Welcome to the January 2008 edition of China Pulse, the U.S. Commercial Service Newsletter for China ("CS China"). CS China offers you the resources you need to grow your business in China. By partnering with CS China, the U.S. Embassy's and Consulate's contacts and expertise are put to work for your business. Knowledgeable Commercial Service specialists and American Trading Center ("ATC") representatives can help you contact and set up appointments with Chinese organizations in 19 cities in China. With access to a broad cross-section of contacts including potential agents and distributors, major end-users and key government officials, you will be sure to meet the right people at the right levels to expand your business. Our customer service team can help you identify top regional markets and opportunities to export your product to China. Click here.
China's Economic Stimulus |
Listen to Bill Brekke, Minister Counselor for Commercial Affairs at the U.S. Embassy, Beijing, China, answer questions about China's economic stimulus package and what it means for American exporters. He discusses the size and scope of the stimulus as well as the targets of the stimulus. Mr. Brekke also discusses how the stimulus may be used for projects related to energy efficiency and sustainability. Finally, he explains how the U.S. Commercial Service can help U.S. companies succeed in China.
International trade shows are an excellent opportunity to access potential buyers! Join our U.S. Pavilions or allow us to arrange for your Single Company Promotion to help you successfully present product or service seminars. Please contact our officers and specialists at any of the following locations you would like to hold your promotion seminar:
Beijing, Shanghai, Shenyang, Chengdu, Guangzhou and Hong Kong.
Follow this link for information about upcoming trade shows in China.
China to keep average tariff at 9.8% in 2009
China will keep the import and export tariff at an average of 9.8 percent next year. But the Ministry of Finance said China will impose import tariffs in 36 new categories, aimed at promoting industrial upgrades. As part of the plan, China will continue to impose low tariffs on textiles, steel, and fertilizer products. The country will also cut import tariffs on some raw materials that have strong local demand. At the same time, China will keep the current tariff rates for crude oil, metal and steel. These rates are in place to restrict exports of these highly consumed and polluting materials. The new rule will take effect on January 1st, 2009.
Shanghai Welcomes More International Companies to Set-up Regional headquarters
The Shanghai municipal government is looking to attract more international companies to set up regional headquarters in the city, an official said on Thursday. New policies, involving governmental subsidies, capital management, and minimum registered capital, will be announced soon, said Sha Hailin, head of the business affairs commission of the municipal government. The municipal government would provide a bounty of five million yuan (about 750,000 U.S. dollars) for those who set a new investment company and ten million yuan for a new national headquarters.
China Patent News
A new study released yesterday projects China to lead the world in new patent applications by 2012. “Patented in China – the Present and Future State of Innovation in China” published in World IP Today by Thomson Reuters Scientific analyzes the top five patenting authorities globally -- Japan, the United States, the European Patent Office, South Korea and China. From 2001 to 2007, Japan has the highest total patent volumes year to year, but the United States has been narrowing that lead. For the period, Japan had 37% of all new patent applications with 3.5 mn. The United States had 27%, or nearly 2.6 mn. China, Korea and Europe each had 12% of the share. But China's year-to-year growth in the sheer number of patents was marked, the report found. Based on the previous five years, Thomson Reuters predicted Japan's annual growth rate in new patents would fall from 2 to -2.7%, the United States would stay at around 13 to 14%, but China would surge from 26.8% annual growth to 34%. "China is set to surpass Japan in 2011 and the United States in 2012," said Bob Stembridge, a spokesman for Thomson Scientific, one of the research arms of Thomson Reuters. "By 2011, China becomes the most prolific basic patenting authority in the world." The report, however, did not look at the quality of the patents, whether they were granted or which precise areas they involved. (Reuters)
Hong Kong: Financial IT Security
Summary
IT security technology within the financial industry enables banks and financial institutions to develop eBusiness and mBusiness (Mobile banking) models. In recent years, data protection and anti-fraud security issues have created challenges for financial institutions to fully explore the potential of state-of-the-art customer solutions. However, in general, Hong Kong financial institutions understand that when done right, IT solutions enable companies to improve business models and technology solutions, reduce costs and provide efficient and safe services to its clients.
In Hong Kong, eBanking has been developing for over 18 years for major banks, providing B to C (Bank to Client) operational models through the internet and broadband technology. With over 200 banks providing personal, retail and corporate banking services to the community, Hong Kong represents a significant market for IT Security related products, technical consultants and “best practices” providers.
Appendix 1 provides a table showing recent data about of computer crimes and related financial losses in recent years. There is increasing concern by the public about security within the financial industry, and with the high profile media attention of recent data loss in Hong Kong, local financial institutions have re-doubled their interest in security technologies.
This report focuses on the market potential of IT Security and related products and services within the financial industry in Hong Kong and nearby markets.
For full article please contact Cannes.Leung@mail.doc.gov
Hong Kong: US$13 billion New Railway Projects Presents Opportunities For U.S. Technology & Engineering Services
Summary
The MTR Corporation, which currently provides 9 main commuter railway lines in Hong Kong, initiated 6 large new railway projects worth US$13.63 billion to increase its coverage by approximately 60 kilometers throughout Hong Kong and into Southern Mainland China. The details of these 6 railway projects which are in various stages of planning and construction in Hong Kong are listed below.
There are opportunities for U.S. companies to tender for contracts and supplies of equipment and trains and these include: ▫ electrical, civil and mechanical engineering contracts ▫ trains for the Shatin Central Line ▫ trains to replace the old Kowloon Canton Railway (KCR) trains ▫ platform work ▫ power supply system ▫ track works ▫ overhead wires ▫ escalator and lifts ▫ building services ▫ signaling systems.
For full article please contact Cannes.Leung@mail.doc.gov
China: Equipment manufacturing in Chongqing
Summary
Equipment manufacturing is a strategic sector which plays an important role in the national economy. As
China continues to modernize its industrial capabilities revitalization of the equipment manufacturing base remains a key government priority. With its role as a major manufacturing center in China, Chongqing’s equipment manufacturing industry is positioning itself for use of more sophisticated technologies and processes. Chongqing manufacturers are increasingly open to foreign involvement, which creates additional opportunities for U.S. companies to export machinery and machine tool products to this market.
For Full articles please go to http://www.buyusainfo.net/docs/x_8846905.pdf
Optimism in face of slowing market |
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Optimism in face of slowing market
The chill from the world financial crisis has begun to take its toll on China’s own still robust growth, with the worst damage seen in export-oriented industries most vulnerable to collapsing demand overseas. Many Western economists are revising their economic growth forecasts for China down to around 8 percent in 2009 and 2010, although opinions regarding the likely scope and duration of the slowdown vary.
InterChina recently surveyed more than 30 CEOs and China managers of multinational companies and found that, depending on the industry, most expect the China market to continue to grow and outperform other major world economies. Most say they believe the impact of the global financial crisis on their China operations will be limited. “I expect that China’s economic growth will slow down a bit in 2009 but the China market still continues to grow faster than others in the world,” a CEO of a multinational company said.
Much of that optimism is pinned to the Chinese government’s aggressive moves in recent weeks to help prop up domestic demand with massive spending. The 4 trillion RMB (US$586 billion) fiscal stimulus plan announced on Nov. 9 calls for substantial investments in public housing, rural infrastructure, transportation, health care and education - exactly the areas economists say must be addressed to help entice frugal Chinese consumers to spend more. The plan, the largest undertaken by Beijing so far, amounts to about 16 percent of China’s economic output last year. It is still too early to predict what impact it will have on domestic demand overall, but it is a much stronger response than that offered by China during the Asian Financial Crisis of the late 1990s. Since economists had anticipated such a move by the government, the spending plan did not result in any significant upward revisions in growth forecasts, which had already taken it into account.
Most of the foreign companies we interviewed are naturally trying to boost sales in China to compensate for lost sales in Europe and the United States - the markets at the center of the epicenter of the global financial upheavals. Managers are under pressure from parent companies to cut costs while expanding sales. So far, none of the companies we surveyed said they planned layoffs in China thanks to the need to build up strength in this growth market.
Still, given the uncertainties prevailing in the world and the difficulties of gauging how recessions elsewhere will affect China, companies have become more cautious in their spending. “Even small, daily expenses can influence annual profits and losses,” said Marco Rampichini, general manager of SCM Group China, a woodworking machinery company. “We now use normal mail instead of express couriers, choose cheaper hotels and book flights in advance to get discounts on our traveling expenses,” he said.
Rampichini is so cautious because he thinks the recession will have a profound impact given China’s own heavy reliance on exports for growth. “China still considers itself the factory to the world. It is too export-oriented and too low-price oriented. This is the first major economic crisis in the Chinese capitalist adventure and managers and entrepreneurs are pretty scared and don’t know clearly how to face the new situation.” he says.
If you interested this article, please go to http://www.interchinaconsulting.com for full article
China Economic Crisis ‘Industry Specific'
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China Economic Crisis ‘Industry Specific'
The China exposure to the global economic crisis is limited in nature and is not affecting all industry sectors. As we exclusively handle investments from foreign clients in China, Dezan Shira & Associates is in a good position to gauge FDI trends in China.
We are seeing closures of some operations in China, but we are also seeing patterns emerging in the types of businesses affected by the economic downturn and those who are not. Businesses involved in low end manufacturing with high labor pools and large export markets have been hit twice – once by an increase in overheads attributable to the impact of the new labor law, and again to the shrinking of overseas markets for their goods. These businesses are at risk and we are seeing closures and layoffs, mostly in Guangdong but also to a lesser extent in Shanghai and the Yangtze River Delta. However, these are mainly SME style operations and are not significant financial investors in the PRC, although they do possess sizable labor pools.
Businesses in China that are manufacturing here and selling to the domestic market appear to be buoyant, despite initial concerns over the extent of the credit crunch and whether or not China would be affected by it. Retail sales in China were up 22 percent last month, the highest in nine years, and many are reporting growth expectations for 2009. However, industries such as auto and property do appear to be slowing down and they may face 2009 with little or no growth. Conversely, the luxury goods market appears buoyant. The Chinese are still buying LV, Prada and Gucci and businesses in this sector appear optimistic over 2009 performances.
When looking at an optimum business model for success next year, companies with existing consumer brands having already achieved local market penetration with a local perception of superior quality will do well, even if they are sold at a premium above local produce. The domestic market is fed up with poor quality and tainted local products, and now is the time to get more stock or the perceived superior quality and consistency of international brands, altered for local market sensitivities, onto the shelves. These companies will do well during 2009, and some are privately expressing anticipated growth next year of 30-40 percent in revenues.
That said, now is a time to be prudent as it is possible from what we hear in other markets that China FDI could dry up. At present however, there is no signal from our industry that things will get significantly worse. We note that KPMG and PWC announced yesterday that despite laying off transactional personnel last week – related to a downturn in mergers and acquisitions – they have also seen an increase in graduate intake from January. The FDI market into China still looks healthy, albeit slightly battered, and MNC’s concerned about slow and negative growth in the United States and Europe still see China as an opportunity.
So although the economic downturn in China may be painful for some, it appears that across the board, the crisis is not having the effect that many in the news media have predicted. In many sectors, investment remains strong and businesses committed, and with China’s economic stimulus package focusing attention on the country’s infrastructure, many will be in a prime position to benefit as China ramps up construction.
AmCham-China in Action |
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EVENTS:
Upcoming Events
Events
AmCham-China, Tianjin Chapter and PricewaterhouseCoopers Present: What does the recent tax and regulatory reform mean to you and your business?
Friday, January 9
Hotel Nikko Tianjin
AmCham-China Presents: Breakfast Briefing with US Chamber of Commerce President Thomas J. Donohue
US-China Commercial Relations and the New American Government
Tuesday, January 13
China World Hotel
About AmCham-China
The American Chamber of Commerce in the People's Republic of China (AmCham-China) is a non-profit organization which represents US companies and individuals doing business in China. AmCham's membership comprises nearly 2,700 individuals from over 1,100 companies. It has more than 40 industry- and issue-specific forums and committees, offers unique services such as the Business Visa Program, holds a wide range of networking and informational events, and meets with US and Chinese officials to discuss challenges and opportunities facing US firms doing business in China.
The Chamber's mission is to help American companies succeed in China through advocacy, information, networking and business support services. Find out how your firm can benefit from a membership with AmCham-China.
Why choose the Commercial Service?
The Commercial Service offers you the access you need to grow your business in China at an affordable rate. By partnering with FCS, the U.S. Embassy's and Consulates's contacts and expertise are put to work for your business. Knowledgeable Commercial Service specialists and American Trading Center (ATC) representatives can help you contact and set up appointments with Chinese organizations across China. With access to a broad cross-section of contacts including potential agents and distributors, major end-users and key government officials, you will be sure to meet the right people at the right levels to expand your business.
China Pulse is Commercial Service China’s official e-newsletter! Inside you will find the latest business news, exciting export opportunities, and inside strategies to help you maximize your success in the China market today!
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