U.S Commercial Service - American Embassy, Beijing
Vol. 2 No. 173
The China Commercial Brief is a biweekly publication featuring 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: Matt Gettman
Contributors: CS Shanghai, Mei Baochun, Zhao Peining, Cai Hongying, Wang Jianhong, Peng Aiqun, Cao Shujuan, Xu Ye, Qiu Jing , Shen Yan
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 Shenyang and Shanghai post.
1.Wedding Market Spending Luxurious in China
2.China Restricts Construction of Large Power Plants
3.China Safety and Security Market Brief
4.The Guangzhou University just received USD 120 million
5.Online Gaming in China: A USD 907 million Market in 2005
6.Beijing-Tianjin High-speed Railway
7.China PC Market
8.China To Unify Enterprises’ Income Tax On Domestic and Foreign Firms
9. Four Factors Restrain Development of China’s Digital TV Industry
10. Cities’ Land Prices on the Rise
1. Wedding Market Spending Luxurious in China
Last year, the Chinese spent approximately USD 30 billion (RMB 248 billion) on wedding ceremonies, and the average cost of a wedding in Shanghai is USD 15,000 (RMB 123,975). The booming and thriving wedding market has attracted wedding operators from all over the world. The 7th China International Wedding Photo Equipment Fair that was inaugurated yesterday is a sound proof of that.
Statistics show that in recent years 10 million couples get married each year. Shanghai alone 80,000-150,000 newlyweds every year. Forecasts suggest that in five years the average expense spent on weddings will be doubled that of last year’s figure.
The 7th China International Wedding Photo Equipment Fair covered an area of 22,000 square meters and was one of the biggest among trade exhibitions. The 250 exhibitors were from Japan, Korea, China and Hong Kong. Items on display included wedding dresses, wedding cosmetics, accessories, wedding photo props and equipment.
(Source: Jie Fang Daily, 02/25/2005 - Translated by FCS Shanghai)
2. China restricts construction of large power plants
China’s State Council has recently approved an emergency plan of the State Development and Reform Commission on firmly stopping the disorderly construction of power plant projects for strict control of power station construction. It means that the State Council has started to exert macro control over the construction of power plants.
This time, China is mainly restricting construction of large power plants with an installed capacity above 200 MW. It will involve 120 GW of power plants, which have started construction with total investment exceeding USD 72.6 billion.
State Development and Reform Commission said that it only approved construction of new power plants of installed capacity totaling 61 GW in 2004. However, the actual installed capacity of power plants that were put under construction amounted to 280 GW, with 120 million kW of power plants built illegally.
(Source: China Business News, 12/27/2004 - Translated by Michael Mei)
3. China Safety and Security Market Brief
China’s safety and security market demand is growing rapidly, and the market has expanded from its traditional industry base in the financial, insurance, customs, police, airport and IT areas to the construction, transportation, and education fields. This expansion demonstrates the increased market demand in China for safety and security equipment. In 2003, the China safety and security equipment market was USD 7 billion. A Chinese government expert in this industry estimated that in 2020, China’s safety and security expenditures would reach USD 30 billion. After 9/11 and through 2005, the Chinese government has already invested USD 130 million to deal with the anti-terrorism and safety and security issues.
There are 132 airports in China now, and by 2010, China will have 240 airports. These 108 planned new airports will propel airport security as one of the key safety issues for the Chinese government. With tourism revenue and air cargo volume increasing, China will upgrade the technology at major airports, enhance air passenger/cargo safety, and add advanced security equipment to conduct security checks efficiently.
(Source: China International Times, 02/10/2005 - Translated by Peining Zhao)
4. The Guangzhou University just received 120 million USD
The Guangzhou University just received USD 120 million (RMB 1 billion) funding authorization to build 8 new gymnasiums and one new stadium. The total construction area is 2.5 million square meters. Construction will begin this year and projects completion by the end of next year 2006. These sports venues will be used for the 2007 University Games, as well as the 2010 Asian Games. The main stadium is planned for opening and closing ceremonies for both events.
(Sources: Chinese Sports Administration Website: www.csiso.com, 02/21/2005- Translated by Cai Hongying)
5. Online Gaming in China: A USD 907 million market in 2005
The online gaming market is growing rapidly in China. Ren Min You Dian, a leading newspaper in China’s information industry, reported on February 24, 2005 that the market size of China’s online gaming sector was USD 669 million (RMB 5.53 billion) in 2004, an increase of 59% over the previous year. The market is expected to hit USD 907 million (RMB 7.5 billion) in 2005.
Online gaming is quickly becoming a killer broadband application. According to the report, the sales volume of online games reached 2.47 billion RMB, about USD 298.8 million, in 2004, representing an increase of 47.9 % over 2003. In 2004, the number of Chinese online game players reached 20.25 million- 21.5% of the total Internet users in China. The statistics of the General Administration of Press and Publication shows that 87% of the users are people aged between 16 to 30.
Korean game developers dominate the market. There were 164 games in operation in 2004 in China. Of the total games online in 2004, 81 were developed by Korean companies, 73 by local Chinese companies, 6 by European and North American developers, and 4 by Japanese companies.
Industry Analysts predict that sales of online games will reach USD 1.32 billion (RMB 10.91 billion) by 2009. The online gaming sector contributed an income of USD 3 billion (RMB 24.8 billion) to the telecom industry and other related industries in 2004.
(Source: Ren Min You Dian, 02/24/2005, Translated by Michael Wang)
6. Beijing-Tianjin high-speed railway
On March 3, 2005, Minister of Railways Liu Zhijun, Beijing Mayor Wang Qishan and Tianjin Mayor Dai Xianglong signed the memorandum on the construction of the Beijing-Tianjin high-speed railway project, which is scheduled to start construction in July, 2005, to complete by December 2007, and begin operating in July 2008.
The total length of the Beijing-Tianjin intercity railway system is 115 kilometers, which can satisfy with the train speed requirement of 200 kilometers per hour.
The Beijing-Tianjin high-speed railway project will be the first built high standard railway for passenger line, and is a focus project for the Beijing 2008 Olympics.
To alleviate rail bottlenecks caused by rapid economic growth, China has unveiled a national plan for mid- and long-term railway development in early 2004. The Beijing-Tianjin high-speed railway construction will be the commencing project among the nine proposal passenger railway lines.
(Source: International Finance News, 03/04/2005 - Translated by Peng Aiqun)
7. China PC market
According to a recent survey by CCID consulting, in 2004, China’s PC market experienced market growth of 9.9%. It is predicted that in the next five years, the market will sustain growth of 9.9%. By 2009, the sales revenue of PCs (Desktop, laptop, and PC server) will reach USD 21.7 billion ( RMB 179.4 billion) with sales volume of around 33 million units.
The desktop PC users are demanding more specific functions, primarily related to pre-installed software. For example, Internet cafe owners are required to monitor the content that is surfed in their establishments. Therefore, they need all their PCs installed with applicable software. PCs used in educational facilities need to be easily managed for a central source. Within the securities industry, there is a demand for small cubage PCs to save space.
The laptop PC market is expected to account for 31.7% of the total PC market in China with units expected to reach 25 million for desktop and 27 million for laptop by 2009. Foreign companies such as HP, Dell and Toshiba have begun to sell low-end laptop PCs, pricing their models between USD 846 (RMB 6,992) to USD 1000 (RMB 8,265).
The PC server market should also have good potential prospects. Foreign companies such as IBM, HP, and Sun dominate the high-end market. Local companies such as Dawning (Shuguang), Langchao and Lenovo (Legend) dominate the low-end market. New technologies such as double kernel, clusters, 64 digit computing, and the blade design has created a whole new greater demand by many individuals in different industries. China’s informatization projects such as the olden Card project, the project in education field, and the value added business of on-line game, video on demand service, and instant message service will bring good opportunities within China’s PC server market.
Following is the sale structure of China PC market in 2004
(Sources: Information Technology Weekly, 03/08/2005- Translated by Cao Shujuan)
8. China To Unify Enterprises’ Income Tax On Domestic and Foreign Firms
According to information from the ongoing sessions of the 10th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the task of unifying enterprises’ income tax for domestic and foreign firms is in progress.
Relevant government agencies have drafted a scheme for the tax reform. The unified enterprises’ income tax rate will be around 24% to 26%. There will be a transitional period for foreign firms. For example, there will be a preferential period of two to three years for newly founded foreign firms in China. Moreover, foreign firms investing in projects serving the public interest will enjoy certain preferential treatment also.
Business insiders state that this is the best time to unify enterprises’ income tax for domestic and foreign firms. China enacted, amended and abolished lots of laws and administrative statutes before and after China’s accession to the WTO. Therefore, these changes created a better investment environment for foreign investors.
(Source: Beijing Business Today, 03/09/2005 - Translated by Xu Ye)
9. Four factors restrain development of China’s digital TV industry
A recent survey on consumers of digital TV programs indicates that four factors are restraining the popularization of digital TV in China:
First, the shortage of high-qualified programs has become a bottleneck in development. The shortage of programs with good contents has restrained the expansion of user base because consumers look on contents as their first preference in the era. Moreover, terminal products and network equipments, which are wonderful in functions, will fail to win viewers’ favor without original and applicable contents.
Second, a unified national standard of digital TV is still virgin ground in China and the final system to be adopted for China’s digital TV is still uncertain.
Third, the development is encountered with the headache of harmonizing the interests among various departments and sectors. As a systematic project, digital TV holds a long industrial chain and involves lots of departments, such as the State Administration of Radio Film and Television (SARFT), Ministry of Information Industry (MII), operators as well as producers, so it is crucial to make a proper arrangement to distribute profits among them.
Fourth, who will pay for the set-top box is also a problem to be solved.
After ten years’ development, the consumption of digital TV in China has actually shown two characteristics: on the one hand, in spite of the price, whether consumers will purchase the set-top box depends on the usefulness of the device; on the other hand, many consumers favor HDTV in their five-year plans.
These problems and restraints deserve much attention, if China’s digital TV industry yearns for a smooth run in the future.
(Source: CEI News, 03/07/2005 - Translated by Qiu Jing)
10. Cities’ Land Prices on the rise
The average land prices in major Chinese cities rose to USD145 ( RMB1,198 ) per square meter last year, up 6.08 per cent over the previous year. The figures were recently released by China’s Ministry of Land and Resources.
Land prices in China’s major cities, such as Beijing, Shanghai, Hangzhou, Shenzhen and Guangzhou, posted a more modest 2 per cent growth.
The average land price in cites in eastern China rose more than two times the average price in western Chinese cities.
(Source: Beijing Daily, 02/28/2005, - Translated by Shen Yan)
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.
Shanghai Economy On All Cylinders
Shanghai reported that its economy grew by more than 14% in 2004. On the ground, it is clear that high growth has continued into 2005: increases in business and tourist visitors, and popular international trade shows, have led to hotels being booked up months in advance and increases in room rates; traffic in both the middle-market and luxury retail sectors is increasing rapidly; and popular restaurants at all levels turn away people without reservations.
Barring any major international disturbances, the only speed-bump ahead is a possible Summer electricity crunch. Last year, the crunch coincided with efforts to the cool the economy and the Shanghai authorities used both market levers -- increasing daytime electricity charges, for example -- and bureaucratic fiat -- withholding power to large, inefficient factories -- to manage fairly well electricity shortages. Hopefully, this year's increases in electricity usage will not outstrip the authorities' ability to manage shortages.
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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INTERNATIONAL COPYRIGHT, U.S. COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2005. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.