U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 154
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Editor: Matthew Gettman
Contributors:CS Shanghai, Mei Baochun, Bai Ying, Xie Pingping, Wang Jianhong, Sherry Cai
News Briefs
In addition to the article summaries CS Beijing provides , 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 Guangzhou post.
1. Complete opening-up of retail industry to foreign investors
2. China's power shortage to worsen in 2004
3. Auto Bulb Manufacturing Market is Growing in China
4. Contact Information for American Companies Interested in the New U.S. Embassy Beijing Complex Project
5. China becomes world's top DSL market
6. The First Group of Hotels Signed the Olympic Lodging Agreement with BOCOG
1. Complete opening-up of retail industry to foreign investors
The Deputy Minister of MOFCOM Mr. Zhang Zhigang said recently that in line with its commitments to the WTO, China will further reinforce its opening-up of the retailing sector. By December 11, 2004, restrictions on geographic location, equity participation, and the number on foreign invested retail enterprises will be removed.
By now, most of the multinational retail giants have entered China. In 2003, the annual revenue of Carrefour reached RMB 13.4 billion (USD 1.62 billion), an increase of 25.7 percent over the previous year. Wal-mart has opened 33 branch stores in China, and its annual sales reached RMB 5.85 billion (USD 708 million) in 2003.
Experts indicated that foreign investment in the retailing sector is still very low in China. Foreign invested retailing is mostly concentrated in the eastern part of China, and is mostly in the form of hyper-markets. As the opening-up gradually takes place, there will be more types of retailing and more companies in the center and western part of China.
Mr. Zhang also pointed out that currently the logistics industry in China is still relatively weak. The opening-up of the retail industry will impact the logistics industry, and bring new opportunities to it.
(Source: Xinwen Morning Post, 03/17/2004 - Edited by CS Shanghai)
2. China's power shortage to worsen in 2004
China will continue to face power shortage as the economy keeps on the fast track. Chai Songyue, chairman of the State Electricity Regulatory Commission (SERC), predicted in a national work meeting on securing power production that China would have a shortfall of more than 20 million kilowatts in electricity supply in 2004. He said in some areas of the country, the power shortage would be even worse than last year.
22 provinces, autonomous regions and municipalities had to implement blackouts to limit electricity consumption in 2003 as China's economy developed at a speed of 9.1 percent. In the first two months of the year, a significant number of areas in the country have already been forced to cut power supply at peak times.
Chai said electricity shortage would be acute in east and south China. Certain parts of north, northwest and central China would also suffer inadequate power supply. The problem would be most prominent in Jiangsu and Zhejiang provinces and Shanghai City in east China this year. In order to guarantee more power supply, China will accelerate construction of new electricity generating plants and power grids. At the same time, the SERC and government will jointly develop incentive measures encouraging balanced electricity consumption.
According to the forecast of the China Electricity Council (CEC), China's power generation capacity will grow 9 percent in 2004, while the consumption of electricity will increase by 12 percent. The association predicts that in 2005, the electricity shortage will be eased to certain extent.
(Source: China Electric Power News, 02/26/2004 - Translated by Mei Baochun)
3. Auto Bulb Manufacturing Market is Growing in China
As China's market for new cars expands and more and more families are able to afford an entry-level vehicle, the demand for auto bulbs has kept pace. Currently, China has 35 auto bulb manufacturers, which produced about 751 million bulbs in 2002, out of which 12 large auto manufacturers produced 628 million auto bulbs. Most of Chinese auto bulb manufactures are located in Guangdong, Zhejiang and Jiangsu provinces. The private-owned companies accounts for 67% of the total auto bulb manufactures, and the rest of 33% are state owned and joint ventures.
The following chart shows the output and type of the auto bulbs manufactured in 2002.
China now has 18 million registered motor vehicles. The number is estimated to reach 25 million by 2005, and 50 million by 2010. The demand for auto bulbs is expected to reach 1 billion by 2005 and further up to 2 billion by 2010. The output of auto bulbs is 750 million in 2002, which shows that there will be a supply shortage of 250 million by 2005.
As China’s auto bulbs manufacturers focus on the development of halogen tungsten and gold halogen tubes, they will need the latest technology and production equipment. China must still import a number of key technologies and equipment to manufacture gold halogen tubes, and this is a good niche for American suppliers of halogen and gold halogen tubes production equipment and services. .
Among the technologies of most interest to China’s auto bulb manufacturers are xenon tube and light emitting diode (LED) tube. In addition, China is seeking high performance and long lasting lighting technologies. U.S. companies, offering equipment and services in these auto lighting market niches should find a ready market in China.
(Source: China Auto News, 02/25/2004 - Translated by Bai Ying)
4.Contact Information for American Companies Interested in the New U.S. Embassy Beijing Complex Project
The groundbreaking ceremony for new U.S. Embassy in Beijing was held on Feb. 11, 2004, and marked the official start of the construction of the largest U.S. State Department overseas facility. The cost of the new embassy is USD 275 million.
The architectural firm Skidmore, Owings & Merrill designed the facility and joint venture partners Zachary-Caddell will build it. Beijing Construction Engineering Group is the Chinese contractor performing site preparation and excavation.
The new U.S. Embassy will have more than 50,000 square meters of floor space and is scheduled for completion in early 2008, just before Beijing hosts the Summer Olympics.
Contact for American Companies: Mr. Plaban K (PK) Bagchi is the Project Director for the New U.S. Embassy Complex Project, and he will be responsible for all the construction operations in Beijing.
American companies interested in becoming suppliers for the new U.S. Embassy in Beijing should contact Mr. Bagchi at
Attention: Mr. Plaban K Bagchi
The Office of Overseas Buildings Operations
Email: BagchiPK@state.gov
Address: Xiu Shui Dong Jie 2,100600 Chaoyang District, Beijing
(Source: FCS Beijng, Edited by Xie Pingping)
5. China Becomes World's Top DSL Market
As the number of DSL users hit 10.95 million in the end of 2003, China became the world's largest DSL market, according to a DSL Forum statement. The DSL Forum is an international industrial consortium of over 200 service providers, equipment makers and other interested parties, with a focus on developing the full potential of broadband DSL.
Japan, formally in the number one position, is now in second place with 10.27 million, while the United States is in third place with 9.12 million and South Korea in fourth at 6.43 million.
As more and more Chinese have increased their interest in using the Internet, industry analysts predict that there will be a strong trend of further growth in China’s DSL market in 2004. A report in Ren Min You Dian Bao, the official newspaper of China’s Ministry of Information Industry (MII), indicated that China Telecom and China Netcom purchased 13 million lines of DSL equipment in 2003. The two telecom carriers are expected to purchase 20 million lines in 2004. Even if the cost of DSL has gone down to RMB 300 Yuan, about USD 40 per line, the investment in DSL equipment by the two telecom carries will reach RMB 6 billion yuan, about USD 750 million, in 2004.
With large fixed-line networks in operation, DSL has become a sharp weapon for both China Telecom and China Netcom to squeeze out smaller broadband service providers like Great Wall Broadband and Bluewave, which uses Ethernet technology. China Telecom and China Netcom provide free DSL modems to users. They expect to attract more subscribers and increase their revenue from the usage of internet. Limited recourses of content and applications are the two barriers that the telecom carriers have to overcome. As China Telecom and Netcom are eager to generate revenues from broadband services, they might be willing to share some of their revenues with ICPs and SPs.
Source: Interfax, 03/12/2004 and Ren Min You Dian Bao, 02/10/2004 and ChinaByte, 03/16/2004, - Translated by Wang Jianhong)
6. The First Group of Hotels Signed the Olympic Lodging Agreement with BOCOG
Beijing 's hospitality industry is getting prepared to serve the spectators of the Beijing Olympic Games. The first seven five-star hotels signed the Olympic lodging agreement with BOCOG on March 18, 2004.
These seven hotels are: Beijing Hotel, China World Hotel, Grand Hotel Beijing, Hong Kong Macao Center Swissotel, Beijing International Hotel, Kunlun Hotel and Crowne Plaza Park view Wuzhou Beijing. The seven hotels will provide accommodations to accredited people from the Olympic Family, the sponsors and the media. At the time of the Games, the seven hotels are to keep the total of 3,500 rooms available to BOCOG while they accommodate other guests.
In line with the Olympic Charter and the Host City Contract, BOCOG will have to provide 22,000 hotel rooms for accredited people during the Games period. To meet this goal, BOCOG will sign the same agreement with some 70 more Beijing star-rated hotels within this year to ensure that a total of 23,000 hotels rooms will be available during the Olympic Games in 2008.
(Source: Beijing Youth Daily,03/19/2004 - Translated by Sherry Cai)
Consulate News: Shanghai
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 Shanghai.
Outreach and advocacy have been high on the list of CS Shanghai's activities in the past month and a half. Commercial staff reached deeper into Jiangsu, Anhui, and Zhejiang provinces with U.S. partnering opportunities for Chinese buyers, also organizing an innovative firefighting seminar at the U.S. Commercial Center (USCC) for all the provincial bureaus. The PCO and her colleagues advocated for U.S. companies on emergency response, airport expansion, lifeboat, motorcycle, and urban design projects, and also worked with U.S. urban planners for Jiangsu Province's resources development. At the same time staff helped U.S. firms extricate themselves from a spate of trade disputes that required patience and persistence in finding solutions. Shanghai continued its District outreach with calls on Xuhui's and Nanhui's Magistrates. Those districts have several giant projects in the medical and transportation sectors. Staff were trained in Gold Key research, success story mining, new uses of the CMS database, and advocacy. CS Shanghai continued to do single company promotions or technical seminars twice a week on average in the USCC, in addition to a steady stream of Gold Keys and Platinum Keys. There were local trade shows, ground breakings, plant openings, and EMBA briefings, as well as missions from the U.S. Chamber of Commerce, Miami-Dade County, and the U.S. micro-electronics industry. Next month FCS will support a high profile U.S. presence at the Nanjing New Products Exhibition.
For more information on CS Shanghai and the Shanghai consular region, visit our website at http://www.buyusa.gov/china/en/Shanghai.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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