U.S Commercial Service - American Embassy, Beijing
Vol. 2 No. 174
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 Guangzhou, Xu Ye, Sun Shuyu, Wan Xiaolei, Cao Yue
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 Guangzhou post.
1. Guangdong to Start Building the 3rd Nuclear Power Plant in December
2. Avon Starting Preparations for Direct Selling Pilot Project
3. Medical Equipment Leasing Service Growing Hot
4. Seven Automatic Monitoring Stations to be set up in Hangzhou
5. Rising Cost to Swallow Up Profit of Paper Industry
1. Guangdong to Start Building the 3rd Nuclear Power Plant in December
The contract signing ceremony for the second phase of Guangdong Ling’ao Nuclear Power Plant was held on March 16, 2005 in Beijing with attendance of Vice Premier Zeng Peiyan. Ling’ao Nuclear Power Plant will be China’s first domestic-built nuclear power plant. The Construction of the 2nd phase of Ling'ao Nuclear Power Plant will begin in December this year. And the new power plant will go into operation between 2010 and 2011 with an annual capacity of 45 billion kilowatt-hours.
The 2nd Research Institute of Nuclear Industry, China Nuclear Power Research Institute, and Guangdong Provincial Power Design Institute will jointly be responsible for the design, while Dongfang Electric Gas Group and other domestic equipment manufacturers will provide the equipments. Upon completion, it will be China’s first 1,000 megawatt-level homemade nuclear power station.
Ling’ao Nuclear Power Plant will be the third commercial nuclear power station built in Guangdong province after the Daya Bay nuclear plant and Ling’ao 1st nuclear plant. It will have two 1,000-megawatt reactors.
(Source: Guangzhou Daily, 03/17/2005 - Translated by FCS Guangzhou)
2. Avon Starting Preparations for Direct Selling Pilot Project
China’s Ministry of Commerce and State Administration of Industry and Commerce have officially approved Avon’s launch of pilot direct selling project in Beijing, Tianjin and throughout Guangdong Province. As a result, Avon announced that they will provide a USD 2.41 million (RMB 20 million) deposit in a designated bank, to prepare for its direct selling pilot project.
According to Avon, in addition to maintaining its sales from existing sales outlets, they will start recruiting no more than 3,000 sales promoters to sell its China-made products to end users directly. Avon will be directly responsible for training of its promoters and issuing temporary certificates. Avon will also report and file promoters’ profiles to the Ministry of Commerce and State Administration of Industry and Commerce. Whenever the number of trainees exceeds 100, Avon must first obtain approval from relevant local government agencies before they can proceed. Avon cannot conduct any activity with more than 500 participants.
Avon will not begin to calculate or pay sales promoters until they have sold its China-made products to consumers. The proportion of payment to sales promoters will not exceed 25% of the income generated from sales.
(Source: China Business Times, 04/20/2005 - Translated by Xu Ye)
3. Medical Equipment Leasing Service Growing Hot
Along with the development of medical science and biological engineering technology, the demand in hospitals for hi-tech imaging apparatus and laser equipment is rising sharply. As the purchase price for such medical equipment is very expensive, medical equipment financing and leasing companies have begun to enter the market.
The procedure of finance leasing is that the lessee selects the equipment needed, inform the leasing company of the selection, and the leasing company purchases the equipment from suppliers. The leasing company pays all the costs while renting the equipment to the lessee.
Likewise, hospitals, or other medical organizations, can sign a contract with a finance leasing company and the rental fee will be deducted from the hospital’s income. Many medical organizations and hospitals like this new leasing service because it is more flexible than purchasing medical equipment with borrowed money.
(Source: Health News, 03/15/2005- Translated by Sun Shuyu)
4. Seven Automatic Monitoring Stations to be set up in Hangzhou
Hangzhou Environmental Protection Bureau (EPB) and its affiliated county level EPBs decided to build another three automatic water-monitoring stations and four automatic air monitoring stations this year.
Before this decision, Hangzhou has already set up six automatic water-monitoring stations and 15 automatic air monitoring stations. These monitoring stations provide reliable data for the protection of portable water and air environment.
Hangzhou EPB requires that both upstream and downstream administration regions should agree to the section site selection. Meanwhile, the implementation work could only be conducted after the approval of provincial and city level EPBs. In principle, downstream parties will conduct the management and data report.
The items of water monitoring include: PH, dissolved Oxygen, and permanganate. Other items like total nitrogen and total phosphorus could be added into depending on local different circumstances. The items of air monitoring include: SO2, NO2, and suspend particulates.
(Sources: China Environmental News, 03/22/2005- Translated by Wan Xiaolei)
5. Rising Cost to Swallow Up Profit of Paper Industry
The cost of newsprint in 2005 will continue to stay high, similar to that of 2004. The average price of wastepaper imported will be slightly higher than in 2004, but the transport charges and water and electricity rates will remain high. The supply and demand in 2005 will be again thrown out of balance, but in the opposite direction as in 2004. Although the demand growth is predicted at more than 15 percent, the rising utilization rate of production capacity will make supply outgrow demand. By the middle of the year, prices will drop, but not much for advantage enterprises.
But printing paper production and operation in 2005 will be vibrating, with competition to become even fiercer. The high prices of imported pulp will keep the cost high, thus providing strong motivation for enterprises to raise prices. On the supply side, several large printing paper projects will be put into operation. The total production capacity in 2005 is expected to rise by at least 30 percent. The big increase in market supply in a short period of time will make competition fiercer. Enterprises have become less able to shift their costs, as there is hardly possibility to raise prices. As these projects will be put into production or start normal operation in the latter half of this year, the current low price may effectively inhibit the import of printing paper. The sales in the first half is expected to go well and paper price is likely to rise a bit as driven by rising costs. With the market competition becoming keener in the latter half of the year, printing paper will end its high profitability era.
The prices and sale of writing paper and other stationery paper in 2004 were steady. But profitability dropped significantly, due to the sharp rise in the raw materials and costs. A survey of the prices of wheat stalk, main raw materials for making pulp for writing paper, shows that the price in the harvest season of June was USD 44 (RMB360)/ton, but it rose quickly to USD48-58 (RMB400-480) /ton and it once peaked at USD60 (RMB500)/ton toward the end of the year. The average purchasing price this year will be above USD48 (RMB400)/ton, at least 50 percent higher than in 2003. The price growth in other areas averaged at least 30 percent. This item alone will dent the gross profitability by nearly 8 percentage points. The wheat stalk price will be kept at a high level this year.
In a word, China is more and more dependent on imported raw materials for paper production. Statistics show that China imported 6.03 million tons of pulp in 2003, 73.5 percent of the demand at home. The amount of wood pulp and wastepaper imported accounted for 1/3 of the total used in the year. In 2004, imports of wood pulp and wastepaper increased by 21.3 percent and 31.1 percent, respectively. As the project of integrating a forestation with paper industry in China is still in the initial stage, the paper industry will remain dependent on imports for its raw material supply. The international pulp price will remain high in the first half of 2005 and it may drop slightly in the latter half due to rising inventories. The profitability of the Chinese paper industry will be further dented.
(Source: China Economic Information, 03/22/2005 -Edited by Yue Cao)
Consulate News: Guangzhou
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 Guangzhou.
Study USA 2005 (Apr. 10-11, Guangzhou)
- CS Bai worked with Hong Kong FCS by arranging meetings and appointments for the Study USA Mission to come to Guangzhou. Eighteen U.S. colleges and educational institutes from this mission visited two private schools, and met the students from these private schools. The mission also had a meeting with the Consul General and a visa officer at the FCS Guangzhou office. The Consul General and visa officer gave an introduction of visa policy and visa application procedures for students. The Consul General and visa officer also answered the questions from the mission members. This meeting enlightened the educational representatives to feel more confident in entering Chinese education market.
Commercial Service
GKS for Spatializer Audio Laboratories Inc. (Apr. 14, Shenzhen)
- CR Kent Guo and CA Sophie Xiao have set up the GK meeting schedule on Apr. 14 in Shenzhen. The client decided to cancel the meetings on Apr. 13 because he has found a Taiwan company the ideal agent for its products. CR Kent then coordinated with CS Taiwan and the Taiwan agent for a meeting with the Taiwan agent’s branch office in Shenzhen.
For more information on CS Guangzhou and the Guangzhou consular region, visit our website at http://www.buyusa.gov/china/en/guangzhou.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.