianjin Hazardous Waste Treatment and Disposal Center a fee of RMB3 (US$0.36) per kilogram of medical waste disposed. The Tianjin Environmental Protection Bureau is responsible for supervising and managing the collection and centralized disposal.
3.China's MII to Support Enterprises with Research and Development Capacity
(China Information World,Issue 59 Page A1, 08/11/2003 - Translated by Xi Xianmin)
The Ministry of Information Industry (MII) spokesperson disclosed on August 6, 2003 that MII would focus on upgrading the technological level of products and promoting the optimization of product mix in the second half of the year. In this process, efforts will be made to encourage enterprise merging and acquisition, combining demand increase with supply increase, introduction of technology with self-innovation as well as expansion of industry scale with full utilization of existing resources.
As a high-tech industry, one of the characteristics of the electronics industry is high return. However, according to statistics, China's current value-add rate for its electronics manufacturing industry is 20%, which is not only 15% lower than those in developed countries, but also lower than the average rate of the manufacturing industry in China. Besides, in recent years, this value-add rate for electronics industry has been on the decline.
The reason for such a phenormenon lies in the weak innovation capacity of the industry. According to MII's statistics, the average percentage of R&D input by China's electronics enterprises is about 5%, less than 1/5 that in developed countries. Besides, even among enterprises which have introduced technologies in this industry, the level of absorption is pretty low. By supporting those enterprises with R&D capacity, they will surely improve their innovation capacity.
4.Review of China’s Oil Market in First Half of 2003 and Look into Second Half
(Source: China Chemical Industry News Vol 7, 2003, 08/10/2003 - Translated by Wang Ling)
The international oil prices fluctuated dramatically in the first half of 2003 due to the Iraqi War. The oil prices in China’s domestic market climbed first and then dropped dramatically owing the influence of such factors as international oil market fluctuation, the domestic economic growth and the outbreak of SARS. The volume of crude supply (production plus net import) in the January-May period is 103.11 million tons, 10.28 percent up from the same period of last year; the crude processing volume is 95.04 million tons, 7.2 %up; the volume of oil products supply 69.88 million tons, 81% up; and the total volume of oil supply (crude supply plus oil products supply) 172.99 million tons, 9.5% up. The oil supply is generally higher than the demand. The domestic oil supply and demand may see a certain growth in the second half of the year. The market will be in stable operation during this time while the prices of oil products are unlikely to grow dramatically or even drop slightly as compared to the prices in the first half of the year.
5.No Government Investment on Beijing Wastewater Treatment Projects
(Source: Beijing Morning Daily , 08/03/2003 - Translated by Wan Xiaolei)
Beijing Water Co. Ltd. – the largest water company in China in terms of registered capital, was established on August 2, 2003. Registered capital equals 4 billion RMB, (482 million USD). It is a joint venture between Beijing Drainage Group and Beijing Capital Co., Ltd. This indicates that all wastewater treatment projects in Beijing will be financed directly by private enterprises not by the Government . Five wastewater treatment projects, including Bei Yuan, Dong Ba, Ding Fuzhuang, Fa Tou, and Wu Lituo, will be opened for public bidding during the Beijing Science Expo, which starts on September 12. In addition, Beijing Water will finance another two wastewater treatment plants, (i.e. Qing He II and Bei Xiaohe II,) in preparation for the Olympic Games in 2008.
Currently, Beijing has six wastewater treatment plants in operation, with treatment rate of 50%. Under China’s commitment to the Olympic Games, there will be another nine wastewater treatment plants put into operation by 2008, with treatment rates exceeding 90%.
6. China Machine Tool Market Expecting Advanced High-Tech Equipment
(Source: China Machine Tool Group, 08/01/2003 - Translated by Zhao Peining)
With economic growth slowing down in much of the world, the business community worldwide has increasingly been drawn to China and her record-level rapid growth over the past twenty years.
In 2002, the Chinese GDP amounted to RMB 10 trillion (USD 1.24 trillion), an increase of 8% per capita RMB 8,500 (USD 962). Trade reached RMB 5 trillion (USD 600 billion) and ranked fifth in the world. China’s foreign direct investment ranked first in the world, totalling RMB 450 billion (USD 50 billion).
In order to handle the increased market opportunities and competition resulting from WTO accession, China has paid close attention to upgrade its conventional industries with more advanced high-tech machinery and equipment. China is also rapidly advancing toward restructuring its state-owned enterprises, joint ventures, and private enterprises. These two initiatives, along with the start-up of numerous major national projects, are stimulating rapid growth in the demand for machine tool & tooling products in China. This is a golden opportunity for machine tool builders to sell their advanced equipment and technology, since China anticipates spending over RMB 12 trillion (USD 1.4 trillion) over the next five years in this market.
Embassy News:
CS Beijing connected with several West Virginia coal mining equipment manufacturers in a Digital Video Conference (DVC) organized jointly with the West Virginia Development Office (WVDO) and EAC Charleston. Commercial Officer David Murphy kicked things off with welcoming remarks. CO Charles Winburn and Commercial Specialist Michael Mei followed with presentations on general business conditions in China and opportunities for U.S. exports of coal mining equipment and services, respectively. A lively question and answer session followed the presentations. Many of the participating companies will visit “China Mining & Coal Expo 2003” this October as part of a WVDO trade mission. Special thanks go to WVDO International Trade Manager Debra Martin and EAC Charleston International Trade Specialist Jim Pittard for organizing a great event.
Consulate News: Chengdu
In keeping with our goal of making the CCB a more integrated publication, our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit consulate news to the CCB on a rotating schedule. This week, we are pleased to feature a contribution from CS Chengdu.
July 30-31, Congressional Staffdel Szymanski Visits Chengdu. Recommended by CS Chengdu and co-arranged with Sichuan Foreign Affairs Office, Mr. Szymanski and his colleagues visited several local companies including Chengdu Aerotech Manufacturing Co. (Pratt and Whitney), Leshan Phoenix Semiconductor Company and Chengdu CCS Optical Fiber Cable Company, an affiliate of Corning. During the Staffdel's visit in Chengdu, Mr. Szymanski also met with Sichuan and local officials, and CG Bleye hosted an informal dinner and briefing for the Staffdel on July 31. August 3-5, the group visited Changan Ford Automobile Company and Puyi-Briggs & Stratton Engine Company in Chongqing to explore business opportunities for U.S. small- and medium-sized companies in the supply chain of the U.S. manufacturers. The delegation also visited the Yinghua Company, affiliated with Chongqing University, and learned about their long-distance education program. Mr. Szymanski was very satisfied with his trip to Chongqing and said that he and his colleagues had seen the highlights of the developing municipality and were very impressed by the fast growing economy.
SCO Allen visited Chengdu Post on August 11 and had very productive meetings with CG Bleyle, Acting Admin. Officer Hinton, and CS staff.
For more information on CS Chengdu and the Chengdu consular region, visit our website at http://www.buyusa.gov/china/en/Chengdu.html
DISCLAIMER: CS China does not guarantee the veracity of the original sources of our news summaries. While we do our best to report accurate and timely articles and news sources, you should always check the source for further information.
The China Commercial Brief is a free newsletter published by the U.S. Embassy- Beijing.
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INTERNATIONAL COPYRIGHT, U.S. COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2003. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.